Luan Van Tham Khao 2

PGSM IEMBA
Paris Graduate School of Management Vietnam National University, Hochiminh City

International Education Institute
INTERNATIONAL EXECUTIVE
MASTER OF BUSINESS ADMINISTRATION PROGRAM
DISSERTATION
VO THI PHUONG LINH
BUSINESS STRATEGY OF
VIETSOVPETRO
IN PERIOD OF 2017-2022
INTAKE 06
VO THI PHUONG LINH

ID: VN1001705
Class: IEMBA INTAKE 06
OCTOBER 2017
November, 2015
Paris Graduate School of Management Vietnam National University, Hochiminh City
International Education Institute
INTERNATIONAL EXECUTIVE
MASTER OF BUSINESS ADMINISTRATION PROGRAM
¯
DISSERTATION
BUSINESS STRATEGY OF
VIETSOVPETRO
IN PERIOD OF 2017-2022
VO THI PHUONG LINH

ID: VN1001705
Class: IEMBA INTAKE 06
OCTOBER 2017
VERIFICATION OF THE ENTERPRISE INVOLVING IN THE
DISSERTATION
Enterprise Name: JOINT VENTURE VIETSOVPETRO

Enterprise Address: 105 Le Loi Street, Ward Thang Nhi, Vung Tau City, Viet Nam.
Phone: +84 (254) 3839 871
Fax: +84 (254) 3839 857
Website: http://www.vietsov.com.vn
Joint Venture Vietsovpetro confirms: Ms. Vo Thi Phuong Linh, attending

PGSM’s IEMBA program (PGSM’s International Executive Master of Business
Administration Program) has chosen Joint Venture Vietsovpetro to study and do her
MBA dissertation with the topic “BUSINESS STRATEGY OF VIETSOVPETRO
IN PERIOD OF 2017-2022”.
On behalf of the Board of Directors, we confirm that all data and figures used
in the dissertation are completely accurate and authentic. We strongly appreciate the
dissertation’s practical value.
On behalf of the Vietsovpetro
i
DISSERTATION DECLARATION FORM
“I declare that this dissertation has been submitted neither to another master's
program nor to any degree-issuing program. All my dissertation citations have
been properly acknowledged in the dissertation references. Further, I warrant that
I have solely conducted the dissertation and in completing my dissertation, I have
applied knowledge gained from the academic programs.
I am fully aware that any breach of the above is considered as plagiarism and can
lead to the dismissal of my dissertation for consideration in the degree program.”
VO THI PHUONG LINH
ii
ACKNOWLEDGEMENT
To be able to complete this Dissertation and the Program of International Executive

Master of Business Administration (IEMBA) of PGSM, I would like to express my
deep appreciation and sincere gratitude to the great help of the following people and
organizations:
Firstly, I would like to express my deep thanks to my instructor - DR. PHAM VAN
TAI for his enthusiastic advice and valuable suggestions to help me finish this
Dissertation. His constant and relevant guidance was one of the most important
factors that contributed to the successful completion of this research.
Secondly, I would like to express sincere thanks to my leaders and colleagues in my

company - Joint Venture Vietsovpetro for their enthusiastic help, enabling me to
learn, collect data to complete the project.
Thirdly, I would like to take this chance to present my gratefulness to all lecturers,
tutors, and staff of PGSM as well as all my classmates for giving me the best
knowledge, collaboration and conditions to complete this IEMBA course.
Finally, I also wish to give thanks to my family and friends, who have been giving
me much inspiration, understanding and support to complete this program and
achieve my goals.
Thanks and best regards,
Vo Thi Phuong Linh
iii
TABLE OF CONTENTS
DISSERTATION DECLARATION FORM............................................................ii

TABLE OF CONTENTS........................................................................................iii
LIST OF ABBREVIATIONS.................................................................................vii
LIST OF TABLES................................................................................................viii
LIST OF FIGURES, GRAPHS AND CHARTS.....................................................ix
INTRODUCTION....................................................................................................1
CHAPTER 1 : GENERAL INTRODUCTION OF RESEARCH.............................2
1.1 Dissertation Topic......................................................................................2
1.2 Rationale for choosing the Topic...............................................................2
1.3 Issues, objectives and questions of the research.........................................5
1.3.1 Research issues.....................................................................................5
1.3.2 Research objectives..............................................................................6
1.3.3 Research questions................................................................................6
1.4 Significance of the research.......................................................................6
1.5 Theoretical framework...............................................................................7
1.5.1 External audit........................................................................................7
1.5.2 Internal audit.........................................................................................8
1.5.3 Strategies building, selection and implementation................................9
1.6 Research methodology.............................................................................10
1.6.1 Data collection methods......................................................................10
1.6.2 Data Analysis......................................................................................10
1.7 Limitations of research............................................................................11
1.8 Structure of research chapters..................................................................11
CHAPTER 2 : THEORETICAL BASES...............................................................13
2.1 Concepts of business strategies and strategic management......................13
2.1.1 Strategies definition............................................................................13
2.1.2 Strategic Management definition........................................................13
2.2 Process of strategies developing and management..................................14
2.3 Developing business strategies................................................................18
2.3.1 Develop vision and mission................................................................18
2.3.2 External audit......................................................................................20
2.3.2.1. Macro environment analysis........................................................21
2.3.2.2. Competitive environment analysis...............................................21
2.3.2.3. Industry analysis..........................................................................24
iv
2.3.3 Internal audit.......................................................................................25
2.3.3.1. Key internal forces.......................................................................25
2.3.3.2. Internal audit summary and evaluation........................................27
2.3.4 Generation of alternative strategies.....................................................28
2.3.4.1. Develop long-term strategic objectives........................................28
2.3.4.2. Types of strategies.......................................................................28
2.3.5 Evaluation of alternative strategies and selection...............................30
2.3.5.1. SWOT Matrix..............................................................................31
2.3.5.2. QSPM Matrix...............................................................................31
2.4 Implementation of selected strategies......................................................32
2.5 Evaluation of implemented strategies......................................................33
2.6 Research Methodology............................................................................35
2.6.1 Data collection methods......................................................................35
2.6.2 Data Analysis......................................................................................36
2.7 Conclusion of Chapter 2..........................................................................36
CHAPTER 3 : DATA ANALYSIS........................................................................37
3.1 Overview of Joint Venture Vietsovpetro.................................................37
3.1.1 History and timeline...........................................................................37
3.1.2 Products and services..........................................................................39
3.1.3 Organization structure.........................................................................40
3.1.4 Human resource..................................................................................42
3.1.5 Business performance in the last 5 years............................................43
3.2 Develop 2017-2022 vision, mission and strategic objectives...................44
3.3 External audit of Vietsovpetro.................................................................46
3.3.1 Macro environment analysis...............................................................46
3.3.2 Competitive environment analysis......................................................50
3.3.3 Industry analysis.................................................................................52
3.3.3.1. Identification of external opportunities and threats......................52
3.3.3.2. Analysis and evaluation of external opportunities and threats.....54
3.4 Internal audit of Vietsovpetro..................................................................58
3.4.1. Key internal forces..............................................................................58
3.4.2. Internal audit summary and evaluation...............................................60
3.4.2.1. Identification of internal strengths and weaknesses.....................60
3.4.2.2. Analysis and evaluation of internal strengths and weaknesses.....61
3.5 Generation of alternative strategies..........................................................63
3.6 Selection of business strategies for VSP in period 2017-2022.................65
3.7 Conclusion of Chapter 3..........................................................................74
v
CHAPTER 4 : CONCLUSIONS AND RECOMMENDATIONS..........................75
4.1 Summary of key findings in Chapter 3....................................................75
4.2 Solutions to implement selected strategies...............................................75
4.2.1. Invest and develop equipment, information and technologies............75
4.2.2. Improve human resource management...............................................76
4.2.3. Enhance operating and management systems.....................................78
4.2.4. Develop Marketing.............................................................................79
4.2.5. Other supporting solutions..................................................................80
4.3 Solutions to evaluate implemented strategies..........................................81
4.4 Recommendations....................................................................................83
4.4.1. For Vietsovpetro.................................................................................83
4.4.2. For PetroVietnam and Zarubezhneft...................................................83
4.4.3. For Vietnam country...........................................................................83
4.5 Limitations and future research direction.................................................84
4.6 Conclusion of chapter 4...........................................................................85
REFERENCES.......................................................................................................86
APPENDICES........................................................................................................89
Appendix 1 : Steps to develop EFE Matrix.........................................................89
Appendix 2 : Steps to develop IFE Matrix..........................................................90
Appendix 3 : Steps to develop QSPM.................................................................91
Appendix 4 : SURVEY QUESTIONNAIRE.......................................................93
vi
LIST OF ABBREVIATIONS
AS Attractiveness Score
CL Cost Leadership strategy
EFE External factors evaluation
GDP Gross Domestic Product
HRM Human Resource Management
IFE Internal factors evaluation
PEST Political, Economic, Social and Technological
PVN PETROVIETNAM
QSPM Quantitative strategic planning matrix
R&D Research and Development
SWOT Strengths- Weakness- Opportunities- Threats
TAS Total Attractiveness Score
USD United State Dollars
VSP Joint Venture Vietsovpetro
ZRB ZARUBEZHNEFT
vii
LIST OF TABLES
Table 2.1. Conditions that cause high rivalry among competing firms....................22
Table 2.2. Conditions that increase consumer bargaining power.............................23
Table 2.3. EFE Matrix sample.................................................................................24
Table 2.4. CPM sample...........................................................................................25
Table 2.5. IFE Matrix sample..................................................................................28
Table 2.6. Types of strategies..................................................................................29
Table 2.7. Porter’s Five Generic Strategies.............................................................29
Table 2.8. SWOT analysis model............................................................................31
Table 2.9. QPSM Model..........................................................................................32
Table 3.1. Academic level of VSP’s employees......................................................43
Table 3.2. VSP’s business operation performance until 31/12/2016.......................43
Table 3.3. Conditions that cause high rivalry in oil and gas industry......................50
Table 3.4. Conditions that increase consumer bargaining power in oil & gas
industry.............................................................................................................51
Table 3.5. VSP’s EFE matrix..................................................................................55
Table 3.6. The Competitive Profile Matrix among VSP, PTSC and Mcdermott.....57
Table 3.7. VSP’s IFE Matrix...................................................................................62
Table 3.8. VSP’s SWOT analysis............................................................................63
Table 3.9. VSP’s 2017-2022 QSPM based on Strategy S/O....................................65
Table 3.10. VSP’s 2017-2022 QSPM based on Strategy S/T..................................68
Table 3.11. VSP’s 2017-2022 QSPM based on Strategy W/O................................70
Table 3.12. VSP’s 2017-2022 QSPM based on Strategy W/T.................................72
viii
LIST OF FIGURES, GRAPHS AND CHARTS
Figure 1.1. Foundation of Vietsovpetro.....................................................................3

Figure 1.2. Chart of Crude Oil Price since 1991........................................................4
Figure 1.3. Chart of Crude Oil Exploited Output since 1991....................................5
Figure 2.1. Process of strategic management...........................................................15
Figure 2.2. A comprehensive strategic management model....................................16
Figure 2.3. Different levels of strategies..................................................................17
Figure 2.4. External audit process...........................................................................20
Figure 2.5. PEST analysis model.............................................................................21
Figure 2.6. Michael Porter’s Five-Forces model of competition.............................21
Figure 2.7. Barriers to entry a new industry............................................................22
Figure 2.8. The Five functions of Management.......................................................26
Figure 2.9. A strategy evaluation framework..........................................................34
Figure 3.1. Important historical milestone of VSP..................................................38
Figure 3.2. Highlight Products and Services of VSP...............................................39
Figure 3.3. Level 1 of VSP’s Organization Chart....................................................40
Figure 3.6. VSP’s Human Resource in the last 5 years...........................................42
Figure 3.7. Chart of Oil sales in the last 5 years......................................................44
Figure 3.8. Vietnam’s GSP growth rate since 2001.................................................47
Figure 3.9. Vietnam’s population demographics by age..........................................49
Figure 3.10. VSP’s Porter’s Five-Forces model......................................................51
Figure 4.1. VSP’s system to manage the provision of services to external clients. .80
ix
Vo Thi Phuong Linh-IEMBA-Intake 06
INTRODUCTION
Researching business strategies in general is not a new issue but it has become
an essential and critical norm for a business to prosper or to overcome
problems. In the case for Joint Venture Vietsovpetro, a company with 85% of
its revenue come from the sales of crude oil, it is now being faced with the
difficulties and hardships from the current situation where the price of crude
oil is seriously dropping from 120USD/barrel in 2012 to 45USD/barrel in
2016, and this trend is expected to continue in the next few years.
Therefore, the main content of this dissertation is to build business strategies

for Vietsovpetro in the next 5 years to fight against the threats from oil price
declining and continue to sustainably develop. The results will be given
through analyzing the background and current performance of Vietsovpetro, as
well as the key internal and external factors that contribute to the success of
Vietsovpetro. Relevant and credible theoretical bases will be applied to ensure
the usefulness and rationality of the dissertation.
Finally, this dissertation will propose the solutions to implement the

established strategies and the measures to evaluate those implemented
strategies, as well as some recommendations to important stakeholders of
Vietsovpetro to facilitate the strategic management process. Besides, some
limitations of the research will also be addressed.
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CHAPTER 1
: GENERAL INTRODUCTION OF RESEARCH
This chapter provides the overview introduction of why the author chose the
dissertation topic, the objectives and questions of the research, how the research is
significant, what are the theoretical framework and research methodology to base
on, and the limitations of the study.
1.1 Dissertation Topic

“BUSINESS STRATEGY OF VIETSOVPETRO IN PERIOD OF 2017-2022”
is registered as the official topic of this study.
1.2 Rationale for choosing the Topic

Vietnam’s oil and gas industry is currently the country’s highest value export sector
and a major procurer of imported technology, services, and equipment. Until 2016,
Vietnam has produced approximately 200 million tons of crude oil, meeting 30%
the demand of energy. Besides, oil and gas industry contributes 28-30% to
Vietnam’s State budget every year (Vietsovpetro, 2017).
Vietnam ranked 28th among 52 countries that have oil and gas potential in the
world. By the end of 2015, the proven crude oil reserves of Vietnam were
approximately 4.4 billion barrels and ranked first place in Southeast Asia, while the
proven gas reserves were about 0.6 trillion cubic meters (Tcm) and ranked the third
place in the South East Asia (after Indonesia and Malaysia) (Le, VT, 2016).
Since the first oil at Bach Ho (White Tiger) field (Block 09-1) in 1986, the Vietnam
National Oil and Gas Group (Petrovietnam) has made significant progress and
strived to be the backbone of the national economy. Petrovietnam also plays an
important part in the process of industrialization and modernization of the country,
contributing averagely about 25 - 30% of the total annual state budget revenues (Le,
VT, 2016). Petrovietnam has uplifted Vietnam’s position in the community of oil
producing countries and contributed to raising Vietnam's international reputation.
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So far, Petrovietnam has built an integrated oil and gas value chain, including
exploration and production, processing and oil and gas services.
Joint Venture Vietsovpetro was founded on 19 June 1981 on the basis of

governmental agreement between Vietnam (represented by Petrovietnam) and the
former Soviet Union, whose successor is Russian Federation (represented by the
company Zarubezhneft). With the multi – section subsidiaries and divisions, highly
qualified staff and a massive quantity of equipment/facilities, Vietsovpetro is the
only company in Vietnam, who can provide integrated services for Oil & Gas
industry, covering from the very beginning of exploration, reservoir estimation to
the final stage of crude oil production in the industry.
Figure 1.1. Foundation of Vietsovpetro
Vietsovpetro is currently an operator with the two largest oil fields in offshore
Vietnam: White Tiger and Dragon fields. Vietsovpetro is also ownership of more
than 30 offshore facilities including Wellhead platforms, Central Processing
Platform, Stateline Platforms and FSO/FPSO (floating production, storage and
offloading); vessels including heavy lift vessels, tug boats/supply vessels, diving
support vessels, and transportation barges.
VSP's Core Businesses include conducting scientific research, exploration drilling,

field development engineering, producing - gathering – processing oil, gas and
condensate in Block 09-1. Provide technical and petroleum-related services to
clients in Vietnam, Russian Federations and third-party countries.
After 35 years of constant development, VSP now consists of 17 subsidiaries and

divisions, who employed over 7,000 certified scientific researchers, technicians,
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managers and highly-skilled labors, capable to conduct all petroleum exploration

and production activities in Vietnam and South-east Asia (Vietsovpetro, 2017).
By April 2016, Vietsovpetro has exploited over 220-million tons of crude-oil,

gathered and transported back-to-shore over 30-billion cubic-meters of gas,
produced over 75-billion USD in turnover, of which 47-billion USD is returned
back to State Budget and Vietnamese profits. With these achievements,
Vietsovpetro is now recognized as the most effective and efficient venture in the
field of petroleum exploration and production in Vietnam, and considered a great
contributor to the economy of Vietnam.
However, since the middle of 2014, the world’s oil and gas industry has been faced
with a lot of difficulties and hardships relating to the significant drop of crude oil
price from 120USD/barrel in 2012 to 45USD/barrel in 2016 (as below chart 1.2),
severely affecting all oil & gas companies, including Vietsovpetro. This
phenomenon has led to the declines of capital investments, delay or cancellation of
many projects, significant loss of revenue … In addition, after 35 years of
exploration and production, the output and reserves of crude oil are also decreasing
quickly, since the peak production in 2002 of 13.5 million tons of crude oil, annual
output of oil exploitation of VSP decreased on average 1 million tons per year to 5
million tons in 2016 (as below chart 1.3). Both below charts 1.2 and 1.3 are based
on information from Vietsovpetro (2017).
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Crude oil Price (average, USD/barrel)

