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EXECUTIVE SUMMARY

The report aims to identify Rang Dong Joint Stock Company’s strategy management as a whole. In order to fulfill the aims websites, annual reports and reports of industrial analysis are used.

The report contains five main parts. Firstly, context of business strategies is mentioned in order to help readers understand generally about business activities. Secondly, key stakeholders of Rang Dong are identified and analyzed. Lastly, strategic plans for Rang Dong are carried out basing on analysis external environment and organization audit of Rang Dong and strategic position of Rang Dong by using techniques such as TWOS, SPACE matrix.

Although the report deals with some limitations such as time, resources however it still be tried to drawn out optimal strategies to Rang Dong, JSC.

INTRODUCTION

At present, Vietnam’s economy is developing significantly and it will obtain high growth the rate in the forthcoming time. According to some statistics, Vietnam has 100 million bulbs are in used for lighting; 80 million bulbs are sued in households, 20 million used in offices, factories, restaurant, hotels. Therefore, this is a good opportunities for companies including Rang Dong to expand business.

Rang Dong JSC is one of Vietnam's thirteen first factories, established by the Vietnam Government, laying the foundation of Vietnam industry after the end of the war (1946-1954). Throughout more than 50 years, Rang Dong has developed unceasingly with distribution system covers throughout the country, including 5 representative offices, 6 branches in the central and South Vietnam, 1 Centre for Consultation on Lighting and Energy saving, with 6,000 shops. This report is made to indentify Rang Dong JSC operation and give some statistic strategy for expanding markets. It includes five main parts:

The first part will define the context of business strategy for Rang Dong JSC

The second part shows vision and mission of Rang Dong Company, its corporation structure as well as the identification of key stakeholders of Rang Dong JSC and the explanation of conducting a stakeholder analysis

The third past will conduct an external environment and organization audit of Rang Dong including SWOT analysis, PESTEL, Porter’s 5 Forces.

The fourth part will analyze the strategic position of Rang Dong using TWOS matrix, SPACE.

The fifth part will show a specific strategy for Rang Dong in recent years based on the analysis in previous parts.

  • I. The understanding of “Business Strategy” in business world

“Strategy sprung from the need for people to defeat their enemies”. In 400 B.C, Sun Tzu’s The art of War was the fist public treatises of narrative strategies which had brought many victory for China during the war. Even until now, The Art of War has been handed down and used by many famous strategists, economists, politicians, presidents, commanders all over the world. In the modern world, many companies utilize strategy in term of marketing, price strategy and the like with the aim of achieving their objectives. It can be said that strategy is what somehow helps the users get their objectives effectively and efficiently.

In the business world, where the competitive environment becomes more and more intensive, the existing of prudent strategies is the survival way of organizations to compete with their competitors. “Business strategy” is the familiar term for those who join in business world and is defined as “the art and science of formulating, implementing, and evaluating cross-functional decision that enables an organization to achieve its objectives” (David, F.R, 1997). Under this point of view, the business strategy is an action plan that the organization develops to describe how it will compete in its chosen industry or market segment. Because business strategy is an art, each businesspeople has their own sense and taste to feel, for this reason; it leads to different business strategies and distinctive successes.

Business strategy is built up because of four major purposes, including: build profit, cash flow growth, shareholder value and gain reputation. Generally, an organization should identify its objectives before setting business strategy because the main function of business strategy is to get the goal of that organization. In addition, when organization builds a business strategy, it means that the organization should develop its mission, identify its internal opportunities and threat, determine internal strengths and weaknesses, set up clearer objectives and achieve them.

A business strategy has gone through three main steps, those are formulating, implementing and evaluating. In formulation process, the company has to propose specific strategies used in certain period by establishing policies, creating effective structure to be able to allocate scarce resources and motivating the employee’s working

attitude so that “formulated strategies can be executed” (David. F, 1999). In process of implementing business that under business strategy, it requires the organization has to decide what business to enter and abandon, how to allocate resources, and whether to expand operations or diversify. In third action, reviewing or revaluating business strategy through the results collected helps to identify whether the business strategy was working. Basing on that, a company will respond to the situation by improving or developing its strategies to get the desire objectives.

Business strategy is not only concerned by the company’s manager but also shareholders, creditors and so on. Relying on the business strategy and the analysis of relevant resources, the shareholders and creditor will be able to identify whether the company enables to achieve its objectives and then to make the decision. For this reason, business strategy becomes a crucial factor of every business.

II. Organizational Structure of Rang Dong Light Source and Vacuum Flask Joint Stock Exchange

II.1. Organizational Structure

Based on the graphic below, at present, it is believed that Rang Dong Lighting Resources and Vacuum Flasks JSC’s structure is organized orderly. All company activities have been obeyed business law and other relevant laws of Vietnam as well as the company’s regulations.

  • - General Director Assistants has the responsibility in dealing with relevant authorities about licenses and permits for new activities and assisting the General Director.

  • - Personnel office has the responsibility in manage Rang Dong human resources

-

Warehouse

management

office

is

responsible

for

materials

management,

inventory management

  • - Quality control office has the responsibility in checking the quality of inputs materials, outputs products in all production stages and solving problems related.

  • - Market Research development office is responsible for doing relevant research, market survey, developing marketing strategies, implementing sales, using product demonstrations to promote and expand markets.

  • - Technology office’s main jobs are to doing strategic planning in science and technology development for Rang Dong and applying new technology, upgrading and replacing equipment.

-

Accounting

and

finance

office’s

responsibilities

are

to

take

care

of

the

administration and accounting of the company and its related entities.

  • - Branches have responsibilities regional market.

in doing Rang Dong business in different

  • - Representative offices are responsible for supervising the company’s consumption, market development, promotion and exhibition of Rang Dong products in different areas

  • - Lighting consulting service has the responsibility for providing service directly, design as well as installing lighting equipment reasonably.

  • - Security office’s main jobs are to protect Rang Dong assets and ensure a safe working environment

  • - Clinics have responsibility to taking care of staffs’ health, workers’ health.

7

II.2.Vision and Mission of Rang Dong JSC

Vision statements are seen as documents that set out the strategic intention of the organization (BPP, 2004). Rang Dong vision in recent years is: ‘Rang Dong JSC always strives to be the local leading manufacturer of light sources and lighting equipments.’ Like many other vision statements, it could be seen that this vision is a sort of super- objective; it provides continuous inspiration towards Rang Dong’s desired future. It is connected with the corporation mission for the growth of Rang Dong JSC as a whole. As the vision being the local leading manufacturer, it is believed that Rang Dong Company understands what their stakeholders need to know that the company stands for and why they should give their loyalty.

Mission describes the organization’s basic function in society, in terms of the products and services it produces for its clients (BPP, p. 27). According to Rang Dong JSC main website (2010) Rang Dong’s mission is that ‘: Rang Dong JSC is committed to offer diversified products with high quality and effective lighting solutions for the people livings and the society.

Like most of mission statements’ content, on Rang Dong’s mission statement, the nature of the firm’s business which is lighting solution is identified along with its most important stakeholders: customers. It includes the way in which Rang Dong Company competes with strong competitors in current market (by offering diversified products with high quality) and the commitment to people and the society.

This mission clear indentify corporation image that Rang Dong Company want to achieve and connect strongly with its business strategy. It is believed that this mission is easy to understand, flexible. Moreover, it would make the firm stand out in such competitive environment after WTO accession. At present, Rangdong is the biggest company specializing in producing light source and vacuum flask in Vietnam with over 40 years of experience. Rang Dong’s products were selected consecutively several years as top ten, and high quality pricducts by consumers in Vietnam. Moreover, the company also has gained an ISO 9001:2000 quality management systems. Therefore, this mission is reliable in the case of Rang Dong Company.

