FINAL REPORT

Course Title

IBUS 496 Special Business Topics in International

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TABLE OF CONTENTS

1. EXECUTIVE SUMMARY.................................................................................................................................3 2. INTRODUCTION................................................................................................................................................3 2.1. THE MARKET ................................................................................................................................................3 2.2. THE COMPANY..............................................................................................................................................3 3. PROBLEM STATEMENT.................................................................................................................................4 4. ANALYSIS............................................................................................................................................................5 4.1. ORGANIZATION CHART OF ELECTRICITY OF VIETNAM........................................................................................5 4.1.1. Top management................................................................................................................................5 4.1.2. Generation Operation Division .........................................................................................................5 4.2. EXISTING DATABASE AND INFORMATION PROCEDURE IN GE.................................................................................6 4.2.1. Existing database...............................................................................................................................6 4.2.2. Current obtaining data procedure......................................................................................................6 4.2.3. Issues in current updating data procedure.........................................................................................8 5. RECOMMENDATIONS.....................................................................................................................................8 5.1. UPDATING PROCESS.......................................................................................................................................8 5.2. RETRIEVING DATA PROCESS.............................................................................................................................9 5.3. FURTHERS..................................................................................................................................................10

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1. Executive Summary
By 1890, Thomas Alva Edison, who had the greatest invention of all - the incandescent electric lamp, had organized his various businesses into the Edison General Electric Company. As businesses expanded, it had become increasingly difficult for the company to produce complete electrical installations relying solely on their own technology. In 1892, Thomson-Houston Company and Edison General Electric Company combined to form the General Electric Company. Several of Edison's early business offerings are in fact still part of GE today, including lighting, transportation, industrial products, power transmission and medical equipment. Many other fields have been developed during the last century, from aircraft engine, home appliances to plastic, from financial services to news and information. The business was expanded not only in term of product line but also in worldwide geographic. GE has offices in more than 100 countries in the world. It had some business records in Southern Vietnam during the Vietnam war. The market was disconnected after the unification of Vietnam in 1975. American embargo was finally lifted in 1993 and normalized diplomatic relation was established in 1998. GE started to come back to this market in 1997 when filling some orders of spare parts for their old steam units installed in Thu Duc Power Plant. The market is developing very fast with average capacity increase of more than 15% per annum. GE has opened their office in Vietnam since 1990 mainly to supply medical equipments under humanity programs. GE Power System just opened their office there in 2002. Due to the longtime disconnection with the market, and the gap in industry standards of Vietnam in comparison with others countries, GE does not have an up-to-date database to support strategic business decisions as well as for sales force to capture business opportunities. The objective of this paper is to analyze the issues and to find out new processes to improve the current situation.

2. Introduction
2.1. The market

After applying open-door policy in 1990, Vietnam has been growing rapidly. Power generation is one of the most important infrastructure elements to develop its overall economy. Electricity of Vietnam (EVN), the state-owned monopoly, manages all power generation activities including building new plants, operating existing plants, transmitting, distributing and selling to end users. Before 1990, the total generation installed capacity of the whole country was just only 2,000 MW. At the average annual development of 15 percent, EVN today can generate up to 8,000 MW, which is four times higher than it was in 1990. The master plan of EVN shows that power generation must keep the same rate of development till 2010 to meet the country industry development needs. The market becomes very attractive to many power generation manufacturers: from the handful of leading companies like GE, ABB, Siemens, MHI (Mitsubishi Heavy Industry) to a number of smaller manufacturers, who make related equipments in power plants.

2.2.

The company

General Electric Power Systems consists of 3 main divisions (1) GE Energy Product: (2) GE Energy Services: Supplying main units to new thermal power plants such as turbines, generators, and control systems Supplying after-sale and maintenance services to thermal power plants including consulting, technical advisors, repair, and spare parts

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and (3) GE Hydro Supply new units and services to Hydro Power Plants The scale of business of GE Energy Product and GE Hydro is normally very big. A new power plant project involves many parties to work together. Most of the preparation and communication are outside Vietnam. Whilst GE Energy Services business, with much smaller scale, requires daily communication with customer. Business strategy decisions are normally made in the country. As the result, in 2002, GE Power Systems decided to establish GE Energy Service Vietnam (GEESVN) in Ho Chi Minh city. The main activities of this office are to keep track of all business opportunities in the country for Energy Services and to realize these businesses. It also works as a representative of GE Energy Products and GE Hydro in Vietnam.

