THESIS

COMPLETION BUSINESS STRATEGY
FOR
VIGLACERA THANG LONG J.S.C.
PERIOD FROM 2015-2020

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TABLE OF CONTENS
CONCLUSION............................................................................72

INTRODUCTION
1. The theme of Topic

2


“Completion Business Strategy of Viglacera Thang Long Ceramic
tiles Joint Stock Company in period of 2010- 20015”.
2. The reason for choosing the Capstone
With achievements through over 20 years innovating and integrating,
Vietnam’s Economics has many changes, We are merging with international
Economics step by step, contracting economical agreement, bilateral and
multilateral trade with countries in the world and area, participating in AFTA,
ASEAN, APEC, ASEM, WTO…Now, Vietnam belongs to group of development
Economics with highest growth rate in the world. Vietnam is one of investment
places where global businessmen are very interested. Government gives many
polices to encourage and support Vietnam business in order to raise competition
ability, merger and development. Especially, Government encourages the group of

sectors have potential development and export such as branch of farming,
handicraft, maritime products, building material production…
Beside advantages of our country development trend and merger, Vietnam
Businesses have to face with difficulties because the change is faster and faster of
socio-economic environment, international competition, and global economic crisis.
Viglacera Thang Long is a company which produces and carries on business
building material. In the past time, beside big efforts to maintain and develop,
Viglacera Thang Long Ceramic tiles JSC also meet not few difficulties in global
finance – economic crisis from 2008 – 2009.
Proceeding from that practice, we can realize that planning for perfecting
business strategy with purpose using resources effectively to explore opportunities,
limit risk in present period and next years. With the reasons, the group of authors
chose theme: “ Completion of business strategy of Viglacera Thang Long ceramic
tiles Joint Stock Company in period of 2010- 20015” in order to make the theme
Capstone for both group and Viglacera Thang Long Ceramic tiles JSC.
3. Aim of research

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Basing on elementary theory about strategy management, through the results
from analyzing outside factors which influence to company, thanks to identify
opportunities, risk; combine to analyze actual situation inside factors company to
find strengths and weaknesses. The group of research hopes to give aim and
proposal strategy to develop business production so that more suitable for Viglacera
Thang Long Ceramic tile JSC in period of 2010 – 2015. Since setting up methods to
carry out strategy effectively.
4. Method of research
Basing on researching inside and outside environment which influence to
company, also assessing practical results of business production in period of 2006 –

2009, the group of research analyses present strategy and give a more suitable
strategy that base on perfecting strategy of Company in present period, When
international Economics has many complex changes, inside practice company also
has many difficulties.
5. Data resource of research
Using primary and ancillary data from reports which assess business
production of Viglacera Thang Long Ceramic tile JSC. Using secondary data of the
reports of Viglacera Corporation and It’s Branches, Sources Data from Vietnam
building ceramic association (VIBCA) and Ministry of Construction.
Using information from the internet, newspapers and other valuable resources.
6. Meaning of the Capstone
In the environment of integration economic at present market, the Vietnam
enterprises face many difficulties and challenges vital.
Building a strategy for each company to survive and develop is a practical
demands and inevitable.
Capstone “Completion business strategy of Viglacera ThangLong JSC in the
period from 2010-2015” is made on the basis of survey and assessment practices

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and by responsible persons will surely have practical and useful value for company
in the near future.
7. Structure of the Capstone.
The Captsone include The Introduction and three main chapters :
Chapter I:
The theoretical basis to etablish business strategy for the Company
Chapter II:
Analyze of the real situation and business strategies of Viglacera
Thanglong JSC in the period from 2006-2009.

Chapter III:
Completion Business strategies for Viglacera Thang long JSC in
period of 2010-2015.
- The conclusions - recommendations:
We have tried to do the best to complete this thesis but surely it can’t avoid
certain deficiencies cause the limit of time and scope.
So we look forward to receiving the comments of your sincere teachers and
students to perfecting this thesis, aims to help companies build the right strategy and
to operate effectively the business strategies in the next period.

