Bài luận về vai trò của chiến lược trong doanh nghiệp
1. Definition and features of business strategy
In business world, the competitors do not face directly and a company does not win
by stifling the opponent's products but through enhancing the position of their products.
They compete with each other in an industry environment towards a target market
segments and efforts to attract customers. Through the consumption, customers will
decide who "win",who "lost". Competitive outcomes express the achievement of each
competitor in the market and customers will recognize thesuccess of each company.
To attract customers anddominate the market, each company uses different methods.
Because in the consumer's mind, the "winner" emerges with the important characteristics
that satisfy their needs, the goal of administrators is to make differences.
The capacity to make differences includes thespecifical ability, skills, technology
and resources, which allows an organization to make differences with competitors and
create competitive advantage. In other words, the ability and skills of an organization
create such difference that the other competitors absolutelycan not copy.The worth ability
and skills in business include activities such as: product design, improvement, low cost,
proprietary technology, outstanding quality, distribution performance. Therefore, to
survive and develop, each business has to ownsomescopes of activities or skills leading to
Indeed, the lessons of success or failure in business has shown that there are
billionaires came from empty hands thanks to the optimal business strategy and vice
versa, there are also billionaires who do wrong in his business wayand givehis property to
rivals after only a short time. The closure of loss companies and the development of
highly effective companies significantly depend on business strategy of thatcompany,
especially in the market economy.
So what is business strategy?
Strategy is a word derived from the military field, which is the way to win a war.
However,the social is growing and strategic thinking is not dedicated only in the military
field, business activities also usewith the elements like strategy and leadership.
In 1962 Chandler, one of the people who initiated and developed the theory of
strategic management,said that: strategy is the identification of targets and long term
goals of the business, and the acceptance of the action sequences as well as the
allocation of necessary resources to implement this goal.
In 1980, Quinn defined: strategy isthe paradigm or plan thatis appropriate with
basic objectives, policies and action sequences ofan organization in a tight overall.
Recently, Johnson and Schole defined that: Strategy is the direction and scope of an
organization in the long termto gain advantage for it through the configuration of its
resources in the context of a changing environment, to meet market needs and satisfy the
expectations of stakeholders.
Mintzbergsummaried those definitions with fiveP:
- Plan: Anintended action sequence.
- Pattern: The consistency in behavior in term of time, intention or not intention
- Position: The compatibility between the organization and its environment
- Perspective: An inveterate way to perceive the world.
- Ploy: A specific way to pass competitors.
Business strategy has the following basic features:
- Business strategy often defines the basic objectives, the business orientation of
each company in each period clearly and it isdisseminated thoroughly in all business
activities of the company to ensure the company to develop continuouslyand sustainably
(greater than 1 year).
- Business strategy ensures maximum mobilization and maximum combination in
the exploitation and usage of enterprise resources in the present and future, promotes the
advantages and seizes the opportunity to gain advantages in business market.
- Business strategy must be reflected throughout a continuous process from strategy
establishment, implementation, testingto evaluation andstrategy adjustment.
- Business strategy must have offensive thinking to win in the market (must fully
utilize its advantages to win).
- Business strategy is usually built for a relatively long period (3 years to 5 years),
tend to shorten down depending on the characteristics of each industry.
administrator to build strategic then to help improve the competitive capacity of his
Characteristics of competitive strategy are drawn from the strategy of military and
economic. That is to make the power and the capacity to make differences appropriate
with the environment in the way that the leader expects to create competitive advantage
against rivals in the same environment.
2. The benefits that strategic brings to the company
The company operates without a strategy like a person goes on the road without
determining where to go, he just moves according to any direction of the crowd (market
and competitors). If he keeps on walking like that, he will forever be a mediocrity in the
A bravery leader will not want to consign the future of hiscompany by operating in
the way the market and competitors lead. So he must deliberately set out a direction and
try to influence to lead the marketfollow this direction, a direction that his company has
prepared and therefore his company will get more advantages than the others.
In fact many businesses, especially small and medium enterprises, less concern with
strategic issues, they even do not identify a strategy for themselves. The main reason is
they do not aware of the rolesof strategy. The problem is that not only large business
should have a strategy. We need to ascertain that any organization, any company needs to
have a strategy. The presence of an official strategy in business is no longer the wish to
have a strategy and it depends mainly on the awareness of the roles of strategy as well as
the knowledge of the business strategy ofthe managers. A question is posed with many
managers is "Why should businesses have a strategy?"
