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Đề xuất chiến lược phát triển 3g cho mobifone PROPOSAL ON DEVEPMENT STRATEGY FOR VMS MOBIFONE’S 3g SERVICE

CAPSTONE
PROJECT REPORT
PROPOSAL ON
DEVEPMENT STRATEGY
FOR
VMS MOBIFONE’S 3G
SERVICE

Group Number: Group 06
Student’s name:
1. Dang Quoc Binh
2. Nguyen Van Ho
3. Nguyen Cao Phuong
4. Nguyen Trung Thuy

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PROPOSAL ON DEVEPMENT
STRATEGY FOR VMS
MOBIFONE’S 3G SERVICE


2


COMMITMENT

4


ACKNOWLEDGEMENTS

Our first sincere thanks will be extended to the University of Griggs in Vietnam,
whose instruction is valuable to our report. Besides, we would like to thank Vietnam
Mobile Telecom Services Company VMS-MobiFone for their whole-hearted
support in provision of data, figures and days of working which help us have a
realistic look in the formation of the company’s strategy. Last but not least, our
thanks also go to the professors and doctors for their help, lectures on skills and
business administration knowledge during the course.

Authors

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TABLE OF CONTENTS

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LIST OF FIGURES

LIST OF TABLES

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LIST OF ABBREVIATIONS
3G

Third generation technology-3G



BTS

Base Transceiver Station

BSC

Base Station Subsystem

CDMA

Code Division Multiple Access

EDGE

Enhanced Data Rates for GSM Evolution

GPRS

General packet radio service

GSM

Global System for Mobile Communications

MMS

Multimedia message service

TDMA

Time division multiple access

VMS

Vietnam Mobile Telecom Services Company

VNPT

Vietnam post and telecommunication

WCDMA
WiFi

CDMA broad band
Wireless Fidelity

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INTRODUCTION
1. Reason for subject selection.
In recent years, mobile information market has been flourishing. There are
now seven mobile information service providers in operation; some others are
taking application procedures for market entrance like Indochina Mobile, VTC
Telecom.... However, the market is getting to saturated point. Competition is
becoming fierce; Growth of revenue, profit is weak, which urges companies to have
new strategies for development. In this scene, 3G service (a set of international
telecommunication standards and technologies promoting mobile phone quality and
efficiency) turns out to be a better solution for companies in attracting more
customers.
The Mobile Information Company (hereinafter called VMS) is the first
mobile information provider in Vietnam under the trademark “MobiFone”. Since its
fully operating day, the company’s first ranking in terms of sales, competitive
competence and experience in network operation and exploitation in Vietnam has
been recognized and will be maintained in the future.
VMS is a 100% State capital enterprise under the Vietnam Posts and
Telecommunications Corporation (VNPT). MobiFone network has covered 62 cities
and provinces and 86.64 percent of Vietnam’s population. VMS is the first and only
mobile information service provider in Vietnam which was awarded with the prize
“Information Network of the Year” by Echip Mobile Magazine in three successive
years (2005-2007). In 2007, the company was ranked in the Top 20 of the 200
Vietnamese biggest enterprises by the UNDP United Nations.
Being the leading mobile information service provider, VMS provides
various mobile information services and products, including voice and data
services. In the financial year of 2010, its turnover was VND 36,000 billion. With
the number of 3,525 competent and experienced officers and workers, the company
is always ready to satisfy demands of more than 35 million customers nationwide.
With desire to put the learned knowledge into practice in the companies
where the authors are working, the Capstone Project Report “Development of
Business Strategy for VMS-MobiFone’s 3-G service” was chosen for the study.
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2. Objectives of the study.
- To re-systemize theories of strategic management, then on that basis
recognizing and solving problems in order to build an effective and suitable strategy
for product/service development.
- To apply system of theoretical and practical basics for analyzing and evaluating
internal, external environments in order to build 3G business strategy for VMSMobiFone.
- To recommend solutions, suggestions in order to complete VMS-MobiFone’s
selected business strategy.
3. Scope of the study.
Due to time and resource limitations, our group only had deep research in
analyzing and building 3G business strategy (one of VMS’s business fields) for VMS
during 2011-2016, the key period for the company’s 3G service expansion and
development.
4. Methods of the study.
To solve the above issues, the report mostly uses the qualitative analysis method
(analyzing facts of the VMS-MobiFone Company). The specific methods of data
collecting such as questionnaire, expert interview have been used. National statistics,
professional information and data, secondary data on strategy and researches, reports
previously done by the VMS-MobiFone company have been also utilized.
5. Lay-out of the subject.
The subject is divided into 3 chapters with the main contents as follows:
Chapter I: Theoretical basis
Chapter II: Study of VMS-MobiFone’s 3G service strategy management
issues
Chapter III: 3G service business strategy recommendations for VMSMobiFone in 2011 – 2016 period and implementation solutions
Conclusion
References
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Index