CHAPTER I:

THE THEORETICAL BASIS TO ESTABLISH
BUSINESS STRATEGY FOR THE COMPANY
1.1. The nature of business strategy
1.1.1. The concept of the strategy

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Business strategy had been long time ago and has the meaning as “Science on
definition and management of corporate operations” (by Webster’s New World).
This term has resource from military. Day by day when economy has been
developed military term is used more in business.
We can introduce some of definitions of strategy as followings:
-

“Strategy is a long trend and a long scope of work of corporation in order to
seize competitive opportunity for corporation by determining its resources in
changeable environment in compliance with market demand and in

satisfaction of concerned parties’ hopes. ” (Johnson G. , Scholes K. , 1999,
Exploring Corporate Strategy. 5th Ed. Prentice Hall Europe)

-

“Strategy is one of complicated actions in order to mobilize corporate resources
to achieve a determined target” . (GaMBA, 2009, Text Book on business strategy,
Definition of strategy, Page 1).

-

“ Strategy is to determine long –term corporate targets , to select method or
plan of implementation and distribution resources necessary for achieving
that target”. (Harvard University definition)
There are a lot of such definitions because strategy has a large concept with

complicated meaning. However, strategy can be recognized by certifying its
character and by distinguishing strategy and tactics.
• By characters, strategy has 3 main following contents:
+ Long-term missions that company wishes to achieve.
+ Setting-up and selecting the solutions for achieving mission.
+ Implementing and distributing resources for mission achievement.
Corporate business strategy is master action program to focus on mission
achievement. Strategy

does not define exact method to achieve the mission,

because this is the target of other supplemented programs. Strategy makes only the
frame of guidance on mind and action for corporate management leaders.
• By level, in any business corporate, strategy has some different levels:,


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+ Corporate strategy : is at corporate level to focus on master mission with
whole corporate scope , satisfying expectations by owners of capital
contribution.
+ Business strategy: is in relation with how corporation can compete
successfully in the market.
+ Organization strategy: is strategy supported to corporate and business
strategy achieving the mission based on recourses, procedures, personnel and
other necessary skills.
+ World-wide strategy (international business) – is a selection, facing to
international business when corporate operates multiple business outside its
border.
In this capstone project it is used other concept “ strategic management”:
How strategy should be managed ? We would like to explain more in the Figure.1.1
as below :

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Determine Mission
and Vision

External Analysis
(Opportunities & Threats)

Internal Analysis
(Strengths & Weaknesses)


Determine the Main
Targets

Set-up strategy on
levels of
- Corporate leader
- Marketing network
- Government authority
- Global worldwide

Define and
Distribute
the sources

Implement
the strategy
on actual
business to
reach the
integration

Corporate
Structural
organization
& internal
control

Figures 1.1: Process of managing the strategy
1.1.2. The meaning of establish the business strategy

Setting up business strategy is one of the most important activities managed by the
corporate leaders. This gives to corporate the best benefits, such as:
- Define exactly the corporate mission in every business period; Support
-

corporate to have a future trend for achievement of targeted mission.
Help corporate leaders to see opportunities and challenges from outside, to
know the corporate strong & weak point , to forecast the changes in the

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future and to have possible solutions for competing and satisfying with new
-

business conditions.
Help corporate to control and use effectively all resources , to promote the

-

most of corporate abilities for development.
Help corporate to distribute reasonable resources in every period, to improve

-

corporate business result.
Improve the corporation and agreement between company leaders to get the

-


targeted mission.
Help corporation to increase human resource productivity, increase sales
revenue , improve corporate management, and minimize the risks and stop

difficulties may occur with corporation.
We can conclude that business strategy can help corporate leaders to define the
mission and vision also ability to set up stable competitive opportunity.
1.1.3. Process of establish the business strategy
Setting up business strategy is a procedure of business definition . It’s
summarized definition of business strategy as Figure 1.2 below :
Define the Strategy
Determine the functions and tasks
Evaluate external environment
Macro
Environmen
t

Industry
Environme
nt

Evaluate Internal environment
Analyze and choose the Strategy
Figures 1.2 : Procedures of determining strategy
* Definition of corporate tasks and functions
Firstly, this is to define corporate task and function , including mission and goal
Mission: define exactly corporate problems and show how to do
- Vision: it’s mission detailed by general goal , having trust on corporate future

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-

Strategic target: define the corporate tasks , and other goals that corporate hopes

to achieve in medium and long term plan.
Based on determining corporate mission, we should have overall general review of
concerned issues and separate them by group as mentioned in this below Figures :