III.Stakeholders Analysis

Thompson- an experienced project manager stated that “Stakeholder analysis is essential to the success of every company’s project, by identifying their real wants and needs, and then engaging the right people in the right way; the company can make a big difference to its success” (mindtool, n. d). When having identified people who have the most power, interests and influence over the organization, it would be more convenient to analyze their requirements and then find ways to satisfy them. By doing that, the company finds the supporters and motivation factors that positively affect the company’s projects.

In addition, gaining key stakeholder’s support benefits the company in terms of useful resources like information, financial supports and new ideas and so on. In other words, basing on their interests and demands, the company can shape the project properly.

There are three main groups of stakeholders, including internal stakeholders, connected stakeholders, and external stakeholders. The table below illustrates more details on who are in these groups.

III.Stakeholders Analysis Thompson- an experienced project manager stated that “Stakeholder analysis is essential to the success

Identify those who have the most interests and influence over the company can help to shape the company’s objectives.

III.1.Internal stakeholders

Employees play an important role in an organization, especially when it is a manufacturing company like Rang Dong Light Source and Vacuum Flask Joint Stock Company. The reason is that they directly influence on production activities of the organization. For this reason, seeking ways to motivate their willing to work and create is optimal rather than essential.

On the side of employees, working in a state-owned organization has both advantages and disadvantages. The advantage is the job security and stable salary. However, the disadvantages are old-fashionable mechanism, hierarchy in management and poor skill development opportunities that might limit the personal development of employees. Having observed the situation along with the privatization in Vietnam, Rang Dong-stated-own organization has looked for ways to improve the working quality as well as satisfaction of employees.

Identify those who have the most interests and influence over the company can help to shape

Maslow’s hierachy of needs

Maslow’s hierarchy of needs is applied to estimate the satisfaction level as well as the wants and needs of worker in Rang Dong Company. With a stable salary, the employees are satisfied with two first needs, which are physiological and safety. In

addition, Rang Dong concentrates on the safety of employees by upgrading working environment, checking and maintaining machines regularly in factories.

Employees find themselves as a part of Rang Dong family when colleagues take care of each other. In holidays and occasion, such as Tet Holiday, Vietnamese Women Day and International Labor Day, managers and every employee gather and share happiness. In 2009, Rang Dong employees took place “Tet holiday in every employee’s heart”, staffs in the company came to each households and send heartfelt Happy New Years’ greetings. Through those informal meeting, all employees can find place where they not only work in but also find a second family.

In order to motivate the working attitude and creativity of employees, Rang Dong annually takes place competition among staff members. Through those competitions like “Hội thao diễn kỹ thuật-Bình chọn lao động giỏi”, the efforts in working of employees are recognized and rewarded. By doing this, the manager observes the self- esteem needs of employees and motivates them effectively. The company should uphold competitions to improve the working creativity of employee to a higher level.

addition, Rang Dong concentrates on the safety of employees by upgrading working environment, checking and maintaining

Rang Dong’s board of director commends and rewards excellent individuals

However, Rang Dong manager should pay attention to the wants and needs of employees towards improving their working skills or in other words, it is the self- actualization of staff members. In fact, many companies view training and development programs for employees as an investment. Rang Dong should send employees to

training program to improve production quality, along with making opportunities for them to learn from seniors. By doing that, the company takes an important and effective step in improving working quality and exploiting potentials from employees.

III.2. Connected stakeholders

Among shareholders, customers, competitors and suppliers, the influential power of shareholders and customer are the most important to the company.

The customers care about the quality of products manufactured by Rang Dong. According to the modern definition of Marketing, knowing the requirement of customer is the key success for the organization. Therefore, identify and forecast the wants and needs of customers timely and correctly can give the company a great hint in producing. When applied the theory to Rang Dong, it cancels the old-fashionable producing conception that only focuses on producing what the company can rather than what customers really need.

training program to improve production quality, along with making opportunities for them to learn from seniors.

Annual meeting with customers and distributors

Annually, the company takes place meetings with close customers and distributors, the first and foremost reason is to communicate and to find a valid connection with customers. From that, the company catches and identifies the consumer trends in order to produce leading product lines in the market. During 2002-2009, with the goal “High quality, high productivity-Electricity saving and environment protection”, Rang Dong has obtained the beliefs and supports from domestic customers.

Manufacturing and creating products that meet the truly demand of customer is the prudent way to develop for any organization.

III.3. External stakeholders

External stakeholders conclude central government, local authority and charities and so on. With the capital reaches 50% of total capital of Rang Dong JSC, besides the authority to create policies influence directly on the company, central government is the most important stakeholder among external stakeholders of Rang Dong Company.

Besides paying attention to the revenue generation and taxation of Rang Dong JSC, the government also cares about how and what the company can contribute to the society in term of supporting charity fund and reducing unemployment rate of the nation. Rang Dong is one of organizations which actively participate in social activities.

Manufacturing and creating products that meet the truly demand of customer is the prudent way to

Rang Dong employees in Nghe An province to support people in need

In 2010, Rang Dong’s directors and employees contributed 50 million VND to Fund to Poor and another 50 million VND with 2500 flasks for people who were facing flood in Nghe An and Ha Tinh province. Social activities of Rang Dong are practical and effective to society and these leave a positive image of the organization in people’s heart.

IV. PESTEL ANALYSIS FOR RANG DONG COMPANY

PESTEL is the effective and efficient method to analyze the impact of macro- environment on the business. Basing on the analysis, the company’s manager and business planners can recognize influential factors on the company from outside PESTEL is short for Political factors, Economic factors, Social factors, Technological factors, Environmental factors and Legal factors.

IV.1. Political/Legal factors

In Vietnam, the “Electricity Savings campaign” supports Rang Dong to participate in producing and developing energy saving devices. Besides, the competitive environment among electricity devices manufacturers to pursuit the campaign is another factor to motivate Rang Dong.

Besides, with the focus on domestic market, along with the “Vietnamese people prioritize using Vietnamese products”, that is the opportunity for domestic company like Rang Dong JSC to develop its production and distribution in the domestic market. However, with the presentation of imported products and the sophisticated requirements of customers, there are more challenges for Vietnamese companies to improve the quality of products, adjust the price to compete for those domestic customers.

In 2006, when Vietnam officially joined in World Trade Organization, this has opened many chances and even challenges for Vietnamese manufacturers in terms of quality standard and quality checking. This event is also the base for foreign competitors to reach the Vietnamese market which is a fertilizing land. Becoming a member in WTO, besides challenges, there are also many opportunities for Vietnamese manufacturers like Rang Dong to innovate production and management performance. The adaption to global production standard, to management and technology is the leverage for domestic companies to deal with problems existed. Besides, it shows Vietnamese companies a new view of domestic market which had not been recognized correctly.

The Vietnamese government has policies to support Vietnamese manufacturers by reducing the tariffs, quota for importation and exportation. This encourages manufacturers to expand the production and distribution. The reduction in importation products benefits the company to import materials from foreign suppliers, however opens a new door for foreign products to enter in Vietnamese market. To deal with the situation, domestic manufacturers should be aware of quality and price of their products to compete in the fierce market.

IV.2. Economic factors

Updating economic information is essential for every company because the economic health of a nation reflects the trend in consumption, resources of investment and even tangible and intangible problems influence the production activities of an organization.