140
120
100
80
USD/barrel
60
40
20
0
91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16
19 19 19 19 19 19 19 19 19 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20
Axis Title
Crude oil Price (average, USD/barrel)
Figure 1.2. Chart of Crude Oil Price since 1991
Crude Oil Exploited Output since 1991

16000
14000
12000
10000
Thousand tons
8000
6000
4000
2000
0
91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16
19 19 19 19 19 19 19 19 19 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20
Axis Title
Crude Oil Output (thousand tons)
Figure 1.3. Chart of Crude Oil Exploited Output since 1991
(Vietsovpetro, 2017)
Vietsovpetro is a big company and currently is conducting business strategies,

however, now being faced with a lot of difficulties, the current strategies are not
suitable anymore and need to be re-examined, reviewed and adjusted by applying
the cycle of strategic management process described in Figure 2.2. Also, by going
Page | 5
through the process from the first stage, new relevant strategies are expected for the
company.
Therefore, in this dissertation, the author boldly chose the topic “Business strategy
of Vietsovpetro in period 2017-2022” for the purpose of thoroughly reviewing,
examining, analyzing all of its current strategies and make effective
recommendations to help the company overcome difficulties and develop in the
next 5 years.
1.3 Issues, objectives and questions of the research
1.3.1 Research issues
The issues of this study are to review, analyze and evaluate the current performance
of Vietsovpetro and to determine the current strengths and weaknesses of the
company, then identify the external opportunities and threats to build business
strategies accordingly and to propose solutions to implement strategic objectives.
This research develops a theoretical basis for development strategies of
Vietsovpetro in the next 5 years from 2017 to 2022, in which the company will be
faced with a lot of difficulties coming from the oil price drop and the decline of
crude oil output.
1.3.2 Research objectives
- Identify the current situation that Vietsovpetro is having due to the oil
price drop and the decline of crude oil output.
- Propose solutions to overcome the above problems based on reviewing,
analyzing and adjusting all current strategies of Vietsovpetro.
- Recommend a 5-year plan to implement the solutions and adjusted
business strategies for Vietsovpetro.
1.3.3 Research questions
To meet these objectives, three research questions are developed as follows:
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- Which products and services does Vietsovpetro provide? What are the
current strategies and organizational structure of the company?
- What are the difficulties that Vietsovpetro is having and will have
because of the oil price drop and decline of crude oil output? How to
develop business strategies for the company to overcome these hardships
and implement an effective business?
- What are solutions to implement the business strategies selected?
1.4 Significance of the research

The first significance of this research is to review and apply where possible all
theoretical knowledge learnt from the IEMBA program to fully understand how a
business works and to be able to make proper recommendations.
This research can also be used as a reference; is can also be used to develop
business strategies for other companies with similar business characteristics.
Building the development strategy for Vietsovpetro up to 2022 through analyzing

all aspects of the company to form skills and contribute better to the performance of
the company.
Supporting the company to achieve its goals effectively and sustainably due to the
ability to take opportunities, limit risks, overcome difficulties in the short term and
prosper in the long term and make a better use of resources.
This research will be applied to support and make recommendations to the

management of Vietsovpetro in the next 5 years.
1.5 Theoretical framework

In this dissertation, technical and strategic administration tools and concepts of
strategy and strategic management are used to research and develop business
strategies for the company.
To analyze and evaluate inside and outside environmental factors influencing the
company, external audit in parallel with the internal audit will be provided to
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develop the effective strategies recommendation with the existed one that being
process by the board of directors.
1.4
1.5
1.5.1 External audit
For external audit, several models will be used to have a thorough overview of how
the company is influenced by the external environment as follows:
- PEST analysis: a management tool, which helps assess the macro-
environmental factors. The analysis can be conducted for companies,
projects, and even countries. PEST analysis is an acronym for Political,
Economic, Social and Technological.
- Porter’s Five Force analysis: in the recent years Vietsovpetro has put a lot
of efforts in providing services to external clients besides self-production.
Therefore an analysis on the competitiveness of the industry is essential
for planning next steps. Porter’s Five Forces tool is the good way to
define the industry structure that can determine the company’s position in
the present and future so that they can measure the profitability of the
business segment in the industry. Porter’s five forces comprise:
competitive rivalry within an industry, threat of new entrants, threats of
substitute products, bargaining power of buyers /customers, and
bargaining power of suppliers.
- Industry Analysis: The External Factor Evaluation (EFE) Matrix: allows
strategists to summarize and evaluate economic, social, cultural,
demographic, environmental, political, governmental, legal,
technological, and competitive information. The aim of this matrix is to
identify the key external opportunities and threats that are affecting or
might affect a company and thus provide the basis for solutions.
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The Competitive Profile Matrix (CPM): Competitive profile matrix is a

tool that helps identify key competitors, their particular advantages and
disadvantages, the total importance score of competitors is also calculated
to determine competitiveness compared to the sample company.
1.5.2 Internal audit
In the process of internal audit, information about the firm’s system of management,
marketing, finance/accounting, production/operations, research and development
and management information system … will be collected and assimilated. To
summarize and evaluate the major strengths and weaknesses in functional areas of a
business, a strategic management tool will be used: the IFE (Internal Factor
Evaluation) matrix.
- The basic functions of management consist of five basic activities:
Planning, organizing, motivating, staffing and controlling.
- Marketing: even though providing services for external clients is not a
strong contribution of revenue to Vietsovpetro, in the recent years this
area has been focused to develop. Marketing can be described as the
process of defining, anticipating, creating, and fulfilling customers’ needs
and wants for products and services. There are seven basic functions of
marketing: customer analysis, selling products/services, product and
service planning, pricing, distribution, marketing research, and
opportunity analysis. Understanding these functions helps strategists
identify and evaluate marketing strengths and weaknesses.
- Finance/accounting: Financial condition is often considered the single
best measure of a firm’s competitive position and overall attractiveness to
investors. Determining an organization’s financial strengths and
weaknesses is essential to effectively formulating strategies. By analyzing
a firm’s financial ratios, liquidity, leverage, working capital, profitability,
asset utilization, cash flow, and equity, strategies can be determined as
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being feasible alternatives or not. Financial factors often alter existing

strategies and change implementation plans.
- Production/operations: The production/operations function of a business
consists of all those activities that transform inputs into goods and
services. Production/operations management deals with inputs,
transformations, and outputs that vary across industries and markets.
Production/operations management comprises five functions or decision
areas: process, capacity, inventory, workforce, and quality.
- Research and development: R&D is an important function of
Vietsovpetro as the company has to continuously find out new
technologies and methods to improve productivity and search for new oil
and gas resources.
- Management information system: Information is the most important
factor in businesses right now. It connects the functions to gather and
provide the information timely for managerial decision.
1.5.3 Strategies building, selection and implementation
Based on the analysis on the internal and external audit, several types of strategies
and strategy alternatives will be built to meet the company’s objectives. In order to
evaluate and select the strategies to implement, certain models will be used such as:
- SWOT analysis: another strategic planning tool that helps a business
identify its own strengths and weaknesses, as well as any opportunities
and threats coming from the external environment. Based on that, a
business’s management board can come up with appropriate strategies to
meet its objectives;
- QSPM (Quantitative Strategic Planning Matrix), which is a technique
designed to determine the relative attractiveness of feasible alternative
strategies generated through SWOT analysis.
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The implementation of selected strategies must take into account all possible issues
relating to all the functions that they may involve. The implemented strategies must
be reviewed, evaluated and controlled on a regular basis during the process to
achieve the best results.
1.6 Research methodology
1.5.
1.6
1.6.1 Data collection methods
This paper uses both quantitative and qualitative research methods to collect
relevant data for the purpose of meeting the objectives of this dissertation, including
but not limited to: theoretical models and methods to build strategies, existing data
and information from published sources, production of primary data suitable for this
dissertation, surveys or in-depth interviews with some key personnel ...
1.6.2 Data Analysis
The data analyzed here are based on the following documents, including but not
limited to existing information and documentations of Vietosvpetro, its policies and
regulations, its organizational chart, structural and functional responsibilities of all
subsidiaries, divisions and departments of Vietsovpetro, their operation/production
manuals and procedures, news in the oil and gas industry and other relevant
documents …
From these information of data analysis, the company's strengths and weaknesses
and the external opportunities and threats can be identified so that appropriate
business strategies can be selected and optimal solutions can be recommended for
the company to implement business strategies it has chosen.
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1.7 Limitations of research

With the limited resources of time and budget of the research, this dissertation has
some research limitations in the following ranges:
- Interview and survey objects encapsulated within employees and clients
who are working with the company. And the sample size is not a guarantee
for the overall representation.
- Short time to learn and study.
- The research has been conducted for Vietsovpetro specifically, and with
some unique characteristics of Vietsovpetro being a joint venture between
two governments, therefore the results may not be true to other oil and gas
companies.
- The secondary data used come from many different sources and may not be
consistent or accurate.
- The primary data collected and produced by the author may not be totally
correct because the author has limited access to confidential and decision-
making information of the company due to the humble position of the
author.
- This research can only be applicable for a short span of time (in the next 5
years) because it serves to help the company overcome this difficult period
where the price of crude oil has been deteriorated sharply and the crude oil
output has been declining. However, these phenomenon are not a long-term
tendency, oil price is expected to recover after a certain period of time and
new oil and gas resources are expected to be discovered.
1.8 Structure of research chapters
The main structure of the dissertation consists of 4 chapters as follows:
- Chapter 1 - General Introduction of Research: introduction of the reasons

for choosing the topic, objectives and questions of the research,
significance of the research, introduction of the theoretical framework,
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research methodology, the limitations of the study and the structure of the
Dissertation.
- Chapter 2 - Theoretical bases: detailed development of the theoretical
framework introduced in chapter 1 and how they relate to and support the
dissertation topic. In addition, research methods are to be specified with
explanations and executed.
- Chapter 3 - Data Analysis: overview of Vietsovpetro, analysis of the
business situation and performance in the last 3-5 years. The collected data
of the researches in chapter 2 will be analyzed to identify the company’s
problems, strengths and weaknesses as well as the external opportunities
and threats. Based on that, business strategies will be generated, evaluated
and selected.
- Chapter 4 - Conclusions and Recommendations: based on the results of
data analysis in chapter 3, this chapter will propose solutions to implement
the selected strategies and then solutions to evaluate the implement
strategies. In addition, some recommendations to joint venture’s parties and
the State of Vietnam will be given and the limitations of the research and
future research direction will be addressed.
Besides, the Dissertation is also accompanied with other documented content such
as the table of contents, acknowledgement, introduction, references and appendices.
Page | 13
Chapter 2 : THEORETICAL BASES
This chapter introduces the detailed development of the theoretical framework

introduced in chapter 1: the concepts of business strategies and strategic
management, the models to analyze and develop strategies for the company. In
addition, research methodology will be specified with explanations.
2.1 Concepts of business strategies and strategic management
2.1.1 Strategies definition
Strategies can be defined and applied in every aspect of life, for example:
In military, strategies can be defined as the science and art of employing the
political, economic, psychological, and military forces of a nation or group of
nations to afford the maximum support to adopted policies in peace or war
(Merriam-Webster. 2017)
In normal life, strategies can be simply defined as a method or plan chosen to bring
about a desired future, such as achievement of a goal or solution to a problem.
In organizations, Michael Porter, a strategy expert and professor at Harvard

Business School, as early as in the 1990s emphasized the need for business strategy
to define and communicate an organization's unique position, and it should
determine how organizational resources, skills, and competencies should be
combined to create competitive advantage and achieve long-term objectives (Porter
1996).
As defined, the need for strategies is therefore undeniable, especially for an

organization in order to survive, develop and prosper.
2.1.2 Strategic Management definition
Building corporate strategies for an organization is a prerequisite, they must also be

managed effectively to reach what the organization wants to achieve. According to
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David (2011), Strategic managementcan be defined as the art and science of

formulating, implementing, and evaluating cross-functional decisions that enable an
organization to achieve its objectives. The focus of this definition is on integrating
organizational functions such as management, marketing, finance/accounting,
production/operations, research and development, and information systems to
achieve organizational objectives. The purpose of strategic management is to take
advantage of the existing resources and create new and different opportunities for
long-range planning.
Strategic management brings essential benefits to an organization such as:

- Identification, prioritization, and exploration of opportunities;
- Organization acts proactively rather than reactive to any situation;
- Financial benefits: organizations that engage in strategic management are
more profitable and successful than those that do not. High-performing firms
tend to do more careful strategic planning to prepare for future fluctuations
in their external and internal environments, hence exhibit superior long-term
financial performance relative to their industry.
- Non-financial benefits: organizations that engage in strategic management
are more aware of the external threats, of competitors’ strengths and
weaknesses and have improved employee productivity as well as lesser
resistance to change. Strategic management is essential as it helps firms to
recognize the changes and communicate the need to change better to their
employees. Finally, strategic management helps increase the discipline and
integration of the organizations in its both internal processes and external
activities.
(Benefits of Strategic Management. 2017.)
2.2 Process of strategies developing and management

There are several models and methods to build strategies for the organizations and
they also vary depending on the characteristics of the businesses. David (2011) has
Page | 15
introduced a common and basic process model of strategies developing and

management which is widely accepted and applied by the majority of organizations.
Therefore, this model will be used in this research for Vietsovpetro. The theoretical
bases of this model will be explained in this section.
The process of strategic management consists of three stages as follows:
Strategy formulation
Includes establishing a vision and mission, identifying external opportunities
and threats and internal strengths and weaknesses
-> establish long-term objectives -> generate alternative strategies
-> Strategies evaluate and selection.
Strategy implementation
Execute the formulated strategies by establishing annual objectives,
policies, allocating resources and motivating managers and employees to
work together toward the stated objectives with enthusiasm.
Called the “action stage” of strategic management: employees and
managers are motivated to put formulated strategies into action. This stage
requires a lot of efforts in discipline, commitment, and sacrifice. Successful
strategy implementation depends on managers’ ability to motivate
employees, which is more an art than a science. Strategies formulated but
not implemented serve no useful purpose.
Strategy evaluation
The final stage in strategic management. All strategies are subject to future
adjustment because external and internal factors are constantly changing.
Review, control and modify the implemented strategies to make sure they are
working well through (1) reviewing external and internal factors that are the
bases for current strategies, (2) measuring performance, and (3) taking
corrective actions.
Page | 16
Figure 2.4. Process of strategic management
Perform external audit
Develop vision and mission statements

Establish long-term
Generate,
objectives
evaluate and select
Implement
strategiesselected
Measure
strategies
and evaluate implemented strateg
Perform internal audit
Strategy Strategy Strategy

formulation implementation evaluation
These three stages can also be represented by a more detailed and comprehensive
model as below:
Important characteristics of strategic management:

- Strategic management must adapt to changes: with the current rapid
development of the world’s all aspects such as communications, information
technology, trends and tendencies…, changes happen everyday. New
competitors can appear without notice and the competition is always fierce
and surprising. If a business cannot follow up with the changing
environment, that business cannot survive. Its decision makers must have
Page | 17
thorough understanding of the environment and must be aware of when the

current strategies are not appropriate anymore and need to be modified or
pursue new ones.
- Strategic management requires a combination of intuition and analysis:

analysis is essential, but good intuition (built based on experience and
knowledge) is a very important factor to build and choose the best strategies.
These two factors must be combined together in strategic management as
they complement each other and only one cannot bring to success, analysis
needs good intuition to decide the most effective strategies to implement,
intuition needs careful analysis to avoid making wrong decisions.
- Strategic management is a regular and continuous process: Periodically

(annually, semi-annually, quarterly, monthly…), strategic managers must
review and evaluate strategies in order to make appropriate adjustments in
accordance with the changing business environment.
- Strategic management is applied in all levels, from the top to the bottom and
requires participation of all level of employees to achieve the highest level of
effectiveness. Levels of strategy of multidisciplinary company are described
as follows:
Increase the responsibilities
Page | 18
Figure 2.6. Different levels of strategies
(Mintzberg H., Ahlstrand B. & Lampel J.B., 2009)
In order to have a thorough understanding of the whole process, each of the above
stages and characteristics shall be researched and studied in further details. In this
dissertation, in order to build business strategies for Vietsovpetro in the next 5 years
2017-2022, the first stage of strategy formulation will be the main focus of the
study. The next two stages will be moderately explained and discussed.
2.3 Developing business strategies

As demonstrated above, the stage of strategy formulation consists of the following
steps:
- Develop vision and mission statements and understand their importance;
- Perform external audit through analyzing external factors affecting the
organization and identifying the opportunities and threats.
- Perform internal audit through analyzing internal factors contributing to the
performance of the organization and determining the firm’s strengths and
weaknesses;
- Establish long-term objectives;
- Understand different types of strategies and generate appropriate alternative
strategies for the organization;
- Evaluate and analyze the alternative strategies and make the decision on
which strategies to implement.
2.3.1 Develop vision and mission
Vision, mission are the “head” of strategy. A business without a vision will not
reach destination; without a mission will have no purpose. The terms vision and
mission should not be mistaken as one, they can be differentiated as: vision is “a
possible and desirable future state of an organization” that includes specific goals,
whereas mission is more associated with behavior and the present.
2.
Page | 19
2.1
2.2
2.2.1.
2.2.2.
 Vision
It is especially important for all managers and employees in any organization to
understand and agree on the basic vision that the firm strives to achieve in the long
term. A vision statement should answer the basic question, “What do we want to
become?”. A clear vision should be established first and foremost and provide the
foundation for developing a comprehensive mission statement. The vision statement
should to be concise, preferably one sentence, and should involve as many
managers and employees as possible to enhance the integrity and establish a strong
and appropriate vision statement.
 Mission
The mission statement is a declaration of an organization’s “reason for being”, what
the organization wants to be and whom it wants to serve, also, the mission statement
is the point of differentiation from other similar competitors. It answers the basic
question “What is our business?”. A clear mission statement is essential for
effectively establishing objectives and formulating strategies, to design managerial
structure, tasks and responsibilities of functions, jobs assignments …
A Mission Statement should have the following characteristics:
- Broad in scope; do not include monetary amounts, numbers, percentages,
ratios …;
- Concise with less than 250 words in length;
- Inspiring, reconciliatory, enduring;
- Identify the utility of a firm’s products;
- Reveal that the firm is socially and environmentally responsible;
Page | 20
- Include nine components: customers, products or services, markets,

technology, concern for survival/growth/profits, philosophy, self-concept,
concern for public image, concern for employees.
 Importance of vision and mission
Researched showed that firms that develop and systematically revisit their vision
and mission statements, treat them as living documents, and consider them to be an
integral part of the firm’s culture realize great benefits. Developing clear vision and
mission statements is the very first step before alternative strategies can be
formulated and implemented. As many managers and employees as possible should
be involved in the process of developing these statements because involvement
motivates great commitment to an organization. An organization benefits a lot from
having a clear Mission and Vision statement:
- Increase the level of unification among all managers and employees.
- Provide a basis for all other strategic planning activities, including the
internal and external audit, developing objectives, generating strategies and
choosing among alternative strategies.
- Provide a focal point, a sense of worth and intent for all stakeholders of the
firm and potential stakeholders.
- Promote a sense of shared expectations and synergy among all managers and
employees.
2.3.2 External audit
An external audit focuses on identifying and evaluating trends and events beyond
the control of a single firm. An external audit reveals key opportunities and threats
confronting an organization so that managers can formulate strategies to take
advantage of the opportunities and avoid or reduce the impact of threats. According
to Pearce J.A. & Robinson R.B. (2011), external factors assessment can be
explained in analyzing three environments as follows:
Page | 21
Assess the influence on the

