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FOREIGN TRADE UNIVERSITY Midterm Report STRATEGIC MANAGEMENT Instructor: Assoc Prof. Dr. Phong Name: ID: Trang Izzo Antonio Pelli Giovanni Lorenzo 1512280078 1990102036 1515280021 1990102048 1513280072 SUMMARY Executive summary............................................................................

Description

FOREIGN TRADE UNIVERSITY

Midterm Report STRATEGIC MANAGEMENT Instructor: Assoc Prof. Dr. Lê Thái Phong

Name:

ID:

Lê Thị Quỳnh Trang Izzo Antonio Mỹ Duyên Pelli Giovanni Lorenzo Vũ Thị Huyền Thương

1512280078 1990102036 1515280021 1990102048 1513280072

SUMMARY Executive summary.....................................................................................................................................................................3

Hanoi, September 24th, 2018

Overview of the project...............................................................................................................................................................4 Description of Kidschool..........................................................................................................................................................4 Goals and objectives.................................................................................................................................................................5 EXTERNAL ANALYSIS............................................................................................................................................................6 PEST MODEL..........................................................................................................................................................................6 Political................................................................................................................................................................................6 Economic..............................................................................................................................................................................7 Social....................................................................................................................................................................................7 Technology............................................................................................................................................................................8 PORTER’S FIVE FORCES......................................................................................................................................................8 Threats of new entrants (Moderate force)............................................................................................................................8 Threat of substitutes (Low pressure).....................................................................................................................................8 Bargaining power of suppliers (Low pressure)....................................................................................................................9 Bargaining power of suppliers (Medium pressure)..............................................................................................................9 Competitive Rivalry (Low pressure).....................................................................................................................................9 STRATEGIC GROUPS (the graph)........................................................................................................................................9 INTERNAL ANALYSIS...........................................................................................................................................................10 VALUE CHAIN ANALYSIS..................................................................................................................................................12 SWOT ANALYSIS.................................................................................................................................................................14 BUSINESS-LEVEL STRATEGY............................................................................................................................................16 Market penetration..................................................................................................................................................................16 Differentiation on market segmentation.................................................................................................................................16 Differentiation on products.....................................................................................................................................................17 IMPLEMENTATION...............................................................................................................................................................20 Build relationship with drivers...............................................................................................................................................20 Build a brand image completely different from the opponent.................................................................................................20 Organizational structure.........................................................................................................................................................20 Leadership and incentives.......................................................................................................................................................21 Legal structure........................................................................................................................................................................21 CONCLUSION..........................................................................................................................................................................22 ASSESSMENT..........................................................................................................................................................................23 REFERENCES..........................................................................................................................................................................23

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Executive summary In Vietnam, the new school year begins with the fact that many parents have to cope with the need to bring their children to school every day. Bringing children to school can be very difficult for parents with busy jobs or unstable schedule. Moreover, some parents are too worried about safety of their young children to let them go to school by themselves or take public transportation. We surveyed a group of parents and they confirmed that a safe and convenient shuttle service with reasonable price is one of the top priority for them. Taking advantage of these emergent demands and innovation in technology, we come up with a new service that can satisfy the parents need: Kidschool. This report is written to interpret our idea into a practical project focusing on how we build our strategic plan and structure the firm in order to achieve it. The report consists of five parts. In the first part, we provide some information about our company, its core value and the competitive advantages compared to the competitors. The next two parts talk about the evaluation of internal and external environment. The analysis method includes: PEST and Five forces analysis in external environment; resources, capability, distinctive competency, SWOT with different alternatives and Value chain analysis in internal environment. The fourth part focuses on the strategy the company needs to implement after analyzing the present context. At the end, we came up discussing the implementation and the firm’s structure.

