EXECUTIVE SUMMARY

The report aims to identify Rang Dong Joint Stock Company’s strategy

management as a whole. In order to fulfill the aims websites, annual reports and reports

of industrial analysis are used.

The report contains five main parts. Firstly, context of business strategies is

mentioned in order to help readers understand generally about business activities.

Secondly, key stakeholders of Rang Dong are identified and analyzed. Lastly, strategic

plans for Rang Dong are carried out basing on analysis external environment and

organization audit of Rang Dong and strategic position of Rang Dong by using

techniques such as TWOS, SPACE matrix.

Although the report deals with some limitations such as time, resources however

it still be tried to drawn out optimal strategies to Rang Dong, JSC.

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INTRODUCTION

At present, Vietnam’s economy is developing significantly and it will obtain high

growth the rate in the forthcoming time. According to some statistics, Vietnam has 100

million bulbs are in used for lighting; 80 million bulbs are sued in households, 20

million used in offices, factories, restaurant, hotels. Therefore, this is a good

opportunities for companies including Rang Dong to expand business.

Rang Dong JSC is one of Vietnam's thirteen first factories, established by the

Vietnam Government, laying the foundation of Vietnam industry after the end of the

war (1946-1954). Throughout more than 50 years, Rang Dong has developed

unceasingly with distribution system covers throughout the country, including 5

representative offices, 6 branches in the central and South Vietnam, 1 Centre for

Consultation on Lighting and Energy saving, with 6,000 shops. This report is made to

indentify Rang Dong JSC operation and give some statistic strategy for expanding

markets. It includes five main parts:

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

The second part shows vision and mission of Rang Dong Company, its

corporation structure as well as the identification of key stakeholders of Rang Dong JSC

and the explanation of conducting a stakeholder analysis

The third past will conduct an external environment and organization audit of

Rang Dong including SWOT analysis, PESTEL, Porter’s 5 Forces.

The fourth part will analyze the strategic position of Rang Dong using TWOS

matrix, SPACE.

The fifth part will show a specific strategy for Rang Dong in recent years based

on the analysis in previous parts.

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

“Strategy sprung from the need for people to defeat their enemies”. In 400 B.C,

Sun Tzu’s The art of War was the fist public treatises of narrative strategies which had

brought many victory for China during the war. Even until now, The Art of War has

been handed down and used by many famous strategists, economists, politicians,

presidents, commanders all over the world. In the modern world, many companies

utilize strategy in term of marketing, price strategy and the like with the aim of

achieving their objectives. It can be said that strategy is what somehow helps the users

get their objectives effectively and efficiently.

In the business world, where the competitive environment becomes more and

more intensive, the existing of prudent strategies is the survival way of organizations to

compete with their competitors. “Business strategy” is the familiar term for those who

join in business world and is defined as “the art and science of formulating,

implementing, and evaluating cross-functional decision that enables an organization to

achieve its objectives” (David, F.R, 1997). Under this point of view, the business

strategy is an action plan that the organization develops to describe how it will compete

in its chosen industry or market segment. Because business strategy is an art, each

businesspeople has their own sense and taste to feel, for this reason; it leads to different

business strategies and distinctive successes.

Business strategy is built up because of four major purposes, including: build

profit, cash flow growth, shareholder value and gain reputation. Generally, an

organization should identify its objectives before setting business strategy because the

main function of business strategy is to get the goal of that organization. In addition,

when organization builds a business strategy, it means that the organization should

develop its mission, identify its internal opportunities and threat, determine internal

strengths and weaknesses, set up clearer objectives and achieve them.

A business strategy has gone through three main steps, those are formulating,

implementing and evaluating. In formulation process, the company has to propose

specific strategies used in certain period by establishing policies, creating effective

structure to be able to allocate scarce resources and motivating the employee’s working

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attitude so that “formulated strategies can be executed” (David. F, 1999). In process of

implementing business that under business strategy, it requires the organization has to

decide what business to enter and abandon, how to allocate resources, and whether to

expand operations or diversify. In third action, reviewing or revaluating business

strategy through the results collected helps to identify whether the business strategy was

working. Basing on that, a company will respond to the situation by improving or

developing its strategies to get the desire objectives.

Business strategy is not only concerned by the company’s manager but also

shareholders, creditors and so on. Relying on the business strategy and the analysis of

relevant resources, the shareholders and creditor will be able to identify whether the

company enables to achieve its objectives and then to make the decision. For this

reason, business strategy becomes a crucial factor of every business.

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

Joint Stock Exchange

II.1. Organizational Structure

Based on the graphic below, at present, it is believed that Rang Dong Lighting

Resources and Vacuum Flasks JSC’s structure is organized orderly. All company

activities have been obeyed business law and other relevant laws of Vietnam as well as

the company’s regulations.

- General Director Assistants has the responsibility in dealing with relevant

authorities about licenses and permits for new activities and assisting the

General Director.

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

- Warehouse management office is responsible for materials management,

inventory management

- Quality control office has the responsibility in checking the quality of inputs

materials, outputs products in all production stages and solving problems

related.

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- Market Research development office is responsible for doing relevant research,

market survey, developing marketing strategies, implementing sales, using

product demonstrations to promote and expand markets.

- Technology office’s main jobs are to doing strategic planning in science and

technology development for Rang Dong and applying new technology,

upgrading and replacing equipment.

- Accounting and finance office’s responsibilities are to take care of the

administration and accounting of the company and its related entities.

- Branches have responsibilities in doing Rang Dong business in different

regional market.

- Representative offices are responsible for supervising the company’s

consumption, market development, promotion and exhibition of Rang Dong

products in different areas

- Lighting consulting service has the responsibility for providing service directly,

design as well as installing lighting equipment reasonably.

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

working environment

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

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II.2.Vision and Mission of Rang Dong JSC

Vision statements are seen as documents that set out the strategic intention of the

organization (BPP, 2004). Rang Dong vision in recent years is: ‘Rang Dong JSC always

strives to be the local leading manufacturer of light sources and lighting equipments.’

Like many other vision statements, it could be seen that this vision is a sort of super-

objective; it provides continuous inspiration towards Rang Dong’s desired future. It is

connected with the corporation mission for the growth of Rang Dong JSC as a whole.

As the vision being the local leading manufacturer, it is believed that Rang Dong

Company understands what their stakeholders need to know that the company stands for

and why they should give their loyalty.

Mission describes the organization’s basic function in society, in terms of the

products and services it produces for its clients (BPP, p. 27). According to Rang Dong

JSC main website (2010) Rang Dong’s mission is that ‘: Rang Dong JSC is committed

to offer diversified products with high quality and effective lighting solutions for the

people livings and the society.’

Like most of mission statements’ content, on Rang Dong’s mission statement, the

nature of the firm’s business which is lighting solution is identified along with its most

important stakeholders: customers. It includes the way in which Rang Dong Company

competes with strong competitors in current market (by offering diversified products

with high quality) and the commitment to people and the society.

This mission clear indentify corporation image that Rang Dong Company want to

achieve and connect strongly with its business strategy. It is believed that this mission is

easy to understand, flexible. Moreover, it would make the firm stand out in such

competitive environment after WTO accession. At present, Rangdong is the biggest

company specializing in producing light source and vacuum flask in Vietnam with over

40 years of experience. Rang Dong’s products were selected consecutively several years

as top ten, and high quality pricducts by consumers in Vietnam. Moreover, the company

also has gained an ISO 9001:2000 quality management systems. Therefore, this mission

is reliable in the case of Rang Dong Company.