3. Problem Statement
GE first business record in Vietnam was the installation of 3 steam turbines in Thu Duc Power Plant in Southern Vietnam, in of the early 70s. GE totally disconnected with Vietnam market after the country reunification in 1975. American embargo was finally lifted in 1993 and normalized diplomatic relationship was established in 1998. GE started to come back to this market in 1997 by filling some orders for spare parts of those steam units in Thu Duc Power Plant. The market has been developing very fast during the last 10 years with almost 30 new GT, 7 HRSG, 15 STG and 30 new hydro turbines installed from various source of suppliers, manufacturers, contractors. However, GE database about the installed base in Vietnam is inaccurate and out-of-date. There is a big gap between the data in GIB (Global Installed Base), OO (Outage Optimizer) and actual market data. There is no efficient process to update and share the information. As the result, many processes from inquiry to order are stuck due to the inconsistent, incomplete and inaccurate information available in the existing database. It takes a long time to fix these issues for any new business. Without the accurate and timely updated database, salespeople cannot capture business opportunities. As the product of GEES is parts and repair/maintenance services, the opportunities are strongly related with the maintenance outage schedule of customers. Normally, EVN have to carry periodical outage for maintenance services to each unit. Depending on the type of units and operation characteristics, the outage interval is from one to four years. For each maintenance outage, users might need old parts either replaced or repaired, upgrading consulting services, and technical advisors. Sales persons must know the outage schedule and intention of users far in advance to market their products and help customers select all options available to them. GE has software called Outage Optimizer to predict the outage schedule and online consultancy for outage scope of works. Sales force utilizes the outcome as a tool to keep track and sell most updated products to customers. However, power generation fleets in Vietnam are from different suppliers, many of them are from Russia and China, with which GE is not familiar. In addition, maintenance schedule of EVN not only bases on technical requirements but also on budget availability. Due to these reasons, Outage Optimizer is not fully applicable to the market. Establishing a proper system to collect and update the market database periodically and a procedure to update outage schedule of all units in Vietnam is the key to help the sales force of GEESVN to improve their capability to capture all business opportunities.

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4. Analysis
4.1. Organization Chart of Electricity of Vietnam

As we mainly focus on how to solve the problem of database and procedure to update the database that serves the business, we will only focus on what relate to that problem rather than discussing how to improve business of GEES in Vietnam in general. The organization chart that we will discuss below will also focus on the units those involve in the discussed problem. 4.1.1. Top management Board of Management Control Dept. President & CEO Internal Audit Dept.

Vice President Investment Development Vice President Generation Construction

Vice President Generation Operation Vice President Network Operation

Fig. 1

Vice President Business

Vice President Finance

All activities of EVN are controlled by six divisions in three groups. Group one is in chart for future development. The function of Investment and Development Division is to foresee the development of demand in 5 to 10 years ahead, then to have proper plan to build up new plants and transmission lines to meet the expected demand. Generation Construction Division will implement the construction for new projects. Group two is in charge for operation the existing facilities of EVN. Generation Operation division controls all power plants in Vietnam. Business of GEES is mainly involved with this division. Further in this paper, we will mainly focus on this division. All grids are controlled by Network Operation Division. The third group, consists of Business Division and Finance Division, is in charge for selling and all financing activities of EVN. 4.1.2. Generation Operation Division

The role of this division is to maintain and optimize the operation of the system. We focus only on the thermal power plants having steam turbines and gas turbines since those are the targeted market of GEES. Among 14 power plants listed in the below charts, only 6 plants, those marked in blue, have GE equipments.

