Nguyen Khanh An
10210847
Khanh An
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I.
INTRODUCTION
Building materials are extremely significant and required in construction projects.
They determine the work's quality, longevity, artistic value, and cost. Because the quality
of materials has a direct impact on the quality of work, the construction materials business
is constantly investing and focusing on development. This research article shares the
analysis of the largest real estate and building materials group in Vietnam – Viglacera and
their competitors, including Vicem and Taicera.
II.
MAJOR FINDINGS
2.1 Overview
 Background knowledge
On July 25, 1974, the Ministry of Construction issued Decision No.366/BXD,
establishing Viglacera as a Terracotta Tile and Ceramic Company based on the merger of
18 factories producing burnt clay bricks manually. Under the Government's Dicision No.
308/CP of September 7th, 1979, it was renamed the Union of Construction Brick and
Porcelain Enterprises. The Union is the production and business management entity that
oversees the production of building porcelain and tiles across the country. The charter
capital of Viglacera is 4,483.5 billion VND (Viglacera, 2020).
Vietnam Cement Industry Corporation (Vicem). Formerly the Union of Cement
Enterprises was established on October 1, 1979, the Union of Cement Enterprises was
established to manage cement factories in the country. On October 5, 1993, the Ministry
of Construction issued Decision No. 456/BXD-TCLD renaming the Union of Cement
factories to Vietnam Cement Corporation. On November 14, 1994, the Prime Minister
issued Decision No. 670/TTg on the establishment of Vietnam Cement Corporation
operating under the model of corporation 91 (Vicem, 2022). Moreover, owner's investment
capital is 60,000,000,000 VND (Vicem,2022).
Taicera Ceramics Industry Joint Stock Company was established in 1994 by 20
Taiwanese shareholders under License 764/GP issued by the State Commission on
Cooperation and Investment, now the Ministry of Planning and Investment on January 11,
1994. Total initial investment capital is USD 19,500,000, of which legal capital is USD
8,500,000 The subscription period is 30 years. Its function is to manufacture quartz tiles,
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ceramic tiles and porcelain products. Observing the positive changes in the business
environment in Vietnam, the company has continuously opened more branches in key cities
and locations, increase the operating life to 50 years and adjust the investment capital to
expand more production lines and add operational functions (Taicera, 2020).
 Vision
As reported by Wilson (1992), the vision specifies the future business's shape,
establishes precise goals, and guides strategy.
Viglacera is focused on maintaining its leadership position in the fields of
construction materials, real estate investment and trading in Vietnam, as well as to
achieving green growth and sustainable development to become the country's and region's
leading brand (Viglacera, 2020).
Meanwhile, in the next 10 years, Vicem will continue to innovate corporate
governance, build an advanced corporate culture and apply science and technology to keep
pace with the industrial revolution 4.0. Continue to pay attention to the protection of natural
resources and the environment, participate in social security programs, reduce poverty with
gestures and ethics that Vicem has been implementing (Vicem, 2022).
With competitive advantages in terms of geographical location, product quality,
sales team, business goals, production, R&D, QC, e-business. Taicera is striving to become
Asia's most competitive ceramic tile service company, including Viglacera (Taicera, 2020).
 Mission
Wilson (1992) established that mission declares the company's primary goal,
defines the company's connection with other organizations, including competitors, and
establishes broad objectives.
Viglacera specializes on offering high quality, all-encompassing goods and
services in the sector of construction materials in Vietnam. Be a trustworthy investor, in
the world of real estate investing and trade (Viglacera, 2020).
On the other hand, focuses on performing tasks to equitize parent companies,
companies with 100% state capital to have capital to develop production capacity by
making new investments, or receiving transferring of enterprises that the Government has
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approved. Government, Ministry of Construction assigned Vicem, maintaining the pivotal
role, is a great balance of Vietnam's cement industry (Vicem, 2022).
Taicera determined their mission couldn't be simpler, which is make the
neighborhood a more lovely place to live (Taicera, 2020).
 Core values
The essential beliefs that everyone in the business shares and sincerely believes in
are known as core values. Core principles, once established in the culture, assist a company
in weathering challenging times (Evans, 2005).