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III.Stakeholders Analysis

Thompson- an experienced project manager stated that “Stakeholder analysis is

essential to the success of every company’s project, by identifying their real wants and

needs, and then engaging the right people in the right way; the company can make a big

difference to its success” (mindtool, n. d). When having identified people who have the

most power, interests and influence over the organization, it would be more convenient

to analyze their requirements and then find ways to satisfy them. By doing that, the

company finds the supporters and motivation factors that positively affect the

company’s projects.

In addition, gaining key stakeholder’s support benefits the company in terms of

useful resources like information, financial supports and new ideas and so on. In other

words, basing on their interests and demands, the company can shape the project

properly.

There are three main groups of stakeholders, including internal stakeholders,

connected stakeholders, and external stakeholders. The table below illustrates more

details on who are in these groups.

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

shape the company’s objectives.

III.1.Internal stakeholders

Employees play an important role in an organization, especially when it is a

manufacturing company like Rang Dong Light Source and Vacuum Flask Joint Stock

Company. The reason is that they directly influence on production activities of the

organization. For this reason, seeking ways to motivate their willing to work and create

is optimal rather than essential.

On the side of employees, working in a state-owned organization has both

advantages and disadvantages. The advantage is the job security and stable salary.

However, the disadvantages are old-fashionable mechanism, hierarchy in management

and poor skill development opportunities that might limit the personal development of

employees. Having observed the situation along with the privatization in Vietnam, Rang

Dong-stated-own organization has looked for ways to improve the working quality as

well as satisfaction of employees.

Maslow’s hierachy of needs

Maslow’s hierarchy of needs is applied to estimate the satisfaction level as well as

the wants and needs of worker in Rang Dong Company. With a stable salary, the

employees are satisfied with two first needs, which are physiological and safety. In

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addition, Rang Dong concentrates on the safety of employees by upgrading working

environment, checking and maintaining machines regularly in factories.

Employees find themselves as a part of Rang Dong family when colleagues take

care of each other. In holidays and occasion, such as Tet Holiday, Vietnamese Women

Day and International Labor Day, managers and every employee gather and share

happiness. In 2009, Rang Dong employees took place “Tet holiday in every employee’s

heart”, staffs in the company came to each households and send heartfelt Happy New

Years’ greetings. Through those informal meeting, all employees can find place where

they not only work in but also find a second family.

In order to motivate the working attitude and creativity of employees, Rang Dong

annually takes place competition among staff members. Through those competitions

like “Hội thao diễn kỹ thuật-Bình chọn lao động giỏi”, the efforts in working of

employees are recognized and rewarded. By doing this, the manager observes the self-

esteem needs of employees and motivates them effectively. The company should uphold

competitions to improve the working creativity of employee to a higher level.

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

However, Rang Dong manager should pay attention to the wants and needs of

employees towards improving their working skills or in other words, it is the self-

actualization of staff members. In fact, many companies view training and development

programs for employees as an investment. Rang Dong should send employees to

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training program to improve production quality, along with making opportunities for

them to learn from seniors. By doing that, the company takes an important and effective

step in improving working quality and exploiting potentials from employees.

III.2. Connected stakeholders

Among shareholders, customers, competitors and suppliers, the influential power

of shareholders and customer are the most important to the company.

The customers care about the quality of products manufactured by Rang Dong.

According to the modern definition of Marketing, knowing the requirement of customer

is the key success for the organization. Therefore, identify and forecast the wants and

needs of customers timely and correctly can give the company a great hint in producing.

When applied the theory to Rang Dong, it cancels the old-fashionable producing

conception that only focuses on producing what the company can rather than what

customers really need.

Annual meeting with customers and distributors

Annually, the company takes place meetings with close customers and

distributors, the first and foremost reason is to communicate and to find a valid

connection with customers. From that, the company catches and identifies the consumer

trends in order to produce leading product lines in the market. During 2002-2009, with

the goal “High quality, high productivity-Electricity saving and environment

protection”, Rang Dong has obtained the beliefs and supports from domestic customers.

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

prudent way to develop for any organization.

III.3. External stakeholders

External stakeholders conclude central government, local authority and charities

and so on. With the capital reaches 50% of total capital of Rang Dong JSC, besides the

authority to create policies influence directly on the company, central government is the

most important stakeholder among external stakeholders of Rang Dong Company.

Besides paying attention to the revenue generation and taxation of Rang Dong

JSC, the government also cares about how and what the company can contribute to the

society in term of supporting charity fund and reducing unemployment rate of the

nation. Rang Dong is one of organizations which actively participate in social activities.

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

In 2010, Rang Dong’s directors and employees contributed 50 million VND to

Fund to Poor and another 50 million VND with 2500 flasks for people who were facing

flood in Nghe An and Ha Tinh province. Social activities of Rang Dong are practical

and effective to society and these leave a positive image of the organization in people’s

heart.

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IV. PESTEL ANALYSIS FOR RANG DONG COMPANY

PESTEL is the effective and efficient method to analyze the impact of macro-

environment on the business. Basing on the analysis, the company’s manager and

business planners can recognize influential factors on the company from outside

PESTEL is short for Political factors, Economic factors, Social factors, Technological

factors, Environmental factors and Legal factors.

IV.1. Political/Legal factors

In Vietnam, the “Electricity Savings campaign” supports Rang Dong to

participate in producing and developing energy saving devices. Besides, the competitive

environment among electricity devices manufacturers to pursuit the campaign is another

factor to motivate Rang Dong.

Besides, with the focus on domestic market, along with the “Vietnamese people

prioritize using Vietnamese products”, that is the opportunity for domestic company

like Rang Dong JSC to develop its production and distribution in the domestic market.

However, with the presentation of imported products and the sophisticated requirements

of customers, there are more challenges for Vietnamese companies to improve the

quality of products, adjust the price to compete for those domestic customers.

In 2006, when Vietnam officially joined in World Trade Organization, this has

opened many chances and even challenges for Vietnamese manufacturers in terms of

quality standard and quality checking. This event is also the base for foreign

competitors to reach the Vietnamese market which is a fertilizing land. Becoming a

member in WTO, besides challenges, there are also many opportunities for Vietnamese

manufacturers like Rang Dong to innovate production and management performance.

The adaption to global production standard, to management and technology is the

leverage for domestic companies to deal with problems existed. Besides, it shows

Vietnamese companies a new view of domestic market which had not been recognized

correctly.

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The Vietnamese government has policies to support Vietnamese manufacturers by

reducing the tariffs, quota for importation and exportation. This encourages

manufacturers to expand the production and distribution. The reduction in importation

products benefits the company to import materials from foreign suppliers, however

opens a new door for foreign products to enter in Vietnamese market. To deal with the

situation, domestic manufacturers should be aware of quality and price of their products

to compete in the fierce market.

IV.2. Economic factors

Updating economic information is essential for every company because the

economic health of a nation reflects the trend in consumption, resources of investment

and even tangible and intangible problems influence the production activities of an

organization.

GDP or Gross Domestic Product is the base to measure the production in a nation;

it also reflects the health of economy. The chart below illustrates the GDP of Vietnam

from 2003-2010.

