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Transition from a centrally-planed economy to market-economic structure, the Vietnamese market becomes more dynamic. All business and production activities are encouraged investment to contribute into economic growth and stabilization of the nation. Like other industries, investment in telecommunication services locally is welcomed and facilitated. The Vietnamese telecommunication service industry has rapidly developed. Together with development of the country, demand for communication quickly increases and high quality services are much preferred.
More and more telecommunication service providers enter into the Vietnamese mobile service market. At present, there are 7 operators including VNPT, Viettel, EVN Telecom, SPT, HanoiPT, GTel and CMC. All players are facing the fierce competition.
Most of the operators try to exploit their distinctive competencies to gain competitive advantages and use the appropriate competitive strategies to get more customers and make more profit. They try to forecast the customer needs and market trends to designing long-term corporate strategy for over all company to achieve the company objectives. In this situation, Vietnam Posts and Telecommunications Group (VNPT) recognised that development of effective business strategy has been considered as a highest priority in order to protect its leading position in this market. Through business strategy helps the company to have a business plan to develop its strengths, minimize its weaknesses in order to achieve opportunities and avoid threats in the marketplace in which it operates.
In such a context, this research study deals with the development of business strategy for VNPT in Vietnamese Mobile service market.
1.2. Problem Statement
As the competition is more and more fierce, developing appropriate corporate strategies for a company is the key to success in the market. But how can the company develop such a corporate strategy? In case of Vietnamese telecom service market, it’s considered that it’s being in stable stage. Especially the mobile service sector and fixed phone sector, they are considered as being in mature stage of its life-cycle. However in broadband sector, it’s being in the potential and growth stage. VNPT is the biggest company in Vietnamese Telecom market which obtained the highest market share compare to other competitors. At present, VNPT is facing the intensified competition from many competitors like Viettel, EVN, FPT, SPT,â€¦ who try to reduce product price to get more customers as well as market share. The question is how can VNPT protect its position in the Vietnamese Telecom service market? To answer this question, VNPT needs to develop the corporate strategy to defend its current position and extent business in another potential market.
This research study examines how to develop the appropriate corporate strategies for Vietnamese Post and Telecommunications Group in order to protect its leading position and develop its business in the telecom service market.
1.3. Objectives of the Research Study
The objectives of this research cover the following issues:
To review literature dealing with the strategic management process, especially the process of strategy formulation
To analyze opportunities and threats of the Vietnamese telecom service market from external forces such as the market trends, suppliers, consumers, competitors.
To analyze the current situation of VNPT in term of strengths and weaknesses of its capacity, market share, and operation activities.
To develop the business strategy for VNPT.
1.4. Research Methodology
1.4.1. Analytical Framework
This research is presented in the form of a case study exposing the complexities of a real business environment in the Vietnamese telecom market. The purpose of this research is to develop corporate strategies for Vietnam Posts and Telecommunications Group. Thus, it is necessary to the analyze market situation and current corporate strategy of VNPT in order to formulate the corporate strategy.
A framework may enable to understand the various linkages and interactions between the variables and to develop corporate strategies of the company. Figure 1.1 illustrates this analytical framework.
The objective of external analysis is to identify opportunities and threats in the business environment in which VNPT has to face. Two interrelated environments should be examined at this stage: the macro environment of the Vietnamese market and the micro environment referred to the industry in which VNPT operates.
The analysis of the macro environment focuses on examining the key achievements and limitation of the Vietnamese economy, political factors and government policies on the telecom service industry.
The analysis of the micro environment involves an assessment of industrial growth, production, consumption pattern and the competition between existing operators in which the analysis the main competitors of VNPT is examined in the terms of strengths and weaknesses about their corporate activities.
The internal analysis is devoted to pinpoint the strengths and weaknesses of VNPT. Therefore, it is necessary to assess the production and business of the company in the terms of capacity, market share, sales volume, finance and corporate activities.
After having analyzed the internal and external factors, the corporate strategy alternatives can be developed. To select the best solution, VNPT needs to evaluate the alternatives with respect to the possibility to achieve the corporate objectives.