Macro environment
organization of macro-
environmental factors
including Political, Economic,
Social, and Technological.
Model used: PEST.
External environment
Competitive environment
Industry
Assess the influence on the organization

of the competition to determine the Assess the influence of the industry
organization’s position in the race. that the organization is operating in.
Model used: Porter’s Five-forces model. Models used: EFE matrix, CPM.
Figure 2.7. External audit process
2.3
2.3.1.
2.3.2.
2.3.2.1. Macro environment analysis
An efficient and widely recognized by the world tool to analyze the macro
environment is PEST model. The inventor of the PEST analysis was said to be
Professor Francis J. Aguilar through his book “Scanning the Business
Environment” in 1964 (according to Collins, R.J. 2014).
Government type, policies and political stability

Political Funding, grants and initiatives
Economic growth
Economical Inflation, Interest and Exchange rates
Labor and Energy costs
Population, education, media
Social Lifestyle, fashion, culture
Emerging technologies, research &developement

Technological Information and communication, Internet
Figure 2.8. PEST analysis model
2.3.2.2. Competitive environment analysis
Page | 22
To analyze the competitive analysis is equivalent to analyze the micro environment

surrounding the organization. Porter’s Five-Forces model is often used by
businesses for developing strategies due to its relevance and usefulness. According
to Michael Porter, five competitive forces in the sector can be categorized as
follows:
Figure 2.9. Michael Porter’s Five-Forces model of competition

(Michael E. Porter. 2008)
 Rivalry among competing firms

Rivalry among competing firms is usually the most powerful of the five competitive
forces. The conditions that cause high rivalry among competing firms are listed in
the below Table 2.1. As rivalry among competing firms becomes more intense, that
industry may become inherently unattractive because of profit decline. On the other
side, if a firm sense its competitors’ weaknesses, it can consider that as an
“opportunity” and will focus on marketing and production efforts to surpass the
competitors.
Table 2.1. Conditions that cause high rivalry among competing firms
No
Conditions No. Conditions
.
When barriers to entering the
1 High number of competing firms 7
market are low
2 Similar size of firms competing 8 When the product is perishable
3 Similar capability of firms competing 9 When rivals have excess capacity
Page | 23
and inventory
Falling demand for the industry’s When rivals sell similar
4 10
products products/services
When consumers can switch brands Falling product/service prices in the
5 11
easily industry
When barriers to leaving the market
6
are high
 Potential entry of new competitors
The easier the new firms can enter a Econo-
mies of
Level of scale
particular industry, the more intense market
Technolo-
gies
saturation
competitiveness among firms becomes.
Possesion Level of
The strategist’s job, therefore, is to of Barrier required
patents s to experience
identify potential new firms entering the
entry Customer
market, to monitor the new rival firms’ Govern- loyalty and
ment brand
regulation
strategies, to counterattack as needed, and preferences
Capital Access to
require- raw
to take advantage of existing strengths ment materials
and opportunities.
Figure 2.10. Barriers to entry a new industry
 Potential development of substitute products

Industries which have more substitute products and services will be more intense in
terms of competition because customers have more power in choosing the most
suitable products among the variety. The presence of substitute products creates a
“price ceiling” that can be charged before consumers will switch to the substitute
product. Determining the level of competiveness coming from substitute products, a
firm can review its current product strategies and make modifications to its product
portfolio to win over the fierce competition.
 Bargaining power of suppliers
The bargaining power of suppliers affects the intensity of competition in an
industry, especially when there is a large number of suppliers, but only a few can
supply good substitute raw materials, or when the cost of switching raw materials is
Page | 24
especially costly. To reduce the bargaining power of suppliers, if they are

unreliable, too costly, or not capable of meeting a firm’s needs on a consistent basis,
firms may apply a backward integration strategy, involving the purchase of, or
merger with, suppliers up the supply chain (Investopedia. 2017)
 Bargaining power of consumers
When customers are concentrated or large or buy in volume, especially for the
products being standardized or undifferentiated, customers can negotiate on the
selling prices, the accompanying services and values to a greater extend. Thus, their
bargaining power increases, which increase the intensity of competition in an
industry. In summary, consumers gain bargaining power when:
Table 2.2. Conditions that increase consumer bargaining power
No Conditions
.
1 If they can inexpensively switch to competing brands or substitutes
2 If they are particularly important to the seller
3 If sellers are struggling in the face of falling consumer demand
4 If they are informed about sellers’ products, prices, and costs
5 If they have discretion in whether and when they purchase the
product
2.3.2.3. Industry analysis

Industry analysis is a tool that evaluates the opportunities and threats identified
from the macro and competition analysis and facilitates a company's understanding
of its position relative to other companies that produce similar products or services.
 EFE Matrix
An EFE (External Factor Evaluation) Matrix is a strategy tool used to examine
company’s external environment and to identify the available opportunities and
threats. The summarized information is evaluated and used for further purposes,
such as, to build SWOT analysis or IE matrix as the basis to formulate strategies.
Even though the tool is quite simplistic, they do the best job possible in identifying
Page | 25
and evaluating the key affecting factors. (See below sample Table 2.4 and Appendix
1 for the detailed steps to build a EFE matrix)
Table 2.3. EFE Matrix sample
Key external factors Weight Rating Weighted
Score
Opportunities
…
Threats
…
Total 1.00
 CPM Matrix:
The Competitive Profile Matrix (CPM) is a tool that helps identify a firm’s key
competitors, their particular strengths and weaknesses in order to determine the
strategic position of that firm in the related industry. The weights and total weighted
scores in both a CPM and an EFE have the same meaning. However, critical
successfactors in a CPM include both internal and external issues; therefore, the
ratings refer to strengths and weaknesses, where 4 = major strength, 3 = minor
strength, 2 = minor weakness, and 1 = major weakness. The critical success factors
in a CPM are not grouped into opportunities and threats as they are in an EFE. In a
CPM, the ratings and total weighted scores for rival firms can be compared to the
sample firm.
Table 2.4. CPM sample
Critical success Company A Company B Company C
Weight
factors Rating Score Rating Score Rating Score
…
Total 1.00
In conclusion, with the fast changing pace of the business world nowadays, the
external audit has become an explicit and vital part of the strategic-management
process, and should be performed as regularly as possible with all existing
resources.
Page | 26
-"It is not the strongest of the species that survive, nor the most intelligent, but the
one most responsive to change." - (Quote of Charles Darwin, the world’s famous
naturalist, geologist and biologist)
2.3.3 Internal audit

To identify the strengths and weaknesses of an organization is to analyze its internal
environment. The strengths must be identified to develop and enhance, the
weaknesses must be identifies to eliminate and overcome. When analyzing the
internal environment, we will answer questions such as: what are advantages and
disadvantages of the company? What are resources and ability to create advantages
and disadvantages? What are factors making the company competitive and
sustainable for development? Internal audit should be performed in parallel with
external audit to have the overall picture of the business.
2.3.3.
2.3.3.1. Key internal forces
The internal audit requires gathering and assimilating information about the firm’s
key internal forces such as management, marketing, finance /accounting,
production/ operations, research and development (R&D), human resource
management and management information systems.
 Management
The functions of management consist of five basic activities: planning, organizing,
motivating, staffing, and controlling.
Page | 27
Planning
Draw out a future course of action & deciding in advance the most appropriate course
of actions to achieve objectives.
Organizing
The process of bringing together physical, financial and human resources and
developing productive relationship amongst them for achievement of organizational
goals.
Motivating
Motivating involves efforts to shaping human behavior of employees towards
achieving the objectives.
Staffing
The function aims to ensure the organization always has the right people in the right
positions and the organizational structure isn’t hindered by lack or excess of
personnel.
Controlling
The process of checking whether or not proper progress is being made towards the
objectives and goals and acting if necessary, and to take corrective actions.
Figure 2.11. The Five functions of Management
 Marketing
Marketing activities in businesses include: market research to identify business
opportunities, strategic planning of product distribution and price to suit the market
where such enterprises are heading towards, and is a key factor enabling supply and
demand on the market to meet, and is an indispensable factor in promoting business
activities of enterprises.
 Finance/ Accounting
Concerning the use of material resources in businesses in each period, the analysis
and assessment of financial activities help businesses control over financial
activities in the enterprises. Financial factors such as: the ability to raise capital,
sources of capital, the ratio of loans and equity, cater business and production
decisions and help businesses better understand the cost to create advantages for
businesses.
 Production/ Operation
Page | 28
Production is the main activity of businesses, associated with the creation of

products and services with primary factors such as production capabilities, quality
of services, low cost satisfying customers. Analyzing production activities helps
enterprises create competitive advantages compared with rivals.
 Research and market development

It helps enterprises effectively apply advanced technologies, create a competitive
advantage in developing production, advancing product quality, improve production
processes and reduce costs.
 Human resources
Human resources include managers at all levels and the corporate executor.
Analyzing human resources helps enterprises timely evaluate the strengths and
weaknesses of members of the organizations, in every function parts compared with
their job requirements to have reasonable treating, organizing and training plans,
and rational use of resources, helping enterprises assure the success of proposed
strategies.
 Information system
Analyzing information system helps assess whether the enterprise's information is
complete, collected accurately and timely among parts or not, and helps businesses
get accuracy and full information for the construction of right strategies.
2.3.3.2. Internal audit summary and evaluation

A summary step in conducting an internal strategic-management audit is to
construct an Internal Factor Evaluation (IFE) Matrix. This strategy-formulation tool
summarizes and evaluates the major strengths and weaknesses in the functional
areas of a business, it helps answer these questions: What strengths that the firm has
and how are they better than those of competitors ? What weaknesses are existing
and how to improve or eliminate them or at least catch up with the competitors?
Page | 29
(See below sample Table 2.5 and Appendix 2 for the detailed steps to build a IFE
matrix)
Table 2.5. IFE Matrix sample
Key internal factors Weight Rating Weighted
Score
Strengths
…
Weaknesses
…
Total 1.00
In conclusion, a strategic-management audit of a firm’s internal environment is

vital to the organizational health and is essential to produce competitive advantages
over rival firms.
-"The idea is to concentrate our strength against our competitor’s relative
weakness."- (Quote of Bruce Henderson, founder of the Boston Consulting Group).
2.3.4 Generation of alternative strategies
2.3.4.
2.3.4.1. Develop long-term strategic objectives
Taken into account the above-described analysis on the vision and mission, the
external and internal factors, an organization should establish its long-term strategic
objectives to motivate an unified direction and purpose for the business as well as
its managers and employees to aim towards.
Long-term strategic objectives must be distinguished from financial objectives and

must be SMART: specific, measurable, achievable, realistic and timeliness
(according to Martin, J. & Fellenz, M., 2010). They are needed at all three levels of
an organization: corporate, business unit and functional.
2.3.4.2. Types of strategies
Page | 30
According to David, F.R. (2011), alternative strategies that an enterprise could

pursue can be categorized into 4 types of strategies as below table:
Table 2.6. Types of strategies

Types of strategy Strategy Definition
Integration Forward integration Gaining ownership or increased
strategies control over distributors or retailers
Backward Seeking ownership or increased
integration control of a firm’s suppliers
Horizontal Seeking ownership or increased
integration control over competitors
Intensive strategies Market penetration Seeking increased market share for
present products or services in
present markets through greater
marketing efforts
Market Introducing present products or
development services into new geographic area
Product Seeking increased sales by improving
development present products or services or
developing new ones
Diversification Related Adding new but related products or
strategies diversification services
Unrelated Adding new, unrelated products or
diversification services
Defensive Retrenchment Regrouping through cost and asset
strategies reduction to reverse declining sales
and profit
Divestiture Selling a division or part of an
organization
Liquidation Selling all of a company’s assets, in
parts, for their tangible worth
In addition, as early as in the 1908s, Michael Porter had introduced a model called
Michael Porter’s Five Generic Strategies to provide another useful tool to build
strategies for enterprises.
Table 2.7. Porter’s Five Generic Strategies
GENERIC STRATEGIES
Page | 31
Differentiatio
Cost Leadership (CL) Focus
n
Type 1: CL-Low Cost Type 3:
Large
SIZE Type 2: CL-Best value Differentiation
OF Type 4: Focus-Low cost
Type 3:
MARKET Small Type 5: Focus-Best
Differentiation
value
As described in the above Table 2.7, the five types of generic strategies are built
based on three general bases:
- Cost Leadership (CL): producing standardized products at a very low per-
unit cost for consumers who are price-sensitive. Type 1 is CL-low cost that
offers customers the lowest price possible of products and services; Type 2 is
CL-best value that offers customers products or services with the most
extended values and benefits at the most attractive price possible. Both Type
1 and Type 2 CL strategies are suitable for large markets;
- Differentiation: producing products and services considered unique industry
wide and directed at consumers who are relatively price-insensitive; and
- Focus: producing products and services that fulfill the specific needs of
specific small groups of consumers. Type 4 is a low-cost focus strategy that
offers that small group of customers (often called niche group) the lowest
price possible of products and services; Type 5 is a best-value focus strategy
that offers that niche group products or services with the most extended
values and benefits at the most attractive price possible. Both Type 4 and
Type 5 focus strategies are suitable for small markets.
2.3.5 Evaluation of alternative strategies and selection
Combining all the above analysis of external and internal environment and
generation of all types of strategies, comes the final and the most critical step of
strategy formulation stage: the evaluation of alternatives strategies and selection.
Using EFE matrix, IFE matrix and CPM matrix as inputs, an organization can apply
several tools and models such as SWOT analysis to produce the most available
Page | 32
appropriate strategies for the organization and finally the QPSM Matrix to select the
most effective ones. This step must be very carefully executed by the most capable
strategists in order to produce the most “correct” strategies for the organization to
survive, develop and prosper.
2.3.5.
2.3.5.1. SWOT Matrix

Credit to Albert Humphrey in the 1960-1970s, SWOT analysis has become very
well-known and recognized by the business world as a simple but useful model to
understand strengths, weaknesses, opportunities and threats in a business
organization. In the process of developing a strategic plan, SWOT analysis serves as
the most basic and effective tool to have an overall picture of the organization’s
performance in order to develop strategies.
SWOT analysis is an acronym for strengths, weaknesses, opportunities, and threats,

but this tool does not only list all the factors but also help develop strategies of how
to take advantage of the strengths and opportunities to overcome the weaknesses
and threats. A SWOT analysis can be simply described as below Table 2.8.
Table 2.8. SWOT analysis model
List Opportunities - O List Threats - T

(External, positive) (External, negative)
SO Strategies:
ST Strategies:
List Strengths - S Use strengths to take
Use strengths to avoid/
(Internal, positive) advantage of
minimize threats
opportunities
WO Strategies: WT Strategies:
List Weaknesses - W Overcoming weaknesses by
Minimize weaknesses and
(Internal, negative) taking advantage of
opportunities avoid threats
2.3.5.2. QSPM Matrix
Page | 33
After using the above SWOT analysis to develop all available appropriate
strategies, strategists can now come to the final decision stage of choosing the most
effective strategies among alternatives by using the Quantitative Strategic Planning
Matrix – QSPM.
The best thing about QSPM is that it never insists the strategist to enter the
information on assumptions, it extract the information and input previously and
analytically collected. The QSPM incorporates all earlier analysis of EFE matrix,
IFE matrix, CPM and SWOT analysis to calculate the score of multiple strategies,
combining with the intuitive thinking of strategists to decide the best strategy for
the organization success.
(See below sample Table 2.4 and Appendix 3 for the detailed steps to build a
QSPM)
Table 2.9. QPSM Model

ALTERNATIVE STRATEGIES
Strategy 1 Strategy 2 Strategy 3
Key factors Weight
AS TAS AS TAS AS TAS
Key External Factors
…
Key Internal Factors
…
Total 1.00
AS: Attractiveness Score, TAS: Total Attractiveness Score.
Limitations of the QSPM:

- Depends mostly on the prerequisite information and matching analyses upon
which it is based.
- Requires good judgment in assigning attractiveness scores. Also, the sum
total attractiveness scores can be really close such that a final decision is not
clear.
- Like all analytical tools however, the QSPM should not dictate decisions but
rather should be developed as input into the owner’s final decision.
Page | 34
At the end of the first stage of strategic management, strategists of an organization

must be able to formulate long-term strategies for the organization to act on and
yearn for achievements through the whole process of defining vision and mission,
performing external and internal audit that affect the organization, establishing
long-term objectives, generate alternative strategies and make selection decision.
2.4 Implementation of selected strategies