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Overview of the project Description of Kidschool Kidschool is a technology platform, headquartered in Hanoi, Vietnam. It is an app – based shuttle service whose aim to help parents, who have small children in school age, in carrying kids to class every day by cars. Kidschool technologies develop, market, and operate a ride-sharing mobile application which allows consumers to submit a trip request, which is routed to drivers. To drivers, our smartphone application connects them with people who need a ride. To consumers, the Android, iOS and Windows Phone app connects them with drivers using their phone's GPS capabilities, letting both parties know one another's location. The driver will text customers when the ride has arrived. The Kidschool app will show parents the details of the driver, such as name, photo, and type of car so clients will know what to look for. Parents can easily watch the live journey video and keep track with their children itinerary through camera which is installed previously in the car and able to connect to parents’ personal account in our app. Kidschool offers different payment forms for their trips: obviously cash, but also credit cards, internet banking, Paypal and so on. Kidschool is a technology platform, headquartered in Hanoi, Vietnam. It is an app whose aim is to help parents, who have small children in school age, in carrying kids to school every day by cars. We created a ride-sharing mobile application which allows consumers to submit a trip request, which is routed to drivers in order to connect them through the Android, iOS and Windows Phone app connects them with drivers using their phone's GPS capabilities, letting both parties know one another's location. The driver will text customers when the ride has arrived. The Kidschool app will show parents the details of the driver, such as name, photo, and type of car so clients will know what to look for. Parents can easily watch the live journey video and keep track with their children itinerary through camera which is installed previously in the car and able to connect to parents’ personal account in our app. Kidschool offers different payment forms for their trips: obviously cash, but also credit cards, internet banking, Paypal and so on.

Initially, the main duty of the driver is to pick students from home to school and take them home when their parents request it through the app. Afterwards, when our company has gain a certain reputation and a large number of loyal customers, we might offers several complementary services. Parents can sign long term contracts with one driver and he/she will be in charge of their child every day at a fixed time and place. For each student, there will be a contract valid for at least one month, stating clearly the student’s address, the school address and

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both parents and student information. The bills will be paid at the end of the month according to the itinerary diary. However, there is also the possibility to get our service for a single ride or for a shorter periods.

To access to our long term service, parents will send their requirement form to our company through online app. After one week, we will send back the full information of expected driver who will be in charge. Moreover, parents can invite their friends or relative who live nearby or attend the same school to share the car in order to be more cost-effective. The number of children in each group depends on the size of the car. If parents expresses their willingness to group with others but they are unable to find appropriate customers, we will find other students to combine a group of three to five students who will share the same driver.

As regards the customer segment, we focus on parents who are at the ages between 35 and 50 and currently allocated in Hanoi and Ho Chi Minh city. They have middle or high income and the monthly average is equal or higher than VND 15,000,000. Each certainly has smartphone which can connect to the Internet. They tends to be busy with their jobs and have limited time so they have difficulty in carrying their children to school on time. The more detailed analysis will be shown in the strategy part of the report.

Goals and objectives Vision: To become the first and also the best app–based shuttle service for children to attend school in Vietnam. Mission: Kidschool is committed to provide the shuttle service through qualified drivers and cars with reasonable price. Kidschool lays on five core values: -

Quality: we have service quality which people can rely on. In working process, cars that are rated below 3* in the feedback function will be eliminated. Therefore, Kidschool serves its customer with the highest quality cars.

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Affordable: The price that our company offers will satisfy any parents. We follow the based price of our initial service, which is VND 7,500/km and some promotions depending on events. Customers with longterm contracts will receive a discount of 20-30%

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Time – saving: we help customer to save time so they can concentrate more on home and office work.

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Safety: Besides the time guaranteed, we give special prominence to the safety of the students. The delay may occur for some objective reasons provided that drivers guarantee traffic safety and minimize unfortunate accidents. 5

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Customer service: We have a customer service department to listen to customers problems and deal with their problems effectively, absolutely and as fast as possible. In addition, frequent customers will be given raincoat, helmet as gifts for their frequent use.

EXTERNAL ANALYSIS PEST MODEL Political Vietnam is considered one of the countries with the most stable political background. The wars’absence, not only brings a peaceful life for the people, but also helps the economy to develop and the country to be more civilized. This situation will make Kidschool easier to develop and to focus just on the business. Vietnam aims to become a country with middle-income class by 2020 and become a modern industrialized state. To achieve this goal, the government has planned to develop a functioning national innovation system. Since past few years the Vietnamese government has been trying to foster many startups and supporting the growth of innovation. Therefore, the government are trying to offer the best support for all vietnamese startups so they can develop at their best, also by attending courses abroad to implement their strategies according to an international vision.