The real GDP growth of Vietnam during 2003-2010

Source: http://www.indexmundi.com/vietnam/gdp_real_growth_rate.html

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Vietnam has possessed a positive GDP rates during years. This reflects the growth

of production of Vietnamese companies. And somehow, it shows the consumption

power of domestic customers and exportation activities of Vietnamese manufacturers.

Joining in stock exchange is the positive turning-point for the domestic

companies, especially for state-owned companies in terms of appealing investments,

innovating the production activities and management system, such as updating

technology to production.

Besides, becoming a member of WTO is the chance for businesses to expand the

market share in domestic and even foreign markets; and improve the production

performance. However, this caused the negative influence on Vietnam in term of

economic crisis in 2007-2010. During recession period, businesses have not only faced

failure in exported market, the increase of materials prices but also in barrier of

financial support. Besides, the consumption power has the trend of decrease in the

economic crisis is another difficulty for Vietnamese manufacturers.

IV.3. Social factors

Vietnam is a large and population nation. With the total population in 2009 was

about 86 million (na. gov, 2009), this point out a potential consumption in domestic

market. Besides, the development in construction as well as the great demands of

Vietnamese people for housing open a great opportunities for consuming power of

household products, especially energy saving devices. These are chance for

manufacturing companies in Vietnam to push their business forward and focus on truly

wants and needs of targeted customers, for instance Vietnamese people prefer electricity

saving products.

IV.4. Technological factors

When adapted technological progress in producing and management process,

Vietnamese manufacturers find ways to improve the quality of products and

productivity. This helps domestic manufacturers to meet various demands of customers

as well as compete with foreign competition in term of global quality standard. If in the

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past, Companies like Rang Dong just only focuses on few product lines, since then

applying high-level equipments to production, the product lines of the company have

increased to above 10.

IV.5. Environmental factors

It should be concerned about the competitive environment in the electricity

devices market since it becomes more and more fierce with the presentation of foreign

products, especially Chinese manufacturers which attack Vietnamese market with low

price and modern design electrical products. Besides, Vietnamese consumers prefer

using imported products from famous brand, such as Phillips, GE, MEGAMAN and so

on. Competitive environment among domestic and foreign manufactures and the

sophisticated requirements of consumers creates more and more challenges. However,

they would become opportunities for the business to show its strengths if the company

knows how to turn difficulties to leverage of development.

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Threat of new entry: high

- Barrier to entry: high

- Requirement:

+ Large capital à high risk

+ Experiences and trainings about lighting technology

+ Technology protection

+ Strong distribution channels

Competitive rivalry: High

- Many competitors such as Philips, GE,

OSRAM, MEGAMAN, Đại Quang, Điện

Quang, etc.

- High customer loyalty

- High costs of leaving market

- Competitive products made in China imported

illegally with very cheap price

Supplier power: neutral

- Raw materials include: gas, oil plastic, steel, chemical, sand,

glass powder, etc. à Number of suppliers: large.

- Raw material costs are affected strongly by the fluctuation in

world price of resources

Threat of substitution:

- Low for light sources

+ There are not many substitutes for the products developed.

+ Substitution products: charging lights

- Neutral for Vacuum flasks

+ Substitute products are electric kettles or tea kettles which function as

both a kettle and a teapot in city markets

Buyer power: high

- Buyers are both individuals, retailers and

wholesalers come from Vietnam, India, Korea,

Egypt, etc.

- Most of requests come from retailers and

wholesalers in large order.

- Price sensibility because of strong

competitive rivalry

V.

PORTER’S FIVE

FORCES ANALYSIS

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V.1.Threat of new entry

It is believed that the lighting resources and vacuum flasks industry require a large

financial investment before a new business can start to build factories and contact with

suppliers for raw materials, etc. Therefore, some potential competitors would not be

able to raise the funds and others will not be prepared to risk so much on a new venture

which may not succeed.

Existing manufacturers such as Rang Dong JSC, Dien Quang or Philips may have

cost advantage from large economic of scale, from the experience curve or from long

term supply contracts at very good prices. Large economies of scale from existing

technology create very powerful barriers to entry for any new business competing in a

new market. At present, some exist companies have strong distribution channels like

Rang Dong JSC (having 5000 stores on 64 provinces of Vietnam), that fact makes them

come close to customers; therefore, it will become a big threat for new company to enter

this market.

Brand names also play an important part in lighting resources and vacuum flasks

industry. As the results, a new competitor would have major problem becoming known

and accepted unless it is prepared to invest heavily in sustained advertising or buy

market share at low price. New company may have to deal with difficult legislation

issues and even legislation that does not affect incumbents. All of this information

above shows that the barrier of entry of lighting resources and vacuum flasks industry is

high. So it will become an advantage for existing manufacturer including Rang Dong

Company.

V.2. Supplier power

As a producing industry, raw materials, labor, components and other suppliers are

required in lighting resources and vacuum flasks industry. This requirement leads to

buyer-supplier relationships between the industry and the firms that provide it the raw

materials used to create products. There are many suppliers that provide gas, oil plastic,

steel, chemical, sand, glass powder, etc exist in the market, and those products are also

standardized. However, in the market, some of the raw materials such as gas, oil,

plastics are not able to be produced in Vietnam; so they must be imported from other

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

fluctuation in world price of resources. So the supplier power of lighting resources and

vacuum flasks industry is neutral.

V.3. Threat of substitution

There are not many substitutions for lighting equipments and lamps products

developed. So the threat of substitution for those products is low. The strongest

substitutions are charging lighting products. At present, there are many different types

of charging lights in the market; some of them could be used for 4-5 hours continuously

without being charged or combine with a fan, etc. In Vietnam, there are regular power

cuts especially in the summer as more people try to use the electricity than there is to go

around. However, the limitation of charging time still makes the lamps gain strong

competitive advantage comparing with charging lights.

Main substitutions for vacuum flasks are kettles. At present, there are many types

of kettles in Vietnam market. Some of them not only have reasonable prices but also

have function of both kettles and teapot; they also could boil water fast and keep the

degree of heat due to new technology. Those products have become a big threat for

vacuum flasks made by Rang Dong JSC and other manufacturers in city market

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V.4. Buyer Power

The power of buyers is the impact that customers have on a producing industry. In

lighting resources and vacuum flasks industry, buyers of the manufacturers such as

Rang Dong, Dien Quang, or Philips are individuals, retailers and wholesalers and

distributors from Vietnam, India, Korea, Egypt, etc. However, most of the requests

come from retailers and wholesalers in large order therefore they could affect the

product prices. Moreover, because of strong competitive rivalry from existing

competitors like Dien Quang, OSRAM, MEGAMAN, and especially from products

made in China imported illegally with very cheap price, the product prices are sensible

in the case of lighting resources and vacuum flasks industry. It is believed that the buyer

power is high in this industry.

V.5. Competitive rivalry

In lighting sources and vacuum flasks industry, there are a large number of firms

existing in the market such as Philips, GE, OSRAM, MEGAMAN, Dai Quang, Dien

Quang, etc. Moreover, products which made in China imported illegally with very

cheap price have become big threat for all manufacturers in current market. It would

increase rivalry because more firms must compete for the same customers and

resources. The plant and equipment required for manufacturing a product is highly

specialized, these assets cannot easily be sold to other buyers in another industry.

However, high exit barriers in this case cause a firm to remain in an industry, even when

the venture is not profitable. High level of customer loyalty is required to endure the

high level of competitive rivalry.