GDP or Gross Domestic Product is the base to measure the production in a nation; it also reflects the health of economy. The chart below illustrates the GDP of Vietnam from 2003-2010.

The Vietnamese government has policies to support Vietnamese manufacturers by reducing the tariffs, quota for importationhttp://www.indexmundi.com/vietnam/gdp_real_growth_rate.html 15 " id="pdf-obj-14-10" src="pdf-obj-14-10.jpg">

The real GDP growth of Vietnam during 2003-2010 Source: http://www.indexmundi.com/vietnam/gdp_real_growth_rate.html

Vietnam has possessed a positive GDP rates during years. This reflects the growth of production of Vietnamese companies. And somehow, it shows the consumption power of domestic customers and exportation activities of Vietnamese manufacturers.

Joining in stock exchange is the positive turning-point for the domestic companies, especially for state-owned companies in terms of appealing investments, innovating the production activities and management system, such as updating technology to production.

Besides, becoming a member of WTO is the chance for businesses to expand the market share in domestic and even foreign markets; and improve the production performance. However, this caused the negative influence on Vietnam in term of economic crisis in 2007-2010. During recession period, businesses have not only faced failure in exported market, the increase of materials prices but also in barrier of financial support. Besides, the consumption power has the trend of decrease in the economic crisis is another difficulty for Vietnamese manufacturers.

IV.3. Social factors

Vietnam is a large and population nation. With the total population in 2009 was about 86 million (na. gov, 2009), this point out a potential consumption in domestic market. Besides, the development in construction as well as the great demands of Vietnamese people for housing open a great opportunities for consuming power of household products, especially energy saving devices. These are chance for manufacturing companies in Vietnam to push their business forward and focus on truly wants and needs of targeted customers, for instance Vietnamese people prefer electricity saving products.

IV.4. Technological factors

When adapted technological progress in producing and management process, Vietnamese manufacturers find ways to improve the quality of products and productivity. This helps domestic manufacturers to meet various demands of customers as well as compete with foreign competition in term of global quality standard. If in the

past, Companies like Rang Dong just only focuses on few product lines, since then applying high-level equipments to production, the product lines of the company have increased to above 10.

IV.5. Environmental factors

It should be concerned about the competitive environment in the electricity devices market since it becomes more and more fierce with the presentation of foreign products, especially Chinese manufacturers which attack Vietnamese market with low price and modern design electrical products. Besides, Vietnamese consumers prefer using imported products from famous brand, such as Phillips, GE, MEGAMAN and so on. Competitive environment among domestic and foreign manufactures and the sophisticated requirements of consumers creates more and more challenges. However, they would become opportunities for the business to show its strengths if the company knows how to turn difficulties to leverage of development.

Competitive rivalry: High

-

-

-

-

Many competitors such as Philips, GE, OSRAM, MEGAMAN, Đại Quang, Điện Quang, etc.

High customer loyalty

High costs of leaving market

Competitive products made in China imported illegally with very cheap price

V.

PORTER’S

FORCES ANALYSIS

Threat of new entry: high

  • - Barrier to entry: high

  • - Requirement: + Large capital à high risk + Experiences and trainings about lighting technology + Technology protection + Strong distribution channels

FIVE

Competitive rivalry: High - - - - Many competitors such as Philips, GE, OSRAM, MEGAMAN, Đại

Supplier power: neutral

  • - Raw materials include: gas, oil plastic, steel, chemical, sand, glass powder, etc. à Number of suppliers: large.

  • - Raw material costs are affected strongly by the fluctuation in world price of resources

Threat of substitution:

  • - Low for light sources + There are not many substitutes for the products developed. + Substitution products: charging lights

  • - Neutral for Vacuum flasks + Substitute products are electric kettles or tea kettles which function as

Buyer power: high

-

Buyers are both individuals, retailers and wholesalers come from Vietnam, India, Korea, Egypt, etc.

-

-

Most of requests come from retailers and wholesalers in large order.

Price sensibility because of strong competitive rivalry

18

V.1.Threat of new entry

It is believed that the lighting resources and vacuum flasks industry require a large financial investment before a new business can start to build factories and contact with suppliers for raw materials, etc. Therefore, some potential competitors would not be able to raise the funds and others will not be prepared to risk so much on a new venture which may not succeed.

Existing manufacturers such as Rang Dong JSC, Dien Quang or Philips may have cost advantage from large economic of scale, from the experience curve or from long term supply contracts at very good prices. Large economies of scale from existing technology create very powerful barriers to entry for any new business competing in a new market. At present, some exist companies have strong distribution channels like Rang Dong JSC (having 5000 stores on 64 provinces of Vietnam), that fact makes them come close to customers; therefore, it will become a big threat for new company to enter this market.

Brand names also play an important part in lighting resources and vacuum flasks industry. As the results, a new competitor would have major problem becoming known and accepted unless it is prepared to invest heavily in sustained advertising or buy market share at low price. New company may have to deal with difficult legislation issues and even legislation that does not affect incumbents. All of this information above shows that the barrier of entry of lighting resources and vacuum flasks industry is high. So it will become an advantage for existing manufacturer including Rang Dong Company.

V.2. Supplier power

As a producing industry, raw materials, labor, components and other suppliers are required in lighting resources and vacuum flasks industry. This requirement leads to buyer-supplier relationships between the industry and the firms that provide it the raw materials used to create products. There are many suppliers that provide gas, oil plastic, steel, chemical, sand, glass powder, etc exist in the market, and those products are also standardized. However, in the market, some of the raw materials such as gas, oil, plastics are not able to be produced in Vietnam; so they must be imported from other

country. As the results, they have unstable prices and are affected strongly by the fluctuation in world price of resources. So the supplier power of lighting resources and vacuum flasks industry is neutral.

V.3. Threat of substitution

There are not many substitutions for lighting equipments and lamps products developed. So the threat of substitution for those products is low. The strongest substitutions are charging lighting products. At present, there are many different types of charging lights in the market; some of them could be used for 4-5 hours continuously without being charged or combine with a fan, etc. In Vietnam, there are regular power cuts especially in the summer as more people try to use the electricity than there is to go around. However, the limitation of charging time still makes the lamps gain strong competitive advantage comparing with charging lights.

country. As the results, they have unstable prices and are affected strongly by the fluctuation in

Main substitutions for vacuum flasks are kettles. At present, there are many types of kettles in Vietnam market. Some of them not only have reasonable prices but also have function of both kettles and teapot; they also could boil water fast and keep the degree of heat due to new technology. Those products have become a big threat for vacuum flasks made by Rang Dong JSC and other manufacturers in city market

V.4. Buyer Power The power of buyers is the impact that customers have on a producing

V.4. Buyer Power

V.4. Buyer Power The power of buyers is the impact that customers have on a producing

The power of buyers is the impact that customers have on a producing industry. In lighting resources and vacuum flasks industry, buyers of the manufacturers such as Rang Dong, Dien Quang, or Philips are individuals, retailers and wholesalers and distributors from Vietnam, India, Korea, Egypt, etc. However, most of the requests come from retailers and wholesalers in large order therefore they could affect the product prices. Moreover, because of strong competitive rivalry from existing competitors like Dien Quang, OSRAM, MEGAMAN, and especially from products made in China imported illegally with very cheap price, the product prices are sensible in the case of lighting resources and vacuum flasks industry. It is believed that the buyer power is high in this industry.

