PHAN TICH VAI TRO VA SỨ MỆNH CỦA CHIẾN LƯỢC TRONG DOANH NGHIỆP Definition of strategy: Michael Porter, “the Father” of the theory of competitive strategy, said: “the premier strategist of an organization must be the leader of that organization” That is true When standing in a position to lead the organization, the work "building strategy” is a default responsibility and only the leader can undertake this task The reason is that the establishment and implementation of the strategy will determine the destiny of an organization The author wishes to give a proof of whether there should be a strategy in business or not: "The Japanese companies rarely have strategies" The Japanese triggered the global evolution of effective operations in the 1970s and the 1980s They also pioneered in the practice as total quality management and continuous improvement As a result, manufacturing industrial of Japan was entitled significantly advantages of cost and quality in many years However, Japanese companies rarely implemented strategic position like the type of strategy discussed in this article Sony, Canon, and Sega for example, the companies have implemented strategy, are the exception rather than the common principle All competitors provide the market with most of products and even all diversified products, all attributes and services, they deploy all channel and they have peer factory configurations The danger of Japanese-style competition is becoming more easily to see In the 1980s, with the competitors operating away from border, productivity seems to win both the cost and quality explicitly The Japanese companies could grow in the domestic economy with the expansion and penetration into global markets It seemed that nothing can brattle their development However, when the distance of operation effectiveness shrunk, Japanese companies were increasingly falling into the trap they created If they wanted to escape from the war that destroyed their result, Japanese company had to learn to build strategy To this, they seemed to have to overcome strong cultural barriers Japan is famous for its tendency to seek consensus, and companies tended to regulate the differences between individuals rather than highlighted those differences On the other hand, the strategy requires difficult choices The Japanese also have inveterate tradition to serve, which causes them wholeheartedly satisfy any demand that their customers express Companies compete in this way may come to overshadow their distinguished status, become all things with all customers But "What is strategy?", "How is a good strategy?", "Why my organization has a good strategy but the operation not achieve the expected results?" , they are always the questions that make leaders and managers at all levels confused, especially in the process of leading and operating their own businesses "Strategy is the direction and scope of an organization in the long term: strategy will bring advantage for the organization through the optimal arrangement of resources in a competitive environment to meet market demand and expectations of the capital contributors" In other words, the strategy is: - The position that the enterprise tries to reach out in the long term (direction) - What market the enterprise must compete on and what kind of business activity the enterprise must carry out in that market (market, scope)? - How the enterprise works better than the competitors in that market (advantage)? - What resources (skills, assets, finance, relationships, technical competence, facilities) the enterprise needs to prepare to have competitive advantage (resources)? - What factors from the external environment affect the competitiveness of the enterprise (the environment)? - What values and expectations that the people who have power in and out the business need (the capital contributors)? The benefits that strategic brings for business First of all, the strategy brings unique activities Competitive strategy is about differentiation That means the leader chose an array of different activities on purpose to bring a combination of unique values The goal of making the differences of general strategy is to achieve competitive advantage of the company by creating products (goods or services) that customers feel unique with some important characteristics The company making differences tries to satisfy its customers in a way that competitors can not with intention to increase the (a significant price higher than the average price in the industry) The ability to generate income by requesting increased price (rather than decrease costs as in the case of cost managers) enables people making differences perform better than their competitors and earn profits higher than the average profit in the industry The increased price of people making differences is usually higher than the price that cost managers require, and customers are willing to pay for it because they believe that the quality of differentiated product has distinguished value Therefore, products are priced on the basis of what the market will bear Therefore, Mercedes Benz car in the U.S is much more expensive than that in Europe, because in U.S it has higher honor Similarly, the cost to produce a BMW is not much more expensive than that of a Honda but its price is determined by customer‘s view Customers think that owning a BMW has something that is more worthwhile The Rolex watch is in the same case It does not need more cost to be produce, moreover, its design has not changed in many years and its gold content is only partially expressed However, customers buy Rolex because of the unique quality that they perceive in it: it is the ability to show the honor of the people who have it In Stereo industry, the Bang & Olufsen of Denmark is a prominent name; in gemstone, it is the Tiffany that is prominent; in aircraft industry, Learjet is the most famous All these products require an increase in price because of their different quality Or for example, Southwest Airlines Company provides transportation services with short route and low cost and it has direct flights between