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VI. SWOT analysis

Strengths

1. Stable Finance

2. Good Reputation

3. High Quality

4. Strong Distribution System

5. High – Experienced Broad of Directors

Weaknesses

1. Lack of management staffs; expert and

skill of management staff are not equal

2. High operating expenses

3. Have to import many raw materials

Opportunities

1. Government’s priority is for industry

that relates to light sources

2. Potential markets: India, Sri Lanka,

Egypt, South Korea, etc.

3. Vietnam joints many trading and

commercial organizations in the world:

WTO, AFTA. Etc.

4. Demands for using lighting equipments

are increasing

Threats

1. Economic regression

- Increasing raw materials price

- Change exchange rate of currency

→increasing financial expenses

2. Numerous competitors:

- Dien Quang, Dai Quang, Philips,

GE, OSRAM, MEGAMAN, etc,

China’s products

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Strengths

S1: Stable finance

According to Huỳnh Tuần Khánh (2009):

2007 2008 2009

Assets structure

Account receivable / total assets 31.3% 21.1% 17.7%

Inventory/Total assets 28.2% 49.7% 49.0%

Fixed assets/total assets 18.6% 22.9% 25.6%

Resources structure

Total liability/total assets 51.5% 53.4% 53.5%

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

The table above shows that, Rang Dong JSC has a stable finance that could

endure the fluctuation of world economy in recent years. It could be seen clearly that

currents assets has the higher percentage in total assets compared with long-term assets

from 2007-2009. So it will be easy for paying current debt and doing business. In total

resources, the liability has about 50% percentage of total resources; the debt is still

under of control and with high current assets / total asset percentage, the company may

pay all the debt if it is necessary. According to table 1, there is not any dramatically

change in Rang Dong’s financial structure in 2007, 2008, 2009. This stable finance

would make Rang Dong stakeholders feel secure and continue to invest or buy Rang

Dong shares.

S2: Good reputation

The business has built steady brand on the market. Rang Dong was founded in

1958. So, the brand appeared a long time on the market so it is known by many people.

The company has existed to at this time, this thing showed that products of the business

is believed and used by many customers. Steady brand helps Rang Dong have many

opportunities for market expansion and product development.

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According to Huỳnh Tuần Khánh (2009) pointed that presently, Rang Dong has

remained 80% market share about vacuum flask and 25% market share about light

source equipment in Vietnam. 80% market share about vacuum flask shows that Rang

Dong’s reputation is at high rate in Vietnam lighting resources and vacuum market

although there are also many brands that manufacture light source equipment. This

strength would help the company develop new products and expand the business to

maintain the current market share.

S3: High quality products

Besides, products of Rang Dong have achieved high quality. The strength is

necessary to remain for all of products. The products have high quality because the

business applied quality management system that bases on 9001: 2008 ISO standard,

formed from 9001: 2000 ISO standard. Rang Dong’s main website (2010) pointed that

Rang Dong has gained many certificate and award including ‘Top ten of high-quality

Vietnam products’, Certificate in System of Quality Management ISO 9001:2008. In

2010, the company received the Golden Cup of “Prestigious Securities Brand-name”;

Rang Dong products also are in list of “National 20 famous brand-name 2010”. As a

result, customers believed and come from Rang Dong’s products because of high

quality of products.

S4: Strong distribution systems

According to Rang Dong’s main web site (2010) at present, Rang Dong

distribution system covers throughout the country, including 5 representative offices, 6

branches in the central and South Vietnam, 1 Centre for Consultation on Lighting and

Energy saving, with 6,000 shops. This is advantage condition for Rang Dong because

the business is known by many customers on the whole country. Likewise, Rang Dong

will be easier to introduce or launch products to all of customers. This thing ensures

that the brand can lie in customers’ choices. As a result, if business operation is

successful, it brings to high profit for the business.

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S5: High-experienced board of directors

Rang Dong has broad of directors, CEO who have many experiences in the

industry. Almost members of broad of directors achieved high qualification that relates

directly to the industry and many experiences are a close- knit with Rang Dong. This

thing helps broad of directors understand clearly about the business and their business

operation so they will be easier to give strategies and plans for the business’s

development.

Weaknesses

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

The business has also existed some of weaknesses that impacted to their

business operation. The first weakness is about management staffs. Presently, the

business has more and more developed and has many activities for expanding markets.

So there are many new management positions that are required. Hence, it is necessary to

have good management staffs and is suitable to the business’s development. However,

in reality, there is a lack in gathering management staffs with required skills and

knowledge. Besides, expert level and management skill of managers are not equal.

Consequently, management of the business has sometimes some of problems, for

instance, work effect of some groups are better other groups by different management

way.

W2: High operating expenses

Operating expenses of the business are high in recent time according to Rang

Dong Annual report 2009. This thing has impacted significantly to business operation’s

results of Rang Dong. According to Rang Dong’s annual report (2008) pointed that in

2008 original budget for selling costs was 46,833 billion VND and administration costs

was 21,866 billion VND however actual costs of business operation in 2008 was 83,528

billion VND for selling costs and 29,054 billion VND for administration costs. As a

result, selling and administration costs increased significantly. Plus, Huỳnh Tuần

Khánh’s study (2009) showed that revenue of the first six months of 2009 has only

24

achieved 8.8% while the figure was 12% in 2008. As the result, the total profit of Rang

Dong can be decreased strongly.

Original Budget2008

Actual Cost

2008

Operating expenses Billion VND 99,418 168,179

Selling expenses Billion VND 46,833 83,528

Administrative expenses Billion VND 21,866 29,054

Financial expenses Billion VND 30,719 55,597

Table 2: Operating expenses of Rang Dong in 2008

Source: Rang Dong’s annual report (2008)

W3: Having to import many raw materials

In the market, some of the raw materials such as gas, oil, plastics are not able to

be produced in Vietnam; so they must be imported from other country. As the results,

they have unstable prices and are affected strongly by the fluctuation in world price of

resources. For this reason, unit price of products can be increased. The company needs

to control the problem because if unit price of product is high, product will met

difficulties for consuming.

Opportunities

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

According to urban lighting development in Vietnam by 2015 1874/QĐ-TTg

(Government Web Portal, 2010), Vietnam government will use issuance mechanisms,

incentive policies to encourage organizations and foreign individuals involved in setting

up a system of urban public lighting, using new energy in urban lighting, using

advanced technology to produce products with high efficiency lighting, energy saving

standards, diversity in types and beautiful models to meet the demand for domestic use

and export. Therefore, as one of lighting resources key players in Vietnam market, Rang

Dong will be give many advantages in borrowing money, tax system, etc; it also helps 25

the company not only run more effectively but also saving money and time because of

complex administrative procedures.

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

Moreover, there are many potential markets in the world that Rang Dong can

consider for trading. In recent time, main export markets of the business are India, Sri

Lanka, Egypt, South Korea, etc. Almost countries mentioned above are potential

markets and are development countries. People have high demands for using of goods

that the business has manufactured and sold. Therefore, Rang Dong’s revenue can

increase significantly from export into these markets. Presently, Venezuela is also

attractive market that Rang Dong has had consideration for expanding market.

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

AFTA. Etc.