Figures 1.3: Corporate and factors related

Econom
y
ScienceTechnol
ogy

Human
resoure

Manuf
acturin
g

Politica
l
Marke
ting

Corpor

ation

Natural
conditio
n

manage
ment

Culture
-Social
finacial

R&D
Interna
tional

Law
Populat
ion

Factors that can effect to corporate business are defined in two groups:
(i)environment outside corporation and (ii) environment inside corporation.
* Determination, Analysis of outside environment :
The second group of procedures of setting up business strategy is to analyze
environment outside corporation . The goal of this analysis is to certify opportunity
and risk from outside , including analysis of environment macro and micro and
industry environment in which the corporation has business.
* Determination, Analysis of inside environment:
The third group of procedures of setting up business strategy is to analyze

environment inside corporation in order to find strengths and weaknesses. We

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defines the method how the corporation can achieve competitive opportunity ,
certify ability of other power, other resource and capability of setting up and
maintain the competitive opportunity. It is requested corporation to achieve
successful result, quality, modernization and customer service.
* Analysis and selection of strategy:
Finally is to define some cases of strategy in compliance with corporate
strengths and weaknesses, opportunities and threats. This analysis is made by
SWOT method. Through SWOT, the corporation defines the strategy that can orient
, realize the nature of competitive opportunity to find out resource, ability and
power that can be the basis to develop the selected strategy.
1.2. Analyze the external environment of the company
Environment outside corporation is the factors outside corporation that
management officers cannot control , but they affect so much to goal achievement
by the corporation, and to corporate development and profitability. Analysis of
environment outside corporation includes analysis of environment macro and micro.
This analysis can help the corporation to define its position and age of its living,
form all effects by outside environment to the corporation and to conclude the
reasonable decision related to business strategy.
1.2.1 Analysis of macro environment
Any changes of macro environment can effect to any corporation of the
industry , can change power and industry challenge. Macro environment includes 6
economic sectors: economy, technology, culture-social, demography, political and
law.
* Economy environment
State of economy environment defines the healthy and prosperous of the

economy. It always effects to corporations and industries. Economy environment
certifies the nature and trend of the economy in which corporation involves. The
effects caused by economy environment can change profit and earning ability
operated by the corporation. 4 factors are important in macro economy: ratio of
economy development, foreign exchange rate, and interest and inflation rate.
- Economy decline often triggers price wars in saturated sectors such as ceramic
industry in Vietnam.

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-

Interest rate changes will impact business performance of companies, because

-

most companies in Vietnam bank loans at a high level.
Exchange rate fluctuations will impact business performance of companies

-

importing raw materials and export products.
High inflation is also a threat to the company, as market prices increase,

decrease business efficiency of the company.
* Science-technology environment
Changes of technology can affect many social sectors through its products,
including substance, activities related to creativeness of new knowledge, movement
of new knowledge to new products or new cycle or new material. The change of

technology environment can give to corporation opportunity and challenge;
Opportunity is to improve production of new competitive product; challenge is to
shorten the product life . The most important effect of technology is to the height of
import barrier and to reset industrial structure.
* Culture-social environment
This is included social manner and culture value; social change can set up
opportunity and challenge . The corporation that wishes to be alive forever with
time

and partners and wish to be recognized by social environment

should

appreciate business culture; that’s why it can lead some changes of technology,
political, law, economy and demography. Society culture In Viet Nam also set up
habit uses people's building material product kinds.
* Demography environment
This is related to population, age structure, geography distribution and
income distribution. Opinion of goods and service consume in different geography
area and point of view of consumes in different age or male/female or job can effect
to the market and to corporation business strategy. Living style can effect to goods
& service demand , including product grade, quality, and form . Population increase
can effect to the content of corporate business strategy.
* Political-legal environment
The change of political-legal environment

can

effect


deeply

to

implementation of corporate business strategy. In fact that a corporation, investing
in new area local or international should pay attention to political-legal environment

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of the invested area ,

its effect to local Government and

vise versa. When

analyzing this environment we should focus on : economy innovation,
administrative reform, changes related to the industry, tax regulations, safety and
environment protection, issuance and adjustment of regulations.
Nowadays, corporation should pay more attention to Government regulations
on using and protection of natural resources. Good environment protection is an
essential condition for stable development.
* International environment
Trend of worldwide integration asks corporation to consider international
effect if it defines a long-term business strategy with high integration and high trend
in political and geography. International market division includes : worldwide
related market, current market changeable, international political issues,
government and cultural basis on the world. Environmental integration affects
international export activities of companies in the ceramic industry in Vietnam.
1.2.2. Analysis the industry environment