The second stage of strategic management is to implement the selected strategies
from stage 1, and is actually more difficult than strategy formulation since it
involves big efforts of all managers and employees to “actualize” the analytical
strategies. Excellent formulated strategies but poorly implemented will also result in
failure of the organization. Strategy implementation is also defined as the manner in
which an organization should develop, utilize, and amalgamate organizational
structure, control systems, and culture to follow strategies that lead to competitive
advantage and a better performance.
According to Hitt, M. & all (2017), the main steps in implementing a strategy
include:
- Resources must be acquired, developed, and configured to create the
capabilities needed for implementing the firm’s strategies;
- Governance actions from owners or board of directors are needed to direct
the formulated strategies in the correct way and ensure that proper actions
are taken to implement those strategies;
- Managing human capital: human capital is considered the most important
resource to implement strategies. The firm must engage in highly effective
HRM practices to attract, motivate, develop and retain the highest quality
human talents possible to reach successful strategy implementation.
- Accounting-based control systems: managing assets and controlling
managerial behavior play a critical role in strategy implementation, and this
can be done through accounting-based systems. Financial/accounting
Page | 35
controls help managers assess the effectiveness of strategies based on the

number figures of revenues, costs and profits.
2.5 Evaluation of implemented strategies

The final step of strategic management involves evaluating the implemented
strategies. The best formulated and best implemented strategies become obsolete as
a firm’s external and internal environments change. It is essential, therefore, that
strategists systematically review, evaluate, and control the execution of strategies.
The process of Strategy Evaluation consists of following framework:
Page | 36
ACTIVITY 1: REVIEW BASES OF STRATEGIES
Prepare revised EFE and IFE matrices and compare with the existing ones
Do significant differences occur? Yes
No
ACTIVITY 3: TAKE CORRECTIVE ACTIONS

ACTIVITY 2: MEASURE ORGANIZATIONAL PERFORMANCE
Modify strategies to promptly match with the changes and ensure desired
Compare actual progress to planned to see if the organization is going towards the stated objectives
Do significant differences occur? Yes
No
Continue present courses
Figure 2.12. A strategy evaluation framework

(David. 2011)
The three stages of strategic management are actually not performed in

consequence, but simultaneously in the best practices to ensure the most effective
and relevant strategic management to match with the always changing and
unpredictable future.
Page | 37
2.6 Research Methodology
2
2.3
2.4
2.5
2.6
2.6.1 Data collection methods
According to Saunders, M. (2009), there are two research methods which are
widely known and used by business practices:
- Quantitative method: is predominantly used as a synonym for any data
collection technique (such as a questionnaire) or data analysis procedure
(such as graphs or statistics) that generates or uses numerical data.
- Qualitative method: is used predominantly as a synonym for any data
collection technique (such as an interview) or data analysis procedure (such
as categorizing data) that generates or use non-numerical data. Qualitative
therefore can refer to data other than words, such as pictures and video clips.
This paper uses both quantitative and qualitative research methods to collect
relevant data for the purpose of meeting the objectives of this dissertation.
- Research on the theoretical basis using academic knowledge to offer
theoretical models and methods to build strategies.
- Using secondary data which are already available such as internal existing
reports, information, documents … and external available sources such as
newspaper, online information, published journals or documentary …
- Using internal information and date accessible to myself to produce primary
data suitable for this dissertation.
- Interviews/surveys with some specialists, key personnel such as department
managers, current employees or external experts on the field. Criteria to be
an expert for interview in survey:
Page | 38
 No bias over Vietsovpetro or its competitors

 Have academic knowledge and experience about the theories and
application of strategic management
 Have practical knowledge and experience about oil and gas industry,
about Vietsovpetro and its competitors.
2.6.2 Data Analysis

The data analyzed here are collected based on the following documents, including
but not limited to:
- The annual audited financial reports of Vietsovpetro in the last 3-5 years
- The company’s policies and regulations.
- The organizational chart, the structural and functional responsibilities of all
subsidiaries, divisions and departments of Vietsovpetro.
- Brochures of Vietsovpetro, which introduce all current products, services
and capacity that the company can offer.
- Operation/production manuals and procedures of Vietsovpetro to understand
how it works and where to improve
- News and facts about the oil and gas industry to see the tendency of changes
and forecast of the future.
- All other relevant documents …
From these collected and analyzed information and data, along with the theoretical
framework of strategic management descried in of this chapter 2, the company's
strengths and weaknesses and the external opportunities and threats can be
identified so that appropriate business strategies can be selected and optimal
solutions can be recommended for the company to implement business strategies it
has chosen.
2.7 Conclusion of Chapter 2

Developing business strategies for a company is a complex task, takes a lot of time
and resources, and must be done by capable strategists who have decision-making
Page | 39
power. Strategic management process of strategies formulating, implementing, and

then evaluating must be executed in long-term, with patience and systematically.
Good strategists move their organization forward with purpose and direction,
continually evaluating and improving the firm’s external and internal strategic
positions. Although not a guarantee for success, strategic management allows
organizations to make effective long-term decisions, to execute those decisions
efficiently, and to take corrective actions as needed to ensure success.
Page | 40
Chapter 3 : DATA ANALYSIS
This chapter provides an overview of Vietsovpetro, analysis of the business

situation and performance in the last 3-5 years, evaluation of the current strategies.
The collected data of the researches in chapter 2 will be analyzed to identify the
company’s strengths and weaknesses as well as the opportunities and threats, based
on that 2017-2022 business strategies for VSP will be generated and selected.
3.
3.1 Overview of Joint Venture Vietsovpetro
The information provided in this section is retrieved from the official website of
Joint Venture Vietsovpetro at http://www.vietsov.com.vn/Eng/Pages/Default.aspx
(2017).
3.1.1 History and timeline
Vietsovpetro was incorporated in Vietnam as a joint venture company based on the

Bilateral Government Agreement signed between S.R. Vietnam’s Government and
Soviet Union’s Government dated June, 19, 1981; amended on July 16, 1991.
On May 27, 1993, Russian Federation officially inherited Soviet Union to join
Vietsovpetro. Vietsovpetro’s Charter was approved by State Committee of
Cooperation and Investment (now known as Ministry of Planning and Investment –
MPI) on June 16, 1993.
Representatives of the two governments managing Joint Venture Vietsovpetro

(hereinafter referred to as VSP) are as follows:
- VIETNAM OIL AND GAS CORPORATION PETROVIETNAM, now
known as VIETNAM OIL AND GAS GROUP (hereinafter referred to as
PVN), and
- RUSSIAN EXTERNAM ECONOMICS FEDERATION, now known as
ZARUBEZHNEFT JSC (hereinafter referred to as ZRB).
Page | 41
Total legal capital of VSP is USD 1.5 billion; each party originally contributed
50%. VSP’s original existing duration was 20 years from January 01, 1991.
According to the Agreement signed between the Government of S.R. Vietnam and
the Government of the Russian Federation on 27 December 2010, from January 01,
2011, the ownership interest proportion of the Vietnamese party increased to 51%
whilst that of the Russian party decreased to 49%. These new percentages gave
superior decisive power to the Vietnamese party.
The new Agreement signed on 2010 stipulated on further cooperation in geological

exploration and petroleum production in the continental shelf of Vietnam (block 09-
1) with a duration of operation up to December 31, 2030.
More details on the timeline history of VSP are presented in below Figure 3.1:
12/04/2016
220 million
27/12/2010 tons of oil
New Bilaterial produced.
11/2001 Government
100 million Agreement
26/06/1986 tons of oil signed on
The 1st ton of produced further
24/05/1984 oil produced at cooperation
Discovery of White Tiger until
the 1st field 31/12/2030
industrial oil
19/06/1981 flow at White
Signing Tiger field
Ceremony of
the Inter-
governmental
Agreement
between S.R.
Vietnam and
Soviet Union
on the
establishment
of Joint
Venture
Vietsovpetro
Figure 3.13. Important historical milestone of VSP
Page | 42
3.1.2 Products and services
Exploration Operation &

research and maintenance
filed of onshore &
development offshore
Drilling, well facilities IT and
Design of survey and Telecommuni
offshore workover cation
facilities services services
Safety and Port and
Emergency logistics
response services
services
Marine Training
transportation services on Hotel and
and diving skills and Transportatio resort services
services languages n services of
Health check-
automobile,
up and
oversize &
treatment
overweight
services
goods
Figure 3.14. Highlight Products and Services of VSP

The main product of VSP is production and sale of crude oil. Also, VSP is capable
to execute complex petroleum projects - from seismic interpretation, exploration
drilling, field development; to engineering, fabrication and installation of offshore
facilities, production and export of crude oil - not only for VSP, but also for other
local and international companies.
1) Exploration, production, gathering, processing, transportation, storing and
selling of petroleum products, gas and condensate in the Socialist Republic
of Vietnam, Russia and third-party countries, through organizations
established by the S. R Vietnam on the basis of petroleum contracts;
2) Scientific research, survey, engineering, construction and development of oil
and gas fields, engineering and construction of oil and gas projects;
3) Buy, sell, import and export of oil and gas materials and equipment;
4) Perform and provide technical services for local and international
companies;
5) Medical treatment and health care services;
Page | 43
6) Other non-illegal services such as hotel and resort.
VSP has discovered nine (09) oilfields with commercial value and rich oil, in which
White Tiger is the biggest oilfield, with major concentration of oil and gas in
granite basement reservoir. This is a special phenomenon, never before seen in over
400 oilfields and 50 sedimentary basins discovered in the Pacific Northwest area.
3.1.3 Organization structure
3.
3.1
3.1.1.
3.1.2.
3.1.3.
As a large-scale organization of over 7,000 employees and concerning two
countries, the organizational structure of Vietsovpetro has many level and is quite
complex.
Below is three organizational charts of three main management levels of VSP, with
the order as follows:
1. General chart to show the top level of management concerning two
governments.
2. Charts of departments under Management Unit (Head Quarter).
3. Charts of 17 divisions as subsidiaries of VSP, each division has their own
management system. Each division has specific and separate mission,
capabilities and is under supervision of an asigned department of Management
Unit and an assigned deputy general director – a member of the Board of
Directors.
Page | 44
Russian Party Vietnamese Party
Joint Venture Committee
Boards of Directors
Management Unit
Subsidiaries
Figure 3.15. Level 1 of VSP’s Organization Chart
MANAGEMENT UNIT
(HEAD QUARTER)
Technical & Operation Dept. Finance & Accounting Dept.

Geology & Field Development Dept. Logistics Dept.
Drilling Dept. Human Resource Dept.
Project Dept. Administration Dept.
Economic & Planning Dept. Inspection & Security Dept.
Commercial Dept. Central coordination division
Risk management & Insurance Dept. Health, safety & environment Dept.
Marketing & Service Dept. Legal Dept.
Internal Inspection Dept. Marine & Transportation Dept.
Management of Petroleum contracts Management of Nam Rong-Doi Moi field
Figure 3.16. Level 2 of VSP’s Organization Chart
SUBSIDIARIES / DIVISONS
Oil & Gas Production Offshore Construction Science Research &

Drilling & Workover
(OGPE) (OCD) Design (R&D)
Marine Transport & Mechanical & Electrical Port & Logistics Gas Exploitation
Diving (ME)
Safety & Environment Information technology
Well logging Medical
Pagecenter
| 45
protection & communication
Service Project
Security Vietsovpetro Hotel Vietsovpetro Resort
Office & Residential
Building Management
3.1.4 Human resource
By 31 December 2016, the number of employees of VSP was 7,605, which

comprised 591 Russian nationals and 7,014 Vietnamese nationals. The number of
employees tend to decline gradually in the last 5 years as presented in the below
chart (Vietsovpetro. 2017)):
VSP's Human Resource in 2012-2016

9000
8500
8000
7500
7000
6500
6000
2012 2013 2014 2015 2016
Vietnamese nationals Russian nationals
Figure 3.18. VSP’s Human Resource in the last 5 years
The human capital of VSP is strategically allocated among the Head Quarter and
Subsidiaries to gain the most advantages.
At 31 December 2016, the human resource is allocated as follows:

1) Management Unit: 398 labors account for 5.2%
2) Main production part: 5937 labor account for 78%
3) Service part: 997 labors account for 13.1%
4) Logistics part: 273 labors account for 3.7%.
Page | 46
Based on Vietsovpetro (2017), the academic level of VSP’s employees at 31

December 2016 is as follows:
Table 3.10. Academic level of VSP’s employees

No. Academic level Quantity Percentage (%)
1. Doctor of Science 1 0,01
2. Doctor of other fields 44 0,58
3. Master 280 3,68
4. University 3360 44,18
5. College 250 3,29
6. Intermediate 210 2,76
7. Worker (Vocational primary, apprentice) 3286 43,21
8. Other 218 2,87
Total 7605
As described above, employees with university degrees and post-graduate degrees
account for 50% of VSP’s human resource, highly skilled technicians account for
the other 44%. This proves a high-quality labor force that VSP is having.
3.1.5 Business performance in the last 5 years

Table 3.11. VSP’s business operation performance until 31/12/2016
No
Main activities Unit Results Remark
.
1. Crude oil production Million tons 217,8
Gas production and inland
2. Billion m3 29
transport
3. Gross revenues of crude oil Billion USD 73,6 Mainly export
Budget contributions and
4. profit distributed to Billion USD 46,2
Vietnamese government
Offshore facilities
5. Facility 47
construction
6. Active region White Tiger, Dragon,
Field 9 Nam Rồng – Đồi Mồi,
Page | 47
Thỏ Trắng, Gấu

Trắng, Bồ câu, Cá
tầm, Thiên ưng, Mãng
cầu, Sông tiền …
Subsea survey and
7. Km 750
construction
More details on the gross revenues of crude oil and the profits contributed to
Vietnamese government’s Budget to in the last 5 years are as follows:
Chart of Oil sales 2012-2016

6000
5429.96
5000 4752.63
4336.09
4000
3366.66
Million USD
3000 2886.47
2447.41
2189.49
2000 1692.97
1339.49
1000 834.91
0
2012 2013 2014 2015 2016
Gross Revenue Contributions to the country's Budget
Figure 3.19. Chart of Oil sales in the last 5 years

As demonstrated above, the great results that VSP has achieved in the previous period
and its contribution to Vietnamese government, despite the declining trend, were
undeniable. VSP has contributed up to 90% of the country’s domestic crude oil
production and around 7-10% in average to the country’s Budget (based on data
provided by Le, VT., 2016).
Page | 48
3.2 Develop 2017-2022 vision, mission and strategic objectives

The first step of building a strategic plan is to establish a vision, mission and
objectives to guide the company towards the desired path of success. Especially in
this current period where the external situation of oil price has been causing serious
difficulties and hardships to Vietsovpetro, a new, suitable and motivating direction
is needed more than ever. With reference to VSP’s website (2017), PetroVietnam
(2017), PV Power (2017) and BaoMoi (2015), VSP’s strategic vision, missions and
objectives for period 2017-2022 can be established as follows:
 Vision statement for VSP in 2017-2022:
Continue to be the “alpha” force in Vietnam oil and gas industry, and together with
the other members of Vietnam Oil and Gas Group (Petrovietnam) build and develop
Vietnam oil and gas into a strong, sustainable and important industry of the world.
 Mission statements for VSP in 2017-2022:
To realize the 2017-2022 vision of VSP, five missions are established as follows:
1. Continue to ensure oil and gas exploration in a comprehensive, effective and
safe way in White Tiger oil field;
2. Regularly carry out research surveys, maintenance, repair, upgrade and
reform of information technology systems, facilities and equipment. Enhance
safety level, improve working conditions, avoid to the minimum labor
accidents and protect the environment.
3. Concentrate in investing for research and development in order to find and
apply the solutions for improving the oil recovery coefficient, as well as
exploring and finding new oil fields to increase crude oil reserves and
guarantee operation performance.
4. Enhance the work of researches, surveys, and expand VSP’s area of
operation in Vietnam and overseas. Accelerate to put new discovered
potential oil fields offshore Vietnam into production.
5. Encourage and expand business to provide services to external clients.
 Objectives for VSP in 2017-2022:
Page | 49
In order to fulfil the missions of VSP during period 2017-2022, VSP has to
establish 5-year objectives and targets which must be SMART and aim towards the
desired achievements. Below are some objective examples:
1. Improve the oil recovery coefficient to ensure meeting annual targets of
crude oil production (5.0 million tons for 2017).
2. Accelerate to put new discovered potential oil fields or oil reservoir such as
Cá Tầm offshore Vietnam into production by 2020.
3. Enhance the work of exploring new oil fields by completing 55 thousand
meters of exploiting drilling and completing construction of 17 new wells.
4. Reduce the costs of operation and management by 20%.
5. Make use of internal abundant resources to provide services to external
clients in Vietnam and overseas to achieve 5-10% increased revenue per
year.
3.3 External audit of Vietsovpetro