V.5. Competitive rivalry

In lighting sources and vacuum flasks industry, there are a large number of firms existing in the market such as Philips, GE, OSRAM, MEGAMAN, Dai Quang, Dien Quang, etc. Moreover, products which made in China imported illegally with very cheap price have become big threat for all manufacturers in current market. It would increase rivalry because more firms must compete for the same customers and resources. The plant and equipment required for manufacturing a product is highly specialized, these assets cannot easily be sold to other buyers in another industry. However, high exit barriers in this case cause a firm to remain in an industry, even when the venture is not profitable. High level of customer loyalty is required to endure the high level of competitive rivalry.

VI. SWOT analysis

Strengths

 

Weaknesses

  • 1. Stable Finance

  • 1. Lack of management staffs; expert and

  • 2. Good Reputation

skill of management staff are not equal

  • 3. High Quality

  • 2. High operating expenses

  • 4. Strong Distribution System

  • 3. Have to import many raw materials

  • 5. High – Experienced Broad of Directors

Opportunities

 

Threats

  • 1. Government’s priority is for industry

  • 1. Economic regression

that relates to light sources

  • - Increasing raw materials price

  • 2. Potential markets: India, Sri Lanka, Egypt, South Korea, etc.

  • - Change exchange rate of currency →increasing financial expenses

  • 3. Vietnam joints many trading and

2.

Numerous competitors:

commercial organizations in the world:

-

Dien Quang, Dai Quang, Philips,

WTO, AFTA. Etc.

GE, OSRAM, MEGAMAN, etc,

  • 4. Demands for using lighting equipments are increasing

China’s products

Strengths

S1: Stable finance

According to Huỳnh Tuần Khánh (2009):

 

2007

2008

2009

Assets structure

     

Account receivable / total assets

31.3%

21.1%

17.7%

Inventory/Total assets

28.2%

49.7%

49.0%

Fixed assets/total assets

18.6%

22.9%

25.6%

Resources structure

     

Total liability/total assets

51.5%

53.4%

53.5%

Table 1: Financial structure of Rang Dong JSC in 2007-2009

The table above shows that, Rang Dong JSC has a stable finance that could endure the fluctuation of world economy in recent years. It could be seen clearly that currents assets has the higher percentage in total assets compared with long-term assets from 2007-2009. So it will be easy for paying current debt and doing business. In total resources, the liability has about 50% percentage of total resources; the debt is still under of control and with high current assets / total asset percentage, the company may pay all the debt if it is necessary. According to table 1, there is not any dramatically change in Rang Dong’s financial structure in 2007, 2008, 2009. This stable finance would make Rang Dong stakeholders feel secure and continue to invest or buy Rang Dong shares.

S2: Good reputation

The business has built steady brand on the market. Rang Dong was founded in 1958. So, the brand appeared a long time on the market so it is known by many people. The company has existed to at this time, this thing showed that products of the business is believed and used by many customers. Steady brand helps Rang Dong have many opportunities for market expansion and product development.

According to Huỳnh Tuần Khánh (2009) pointed that presently, Rang Dong has remained 80% market share about vacuum flask and 25% market share about light source equipment in Vietnam. 80% market share about vacuum flask shows that Rang Dong’s reputation is at high rate in Vietnam lighting resources and vacuum market although there are also many brands that manufacture light source equipment. This strength would help the company develop new products and expand the business to maintain the current market share.

S3: High quality products

Besides, products of Rang Dong have achieved high quality. The strength is necessary to remain for all of products. The products have high quality because the business applied quality management system that bases on 9001: 2008 ISO standard, formed from 9001: 2000 ISO standard. Rang Dong’s main website (2010) pointed that Rang Dong has gained many certificate and award including ‘Top ten of high-quality Vietnam products’, Certificate in System of Quality Management ISO 9001:2008. In 2010, the company received the Golden Cup of “Prestigious Securities Brand-name”; Rang Dong products also are in list of “National 20 famous brand-name 2010”. As a result, customers believed and come from Rang Dong’s products because of high quality of products.

S4: Strong distribution systems

According to Rang Dong’s main web site (2010) at present, Rang Dong distribution system covers throughout the country, including 5 representative offices, 6 branches in the central and South Vietnam, 1 Centre for Consultation on Lighting and Energy saving, with 6,000 shops. This is advantage condition for Rang Dong because the business is known by many customers on the whole country. Likewise, Rang Dong

will be easier to introduce or launch products to all of customers. This thing ensures that the brand can lie in customers’ choices. As a result, if business operation is successful, it brings to high profit for the business.

S5: High-experienced board of directors

Rang Dong has broad of directors, CEO who have many experiences in the industry. Almost members of broad of directors achieved high qualification that relates directly to the industry and many experiences are a close- knit with Rang Dong. This thing helps broad of directors understand clearly about the business and their business operation so they will be easier to give strategies and plans for the business’s development.

Weaknesses

W1: Lack of management staffs; expert and skill of management staff are not equal

The business has also existed some of weaknesses that impacted to their business operation. The first weakness is about management staffs. Presently, the business has more and more developed and has many activities for expanding markets. So there are many new management positions that are required. Hence, it is necessary to have good management staffs and is suitable to the business’s development. However, in reality, there is a lack in gathering management staffs with required skills and knowledge. Besides, expert level and management skill of managers are not equal. Consequently, management of the business has sometimes some of problems, for instance, work effect of some groups are better other groups by different management way.

W2: High operating expenses

Operating expenses of the business are high in recent time according to Rang Dong Annual report 2009. This thing has impacted significantly to business operation’s

results of Rang Dong. According to Rang Dong’s annual report (2008) pointed that in 2008 original budget for selling costs was 46,833 billion VND and administration costs was 21,866 billion VND however actual costs of business operation in 2008 was 83,528 billion VND for selling costs and 29,054 billion VND for administration costs. As a result, selling and administration costs increased significantly. Plus, Huỳnh Tuần Khánh’s study (2009) showed that revenue of the first six months of 2009 has only achieved 8.8% while the figure was 12% in 2008. As the result, the total profit of Rang Dong can be decreased strongly.

   

Original Budget

Actual Cost

2008

2008

Operating expenses

Billion VND

99,418

168,179

Selling expenses

Billion VND

46,833

83,528

Administrative expenses

Billion VND

21,866

29,054

Financial expenses

Billion VND

30,719

55,597

Table 2: Operating expenses of Rang Dong in 2008

Source: Rang Dong’s annual report (2008)

W3: Having to import many raw materials

In the market, some of the raw materials such as gas, oil, plastics are not able to be produced in Vietnam; so they must be imported from other country. As the results, they have unstable prices and are affected strongly by the fluctuation in world price of resources. For this reason, unit price of products can be increased. The company needs to control the problem because if unit price of product is high, product will met difficulties for consuming.

Opportunities

O1: Government’s priority is for industry that relates to light sources

According to urban lighting development in Vietnam by 2015 1874/QĐ-TTg (Government Web Portal, 2010), Vietnam government will use issuance mechanisms,

incentive policies to encourage organizations and foreign individuals involved in setting up a system of urban public lighting, using new energy in urban lighting, using advanced technology to produce products with high efficiency lighting, energy saving standards, diversity in types and beautiful models to meet the demand for domestic use and export. Therefore, as one of lighting resources key players in Vietnam market, Rang Dong will be give many advantages in borrowing money, tax system, etc; it also helps the company not only run more effectively but also saving money and time because of complex administrative procedures.

O2: Potential markets: India, Sri Lanka, Egypt, South Korea, etc.

Moreover, there are many potential markets in the world that Rang Dong can consider for trading. In recent time, main export markets of the business are India, Sri Lanka, Egypt, South Korea, etc. Almost countries mentioned above are potential markets and are development countries. People have high demands for using of goods that the business has manufactured and sold. Therefore, Rang Dong’s revenue can increase significantly from export into these markets. Presently, Venezuela is also attractive market that Rang Dong has had consideration for expanding market.