Generally, Rang Dong Light Source & Vacuum Flask J.S.C can achieve

opportunities from business environment of WTO, AFTA. At this time, World Trade

Organization (WTO) is one of big opportunities of Rang Dong. When Vietnam joined

in WTO, the business will have many opportunities to expand markets. If the business’s

goods achieve high quality, it will help the business’s brand be raised at these new

markets. Rang Dong can be easier to export goods into countries that are WTO’s

members or import easily materials from these countries. Plus, tariff of the business can

be decreased because Vietnam was WTO’s member. WTO brings to opportunities to

learn experiences about management way or technological lines from WTO’s members.

Likewise, presently ASEAN’s countries are developing rapidly. Plus, Vietnam

has played president role of ASEAN in this year so it is significant opportunity for Rang

Dong to have trades with ASEAN Free Trade Area (AFTA)’s members. It is a benefit

for the business because tariff for goods will be cut or decreased minimum for AFTA’s

members. Agreement about Common Effective Preferential Tariff (CEPT) is confirmed

by ASEAN’s members. According to Wattpad (2010) pointed that based on the

agreement, tariff will be decreased and remains from 0% to 5% for goods of ASEAN’s

26

members; tariff barriers will be cancelled within 10 years. This is really valuable

opportunity that helps Rang Dong expand markets, increase revenue.

O4: Demands for using lighting equipments are increasing

Light Source & Vacuum Flask are important and necessary products that serve

for production and activities daily of people. Therefore, Rang Dong products are easy

to consume because people has achieved benefits from these products. In addition,

the more Vietnam has developed, the higher the demands for these products. Based

on below chart and table, it is easy to realize that the industry has potential

development because Vietnam population has increased and demand for using

lighting bulbs can be increased rapidly. This is a great opportunity for Rang Dong to

increase volume of production and develop the market.

Figures Units 2004A 2005A 2006A 2007E 2008F 2009F 2010F

Vietnam

populatio

n

Mil.

People

82 83,1 84,2 85,2 86,3 87,4 88,5

Grow rate % 1.4% 1.34% 1.32% 1.19% 1.27% 1.27% 1.27%

Lightings

bulbs

Thousands

bulbs

118,01

3

102,21

4

208,13

3

239,03

2

246,20

3

283,13

3

325,60

3

Grow rate % 11.8% -13.4% 103.6

%

14.8% 3.0% 15.0% 15.0%

Source: Research Department (2008)

27

Table 3: Vietnam lighting bulbs industry total output

Unit: Billion VND

Threats

T1: Economic regression

Economic regression is one of dangerous threats to Rang Dong’s business

operation. Any business operation can be impacted by the economic regression. In

particular, economic regression associated with increasing material price that is one of

biggest impacts to Rang Dong. Many materials of the business are imported from

foreign countries so certainly, influence of material price cannot avoid. Plus, economic

regression results in price inflation so it influences directly to Rang Dong’s financial

activities. Typically, economic regression in 2008 has influences to Rang Dong’s

business operation. Price storms happened in the year. According Rang Dong annual

report 2009, almost materials of Rang Dong are imported from China and are charged

follow USD. However, in 2008 USD is devalued with CYN of China. Plus, in 2008

China met high inflation so CYN is also devalued. As a result, material price is

imported from China of Rang Dong was increased significantly.

28

T2: Threat from many competitors existing in the market

Besides, Rang Dong. Philips, GE, OSRAM, MEGAMAN, Dai Quang or Dien

Quang, etc are strong competitors of Rang Dong about light sources products. One of

strong competitor of Rang Dong in light sources products are Dien Quang. Dien Quang

is the brand that occupies higher market share at South provinces. Rang Dong annual

report (2009) pointed out that in light source market, Dien Quang occupied 90% market

share in South and 27% market share of the whole country. Likewise, at present, Philips

has also strong competition with Rang Dong. Philips has had reduced price from 50% to

60% with original plan so at this time Philips was occupied market shares for some of

products that previously Rang Dong remained them. Moreover, China’s products are

significant competition for Rang Dong. Almost China’s products have cheaper price

than Rang Dong’s price.

29

VII. TWOS MATRIX FOR RAL COMPANY

Strengths

1. Stable finance

2. Good reputation

3. High quality

product

4. Strong distribution

system

5. High-experienced

broad of directors

Weaknesses

1. Lack of

management staffs

and experts

2. High operating

expenses

3. Have to import raw

materials

Opportunities

1. Government’s

priority for the

industry

2. Potential markets

3. Viet Nam jointed

into commercial and

trading organizations

4. Demands in lighting

equipments are

increasing

SO- strategies

1.concentrate on expanding

export market

(S1,S2,S3,O2,O3)

2.strengthen key strategic

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

WO-strategies

1.building new

management model

(W1,O3)

2.increase efficiency in

business process and

supply chain of company

(W2,O3)

Threats

1. Economic regression

2. Numerous

competitors

ST-strategies

1.Consolidate existing

distribution system,

approach modern

distribution

channels(S4,T2)

2.Concentrate to develop

raw materials

WT-strategies

1.take advantage from

domestic raw materials

resources (W3,T1)

30

factory(S1,S5,T1)

VII.1. SO- Strategies

SO strategies are which use strengths to maximize opportunities. It means that

Rang Dong would use its strengths to take advantage of the opportunities. From

analyzing Rang Dong’s strengths and opportunities, there are some strategies are

pointed out as following.

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

Expanding export market play important role in increasing revenues and it would

react positively to development domestic market share.

With internal strengths of stable finance, good reputation and high quality

products, Rang Dong can take advantage of the external opportunities of demands in

potential market and foreign markets after Vietnam joints trading and commercial

organizations by expanding export market.

When Viet Nam jointed into commercial or trading organization such as World

Trade Organization (WTO) or ASEAN Free Trade Area (AFTA) there are many

benefits to Rang Dong in term of export activities. For instance, since jointing in AFTA

tariff to Rang Dong’s export products would be reduced following tariff reduction

policy of CEPT/AFTA in 2007. Additional, it is easier to Rang Dong in exporting

products into foreign countries when Viet Nam joint WTO. On other hand, company

has strengths in terms of finance, reputation and products’ quality. It is a solid stepping-

stone on expanding export to foreign countries.

VII.1.2. Rang Dong should strengthens key strategic products

Key strategic products are lights and lighting equipments that have high quality,

high performance, power saving and environmental protection.

Using strengths in reputation and distribution system, the company could take

advantage opportunities of increasing demands in lighting equipments and

government’s priority in the industry in order to develop key strategic products. It is

31

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

awareness and strong and diversified distribution system.

Customer’s demands in lighting equipments are increasing. Moreover, the

products are required not only meet core functions but also bring to consumers benefits

and advantages. Rang Dong could build up its competitive advantage basing on

developing the products. Furthermore, in process of strengthening develop key strategic

products; government’s priority through supportive policies would be an advantage.

VII.2. WO- Strategies

WO strategies are formed by using opportunities to overcome weaknesses. They

would minimize weaknesses by taking advantages of opportunities.

VII.2.1. Building new management model

At the present, Rang Dong Company lacks large number of management staffs

and experts. Qualification of management staffs is not evenly. Therefore, it can be

reasons that leading to increase administrative expense because of poor management

system. For these reasons, taking advantages from knowledge and experiences of

foreign organizations or companies would be help the company overcome the

weaknesses.

When Vietnam jointed into WTO, it is opportunities to attract foreign companies

invest and operate in Vietnam market. Therefore, Rang Dong would be able to learn

knowledge and experiences in business activities.