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CHAPTER 1: THEORETICAL BASIS
Building a business strategy is a top-ranking task of enterprises. In order to
make it viable and developmental in the currently changing and competitive
environment, each enterprise has to be active and creative in building suitable
business strategies.
There are different ways of approach and analysis to build and select a
business strategy in accordance with the enterprise’ specific characteristics.
1.1. Main issues on strategy and business strategy
1.1.1. Concepts of strategy:
Majority of world enterprises currently consider strategy development their
top duty, especially in today’s severely competitive business environment. To
survive and develop, each enterprise should be dynamic and creative to set up its
own suitable business strategy. Methods and approaches are available to set up and
select business strategy in accordance with the enterprise. The following is the
introduction of theoretical method of developing and selecting business strategy for
a product or service, the process and experience in strategy development in the
world.
The term “strategy” originated from the art of warfare in old times. It is
considered as the art of commanding means to win or reach one’s aims. Carl von
Clausewitz, a 19th-century strategy researcher, said” Strategy is to making plan for
warfare and plan strategic campaigns which determine the participation of each
soldier”. Edward Mead Earle, a historian described: “Strategy is the art of
controlling and using a nation’s resources to ensure and increase the effectiveness of
one’s essential rights”
The term of strategy is now used popularly and is regarded as the growing
for companies’ business activities. The concepts of strategy are of variety, such as,
“strategy is modules of goals, purposes and plans to reach them” (Kenneth, 1965),
or “strategy is the striking thread through out a company or organization’s activity”
(Ansoff, 1965). Kenneth Andrew is the first to point out out-standing ideology in
the book “The Concept of Corporrate Strategy”. In his view, strategy is what a
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company has to perform basing on its strengths and weaknesses in the scene of both
opportunities and challenges.
The formation of concepts and viewpoints has undergone the process of
generalization of approaches, such as:
-

Classic view supposes that it is possible to plan long term competitive
advantages;

-

Evolution view sees a company as a living thing which will struggle and adjust
to adapt to and survive competitive environments;

-

Process view stresses that the survival and development of a company is a
process of experience accumulation, struggle by all means to reach the goals,
and a strategy is needed to carry out the process;

-

Systematic view state that a company’s business activity must be done
systematically to reach a long-term success.
The struggle and exchanges among those views gradually create new

common views on strategy. No matter how it is approached, a company’s business
strategy is characterized by 3 commonest features:
-

Setting up an overall action plans towards the future in terms of the company’s
long-term business aims

-

Company owner will decide important policies and methods;

-

Setting up the steps, patterns and allocation of sources to carry out the
company’s goals

1.1.2. Business strategy and selection of business strategy
Business strategy concepts
The above analysis of concepts and views leads to the concept of business
strategy that orientates targeted business activities in a long time together with a
system of policies, measures and resources allocation to reach the company’s targets
the same duration of time.
A company’s business strategy is a general action programmer towards
reaching its goals. It is not aimed at working out a specific way to achieve as it is
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the duty of other supportive programmers and functioning strategies. It is business
strategy to create the frameworks for thought of business direction and action.
According to a generalization, business strategy might be categorized into 3
groups:
-

Group 1: business strategy is an art to create business advantages;

-

Group 2: business strategy is the special form of planning “business strategy,
the way, the means to reach the goals” or “to identify long term goals”