medium-sized cities and secondary airports in major cities The company avoids the large airport and does not fly for long distances Customers of the company include business travel, families and students Regular schedule and low price attracts customers who are sensitive to price (otherwise, they will go by bus or car) and attracts customers who like the convenience that they select an airline brand with full service on other routes Most managers will describe the establishment of strategic position according to customers is "Southwest Airlines serves passengers who have price sensitivity and love the convenience." But the core of the strategy is in the activities, the leader chooses to perform activities differently or to perform different activities than the competitors Picture 1: Operational structure of Southwest Airlines The airline brands have fully arranged services to bring passengers from any point A to any point B To cover more destinations and serve passengers by the connecting flights, the full service airlines deploy "shaft and spoke" system with the shafts located at major airports To attract passengers who want more comfort, they supply first class service or business class service To attract passengers who have to change planes, they coordinate schedules, provide procedures of interline baggage Because some passengers will fly in several hours, the full service airlines will serve the meal In contrast, Southwest amends entire operations to provide convenient services with low cost on a particular journey By turning fast in every port in just 15 minutes, Southwest can arrange for the aircraft to fly more hours than competitors and provide regular flight with less aircraft Southwest does not serve meals, select seats and does not provide procedures of interline baggage or serve premium class The automatical procedures at the port encourage passengers to ignore the ticketing agent, helps Southwest avoid agent commissions A standardized aircraft fleet -737- will help enhance the effectiveness of aircraft maintenance Secondly, strategic brings competitive advantage A terminology relating to competition is competitive advantage It is the ownership of peculiar value, which can be used to "seize the opportunity" and to make profit When we mention to competitive advantage, we talk about the advantage that a business or a country is having or can have in comparison with their competitors Competitive advantage is a concept that has both micro meaning (for enterprise) and macro meaning (national level) Beside, we have terminology “sustainable competitive advantage”, which means that the enterprise must continually provide the market with a special value that no competitor can provide These attributes are: - Conditions of production factors - the position of a country in production factors such as high-qualified labors or necessary infrastructure to compete in a particular industry - The conditions of demand - domestic demand for goods or services of an industry - The supported and related industries - the presence or availability supported and related industries that have international competitiveness - Strategy, structure and level of competition within the industry – conditions for the company to organize and govern the management and the nature of local competition Picture 2: The factors to determine national competitive advantage - diamond pattern of M Porter Porter mentioned to these four attributes as the four elements that constitute diamond pattern He argued that companies will have the highest potential for success in the sector or sub-sector if the diamond pattern are in the most favorable way He also said that the diamond pattern is a interactive and supported system The impact of an attribute will depend on the status of the other attributes For example, according to Porter, the favorable demand conditions will not bring competitive advantage unless the situation of competition in the sector is enough for the company to respond to those conditions Competitive advantage turns a strategic as macro vision into a consistent structure of the inner workings - an important part of international business thinking today That strong structure provides effective tools to understand the impact of cost and relative position of costs in the company The value chain of Porter helps managers distinguish the potential resource of buyer value- which can help us set a high price, and the reason why this product or service can replace the other ones We can take the example about the competitive advantage of Vietnam enterprises on the domestic market in recent years as follows: Viettel Post Joint-stock Corporation (Viettel Post) has applied the strategy of indirect confrontation by choosing to develop in the market of neighboring countries such as Cambodia, China With the domestic market, the company has built strategic “network goes ahead, business follows" to obtain its own advantage And with 100% of the districts, 85% of communes in the country has presence of service network, Viettel Post has actually obtained advantage in domestic market, which the foreign firms take a long time to Thirdly, strategic brings tangible and intangible benefits for the business: - Tangible benefits are the economic that strategy brings to the company in particular and the economy in general Recent researches indicate that companies use the principles of strategy will be more successful than the organizations that not apply it After nearly two decades, Vietnamese automobile industry still depends totally on foreign investment Can this industry survive and develop in the future when the market is opened under the international commitments Vietnamese Government has protected automobile industry for a long time by tariff and non-tariff barriers that limit importation However, the protected policies have no meaning to nurture private enterprises in domestic market (capital of Vietnam) and they just protect foreign investors in Vietnam Observing the changes in stiff competition conditions in both width (all industries, categories) and depth (the stages to produce one