An industry is group of companies or corporations, supplying products or services
that can replace by each other closely. The close replacement dedicates that
products or services satisfying customer requirement are the same.
Industry analysis and competition are a complete set of technical conception to
clarify the main content of:
+ Main industry economic particularity.
+ Competitive forces in the industry, nature and power of each force
+ Motive power causing the change of industry and its effective
+ Companies that have the most strong or weak position
+ Who can make the next movement of industry?
+ The main factors of success or fail in competition
+ Industry attractiveness of average profit recovery
Industry environment is impacted by the followings (The 5 competitive forces in
the industry Model by M. Porter):
(1) Risk of new company entering into it;
(2) Level of competition between the industrial companies;
(3) Power in negotiation with buyer;
(4) Power in negotiation with seller
(5) Risk of product replacement.

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M. Porter indicates that these forces are stronger, minimize its ability in price
increasing and high earnings. The task setting for corporate managers is to
recognize the opportunity and challenger , we can see the model as figure 1.4
below:
Threats of new
Entrants


Bargaining
power of
Supliers

Industry
Competitors

Bargaining
power of
Customers

Threat of
Substitutes

Figures 1.4: Model of 5 competitive forces by M. Porter
(Source: Le The Gioi, …, 2009, Strategic Management, Model of 5 competitive
forces by Mr. Porter, pg.106)
• Challenge of new company enters can represent in these facts:
In nature this force concludes the companies that have no competition in industry,
but they can enter in because they have implicit of competition, and industry
attractiveness and other entering barrier. Entering barrier is the most difficult for
other competitive corporations. Sponsor for competitive position of the company
includes the maintaining of legal barrier and the current opportunity of the
company. It consists of:
- Faithful to trade mark: it is a customer’s love of company current product.
- Absolute cost advantage: the best operation through experiences; control of
input, labor cost, material, equipment, management skill,…approach to capital
with low interest. When industry companies have absolute advantage the
threatening of current companies may decrease.


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-

Economical scale: effective for company with many experiences when scale

-

increases.
Cost of movement appears when customer changes his shopping from this

company to another.
- Government barrier regulations.
- Retaliatory measure of other industry companies.
- Becoming a member and other competitive barrier.
• Negotiation ability of supplier can have some features, such as:
Suppliers can be a warning force when they can increase input price or reduce
quality of product and service to be supplied and company profit can be decreased.
Level of effective depends on supplier’s focus, quantity of sold goods, and
difference between suppliers, effective of input to company cost or difference
between products, cost movement of industry companies, existence of replaceable
supplier, a merger of suppliers, supplying cost.
• Negotiation ability of customer can have such features:
Buyer as threatening when they ask lower price or better service. Level of
effective depends on: position in negotiation, quantity of buyers, information
that buyer can have, character of product trade mark, essential level to price,
product difference, existence of replaceable product, customer needs, ability of
buyer when he can use another supplier.
• Risk of replaceable product can have such futures:

Industry products to be supplied to the customers with the same product of
industry analyzing. Level effective depends on : cost of movement of product
using, trend of using replaceable product, relation between price and quality.
• Competitive intensive of industry can have such futures:
Competition in economical market , hard competition between companies causing
by position change of other company. Tools to be used in this competition are price,
quality, product difference, service, distribution, promotion, improvement and
satisfaction to customer needs. Level of effective depends on : industry structure,
need requirements, industry barrier, industry development, overload, product
difference, cost movement, character of trade mark, multiple suppliers, and industry
selection.
1.2.3. Analyze generally the internal environment