-

Group 3: business is both an art and a programmer to implement long term
strategic goals; it is the combination of policy, programmer, project and plan.
From the above viewpoints, it is clear that business strategy is characterized by

target orientation, long term, advancing ideology which is realized as a systematic
estimation process.
Features of business strategy
Although there are many different opinions and approaches on the term of
strategy, main features of business strategy are concerted unanimously. The features
are:
Objectiveness: business strategies often determine the fundamental goals, the
business orientation of each enterprise in each period and policies to implement the
objectives set out.
Appropriateness: this requires the company when building business strategy, to
evaluate precisely facts of its business performances. In the mean time, it has to
regularly revise and adjust to fit to environmental changes.
Orientation, long-run: business strategy is built for long period (5 years). Therefore,
business strategy has character of route and is concretized by strategies with shorter
term, so called plan.
Flexibility, elasticity: business strategy is built on the basic of future market
forecast, thus, strategy should be flexible, elastic upon market fluctuations.
Continuousness: Business strategy is a continuous process from building,
implementation organization, checking, supervising to strategy adjustment.
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Competitiveness: Business strategy, nowadays, cannot be separated from
competition because business strategy partially ensures the company’s capability to
compete on the market.
Classification of business strategy
Classification of business strategy comes into different types, creating the
diversification of ways to carry out business strategy. With strategic level
classification, we have company level strategy, business level strategy, and
functions level strategy. To classify basing on the content of the strategy, French
managers state that the business strategy consists of commerce, technology, finance
and human strategy. And classification upon strategic process gives out orientation
and action strategy.
1.1.3. Role of business strategy
Business strategy has more and more become the tool help company orientate
and develop after goals put forwards and in accordance with business environment.
Proper business strategy will create a good way for the company. Business strategy
can be deemed to be guideline for the company heading on the right direction.
Business strategy brings back many profits for the company. Its importance is
proved as in the following aspects: Firstly, it helps the company orientate its
activities in the future through business environment analysis and forecasts;
Secondly it helps the company hold opportunities as well as challenges to
development of the company’s resources. It helps the company exploit and use
properly all resources, prove the company’s strengths.
Thirdly, business strategy creates an operation orbit for the company, helps the
company unite personals with different benefits heading to a common target, to
develop the company.
Fourthly, through comprehensive analysis of factors of macro-environment,
micro-environment, it helps the company identify its competitors, then to launch an
overall solution to raise the company’s competitiveness.
1.2. Process to develop strategy
To develop a strategy requires strategic thought and answers to 3 questions:
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“Where are we now? Where are we going to? And how can we get there?” through
7 steps.
1. Evaluation of the current task: task, goal, strategy.
2. Analysis of business environment: market structure, development,
analysis of competition and company position.

Where

are

we

are

we

3. Macro-environment analysis: demographic, socio-economic, now?
financial, technological
4. Internal company analysis: structure, resources, procedures, labor
force and culture.

Where

5. Analysis of strengths, weakness, opportunity and threat (SWOT).

going to?

6. Analysis of strategy selection: in general or in particular.

How can we get

7. Evaluation and implementation: demand of labor force, risks and there?
benefit.
It is obvious that the identification of business strategy relates to customers’
needs, groups of customers or who will be satisfied and possibility of needs being
met. These decisions are the focus
of company-level
strategy selection as they form
TASK and
VISION
the root of competitive advantages against the competitors.
Internal environment
of external
environmentto
Strategicanalysis
administration consists of: the analysisAnalysis
of external
environment
+ model:
+ macro environment
Value
String opportunities and threat, of internal environment
+ micro
identify
to environment
identify the strengths
Competitive advantages
+
conclusion:
Develop and select (SWOT)
+ Conclusion:
ooportunity
and weaknesses. Working out and selecting proper strategy
basing on task, vision,
strengths
Threat
weaknesses
strength, weakness, opportunity and weakness. The implementation and evaluation

of strategy should be done so as to make the company’s organization suitable to the
strategy. Strategic administration steps are illustrated in the followings:
Figure 1-1: Process to develop strategy
Chosen strategy
Lead in low cost
Product differentiation
concentration

Make organizations
Suitble to strategy

Supervise and review implementation of strategy
Implement and revise strategy
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Source: Materials on strategic administration – Griggs
1.2.1. Strategic task and vision
Task is a concept used to refer to the highest goal, significance of the
appearance and survival of a company. It is also the testimony to the company’s
usefulness to society. The term is equivalent to others, namely, motto. A company’s
task is valid throughout the company’s operation time if not revised. However, it
will be made specific to suit strategic phase in form of strategic goals.
Vision is understood as a statement on the company’s desirable status. This
statement will draft the company’s future in its goals and aims. The statements
might be of different length, e.g. a short utterance or a long paragraph, but it has to
identify the company’s aims. The vision of a company needs to have these factors,
(1) the time it targets at, (2) scale and status in business circle and society; (3)
setting up the vision towards ensuring the highest quality and lowest price product,
(4) the company should pay attention to customers’ benefit.
1.2.2. Strategic goals
Strategic goals are milestones or moods that the company want to reach in
strategic periods. Thus, the identification is really significant to the company as:
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-