3.3.1 Macro environment analysis
To examine how the macro environment affects VSP, the PEST model described in
article 2.3.2.1 of chapter 2 will be analyzed as follows:
 Political factor:
- Vietnam is a socialist country operating under the control and leadership of
the Communist Party. A national congress of Vietnam's Communist Party is
held every five years shaping the country's orientation, laws, regulations,
policies, and strategies on solutions for socio-economic development.
- The “Đổi Mới” political and economic reform in 1986 has allowed Vietnam
to improve and reform its political status in international arena. Until 2016,
the country has successfully established diplomatic relations with more than
170 countries in the world, strategic partnerships with 12 important
economies, both developed and emerging (Stratfor Worldview. 2017).
Page | 50
- Political violence is of little concern for Vietnam due to the government’s

control over the country and support from the military. However, reports of
localized protests over land, labor, and economic injustices surface
periodically.
- Corruption is considered to be the most significant political problem of
Vietnam since its level of corruption was ranked at 113/176 listed countries
according to the Corruption Perceptions Index 2016 (Transparency
International e.V. 2017). Corruption in Vietnam is due in large part to a lack
of transparency, accountability, and media freedom, as well as low pay for
government officials and inadequate systems for holding officials
accountable for their actions. Competition among government organizations
for control over businesses and investments has created a confusing
overlapping of jurisdictions and bureaucratic procedures and approvals,
which create opportunities for corruption (John Pike. 2017). This has given
government officials considerable discretion to demand bribery or “under the
table” money to “facilitate” the administrative procedures or government
permissions.
 Economic factor
- Since the “Đổi Mới” economic reform in 1986, Vietnam has focused on
developing economy as its main source of continued legitimacy. Although
Vietnam’s economy is governed and controlled by the communist party
through banking systems and large state-owned enterprises, they have been
gradually reforming and approaching a more market oriented economy.
Vietnam’s development record (GSP growth rate) over the past 30 years is
remarkable as demonstrated in below Figure 3.8, which has transformed
Vietnam from one of the world’s poorest nations to a lower middle-income
country (Vietnam Overview. 2017.)
Page | 51
VN's GDP growth rate (%)

8
7.5
7
6.5
6
5.5
5
4.5
01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 7f 8f 9f
20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 201 201 201
GDP growth rate (%)
Figure 3.20. Vietnam’s GSP growth rate since 2001

(Source: Data from World Bank 2017)
- The great progression of Vietnam’s economy also increasingly attract
foreign investors. In addition, in 2007, Vietnam joined and became an
official member of the World Trade Organization (WTO), which gave a
major boost to develop Vietnam's export-oriented economy. After 10 years
of joining WTO, Vietnam’s import and export revenue has tripled (Nhan
Dan Online. 2017.)
- However, Vietnam also suffered from the recent global recession which
lowered the growth rate and especially export decline. With economic
problems in the US, EU and Japan, which together account for more than
60% of Vietnamese exports, Vietnam saw a significant decline in export
revenues.
- The other challenge for Vietnam‘s economy is the inflation rate, Viet Nam’s
2016 inflation rate has been kept relatively low at 4.74%, compared to the
peak inflation rate of around 28% in 2008, this is considered as an
achievement thanks to the combined effort of the government and financial
economic administrative agencies. (VietNamNet. 2017.)
Page | 52
 Social factor
- Vietnam is entirely located in the tropical region and the area including the
sea is up to 3.5 million km2, and the water is never frozen.
- Because of the wars before 1975, Vietnam now has a younger population of
about 90 million people. Due to that, Vietnam can offer a large labor force
with the willingness to relocate is high, in addition wages are still relative
low compared to neighbor countries.
Figure 3.21. Vietnam’s population demographics by age

(Source: Data from the General Statistics Office of Vietnam, 2017)
- The education system is however not advanced to provide high skilled
workers in all sectors. Vietnam has been making great efforts to improve
education systems, but the changes only happen in big cities and still poor in
the suburbs or rural areas.
 Technological factor
Page | 53
- As the world is developing towards modernism and advanced information

technologies, with the strong power of Internet and its extensive coverage in
all aspects of life, Vietnam has also realized the importance to learn and
apply these modern techniques into its socio-economic development, and has
therefore promptly caught up with all the current trends and updated with all
the new and advanced technologies there are.
- Research and development area is also focused to be able to invent and use
new technologies for better improvements of all kinds of businesses.
3.3.2 Competitive environment analysis
Using Porter’s Five-Force model, VSP’s competitive environment can be analyzed

to determine its position in the oil and gas industry.
 Rivalry among competing firms
Table 3.12. Conditions that cause high rivalry in oil and gas industry
Conditions Applied to the industry
1 High number of competing firms Yes
2 Similar size of firms competing Yes
3 Similar capability of firms competing Yes
4 Falling demand for the industry’s products Yes
5 When consumers can switch brands easily No
6 When barriers to leaving the market are high No
7 When barriers to entering the market are low No
8 When the product is perishable No
9 When rivals have excess capacity and inventory Yes
10 When rivals sell similar products/services Yes
11 Falling product/service prices in the industry Yes
As above table, the level of rivalry among competing firms in oil and gas industry is
moderately high. Even though most of the domestic oil and gas companies are
under PetroVietnam, they still have to compete with each other to ensure a fair and
healthy industry.
 Potential entry of new competitors
Page | 54
There are a lot of barriers of entry to oil and gas industry for new companies, the
difficulties lie mostly in the government policies and regulations to gain access to
oil fields, and also large capital is required to expand the business. However, more
and more foreign companies is trying to enter Vietnam oil and gas market with their
strong capabilities.
 Potential development of substitute products
Crude oil is a product hard to be replaced or substituted, some substitute products
may include gas power, electrical power, solar power, wind power or special
chemicals … but none of these has a remarkable existence in Vietnam.
 Bargaining power of suppliers

To produce crude oil, appropriate and high-quality material and equipment must be
acquired. There are a lot of suppliers for these items and the competition among
suppliers themselves is fierce. Therefore, the bargaining power of suppliers in oil
and gas industry is moderate low.
 Bargaining power of consumers
Table 3.13. Conditions that increase consumer bargaining power in oil & gas
industry
Conditions Applied to
the industry
1 If they can inexpensively switch to competing brands or
No
substitutes
2 If they are particularly important to the seller Yes
3 If sellers are struggling in the face of falling consumer demand No
4 If they are informed about sellers’ products, prices, and costs Yes
5 If they have discretion in whether, when they purchase the
Yes
product
Therefore, the bargaining power of consumers is moderate.
In conclusion, the level of competitiveness in oil and gas industry is moderate and is
expected to become more intense because of the current critical situation.
Page | 55
Potential development of substitute products

LOW
Bargaining power of suppliersRivalry among competing firmsBargaining power of consumers

MODERATE LOW MODERATE HIGH MODERATE
Potential entry of new competitors

MODERATE
Figure 3.22. VSP’s Porter’s Five-Forces model
3.3.3 Industry analysis
3.2
3.3
3.3.1.
3.3.2.
3.3.3.
3.3.3.1. Identification of external opportunities and threats
Based on the analysis on PEST and Porter’s Five Forces competitive model for oil
and gas industry, the external opportunities and threats are identified as follows:
OPPORTUNITIES
O1 : Political stability and government support.
It was pointed out that the one-party political system might have led to a more
stable, less violent, protesting and predictable political situation since it can avoid
all disturbing and chaotic issues may be caused by political disputes that multiple-
party system might have. Companies can focus on doing businesses. In addition, the
government give big support the oil and gas industry because of its significant
contribution to the development of economy.
O2 : Ease and strong benefits from joining the international business world.
Page | 56
Vietnamese oil and gas companies benefit a lot from the significant changes in
Vietnam through becoming an official members of WTO and the world’s economy.
Barriers are eliminated, tariffs are reduced, the costs lower and become more
competitive, the import and export of raw material and equipment become easier
and thus gain more revenues. In addition, more and more foreign investments are
attracted as a result of changes of government policies.
O3: The development of advanced information technology systems.

The more Vietnam opens and integrates into international business world, the more
updated it can be on new and advanced technologies, the oil and gas industry
including VSP benefits greatly from this. It will facility and improve the process of
crude oil production, or contribute to the research and exploration of new oil fields
in Vietnam and overseas.
O4: Huge potential of resources in Vietnam.

With the large continental shelf, Vietnam still have a lot of potential resources
including undiscovered oil fields to be researched and explored. Also, the
convenient and strategic location of the country is the key to develop transportation
and trading with other countries all over the world.
O5: Large and skilled labor force with increasing educational level.
60-70% of the population belong to the age of working, with the efforts from the
government to improve the educational level of citizens, and the increasing trend of
studying abroad, companies in oil and gas industry have less worry to find and
employ high-quality labor force. Also, the globalization process ongoing in
Vietnam makes the firms’ HRM able to recruit foreign experts and enhance
performance.
O6: Unique characteristics of products and services.

Although the crude oil price is dropping, the product is always an important and
essential requirement of life. There are very few substitute products that can entirely
replace crude oil. Besides the crude oil production, the accompanying services can
Page | 57
also be used in other industries such as research and development of energy sources,
construction services, transportations and logistics services …
THREATS
T1 : The significant drop of crude oil price.
The global recession and global political disputes together with other global issues
have brought the price of crude oil to the bottom and cause many difficulties to the
companies in oil and gas industry, VSP is not an exception, and even more seriously
affected. Many projects are delayed or cancelled, lack of jobs, unnecessary excess
of human and facility resources, revenues cannot cover costs, profits are not enough
to pay the debts, production might be halted, some mines have to be closed, labor
force has to be cut … (VietNamNet. 2017.)
T2 : Corruption in Vietnam.
In the current period when the costs and debts cannot be covered by revenues and
profits as analyzed above, the heavy corruption of Vietnam has put more burden
and pressure on oil and gas firms. Corruption is also a big threat to the socio-
political stability of the country, which may cause the loss of huge amount of
money and land, and also make the administrative procedures more lasting and
complicated.
T3 : The decline of demand for crude oil.

Global recession, inflation, exchange rates … make the companies in the world lose
revenue and profit, and thus have to limit their costs and expenses, reduce
operations and therefore the demand for oil and gas products risks declining
sharply.
T4 : The decline of crude oil reserves.

The oil fields in Vietnam, in particular the White Tiger field operated by VSP, have
been exploited for over 30 years and are now reaching their ends. The crude oil
Page | 58
reserves are declining and therefore oil and gas firms, including VSP, are faced with
closure if they cannot find new oil fields or other solutions.
T5: Pressure from outside forces.

Since the recent years, the pressure of the force outside of Vietnam is increasing.
The situation of military dispute in the East Sea offshore Vietnam is getting intense
and increase the instability of oil and gas industry, causing even more difficulties in
crude oil exploration and production. Reportedly, Vietnam had to halt drilling
operation after being “threaten” by the outside forces (BBC News. 2017.).
T6: Pressure from competition.

During the difficult period, the competition is becoming fierce more than ever and
putting a lot of pressure to VSP in order to maintain its “chief force” position.
3.3.3.2. Analysis and evaluation of external opportunities and threats

Based on article 2.3.2.3 of chapter 2, EFE matrix and CPM will be analyzed to
evaluate how VSP responses the external opportunities and threats.
To do the research, the author has conducted surveys and interviews with about 30
specialists and experts with the Survey Questionnaire attached in Appendix 4. 85%
of the research sample is the specialists who are currently, or used to be, managers
and employees of VSP’s divisions and departments and outside specialists from
other companies in the oil and gas industry; 15% of the sample are experts from
academic institutions who have profound knowledge and expertise on the
management process of business strategies. Some descriptive statistics of the
research sample are as follows:
Page | 59
Field/Company Age range Years of expe-

rience
7%
13% 13%
13%
30%
43% 37%
20% 23%
37%
27%
37%
Vietsovpetro Under 10 years

Outside oil & gas companies 10-20 years
Academic institution 25-35 35-45 20-30 years
Other related companies 45-55 55-65 Over 30 years
The opinions expressed are internal and external factors to build IFE matrix, EFE
matrix, CPM and QSPM. From results obtained from the surveys and interviews,
data are collected and evaluated following the steps described in Appendix 1, 2 and
3.
 Evaluate external factors (EFE Matrix).
Based on the opportunities and threats identified as well as the data collected from
surveys and interviews in Appendix 4, the results of EFE matrix is as follows:
Table 3.14. VSP’s EFE matrix
No Weighted
Key External factors Weight Rating
. Score
OPPORTUNITES
1 Political stability and government support 0.15 4 0.6
2 Ease and strong benefits from joining the 0.1 3 0.3
international business world
3 The development of advanced information 0.13 3 0.39
technology systems
4 Huge potential of resources in Vietnam 0.06 3 0.18
Page | 60
No Weighted
Key External factors Weight Rating
. Score
5 Large and skilled labor force with increasing 0.08 2 0.16
educational level
6 Unique characteristics of products and services 0.03 1 0.03
THREATS
7 The significant drop of crude oil price 0.2 4 0.8
8 Corruption in Vietnam 0.03 1 0.03
9 The decline of demand for crude oil 0.05 2 0.1
10 The decline of crude oil reserves 0.11 4 0.44
11 Pressure from outside forces 0.02 1 0.02
12 Pressure from competition 0.04 2 0.08
Total 1.00 3.13
Result: the total weighted score of 3.13 shows that the VSP has made efforts to
build strategies that responses greatly to the external environment, to effectively
take advantage of existing opportunities and minimize the potential negative effects
of external threats.
 Competitive Profile Matrix (CPM)

According to Vietsovpetro (2017), in Vietnam and region, there are two major
competitors of VSP in the fields of researching and exploring of oil and gas,
development of techniques and extension of market and scope of services, which
are: PTSC (PetroVietnam Technical Services Corporation) and McDermott Asia
Pacific Sdn Bhd (McDermott).
PTSC is a member of Vietnam Oil and Gas Group (PetroVietnam) and has been a
fierce competitor of VSP for many years because its main operation field is to
supply technical services to the oil & gas, industries. Several types of its key
services have been developed and professionalized to achieve the international level
such as: EPCI for Offshore facilities, Offshore support vessels, Seismic survey
services, Geophysical and Geotechnical survey services, ROV Services and Subsea
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works; Installation, Operation and Maintenance Offshore facilities; Supply Base

and Port services and Other services.
On the other hand, McDermott is a foreign company from Malaysia and has
branches all over the world. The main business of the company is the Integrated
engineering, procurement, construction and installation services (EPCI) for
upstream field developments worldwide. It has entered the Vietnam oil and gas
market since several years and has made significant achievements in the field. By
winning several big oil and gas projects, McDermott has increased the level of
competitiveness for domestic companies, including VSP.
Based on the results from surveys in Appendix 4, the CPM among the three
companies is built as follows:
Table 3.15. The Competitive Profile Matrix among VSP, PTSC and Mcdermott
VSP PTSC McDermott
Critical success
No. Weight Scor
factors Rating Rating Score Rating Score
e
1 Market share 0.07 3 0.21 3 0.21 1 0.07
Science, techniques
2 and technologies 0.2 4 0.8 3 0.6 4 0.8
advancement
Organization
3 structure & 0.08 2 0.16 3 0.24 3 0.24
Management system
Prive
4 0.11 2 0.22 4 0.44 4 0.44
competitiveness
5 Financial position 0.08 4 0.32 3 0.24 3 0.24
6 Global expansion 0.06 2 0.12 2 0.12 4 0.24
High quality labor
7 0.12 3 0.36 3 0.36 4 0.48
force
Facilities,
8 infrastructure and 0.13 3 0.39 2 0.26 3 0.39
equipment
Diversification of
9 products and 0.09 3 0.27 2 0.18 2 0.18
services
Support from
10 0.06 3 0.18 3 0.18 1 0.06
government
Total 1 3.03 2.83 3.14
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Through analyzing the above CPM, it can be seen that the foreign competitor
McDermott (with the score of 3.14) seems to be doing better than the two domestic
companies, especially in the price competitiveness and global expansion. On the
other hand, even though PTSC has a lower score (2.83) than VSP (3.03), but it is
much better than VSP in the price competitiveness for services. The weakness of
VSP in the service prices is due to the high complication level of its organization
structure and management system, which adds a lot of markup amount to the price.
3.4 Internal audit of Vietsovpetro

3.4.1. Key internal forces
Key Internal Factors of VSP are as follows:
 Management
As described in the organization chart in article 3.1.3 of chapter 3, VSP operates as
a joint venture, with the joint venture Committee as the highest management level
(consisting of 6 representatives, half of them from each Vietnamese and Russian
party). Daily operations of VSP are managed by a Board of Directors consisting of
01 General Director (GD) and 11 Deputy General Director (DGD), each DGD
managed a different field of activities, that includes some departments in the
Management Unit and some Divisions in charge of that field.
During over 35 years of operation, VSP has built a consistent management system
of numerous divisions and subsidiaries, each of them has different functions and
tasks and compliments each other. This has enabled VSP to fully perform a
complex service from the beginning to the end.
However, VSP has a massive and complicated organizational structure as well as

very bureaucratic procedures and is not really suitable to deliver service. Function
of some parts overlap. Many regulations and procedures are unreasonable and take
a lot of time and lead to ineffective work processes. Thorough review before the
decision is an important and necessary regulation, but in VSP most of the issues
must be considered and approved by many people before the final decision can be
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made. This is very time-consuming and sometimes lead to business opportunities

being missed out, or very low responses to clients.
 Marketing
With the main activity of the business being oil production, providing services to
external clients is not really a focused strategy of VSP. Marketing is an important
factor in understanding the needs of the market, the customer as well as the
strengths and weaknesses of competitors. This information will increase the
competitiveness of VSP and increase the effectiveness of its business. However,
this field for VSP is still not developed and explored of its potential.
 Finance/accounting
With strong financial resources from oil revenues and the capital support from both
Vietnamese and Russian Government, VSP has many advantages in mobilizing
capital when needed. With the available resources, Vietsovpetro can take the
initiative in mobilizing financial resources, people and equipment to serve its own
operation and to provide services at competitive prices.
 Production/ operation
Many of VSP's existing equipment already become old with low efficiency. This
increases the working time required, leads to higher costs and reduces the
competitiveness of VSP's products and services. However, after 35 years of
operation, VSP has been able to build up an impressive and diversified
infrastructure (more than 10 onshore office buildings and many offshore facilities,
platforms) that very few competitors can compare to.
VSP has a diversified products and services portfolio, some of them are special and
exclusive of VSP that no other competitor can compete with (for example, offshore
construction, oil spill response, maintenance and repair of offshore facilities …)
 Research and development (R&D)
VSP always focuses on encouraging creativity and research and development in the
field of science and production. VSP has offered many initiatives to motivate the
generation of new ideas and invention of employees. Some special ideas and
Page | 64
inventions can get national recognition. These activities have brought high
efficiency in production and business, saving human and material resources in
production, increasing drilling speed and increasing oil recovery capacity.
 Human resource management
As demonstrated in article 3.1.4 of chapter 3 about the human resources of VSP, the
company has a very promising and impressive work force. VSP's personnel are well
trained in universities and training centers in domestic and abroad with high
professional qualifications and experience in both management and production.
In addition, employees of VSP have been accustomed for many years to just
perform the tasks to achieve the assigned targets but not really interested in
efficiency, which means they are more goal-oriented than performance-oriented.
Due to the lasting subsidy system from the past, the majority of VSP’ employees
tend to be conservative and very resistant to change, they are not familiar with the
style of service if the company wants to expand to external clients. The recruitment
process is not really transparent and effective, therefore it exists the situation that
the human resource is both short and excess in some areas. Moreover, employee
satisfaction is not high because they are unhappy with the level of promotion and
rationality in arranging work.
 Management information systems
VSP has been making efforts to apply information technology to manage materials
and finance to improve efficiency in inventory management and financial use.
However, due to the variety and complexity of materials as well as many kinds of
materials purchased and used in numerous subsidiaries of VSP, the system is not yet
accurate and complete as a basis for decisions.
3.4.2. Internal audit summary and evaluation
3.4.2.1. Identification of internal strengths and weaknesses

Based on the above analysis of key internal factors, VSP’s internal strengths and
weaknesses can be identified as follows:
Page | 65
STRENGTHS
S1: Strong brand reputation and position in oil and gas industry
S2: Ability to fully perform a complex service from the beginning to the end
S3: Diversified products and services portfolio, some of them are special and
exclusive of VSP that no other competitor can compete with.
S4: Large workforce with moderate level of skill and education and rich
experiences
S5: Strong financial resources from oil revenues and the capital support from both
Vietnmamese and Russian Government
S6 : Ability to mobilize capital, financial resources, people and equipment to serve
its own operation and to provide services at competitive prices
S7 : Strong focus and investment in research and development
S8 : Possession of an impressive and multi-purpose infrastructure built up after 35
years of operation.
WEAKNESSES
W1: Massive and complicated organizational structure as well as very bureaucratic
procedures.
W2 : Conservative and resistant to change workforce
W3 : Not reasonable organizational structure of external service provision
W4 : Too many divisions and subsidiaries, hard to consistently integrate and
manage all systems
W5: Not fully make use of existing resources such as facilities, infrastructure and
human
W6: Existing equipment become old with low efficiency.
3.4.2.2. Analysis and evaluation of internal strengths and weaknesses
Page | 66
Based on the strengths and weaknesses identified as well as the data collected from
surveys and interviews in Appendix 4, the results of IFE matrix is as folows:
Table 3.16. VSP’s IFE Matrix

Weighted
No. Key Internal factors Weight Rating
Score
STRENGTHS
1 Strong brand reputation and position in oil
0.05 4 0.2
and gas industry
2 Ability to fully perform a complex service
0.13 4 0.52
from the beginning to the end
3 Diversified products and services portfolio,
some of them are special and exclusive of
0.1 4 0.4
VSP that no other competitor can compete
with
4 Large workforce with moderate level of skill
0.07 3 0.21
and education and rich experiences
5 Strong financial resources from oil revenues
and the capital support from both 0.08 3 0.24
Vietnamese and Russian Government
6 Ability to mobilize capital, financial
resources, people and equipment to serve its
0.06 3 0.18
own operation and to provide services at
competitive prices
7 Strong focus and investment in research and
0.07 3 0.21
development
8 Possession of an impressive and multi-
purpose infrastructure built up after 35 0.04 3 0.12
years of operation
WEAKNESSES
9 Massive and complicated organizational
structure as well as very bureaucratic 0.09 1 0.09
procedures
10 Conservative and resistant to change
0.06 2 0.12
workforce
11 Not reasonable organizational structure of
0.05 2 0.1
external service provision
12 Too many divisions and subsidiaries, hard to 0.1 1 0.1
Page | 67
Weighted
No. Key Internal factors Weight Rating
Score
consistently integrate and manage all
systems
13 Not fully make use of existing resources
0.06 2 0.12
such as facilities, infrastructure and human
14 Existing equipment become old with low
0.04 2 0.08
efficiency
Total 1 2.69
Result: the total weighted score of 2.69 shows that the VSP just has an average
level of internal strength and still needs a lot of efforts to enhance the internal
strengths and eliminate or reduce the internal weaknesses to the minimum.
3.5 Generation of alternative strategies
To generate alternative strategies for VSP based on the internal strengths and
weaknesses, and the external opportunities and threats, the SWOT matrix will
analyzed as follows:
Table 3.17. VSP’s SWOT analysis
OPPORTUNITIES – O THREATS - T
O1. Political stability and

T1. The significant drop of
government support
crude oil price
O2. Ease and strong benefits
T2. Corruption in Vietnam
from joining the international
T3. The decline of demand
business world
for crude oil
O3. The development of
SWOT MATRIX advanced information
T4. The decline of crude oil
reserves
technology systems
T5. Pressure from outside
O4. Huge potential of resources
forces
in Vietnam
T6. Pressure from
O5. Large and skilled labor force
competition
with increasing educational
level but low cost
O6. Unique characteristics of
products and services
STRENGTHS - S S/O STRATEGIES S/T STRATEGIES
S1: Strong brand reputation and Use strengths to take advantage Use strengths to avoid/
position in oil and gas industry
S2: Ability to fully perform a complex of opportunities minimize threats
service from the beginning to the end
S3: Diversified products and services 1. S/O-1:S1,2,3,4,6+O1,2,5,6: 1. S/T-1: S1,4,5 + T5,6:
Page | 68
portfolio, some of them are special

and exclusive of VSP that no other Strategy to develop and Strategy of horizontal
competitor can compete with. expand the market into new integration.
S4: Large workforce with moderate
geographic areas (market
level of skill and education and rich
development) 2.S/T-2: S4,5,7,8+T1,4:
experiences
S5: Strong financial resources from oil Strategy to develop
revenues and the capital support from 2. S/O-2: S3,4,5,7 + O3,4,5: techniques and
both Vietnmamese and Russian Strategy to enhance research technologies to increase
Government and development to explore the exploited output of
S6 : Ability to mobilize capital, new oil fields (product crude oil (product
financial resources, people and
development) development)
equipment to serve its own operation
and to provide services at competitive
prices 3. S/O-3: S1,2,3,4 + O1,3,6:
S7: Strong focus and investment in Strategy to seek increased
research and development market share for present
S8: Possesstion of an impressive and products or services in
multi-purpose infrastrature built up present markets through
after 35 years of operation.
greater marketing efforts
(market penetration)
WEAKNESSES – W W/O STRATEGIES W/T STRATEGIES

W1: Massive and complicated Overcoming weaknesses by Minimize weaknesses and
organizational structure as well as very
bureaucratic procedures. taking advantage of avoid threats
W2 : Conservative and resistant to opportunities
change workforce 1. W/T-1: W1,2,3,6 + T1,3,4:
W3 : Not reasonable organizational
1. W/O-1: W1,3,4 + O1,3,5: Strategy to cut costs and
structure of external service provision
W4 : Too many divisions and Strategy to “shrink” the expenses to the minimum
subsidiaries, hard to consistently organization structure (retrenchment)
integrate and manage all systems (retrenchment)
W5: Not fully make use of existing 2. W/T-2: W2,3,4 + T1,3,5,6:
resources such as facilities, Strategy to sell a division
infrastructure and human 2. W/O-2: W4,5,6 + O1,2,3,6:
or a part of the
W6: Existing equipment become old Strategy to sell excess of
with low efficiency organization (divestiture).
resources such as the old
facilities, infrastructure or
equipment (divestiture)
To sum up:
S/O Strategies: Use strengths to take advantage of opportunities.
- S/O-1: Strategy to develop and expand the market through making use to the
maximum of its ability to provide diversified complex services and its
abundant resources (financial, human, technology…) to seek and present
VSP’s services into new markets at a competitive price.
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- S/O-2: Strategy to enhance research and development (R&D) to explore new

oil fields through heavy investment and efforts on improving and finding
new technologies to maximize Vietnam’s oil potential.
- S/O-3: Strategy to seek increased market share for present products or
services in present markets through greater marketing efforts.
S/T Strategies: Use strengths to avoid/ minimize threats.
- S/T-1: Strategy of horizontal integration through using VSP’s financial
strengths to acquire or seek increased control over competitors to reduce the
pressure from competition.
- S/T-2: Strategy to develop techniques and technologies to increase the
exploited output of crude oil, which means to invest in the development and
updates of technical methods to improve the oil recovery coefficient for the
purpose of exploiting the most of the remaining crude oil reserves.
W/O Strategies: Overcoming weaknesses by taking advantage of opportunities.
- W/O-1: Strategy to “shrink” the organization structure, referring to the
regrouping of divisions, departments and subsidiaries which have similar
tasks and functions in order to reduce to bureaucratic, time-consuming and
ineffective organization structure.
- W/O-2: Strategy to sell excess of resources such as the old facilities,
infrastructure or equipment, to have some returns and avoid unnecessary
costs on these items.
W/T Strategies: Minimize weaknesses and avoid threats.
- W/T-1: Strategy to cut costs and expenses to the minimum, involving
reviewing and analyzing all operations and financial activities.
- W/T-2: Strategy to sell a division or a part of the organization, which have
the lowest performance or have become no longer necessary to VSP.
Page | 70
3.6 Selection of business strategies for VSP in period 2017-2022

3.4
3.5
3.5.1
3.5.2
To evaluate and select strategies among the alternatives generated from SWOT
analysis for each group of strategies S/O, S/T, W/O and W/T, the Quantitative
Strategic Planning Matrix (QSPM) will be applied in this section. Following the
steps describe in Appendix 3 and based on the data collected from the interviews
with specilists and experts in Appendix 4, the results of QSPM are as follows:
Table 3.18. VSP’s 2017-2022 QSPM based on Strategy S/O

ALTERNATIVE STRATEGIES S/O
S/O-1 S/O-2 S/O-3
Expand Explore new Increase
No. Key factors Weight
market oilfields market share
Political stability and
1 0.15 3 0.45 2 0.3 3 0.45
government support
Ease and strong benefits from
2 joining the international 0.1 4 0.4 2 0.2 2 0.2
business world
The development of advanced
3 information technology 0.13 3 0.39 4 0.52 3 0.39
systems
Huge potential of resources in
4 0.06 3 0.18 4 0.24 3 0.18
Vietnam
Large and skilled labor force
5 with increasing educational 0.08 3 0.24 3 0.24 3 0.24
level
Unique characteristics of
6 0.03 3 0.09 2 0.06 1 0.03
The significant drop of crude
7 0.2 2 0.4 3 0.6 3 0.6
oil price
8 Corruption in Vietnam 0.03 - - - - - -
The decline of demand for
9 0.05 3 0.15 2 0.1 2 0.1
crude oil
Page | 71

S/O-1 S/O-2 S/O-3
The decline of crude oil
10 0.11 3 0.33 4 0.44 2 0.22
reserves
11 Pressure from outside forces 0.02 - - - - - -
12 Pressure from competition 0.04 - - - - - -
Strong brand reputation and
13 0.05 4 0.2 2 0.1 3 0.15
Ability to fully perform a
14 complex service from the 0.13 4 0.52 4 0.52 3 0.39
beginning to the end
Diversified products and
services portfolio, some of
15 them are special and exclusive 0.1 3 0.3 2 0.2 3 0.3
of VSP that no other
competitor can compete with
Large workforce with
16 moderate level of skill and 0.07 3 0.21 3 0.21 3 0.21
education & rich experiences
Strong financial resources
from oil revenues and the
17 capital support from both 0.08 - - - - - -
Vietnmamese and Russian
Government
Ability to mobilize capital,
18 equipment to serve its own 0.06 4 0.24 4 0.24 2 0.12
operation and to provide
services at competitive prices
Strong focus and investment in
19 0.07 2 0.14 4 0.28 2 0.14
research and development
Possesstion of an impressive
and multi-purpose
20 0.04 3 0.12 3 0.12 2 0.08
infrastrature built up after 35
years of operation
Massive and complicated
organizational structure as
21 0.09 - - - - - -
well as very bureaucratic
procedures
Page | 72

S/O-1 S/O-2 S/O-3
Conservative and resistant to
22 0.06 - - - - - -
change workforce
Not reasonable organizational
23 structure of external service 0.05 - - - - - -
provision
Too many divisions and
subsidiaries, hard to
24 0.1 3 0.3 2 0.2 1 0.1
consistently integrate and
manage all systems
Not fully make use of existing
25 resources such as facilities, 0.06 3 0.18 3 0.18 2 0.12
infrastructure and human
Existing equipment become
26 0.04 2 0.08 2 0.08 2 0.08
old with low efficiency
Total 4.92 4.83 4.1
As a result, both strategies S/O-1 and S/O-2 have almost similar TAS (4.92 and
4.83 respectively) while strategy S/O-3 has the lowest score (4.1), therefore VSP
should select strategies S/O-1 and S/O-2 since they have more potential to succeed
than S/O-3 because VSP already has a very high market share in Vietnam and hard
to increase.
Table 3.19. VSP’s 2017-2022 QSPM based on Strategy S/T

ALTERNATIVE STRATEGIES S/T
S/T-1 S/T-2
Horizontal Increase crude oil
integration output
AS TAS AS TAS
1 0.15 3 0.45 3 0.45
government support
2 joining the international 0.1 2 0.2 2 0.2
business world
Page | 73

S/T-1 S/T-2
integration output
AS TAS AS TAS
3 information technology 0.13 3 0.39 4 0.52
systems
4 0.06 3 0.18 2 0.12
Vietnam
5 with increasing educational 0.08 3 0.24 3 0.24
level
6 0.03 3 0.09 3 0.09
7 0.2 2 0.4 3 0.6
oil price
8 Corruption in Vietnam 0.03 - - - -
9 0.05 1 0.05 2 0.1
crude oil
10 0.11 3 0.33 4 0.44
reserves
11 Pressure from outside forces 0.02 - - - -
12 Pressure from competition 0.04 4 0.16 1 0.04
13 0.05 2 0.1 2 0.1
14 complex service from the 0.13 2 0.26 4 0.52
15 them are special and exclusive 0.1 3 0.3 3 0.3
16 moderate level of skill and 0.07 3 0.21 3 0.21
17 capital support from both 0.08 4 0.32 3 0.24
Government
Page | 74

S/T-1 S/T-2
integration output
AS TAS AS TAS
18 equipment to serve its own 0.06 2 0.12 3 0.18
19 0.07 1 0.07 4 0.28
and multi-purpose
20 0.04 2 0.08 3 0.12
years of operation
21 0.09 - - - -
procedures
22 0.06 3 0.18 1 0.06
change workforce
23 structure of external service 0.05 - - - -
provision
24 0.1 - - - -
manage all systems
25 resources such as facilities, 0.06 2 0.12 3 0.18
26 0.04 2 0.08 2 0.08
Total 4.33 5.07
As a result, VSP should select the strategy to increase the exploited output of crude
oil (TAS 5.07) rather than acquiring the competitors (TAS 4.33) by improving to
the maximum possible the crude oil recovery coefficient with the help of technique
and technology advances.
Page | 75
Table 3.20. VSP’s 2017-2022 QSPM based on Strategy W/O

ALTERNATIVE STRATEGIES W/O
W/O-1 W/O-2
"Shrink" Sell excess
organization resources
AS TAS AS TAS
1 0.15 3 0.45 2 0.3
government support
business world
systems
4 0.06 2 0.12 2 0.12
Vietnam
level
6 0.03 2 0.06 2 0.06
7 0.2 4 0.8 4 0.8
oil price
9 0.05 3 0.15 3 0.15
crude oil
10 0.11 3 0.33 3 0.33
reserves
13 0.05 2 0.1 2 0.1
14 complex service from the 0.13 2 0.26 2 0.26
16 Large workforce with 0.07 3 0.21 3 0.21
Page | 76
ALTERNATIVE STRATEGIES W/O

W/O-1 W/O-2
"Shrink" Sell excess
AS TAS AS TAS
moderate level of skill and
17 capital support from both 0.08 - - - -
Government
19 0.07 2 0.14 2 0.14
and multi-purpose
20 0.04 2 0.08 2 0.08
years of operation
21 0.09 4 0.36 2 0.18
procedures
22 0.06 3 0.18 2 0.12
change workforce
provision
24 0.1 4 0.4 2 0.2
manage all systems
26 0.04 2 0.08 4 0.16
Total 5.42 5.03
Page | 77
As a result, VSP should select the strategy to “shrink” the organization structure
(TAS 5.42) rather than selling the existing excess of resources (TAS 5.03). This can
be done through regrouping and merging of similar departments, divisions and
subsidiaries to incorporate into a more effective organization.
Table 3.21. VSP’s 2017-2022 QSPM based on Strategy W/T

ALTERNATIVE STRATEGIES W/T
W/T-1 W/T-2
Cut costs & Sell a division or a
expenses part
AS TAS AS TAS
1 0.15 2 0.3 2 0.3
government support
business world
systems
4 0.06 2 0.12 1 0.06
Vietnam
level
6 0.03 1 0.03 2 0.06
7 0.2 4 0.8 3 0.6
oil price
9 0.05 3 0.15 3 0.15
crude oil
10 0.11 3 0.33 3 0.33
reserves
13 0.05 2 0.1 3 0.15
14 Ability to fully perform a 0.13 3 0.39 1 0.13
Page | 78