Viglacera maintains the company with these core values: colonists, energetic,
innovative, quality and client oriented. Furthermore, four more core values are detailed:
responsibility to society is maximum product quality; responsibility for oneself is passion
for the product and for the labor; responsibility towards colleagues is a forward-thinking
culture and constantly learning; and collective responsibility to create a harmonious
atmosphere among people, through respect for differences (Viglacera, 2020).
Vicem has not yet built up the core values of an authentic brand, while it shows
the corporate culture foundation.
On the flip side, Taicera operates their business with six core values, which is
faith, classic, revolution, speed, security and protection of the environment.
 Goals and Objectives
An aim is the direction in which a company wishes to travel in the future, or its
objectives. It's a mission statement. The stated, quantifiable targets of how to attain
corporate goals are known as business objectives (tutor2u, 2021).
Viglacera intends to maintain its position as a prominent business in Vietnam’s
construction materials and real estate industries. It is an achievement verifying the efforts
of firms in the strategy of creating and developing brand names in both domestic and
international markets, as it has been recognized by the government as a National Brand on
a continuous basis.
Vicem aims to maintain its pivotal role, pioneering in the cement manufacturing
industry in particular, and building materials in general.
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Taicera aims to produce durable, good-quality ceramic tiles, suitable for per
capital income and adapting to Vietnam's weather.
2.2 Categories of each companies
The 3 companies listed above belong to two different types of organizations. To
verify that, we need to describe and explain includes sub-sector, legal structure, size, and
scope.
 Sub-sector
In accordance with Dung (2022), she stated Clause 11 Article 4 of the Enterprise
Law 2020 stipulates: “Public organizations are enterprises in which the State holds more
than 50% of charter capital, the total number of shares with voting rights as prescribed in
Article 88 of the Law on Enterprises”. By contrast, private sectors are enterprises in which
the State holds less than 50% of the charter capital or the total number of voting shares.
Furthermore, private organizations owned by individuals or other private enterprises
(including foreign organizations and individuals) (Ngan, 2020).
More than 50% of Viglacera's shares are owned by individuals and private
business. The individual holding the most shares is Mr. Nguyen Van Tuan - Chairman of
the Board of Directors. Moreover, 57,2% stocks of Gelex Corporation is owned by
individuals, which means Gelex is a private corporation. At the same time, Gelex has 46%
stocks of Viglacera. Hence, Viglacera is a private organization.
The State holds about 59,64% stocks of Vicem, thus, Vicem is also belong to
public sector.
In 1994, Taicera was established by 20 Taiwanese shareholders and has been
maintained until now. The percentage of shares held by the state is not listed in the annual
report. Therefore, Taicera can be classified as a private enterprise.
 Legal Structure
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In 2014, Viglacera Corporation organized the first General Meeting of
Shareholders, officially transformed from State Enterprise to Joint Stock Company
(Viglacera, 2020).
Similarity, Vicem is also a Joint Stock Company. They are focusing on performing
tasks to equitize parent companies and companies with 100% state capital.
Coincidentally, Taicera was founded by 20 shareholders. They joined in the Stock
Market in December 2006. Thus, Taicera is also a Joint Stock Company.
As can be seen, three chosen companies are Joint Stock Company, which come
along with advantages and disadvantages:
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Advantages: Firstly, the liability regime of a Joint Stock Company is limited
liability, the shareholders are only responsible for the debts and other property
obligations of the company within the scope of their contributed capital, so the risk
level of the shareholders is not high. Moreover, the operation capacity of Joint Stock
Company is wide, in most fields and industries. Another advantage is the capital
structure of a Joint Stock Company is very flexible, allowing many people to
contribute capital to the company. The ability to raise capital of a Joint Stock
Company is very high through the issuance of shares to the public. Lastly, the
transfer of shares in a joint-stock company is relatively easy, so the scope of subjects
eligible to join a Joint Stock Company is very wide, even officials and employees
have the right to buy shares.
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Disadvantages: The management and operation of a Joint Stock Company is
complicated because the number of shareholders could be very large, many
individuals do not know each other, and there may even be a division into groups of
shareholders that are antagonistic to each other when it comes to benefit. Secondly,
the establishment and management of a Joint Stock Company is also more
complicated than other types of companies because it is strictly bound by the
provisions of law, especially on the financial and accounting regime.