Strategic goal is the means for the company to fulfill its tasks

-

Strategic goal is the foundation for setting up priorities when allocating
resources

-

Strategic goal is the ground for the development of strategy, policy and business
plans

-

Strategic goal is the base for gathering and orientating relating entities, like
customers, shareholders and staff.
It can be seen that a company’s business strategy is shaped on the balance

between 3 factors, strategic goals, business environment, and the company’s
capacity.
However, it does not mean that the company’s strategic goals, when setting up,
can be as high as expected but restricted to the company’s circumstance and
capacity in general. The goals should be proper and feasible. To that end, the
identification of a company’s goals should be based on:
-

the company’s business task in general and in specific periods

-

business philosophy

-

Overall understanding of business environment and company’s capacity.

1.2.3. Analysis of external environment
The analysis of external environment is aimed at working out opportunities
and threat to the company so as to implement and fully grasp the opportunities from
external environment as well as avoid threats. The scope of the analysis is macroenvironment (or general environment) and micro-environment (or industry
environment).
1.2.3.1 Analysis of macro environment
The company’s objective environment includes 6 partitions: economy,
politics and legislation, socio-culture, demography, technology and globalization.
Changes in macro environment can affect directly to any forces in the industry.
Thus, it change relative strength to other forces and itself, and finally, it changes the
attractiveness of an industry.
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The company must realize opportunities, threats brought by objective
environment which the company has to get used to and also press for environment
changes. Factors of macro environment are shown by following model:
Figure 1-2: External environment

Source: Materials on strategic administration – Griggs
-

Analysis of demographic environment

Population scale: observation of demographic change on population would raise the
importance of this partition. Forecast of population will reveal global challenges
about population of 21st century and opportunities for businessman.
Age structure: It reveals opportunities of old people care services, insurance
services. However, it also hides a challenge to companies about labor resource.
Geographic allocation: this can create advantage for telecommunication
technology. By computer, human can stay at home and communicate with the others
via telecommunication.
-

Analysis of politics and legal environment

20


Politics, legislation environment includes: political regime, government institution,
regime of political party, organizations, legislation system... Factors of politics,
legislation impact on the company’s development strategy in different ways. They
may be opportunities for one company, but also threats to the others. Open policy
encourages many economic elements to take part in production and business
activities. This is the threat for state owned enterprises but an opportunity for
private companies joining the market.
Impact of politics and legislation environment to the company’ business activities
are deep and wide, and even decisive. Generally, if a country is stable in politics,
clear and consistent policies, strict legislation, its companies can develop healthily
and stably.
-

Analysis of economic environment

Economic environment is socio-economic situation and economic policy in the
country where the company exists and develops. Economic environment includes:
socio-economic structure, level of economic development and macroeconomic
policy
-

Analysis of techniques and science environment:

Techniques and sciences environment: it is the factor of techniques and science and
a collection of social phenomena directly related to techniques and science at place
where the company exists and develops; government’s scientific institution; policy
of techniques and science and legal documents on techniques and science.
-

Analysis of socio-culture environment:

Social environment: it includes foundation and fluctuation of society classes,
population structure, population immigration, social power structure, people work
and live custom. Facts and fluctuation of these factors can affect the company’s
business.
Cultural environment: it includes factors of philosophy, religion, language,
literature, art. Impacts of these factors to the company’s business are mostly indirect
but cannot be underestimated.
-

Global environment:
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Global environment includes related global markets, present changing markets,
significant political issues, and basic institutional and cultural characteristics in
global markets. Macro analysis enables the company to evaluate macro-economic
factors affecting the company’s operation and changes in competitive environment.
It can be illustrated as the followings:
Table 1-1: Analysis of macro environment
Demographic
segment

Population scale

Race diversity

Age structure

Income distribution

Geographical allocation
Economic segment

Inflation rate

Rate of personal savings

Interest

Rate of enterprise savings

Trade surplus or deficit

GDP

Budget surplus or deficit
Political and legal Laws on anti-monopoly
segment
Laws on tax
Stipulations
decentralization
Socio-cultural
segment