According to Mintzberg, the company needs to have strategy because strategy
allows business: 1) to establish long-term orientations for the business; 2) to focus the
efforts of the company in the implementation of tasks to achieve expected goals; 3) to
determine the mode of organization and action in accordance ofdesired goals; and 4) to
build the steadiness and harmony of the organization.
In my own opinion, three basic benefits that strategy brings is: to build competitive
advantage by creating high and uniquevalue; to plan the activities of the company and to
ensure efficient usage of resources.
They are 3 basic benefits because deriving from the definition of strategy, the
primary purpose of strategy is through the orientations and the rational allocation of
necessary resources to create advantages for the organization. And these benefitsare also
three core objectives that thestrategist looks for whencreate strategy.
To understand clearly, we have detailed analysis of these benefits:
The strategy helps businesses to build competitive advantage by creating
high and unique value
There are three important factors that impact on the competitive advantage of a
company: the strategy and the resources of the business, industry factors, and
macroeconomic factors. This statement highlights the roles of strategyin enhancing the
competitiveness of the company.
Competition is the rivalry between economic subjects (producers and consumers) in
order to win more favorable positions in production or goods consumption to obtain the
most benefit. Competition brings many benefits, especially for consumers. The producers
must find ways to make productsmorestunning,to have high quality, low costs, high rate
of scientific knowledge andhigh technology ... to meet the demands of customers.
Competition makes producers more dynamic, more responsive and better grasp of
customer needs, constantly improve technology, applynew advances and research into
production; complete the way of organizing and managing production to improve
productivity, quality and economic efficiency.
Competitiveness is the ability to win in the rivalry between entities in the same
environment and having the same attention to an object. Competitiveness of the product
is measured by the share of that product. It depends on the quality, price, speed of supply,
accompanied services, the seller's reputation, brand, advertising, sale conditions.
Competitiveness of a company is the ability to create competitive advantage or the
capacityto generate higher productivity and quality than competitors, toaccount for large
market share as well as to create high-income and sustainable development.
Competitiveness of a company realizes the power and advantages of it versus competitors
in the way it satisfies customer demands betterand make higher profits.
Thefactors create a competitive advantage:
Picture 2: Main factors that create competitive advantage
The simplest measure of effectiveness is to divide the number of outputs to inputs.
A company is more efficient if it needs fewer inputs to produce a given output. For
example, if General Motors needs 30 hours to assemble a car and Ford needs 25 hours,
we say that Ford is more efficient than GM. Moreover, provided that other factors are
equal, such as salary, we can assess from these data, and say that Ford will have a lower
cost structure than GM. Thus, the efficiency helped the company achieve low-cost
The most important component of effectiveness of many companies is labor
productivity. This indicator is often measured by amount of outputs per worker. If all
other factors do not change, in generally, the company that has the highest productivity in
the industry will have the lowest production cost. In other words, companies will have the
competitive advantage of low cost.
The impact of high –qualified products to competitive advantage includes two parts.
Firstly, the provision of high - qualified products will increase the value of products in the
customer's eyes. From this awareness of value, the company can require higher price. For
example, in the automobile industry, companies like Toyota not only have cost
competitive advantage based on productivity but they can also require higher price
because of their higher quality. Thus, in comparison with General Motors, Toyota has
both lower costs and the ability to require higher price.
Improvementis considered as anything that is new or novel in the way that a
company operates or manufactures its product.
Improvement is perhaps the most important factor of competitive advantage. In the
long term, competition may be regarded as a process driven by improvement. Not all
improvements were successful but improvements are a key source of competitive
advantage, because, according to the definition, it makes unique things for the company
-the things that its competitors do not have (at least until they mimic successfully).
Uniqueness helps the company to create the differences and requires an increase in price
for its products, or reduces costs significantly in comparison with its competitors.
A few examples highlight the importance of improvement as the platform of
competitive advantage: Xerox develops copier, Cisco develops router, Intel develops new
microprocessor, Hewlett -Packard develops laser printers, Nike develop high technology
sneakers or Sony develops Walkman. All these improvements have helped the pioneered
companies to create competitive advantage. In each case, the company can require an
increase in price for the attractiveness of the unique supplier. The evidence also shows
that customers are aware of the higher values on a global scale, not only from the
A company that satisfies customer well must have the ability to identify and meet
customer needs better than the competitors. If so, customers will feel the value of
products of the company, and it can have competitive advantage on the basis of
The improvement in the quality of products helps the company to satisfy their
customers by developing new products with the features that current products do not
have. In other words, the achievement of outstanding quality and improvement is an
essential part to satisfy customers remarkably. For example, following Toyota, Saturn
subsidiary of GM manufactures cars in compliance with the orders of individual
customers, gives customers a wide range of choices of color and other options.
