PHAN TICH VAI TRO VA SỨ MỆNH CỦA CHIẾN LƯỢC TRONG DOANH NGHIỆP
1. Definition of strategy:
Michael Porter, “the Father” of the theory of competitive strategy, said: “the premier
strategist of an organization must be the leader of that organization”
That is true. When standing in a position to lead the organization, the work
"building strategy” is a default responsibility and only the leader can undertake this task.
The reason is that the establishment and implementation of the strategy will determine
the destiny of an organization.
The author wishes to give a proof of whether there should be a strategy in business
or not: "The Japanese companies rarely have strategies". The Japanese triggered the
global evolution of effective operations in the 1970s and the 1980s. They also pioneered
in the practice as total quality management and continuous improvement. As a result,
manufacturing industrial of Japan was entitled significantly advantages of cost and
quality in many years.
However, Japanese companies rarely implemented strategic position like the type of
strategy discussed in this article. Sony, Canon, and Sega for example, the companies have
implemented strategy, are the exception rather than the common principle. All
competitors provide the market with most of products and even all diversified products,
all attributes and services, they deploy all channel and they have peer factory
The danger of Japanese-style competition is becoming more easily to see. In the
1980s, with the competitors operating away from border, productivity seems to win both
the cost and quality explicitly. The Japanese companies could grow in the domestic
economy with the expansion and penetration into global markets. It seemed that nothing
can brattle their development. However, when the distance of operation effectiveness
shrunk, Japanese companies were increasingly falling into the trap they created. If they
wanted to escape from the war that destroyed their result, Japanese company had to learn
to build strategy.
To do this, they seemed to have to overcome strong cultural barriers. Japan is
famous for its tendency to seek consensus, and companies tended to regulate the
differences between individuals rather than highlighted those differences. On the other
hand, the strategy requires difficult choices. The Japanese also have inveterate tradition to
serve, which causes them wholeheartedly satisfy any demand that their customers
express. Companies compete in this way may come to overshadow their distinguished
status, become all things with all customers.
But "What is strategy?", "How is a good strategy?", "Why my organization has a
good strategy but the operation do not achieve the expected results?" .., they are always
the questions that make leaders and managers at all levels confused, especially in the
process of leading and operating their own businesses.
"Strategy is the direction and scope of an organization in the long term: strategy
will bring advantage for the organization through the optimal arrangement of
resources in a competitive environment to meet market demand and expectations of the
In other words, the strategy is:
- The position that the enterprise tries to reach out in the long term (direction)
- What market the enterprise must compete on and what kind of business activity the
enterprise must carry out in that market (market, scope)?
- How the enterprise works better than the competitors in that market (advantage)?
- What resources (skills, assets, finance, relationships, technical competence, facilities)
the enterprise needs to prepare to have competitive advantage (resources)?
- What factors from the external environment affect the competitiveness of the enterprise
- What values and expectations that the people who have power in and out the business
need (the capital contributors)?
2. The benefits that strategic brings for business
First of all, the strategy brings unique activities
Competitive strategy is about differentiation. That means the leader chose an array
of different activities on purpose to bring a combination of unique values.
The goal of making the differences of general strategy is to achieve competitive
advantage of the company by creating products (goods or services) that customers feel
unique with some important characteristics. The company making differences tries to
satisfy its customers in a way that competitors can not do with intention to increase the (a
significant price higher than the average price in the industry). The ability to generate
income by requesting increased price (rather than decrease costs as in the case of cost
managers) enables people making differences perform better than their competitors and
earn profits higher than the average profit in the industry. The increased price of people
making differences is usually higher than the price that cost managers require, and
customers are willing to pay for it because they believe that the quality of differentiated
product has distinguished value. Therefore, products are priced on the basis of what the
market will bear.
Therefore, Mercedes Benz car in the U.S is much more expensive than that in
Europe, because in U.S it has higher honor. Similarly, the cost to produce a BMW is not
much more expensive than that of a Honda but its price is determined by customer‘s
view. Customers think that owning a BMW has something that is more worthwhile. The
Rolex watch is in the same case. It does not need more cost to be produce, moreover, its
design has not changed in many years and its gold content is only partially expressed.
However, customers buy Rolex because of the unique quality that they perceive in it: it is
the ability to show the honor of the people who have it. In Stereo industry, the Bang &
Olufsen of Denmark is a prominent name; in gemstone, it is the Tiffany that is prominent;
in aircraft industry, Learjet is the most famous. All these products require an increase in
price because of their different quality.