W/T-1 W/T-2
expenses part
AS TAS AS TAS
complex service from the
16 moderate level of skill and 0.07 3 0.21 3 0.21
17 capital support from both 0.08 - - - -
Government
19 0.07 - - - -
and multi-purpose
20 0.04 2 0.08 3 0.12
years of operation
21 0.09 3 0.27 3 0.27
procedures
22 0.06 3 0.18 3 0.18
change workforce
provision
24 Too many divisions and 0.1 4 0.4 4 0.4
Page | 79

W/T-1 W/T-2
expenses part
AS TAS AS TAS
manage all systems
26 0.04 3 0.12 2 0.08
Total 5.15 4.61
As a result, VSP should select the strategy to cut unnecessary costs and expenses
(TAS 5.15) rather than selling a division or a part of VSP (TAS 4.61). All
operations, financial activities, all processes … must be carefully reviewed and
analyzed to find the most feasible and effective cost cut-off so that VSP can survive
this critical period.
3.7 Conclusion of Chapter 3

This chapter provides an overview of Vietsovpetro’s business including its
background, its organization structure and its business performance over the 35
years of existence and operating. Then VSP’s external audit and internal audit were
performed to identify key external and internal factors affecting VSP, based on
which draw out external opportunities and threats as well as internal strengths and
weaknesses.
The key factors of external and internal environment were then analyzed and
evaluated through EFE Matrix, IFE Matrix, from which, it was proven that VSP has
good responsiveness to the external factors but does not have a strong internal
position.
Based on these findings, the SWOT matrix was developed to combine all the factors
and build possible alternative strategies for Vietsovpetro. These alternatives
Page | 80
strategies were then applied in a QSPM model to help VSP make selection
decisions as follows:
- Strategy S/O-1: Strategy to develop and expand the market into new
geographic areas (market development)
- Strategy S/O-2: Strategy to enhance research and development to explore
new oil fields (product development)
- Strategy S/T-2: Strategy to develop techniques and technologies to increase
the exploited output of crude oil (product development)
- Strategy W/O-1:Strategy to “shrink” the organization structure
(retrenchment)
- Strategy W/T-1: Strategy to cut costs and expenses to the minimum
(retrenchment).
The plan to implement the above selected strategies then evaluate the implemented
strategies will be further performed in the following chapter 4.
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Chapter 4 : CONCLUSIONS AND RECOMMENDATIONS
4.
4.1 Summary of key findings in Chapter 3
Chapter 3 has provided a thorough analysis and evaluation of VSP’s current

strengths, weaknesses, opportunities and threats through applying the EFE, IFE
matrices and CPM. Through SWOT and QSPM models, the research has achieved
to establish 5 most appropriate business strategies for VSP in period 2017-2022 as
follows:
1) Strategy to develop and expand the market into new geographic areas
(market development)
2) Strategy to enhance research and development to explore new oil fields
(product development)
3) Strategy to develop techniques and technologies to increase the exploited
output of crude oil (product development)
4) Strategy to “shrink” the organization structure (retrenchment)
5) Strategy to cut costs and expenses to the minimum (retrenchment).
This chapter will continue the final stages of VSP’s strategic planning for period
2017-2022 through proposing solutions to implement the selected strategies and
solutions to evaluate the implemented strategies. Finally, some recommendations to
VSP’s important stakeholders will be given along with the limitations of this
research.
4.2 Solutions to implement selected strategies

After the decision making on which strategies are the best for VSP to apply, VSP
now has to establish and implement specific solutions and measures to put those
strategies “in action”.
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4.2.1. Invest and develop equipment, information and technologies

Equipment, information and technology are important and necessary factors to
achieve the results of any business. The development of technical and technological
infrastructure will create opportunities to capture information in the business
planning process, adjust the plan or cancel as needed. It will also reduce costs in the
business because these factors will optimize the company's use of resources such as
time, human, financial and tangible assets. Infrastructure and the application of
advanced science and technology will increase the competitiveness of VSP’s
products and services.
To be able to develop and expand the market, VSP has to upgrade the quality of
equipment and technology by replacing the old and obsolete ones and regularly
perform inspection, maintenance and repair of facilities, materials and equipment so
that they are always in good operating condition and always ready to provide
services to external clients.
To be able to improve present product or develop new ones, investment on research

and scientific and technological advances is very critical. Improve present product
in VSP’s case means to improve the oil recovery coefficient to increase the
production of crude oil reserves at White Tiger oil field. Develop new products
involves researches, surveys, exploration and exploitation of new oil fields offshore
Vietnam where VSP is authorized to operate. Both missions have been employed by
VSP since its establishment, and have become more essential to the company
during this difficult period.
To be able to apply retrenchment strategy in costs and assets, good information and
financial technologies are required to evaluate and identify where the performance
is ineffective, or where there are redundant capacity, so that managers can apply
necessary measures to improve the situation. For example, the departments or
divisions who have the similar functions could be merged and share the same
resources to reduce the costs.
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4.2.2. Improve human resource management
Human factor always play an important and decisive role in the success of any
company, as well as its implementation of all strategies recommended. A strong
human resource with strong skills and experience will help enhance the
development strategies including market development and product development
(explore new oil fileds and increase the exploited output of crude oil). Also,
thorough managing the human resource to use its full potential or to reduce the
unnecessary portion is an important step in the process of implementing
retrechment strategies such as regrouping and cutting costs to the minimum.
VSP’s current HRM still has a lot of weaknesses and shortcomings. In the current
situation where there are less and less projects and jobs, 7000 employees of VSP are
a giant number but the performance is not as effective as its potential, hence VSP’s
human recourse need to be re-structured. However, re-structuring human resource is
a big job and outsourcing professional consulting services is necessary.
Nevertheless, re-structuring and reducing the number of human resource is a very
sensitive and difficult job. The process must be performed carefully not only to
avoid violating the labor law, but also to prevent unfair and cruel treatment towards
the employees who have contributed to make VSP today. Some methods that VSP
is applying and could be applied as follows:
- Encourage early retires with compensation benefits

- Reduce recruiting new employees, except experts required to do specific
jobs
- Rotate employees in a flexible way to make the most use of their
capabilities and experiences.
- Outsourcing people through a third-party company to work on a project
by project basis.
- For the purpose of saving costs, rather than laying off employees,
reducing a small portion in the wages and salaries of the high level
Page | 84
managers and expats may be more reasonable because their wage level is
on average 5-7 times more than a working level employee (Vietsovpetro,
2017).
In addition, to have a strong human resource, VSP has to establish a clear and
transparent recruitment process to employ the most suitable candidates. Clear
identification of criteria, requirement for the job description is a must. The final
employment decision must be made based on the level of fit, knowledge,
capabilities and skill of the candidates with the job, and restraint from personal
relationships or other irrelevant factors. Attracting, motivating and retaining talents
with high professional skills and experience are also an important step. VSP has to
offer worthy compensation systems, special initiatives, regular and relevant training
programs, as well as clear and reasonable performance evaluation systems so that
its personnel can be motivated to work with more efficiency, enthusiasm and
responsibilities.
One big weakness of VSP that made VSP usually lose to competitors in the
provision of external services is the “stubbornness” and resistance to change of
employees. Since the long past, VSP had been operating with a subsidized system
and people had gotten accustomed to getting paid regularly without making much
efforts. Until now this old habit still exists and thus a significant number of
employees is still very conservative and resist to update with the new changes of the
economy. It is this habit that made VSP slow in responding to clients, slow in
catching up with new trends and opportunities, and caused the price to be
uncompetitive which lead to the losses of VSP to other competitors. It takes a
certain time to improve this weakness of VSP and it requires patience, good
direction from the top management and motivating compensation systems and
initiatives (giving bonuses to employees who make great efforts in improving their
work performance) to encourage people to realize the need for change and make the
changes.
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4.2.3. Enhance operating and management systems
VSP needs to review and re-structure its operating and management systems since
its current systems pose a big weakness to the company. Too many bureaucratic and
administrative procedures, the time-consuming report and approval process for
every decision … have made VSP very passive and slow in responding to the needs
of clients or in discovering new oil fields. VSP has to authorize and assign an
appropriate level of decision making power to subsidiaries to increase the level of
responsiveness to opportunities and problems.
In addition, the process of reviewing and analyzing the current management system
can help VSP identify the possible places to apply re-structuring and retrenchment
methods, such as:
- Merge departments in the Management Unit which have similar tasks,
functions and capabilities;
- Merge departments in the Management Unit to departments of Divisions
which have the same function (or vice versa);
- Merge Divisions which provide services and capabilities relating to each
other to become one that can provide more integrated services, for
example: Oil & Gas Production division with Gas Exploitation division
to become Oil & Gas Production and Exploitation Division.
Enhancing the operation and management systems will also bring benefits to VSP’s
development strategies, for example:
- For the strategy of expanding the market: a less bureaucratic
administration and management system will improve the level of
reponsiveness of VSP to the outside changes and opportunities.
- For the strategy of improving technologies, research and development to
explore new oil fields or increase the exploited output of crude oil: a
consistent and transparent management system will provide a favorable
basis for all activities, improve productivity and facilitate the process of
making important decisions.
Page | 86
4.2.4. Develop Marketing
To promote the provision of services to external clients, VSP has to make a lot of
Marketing efforts through promoting VSP’s competitive advantages to the world
and conducting researches on the market, on potential competitors and on VSP’s
capabilities to meet the job’s requirements. Moreover, VSP has to establish a
proficient internal “system” consisting of all levels of management from the Board
of Directors, through the Management Unit, to the subsidiaries. Currently such a
system exists in VSP as follows:
Board of Directors
Supporting internal Management Unit

departments and Main division providing a
(Marketing & Service
divisions specific service
dept.)
External clients
Figure 4.23. VSP’s system to manage the provision of services to external

clients
However, this system is not as effective as desired because: 1) the main mission of
the personnel is still the production, the provision of external services is still a
concurrent task and not their main job; 2) it still involves many layers of approval
and decision making, thus is very time-consuming and passive. Therefore VSP has
to re-examine the effectiveness of this system and build a simpler and quicker
system to be able to promptly meet clients’ needs and requirements.
Other Marketing efforts must be made such as going overseas to research the
potential markets and also present VSP’s capabilities to potential clients, investing
in developing an official website of VSP, investing in building relationships with
potential clients and partners to facilitate the process and establishing strategic
cooperation to use each other’s strengths to jointly participate in projects in
Vietnam and overseas.
Page | 87
4.2.5. Other supporting solutions
 Cost control and management

To implement the retrenchment strategy and effectively control and manage the
costs of VSP in order to reduce the unnecessary expenses. Strengthen the financial
supervision both in terms of monitoring mechanism and monitoring criteria. It is
necessary to improve the quality of internal inspection and put in place a system of
indicators for assessing the effectiveness of financial management.
 Strategic cooperation
Another solution to market development is the strategic cooperation with other
companies to offer a more competitive bidding strengths. This is a strategy that VSP
has been implementing effectively in the last few years and has brought remarkable
benefits to VSP. This solution also help reduce the number of competitors and
competitive pressure in providing services.
 Practice saving and waste prevention
Retrenchment strategy also applies in the efforts to practice saving and waste
prevention. VSP needs to establish specific regulations on making the most use of
existing resources and restraining from buying new ones. This involves the
mobilization of capital, human, facilities, material and equipment to the places they
are needed, and the economical use of these resources to avoid unnecessary wastes.
 Allocate effectively investments and financial resources
Based on the plan to develop existing oil fields, exploring and exploiting new oil
fields, as well as the capital required to meet present needs and future investments,
VSP should build a detailed annual plan on investment balancing and the most
reasonable allocation of the financial resources.
Page | 88
4.3 Solutions to evaluate implemented strategies

The evaluation process based on Figure 2.10 - A strategy evaluation framework of
strategies must be performed in parallel with the implementation process to timely
adjust to cope with the changing environments.
Since the current situation is critical and subject to frequent change, a revised
analysis of external and internal environment (EFE and IFE) should be performed
regularly on a monthly and quarterly basis, to be able to recognize significant
differences between the two versions (in any) and make corrective actions right
away to ensure the plan is going the right way.
If there is only negligent differences, then VSP should measure the results of the
actual implementation compared to the planned outcome. For this to be effective,
Key Performance Indicators (KPI) should be established in the beginning of the
plan to have a basis to compare to and control the process. Some example of the
KPI can be the financial ratios, such as Return on investment, Return on equity,
profit margin, sales growth …
If there is significant difference between the actual and the planned outcome,
corrective actions should be employed. According to David (2011), there are some
possible corrective actions needed as follows:
- Alter the firm’s structure
- Replace one or more key individuals
- Divest a division
- Alter the firm’s vision and/or mission
- Revise objectives
- Alter strategies
- Devise new policies
- Install new performance incentives
- Raise capital with stock or debt
- Add or terminate salespersons, employees, or managers
Page | 89
- Allocate resources differently

- Outsource (or rein in) business functions …
The corrective actions can be applied in any step of strategic management where
appropriate. The important point is that VSP must be able to quickly realize the
changes, how they affect the current strategies and how VSP can adjust to respond
to those changes.
4.4 Recommendations
4.4.1. For Vietsovpetro
In order to achieve the desired success, Vietsovpetro must strive to fully recognize
and utilize the advantages identified to overcome the current problems and
difficulties, in addition, it is very important to seek and make full use of the support
from the State and Joint Venture’s parties.
4.4.2. For PetroVietnam and Zarubezhneft

To increase the returns from the investments on Joint Venture Vietsovpetro through
increasing its performance, effectiveness and competitiveness, as the “parent”
companies of VSP, PetroVietnam and Zarubezhneft should:
- Use their rights and powers to prioritize giving projects to VSP and decrease
the intensity of competition
- Promptly update and provide new information about the oil and gas industry,
the area of researching and exploration of oil fields so that VSP can catch up
with new opportunities and avoid potentials threats.
- Direct and support VSP to have a sufficient budget to improve the quality of
material, technical facilities, infrastructure and human resources in order to
successfully implement its long-term strategies.
- Giving reasonable power of decision making to VSP so that the organization
can save time and efforts used for reporting and approval process, also to
quickly respond to opportunities and threats.
Page | 90
4.4.3. For Vietnam country

With the role as the chief force of Vietnam Oil and Gas Group, VSP has been
making significant contributions to the State’s Budget, to the protection of safety,
the improvement of conditions of life and the socio-economic development of the
country. Therefore, to facilitate the stable and long-term development of VSP as
well as to enhance its competitiveness and success, the State should:
- Continue to maintain preferential policies and preferential tariffs to increase
opportunities to improve the quality of material and technical facilities of
VSP to improve competitiveness.
- Strengthen diplomatic relations and cooperation to create favorable
conditions for VSP to effectively provide services to the international
market.
- Improve the legal system as well as build an appropriate legal corridor to
attract more foreign investments.
- Continuing to have mechanisms and policies to support VSP to properly play
the role of a state-owned joint venture company, strengthen Vietnam-Russia
relationship, and develop the oil and gas industry, one of the key economic
sectors plays a decisive role in ensuring national energy security.
4.5 Limitations and future research direction

The dissertation was done with great efforts, however, due to limited time and
scope of the research, this dissertation still has some limitations and could be give
directions to future research as follows:
- The survey was done by around 30 specialists and experts while VSP has
around 7000 employees, therefore the results are only a representative figure
which provide principles and orientations for VSP.
- The research was conducted only based on the external and internal
information that the author can get access to. There might be other important
and decisive information but kept in the confidential access of top
management level.
Page | 91
- This research can only be applicable for a short span of time in the next 5
years 2017-2022 where it’s predicted that the price of crude oil will continue
to decline and based on the assumption that there is no significant changes in
the industry and for Vietsovpetro.
Future researches can be conducted on the concrete long-term, medium-term and

short-term plans, and the concrete detailed results of the strategies implemented.
4.6 Conclusion of chapter 4

Based on the theoretical framework for strategic planning in Chapter 2, the results
of analyzing the business environments of Vietsovpetro, the generation and the
selection of business strategies for VSP in Chapter 3, the dissertation was able to set
out a business strategy plan consisting of 5 business strategies for VSP in the next 5
years 2017-2022 to fight against the oil price dropping situation.
1) Strategy 1: to develop and expand the market into new geographic areas
2) Strategy 2: to enhance research and development to explore new oil fields
3) Strategy 3: to develop techniques and technologies to increase the exploited
output of crude oil
4) Strategy 4: to “shrink” the organization structure
5) Strategy 5: to cut costs and expenses to the minimum.
The solutions to implement the above strategies are:

1) Investing and develop equipment, information and technologies: should be
used mainly to implement strategies 1, 2 and 3.
2) Improving human resource management: should be focused to implement
all 5 strategies.
3) Enhancing operating and management systems: should be focused to
implement all 5 strategies.
4) Developing Marketing: should be mainly to implement strategy 1.
5) Other supporting solutions such as Cost control and management, Strategic
cooperation and Practice saving and waste prevention.
Page | 92
The implementation process is then followed by the evaluation process to see is the
results of the implementation are as desired. If not, then corrective actions should be
taken to ensure VSP can accomplish long-term objectives.
Besides, chapter 4 also proposed the recommendations to Joint Venture’s Parties

(PVN and ZRB) and the State of Vietnam to support VSP’s operation and
performance of strategies./.
Page | 93
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APPENDICES
Appendix 1 : Steps to develop EFE Matrix
The EFE Matrix can be developed in five steps:
 Step 1: List key external factors as identified in the external-audit process.
Include both opportunities and threats, that affect the firm and its industry. List
the opportunities first and then the threats.
 Step 2: Assign to each factor a weight that ranges from 0.0 (not important) to 1.0
(very important). The weight indicates the relative importance of that factor to
being successful in the firm’s industry. Opportunities often receive higher
weights than threats, but threats can receive high weights if they are especially
severe or threatening. The sum of all weights assigned to the factors must equal
1.0.
 Step 3: Assign a rating between 1 and 4 to each key external factor to indicate
how effectively the firm’s current strategies respond to the factor, where 4 = the
response is superior, 3 = the response is above average, 2 = the response is
average, and 1 = the response is poor. Ratings are based on effectiveness of the
firm’s strategies. Ratings are thus company-based, whereas the weights in Step 2
are industry-based.
 Step 4: Multiply each factor’s weight by its rating to determine a weighted
score.
 Step 5: Sum the weighted scores for each variable to determine the total
weighted score for the organization.
Regardless of the number of key opportunities and threats included in an EFE
Matrix, the highest possible total weighted score for an organization is 4.0 and the
lowest possible total weighted score is 1.0. The average total weighted score is 2.5.
A total weighted score of 4.0 indicates that an organization is responding in an
outstanding way to existing opportunities and threats in its industry. In other words,
the firm’s strategies effectively take advantage of existing opportunities and
minimize the potential adverse effects of external threats. A total score of 1.0
Page | 97
indicates that the firm’s strategies are not capitalizing on opportunities or avoiding
external threats .
Page | 98
Appendix 2 : Steps to develop IFE Matrix
Development steps of IFE Matrix.