32

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

modern management system through learning experiences and knowledge from foreign

companies. One of the best management systems is Enterprise Resource Planning.

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

Supply Chain Management encompasses the planning and management of all

activities involved in sourcing and procurement, conversion, and all logistics

management activities. Importantly, it also includes coordination and collaboration with

channel partners, which can be suppliers, intermediaries, third-party service providers,

and customers. In essence, supply chain management integrates supply and demand

management within and across companies. Supply “Chain Management is an

integrating function with primary responsibility for linking major business functions

and business processes within and across companies into a cohesive and high-

performing business model. It includes all of the logistics management activities noted

above, as well as manufacturing operations, and it drives coordination of processes and

activities with and across marketing, sales, product design, and finance and information

technology”(CSCMP, no date).

When Vietnam integrated WTO, it is opportunities to Rang Dong link and

associate with other companies to create smart network of supply chain. Therefore,

trend in downstream integration is increasing. When applying supply chain, the

company could change raw materials sources or optimize transport raw materials,

products. Therefore, Rang Dong can reduce expenses, increase its competitive ability.

33

Moreover, company has built up new factory that produce raw materials. Then it

leads to operating expenses would be increasing. For this reason, building supply chain

is the best solution for Rang Dong to increase efficiency in business process.

VII.3. ST- strategies

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

and potential threats.

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

channels

Rang Dong is facing with numerous competitors in the market such as Philips,

Dien Quang and China Products. In order to compete with these competitors, Rang

Dong should build up strong and modern distribution system. It would ensure that

opportunities to Rang Dong’s products reach customers are higher than its competitors.

At present, Rang Dong has built up nationwide strong distribution system. Beside

continuing develop and consolidate existing distribution system, Rang Dong should

approach new and modern distribution channels such as selling through website,

distribute to building markets.

VII.3.2. Concentrate to develop raw materials factory

Rang Dong should use strengths of stable and good financial position and of high-

experienced broad of directors to avoid threat of competition pressure by concentrating

on develop raw materials factory in order to create its competitive advantage.

At present, Rang Dong has one glass factory. After the one glass factory in Que

Vo was put into operation, the Rang Dong is a the few units in the country can produce

high-grade glass. It does not only solve raw materials problems but also improve

efficiency and reduce defect rates.

However, with operation of new factory, an increase of labor expenses and

depreciation expenses is inevitable. Beside company might have to change management

model to suit with large-scale development. At this time, high-experienced broad of

directors would point out and plant smart strategies to operate of Rang Dong.

VII.4. WT- strategies

34

WT strategies are defensive tactics directed at reducing internal weaknesses and

avoid environment threats.

VII.4.1. Taking advantages from domestic raw materials resources

Taking advantages from domestic raw materials resources is seems to be the best

optimal solution to avoid effects of economic regression that caused to increasing raw

materials prices and change of current exchange and minimize weaknesses of Rang

Dong in exporting raw materials.

On other hand, proportion of raw materials still dominate (about 60%) basing on

production structure. It is high quantity requirement to raw material. Developing

domestic raw materials resources is necessary.

Besides building factory to produce raw materials, company could associate with

companies that have similar products in order to exploit thoroughly possible domestic

raw materials resources.

VIII. SPACE MATRIX

Competitive Advantages

35

Product quality -1

Technological know – how -2

Customer loyalty -2

Market share -2

Total -7

Average -1.75

Product Quality

Presently, product quality is one of advantages that Rang Dong’s products are

over its competitors. Rang Dong has used product quality like a commitment to

consumers. ISO 9001: 2008 – Quality standard is applied by the company. So, almost

products has achieved high quality and satisfied consumers’ needs. Typically, the

company was achieved many rewards that showed Rang Dong’s product quality. For

example, according to Nguyễn Nhung (2010) pointed that Compact Fluorescent Light is

product that is obtained reward – Vietnam Energy Star about durability, power, and

quality in 2010. Besides, the company has obtained “Vietnam High – Quality Product”

in many continuous years. Generally, Rang Dong’s products are always believed by

high quality, power, saving energy and environment protection.

Technological know – how

In recent years, the company steps up many applications of technological lines

into its production. In 2006, the company has opened two new manufacturers at Que Vo

and Bac Ninh. These manufacturers are used high technological lines for production.

Huỳnh Tuần Khánh. (2009) pointed that by using technological lines, Rang Dong has

produced high – ranking glass material that is used for lamps production. Or the

company applied new technologies of Japan to reduce costs about gas flue and so on. In

general, the company used technological lines effectively and it has become competitive

advantages of the company.

36

Customer Loyalty

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

advantage. Almost customers has used Rang Dong’s products, they feel believe on the

company’s products. Customers’ beliefs base on core values about product quality that

they are achieved from Rang Dong. The company’s products meet customer’s needs

and wants. Besides, the company always tries to build good relationships with

customers so the company has had customer loyalty like a obvious thing.

Market share

Rang Dong 26%

Dien Quang 27%

Foreign companies 23%

Others 24%

Lighting bulbs total output in 2007

Source: Research Department (2008)

In recent study by Research Department (2008) showed that in 2007, lighting

bulbs total output of Rang Dong was 26%. This thing showed that Rang Dong’s

products occupied quite good market share in the market. Almost Rang Dong’s product

37

is consumed strongly at North Market of Vietnam. Besides, the company had

advantages for vacuum flasks. Today, the company keep high market share for the

product line. In Vietnam, Rang Dong’s vacuum flask occupied around 80% market

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

the company.

Industry strengths

Growth potential 3

Profit potential 3

Barrier to entry 4

Bargaining power of supplier 3

Total 13

Average 3.25

Growth Potential

In three recent years, the electrical equipment, electronic equipment and

telecommunications industry has achieved strong sales growth. Vpbs (n.d.) provided

data about sales growth of the electrical equipment, electronic equipment and

telecommunications industry and the whole of industry sector. Vpbs (n.d.) pointed that

sales growth of the industry was 31.07% while the whole of industry sectors was

29.79%. This thing showed that Growth potential of the industry is very good. Sales of

the industry achieved significantly level. However, four most recent quarters expressed

other trend about sales growth. In four most recent quarters, sales growth of the industry

was – 26.91% while industry sector was 3.92%. Perhaps, sales growth of the industry

was downward trends. But anyhow, downward trend has not showed exactly the

industry yet, it still depends on the whole of growths in many years.

Profit potential

38

The lighting bulbs manufactures lie in the electrical equipment, electronic

equipment and telecommunications industry of the whole of industry in Vietnam. Vpbs

(n.d.) provided below figures that relates to operating margin, profit before tax or profit

margin of the industry. According Vpbs (n.d.) showed that in recent four quarters, the

industry’s operating margin was 2.96% while the whole of industry in Vietnam was

8.42%. The figure expressed that the industry has had significant profit from its

business operation that it has occupied the whole of industry. On the other hand, the

ratio for three recent years was 5.91% while the whole of industry sector was 7.96%.

Likewise, Profit before tax of the industry was 5.5% while the whole of industry sector

was 7.42% in three recent years. Or the ratio about the industry’s profit margin in three

recent years was 4.81% while the whole of industry sector was 6.33%. The above ratio

showed profit potential of the electricity equipment, electronic equipment and

telecommunications industry, the profit potential is good and stable.