Laws on training
Policies and educational trends
on

Women in labor force

Environment concerns

Diversity of labor force

Changes in job selection

Attitude toward work quality

Changes relating to priority of
products and service

Technological
segment

Product innovation

Government’s spending o R&D

Knowledge application

New
technologies
telecommunication

Global segment

Major political events

Newly industrialized countries.
Cultural
and
institutional
differences

Key global markets

of

(Source: textbook on strategic administration- 2007)

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1.2.3.2 Analysis of micro environment (model of 5 competitors)
Industry is divided by characteristics of the product or service and its role in
the national economy. In any industry, a company is always under 5-sided
competitive pressure, such as, the pressure from newly-participated company, from
those in the industry, from the alternative products, the impact of supplier and
customer. Michael Porter’s 5-force model is a big help to strategists analyze these
forces’ competition as the following chart.

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Figure 1-3: Model of Michael Porter’s 5 forces
Threat from potential competitor competitors

Competition from industry competitors
Providers’ bargain ability

Buyer’s bargain ability

Threat from alternative products

Source: Lectures on strategic administration – Griggs
The threat from a potential competitor:
The newly participated company is a newly founded one or the one with
many kinds of products. The fact that there are many or few Potential Entrants, their
pressure to industry is strong or weak depends on attracting factors of the industry.
These factors are showed by profit ratio, customer number, number of companies in
the industry.
The threat from alternative product
Alternative products are those of the same usage. If they are of greater
advantages, they will pose bigger competitive pressure. If its producers quickly
develop the production, the industry will be vigorously threatened.
Buyer or customer’s bargaining capacity

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A company’s customer can be a direct customer who might puts more pressure
on the company when demanding higher quality or lower price products. However,
he or she can be a distributor or an agent. The matter is who is the real customer
with bargaining capacity that the company should pay attention to; those specialized
products serving the society, like the construction of a bridge or road, then customer
is the investors who demand high standards that the company has to satisfy,
therefore, the company must be able to meet in the competition or bidding process.

-

Threat from industry competitors
The competition from existing companies in the same industry is exposed
through the patterns and features. The competition is related to the industry’
characteristics, the scale, the number of companies and the market structure.

-

Threat from suppliers’ bargaining capacity
The suppliers of raw materials are able to raise the price or lower the quality or
both raise the price and lower the quality. Companies are concerned much for the
ability to negotiate with the suppliers to fix the problems while achieving what they
want, such as, quality, price, ability to supply..
In summary, the analysis of business environment which consists of macro and
micro-one is crucial to a company. It is aimed at identifying opportunities and
threats to produce suitable administration. These 5 factors always impact the
company so the company is required to accumulate data regularly. Some core
contents are drawn from these as the followings:
1. If the company meets the environment’s demands, its strategy will be more
effective.
2. The company’s recession is largely attributed to environment, not to internal
factors.
3. Once dependant on environment, the company should focus on the analysis
and estimation
4. Good analysis and estimation are needed if the environment is unstable and
changeable.
5. A good strategist always knows well eternal and external environment.
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1.2.4. Analysis of the company’s internal environment:
The aim of internal environment analysis is to have a general and
comprehensive view beside the recognition of potential resources as well as existing
ones making sustainable competition advantage for the company. Realize strengths
and weaknesses of the company creating foundation for planning and implementing
business strategy. Objectives under consideration are primary factors inbound the
company, within its control and include: human resource, finance, accounting,
marketing, communication system, organization system.
1.2.4.1. Value String
A company’s value created is measured by the mount paid by the buyer to
the product. To have competitive advantages, the company’s functional departments
have to produce a low-cost product or a distinguishable one. In other words, the
company has to pursue a low-cost or distinguishable product strategy.
Michael E. Porter introduced the term “value string”, divided into main
performance and supporting performance, to analyze the process to create value,
and add more value to the product. Value String offers us an overall picture of a
company’s performance, the competitive strengths in a company’s strategy. The
classification of performances in Value String facilitate the checking of cost and
results of each activity, innovating and coordinating them as the way to create value
for each product as well as the whole company. Supporting performances are listed
as the followings:
Figure 1-4 Value chain Mode

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Marketing and sales
External logistics
R&D

Production

Internal logistics

HM management
lựclực.

Primary activities

Infrastructures

Purchases

Service

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