Or for example, Southwest Airlines Company provides transportation services with
short route and low cost and it has direct flights between medium-sized cities and
secondary airports in major cities. The company avoids the large airport and does not fly
for long distances. Customers of the company include business travel, families and
students. Regular schedule and low price attracts customers who are sensitive to price
(otherwise, they will go by bus or car) and attracts customers who like the convenience
that they select an airline brand with full service on other routes.
Most managers will describe the establishment of strategic position according to
customers is "Southwest Airlines serves passengers who have price sensitivity and love
the convenience." But the core of the strategy is in the activities, the leader chooses to
perform activities differently or to perform different activities than the competitors.
Picture 1: Operational structure of Southwest Airlines
The airline brands have fully arranged services to bring passengers from any point A
to any point B. To cover more destinations and serve passengers by the connecting
flights, the full service airlines deploy "shaft and spoke" system with the shafts located at
major airports. To attract passengers who want more comfort, they supply first class
service or business class service. To attract passengers who have to change planes, they
coordinate schedules, provide procedures of interline baggage. Because some passengers
will fly in several hours, the full service airlines will serve the meal. In contrast,
Southwest amends entire operations to provide convenient services with low cost on a
particular journey. By turning fast in every port in just 15 minutes, Southwest can arrange
for the aircraft to fly more hours than competitors and provide regular flight with less
aircraft. Southwest does not serve meals, select seats and does not provide procedures of
interline baggage or serve premium class. The automatical procedures at the port
encourage passengers to ignore the ticketing agent, helps Southwest avoid agent
commissions. A standardized aircraft fleet -737- will help enhance the effectiveness of
Secondly, strategic brings competitive advantage
A terminology relating to competition is competitive advantage. It is the ownership
of peculiar value, which can be used to "seize the opportunity" and to make profit. When
we mention to competitive advantage, we talk about the advantage that a business or a
country is having or can have in comparison with their competitors. Competitive
advantage is a concept that has both micro meaning (for enterprise) and macro meaning
(national level). Beside, we have terminology “sustainable competitive advantage”,
which means that the enterprise must continually provide the market with a special value
that no competitor can provide.
These attributes are:
- Conditions of production factors - the position of a country in production factors
such as high-qualified labors or necessary infrastructure to compete in a particular
- The conditions of demand - domestic demand for goods or services of an industry.
- The supported and related industries - the presence or availability supported and
related industries that have international competitiveness.
- Strategy, structure and level of competition within the industry – conditions for the
company to organize and govern the management and the nature of local competition.
Picture 2: The factors to determine national competitive advantage - diamond
pattern of M. Porter
Porter mentioned to these four attributes as the four elements that constitute
diamond pattern. He argued that companies will have the highest potential for success in
the sector or sub-sector if the diamond pattern are in the most favorable way. He also said
that the diamond pattern is a interactive and supported system. The impact of an attribute
will depend on the status of the other attributes. For example, according to Porter, the
favorable demand conditions will not bring competitive advantage unless the situation of
competition in the sector is enough for the company to respond to those conditions.
Competitive advantage turns a strategic as macro vision into a consistent structure
of the inner workings - an important part of international business thinking today. That
strong structure provides effective tools to understand the impact of cost and relative
position of costs in the company. The value chain of Porter helps managers distinguish
the potential resource of buyer value- which can help us set a high price, and the reason
why this product or service can replace the other ones.
We can take the example about the competitive advantage of Vietnam enterprises on
the domestic market in recent years as follows:
Viettel Post Joint-stock Corporation (Viettel Post) has applied the strategy of
indirect confrontation by choosing to develop in the market of neighboring countries such
as Cambodia, China. With the domestic market, the company has built strategic “network
goes ahead, business follows" to obtain its own advantage. And with 100% of the
districts, 85% of communes in the country has presence of service network, Viettel Post
has actually obtained advantage in domestic market, which the foreign firms take a long
time to do.
Thirdly, strategic brings tangible and intangible benefits for the business:
- Tangible benefits are the economic that strategy brings to the company in
particular and the economy in general.
Recent researches indicate that companies use the principles of strategy will be
more successful than the organizations that not apply it.