Barrier to Entry

At this time, almost companies in the industry have steady position so it will be

difficult for new entrants who want to entry the industry. Plus, to entry the industry

requires high capital for objects who want to have similar – sized businesses. The new

objects need invests for human resources and technology so it is significant factors that

impact to entry of the new entrants.

Bargaining Power of Supplier

In general, the industry has still import materials or buys machines from foreign

countries. As a result, production costs can be increased. However, in recent time, the

industry concentrates on using and applying new technological lines so material import

has reduced because the industry has produced materials by itself to serve for

production. Therefore, bargaining power of supplier for the industry is neutral at this

time.

Financial Strengths

39

ROA 5.21% (three most recent years) 3

Leverage - Total debt to owner equity 59%

(in 2009)

3

ROE 11.16% (three most recent years) 3

Liquidity - current ratio 1.24 (in 2009) 2

Total 11

Average 2.75

ROA

According to Vpbs (n.d.) pointed that in three most recent years, Rang Dong’s

ROA achieved 5.21% while the whole of electrical equipment, electronic equipment

and telecommunications industry was 4.92%. This thing has known as significant

advantage for the business because in fact, the figure pointed that Rang Dong used total

asset efficiently in comparison with the whole of industry.

Leverage – Total debt over equity

Cổphiếu68 (n.d.) provided figure that in 2009, total debt to owner equity of

Rang Dong was 59%. This thing showed that total debts of the company were higher

than its total owner equity. The company can develop and expand business operation

with the total debts. Total debt of Rang Dong was not high figure so perhaps, the

company can have ability to pay the total debt.

ROE

Likewise, Vpbs (n.d.) argued that in three most recent years, ROE of Rang Dong

was 11.66% while the ratio for the whole of electrical equipment, electronic equipment

and telecommunications industry was 11.33%. The ratio expressed that return on equity

of Rang Dong was good. Rang Dong used efficiently shareholder’s capital or money to

invest its business operation and this thing brought to profit for shareholders. In general,

the ratio of Rang Dong is normal level in comparison with the whole of industry.

40

Liquidity – Current ratio

Current ratio shows Rang Dong’s financial strengths. Cổphiếu68 (n.d.) pointed

that in 2009, current ratio of the company achieved 1.24 or 124%. The figure showed

that Rang Dong has totally ability to pay back its short- term liabilities. The payment

ability for short -term liabilities are very important for any businesses. Because if a

business has not good financial health, the payment can meet difficulties and even it can

have bankrupt. However, Rang Dong has had stable financial health and maintained

payment for its current ratio.

Environment Stability

Demand variability -1

Pressure from substitute products -2

Inflation -3

Technologies changes -2

Total -8

Average -2

Demand variability

In general, demand for using electrical equipment or flask vacuums is more and

more increasing. Because when Vietnam population has increased, it means that

demand for using these products has also upward trend. Besides, quality of life has

many changes and is more and more developed; many buildings or households are built

rapidly so Rang Dong can ensure that its business environment is stable.

Pressure from substitute products

41

Presently, lighting equipments, lamps or vacuum flasks has also main

equipments that are used by almost people. However, some of substitute products have

appeared in recent time. For vacuum flasks of Rang Dong, substitute products are

kettles that can boil water and keep water’s temperature. For lighting bulbs of Rang

Dong, substitute products are electrically charged lamps or use by batteries. However,

substitute products have not popular yet and have high price so pressure from substitute

products is not high.

Inflation

It is ensure thing that inflation can impact significantly to business operations for

any businesses. However, if businesses have suitable business strategies, the

businesses can pass the inflation period. Likewise, Rang Dong is one of business that

meets difficulties from inflation. But because the business has good business strategies

so Rang Dong reduced impacts from inflation. Typically, inflation happened in 2008

and Rang Dong’s main competitor – Dien Quang meet many difficulties. Although in

that time, export market was decreased, material costs was increased strongly

however Rang Dong’s financial health was stable. The below table shows Rang Dong’s

stable finance

Business names 2008

Sales Profit after

tax

ROA ROE

Rang Dong Light source

and vacuum flask JSC

837 49 5.5% 11.7%

Dien Quang Light Bulb

JSC

380 2 0.1% 0.2%

Alphanam JSC 1.302 23 2.4% 3.4%

Dry cell and storage

battery JSC

1.241 78 15.4% 25.4%

42

SACOM Investment and

Development Corporation

1.269 -76 - -

Source: Research Department (2008)

But anyhow, the inflation has also impacts to Rang Dong and increases about material

costs are significant impact for Rang Dong. For example, inflation impacts to oil price

that Rang Dong uses for its machines to produce lighting bulbs and flask vacuums.

According to Research Department (2008) found that in 2008, oil price was 7.7 million

VND per ton in Vietnam while the price was only 3.5 VND per ton in China and 4.2

million VND per ton in Singapore.

Technologies changes

Likewise, technology is one of factors that impacts to production capacity or

power of Rang Dong. However, present investment for technological lines helped Rang

Dong ensure its manufacture environment. Technologies changes normally bring to

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

environment stability by the element.

43

X - Axis 3. 25 – 1.75 = 1.25

Y – Axis 2.75 – 2 = 2

Rang Dong is a financially stable firm in growing industry so the company can consider

to three below strategies:

- Market development

- Market penetration

- Product development

Market development focuses on selling existing products into new markets. At

this time, almost Rang Dong’s products are sold into 64 provinces of domestic markets

so Rang Dong can consider to new markets, it can be members of trade and commerce

organizations such as: WTO (World Trade Organization); AFTA (ASEAN Free Trade

Area). Almost these countries are more and more developed so their demand for using is

increased. As a result, consumption for Rang Dong’s product lines can be upward trends.

Plus, WTO or AFTA and so on are big commercial organizations so the organizations

will create advantages for member countries when the countries’ businesses sell products

into market. For this reason, Rang Dong can take advantages to develop its reputation at

44

new markets. It is necessary thing for Rang Dong to apply its competitive advantage

about product quality, since it will be easier to attract new markets.

Besides, Rang Dong can consider to market penetration that focuses on selling

existing products into existing markets. Because the company has stable financial health

so it can take the advantages to maintain and develop its business operation in existing

markets. For flask vacuums, Rang Dong needs to maintain market share for product lines

by ensuring high quality. Besides, the company needs to increase market share for

lighting equipments. To increase market share for product line is also necessary thing for

ensuring product quality. Moreover, the company should use advertising programs on

TV, magazines, websites and etc. This thing can help the company’s product lines are

known by many customers. In general, Rang Dong has environment stability for business

development so the company should base on the advantages for market penetration

strategy.

Likewise, the company can sell new products into existing markets. The strategy

is product development. Rang Dong needs to ensure that its new products can attract

existing market because of its outstanding features. Based on government’s policies

about saving energy, Rang Dong’s new products should save electric, achieve high

quality and environmentally friendly products. Rang Dong has competitive advantage

about customer loyalty so the company can introduce the new products to existing

customers, the strategy can be conducted totally. For the strategy, it may be better when

the company applies advertising programs on TV, magazines, websites and etc. This

thing can help existing customers are easier to know that Rang Dong has new product

lines and consider to them.