The framework of this study can be illustrated by Figure 1.1
1.4.2. Information Needed
To examine this research, information needed consists of the following issues:
The Vietnamese Telecom service market reports in recent years, general information about Vietnamese economic climate, economic development, and government policies on the telecom industry are also collected.
Competition in the telecom market, which is focused on getting information about main competitors in terms of strengths and weaknesses involved corporate activities such as product, price, distribution and promotion.
Information about the current situation of VNPT that needs to be obtained including the company profile, corporate objectives, production capacity, market share, corporate activities.
1.4.3. Data Sources
Data and information needed for conducting the research were basically obtained from the following main sources:
Primary data: Interviews in-depth with managers, key persons of the VNPT Group as well as other specific telecom companies.
Data requirements were extracted from the publication of the government offices such as the Vietnamese Ministry of Information and Communication. Data relating to international context was obtained from the Internet websites, the academic journals
Data and information from books and journals, newspapers, articles related to the research were collected in CFVG library and the Vietnamese national library.
Data and information were also obtained from VNPT annual reports, from in-depth interviews conducted with VNPT general director, and functional managers.
Michael Porter 5 forces
Scanning external environment
Analyzing competitive environment
Scanning internal environment
Evaluating current performance results
EVALUATION AND SELECTION OF THE STRATEGY
CONCLUSIONS AND RECOMMENDATIONS
Figure 1.1 Framework of the research study
1.5. Scope and Limitation of the Research Study
This research study is conducted mainly at Vietnamese Posts and Telecommunication Group, Vietnam focus mainly in 3 main sectors: Mobile service, Fixed-phone and Broadband service. The study has been undertaken purely from a viewpoint of strategic management in order to set up a long term development for VNPT.
This research has the following limitations:
The process of strategic management involves 4 basic stages: (1) environment analysis (2) strategy formulation, (3) strategy implementation, and (4) evaluation and control. The research focuses only 2 steps: environment analysis and strategy formulation.
In assessing the strengths and weaknesses of VNPT, the research has not examined its financial ability due to difficulties in gaining and assessing data necessary.
Data about the competitors of VNPT mainly collected from secondary data, not from those ports themselves. Therefore, the information of these competitors is not sufficient.
The tools which can be used to do strategic analysis are many but the only 5 will be under the research namely:
PEST analysis: It is a technique understanding the “environment” factors like political, economic, social, and technology in which the business operates.
Five forces analysis: it is a technique for identifying the forces which affect the level of competition in an industry level and business level.
SWOT analysis: it is a useful summary technique for summarizing the key issues arising from an assessment of a businesses “internal” position and “external” environmental influences to company.
Strategic Choice: This process involves understanding the nature of stakeholder expectations along with identifying strategic options, and then evaluating and selecting strategic options in the business.
BCG matrix: It is a technique and analysis that seeks to summarize a businesses’ overall competitive position in business level and industry level.
1.6. Organization of the Research Study
This research is organized in six chapters, as follows:
Chapter 1: Introduction – provides an introduction including background, problem statement, objectives, scope and limitation of the research study as well as research methodology.
Chapter 2: Literature review – presents the literature review of the study and summarizes the work of previous studies, it relates to the fundamental ideas on developing business strategy including strategy analysis and strategy designing.
Chapter 3: Analyzing external environment – covering the economic situation in Vietnam and situation of the telecom service market situation in order to find out opportunities and threats in the environment in which the company operates.
Chapter 4: Analyzing internal operation – analyzes and assesses the current position of the company regarding strengths and weaknesses of VNPT about its performance, market share and operation activities.
Chapter 5: Developing strategies for VNPT – conclude about above analysis based on SWOT matrix, BCG matrix identify competitive position and suggest a strategic approach, in particular a competitive strategy for VNPT’s development in Mobile service Industry. Based on suggested strategy, recommende functional strategies for VNPT.
Chapter 6: Conclusions – summarizes the main points draw out from the study.
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