The current corporate tax is about 20% and 15-17% for startups. With above conditions, Vietnamese government is creating more opportunities to establish new business and attract so many talented people to do business in Vietnam. The startups’development has a huge impact on economic growth. Therefore countries around the world have many policies to support start-up businesses, the mains are tax incentives. Direct tax incentives for start-ups often focus on corporate income tax. Accordingly, start-up enterprises shall enjoy preferential tax rates and enjoy tax exemption and reduction in the first period of production and business activities. In addition, indirect support for start-up businesses consists on: agevolazioni in personal income taxes for investors who investing in start-up businesses, tax incentives for venture capital funds and for establishment of enterprise. Personal income tax incentives are made by exempting income from capital investment in start-up businesses. In Vietnam, there is the restriction in freedom of speech as press is strictly and censored by the government, that will have unfavorable impact on enterprises. However, the situation is gradually improved when the freedom of press seems to be extended and the Party has taken tough measures to eliminate and punish the wrongdoing.

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Economic According to main statistics Vietnam’ GDP is around 705 billion USD and GDP per capita is 7463 USD in 2017. GDP growth rate in recent years has been hovering around 6 to 7% (6.79% in 2017 to be specific), making Vietnam become one of the most dynamic emerging economies in East Asia. The country’s inflation rate in 2017 is 2.65 percent (Trading Economics, 2018), which has been a positive sign of a developing economy. It means that the living standard of Vietnamese people is higher and higher and they will spend more money to enjoy highquality services to improve their life. Kidschool launched will be the good idea for busy parents to pick up and take their children from home to school with safety and reliability. However, the growth of Vietnamese people’s income could be also a weakness for our company because more and more parents can afford luxury cars or motorbike and want to take kids to school by themselves or hiring assistants or charwoman to do that instead of them.

Social Firstly, the population in 6-18 years old is increasing. Experts estimate Vietnamese market as a profitable potential market, Vietnam has a big part of the population under the age of 30. Therefore, there is a huge demand for transportation, especially for going school. However, parents tend to become busier and busier, they even work hard for 12 to 14 hours a days to earn more money or complete their jobs and they have less time to take care of their children. And all they need are services to help them caring about their kids more and better. Nowadays we are living a technological boom. Adults and even children use smartphones. They are always exploring and searching on the phone to satisfy their own needs and make life more convenient. Kidschool is exploiting this aspect, in fact it is launching its own projects through a phone app. Another social factor is the climate changing. Citizens in big cities are facing more and more heavy rain, flood, bad weather. Moreover, every year 15000 people die in traffic accidents in Vietnam. In 2017, traffic accidents reduced but still alarming with more than 20,000 cases, resulting in 8,267 deaths and many of them are school-age children. They are all warnings which makes parents not want their kids to go to school by themselves and hope them be safe in cars or motorbikes with qualified drivers to take them to school. However, kidnapping in big cities has increased recently, which may reduce the trust of parents in our transportation services. So it will be a big challenge for Kidschool to build trust from parents.

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Technology Smartphones are becoming more and more popular. According to research made from eMarketer, this year the number of smartphone users globally will go up to 2.39 billion people, of which the biggest increases are India and Vietnam. In addtion, there are more and more smart apps on telephones, tablets, laptops to serve and improve living standard. Last but not least, Internet is becoming available everywhere in Vietnam, not only in big cities but also in suburbs. In big cities such as Da Nang, Ho Chi Minh city and Hanoi, government installed free wifi in some places which they do not need to pay for fees or passwords.

PORTER’S FIVE FORCES Threats of new entrants (Moderate force) In big cities like Ho Chi Minh, Ha Noi, GoViet and grab are transportation apps with reasonable cost and using motorbikes and cars as their main vehicles. They have Therefore, it is a little easy for them to develop an app like Kidschool. They have a very talented young team and are very intelligent with good business strategies. Moreover, their supply is also remote drivers having their own cars and motorbikes like kidschool so it's easier for these apps to develop another function or apps like kidschool.

Threat of substitutes (Low pressure) In some schools with high fees, there are school buses. However, on each trip, between 16 and 30 children will need to be taken to school and home. In addition, large cities such as Ho Chi Minh and Ha noi always have traffic jams during peak hours, which will make children spend more time on the car which takes time and also causes them fatigue. Moreover, there are so some public buses with the route on the way from home to school with cheap prices but spending so much time because of traffic jams and robberies, pickpockets, and pedophiles are still happening on the public buses which are very dangerous for kids. Some taxi drivers, who have close relationship with parents will sign contracts with parents ...