45

IX. KEY STATEGIES FOR RANG DONG COMPANY

Resulting from TOWS matrix and SPACE matrix, there are many strategies for

Rang Dong Company. However, selecting appropriate and practical strategies for the

company requires thoughtful consideration and research. Basing on the macro-factors

analysis-PESTEL and Porter’s 5 forces and the organizational audit, there are three

leading key strategies for Rang Dong, which are:

IX.1. Brand name power backbone

Rang Dong JSC concentrates on manufacturing household products, in which

light devices and flask are leading products of the company. With the motto in

producing “High quality, high productivity, electricity saving and environment

protection”, Rang Dong JSC has obtained beliefs and supports from consumers. For this

reason, promoting and focusing on these leading products are the first and foremost

actions for Rang Dong’s production activities.

Basing on PESTEL analysis, there are many factors that motivate the company to

pursuit the strategies of fostering brand name power in the domestic market to create a

leverage to expand the company’s economics of scale in the future.

In political factors, under the positive affect of two major campaigns “Electricity

saving campaign” and “Vietnamese people prioritizes using Vietnamese products”,

these events create a great hint for domestic manufacturers like Rang Dong to focus on

producing and distributing goods in the domestic market. Besides, being a domestic

company, Rang Dong Company has possessed the understanding of Vietnamese

people’s consumption habit and requirements. From that base, the company can exploit

the great demand for electricity household devices; especially in construction flied

which is one of the most developmental industries in Vietnam.

Rang Dong is not only a domestic company but also a state-owned and listed

organization, hence the company find more convenient to strengthen its competitive

advantage in terms of financial supports, legal and political supports. With strong

financial supports from investments, the company is able to invest in technology in

order to advance the product quality, decrease productivity in manufacturing and even

reduce unnecessary expense arisen from weak management methods. Besides, it is

46

suggested for this company to do promotion activities through modern channels, such as

Internet, construction material supermarket and so on. By doing that, Rang Dong JSC is

building a positive image of the organization over other competitors.

In the competitive environment among domestic and foreign electricity devices

manufacturers, fostering brand name power along with develop product quality to meet

the demand of customers are prudent action for the company to compete for those new

customers and affirm its strong spot in the domestic market.

IX.2. Human Resources Backbone

In order to build human resources backbone to Rang Dong, one of the optimal

strategies is building new and effective management model as following.

Firstly, at present, Rang Dong has faced with huge shortage management staffs.

Moreover, qualifications of existing management staffs are not evenly. On other hand,

one new factory that produce raw materials has built up in Que Vo required large

number of employees in the factory. The number of existing employees who change

move to the new factory makes up 35% of total existing employees in the Rang Dong

Company. Therefore, the company has to recruit more employees. Because new factory

is built up, then it leads to operating expenses would be increasing. Therefore it requires

effective management to minimize operating expenses.

Rang Dong has privatized for short time. Then management system is still

impacted by policies of state-owned companies. For this reason, taking advantage from

opportunities of changing human resources structure, Rang Dong should improve its

management system.

Following five force analysis, competitive rivalry is high. Therefore, Rang Dong

should concentrate on building human resources become its backbone to increase

competitive advantage.

Following political/legal factors and economic factor in PESTEL analysis, when

Vietnam officially joined in WTO, there are also many opportunities for Rang Dong to

innovate production and management performance. It is still opportunities to the

company adapt to global and modern management system using technologies.

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One of the best tools that support to management process of Rang Dong Company

is Enterprise Resources Planning. “Enterprise Resource Planning or ERP is actually a

process or approach which attempts to consolidate all of a company's departments and

functions into a single computer system that services each department's specific needs.

It is, in a sense, a convergence of people, hardware and software into an efficient

production, service and delivery system that creates profit for the company” (Topbits,

no date).

ERP help Rang Dong in savings in relation to energy consumption and data

management. The company could form smart and effective management system

because ERP integrating the different functions and activities into a seamless whole

where information needed for decision-making is shared across departments, and the

action taken by one department results in the appropriate follow-up action up and down

the line.

Strong human resources do not only mean that Rang Dong has good staffs with

high qualification but also that RAL should have smart and effective management

system.

IX.3. Growth backbone

At present, imported products only occupies 15% – 20% of Rang Dong’s total

sales. Therefore, Market expansion is considered as one of key strategies for Rang

Dong Joint Stock Company in the future.

In recent years, AFTA (ASEAN Free Trade Area) has achieved significant

development about scales. There are more and more countries in South East Asia take

part in AFTA such as Brunei, Singapore, Indonesia, Thailand, Malaysia, Laos,

Philippines, Cambodia, and Vietnam, Myanmar. So it may be a potential market for

Rang Dong Company to exploit.

Besides AFTA, WTO accession has given the company great opportunity to

increase sales in some developing countries with young population, high demand such

as Egypt, India, Korea, Venezuela.

This strategy would help Rang Dong JSC increase its total sales by importing

goods. Moreover, corporation image can be improved by expanding markets. More 48

importantly, it can have positive impacts to local market. Vietnamese are able to ensure

the quality of Rang Dong Company since those goods are also used and believed by

foreigners. Furthermore, when products are exported, it has to meet high standard tests

in these countries; if Rang Dong is able to past these tests, it means that Rang Dong

confirms again products’ quality.

Likewise, while expanding new markets, Rang Dong also gains some experiences

from these markets about management ways, global standard for products. In addition,

market expansion helps the company is easier to see new trends, from this point Rang

Dong give new strategies for production that is suitable to these trends.

As one member in AFTA or WTO, Vietnam can be obtained some of advantages

in tariff reduction. As a result, tax is decreased so price of products can be downward;

this thing creates competitive advantages for the company when it sells goods into new

markets.

Based on Rang Dong’s strengths about financial heath, reputation and quality, it

helps the company can have beliefs for the successes of this strategy.

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CONCLUSION

The business strategy becomes a more and more familiar term for businesses

which are competing in the market. But how a business can make its own strategy that

is supposed to be the weapon to compete for those new customers and relying on what

bases to set up appropriate business strategies. To answer the questions, businessmen

look for effects of business environment analysis tools, PESTEL and Porter’s 5 forces

for macro-environmental audit, SWOT for internal audit and so on. These tools are

good bases to make the strategies in terms of TOWS matrix and SAPCE matrix.

Applied the methods to Rang Dong Light Source and Flask Vacuum Joint Stock

Exchange Company, it leads to a state that in general, RAL’s situation is rather good.

Environment and organization audit to RAL were conducted by analyzing PESTEL and

five forces. This thing helps the company is easier to realize elements that can be for or

against its business operation. PESTEL and Five Forces Analysis will bring to take

advantages for Rang Dong when the company sets up its business strategies.

In addition, by using TOWS matrix and SPACE matrix, strategies available to

Rang Dong are pointed out. Combining with five force and PESTEL analysis, the best

optimal strategies are suggested. These strategies aim to build three backbones to Rang

Dong’s development: Building brand name power backbone by strengthening key

strategic products, human resources backbone by building new and effective

management model and growth backbone by expanding to exported markets.

RAL Company has advantages to compete further in not only the domestic

market but also foreign markets in terms of being a state-owned company and a jointed

stock company. Hence, there are available sources of investments and other financial,

legal and even political that support the company. Besides,, with the entry in WTO of

Vietnam, many opportunities to expand the business open to the company. However,

this is also a challenge for RAL to improve its management and production system to

hit the requirements of global standard.

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REFERENCES

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Indexmundi (no date) GDP-Real growth rate of Vietnam. [Online] Available at:

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