Fpt Strategy

FPT Strategies
FPT was originally found in September 1988 as The Food and Processing Technology Company. After 22 years of operation, now it is the largest Information and Communication Technology (ICT) Corporation in Vietnam. This report will firstly analyze the major changes in external environment that will affect the corporate-level strategy, the need and expectations of stakeholders. Secondly, it will review FPT’s position in the market and evaluate strengths and weaknesses of chosen business strategies.
. On the begin of April 2011, FPT was on the headline when it suddenly changed CEO. The new corporate-level strategy is set up to “Because of e-citizen”. This new strategy states that FPT will become a leader in network infrastructure development and IT services. The Internet has changed the world completely and the chances of Vietnam join the world. The essential needs of people will not change but the method to satisfy the needs will change by using Internet. FPT calls organizations and consumers who use internet as e-citizens.
FPT has five core businesses with their own business-level strategies that related to the corporate-level strategy. FPT Information System focuses on software and hardware integration (ERP software, network implementation, client and server computers…). FPT Trading distributes mobile phones and ICT products of well-known brand name like Nokia, Acer, IBM, and Samsung…. FPT Telecom provides internet services including leased line, FTTx, online game, and internet related services. FPT Software outsources products for customer in Japan, US, Europe. FPT University provides computer science and business management training.
The below PESTEL table analyze the external environment for both corporate-level and business-level strategies.
Political
- Government support ICT industry and education development
- Politic is stable, no strike
- Limit number of Telecom company
- E-government is on the way to use Economic
- GDP increasing rate 7% every year
- Inflation rate is high
- Interest Rate is high 15-20%

Social
- 20 million people use internet
- hi-tek generation population
- Per capita income increase Technological
- R&D is considered important
- cable line, high-speed internet
- complicate software and high tech devices is used popularly
Environmental Legal
- Limit of time to play game online(FPT Telecom will be affected)
- Law of Internet limit many internet services, websites that can be accessed in Vietnam

There are some major changes in macro-environment. In term of Political, minister of Vietnam recently has issued a document state that Vietnam will become a strong nation in IT services exporting by 2020. Government keeps giving tax deduction for IT corps(less than 10% compare to other companies). The Hoa Lac IT Park in the North and Hitech Park the South are built to provide modern infrastructure for hi-tech companies. By moving headquarter to the Hi-tech Park, FPT Software will lower the all cost for more professional working environment. Furthermore, hi-tech park look like an e-city with everything online, all of its employees are the first e-citizen generation. In term of exporting software, FPT Software also set up the strategy to expand in the Japan IT market. It is very successful in profiting from the 2nd largest IT market, and importing the newest hi-tech internet software and devices.
In term of social changes, the new generation of Vietnam (occupied 30% of population) grows up with computers and internet; they are ready to be online all the time. Young people like game online, banking online, paying online. FPT will make profit with Gaming companies, banks, and utilities providers. The costumers, in turn, become e-citizen.
The legal changes in Internet service may cause a lot of trouble to FPT. Government limit the time of online game, some big websites like facebook.com is not allow to access in Vietnam(because of national security matters), or limit in e-signature, e-payment. All the limitations will decrease the number of e-citizens.
The main changes in technologies would be the uses of cable internet, 3G Mobile Network, popularity of open-sources software, and web 2.0. Cable internet and 3G Mobile Network are 10 times faster the previous technology, but the cost to replace the old infrastructure in big. FPT Telecom will buy 44% share of EVN Telecom that will strengthen FPT’s internet infrastructure and immediately enter the mobile telecommunications market supported by a 3G network. Open-source and web 2.0 are also big opportunities, since they are cheap and easy to implement. Unfortunately, FPT have not paid attention to open-sources software and have zero connection with web 2.0.
The Five forces framework will give more details of FPT external environment. In term of the threat of entry, Information System and Software industries are not too hard to get in. FAST Software, MISA Company, and Effect Software are some companies that have ERP Software. Substitutes products would be open-source with the same functions with ERP and much cheaper. FPT Trading has suppliers like Samsung, Nokia, Dell…Those companies may have bargaining power since they are big and well-known. Big supplier can cause FPT Trading big cost of good sold then decrease the net income. Overall, FPT has occupied 50% of ICT services market with big customers (mostly government sectors), but competitive rivals like HPT, CMG, Viettel have better services, technology, and better prices in some ICT services and product. They have better relationship with private sectors like banks, manufactures, big private corps.
The need and expectations of stakeholders is clear. The management board would like to build FPT to be a Multinational Corporation that operates in many industries. Investors expect to have higher return from operations. Employees need better work-life balance.