O3: Vietnam joints many trading and commercial organizations in the world: WTO, AFTA. Etc.

Generally, Rang Dong Light Source & Vacuum Flask J.S.C can achieve opportunities from business environment of WTO, AFTA. At this time, World Trade Organization (WTO) is one of big opportunities of Rang Dong. When Vietnam joined in WTO, the business will have many opportunities to expand markets. If the business’s goods achieve high quality, it will help the business’s brand be raised at these new markets. Rang Dong can be easier to export goods into countries that are WTO’s members or import easily materials from these countries. Plus, tariff of the business can be decreased because Vietnam was WTO’s member. WTO brings to opportunities to learn experiences about management way or technological lines from WTO’s members.

Likewise, presently ASEAN’s countries are developing rapidly. Plus, Vietnam has played president role of ASEAN in this year so it is significant opportunity for Rang

Dong to have trades with ASEAN Free Trade Area (AFTA)’s members. It is a benefit for the business because tariff for goods will be cut or decreased minimum for AFTA’s members. Agreement about Common Effective Preferential Tariff (CEPT) is confirmed by ASEAN’s members. According to Wattpad (2010) pointed that based on the agreement, tariff will be decreased and remains from 0% to 5% for goods of ASEAN’s members; tariff barriers will be cancelled within 10 years. This is really valuable opportunity that helps Rang Dong expand markets, increase revenue.

O4: Demands for using lighting equipments are increasing

Light Source & Vacuum Flask are important and necessary products that serve for production and activities daily of people. Therefore, Rang Dong products are easy to consume because people has achieved benefits from these products. In addition, the more Vietnam has developed, the higher the demands for these products. Based on below chart and table, it is easy to realize that the industry has potential development because Vietnam population has increased and demand for using lighting bulbs can be increased rapidly. This is a great opportunity for Rang Dong to increase volume of production and develop the market.

Figures

Units

2004A

2005A

2006A

2007E

2008F

2009F

2010F

Vietnam

Mil.

82

83,1

84,2

85,2

86,3

87,4

88,5

populatio

People

n

Grow rate

%

1.4%

1.34%

1.32%

1.19%

1.27%

1.27%

1.27%

Lightings

Thousands

118,01

102,21

208,13

239,03

246,20

283,13

325,60

bulbs

bulbs

3

4

3

2

3

3

3

Grow rate

%

11.8%

-13.4%

103.6

14.8%

3.0%

15.0%

15.0%

%

Source: Research Department (2008)

Table 3: Vietnam lighting bulbs industry total output Threats T1: Economic regression Unit: Billion VND Economic

Table 3: Vietnam lighting bulbs industry total output

Threats

T1: Economic regression

Unit: Billion VND

Economic regression is one of dangerous threats to Rang Dong’s business operation. Any business operation can be impacted by the economic regression. In particular, economic regression associated with increasing material price that is one of biggest impacts to Rang Dong. Many materials of the business are imported from foreign countries so certainly, influence of material price cannot avoid. Plus, economic regression results in price inflation so it influences directly to Rang Dong’s financial activities. Typically, economic regression in 2008 has influences to Rang Dong’s business operation. Price storms happened in the year. According Rang Dong annual report 2009, almost materials of Rang Dong are imported from China and are charged follow USD. However, in 2008 USD is devalued with CYN of China. Plus, in 2008 China met high inflation so CYN is also devalued. As a result, material price is imported from China of Rang Dong was increased significantly.

T2: Threat from many competitors existing in the market

Besides, Rang Dong. Philips, GE, OSRAM, MEGAMAN, Dai Quang or Dien Quang, etc are strong competitors of Rang Dong about light sources products. One of strong competitor of Rang Dong in light sources products are Dien Quang. Dien Quang is the brand that occupies higher market share at South provinces. Rang Dong annual report (2009) pointed out that in light source market, Dien Quang occupied 90% market share in South and 27% market share of the whole country. Likewise, at present, Philips has also strong competition with Rang Dong. Philips has had reduced price from 50% to 60% with original plan so at this time Philips was occupied market shares for some of products that previously Rang Dong remained them. Moreover, China’s products are significant competition for Rang Dong. Almost China’s products have cheaper price than Rang Dong’s price.

VII.TWOS MATRIX FOR RAL COMPANY

 

Strengths

 

Weaknesses

 

1.

Stable finance

1.

Lack

of

2.

Good reputation

management

staffs

 

and experts

3.

High

quality

 

product

2.

High

operating

 

expenses

4.

Strong

distribution

 

system

3.

Have to import raw materials

5.

High-experienced broad of directors

 

Opportunities

 

SO- strategies

 

WO-strategies

 
  • 1. Government’s

 

1.concentrate on expanding

1.building

new

 

priority

for

the

export

market

management

model

industry

(S1,S2,S3,O2,O3)

(W1,O3)

  • 2. Potential markets

 

2.strengthen

key

strategic

2.increase efficiency

in

  • 3. Nam jointed

Viet

products (S2,S3,S4,O1,O4)

business

process

and

 

into commercial and

supply chain of company

trading organizations

(W2,O3)

  • 4. Demands in lighting

 

equipments

are

increasing

Threats

ST-strategies

 

WT-strategies

 
  • 1. Economic regression

1.Consolidate

existing

1.take

advantage

from

  • 2. Numerous

 

distribution

system,

domestic

raw

materials

competitors

approach

modern

resources (W3,T1)

 

distribution

 
 

channels(S4,T2)

 

2.Concentrate

to

develop

 

raw

materials

factory(S1,S5,T1)

VII.1. SO- Strategies

SO strategies are which use strengths to maximize opportunities. It means that Rang Dong would use its strengths to take advantage of the opportunities. From analyzing Rang Dong’s strengths and opportunities, there are some strategies are pointed out as following.

VII.1.1. Rang Dong should concentrate on expanding export market

Expanding export market play important role in increasing revenues and it would react positively to development domestic market share.

With internal strengths of stable finance, good reputation and high quality products, Rang Dong can take advantage of the external opportunities of demands in potential market and foreign markets after Vietnam joints trading and commercial organizations by expanding export market.

When Viet Nam jointed into commercial or trading organization such as World Trade Organization (WTO) or ASEAN Free Trade Area (AFTA) there are many benefits to Rang Dong in term of export activities. For instance, since jointing in AFTA tariff to Rang Dong’s export products would be reduced following tariff reduction policy of CEPT/AFTA in 2007. Additional, it is easier to Rang Dong in exporting products into foreign countries when Viet Nam joint WTO. On other hand, company has strengths in terms of finance, reputation and products’ quality. It is a solid stepping- stone on expanding export to foreign countries.

VII.1.2. Rang Dong should strengthens key strategic products

Key strategic products are lights and lighting equipments that have high quality, high performance, power saving and environmental protection.

Using strengths in reputation and distribution system, the company could take advantage opportunities of increasing demands in lighting equipments and government’s priority in the industry in order to develop key strategic products. It is

easier to Rang Dong in develop the new products when it has good image in customers’ awareness and strong and diversified distribution system.

Customer’s demands in lighting equipments are increasing. Moreover, the products are required not only meet core functions but also bring to consumers benefits and advantages. Rang Dong could build up its competitive advantage basing on developing the products. Furthermore, in process of strengthening develop key strategic products; government’s priority through supportive policies would be an advantage.