 Size
Currently, Vietnamese law does not have a specific concept on how to define a
large enterprise, but usually only talks about the size of that business to assess what type
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of business it is. Pursuant to Hung (2021), when a company's total capital exceeds 100
billion VND and its total number of workers exceeds 300, it is considered a significant firm
in Vietnam.
Based on the above factors, the size of the 3 selected businesses could be
classified:
Viglacera called large enterprise with 7698 workers and 483.5 billion VND in
chartered capital.
Vicem is also a large enterprise when both the charter capital and investment
capital of the owner of Vicem are 60 000 000 VND. However, the number of employees
of the company is not disclosed.
There are about 1200 employees working for Taicera, total invest capital is 82
million USD, so Taicera is identified as a large enterprise as well as Viglacera and Vicem.
 Scope
Integration contains two categories, which is Horizontal integration and Vertical
integration. Horizontal integration is the joining of two companies in the same industry and
at the same point in the supply chain . Buying a company in the same sector but at a
different step of the supply chain is known as vertical integration (tutor2u, 2021)
Fired clay bricks, AAC blocks and panels, ceramic tiles, sanitary ware, and
building glasses are all available from Viglacera. Because these are also construction
materials, they are all identical goods, and this is referred to as horizontal integration.
Products that Vicem brings are cement and real estate rental. It can be seen that
cement business and real estate leasing are two unrelated fields (building materials and real
estate), so this is considered a vertical integration.
Taicera only focuses on trading in a single product, which is high-class floor tiles
with many different sizes, so this is considered a horizontal integration.
 Stakeholders and Stakeholder Mapping
Individuals or groups with ownership, rights, or attentiveness in an enterprise or
its operations, past, present, or future, are referred to as stakeholders (Brugha, 2000). Here
are the 4 main stakeholder components:
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Government:
Since its inception, Viglacera is a public enterprise, the Ministry of Construction
is a major shareholder holding 53.97% of charter capital. Through the
announcement of share capital transfer of the Ministry of Construction (2018), in
2014, Viglacera officially transformed from a state-owned enterprise to a Joint
Stock Company. However, the government's influence on businesses is still quite
large when the way to operate, the approvement to import raw materials requires
the government's clearance.
As a pubilc organization, it cannot be denied that Vicem relies heavily on the
government in its business operations.
As a licensed foreign-invested enterprise, Taicera is strictly regulated by the
government. In addition, Taicera imports raw materials and production technology
from Italy. Therefore, it is necessary to allow the import of international goods from
the government.
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Customers:
Not only is the company holding a large market share in the building materials
industry, Viglacera also builds a reputation among retail customers in the household
goods category when the household products are diverse, product quality is cared
for and thoughtful customer service.
Vicem holds a large share in the cement market, is a major supplier of many
construction companies when it produces 27 million tons of cement per year.
Taicera's target customer is buildings rather than households. Thanks to Taicera's
many brick projects, this business has built a remarkable reputation in the market.
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Suppliers:
It can be said, Viglacera and Vicem maintain a pretty good relationship with
suppliers. More notably, Viglacera's share in the market is more than both Vicem
and Taicera, especially Taicera in ceramic tiles. Moreover, Vicem not only focuses
on building materials industry but also real estate leasing, so they do not depend on
suppliers like the other two competitors.
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Shareholders:
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Most of Vicem's shares are held by the state, so Vicem shareholders will not have
as many rights as Viglacera shareholders. Taicera establishment has 20
shareholders, which proves that the rights of shareholders are very large, the biggest
in the remaining companies.
High
High power, low interest
High power, high interest
Low power, low interest
Low power, high interest
Power
Low
Low
Interest
High
Figure 1: Stakeholder mapping among three companies
Government
Customers
Shareholders
Suppliers
Taicera
Viglacera
Vincem
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2.3 Viglacera's business functions and their interrelationships
To operate the business effectively, it requires close linkage between departments
as a link, including Viglacera.
 Marketing
Marketing competency is described as the process through which a company
integrates its tangible and intangible resources to comprehend complicated
customer demands, differentiate products from competitors, and build better brand
equity (Nath, 2010).