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Through analyzing the macro-environment and industry environment, we
find and give some general evaluations about external factor affecting to activities
of the enterprise in producing ceramic tiles. Analyzing and summarizing the factors
in the past and at current time can give future forecast ; it can help corporation to
define business strategy, fail risk and achieve the targeted mission.
Viglacera ThangLong Company should know competitor about: Who is
competitor? What is their corporate business ? What is their mission? What is their
strong and weak point? How is their action? We can review these information
whether they can support so much to corporation in definition of corporate business
strategy.
Basing on appraisal of opportunity and challenge, corporate business strategy
can be determined. Opportunity is conditions of the general environment where
company can have good opportunity if it knows and exploit well. Challenge is the
conditions of the general market that can block company to achieve competitive

opportunity.
1.3 Analyze the internal environment of the company
Inside environment consists of internal factors that company can control.
Analysis of environment inside corporate determines the strong and weak point of
the company ; this is support to definition of mission system and business strategy
to exploit maximum the strong and weak points . The main factors are corporate
value chain and internal corporate capability, such as: production, Marketing,
management activities, accounting-financial, research and development, system
recovering and resolving information.
1.3.1. Producing activities
Analysis of production operation is to review product manufacturing cycle in
compliance with corporate business policy or not and give comment for
improvement if necessary.

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-

Analysis of production capability: production capability is ability to produce the
products in compliance with technical norms regulated in that time. It can
present ability of production factors , such as equipment and technology.

-

Analysis of raw material, energy and spare part supply: this is to analyze mainly
quality, trust and prompt supply by supply sources.

-


Analysis of reasonable production : it’s mainly to analyze production
organization and operation manual, continuous and technical equipment ability
satisfied with product change.

-

Analysis of quality control: it’s mainly to analyze role of quality control system
and its efficiency.

1.3.2. Marketing activities
Marketing strategy is one of important part related to implementation of
corporate business strategy.
Marketing helps in set up value chain in corporate operation. Through
dedicating trade mark and advertisement, marketing functions can make added
value for customers. This activity can make a good impression for customer , so it
makes value added for them. Marketing and selling can make more added values if
they know well customers’ needs and inform to study and development activity to
produce the product that customer likes.
Role of customer service is to provide service or support after sales. It can
make good impression by customer after they bought product.
1.3.3. Managing activities
Corporate management activities are a set of activities supported to main
operation in corporate value chain.
*Infrastructure
This is to analyze reasonable investment of building factory, utility system,
infrastructure to ensure normal operation , equipment operation and product quality.
* Human resource management

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Corporate organization is a set of human resources. Reasonable organization
has united instruct, un-coincidence, conflict in instruct, chaos in informatics
system .Corporate operation is a living subject . Management leaders should
analyze its mission and results , compliance between responsibility and power,
relationship between corporation and departments,

functions of corporate

employees . Through this analysis, we can know problems to be resolved or
adjusted.
*Raw material management
This mission is material movement from buying to distribution. So , cost can
be minimizes and operation can be more effective. Using strict control of inventory
from store house to customer, company can reduce stocks on hand, minimize cost
and have added value.
* System recovering and resolving information
System recovering and resolving information is a group of technology staff
to recover and resolve information related to product, customer, product distribution
system, trade mark and logo, human resource management in order to provide
resolved information to corporate leaders, helping them to analyze and set –up
business strategy. This system is more important for company in current period.
* Corporate financial management
Financial resources are the most basic and the first for other resources .
Analysis of financial resources and appraisal of corporate financial potentiality are
the conditions for investment capital. This a basic factor for setting up feasible
business strategy.
1.3.4. Research and development (R&D.)
Research and development can make production more effectively, minimize
cost. R&D can improve product quality and make it more attractive to customer. At

the current time when technology has developed too fast, research and development
activities can support corporate to hold modern technology , applying in company
operation.
1.4. Analyze generally the internal environment through value chain

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1.4.1 Value Chain
Value chain is an idea that company is a chain of activities , changing from
inputs to value product for customer. Flowchart of changing from inputs to value
product for customer has a main activity and additional activities . Every activity
can increase value of product.
Infrastructure
Information system
Human resource
Support
Materials management
Researching and developing
activities
Buying and collecting
Major
Customer Marketing
External
Manufacture
Internal
activities
services
& selling
supply

supply
(Source: Le The Gioi, …, 2009, Strategic management, Value chain, pg.184)
Figures 1.5: Model of value chain of M.Porter
Value of corporation is equal volume that buyer can buy & pay for product.
Achieving competitive opportunity, company groups and departments should make
a value with lower cost compared competitor. Or another way, company groups
make product quite different from competitor’s product.
Value chain has main activity (organizational activity) and supporting activities.
The group that can produce product is production group. Group that implements
goods public relation, distribution and customer service is marketing group.
Supporting activities are: material and infrastructure , research and development.
Value chain can give us a general picture of company business to show the strong
and weak point .
Finally, after analyzing company internal factors we should remember that the
factors cannot dependent , but they have close relation.
1.4.2. Definition of stable competitive opportunity
Stable
competitive
opportunity

- Capability is quite better than competitor.
Long-term is competitive with stable competitor

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Most ability

When ability is better than competitor’s
It’s the most ability.


