Unit 32 Business Strategy Analysis: Binh Minh Plastic Report

This report provides a detailed analysis of Binh Minh Plastic Joint Stock Company (BMP), focusing on its business strategy within the Vietnamese plastic industry. It begins by defining and identifying BMP's strategic capabilities, including resources and competencies, and then analyzes these capabilities using benchmarking against competitors like Tien Phong Plastic Joint Stock Company (NTP), value chain analysis (primary and support activities), and the VRIO framework. The report identifies BMP's strengths, such as strong financial resources and brand reputation, and weaknesses. The report also discusses the company's production processes, distribution network, and market position, highlighting its competitive advantages and areas for improvement. The analysis covers financial performance, production technology, product portfolios, and human resources. The report concludes with an overview of BMP's strategic position and recommendations for future development. The report utilizes data from annual reports and industry analyses to support its findings.

ASSIGNMENT 2 FRONT SHEET
Qualification BTEC Level 4 HND Diploma in Business
Unit number and title Unit 32: Business Strategy (574)
Submission date 18/06/2021 Date received (1 st submission)
Re-submission date Date received (2 nd submission)
Student name NGO HOANG ANH Student ID GBH190038
Class GBH0904 Assessor name DO THACH ANH
Student declaration
I certify that the assignment submission is entirely my own work and I fully understand the consequences of plagiarism. I understand
that making a false declaration is a form of malpractice.
Student’s signature:
Anh
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Table of Contents
I. Introduction.........................................................................................................................................4
II. Identify the strategic capabilities of Binh Minh Plastic Joint Stock Company by using benchmarking,
the value chain & the value system.............................................................................................................4
1. Strategic Capabilities.......................................................................................................................4
1.1. Definition.................................................................................................................................4
1.2. The capabilities of Binh Minh Plastic Joint Stock Company.....................................................6
2. Benchmarking analysis....................................................................................................................8
3. Value chain analysis.......................................................................................................................15
3.1. Primary activities...................................................................................................................16
3.2. Support activities...................................................................................................................24
III. Carry out the strategic capability analysis by using VRIO framework............................................29
1. Strong and sustainable financial resources....................................................................................31
2. Production process........................................................................................................................32
3. Distribution network......................................................................................................................33
IV. Identify and analyze the main strengths and weaknesses that the Binh Minh Plastic Joint Stock
Company is currently having.....................................................................................................................34
1. Strengths.......................................................................................................................................34
2. Weaknesses...................................................................................................................................37
V. Inconclusion.......................................................................................................................................39
Bibliography...............................................................................................................................................40

I. Introduction
The market constantly appears new companies and changes business trends which making
businesses always have to innovate and create. A business strategy is built up not only for the
purpose of capturing markets and customers, but also to be competitive with competitors.To
build an appropriate business strategy, businesses need to understand the company's resources
to assign and allocate human and financial resources to implement specific tactics. Therefore,
this report will focus on analyzing the internal factors of Binh Minh Plastic Joint Stock
Company. The data and information will be updated from reliable sources and divided into 3
main parts: Outline of strategic capabilities, Analysis of strategic capabilities and Analysis of
strengths and weaknesses.
II. Identify the strategic capabilities of Binh Minh Plastic Joint Stock
Company by using benchmarking, the value chain & the value
system
1. Strategic Capabilities
1.1. Definition
Strategic capability includes resources and competences that a firm utilises to contribute to
its long-term survival and compete in its business environment. It can therefore constitute a
firm’s strengths and weaknesses, and be a source of competitive advantage or disadvantage
over its rivals (Whittington et al., 2017).
Certain assets are used by the organization's activities and processes. These assets are
referred to as resources. Within the organization, these resources can be created. These
generated resources are unique to each organization. Otherwise, they could be
obtained from external suppliers in the resource markets. Also resources can be broadly