VII.2. WO- Strategies

WO strategies are formed by using opportunities to overcome weaknesses. They would minimize weaknesses by taking advantages of opportunities.

VII.2.1. Building new management model

easier to Rang Dong in develop the new products when it has good image in customers’

At the present, Rang Dong Company lacks large number of management staffs and experts. Qualification of management staffs is not evenly. Therefore, it can be reasons that leading to increase administrative expense because of poor management system. For these reasons, taking advantages from knowledge and experiences of foreign organizations or companies would be help the company overcome the weaknesses.

When Vietnam jointed into WTO, it is opportunities to attract foreign companies invest and operate in Vietnam market. Therefore, Rang Dong would be able to learn knowledge and experiences in business activities.

In order to overcome the weaknesses, Rang Dong should build up smarter and modern management system through learning experiences and knowledge from foreign companies. One of the best management systems is Enterprise Resource Planning.

VII.2.2. Increasing efficiency in business process and supply chain of company

In order to overcome the weaknesses, Rang Dong should build up smarter and modern management system

Supply Chain Management encompasses the planning and management of all activities involved in sourcing and procurement, conversion, and all logistics management activities. Importantly, it also includes coordination and collaboration with channel partners, which can be suppliers, intermediaries, third-party service providers, and customers. In essence, supply chain management integrates supply and demand management within and across companies. Supply “Chain Management is an integrating function with primary responsibility for linking major business functions and business processes within and across companies into a cohesive and high- performing business model. It includes all of the logistics management activities noted above, as well as manufacturing operations, and it drives coordination of processes and activities with and across marketing, sales, product design, and finance and information technology”(CSCMP, no date).

When Vietnam integrated WTO, it is opportunities to Rang Dong link and associate with other companies to create smart network of supply chain. Therefore, trend in downstream integration is increasing. When applying supply chain, the company could change raw materials sources or optimize transport raw materials, products. Therefore, Rang Dong can reduce expenses, increase its competitive ability.

Moreover, company has built up new factory that produce raw materials. Then it leads to operating expenses would be increasing. For this reason, building supply chain is the best solution for Rang Dong to increase efficiency in business process.

VII.3. ST- strategies

ST strategies use a Rang Dong’s strengths to avoid or reduce the impact of real and potential threats.

VII.3.1. Consolidate existing distribution system, approach modern distribution channels

Rang Dong is facing with numerous competitors in the market such as Philips, Dien Quang and China Products. In order to compete with these competitors, Rang Dong should build up strong and modern distribution system. It would ensure that opportunities to Rang Dong’s products reach customers are higher than its competitors.

At present, Rang Dong has built up nationwide strong distribution system. Beside continuing develop and consolidate existing distribution system, Rang Dong should approach new and modern distribution channels such as selling through website, distribute to building markets.

VII.3.2. Concentrate to develop raw materials factory

Rang Dong should use strengths of stable and good financial position and of high- experienced broad of directors to avoid threat of competition pressure by concentrating on develop raw materials factory in order to create its competitive advantage.

At present, Rang Dong has one glass factory. After the one glass factory in Que Vo was put into operation, the Rang Dong is a the few units in the country can produce high-grade glass. It does not only solve raw materials problems but also improve efficiency and reduce defect rates.

However, with operation of new factory, an increase of labor expenses and depreciation expenses is inevitable. Beside company might have to change management model to suit with large-scale development. At this time, high-experienced broad of directors would point out and plant smart strategies to operate of Rang Dong.

VII.4. WT- strategies

WT strategies are defensive tactics directed at reducing internal weaknesses and avoid environment threats.

VII.4.1. Taking advantages from domestic raw materials resources

Taking advantages from domestic raw materials resources is seems to be the best optimal solution to avoid effects of economic regression that caused to increasing raw materials prices and change of current exchange and minimize weaknesses of Rang Dong in exporting raw materials.

On other hand, proportion of raw materials still dominate (about 60%) basing on production structure. It is high quantity requirement to raw material. Developing domestic raw materials resources is necessary.

Besides building factory to produce raw materials, company could associate with companies that have similar products in order to exploit thoroughly possible domestic raw materials resources.

VIII.

SPACE MATRIX

Competitive Advantages

Product quality

-1

Technological know – how

-2

Customer loyalty

-2

Market share

-2

Total

-7

Average

-1.75

Product Quality

Presently, product quality is one of advantages that Rang Dong’s products are over its competitors. Rang Dong has used product quality like a commitment to consumers. ISO 9001: 2008 – Quality standard is applied by the company. So, almost products has achieved high quality and satisfied consumers’ needs. Typically, the company was achieved many rewards that showed Rang Dong’s product quality. For example, according to Nguyễn Nhung (2010) pointed that Compact Fluorescent Light is product that is obtained reward – Vietnam Energy Star about durability, power, and quality in 2010. Besides, the company has obtained “Vietnam High – Quality Product” in many continuous years. Generally, Rang Dong’s products are always believed by high quality, power, saving energy and environment protection.

Technological know – how

In recent years, the company steps up many applications of technological lines into its production. In 2006, the company has opened two new manufacturers at Que Vo and Bac Ninh. These manufacturers are used high technological lines for production. Huỳnh Tuần Khánh. (2009) pointed that by using technological lines, Rang Dong has produced high – ranking glass material that is used for lamps production. Or the company applied new technologies of Japan to reduce costs about gas flue and so on. In general, the company used technological lines effectively and it has become competitive advantages of the company.

Customer Loyalty

Rang Dong has customers loyalty and take the advantage like a competitive advantage. Almost customers has used Rang Dong’s products, they feel believe on the company’s products. Customers’ beliefs base on core values about product quality that they are achieved from Rang Dong. The company’s products meet customer’s needs and wants. Besides, the company always tries to build good relationships with customers so the company has had customer loyalty like a obvious thing.

Market share

Rang Dong

26%

Dien Quang

27%

Foreign companies

23%

Others

24%

Rang Dong has customers loyalty and take the advantage like a competitive advantage. Almost customers has

Lighting bulbs total output in 2007 Source: Research Department (2008)

In recent study by Research Department (2008) showed that in 2007, lighting bulbs total output of Rang Dong was 26%. This thing showed that Rang Dong’s products occupied quite good market share in the market. Almost Rang Dong’s product is consumed strongly at North Market of Vietnam. Besides, the company had advantages for vacuum flasks. Today, the company keep high market share for the product line. In Vietnam, Rang Dong’s vacuum flask occupied around 80% market

share. Market shares about these main product lines will be competitive advantages for the company.

Industry strengths

Growth potential

3

Profit potential

3

Barrier to entry

4

Bargaining power of supplier

3

Total

13

Average

3.25

Growth Potential

In three recent years, the electrical equipment, electronic equipment and telecommunications industry has achieved strong sales growth. Vpbs (n.d.) provided data about sales growth of the electrical equipment, electronic equipment and telecommunications industry and the whole of industry sector. Vpbs (n.d.) pointed that sales growth of the industry was 31.07% while the whole of industry sectors was 29.79%. This thing showed that Growth potential of the industry is very good. Sales of the industry achieved significantly level. However, four most recent quarters expressed other trend about sales growth. In four most recent quarters, sales growth of the industry was – 26.91% while industry sector was 3.92%. Perhaps, sales growth of the industry was downward trends. But anyhow, downward trend has not showed exactly the industry yet, it still depends on the whole of growths in many years.

Profit potential

The lighting bulbs manufactures lie in the electrical equipment, electronic equipment and telecommunications industry of the whole of industry in Vietnam. Vpbs (n.d.) provided below figures that relates to operating margin, profit before tax or profit margin of the industry. According Vpbs (n.d.) showed that in recent four quarters, the industry’s operating margin was 2.96% while the whole of industry in Vietnam was 8.42%. The figure expressed that the industry has had significant profit from its

business operation that it has occupied the whole of industry. On the other hand, the ratio for three recent years was 5.91% while the whole of industry sector was 7.96%. Likewise, Profit before tax of the industry was 5.5% while the whole of industry sector was 7.42% in three recent years. Or the ratio about the industry’s profit margin in three recent years was 4.81% while the whole of industry sector was 6.33%. The above ratio showed profit potential of the electricity equipment, electronic equipment and telecommunications industry, the profit potential is good and stable.

Barrier to Entry

At this time, almost companies in the industry have steady position so it will be difficult for new entrants who want to entry the industry. Plus, to entry the industry requires high capital for objects who want to have similar – sized businesses. The new objects need invests for human resources and technology so it is significant factors that impact to entry of the new entrants.

Bargaining Power of Supplier

In general, the industry has still import materials or buys machines from foreign countries. As a result, production costs can be increased. However, in recent time, the industry concentrates on using and applying new technological lines so material import has reduced because the industry has produced materials by itself to serve for production. Therefore, bargaining power of supplier for the industry is neutral at this time.

Financial Strengths

ROA 5.21% (three most recent years)

3

Leverage - Total debt to owner equity 59% (in 2009)

3

ROE 11.16% (three most recent years)

3

Liquidity - current ratio 1.24 (in 2009)

2

Total

11

Average

2.75

ROA

According to Vpbs (n.d.) pointed that in three most recent years, Rang Dong’s ROA achieved 5.21% while the whole of electrical equipment, electronic equipment and telecommunications industry was 4.92%. This thing has known as significant advantage for the business because in fact, the figure pointed that Rang Dong used total asset efficiently in comparison with the whole of industry.

Leverage – Total debt over equity

Cổphiếu68 (n.d.) provided figure that in 2009, total debt to owner equity of Rang Dong was 59%. This thing showed that total debts of the company were higher than its total owner equity. The company can develop and expand business operation with the total debts. Total debt of Rang Dong was not high figure so perhaps, the company can have ability to pay the total debt.

ROE

Likewise, Vpbs (n.d.) argued that in three most recent years, ROE of Rang Dong was 11.66% while the ratio for the whole of electrical equipment, electronic equipment and telecommunications industry was 11.33%. The ratio expressed that return on equity of Rang Dong was good. Rang Dong used efficiently shareholder’s capital or money to invest its business operation and this thing brought to profit for shareholders. In general, the ratio of Rang Dong is normal level in comparison with the whole of industry.

Liquidity – Current ratio

Current ratio shows Rang Dong’s financial strengths. Cổphiếu68 (n.d.) pointed that in 2009, current ratio of the company achieved 1.24 or 124%. The figure showed that Rang Dong has totally ability to pay back its short- term liabilities. The payment ability for short -term liabilities are very important for any businesses. Because if a business has not good financial health, the payment can meet difficulties and even it can have bankrupt. However, Rang Dong has had stable financial health and maintained payment for its current ratio.

Environment Stability

Demand variability

-1

Pressure from substitute products

-2

Inflation

-3

Technologies changes

-2

Total

-8

Average

-2

Demand variability

In general, demand for using electrical equipment or flask vacuums is more and more increasing. Because when Vietnam population has increased, it means that demand for using these products has also upward trend. Besides, quality of life has many changes and is more and more developed; many buildings or households are built rapidly so Rang Dong can ensure that its business environment is stable.

Pressure from substitute products

Presently, lighting equipments, lamps or vacuum flasks has also main equipments that are used by almost people. However, some of substitute products have appeared in recent time. For vacuum flasks of Rang Dong, substitute products are kettles that can boil water and keep water’s temperature. For lighting bulbs of Rang Dong, substitute products are electrically charged lamps or use by batteries. However, substitute products have not popular yet and have high price so pressure from substitute products is not high.

Inflation

It is ensure thing that inflation can impact significantly to business operations for any businesses. However, if businesses have suitable business strategies, the businesses can pass the inflation period. Likewise, Rang Dong is one of business that meets

difficulties from inflation. But because the business has good business strategies so Rang Dong reduced impacts from inflation. Typically, inflation happened in 2008 and Rang Dong’s main competitor – Dien Quang meet many difficulties. Although in that time, export market was decreased, material costs was increased strongly however Rang Dong’s financial health was stable. The below table shows Rang Dong’s stable finance

Business names

 

2008

Sales

Profit after

ROA

ROE

tax

Rang Dong Light source and vacuum flask JSC

 
  • 837 5.5%

49

 

11.7%

Dien Quang Light Bulb JSC

 
  • 380 0.1%

2

 

0.2%

Alphanam JSC

 
  • 1.302 2.4%

23

 

3.4%

Dry cell and storage battery JSC

 
  • 1.241 15.4%

78

 

25.4%

SACOM Investment and Development Corporation

  • 1.269 -76

 

-

-

Source: Research Department (2008)

But anyhow, the inflation has also impacts to Rang Dong and increases about material costs are significant impact for Rang Dong. For example, inflation impacts to oil price that Rang Dong uses for its machines to produce lighting bulbs and flask vacuums. According to Research Department (2008) found that in 2008, oil price was 7.7 million VND per ton in Vietnam while the price was only 3.5 VND per ton in China and 4.2 million VND per ton in Singapore.

Technologies changes

Likewise, technology is one of factors that impacts to production capacity or power of Rang Dong. However, present investment for technological lines helped Rang Dong ensure its manufacture environment. Technologies changes normally bring to

advantages or good trends for the business. Therefore, the business can ensure environment stability by the element.

X - Axis 3. 25 – 1.75 = 1.25 Y – Axis 2.75 – 2 = 2

advantages or good trends for the business. Therefore, the business can ensure environment stability by the

Rang Dong is a financially stable firm in growing industry so the company can consider to three below strategies:

  • - Market development

  • - Market penetration

  • - Product development

Market development focuses on selling existing products into new markets. At this time, almost Rang Dong’s products are sold into 64 provinces of domestic markets so Rang Dong can consider to new markets, it can be members of trade and commerce organizations such as: WTO (World Trade Organization); AFTA (ASEAN Free Trade Area). Almost these countries are more and more developed so their demand for using is increased. As a result, consumption for Rang Dong’s product lines can be upward trends. Plus, WTO or AFTA and so on are big commercial organizations so the organizations will create advantages for member countries when the countries’ businesses sell products into market. For this reason, Rang Dong can take advantages to develop its reputation at new markets. It is necessary thing for Rang Dong to apply its competitive advantage about product quality, since it will be easier to attract new markets.

Besides, Rang Dong can consider to market penetration that focuses on selling existing products into existing markets. Because the company has stable financial health so it can take the advantages to maintain and develop its business operation in existing markets. For flask vacuums, Rang Dong needs to maintain market share for product lines by ensuring high quality. Besides, the company needs to increase market share for lighting equipments. To increase market share for product line is also necessary thing for ensuring product quality. Moreover, the company should use advertising programs on TV, magazines, websites and etc. This thing can help the company’s product lines are known by many customers. In general, Rang Dong has environment stability for business development so the company should base on the advantages for market penetration strategy.

Likewise, the company can sell new products into existing markets. The strategy is product development. Rang Dong needs to ensure that its new products can attract

existing market because of its outstanding features. Based on government’s policies about saving energy, Rang Dong’s new products should save electric, achieve high quality and environmentally friendly products. Rang Dong has competitive advantage about customer loyalty so the company can introduce the new products to existing customers, the strategy can be conducted totally. For the strategy, it may be better when the company applies advertising programs on TV, magazines, websites and etc. This thing can help existing customers are easier to know that Rang Dong has new product lines and consider to them.

IX. KEY STATEGIES FOR RANG DONG COMPANY

Resulting from TOWS matrix and SPACE matrix, there are many strategies for Rang Dong Company. However, selecting appropriate and practical strategies for the company requires thoughtful consideration and research. Basing on the macro-factors analysis-PESTEL and Porter’s 5 forces and the organizational audit, there are three leading key strategies for Rang Dong, which are:

IX.1. Brand name power backbone

Rang Dong JSC concentrates on manufacturing household products, in which light devices and flask are leading products of the company. With the motto in producing “High quality, high productivity, electricity saving and environment protection”, Rang Dong JSC has obtained beliefs and supports from consumers. For this reason, promoting and focusing on these leading products are the first and foremost actions for Rang Dong’s production activities.

Basing on PESTEL analysis, there are many factors that motivate the company to pursuit the strategies of fostering brand name power in the domestic market to create a leverage to expand the company’s economics of scale in the future.

In political factors, under the positive affect of two major campaigns “Electricity saving campaign” and “Vietnamese people prioritizes using Vietnamese products”, these events create a great hint for domestic manufacturers like Rang Dong to focus on producing and distributing goods in the domestic market. Besides, being a domestic company, Rang Dong Company has possessed the understanding of Vietnamese people’s consumption habit and requirements. From that base, the company can exploit the great demand for electricity household devices; especially in construction flied which is one of the most developmental industries in Vietnam.

Rang Dong is not only a domestic company but also a state-owned and listed organization, hence the company find more convenient to strengthen its competitive advantage in terms of financial supports, legal and political supports. With strong financial supports from investments, the company is able to invest in technology in order to advance the product quality, decrease productivity in manufacturing and even reduce unnecessary expense arisen from weak management methods. Besides, it is suggested for this company to do promotion activities through modern channels, such as Internet, construction material supermarket and so on. By doing that, Rang Dong JSC is building a positive image of the organization over other competitors.

In the competitive environment among domestic and foreign electricity devices manufacturers, fostering brand name power along with develop product quality to meet the demand of customers are prudent action for the company to compete for those new customers and affirm its strong spot in the domestic market.

IX.2. Human Resources Backbone

In order to build human resources backbone to Rang Dong, one of the optimal strategies is building new and effective management model as following.

Firstly, at present, Rang Dong has faced with huge shortage management staffs. Moreover, qualifications of existing management staffs are not evenly. On other hand, one new factory that produce raw materials has built up in Que Vo required large

number of employees in the factory. The number of existing employees who change move to the new factory makes up 35% of total existing employees in the Rang Dong Company. Therefore, the company has to recruit more employees. Because new factory is built up, then it leads to operating expenses would be increasing. Therefore it requires effective management to minimize operating expenses.

Rang Dong has privatized for short time. Then management system is still impacted by policies of state-owned companies. For this reason, taking advantage from opportunities of changing human resources structure, Rang Dong should improve its management system.

Following five force analysis, competitive rivalry is high. Therefore, Rang Dong should concentrate on building human resources become its backbone to increase competitive advantage.

Following political/legal factors and economic factor in PESTEL analysis, when Vietnam officially joined in WTO, there are also many opportunities for Rang Dong to innovate production and management performance. It is still opportunities to the company adapt to global and modern management system using technologies.

One of the best tools that support to management process of Rang Dong Company is Enterprise Resources Planning. “Enterprise Resource Planning or ERP is actually a process or approach which attempts to consolidate all of a company's departments and functions into a single computer system that services each department's specific needs. It is, in a sense, a convergence of people, hardware and software into an efficient production, service and delivery system that creates profit for the company” (Topbits, no date).

ERP help Rang Dong in savings in relation to energy consumption and data management. The company could form smart and effective management system because ERP integrating the different functions and activities into a seamless whole where information needed for decision-making is shared across departments, and the action taken by one department results in the appropriate follow-up action up and down the line.

Strong human resources do not only mean that Rang Dong has good staffs with high qualification but also that RAL should have smart and effective management system.

IX.3. Growth backbone

At present, imported products only occupies 15% – 20% of Rang Dong’s total sales. Therefore, Market expansion is considered as one of key strategies for Rang Dong Joint Stock Company in the future.

In recent years, AFTA (ASEAN Free Trade Area) has achieved significant development about scales. There are more and more countries in South East Asia take part in AFTA such as Brunei, Singapore, Indonesia, Thailand, Malaysia, Laos, Philippines, Cambodia, and Vietnam, Myanmar. So it may be a potential market for Rang Dong Company to exploit.

Besides AFTA, WTO accession has given the company great opportunity to increase sales in some developing countries with young population, high demand such as Egypt, India, Korea, Venezuela.

This strategy would help Rang Dong JSC increase its total sales by importing goods. Moreover, corporation image can be improved by expanding markets. More importantly, it can have positive impacts to local market. Vietnamese are able to ensure the quality of Rang Dong Company since those goods are also used and believed by foreigners. Furthermore, when products are exported, it has to meet high standard tests in these countries; if Rang Dong is able to past these tests, it means that Rang Dong confirms again products’ quality.

Likewise, while expanding new markets, Rang Dong also gains some experiences from these markets about management ways, global standard for products. In addition, market expansion helps the company is easier to see new trends, from this point Rang Dong give new strategies for production that is suitable to these trends.

As one member in AFTA or WTO, Vietnam can be obtained some of advantages in tariff reduction. As a result, tax is decreased so price of products can be downward; this thing creates competitive advantages for the company when it sells goods into new markets.

Based on Rang Dong’s strengths about financial heath, reputation and quality, it helps the company can have beliefs for the successes of this strategy.

CONCLUSION

The business strategy becomes a more and more familiar term for businesses which are competing in the market. But how a business can make its own strategy that is supposed to be the weapon to compete for those new customers and relying on what bases to set up appropriate business strategies. To answer the questions, businessmen look for effects of business environment analysis tools, PESTEL and Porter’s 5 forces for macro-environmental audit, SWOT for internal audit and so on. These tools are good bases to make the strategies in terms of TOWS matrix and SAPCE matrix.

Applied the methods to Rang Dong Light Source and Flask Vacuum Joint Stock Exchange Company, it leads to a state that in general, RAL’s situation is rather good. Environment and organization audit to RAL were conducted by analyzing PESTEL and five forces. This thing helps the company is easier to realize elements that can be for or

against its business operation. PESTEL and Five Forces Analysis will bring to take advantages for Rang Dong when the company sets up its business strategies.

In addition, by using TOWS matrix and SPACE matrix, strategies available to Rang Dong are pointed out. Combining with five force and PESTEL analysis, the best optimal strategies are suggested. These strategies aim to build three backbones to Rang Dong’s development: Building brand name power backbone by strengthening key strategic products, human resources backbone by building new and effective management model and growth backbone by expanding to exported markets.

RAL Company has advantages to compete further in not only the domestic market but also foreign markets in terms of being a state-owned company and a jointed stock company. Hence, there are available sources of investments and other financial, legal and even political that support the company. Besides,, with the entry in WTO of Vietnam, many opportunities to expand the business open to the company. However, this is also a challenge for RAL to improve its management and production system to hit the requirements of global standard.

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