Basic ability

When basic ability makes a success,
-

Intangible a/s: trade mark, commercial
opportunity
- Tangible: assets, capital
Material base, human resource, financial

Ability
Resources

Figures 1.6: Procedures of identifying stable competitive opportunity
When satisfying 4/5 items mentioned below, most ability can be stable competitive
opportunity:
(1) Valuable,
(2) Rare,
(3) Costly to imitate,
(4) Distance is big enough,
(5) The same as successful factor
Internal Analysis a Company is to realize current and potential resources that can
make the competitive opportunity for the company (strong point); and recognize
difficulties for maintaining opportunity (weak point). Based on it we can select the
best business strategy that promote strong point and eliminate weak point.
1.5. Establish and choose the business strategy
1.5.1. Analyze SWOT matrix
SWOT is abbreviation of English words : Strengths; Weaknesses; Opportunities;
Threats. This is an effective tool for more understanding or making decision related

to corporate organization and business management . This model is that authors use
analysis tools and establish business strategies in Viglacera ThangLong Company.
SWOT analysis can be summarized as below:
Table 1.1 SWOT Analysis minimalist frameworks
Environment analysis

Internal

S
strength

External Environment
O - Opportunity
T - Threat
S-O: Deploy sthengths to S-T: Encourage strengths
exploy oppoturnity,

to neutranlize threats

define business policy
W-O: Exploit

W-T: Improve weakness

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Environment

W

opportunity to improve
weakness
weakness.

and prepare carefully to
overcome external
threats.

1.5.2. The basic business strategies in the practice
A company, focusing on market and customer is in the centre, can concentrate more
on customer development during defining business strategy .
(1) Customer needs , What they should be satisfied with;
(2) group of customers, Who will be satisfied;
(3) other special ability, How customer’s need can be satisfied.
This is the main issue for selecting corporate business strategy, because it is basis
for definition of business opportunity and of competitive method .
* Customer’s needs and multiple differences of products.
Customer’s need is wish or requirement to be satisfied by product character
or by service. The difference of product can make a competitive opportunity by
product design or service that can satisfy customer’s needs. The product difference
of this company in comparison with other companies can make a basis of company
competitive opportunity.
Company that do not select or cannot define by the product difference, will
have low selling price and this price is indentified that company’s product. Other
company tries to make special type of its product in order to satisfy customer’s
needs .
* Group of customers and market definition
Market definition is considered as method used by company to select group of
customer basing on the difference of their needs or habit , then to achieve
competitive opportunity. Reasonable business strategy can be defined based on it.

Generally, there are 3 different strategies of market definition.
-

Firstly, market is considered with high identity and application of this
strategy is for all the markets. This applied strategy is high cost strategy.

21


-

Secondly, market can divide into some different parts (“market area” or
“market sector”) and product should be developed in accordance with
that area or sector. Strategy applied for market sector is strategy focusing
on product difference.

-

Thirdly, even market has many sectors, but service is for some only. This
strategy applied for market sector is policy focusing on important issue.

Product supply is decided for many market parts, so company can satisfy better
service. Although, customer’s needs of all company products is increased and sales
revenue is more bigger , that’s better if company can supply only one product .But
industry nature or product character do not allow big difference. In case, if there is a
little of opportunities for product difference and market sector , so there is a few
opportunity of service for customer and group of customers. Instead of it, price is
used by customer to recognize product and competitive opportunity is belong to the
company that can supply product with low price.
*Decision of special ability

The third issue of corporate business strategy is to pursue indentified special
ability in order to satisfy consumer needs and market sector. Indentified special
ability is company facility that it can use well to satisfy consumer needs of customer
group .
Every company defines its position in the industry by its current
opportunities. Michael Porter said that company opportunity is clarified in 2 issues:
cost opportunity and product difference. Applying this opportunity, company
pursues 3 policies: top of cost minimize, product difference and concentration. They
are called master strategy because they do not depend on any company or any
industry. We can explain more about M. Porter’s strategy as below:
Table 1.2: General Strategies of M.Porter