 Step 1: List key internal factors as identified in the internal-audit process. Use a
total of from 10 to 20 internal factors, including both strengths and weaknesses.
List strengths first and then weaknesses.
 Step 2: Assign a weight that ranges from 0.0 (not important) to 1.0 (very
important) to each factor. The weight assigned to a given factor indicates the
relative importance of the factor to being successful in the firm’s industry.
Regardless of whether a key factor is an internal strength or weakness, factors
considered to have the greatest effect on organizational performance should be
assigned the highest weights. The sum of all weights must equal 1.0..
 Step 3: Assign a 1-to-4 rating to each factor to indicate whether that factor
represents a major weakness (rating = 1), a minor weakness (rating = 2), a minor
strength (rating = 3), or a major strength (rating = 4). Note that strengths must
receive a 3 or 4 rating and weaknesses must receive a 1 or 2 rating. Ratings are
thus company-based, whereas the weights in step 2 are industry-based.
 Step 4: Multiply each factor’s weight by its rating to determine a weighted score
for each variable.
 Step 5: Sum the weighted scores for each variable to determine the total
weighted score for the organization.
Regardless of how many factors are included in an IFE Matrix, the total weighted
score can range from a low of 1.0 to a high of 4.0, with the average score being 2.5.
Total weighted scores well below 2.5 characterize organizations that are weak
internally, whereas scores significantly above 2.5 indicate a strong internal position.
Page | 99
Appendix 3 : Steps to develop QSPM

Step 1
Make a list of the firm’s key external opportunities/threats and internal
strengths/weaknesses in the left column of the QSPM. This information should be
taken directly from the EFE Matrix and IFE Matrix. A minimum of 10 external
critical success factors and 10 internal critical success factors should be included in
the QSPM.
Step 2
Assign weights to each key external and internal factor. These weights are identical
to those in the EFE Matrix and the IFE Matrix. The weights are presented in a
straight column just to the right of the external and internal critical success factors.
Step 3
Examine the Stage 2 (matching) matrices and identify alternative strategies that the
organization should consider implementing. Record these strategies in the top row
of the QSPM. Group the strategies into mutually exclusive sets if possible.
Step 4
Determine the Attractiveness Scores (AS), defined as numerical values that indicate
the relative attractiveness of each strategy in a given set of alternatives.
Attractiveness Scores are determined by examining each key external or internal
factor, one at a time, and asking the question, “Does this factor affect the choice of
strategies being made?” If the answer to this question is yes, then the strategies
should be compared relative to that key factor. Specifically, Attractiveness Scores
should be assigned to each strategy to indicate the relative attractiveness of one
strategy over others, considering the particular factor. The range for Attractiveness
Scores is 1 = not attractive, 2 = somewhat attractive, 3 = reasonably attractive, and
4 = highly attractive. If the answer to the above question is no, indicating that the
respective key factor has no effect upon the specific choice being made, then do not
assign Attractiveness Scores to the strategies in that set. Use a dash to indicate that
the key factor does not affect the choice being made. Note: If you assign an AS
Page | 100
score to one strategy, then assign AS score(s) to the other. In other words, if one
strategy receives a dash, then all others must receive a dash in a given row.
Step 5
Compute the Total Attractiveness Scores. Total Attractiveness Scores are defined as
the product of multiplying the weights (Step 2) by the Attractiveness Scores (Step
4) in each row. The Total Attractiveness Scores indicate the relative attractiveness
of each alternative strategy, considering only the impact of the adjacent external or
internal critical success factor. The higher the Total Attractiveness Score, the more
attractive the strategic alternative (considering only the adjacent critical success
factor).
Step 6
Compute the Sum Total Attractiveness Score. Add Total Attractiveness Scores in
each strategy column of the QSPM. The Sum Total Attractiveness Scores reveal
which strategy is most attractive in each set of alternatives. Higher scores indicate
more attractive strategies, considering all the relevant external and internal factors
that could affect the strategic decisions. The magnitude of the difference between
the Sum Total Attractiveness Scores in a given set of strategic alternatives indicates
the relative desirability of one strategy over another.
Page | 101
Appendix 4 : SURVEY QUESTIONNAIRE
Part I. Introduction
Dear Sir/Madame,
My name is Vo Thi Phuong Linh, a student pursuing a collaborative International
Executive Master of Business Administration (IEMBA) program between Ho Chi
Minh City National University and Paris Graduate School of Management (PGSM).
I’m currently conducting a dissertation on “Business strategy of Vietsovpetro in
period of 2017-2022”
In order to collect data for the dissertation, your knowledge and experience are very
necessary and valuable to my research. Please kindly spend some minutes of your
precious time to answer the questionnaire below. I herewith attach the IFE matrix,
EFE matrix, CPM and QSPM of Vietsovpetro (VSP), the meaning and instructions
to fill the answers are explained in each part. Your comment/ ideas are very
important and appreciated for the research.
Thanks you very much for your help and support.
Vo Thi Phuong Linh.
Page | 102
PART II: EXTERNAL FACTORS EVALUATION (EFE) MATRIX.

In the column of Importance: please give your rating on the level of relative
importance of each factor to the success of VSP in oil and gas industry. The scale is
from 1 to 5 with 1 is the least important and 5 is the most important.
In the column of Responsiveness: please five a rating between 1 and 4 to each factor
to indicate how effectively VSP’s current strategies respond to the factor, where 4 =
the response is superior, 3 = the response is above average, 2 = the response is
average, and 1 = the response is poor.
Importance Responsiveness
No. Key External factors
1 2 3 4 5 1 2 3 4
OPPORTUNITES
1 Political stability and government support
2 Ease and strong benefits from joining the
3 The development of advanced information
technology systems
4 Huge potential of resources in Vietnam
5 Large and skilled labor force with
increasing educational level
6 Unique characteristics of products and
services
Other (Please specify): ________________
THREATS
7 The significant drop of crude oil price
8 Corruption in Vietnam
9 The decline of demand for crude oil
10 The decline of crude oil reserves
11 Pressure from outside forces
12 Pressure from competition
Other (please specify) : ________________
Page | 103
PART III: COMPETITIVE PROFILE MATRIX (CPM)

In the column of each company: please give a rating from 1 to 4 to each factor to
indicate whether that factor represents a major weakness (rating = 1), a minor
weakness (rating = 2), a minor strength (rating = 3), or a major strength (rating = 4)
of that company.
No. Critical success Importance VSP PTSC McDermott

factors 1 2 3 4 5 1 2 3 4 1 2 3 4 1 2 3 4
1 Market share
2 Science, techniques
and technologies
advancement
3 Organization
structure &
Management system
4 Prive competitiveness
5 Financial position
6 Global expansion
7 High quality labor
force
8 Facilities,
infrastructure and
equipment
9 Diversification of
10 Support from
government
Other (Please
specify): ________
Page | 104
PART IV: INTERNAL FACTORS EVALUATION (IFE) MATRIX.

In the column of Evaluation: please give a rating from 1 to 4 to each factor to indicate
whether that factor represents a major weakness (rating = 1), a minor weakness
(rating = 2), a minor strength (rating = 3), or a major strength (rating = 4). Note that
strengths must receive a 3 or 4 rating and weaknesses must receive a 1 or 2 rating.
No. Key Internal factors Importance Evaluation

1 2 3 4 5 1 2 3 4
STRENGTHS
Strong brand reputation and position in oil and gas
1
industry
Ability to fully perform a complex service from the
2
Diversified products and services portfolio, some of
3 them are special and exclusive of VSP that no other
Large workforce with moderate level of skill and
4
education and rich experiences
Strong financial resources from oil revenues and the
5 capital support from both Vietnmamese and Russian
Government
Ability to mobilize capital, financial resources,
6 people and equipment to serve its own operation and
to provide services at competitive prices
Strong focus and investment in research and
7
development
Possesstion of an impressive and multi-purpose
8
infrastrature built up after 35 years of operation
Other (Please specify): _______________
WEAKNESSES
Massive and complicated organizational structure as
1
well as very bureaucratic procedures
2 Conservative and resistant to change workforce
Not reasonable organizational structure of external
3
service provision
Too many divisions and subsidiaries, hard to
4
consistently integrate and manage all systems
Not fully make use of existing resources such as
5
facilities, infrastructure and human
6 Existing equipment become old with low efficiency
Page | 105
Other (please specify) : _______________

PART V: Quantitative Strategic Planning Matrix (QSPM)
In the column of Attractiveness, please give an Attractiveness Score (AS) to indicate
the relative attractiveness of each strategy in a given set of alternatives.
Attractiveness Scores are determined by examining each key external or internal
factor, one at a time, and asking the question, “Does this factor affect the choice of
strategies being made?”
If the answer to this question is yes, then the strategies should be compared relative
to that key factor. Specifically, AS should be assigned to each strategy to indicate the
relative attractiveness of one strategy over others, considering the particular factor.
The range for AS is 1 = not attractive, 2 = somewhat attractive, 3 = reasonably
attractive, and 4 = highly attractive.
If the answer to the above question is no, indicating that the respective key factor has
no effect upon the specific choice being made, then do not assign AS to the strategies
in that set. Use a dash “-” to indicate that the key factor does not affect the choice
being made.
Note: If you assign an AS score to one strategy, then assign AS score(s) to the other. In
other words, if one strategy receives a dash, then all others must receive a dash in a
given row.
There are 04 sets of alternative strategies to evaluate.
Page | 106
Attractiveness of strategies - SET 1

No. Key factors Explore new Increase market
Expand market
oilfields share
1 2 3 4 5 1 2 3 4 5 1 2 3 4 5
1 Political stability and
government support
2 Ease and strong benefits from
joining the international
business world
3 The development of advanced
information technology
systems
4 Huge potential of resources in
Vietnam
5 Large and skilled labor force
with increasing educational
level
6 Unique characteristics of
7 The significant drop of crude
oil price
9 The decline of demand for
crude oil
10 The decline of crude oil
reserves
13
position in oil & gas industry
14 complex service from the
15
them are special & exclusive
of VSP
16 moderate level of skill and
from oil revenues and capital
17
support from Vietnmamese
and Russian Government
18 Ability to mobilize capital,
financial resources, people
Page | 107
Attractiveness of strategies - SET 1

No. Key factors Explore new Increase market
Expand market
oilfields share
1 2 3 4 5 1 2 3 4 5 1 2 3 4 5
and equipment to serve its
own operation and to provide
Strong focus and investment
19
in research&development
& multi-purpose infrastrature
20
built up after 35 years of
operation
21
procedures
22
change workforce
23 structure of external service
provision
24
manage all systems
25 resources such as facilities,
26
Page | 108
Attractiveness of strategies – SET 2

No. Key factors Horizontal Increase crude oil
integration output
1 2 3 4 5 1 2 3 4 5
technology systems
5 Large and skilled labor force with increasing
educational level
6 Unique characteristics of products and services
Strong brand reputation and position in oil & gas
13
industry
14
Diversified products and services portfolio, some
15
of them are special and exclusive of VSP
16
Strong financial resources from oil revenues and
17 capital support from Vietnmamese and Russian
Government
18 people and equipment to serve its own operation
and to provide services at competitive prices
19
research&development
Possesstion of an impressive & multi-purpose
20
Massive and complicated organizational structure
21
as well as very bureaucratic procedures
23
service provision
24
25 Not fully make use of existing resources such as
Page | 109

No. Key factors "Shrink" Sell excess
1 2 3 4 5 1 2 3 4 5
technology systems
educational level
13
industry
14
15
16
Government
19
20
21
23
service provision
Page | 110

24
25
No. Key factors Cut costs & Sell a division or a
expenses part
1 2 3 4 5 1 2 3 4 5
technology systems
educational level
13
industry
14
15
16
Government
19
20
21
Page | 111

23
service provision
24
25
LIST OF SPECIALISTS AND EXPERTS FOR THE SURVEY
No Full name Position Organization
1 Mai Dang Tuan Manager of Marketing dept. Vietsovpetro
2 Phan Thanh Liem Deputy Director of R&D division Vietsovpetro
3 Nguyen Thanh Minh Deputy Manager of Marketing dept. Vietsovpetro
Deputy Manager of Economic &
4 Tran Thi Kim Lan Vietsovpetro
Planning dept.
5 Vu Thi Hang Human resource specialist Vietsovpetro
6 Nguyen Tien Xuan Gas specialist Vietsovpetro
Nguyen Ngoc Anh
7 Technical specialist Vietsovpetro
Tuan
Former Manager of Material and
8 Vo Duy Vinh Vietsovpetro
Equipment dept.
9 Dinh Thuy Quynh Deputy Manager of Marketing dept. Vietsovpetro
Nguyen Thi Ngoc
10 Marine specialist Vietsovpetro
Tuyet
11 Nguyen Trung Hieu Project engineer Vietsovpetro
12 Nguyen Anh Ngoc Marketing specialist Vietsovpetro
13 Nguyen Thi Van Anh Deputy Manager of Service Dept. OCD Vietsovpetro
14 Trinh Hoang Quan Engineer PTSC M&C
15 Dao Minh Dung Technical Manager PTSC G&S
16 Truong Thanh Can Project engineer PTSC G&S
17 Nguyen Xuan Bach Accounting expert PTSC G&S
18 Bui Trung Hieu Business development PTSC M&C
19 Ta Hong Nhung Loan specialist Vietcombank
Asia Pacific
20 Quan Duy Minh Business Development Manager
Immigration
21 Do Tuan Cuong Contract management Hoang Long JOC
22 Pham Thi Thu Contract management PVD Tech
23 Vu Cam Trang Procurement Premier Oil
Mohankumar
24 O&G Business Development Solar Turbine
Ranganathan
25 Vijayan Pavadai Subcontract Specialist McDermott
Sapura Kencana
26 Ramlan Husain Business Development
Petroleum
Dr. Nguyen Van Tra Vinh
27 Professor
Nguyen University
Page | 112
Dr. Truong Quang HCMC University

28 Professor
Dung of Technology
Vietnam Aviation
29 Dr. Nguyen Hai Quang Professor
Academy
30 Dr. Ly Ngoc Diep Professor RMIT University
And others
END OF DISSERTATION.
Page | 113

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PGSM IEMBA

Paris Graduate School of Management Vietnam National University, Hochiminh City

VO THI PHUONG LINH

VO THI PHUONG LINH

Enterprise Name: JOINT VENTURE VIETSOVPETRO

Joint Venture Vietsovpetro confirms: Ms. Vo Thi Phuong Linh, attending

On behalf of the Vietsovpetro

VO THI PHUONG LINH

To be able to complete this Dissertation and the Program of International Executive

Secondly, I would like to express sincere thanks to my leaders and colleagues in my

Thanks and best regards,

Vo Thi Phuong Linh

DISSERTATION DECLARATION FORM............................................................ii

CL Cost Leadership strategy

EFE External factors evaluation

GDP Gross Domestic Product

HRM Human Resource Management

IFE Internal factors evaluation

PEST Political, Economic, Social and Technological

QSPM Quantitative strategic planning matrix

R&D Research and Development

SWOT Strengths- Weakness- Opportunities- Threats

TAS Total Attractiveness Score

USD United State Dollars

VSP Joint Venture Vietsovpetro

Figure 1.1. Foundation of Vietsovpetro.....................................................................3

Therefore, the main content of this dissertation is to build business strategies

Finally, this dissertation will propose the solutions to implement the

1.1 Dissertation Topic

1.2 Rationale for choosing the Topic

Joint Venture Vietsovpetro was founded on 19 June 1981 on the basis of

Figure 1.1. Foundation of Vietsovpetro

VSP's Core Businesses include conducting scientific research, exploration drilling,

After 35 years of constant development, VSP now consists of 17 subsidiaries and

managers and highly-skilled labors, capable to conduct all petroleum exploration

By April 2016, Vietsovpetro has exploited over 220-million tons of crude-oil,

Crude oil Price (average, USD/barrel)

Crude oil Price (average, USD/barrel)

Figure 1.2. Chart of Crude Oil Price since 1991

Crude Oil Exploited Output since 1991

Crude Oil Output (thousand tons)

Figure 1.3. Chart of Crude Oil Exploited Output since 1991

Vietsovpetro is a big company and currently is conducting business strategies,

1.3 Issues, objectives and questions of the research

1.3.1 Research issues

1.3.2 Research objectives

1.3.3 Research questions

To meet these objectives, three research questions are developed as follows:

1.4 Significance of the research

Building the development strategy for Vietsovpetro up to 2022 through analyzing

This research will be applied to support and make recommendations to the

1.5 Theoretical framework

1.5.1 External audit

The Competitive Profile Matrix (CPM): Competitive profile matrix is a

1.5.2 Internal audit

being feasible alternatives or not. Financial factors often alter existing

1.5.3 Strategies building, selection and implementation

1.6 Research methodology

1.6.2 Data Analysis

1.7 Limitations of research

1.8 Structure of research chapters

The main structure of the dissertation consists of 4 chapters as follows:

- Chapter 1 - General Introduction of Research: introduction of the reasons