After nearly two decades, Vietnamese automobile industry still depends totally on
foreign investment. Can this industry survive and develop in the future when the market
is opened under the international commitments. Vietnamese Government has protected
automobile industry for a long time by tariff and non-tariff barriers that limit importation.
However, the protected policies have no meaning to nurture private enterprises in
domestic market (capital of Vietnam) and they just protect foreign investors in Vietnam.
Observing the changes in stiff competition conditions in both width (all industries,
categories) and depth (the stages to produce one product) in Asia recently, we can affirm
that unless Vietnam urgently builds strategy to strengthen competitiveness and consider
local manufacturing enterprises as the core, the automobile industry and accessary will
soon be swept away by the strong free trade tide.
Try to get some numbers to compare. China surpassed Japan in 2009 and became
the largest automobile manufacturer in the world (nearly 14 million units). Besides,
Thailand has reached the threshold of 1 million units / year. In terms of consumption, the
amount of domestic sales is constantly rising in China, its sales in 2010 is on top all over
the world with 18 million cars were sold. Meanwhile, the production and consumption of
Vietnamese automobile was about 100,000 units per year.
Other number, the factory having the largest capacity of Toyota in Vietnam just
produces 20,000 units per year, which is lowly in comparison with the factory of the
same corporation in neighboring countries such as China (now has two factories in
Tianjin with the capacity of 280,000 units per year and in Guangzhou with the capacity of
170,000 units per year, China is expected to build new factory with the capacity of
100,000 units per year in Changchun) and Thailand (three factories in Bangkok with total
capacity of 630,000 units per year and it is expected to improve to 700,000 units per
The problem is that companies in China and Thailand have the right strategy, which
is clearly expressed in economic efficiency as presented above. At the same time,
Vietnamese automobile industry has not clearly defined of how their strategies will be.
- Intangible Benefits
This is not a financial success in term of the number. These benefits are extremely
important and it decides the survive of the business.
Intangible assets are described as "knowledge exists in the organization to create
the different advantage" or "the ability of employees in the company to meet the demand
of customers". Intangible assets include various types of assets such as patent rights,
copyrights, knowledge of human resources, leadership spirit, information systems and
operating process.... Intangible assets can be divided into 3 categories with objectives as
- Human capital: the availability of talent, skills, keys to perform the operation as
the request of the strategy.
- Information capital: the availability of information systems and applications, and
necessary infrastructure to serve the strategy.
- Organization capital includes Culture: awareness and ability to internalize the
vision, mission and necessary general values to implement the strategy. The leadership
spirit: the availability of good leaders at all levels to lead the organization to the right
strategy. Cohesion: linking goals and reward regime with strategy at all levels of the
organization. Collective spirit: the sharing of knowledge assets and human resources with
These objectives describe the important intangible assets and provide an effective
model to link and combine them into the organization's strategy.
Link and combine intangible assets
Strategic map creates cohesion and connection by providing a common point for
corporate strategy and in term of the internal aspects, the map identifies a few key
processes to produce the expected results for customers and shareholders. Intangible
assets must be linked with the internal procedure to create this value. There are 3
techniques to provide a bridge between strategic map and intangible assets:
+ Group of strategic jobs: For each strategic process, one or two groups of work
will have the biggest impact to that strategy. By identifying this group along with
determining necessary capacity and ensuring their development, we can improve the
outcomes of strategy.
+ List of strategic information technology investments: to implement each strategy
procedure, the company needs IT system and specific infrastructure. These systems
represent a portfolio of preferentially technical investments in terms of financial and
+ Schedule of organizational change: the strategy requires changes in culture, both
inside (for example: Collective spirit) and external (for example: consider customer as the
focus). A schedule of changes in culture resulting from the strategy helps to shape the
development of new environment and culture.
Through the development, the company links and combines capital in human,
information and organization with some key strategic procedures, creating the biggest
achievements from its intangible assets
Business strategy plays an important role for the existence and development of
every business. Right business strategy will provide a good direction to the business. It
can be seen as a guide to lead the business in the right direction.
In fact, there are many businesses thank to the right business strategy to achieve
lots of successes, surpass competitors and make their position in the market.
1. “Strategic Maps” – Robert S. Kaplan and David P. Norton (The “Fathers” of
2. Strategic Management – National Economics University - Statistics publisher,
3. Website: Bic Bank - address:
4. Website: Ecomomic - address:
5. Website: Pace - address:
6. Website: Business- address: