Solutions for developing competitive strategies of Vietnam Airlines

- Analyze and evaluate competitive factors of the competitive strategy at Vietnam National Airlines

- Provide solutions to help improve the competitive strategy at Vietnam Airlines through competitive factors in the industry, helping the airline compete sustainably with competitors in the industry.

3. Subject and scope of research

- Systematize theories on competitive strategy and competitiveness of Vietnam National Airlines.

- The scope of research of the project is over a period of 5 years from 2005 to present.

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4. Research methods

The topic is researched on the basis of combining analysis and synthesis methods, combining theory with practice, going from the general to the specific, from analysis to evaluation to provide development directions together. with complete solutions and recommendations.

5. Thesis structure

In addition to the introduction, conclusion and references, the content of the thesis includes 3 chapters:

Chapter I: Theoretical issues about competitive strategy in air transport Chapter II: Current status of competitive strategy at Vietnam Airlines

Chapter III: Some solutions to improve competitive strategies at Vietnam Airlines. The writer hopes that through this thesis, he can research and contribute his own opinions on an important issue that is of concern to many businesses. . However, due to a student's limited qualifications and limited research time, this thesis cannot avoid shortcomings. The writer hopes that teachers and everyone will contribute their opinions to help the writer complete his research paper well.

I sincerely thank MSc. Nguyen Le Hang and everyone who helped me complete this thesis!

CHAPTER I – THEORETICAL ISSUES OF COMPETITIVE STRATEGY IN THE AIR TRANSPORT INDUSTRY‌‌

I – Theory of competitive strategy

1. Strategy

1.1. Strategic concept

In the common sense, strategy (comes from the Greek root strategos) is a military term used to refer to the planning and distribution of forces with the goal of defeating the enemy. Carl von Clausewitz - the 19th century strategist of war - described strategy as “planning war and planning combat campaigns. Those campaigns will determine each individual's participation." More recently, historian Edward Mead Earle described strategy as “the art of controlling and using the resources of a nation or a coalition of nations for the purpose of securing and increasing the effectiveness of essential interests.” mine".

From the 1960s and 20th century, strategy was applied to the business field and the term "Business Strategy" was born. The concept of business strategy develops gradually over time and is approached in many different directions.

In 1962, Chandler defined strategy as “the determination of the basic long-term goals and objectives of an enterprise and the adoption of a series of actions as well as the allocation of resources necessary to realize those goals. this goal” (Chandler, A. (1962). Strategy and Structure. Cambridge, Massacchusettes. MIT Press). There are many different definitions such as "Strategy is a set of sequences of activities designed to create sustainable competitive advantage." According to McKinsey (1978) or "Strategy is not just a plan, nor just an idea, strategy is the philosophy of life of a company."(Cynthia. A. Montgomery) to this day, organizations Business approaches strategy in a new way: Strategy is a plan to control and use an organization's resources such as people, assets, finance... for the purpose of enhancing and ensuring its essential rights. . Kenneth Andrews was the first to put forward these outstanding ideas in his classic book The Concept of Corporate Strategy. According to him, what is strategy?

An organization must work on its strengths and weaknesses in the context of opportunities and threats.

Regardless of the approach, the essence of strategy is still to outline the future image of the business in its field of operations and exploitation capabilities. According to this understanding, the term business strategy is used in three most common meanings: first, establishing long-term goals of the business; Second, provide general action programs; Third, choose methods of action and deploy and allocate resources to achieve that goal. It can be said that building and implementing strategy has truly become a top and important task in every business today so that businesses can develop sustainably on the basis of their strategic perspective.

1.2. Strategic levels in the enterprise

There are three levels of corporate strategy to consider: corporate-level strategy, competitive strategy (business strategy - business unit-level strategy), and functional-level strategy.

For corporate-level strategies, businesses must identify the industry or business sectors in which the business will compete. At the same time, businesses also need to determine how those businesses are managed to enhance the overall position of the business.

As for competitive strategy - the strategy that this essay focuses on, this strategy is the strategy through applying competitive strategy so that businesses can create competitive advantages in a field. specific business. At this strategic level, there are three main types of competitive strategies: low-cost strategy, differentiation strategy, and focus strategy.

For functional-level strategies, these strategies are strategies related to functional departments in the business, for example: price strategy, product strategy, marketing strategy, research strategy. and product development...Functional level strategies will help ensure and specify the above two strategic levels.

1.3. Basic characteristics of strategy

Although there are many different views and approaches to the category of strategy, the basic characteristics of strategy in business are relatively unified.

First, the strategy clearly identifies the basic goals and direction the business needs to achieve in each period and is fully understood in all areas of enterprise management activities. The direction of the business is to ensure continuous and steady development of the business in an often fluctuating business environment.

Second, a business strategy only outlines the business's long-term operating directions and the business's operating framework in the future. It is only directional, but in practice, business operations require combining strategic goals with economic goals, considering reasonableness and adjusting to suit the environment and business conditions to ensure ensure business efficiency and overcome deviations caused by the directionality of strategy

Third, the business strategy is built on the basis of the competitive advantages of the enterprise to ensure maximum mobilization and good combination with the exploitation and use of resources (human resources, physical assets, etc.). tangible and intangible), core competencies of businesses in the present and future to promote advantages and seize opportunities to gain advantage in competition.

Fourth, business strategy is reflected in a continuous process from formulation to implementation, evaluation, testing and adjustment of the strategy.

Fifth, business strategy always carries the idea of attacking and winning in competition. Business strategy is formed and implemented on the basis of discovering and taking advantage of business opportunities and comparative advantages of the enterprise to achieve high business efficiency.

Sixth, all important strategic decisions in the past of building the organization to implement, evaluate and adjust the strategy are focused on the senior administrator group. To ensure the accuracy of long-term decisions and information confidentiality in competition.

1.4 The role of business strategy

With those characteristics, it can be said that in the market mechanism, building and implementing business strategies is important for the survival and development of businesses.

Firstly, business strategy helps businesses clearly realize their goals and direction in the future as a guideline for all activities of the business. Business strategy plays a role in guiding long-term operations of an enterprise, it is a solid basis for implementing operational activities. The absence of a strategy or an unclearly established strategy without solid arguments will cause the business's operations to lose direction, causing many problems to arise that are only visible in the immediate future and cannot be linked to the long term. Only seeing the local area but not seeing the local role in the entire enterprise's activities.

Second, business strategy helps businesses grasp and take advantage of business opportunities, and take proactive measures to deal with risks and threats in the business marketplace.

Third, business strategy contributes to improving the efficiency of resource use, strengthening the position of the business to ensure continuous and sustainable development.

Fourth, business strategy creates solid bases for businesses to make decisions appropriate to market fluctuations. It creates a solid basis for research and development activities, investment in personnel training and development, market expansion and product development activities.

The source of success or failure depends on one of the important factors: what business strategy the business has.

2. Competition

2.1. Competition concept

In a market economy, competition is a common phenomenon and has important implications for economic development in countries. The terms "competition" and "competitiveness" are widely used and frequently mentioned in the

economic forums as well as in the mass media, attracting the attention of researchers and being analyzed from many different angles, but up to now, the world still does not have a unified concept of compete.

Reviewing competition theory in history, we can see two typical schools: the classical school and the modern school. The classical school with typical representatives such as A.Smith, John Stuart Mill, Darwin and Karl Marx made certain contributions in later competition theory. The modern school has a massive theoretical system with three approaches: Approach based on industry organization with representatives of the Chicago and Harvard schools; Psychological approach with representatives such as Meuger, Mises, Chumpeter, Hayek of the Viennese school; The "perfect competition" approach develops Neoclassical theory.

Some basic contents of competition theory in current market economic conditions can be summarized as follows:

First, competition is a common and inevitable phenomenon, a basic rule in the market economy.

Second, competition has two sides: positive impacts and negative impacts. Competition is a strong driving force that motivates business entities to operate more effectively on the basis of improving productivity, quality, and efficiency for their survival and development. However, competition also has the risk of leading to competition, fighting, controlling each other... creating the risk of causing chaos and even major disruption. To promote positive aspects and limit negative aspects, it is necessary to maintain a healthy, legal competitive environment and control monopoly, and handle unfair competition between business entities.

Third, in current conditions, competition shifts from an antagonistic perspective to competition based on cooperation. Competition does not always mean destroying each other or destroying each other. In fact, modern competitive tactics are based on competition based on quality, design, price and support services. Because, when there are too many competitors, destroying different competitors is not a simple problem.

Competition is one of the basic characteristics of the market economy, related to the survival of each business. Competition can be understood as competition between businesses in competing for a factor of production or customer to enhance their competitive position in the market or achieve a specific business goal. such as profit, sales, market share. In a market economy, price and profit signals create incentives for businesses to transfer resources from places that create lower value to places that create higher value. The condition for competition in a market is that there must be at least two subjects with an antagonistic relationship, with a correspondence between the level of contribution and benefit of each member in the market.

In essence, competition is a selection process based on comparison between groups of objects that have relatively similar functional features and can replace each other. Today, most countries in the world acknowledge competition and consider it not only as an environment for development but also as an important factor in healthy social relations, creating motivation for development. development.

2.2 Competitive advantage

2.2.1Definition of competitive advantage

Businesses that exist in a competitive market must have certain positions and dominate certain markets. That is the only condition that maintains the existence of businesses in a market where businesses are always surrounded by competitors. Therefore, each business needs to create its own advantage to be able to compete with other competitors and stand firmly in its target market.

Competitive advantages are the unique capabilities of a business that are accepted and appreciated by the market through which the business can create superiority or superiority over other competitors in the industry. Unique capabilities are the strengths of a business compared to other businesses, and this strength helps the business earn higher profits. However, not every business can build its own unique capabilities, because to be able to build unique capabilities, businesses need to have two things:

Necessary conditions are: resources and capacity. Resources are physical facilities, infrastructure, capital, financial, human, technological resources... Capacity is the ability to use resources effectively.

2.2.2 Sources of competitive advantage

You can create your business's competitive advantage through two ways: first, doing the same as your competitors but at a lower cost; Second, be different from your competitors. With a different way of doing business, competitors have two ways to do it: one is, perfect the product and sell it at a higher price; Second, simplify the product and sell it at a lower price. When a business creates a positive profit between the cost of performing this activity and the price it sells to customers, the business has created a competitive advantage for itself.

2.2.3 Scope of operations of the enterprise

To differentiate its products or produce products at lower costs, businesses can focus on competing in a large market or focusing on competing in one or a few. certain market segment.

Businesses can focus on competing for a large market when the business has accepted to confront all competitors in the industry. However, businesses can also focus on competing in one or a few certain market segments. If you only focus on a certain market, a business can avoid major competitors in the industry, or even have no competitors if that market segment is a new market developed by the business. appear.

3. Competitive strategy

3.1. Concept

From studying competitive advantages of businesses, when combining sources of competitive advantage and target market scope, we have three basic types of competitive strategies: low cost strategy, differentiation strategy, key strategy. In particular, the focus strategy is divided into two sub-strategies: the focus strategy based on low cost and the focus strategy based on differentiation. Chief

Solutions for developing competitive strategies of Vietnam Airlines - 2

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