Broad market
Scope

Competitive Advantage
Low cost
Uniqueness
Cost Leadership
Products Diffirentiation
Strategy
Strategy

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of
Narrow market
Focusing Strategic
Focusing strategy

activity
(Cost Leadership)
(product differentiation)
(Source: Nguyen Thanh Thao, “Trade mark strategy by Michael Porter’s theory)
a, Cost Leadership strategy
* Identities:
Company goal of low cost strategy is better operation (better opportunity)
than other competitor , so that company tries the best to have low price product or
service.
This strategy has 2 basic opportunities. At first, with lower cost the company
can give lower price comparing with other company, but they can get profit the
same as other competitor’s.. Secondly, if industry competition is increased and
companies compete by lower cost, so the company with lowest cost can stay and
develop than other company.
* Strategy on solution:
Low cost companies select the product difference . They ignore marker
sectors. They often pay attention to the global market generally; in fact they can
give lower price comparing with other company to attract customer to their product.
Developing special ability, an important mission for lower cost company is
to develop all available abilities for increasing efficiency and minimizing cost.
Lower cost company make all selections of product or market or special
ability to have an unique mission of cost minimum to set up an competitive
opportunity.
All solutions , helping the company to achieve lower cost opportunity will
change or adjust according to every industry and industry structure. It’s from large
scale of product manufacturing, product factors, service quality and technical cycle.
* Opportunity and threat when using lower cost strategy
Oppoturnity of every basic strategy can describe well in model of 5 forces
by Porter. 5 forces include threat from competitor, powerful buyer, replaceable
products and new comer into industry. Lower cost company can attack industry

competitor by its lower cost opportunity. Lower cost product can minimize affective

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of high price input from powerful supplier and of lower price product from
powerful buyer.
If replaceable product is entered into market , the lower cost company can
reduce product price in comparison with new entering product and can maintain its
market share.
Finally, opportunity of lower coat company is to make a barrier for new
comer because other company cannot enter into industry , or to set up cost and price
reasonable with the best lower cost company. Lower cost company can be safety if
it can maintain its opportunity of lower cost and product price lower for customer.
Threat of lower cost policy can be in ability of other competitors who try to
manufacture its product with lower cost and that competitor can attack the lower
cost company by its strong point of lower cost. Ability of fact copy by competitor is
a big threat to lower cost company.
Finally, lower cost policy can make a risk for lower cost company that they
think only about reduce cost , do not see changes of consumer taste. So that
company can focus too much on investment or improvement internally and do not
reinforce its market.
Willing of lower cost policy does not ignore ability of specialization. The
important that company product should be accepted by customer when they
compare it with the same product. So that, lower cost can be competitive if
company ensures a quite difference of its product

that can make clear

reorganization accepted by customer.

In the ceramic industry, the investment company recently completed a large
capacity can lead to pursue strategic cost advantage due to scale. But the fact also
that the company has little strategic interest in quality to low trade mark position.
b, Product Diffirentiation Strategy.
* Particulars:
Particulars of difference strategy are to achieve competitive opportunity by
manufacturing product or service that customer can recognize the best .

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Ability of company who has policy of product difference that competitor cannot
hold can allow them to give product price higher than average industry price .
Opportunity of sales revenue increasing by high price (not by lower cost input)
allows lower cost company to operate better its business and get profit higher than
average industry profit , and customer can pay with such price because they believe
product quality is different and the difference already in this price.
* Solutions of strategy
Product difference company can select high difference product to achieve
competition. Product difference can achieve by three ways: quality, renovation and
satisfaction by customer. The renovation is very important for product with high
technology , and new particular is base for difference. When difference is based on
level of satisfaction by customer , manufacturer and seller should ensure to provide
a good service after sales.
Product challenge for customer hope can be a base of difference. The
challenge can be a factor related to position or pride of customer. Product difference
can be suitable with age group and social-economic group.
Company with product difference policy can divide market into some parts.
Product supply department designs product specialized for every market part.
Company can decide business in a large market , but they can serve for some

market part only where they have difference opportunity.
After decision of product difference policy , company should focus on
corporate organization and product supply to set up competitive difference for its
product.
Product difference policy requires company to set up competitive
opportunity by selection of product/market/specialized ability to make added value
for its product or service recognized by customer.
However, company with product difference policy should focus on
communication or public relation activity to supply information on unique and
different character of its product in comparison with other companies.

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