FPT positions in current market are shown by the strengths and weaknesses of its subsidiaries. FPT Telecom partner with EVN Telecom is a strategic step to fully involve in internet and telecommunication industry. EVN has an existing North-South backbone through its power lines, which is national wide. FPT Telecom is still investing backbone, which is very costly and timely. Furthermore, FPT can benefit from additional international capacity bandwidth for better services. In addition, EVN Telecom has newest technology 4G which is good for FPT strategy to implement mobiles applications like e-payment, video, games…The weakness of this strategy is the old technology GMS dominates Vietnam mobile phone market for long. It is hard for customers to change to 3G or 4G in old existing devices. One more downside is EVN Telecom has big asset, so 44% of share cost huge money for FPT to invest.
FPT Software export product to Japan, US and Europe. Low IT labor cost is an advantage of Vietnam and FPT as well. FPT is on the right track to focus on Japan market. However, the competitors from India, Philippine cause FPT has less bargaining powers. The IT employees cannot speak Japanese is also a big thing that limit software outsourcing abilities.
FPT Information System provides services in system integration, upgrading, and ERP implementation for banks, public sectors, mid-size and large-size corporations. When it initially implements computer networks for an organization, it also creates potential jobs for maintaining that system in the future. ERP consultant and implementation is a strategic service that contributes large portion of revenue. However, ERP is too expensive (licenses from Oracle or SAP), hard to convince Viernamese enterprises to use, hard to do business analyst, and difficult to implement. It requires skilled business analysis and expensive developers, which are not always available. Finally yet importantly, IT government projects depend on the economic status, sometimes are delayed and have to wait for long.
FPT Trading used to depend mostly in Nokia mobile phones, which is risky. After the launching of F-Mobiles, the risk become less and less. F-Mobile is strategic product line of FPT Corporation. After FPT Telecom done M&A case with EVN Telecom, 3G or 4G services will be provided on F-Mobiles. The thing is, F-Mobile is still more expensive compare to some Chinese brands like K-Touch, Mobell. Q-Mobile.
FPT University occupies small part of FPT corp. It use real-life training in business and IT, and is backup by the FPT as an ICT Corporation. Graduates are easy to get good job at FPT itself. However, the school fee is too expensive relative to per capita income in Vietnam. Some universities come from oversea have set campus in Vietnam with better education services and prices.
In general, FPT and its subsidiaries have been very success in ICT industry. In addition, it tries to dominate the fields that they are in. FPT software could have more contracts from Japan if it considers Japanese language important. It can train fresh graduates, existing employees seriously so they can speak Japanese better. It should consider using open-source software because it is the next generation of software industry. FPT Information System should target to business analysis and consultant, and better customer services. The business-level strategy is still somewhat different with the corporate-level strategy. The daughter companies still have planed and implemented their own strategies that a little far away from “because of e-citizen”. The member companies may revise their strategies to fit the overall strategies
In conclusions, this essay analyzes the changes in external environment of FPT Corporation that affect its strategy, and position of FPT in current market. To be a multination corporation, FPT should get into more industries that are related or not related to ICT products and services. Also, FPT should set up Research and Development Department to create products that can connect all the subsidiaries.
References:
1. FPT stock analyzing, VietCapital
2. FPT stock analyzing, VDSC
3. Business strategy of FPT 2011, Nguyen Hoang Long, FPT Corp
4. Website www.fpt.com.vn
5. Gerry Johnson, Exploring Corporate Strategy, 8th edition, FT Prentice Hall, chapter 2

References: 1. FPT stock analyzing, VietCapital 2. FPT stock analyzing, VDSC 3. Business strategy of FPT 2011, Nguyen Hoang Long, FPT Corp 4. Website www.fpt.com.vn 5. Gerry Johnson, Exploring Corporate Strategy, 8th edition, FT Prentice Hall, chapter 2