Thus, managers need to find out the key factors the groundbreaking factors in
production then compares the relative advantage in products and services with stronger
competitors, finds the company’s strengths to build business strategies.
Strategy helps the company to plan its activities
Strategy plays an important role in the formulation of the company's operations. In
fact, many companies still do not have annual plan. What many people call "the plan"
sometimes is only a few numbers of sales, outputs, profits and expenses. Others also have
plan but it does not have high quality, which means between plan and the implementation
has far distance.
Indeed, the reason why many companies find it difficult in planning is because the
company does not have a strategy. The plan is set out but the implementation is
successful or not depends largely on strategy. An action plan that is built on the basis of a
right strategy is always feasible than the action plan that is based on subjective desire of
the people who set the plan.
Chandler (1962) asserted that "market is like battlefield, if the strategy is basically
correct, even with a number of tactical errors, the company can also reach the intended
target". Thus, when having a good strategy, though in the process of implementing the
strategy the company may make a certain number of errors or even its starting point is in
a weak position, the company can still achieve the intended target.
Planning is one of the basic operations of the administrators and it has the largest
meaning. Definition of planning in general is understood to sketch and complete ideas
and projects. Planning has strategic meaning and along with the development of the
organization, it is increasingly important. It is the backbone that governs all activities as
well as the culture of an organization.
We will take the fight of Pepsi against Coca as an example.
Pepsi Co. would not have the position as today if it did not build the right strategy.
To catch up with Coca, from 1950 to 1955, Pepsi applied five important decisions.
First, to improve the taste in order not to lose Coca Cola. Second, to design the glass
bottle and unify its business criteria. Third, to redesign promotional activities, enhance
brand image. Fourth, to focus on occupy large market of bringing drink home that Coca
Cola overlooked. Finally, to set 25 cities of U.S as target markets for the competition with
By the late 1970s, the strategists of Pepsi decided to implement offensive strategy in
second stage, mainly applied powerful marketing strategies to increase consumption and
directly invaded the market that Coca Cola occupied. By 1991, total sales of Pepsi is
more than four times higher than that in 1955
In 1985, to dislodge Coca-Cola, Pepsi started the campaign to fight in aerospace.
The company designed special boxes to send drink to the crew of Space Shuttle
Challenger spacecraft and the STS-51-F to test packaging and distribution technology in
zero gravity condition. Although the space program of the company was judged as a
failure but it has proved that Pepsi wants to assert itself, even in completely new fields.
Pepsi also conducted tasting contest that made name of Pepsi massively popular, the
market also expanded greatly. At that time, many people believed that Coca tasted well
than Pepsi or other soft drinks. To make people aware of the truth, Pepsi had launched a
strategy with the hope to beat Coca called "Let your taste decide!".With this plan, Pepsi
set up tasting stations in supermarkets and stores across the United States. Discreetly they
poured Pepsi and Coca into two different glasses then they invited guests to drink these
glasses and let them know what kind is better. The result has surprised many people:
more than half of customers taking the test chose Pepsi, although many of these have
drunk Coca for life
The competition between the two brands also takes place in other distribution
channels. People like Coca - Cola certainly never find the products of this brand in
Lotteria, Chicken Express, KFC, Subway - where Pepsi has exclusive distribution.
Beside supermarkets, Coca-Cola and Pepsi also debated to gain the exclusive
distribution contracts in small dealers through incentive programs such as offering
cabinets, tables, chairs, umbrella, glass or Services to maintain and repair refrigerator for
Pepsi was founded nearly a century ago and its starting is completely different from
Coca-Cola. While Coca began to construct abroad factories in Paris, Bordeaux and other
European cities (1919), Pepsi declared its bankruptcy in 1923. In 1928, Pepsi Cola was
acquired by Craven Holdings Corporation which had headquartered in the state of
Virginia (U.S.). However, in 1931, Pepsi once again went bankrupt and was sold to Mr.
Charles G.Guth. At the same time, Coca continuously expanded its market to Australia,
Austria and South Africa.