product) in Asia recently, we can affirm that unless Vietnam urgently builds strategy to strengthen competitiveness and consider local manufacturing enterprises as the core, the automobile industry and accessary will soon be swept away by the strong free trade tide Try to get some numbers to compare China surpassed Japan in 2009 and became the largest automobile manufacturer in the world (nearly 14 million units) Besides, Thailand has reached the threshold of million units / year In terms of consumption, the amount of domestic sales is constantly rising in China, its sales in 2010 is on top all over the world with 18 million cars were sold Meanwhile, the production and consumption of Vietnamese automobile was about 100,000 units per year Other number, the factory having the largest capacity of Toyota in Vietnam just produces 20,000 units per year, which is lowly in comparison with the factory of the same corporation in neighboring countries such as China (now has two factories in Tianjin with the capacity of 280,000 units per year and in Guangzhou with the capacity of 170,000 units per year, China is expected to build new factory with the capacity of 100,000 units per year in Changchun) and Thailand (three factories in Bangkok with total capacity of 630,000 units per year and it is expected to improve to 700,000 units per year) The problem is that companies in China and Thailand have the right strategy, which is clearly expressed in economic efficiency as presented above At the same time, Vietnamese automobile industry has not clearly defined of how their strategies will be - Intangible Benefits This is not a financial success in term of the number These benefits are extremely important and it decides the survive of the business Intangible assets are described as "knowledge exists in the organization to create the different advantage" or "the ability of employees in the company to meet the demand of customers" Intangible assets include various types of assets such as patent rights, copyrights, knowledge of human resources, leadership spirit, information systems and operating process Intangible assets can be divided into categories with objectives as follows: - Human capital: the availability of talent, skills, keys to perform the operation as the request of the strategy - Information capital: the availability of information systems and applications, and necessary infrastructure to serve the strategy - Organization capital includes Culture: awareness and ability to internalize the vision, mission and necessary general values to implement the strategy The leadership spirit: the availability of good leaders at all levels to lead the organization to the right strategy Cohesion: linking goals and reward regime with strategy at all levels of the organization Collective spirit: the sharing of knowledge assets and human resources with strategic potential These objectives describe the important intangible assets and provide an effective model to link and combine them into the organization's strategy Link and combine intangible assets Strategic map creates cohesion and connection by providing a common point for corporate strategy and in term of the internal aspects, the map identifies a few key processes to produce the expected results for customers and shareholders Intangible assets must be linked with the internal procedure to create this value There are techniques to provide a bridge between strategic map and intangible assets: + Group of strategic jobs: For each strategic process, one or two groups of work will have the biggest impact to that strategy By identifying this group along with determining necessary capacity and ensuring their development, we can improve the outcomes of strategy + List of strategic information technology investments: to implement each strategy procedure, the company needs IT system and specific infrastructure These systems represent a portfolio of preferentially technical investments in terms of financial and other resources + Schedule of organizational change: the strategy requires changes in culture, both inside (for example: Collective spirit) and external (for example: consider customer as the focus) A schedule of changes in culture resulting from the strategy helps to shape the development of new environment and culture Through the development, the company links and combines capital in human, information and organization with some key strategic procedures, creating the biggest achievements from its intangible assets Conclusion: Business strategy plays an important role for the existence and development of every business Right business strategy will provide a good direction to the business It can be seen as a guide to lead the business in the right direction In fact, there are many businesses thank to the right business strategy to achieve lots of successes, surpass competitors and make their position in the market 10 References: “Strategic Maps” – Robert S Kaplan and David P Norton (The “Fathers” of “Balanced Scorecard” Strategic Management – National Economics University - Statistics publisher, 2000 Website: Bic Bank - address: http://www.bic.vn/PortletBlank.aspx/A7A6A09629AE4441A567FBF31076CCB4/ View/590/13342/?print=3515352 Website: Ecomomic - address: http://www.dankinhte.vn/quan-tri-chien-luoc-la-gi/ Website: Pace - address: http://www.pace.edu.vn/vn/dao-tao/ChuongTrinh/170/slm-chien-luoc-quan-trichien-luoc Website: Business- address: http://kinhdoanh.anvui.vn/forum/Thread-the-nao-la-quan-tri-chien-luocu.html 11 ... objectives as follows: - Human capital: the availability of talent, skills, keys to perform the operation as the request of the strategy - Information capital: the availability of information systems and... for goods or services of an industry - The supported and related industries - the presence or availability supported and related industries that have international competitiveness - Strategy,... structure of the inner workings - an important part of international business thinking today That strong structure provides effective tools to understand the impact of cost and relative position