classified as tangible and intangible. The physical assets that an organization possesses
are called tangible resources. The physical resources, human resources and final
resources come under this category. The intellectual resources, technological resources
and the organizational reputation together form the intangible resources (Prachi, 2015).
An organization should posses some good characteristics in order to have the ability to
compete with other organizations in the market place. These characteristics form the
competencies of the organization. For any organization to survive in an industry
competencies are must. At the same time competencies cannot be useful to an
organization when they stand alone. It is when they combine together in the right
combination that they help the organization to attain competitive advant age (Prachi,
2015).
There are various definitions of dynamic capabilities from various authors, each with their
own point of view. Teece et al. define dynamic capabilities as a firm's ability to integrate,
build, and reconfigure internal and external competencies in response to rapidly changing
environments. Processes within the firm that use resources – specifically, processes to
integrate, reconfigure, gain, and release resources – to match or even create market change
(Teece, Pisano and Shuen, 1997). In a nutshell, dynamic capability is an organization's ability
to renew and recreate its strategic capabilities in response to changing environments.
Threshold capabilities are the minimum capabilities needed for the organisation to be able
to compete in a given market .
An organization’s resources which are critical in imparting it with competitive advantage are
called distinctive capabilities. When the capabilities originate from an attribute which other
firms do not have then they form an organization’s distinctive capabilities. In addition to
having a distinctive characteristic it should also be sustainable and appropriable (Prachi,
2015). Competitive advantage is explained by the distinctiveness of capabilities:
Distinctive resources are indispensible element of organization to create competitive
advantage. These unique resources should be hard to imitate or obtain. A powerful

brand can be seen as a distinctive resource for organization as it cannot be imitated
easily (Johnson, Scholes and Whittington, 2008). A powerful brand related to a long
term development of culture and history of organization.
Distinctive competences are the ways of doing things that are unique to that
organization and effectively utilized so as to be valuable to customers and difficult for
competitors to obtain or imitate.
Core competences refers to a firm’s know-how that allows it to integrate its skills, activities
and resources to offer its best services, processes and products to customers, thus
obtaining competitive advantage and potentially, can be extended and developed as
markets change or new opportunities (Enginoğlu and Arikan, 2016).
1.2. The capabilities of Binh Minh Plastic Joint Stock Company
Resources Competences
Number of employees over
1.400 people 47% of employees have vocational
certificates and higher
Dynamic
capabilities
Production infrastructure BMP owns 2 representative offices
and 4 large production factories.
BMP's infrastructure capacity is
relatively solid

Product quality - BMP's products are always improved
and more diverse than the market.
- In 2018, BMP's products were
awarded the Asia - Pacific
International Quality Award
- BMP is awarded the National Quality
Gold Award in 2017.
New management system - The system is optimized for
information technology.
- BMP uses the overall management
of enterprises ERP - the system
selected based on the technology
platform of Oracle EBS solution, one
of the leading solutions in the world
today.
- BMP uses intelligent reporting
system to serve leaders.
Threshold
capabilities
Administration apparatus BMP is run by talented
administrators. Headed by the
General Director - Nguyen Hoang
Ngan, who was voted as the Typical
Young Enterprise of Ho Chi Minh City
in 2002, was repeatedly selected by
the Ministry of Industry and Trade as
an emulation soldier, and in 2012 was
awarded a certificate of merit by the
Prime Minister.

Organizational structure BMP has a full range of functional
departments to facilitate
development, work processing, and
maximum efficiency in production.
Distinctive
capabilities
Production process - BMP became the first and only
manufacturer in Vietnam certified by
WRAS to successfully apply the latest
additive system.
- BMP has introduced 13 automatic
manipulators into the production
process (robots) on the injection
molding machine and is expected to
add 50 robots in 2021.
Long-standing brand reputation - BMP has been operating for over 40
years.
- BMP achieved many great
achievements such as the Labor
Medal, the Independence Medal, ...
- For the 5th time in a row, BMP was
honored in the List of 50 Leading
Brands organized by Forbes Vietnam.
Strong and sustainable financial
resources.
- Revenue and profit increase steadily
every year.
- Low loan rate.
- High payment capacity.
- Financial resources focus more on
development investment.
(BMP, 2021).