Thus, at the starting point, consumption and reputation of Pepsi is far less than Coca
Cola. But by the early 1990s, Pepsi was honored to rank 7th among the 10 largest
corporation in U.S. and became the strongest competitor of Coca Cola. According to
Beverage Digest magazine, market share in the U.S of Coca Cola reduced by 0.4% to
43.7% while Pepsi's market share increased by 0.2% to 31.6%. This means that on the
beverage market, Pepsi was still No. 2 after Coca Cola, but this is the first time since
1988 Pepsi gained market share of Coca Cola.
The question is that: if Walter S.Mack undertook the position of President but he did
not build strategies, did not determine the path for Pepsi, can Pepsi emerge or go into
footsteps of bankruptcy?
Strategy ensures the company uses its resources effectively.
In term of narrow sense, resource is often understood as material resource for the
development such as natural resource, asset, capital in cash ... In terms of wide meaning,
the resource is understood to include all of the advantages, material and non-material
potential to serve a certain development target. Depending on the scope of analysis, the
definitions of resource are widely used in different levels: national, regional, the scope of
a company or each entity who is involved in the process of economic development....
Within the scope of this exercise, I use the definition as: Resource of a company is
understood as the ability to provide the necessary elements for the survival and
development process of the company.
The main resources of the company:
- Human resources
- Machinery and equipment
- Fixed assets
- Customers, suppliers
- Manufacturing process and technical process of the company
- The management capacity
- The business capacity
- Brand and reputation of each product, each services and of the company
Each type of resource has a particular and irreplaceable importance. Using these
resources economically and effectively is indispensable, it requires administrators to
respect and develop reasonably, to ensure harmonious relationship between resource
elements. Even at the national level, using resources rationally and efficiently is also
problem that needs to be solved fiercely. Because national resource is limited and when
the economy does not develop at high level, if the Government only interests in growth,
they will have to spend a lot of resources.
We can see that Vietnamese automobile industry has many favorable conditions for
resources. They are: cheap labor, large amount of financial investment, the State applies
protected policy, the domestic market is the potential market because of large demand
while imported cars are very expensive (due to the taxes, fees at high level). However,
Vietnamese automobile industry still has little flourishes. Domestic production stops in
small quantities, mainly processing and assembling.... The factory which has the biggest
capacity of Toyota only reached 20,000 units per year while the factories in the same
corporation in neighboring countries have very large capacity. Three factories in
Bangkok, Thailand have total capacity of 630,000 units per year and it is expected to
increase in this year. Thus, the absence of proper strategy has led the automobile industry
wasted resources, leading to inefficient operation.
Other example of success in the use of resources thanks to proper strategy is
Military Telecom Corporation - Viettel. Viettel even has less resources than the
automobile industry since this sector is not protected by the State and the company also
faces stiff competition from two tycoons – Vinaphone and Mobiphone. However,Viettel
has risen up and assert its position thanks to the right strategies. Viettel took advantage of
cheap labor to build broadcast system even in rural areas and expanded coverage.
Ensuring quality and transmission line is one of the reasons why customers choose
Viettel. In addition, the Corporation also focuses on customer care by customer care
center across the country. Based on the financial strength after having certain success, the
Corporation has focused on promoting its branding in 2 ways.Firstly, it spent money to
advertise on the mass media. Secondly, the Corporation has sponsored many programs
like “We are the soldiers”, the humanitarian programssuch as "Heart for Children",
"Smilesof the children", program towards Spratlys.... These social activities have
increased the reputation of Viettel, helping its image to get much love.
In addition, the Viettel also expands their market to neighboring countries.
Metfoneis Viettel's brand in Cambodia, Natcom are Viettel’strademark in Haiti, Movitel
is the trademark of Viettel in Mozambique. Moreover,Viettel also known Telemor (in
East Timor), Bitel (in Peru) and this corporation also associate with Lao Asia Telecom
Company to form a joint venture named Unitel.
Strategy in general and business strategy in particular increasingly asserted its
importance, especially in the market economy with high competitive. Building a good
strategy is the strong foundation for sustainable growth of the business. Building strategy
is the work of the administrators and it requires managers to have specialized knowledge,
abilities and work experience.
Any business should also have strategy to develop but the strategy of each business
must be different and this company cannot mimic the way of other companies. In
business, following others or imitating others, the company will never get it own sky.
Only those who have the courage to go ahead of others would have spectacular success.
In conclusion, managers need to improve their knowledge, skills and based on the
conditions and characteristics of their own company to build suitable strategic and help
the company to develop sustainably.
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