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Generation Operation Division

Science Technology Dept

Safety and Protection Dept

Power Plants

Power Generation Dept

Electrical Equipment Factory

Coal-fired Thermal Power Plant

Hydro Power Plant

Oil- fired Themal Power Plant

Diesel Engines

Gas Turbine Power Plants

Other Independe nt Power Plants

PhaLai 1 PhaLai 2 Uong Bi Ninh Binh

Thu Duc Can Tho

Thu Duc Can Tho Ba Ria PhuMy 1 PhuMy 2-1 PhuMy 2-2

Plant contains GE units Plant does not contains GE units Fig. 2

PhuMy 3 PhuMy 4

4.2.

Existing database and information procedure in GE

Existing database

4.2.1.

Current database of GE only contains data of 6 plants having GE equipments as marked in above chart. The available data is only very basic information such as installed day, unit serial number, model, and manufacturer. This information had been input by GIB (Global Installed Base) team in the US longtime ago when the unit was installed (refer to Fig.3 below). It only lets the sales force knows briefly how big potential of the market is but could not provide any updated information about business opportunities at required times. 4.2.2. Current obtaining data procedure

As illustrating in Fig.4, when the sales force wants to get some information about the market, they access GIB and OO (Outage Optimizer) database. In some other countries, where the utilities strictly followed the operation recommendation of GE, the OO can provide significant information about the schedule of next outage as well as expected spare parts or services the company can sell. By using the output report of OO, sales people can capture the business opportunity and set up their action plan to achieve it. However, due to the embargo in Vietnam, the incompatible trade system and the constraint of budget, power plant utilities are not able to comply with GE maintenance and operation recommendation. The OO system was built to run automatically by utilizing certain standard input data. It cannot work with the substandard operation and maintenance characteristic of power utilities in Vietnam. So in most of the cases, the sales person has to go directly to each utilities to get updated information for every single piece of information required.

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Fig. 3

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Information required Update by regional offices New unit installed US database control and update team GIB databse OO databse

Update to database Check with customer by regional offices Not satisfied Information obtained Satisfied Predicted business plan

Fig. 4

4.2.3.

Issues in current updating data procedure

So far, there has been no well-studied procedure to update the database in Vietnam. In order to know where to improve the updating system, we will analyze the variation source by below Fishbone Diagram
Process No process to formally update the database 2 No appropriate process to follow up the latest status Manpower No following up on the status of new data 1 No responsible person Incomplete and Out of date Database 1 No tool to share data 1 Data incomplete, inaccurate Focus only GE equipment Data not share Impact High Low Easy 1 3 Implement Hard 2 4 Data

No appropriate tool to enable updating Tool

Fig.5

5. Recommendations
5.1. Updating process

From above Fishbone analysis, due to the unique operating characteristics of power generation fleet in Vietnam, the country team should have its own personnel to update required information and data to serve its activities and link with the head quarter database. The team has to work with headquarter about the configuration how to share data and also

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work with all related business sections to know what kind of data is required. Upon knowing what need to be collected, the team has to update all required data at least once every quarter. The data will be shared selectively to GIB and OO by headquarter team. The whole process is as Fig 6 below.
Country database control and update team Update by regional offices New unit installed US database control and update team GIB databse OO databse Quarterly update Country databse

Fig.6

5.2.

Retrieving data process

The data updated by country team should be accessible to all GE related sections. The sales forces will mainly access to the country database or can get general information from GIB and OO. Since the data in country database is collected per requirement of all related business sections as mentioned above, the sales force should be able to get most of necessary information. In case new data are required, the request should send to local team directly. Depending on how urgent the request is, the local team can either do an adhoc checking and update or can wait until the quarterly update. Again, all updates will be posted to headquarter automatically.
Information required

US database control and update team Quarterly update Adhoc update

GIB databse

OO databse

Country database control and update team

Country databse

Not satisfied

Information obtained Satisfied Predicted business plan

Fig.7

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5.3.

Furthers

The market in Vietnam is changing very quickly these years. Its required to review and adjust the procedure periodically to match the market situation. The control system of database in headquarter is also in the continuous changing process to adapt to the changes of the global market. Ensuring the match of country system to headquarter system is critical.

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