Viglacera's marketing system includes: internal reporting system and external
regular marketing information collection system, marketing research system and
marketing information analysis system. The above systems are essential for
Viglacera's Marketing department to define the vision, mission and policy of
product consumption. However, due to the lack of coordination between the Finance
department, simple metrics such as the cash flow statement of the Marketing
department are not well known.
 Finance
Like every other business, the finance department has an important role in
Viglacera. The finance department will make buying and selling decisions,
adjusting the budget for each item to meet the revenue target with the company. As
mentioned above, the biggest point that needs to be overcome is the need to work
more closely with the marketing department to bring the company to the final goal.
 Human Resource Management
Being a large corporation when creating job opportunities for more than 8000
people, HR Department is one of the biggest department of Viglacera. The strength
of the human resources department at the group is always setting employee retention
policies, creating a dynamic environment in line with Viglacera's core values.
Control the recruitment process well to find the most suitable candidates with the
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company's core values. It can be said that this is the department that works alone
but still able to do its job well.
 Operations
At Viglacera, Operation Block plays a very important role when directly
manufacturing and manufacturing construction materials such as bricks, ceramic
tiles, granite bricks, concrete bricks. Therefore, this department will directly
communicate with suppliers to import raw materials such as clay, cement, sand and
water to turn them into bricks and other tiles.
As can be seen, all departments of Viglacera clearly define their tasks and goals.
More specifically, the finance department and the marketing department require
close coordination, namely the full exchange of reports so that the two departments
can give direction to the company. So both department should fix this problem to
improve work performance. Operations and human resources departments have
been doing their jobs well, operating effectively and increasing profits for the
company.
2.4 Analyze the interrelationships between organizational structure and consider
the implications for the organization's structure
According to the interview with Mr. Lauri Johannes Heikkila – Brand Director of
Viglacera Vietnam, he established Viglacera’s organizational structure as divisional.
 Advantages
Each division of Viglacera may be accounted for separately thanks to the
divisional organizational structure. It is clear which departments are profitable and
which are losing money. Loss-making segments can be totally shut down, allowing
more money to be invested in profit-making sections. When Viglacera is acting in
other structures, such as functional structures, this analysis is impossible.
People in a department can engage with one another thanks to departmental
organizational systems. When everyone works for a common objective, the
department's success, their desire to work is at an all-time high. Everyone
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understands what the other requires from them, and communication is much more
successful.
A division that is entirely focused on its own product, service, or geographic area.
This allows them to pay more attention to external issues that may have an impact
on their operations. Weather changes, natural catastrophes, financial crises, union
conflicts, and other external events make departments more adaptable.
Each department is led by a different person. Leaders collaborate with their staff
to develop goals and work toward them. Viglacera's top management no longer has
direct influence over the company. Top management has the authority to make
strategic decisions. Department heads become into specialists in their subjects and
are extremely productive.
 Disadvantages
Healthy departmental competition is beneficial to Viglacera, but when it becomes
so severe that department heads begin to carry grudges against one another, it may
be tremendously destructive to the entire organization. Instead of doing well on their
own, divisions will desire other divisions to perform poorly in order to surpass them
and obtain incentives. Employees consider themselves to be part of a certain
department, although they are still a member of a much broader company.
Departments that do not communicate with one another will be unaware of each
other's aims and ambitions. This misunderstanding can cause problems for the
business in the form of higher taxes, fines, and a shortage of funding since a
department may have spent more money on corporate social responsibility, among
other things.
If connected items are not properly coordinated, Viglacera may suffer significant
losses.
 Solution
Viglacera should also have weekly meetings to properly convey goals and
objectives and equitably distribute work among members to minimize unfair rivalry.
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III. CONCLUSION
In short, Viglacera has many strengths such as rigorous working processes,
efficient departments, simple management due to many management layers
divided to ensure quality. However, it also has weaknesses, such as a lack of
communication among employees, unintentionally creating an unhealthy
competitive environment. This study aims to explore the strengths and
weaknesses of Viglacera and its competitors in the building materials industry
and presents some solutions from a personal perspective.
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