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Determining the Importance of External Environmental Factors

The tourism business in 2011 was average (See Business Results of the Three Companies - Appendix 2). This shows that the high inflation factor and the impact of exchange rates did not have much impact on Ky Nghi Viet Company. Score 2.

Factor 3: Vietnam's infrastructure is not yet synchronized:

Importance to the industry: Due to poor infrastructure conditions, Vietnam tourism ranks only 5th in ASEAN (after Singapore, Malaysia, Thailand and Indonesia). This has a negative impact on the tourism industry. Score 3, strongly affecting the industry.

Impact on the company: due to the main tours of Ky Nghi Viet company to locations such as Hanoi - Sapa - Ha Long - Hue - Hoi An - My Son - Da Nang - Nha Trang - Ho Chi Minh City - provinces of the Mekong Delta. These are all cities with routes that are often congested due to high traffic density, so it takes a lot of time to travel, making tourists tired when thinking about traveling, this has a negative impact on tourism. So this factor has a relatively large impact on the Company. Score 2.

Factor 4: Threats from terrorism and violence in some countries:

This factor has a medium impact on the industry because the Vietnamese tourism industry currently only has a few tours - routes to countries with unstable political situations such as (Thailand, USA, ...). So in general, it does not affect the whole industry. The level of importance is: 2. Ky Nghi Viet Company also has tours to Thailand, but the violence there does not affect the company much, because the implementation of the Thailand tour is organized by the Board of Directors with a purpose and always has measures to avoid violence in this country. Therefore, this factor has a poor impact on the business. Score 1.

Factor 5: Strong tourism market development: This factor has a positive impact on the tourism industry in general and the development of Ky Nghi Viet Company in particular. Impact score 3.

Factor 6: Vietnam has rich tourism resources: For the tourism industry, the rich natural resources available are an advantage for development. Score 3. For Ky Nghi Viet Company, it is a young company so it has not yet fully exploited the available natural potential. Score 2.

Factor 7: Vietnam has a stable political situation: This factor has a beneficial impact on both the industry and the Company. Should be given a score of 3.

Factor 8: The quality of restaurants and hotels is increasingly improved: Due to the industry's characteristics being closely related to restaurant and hotel services, when the quality of restaurants and hotels is improved, it also helps improve tourism products. Score 2.

Factor 9 and factor 10 (Vietnam is a member of APEC; the State is interested in developing domestic tourism): Positive impact on Vietnam's tourism industry, when becoming a member of APEC, it will enjoy many benefits and policies to protect the industry, at the same time orienting the industry to operate for the common benefit of the community (such as protecting resources and the environment). Score 3. However, Ky Nghi Viet Company has not yet exploited the benefits from these 2 factors, so it is scored 1.

From determining the impact of external factors on the industry and company, I can calculate the importance of each factor, specifically according to the following table 2.5:

Table 2.5. Determining the importance of external environmental factors


STT


External environmental factors

Importance to the industry

Impact on the company


Value

Importance

Threat

1

High inflation

2

2

4

0.08

2

Impact of exchange rates

2

2

4

0.08

3

Vietnam's infrastructure is not yet synchronous.

3

2

6

0.12

4

Threats from terrorism and violence in some countries

2

1

2

0.04

Opportunity

5

The tourism market is growing strongly.

3

3

9

0.18

6

Vietnam has rich tourism resources.

3

2

6

0.12

7

Vietnam has a stable political situation.

3

3

9

0.18

8

The quality of restaurants and hotels is increasingly improved.

2

2

4

0.08

9

Vietnam is a member of APEC association.

3

1

3

0.06

10

The State is interested in developing domestic tourism.

3

1

3

0.06

TOTAL



50

1.00

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Determining the Importance of External Environmental Factors

After determining the importance of external factors, continue to create the EFE matrix by giving a score from 1-4 for each factor, to see how Viet Holiday Company responds to each factor. Specifically:

Factor 1: High inflation: High inflation (in 2011, the inflation rate reached 18.58%) and currency devaluation, however, this issue did not greatly affect the company. In fact, revenue increased steadily over the years: 2010 compared to 2009 increased by 13.3%, equivalent to an increase of 3,244,042,580 VND; Revenue in 2011 compared to 2010 increased by 4.72%, equivalent to an increase of 1,303,875,680 VND. Therefore, the inflation factor has a weak impact on the company's travel business. Score 1.

Factor 2: Impact of exchange rate: According to the General Statistics Office, the USD/VND exchange rate in 2011 increased by 8.47% compared to 2010, which is beneficial for Vietnamese international tourism businesses, because the amount of revenue is converted into Vietnamese currency more. Ky Nghi Viet Company mainly organizes tourism programs for foreign guests, so it is more profitable. Therefore, the exchange rate factor has an average impact on the travel business at the company. Score 3.

Factor 3: Vietnam's infrastructure is not yet synchronized: Based on the main tours and routes of Ky Nghi Viet travel company to locations such as Hanoi - Sapa

- Ha Long - Hue - Hoi An - My Son - Da Nang - Nha Trang - Ho Chi Minh City - provinces of the Mekong Delta. These are all cities with routes that are often congested due to high traffic density, so it takes a lot of time to travel, making tourists tired when thinking about traveling, which has a negative impact on tourism. Score 3.

Factor 4: Threats from terrorism and violence in some countries: Due to the company's outbound tours to some countries, including Thailand. The current political situation in Thailand is unstable, with the emergence of two factions: the red shirts and the blue shirts, and frequent riots, so tourists are also hesitant to travel to this country. This has a negative impact on the company's tours to Thailand. However, the company has minimized risks for tourists by always updating and monitoring the political situation in Thailand, thereby organizing tours at times of political stability. (Interview with Mr. Mai Nam - Sales Manager). Therefore, this factor does not have much impact on the company's business. Score 1.

Factor 5: Strongly developing tourism market: In 2011, Vietnam tourism attracted nearly 6 million international visitors, served 30 million domestic visitors, total revenue from tourism reached about 130 thousand billion VND, the corresponding growth rate compared to 2010 was 19%; 7.14% and 30%. In fact, Ky Nghi Viet Travel Company grasped this opportunity, so the number of tourists increased significantly, specifically: in 2011, the number of Inbound visitors increased by 9% compared to 2010, the number of Outbound visitors increased by 5.14% compared to 2010, the number of Domestic visitors increased by 5.73% compared to 2010.


Table 2.6. Number of tourists of Ky Nghi Viet travel company

Unit: Person


Number of Customers

2010

2011

Difference (%)

Inbound

1511

1647

9%

Outbound

498

754

5.14%

Inland

307

483

5.73%

Total

2316

2884

24.5%

(Source: Inbound and Outbound Department of Viet Holiday Travel Company)

So the company responded very well to this factor. Score 4.

Factor 6: Vietnam has rich tourism resources: Taking advantage of this strength, the Company has exploited quite well the tours introducing the country's scenic spots such as: Sapa - Ha Long - Hue - Hoi An - My Son - Da Nang - Nha Trang - the provinces of the Mekong Delta. Especially the tours to the West for both domestic and foreign guests with the program "Don ca tai tu" . It has brought the company a large amount of income. However, in some tours, the company's tourism programs have not highlighted the natural beauty of Vietnam due to human impact, so they are not attractive to tourists. Score 3.

Factor 7: Vietnam has a stable political situation: According to the above analysis, the general trend to ensure tourism safety is that tourists often choose to go to countries with stable politics and little violence. This is Vietnam's strength.

However, according to TTCI's ranking, laws and regulations in Vietnam are still weak (ranked 96/133), demonstrated by high entry visa requirements (116th), large business start-up time limits (112th) and restrictions on foreign ownership (104th).

Understanding that this difficulty will make it difficult for international tourists to Vietnam to apply for a visa, Ky Nghi Viet Travel Company not only sells tours to customers but also combines additional services for customers such as visas, airline tickets... This makes customers coming to the company very satisfied because of the convenience and time savings. Score 4.

Factor 8: The quality of restaurants and hotels is increasingly improved: These are services that go along with travel. When the quality of restaurants and hotels is increasingly high to meet the needs of tourists, tourists will return more often. Ky Nghi Viet Travel Company also cooperates with large hotels and restaurants in each city and country where the Company provides corresponding tourism products to bring the most comfort to customers when coming to the company's tourism products. Score 3.

Factor 9: Vietnam is a member of APEC association: this brings many opportunities for Vietnamese travel companies to promote products and participate in many programs for APEC members to promote tourism growth. However, currently, Ky Nghi Viet Travel Company has not yet accessed the policies of this association, has not applied and promoted its potential. Score 1.

Factor 10: The State is interested in developing domestic tourism: According to the above analysis, the tourism industry has become the spearhead of the economy. Therefore, the State has proposed a Strategy for developing Vietnam tourism to 2020, with a vision to 2030. Ky Nghi Viet Travel Company has researched and found appropriate directions based on this general strategy. Score 3.

After giving a score from 1-4 for each factor, I created a specific EFE matrix table as follows:

Table 2.7. External Factor Evaluation (EFE) Matrix


STT


External environmental factors

Importance

Classification

Important points

Threat

1

High inflation

0.08

1

0.08

2

Impact of exchange rates

0.08

3

0.18

3

Vietnam's infrastructure is not yet synchronous.

0.12

3

0.36

4

Threats from terrorism and violence in some countries

0.04

1

0.04

Opportunity

5

The tourism market is growing strongly.

0.18

4

0.72

6

Vietnam has rich tourism resources.

0.12

3

0.36

7

Vietnam has a stable political situation.

0.18

4

0.72

8

The quality of restaurants and hotels is increasingly improved.

0.08

3

0.24

9

Vietnam is a member of APEC association.

0.06

1

0.06

10

The State is interested in developing domestic tourism.

0.06

3

0.18

TOTAL

1.00


2.94

Comment: The company achieved an important score of 2.94, proving that the company has taken advantage of opportunities very well and overcome challenges to always maximize profits. However, there are still some factors that the company has not performed well and need to take corrective measures.

2.2.3. Analysis of micro-environmental factors


Diagram 2.2. Description of 5 competitive forces for Vietnam Holiday Travel Company according to the Michael Porter model

COMPETITION OF POTENTIAL COMPETITORS

- Small, new travel companies.

- State tourism company is being equitized.

- Branches of foreign travel companies.

SUPPLIER COMPETITION

- Bus stations, hotels, restaurants and tourist attractions.

- Airlines offer tour tickets…

CUSTOMER COMPETITION

- Tourism products are increasingly diverse.

- Specific tour information is posted on the website so customers have many options.

COMPETITION IN THE INDUSTRY

- Domestic travel companies, especially groups: Sai Gon Tourist, Viet Travel, T&K ...

- International travel companies.

COMPETITION OF SUBSTITUTE PRODUCTS

- Amusement and recreation areas; water parks, restaurants

- eat and drink…

Industry competitors

According to the Top Large Enterprises Electronic Newspaper: The list of famous Vietnamese travel companies includes Hanoitourist, Vietravel, Saigontourist, Fiditour, Ben Thanh Travel Company, Hanoi Service Travel Company, Trans Viet Travel Company, Asia Travel Company, Open Investment Joint Stock Company - Vietnam Tourism. These are the companies that have achieved the title of "Top ten international travel companies" awarded by the General Department of Tourism and the Vietnam Tourism Association. Thereby, it can partly affirm the names of these companies in the travel business market in Vietnam.

The above companies are all large and very famous travel companies in Vietnam and most of them operate mainly in Ho Chi Minh City and Hanoi. Each company has its own strengths. Currently, these companies are occupying a large market share in the tourism industry. This causes difficulties for small and medium enterprises such as Ky Nghi Viet Company. If a company wants to gain market share, it must create products with its own characteristics, be highly competitive and especially must meet the needs of customers.

Potential competitors

Potential competitors of Ky Nghi Viet Travel Company in the field of travel business are small, new travel companies ; State-owned travel companies in the process of equitization; Branches of foreign travel companies; large companies in Vietnam, currently doing business in many fields, seeing the benefits of the company.

huge profits from the travel business so they jumped into this field. However, at present, these potential competitors have not put much pressure on Ky Nghi Viet Company because potential competitors who want to enter the travel industry face many difficult barriers as follows:

The first difficulty is that the product brand is not yet known. Because in the tourism industry, customers always tend to choose famous travel companies to ensure safety and service quality.

The second difficulty is that the domestic inflation rate is too high. Too high domestic inflation leads to a huge pressure to increase input costs, affecting the profit rate of enterprises. In addition, too high inflation rate also causes the real exchange rate to increase due to the large difference in domestic and foreign inflation rates, creating pressure to reduce the value of the domestic currency. Because of this difficulty, it has indirectly become the biggest obstacle for Vietnamese tourism and hotel companies to penetrate foreign markets.

The third difficulty is the competitive pressure from competitors in the international market. Because when doing business in the international market, due to the protection policies of foreign markets; non-tariff barriers, quality standards of imported goods... causing businesses to suffer losses if they do not understand international business laws.

Alternative products

Travel and tourism is a special product, with its own characteristics, a combination of many types of products from many different industries (food and beverage, entertainment, restaurants, hotels, etc.). This is a very complex product. Partly because the main component of the travel and tourism product is service, and service is a special and different type of commodity. Currently, there is no product that can replace the travel and tourism product. There are only products that can meet the needs of entertainment, recreation, and relaxation of customers (such as amusement parks, water parks, restaurants, etc.), so the competitive pressure from substitute products is not large.

Supplier

As mentioned above, travel products are special products with their own characteristics, combining many types of products from many different industries (food, entertainment, restaurants, hotels, etc.), so travel companies need many sources to provide different products and services such as: Bus companies, hotels, restaurants, tourist attractions; Airlines providing tour tickets

tourism… Currently, the Company is able to be self-sufficient in its fleet of vehicles, so it is less dependent on suppliers. The Company is also an agent for Vietnam Airlines, Mekong Air, Jet Star, so the Company saves on airfare booking costs. At each tourist destination, the Company has good cooperative relationships with hotels, restaurants, etc. Therefore, current suppliers are not a big pressure for Ky Nghi Viet Company.

Client

Nowadays, tourism products are increasingly rich and diverse; in addition, specific tour information is posted on the website, so customers have many choices. Therefore, travel companies that want to sell products not only need to have products with differences and interestingness, but information about the products also needs to be brought closer to customers.

2.2.4. Create a competitive image matrix – CPM

The competitive image matrix is ​​built on the basis of including external factors affecting competitors and internal factors of competitors that affect the strengths and weaknesses of competitors. The competitive image matrix includes the following factors: Product and service quality; Price competitiveness; Tour guide team; Distribution network; Marketing; Partnership network; Brand; Financial strength; Customer support and service attitude of sales staff.

Basis for weighting to determine the importance of factors: Factors 1 and 8: Product and service quality ; Brand:

In 2011, total tourism revenue reached over 130 trillion VND, contributing over 5% of GDP and creating over 1.3 million jobs. This affirms the position and role of the tourism industry in socio-economic life. Therefore, to compete with countries in the region and the world, tourism products need to be of high quality, diverse, branded, and imbued with national cultural identity. Tourism products need to focus on developing tourism in depth, ensuring quality, closely linked to preserving and promoting national cultural values; preserving landscapes, protecting the environment; ensuring national security, social order and safety. This factor has a positive impact on the industry and the Company, giving a score of 3.

Factor 2. Price competitiveness:

Based on the 2011 Travel and Tourism Ranking Index (TTCI), Vietnam has the highest price competitiveness (ranked 11/133). Other component indicators contributing to price competitiveness are airport tickets and fees (20/133), fuel prices

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