Strategic Management Process of Vietnamese Construction Organizations in Ho Chi Minh City

The 21st century has become more challenging for all industries due to various innovations. Most business players feel the uncertainties and Vietnamese construction industries are facing the same risks. After the open-door policy, Vietnamese construction industry is gradually changing day by day with many invested projects. The Vietnam government welcomes and encourages all investors to invest in condition of good relationship cooperation. That Vietnam policy is given but Vietnamese construction companies are not ready to undertake projects invested in Vietnam. In confronting the challenges, the projects thereby are taken over by foreign companies. Consequently, Vietnamese construction companies are forced to improve their capabilities for adapting to the new situation (Hung, 1995). Because of the limited attention to strategic management, the construction industry is poor compared with other sectors in terms of the economy.

The Vietnamese construction industry related to strategic issues receives less attention. Strategic management of construction organizations is taken place within the context of the fortunes of the construction industry. Furthermore, there are many factors affecting construction, for instance, the economy crisis occurs. These economic developments with the slow reforms of Vietnam’s investment climate have prompted many foreign multinational corporations to leave (Haley, 2000).

Quang et al. (2000) showed several reasons that foreign business identified the current investment construction environment. Firstly, the legal framework is inadequate. Second, red tape and bureaucracy are unchanged big problem. Third, costing projects are unfair treated. Fourth, the problems of import/export tariffs are hard to accept. Finally, the corruption is always high. Those barriers make construction painful to take competitive advantages in obtaining project investment and domestic market. It is important for strategic analysis in Vietnamese construction organizations to understand the recent evolution of industry. Then they can reach a strategic management approach to implement in those barriers and the changing environment (Langford and Male, 1991).

Mr. Nguyen Huu Nghia made a study which major objective is to find the ways to improve the Vietnamese construction companies in relation to their understandings and practices of the strategic management. To achieve this major objective, three minor objectives were needed to accomplish as follows: (1) to investigate the understandings and practices related to strategic management in public and private sectors; (2) to analyze the critical problems in organizational strategic management context; and (3) to propose recommendations to improve the strategic management process applicable for the Vietnamese construction organizations.

Conclusion

The initial finding revealed the perception of Vietnamese construction manager that is paid substantially to strategic management application for their firms developing and competing in advance. The government backing seems to be the decisive factor for public contractor performance in strategic management. However, due to substantial attention and managerial knowledge, it is believed generally that Vietnamese construction companies used to practise fragmented which were the issues of this research. The followings are the major conclusions that derive from this study.

1. Strategy Formulation Process

Vietnamese contractors realize the necessity role of strategy formulation process for strategy success. Specifically, public contractors have strong awareness of strategy formulation. However, it is seemed that there is no significant difference awareness between public and private contractors in this stage except some few emergent factors. The main conclusions would illustrate general image of Vietnamese construction companies on strategy formulation.

2. Strategy Implementation Process

Strategy implementation is an important task in which strategies are made into actions. There are many things that must be done or changed. To facilitate this task, the set of programs, budget allocation and procedures should be developed. However, these do not seem to be performed formally in Vietnamese construction companies. Most of contractors have experienced unofficially on those issues. Besides, the important problems in strategy implementation that Vietnamese contractors usually have to confront are “financial requirement” and “external factor impacts”. After all, based on above findings, the deficiency is that Vietnamese contractors paid less attention on deploying tasks in official form for all personnel able to comply. Furthermore, the deficiency could be that the lack of managerial knowledge on strategic management created the serious problems instead of able to overcome if they were planned formally at the first time.

3. Strategy Measurement Process

Performance measurement is a key factor in ensuring the successful implementation of organization’s strategy. In general, Vietnamese contractors realize the importance role of strategy performance measurement that should be executed for the effectiveness of strategy. Public contractors have stronger awareness in pursuing measurement than private ones. The research also found some shortcomings that embrace in the current measurements of Vietnamese contractors. They admit their shortcomings in strategy measurement such as they do not identify how competitors are performing. Furthermore, their measurements fail to provide responsiveness and flexibility of the changes in construction environment. These could be the deficiencies because they cannot benchmark competitors for successful competition in business and lack the attention on environment to update and validate their strategic management appropriately.

Recommendation

According to this research, the findings and problems are found on current perceptions related to strategic management application of Vietnamese construction companies. They need to be improved for management in which they should pay more commitment and have to be trained. Therefore, recommendation of this study is produced to improve the problems that are caused by the most important factors in generally rather than by any possible influences of factors.

The research proposes the strategic management practice in Vietnamese construction companies. The critical problems are found out that indicate the fragmented situation of strategy application. It is believed that strategic management does not seem to be applied familiarly in practice of Vietnamese contractors. The survey found that there are a little number of contractors applying strategy concept formally for developing and competing. The call for improvement is very necessary to confront new changes of competitive environment. For increasing awareness of strategy application, professional learn and strong commitment are major requirements. Then, based on the evaluation of problems, construction companies should concern with broad factors to validate for strategy success.

His thesis abstract is copied and posted.

ABSTRACT

Strategic management has the positive meaning that aids to react with the various internal and external influences of an organization. It responds the current situation of competition state, predicts the needs of the future and consequently proposes the potential method for achieving competitive advantages. Strategic management benefits for companies to develop and compete especially in the changing environment of construction industry. However, Vietnamese construction companies do not know and apply well the strategic management. Therefore, the research would like to investigate their understandings and practices in strategic management issue, then to find the problems and finally to propose the solutions to improve the current situation. The survey is executed on thirty public and private contractors respectively in Ho Chi Minh City. The survey result indicates that there is a substantial perception on strategic management application at all levels in Vietnamese construction companies. As that result, all of them have performed unofficially on every practice of strategic management. Mission statement and objectives are not designed officially. They lack a mature analysis for generating strategies. In strategy implementation, they lack the formal plan and have to confront the problems of finance and external force impacts. Moreover, they mainly focus on financial and internal business for effectiveness of performance measurement and do not concern in other aspects for value contribution to strategy success. In order to reinforce the situation, Vietnamese contractors should change their perceptions by professional study and pay strong commitment to compete and accommodate with the changes of construction industry.