2. Benchmarking analysis
With a fast development speed, the plastic industry is being considered as a dynamic
industry in the Vietnamese economy. That growth comes from a large, potential market.
According to statistics of the Vietnam Plastics Association (VPA), currently the plastic
industry is close to 4.000 enterprises, of which the number of enterprises in the
construction plastic segment is smaller but generates the highest revenue scale – as of 2019
(FPT Securities, 2019). Typically, the two leading enterprises in revenue in the construction
plastic segment are Binh Minh Plastic Joint Stock Company (BMP) and Tien Phong Plastic
Joint Stock Company (NTP). The following benchmarking table will show the different BMP
and NTP metrics for Finance, Technology, Product and Human Resources of the two
companies, thereby identifying the business strategies and organizational activities that the
two companies have. this company is using. All data is collected from Annual report 2020
and official website of these two companies.
Key performance metrics BMP NTP
Financial
Market share
28% of the country's market
share.
43% of the South.
5% of the North.
Nearly 30% of the country's
market share.
Nearly 60% of the North.
Revenue 4.686 billion VND 4.393 billion VND
Profit 523 billion VND 435,8 billion VND
Capital
structure
12.7% debt 37.5% debt
ROA 17.8% 11.45%
ROE 21.2% 17.27%

Inventory 497 billion VND 430 billion VND
Distributors 1900 distribution stores 16309 distribution stores
Production
technology
Unique
technology
application
The only company today that
manufactures a full range of PVC-
U pipes and fittings that do not
contain heavy metal components,
are environmentally friendly and
safe for consumers
The only company currently
producing HDPE pipes with
a diameter of 2000mm and
MPVC pipes according to
Australian technology
Factory capacity 4 factories 3 factories
Total capacity 160.000 tons/year 190.000 tons/year
Product
Production 110.574 tons/year 91.014 tons/year
Product
portfolio
PVC U, HDPE, PPR, Ribbed tubing,
adhesives and rubber seals,
aerosols and protective gear
UPVC, MPVC, PP-R, HDPE,
PP-PE, engineering control
box
Product price
(PVC-U pipe) 28.000 VND 32.000 VND
Unit product
cost
25.595 VND/ton 34.037 VND/ton
Human
Resources
Number of
employees
1407 employees 1500 employees
Average salary
18.65 million VND
/employee/month
13.7 million VND
/employee/month

Training hours 11.45 hours/employee 10.55 hours/employee
(BMPlasco, 2020) (Tien Phong Plastic,2020).
In terms of finance, comparative factors are given to consider the growth of the two
companies. It can be seen that both BMP and NTP have the same national market share in
manufactured plastics – nearly 30%. BMP is mainly concentrated in the South market with
43%, while NTP is dominating the North market with 60%. However, the difference in the
strategy of the two companies is that BMP is expanding and penetrating the Northern
market and has achieved a market share of about 5%, while NTP has not yet made any
move to enter the South market. However, VDSC found that BMP's counterpart in the
North, NTP, proved more flexible in exploiting this market. Although this customer group is
characterized by bringing less profit and more cash flow risk to building material
manufacturers in general, VDSC still believes that this is a consumption market that will help
developers plastic pipe production in general, especially in the context of falling incomes
due to COVID, and expected government spending and driving demand for construction (Ta,
2020).
Therefore, NTP remains a major barrier for BMP's entry into the northern market. However,
in 2020, BMP has had good revenue growth to be able to expand the market. BMP's
revenue in 2020 is up to 4,686 billion VND, slightly higher than NTP's about 293 billion VND.
According to analysts, although businesses have to go through the difficulties of Covid-19 in
2020, BMP and NTP still belong to companies with growing profits. However, the profit of
BMP is much higher than that of NTP. This is thanks to BMP's efforts, including an active
strategy of manufacturing plastic household products. When social distancing caused
production to stall, BMP achieved positive revenue growth. This is thanks to an increase in
the market for home repair materials, agencies, etc. When people gather at home and
have time to repair housing projects, this will be a trend for BMP's consumer and
construction plastic product business strategy.

Figure 1. Profit of BMP (2020)
Figure 2. Profit of NTP (2020)
The capital structure of BMP and NTP is clearly different. This shows that BMP is not too
dependent on creditors, banks, etc. In recent years, interest expense has also increased
quite high. That's why NTP's revenue is close to BMP's but profit is much lower. This can
also be a strategy to contribute to the financial safety of NTP, because the company has
switched to finance mainly with its own capital, instead of using borrowed capital as before
(Le, 2020).
BMP's ROA indicator shows that for every 1 dong of assets used in the production and
business process in 2020, it will generate 0.178 dong of after-tax profit. Compared to the
NTP of 0.1145, the BMP shows better investment with greater returns and better asset