Group Number: 10 - GaMBA01.N04 GRIGGS UNIVERSITY GLOBAL ADVANCED MASTER OF BUSINESS ADMINISTRATION PROGRAM CAPSTONE PROJECT REPORT SET UP BUSINESS STRATEGY OF PETRO VIETNAM INSURANCE JOIN STOCK COMPANY (PVI) FROM (2011 – 2015) Group Number: 10 - GAMBA01. Vang Dam Ngoc 2. Bay Ngo Pham 3. Thanh Nguyen Thi Kim 4.
Phuc Pham Thi Hanh HA NOI 2011 –––––––––––––––––– 1 Group Number: 10 - GaMBA01. :4 Chapter I: Basic theory issues on strategic management applied in insurance field. Concept and strategic management process. Concept of strategic management .2 Strategic management process.
Steps to set up the business strategy. Define function, task and target of the business strategy. Analysis outside environment. Analysis inside environment.
Analyse SWOT matrix. Basic business strategies in reality. Select optimal strategy. :29 Chapter II: Set up business strategy of PVI.
PVI in general. Analyse elements of outside environment. Opportunities and Threats Assessment. PVI internal factors analysis.
Analyse SWOT matrix. :70 Chapter III : Solutions to implement strategy for PVI ……………………………. Sales target of PVI from 2011 to 2015. Identify replace marketing strategies.
Solutions to carry out he strategy. :85 –––––––––––––––––– 2 Group Number: 10 - GaMBA01. Solution for develop the human resource. Technological and information system.
Build cultural organization. Set up material facilities. Business strategy and policy, 2006 2. MBA in hand – Marketing 3.
Marketing management – doctor Nguyen Thi Tuyen Mai 4. Marketing strategy of G&H Management Services 5. Insurance Magazine of Vietnam Insurance Association 6. –––––––––––––––––– 3 Group Number: 10 - GaMBA01.
The reasons of choosing this subject: There are many different definitions about insurance which are written on researching society, legal, economy, technology,… Insurance is the contribution of plural’s money to the unlucky minority. The insurance is which guarantees to pay for you or him/her a amount of money (insurance fee) in an unlucky case. In that case you or he/she will receive a compensation for damage paid by another: it is insurance man. The insurance man have responsibility for risk and compensate for the damages according to statistics.
The insurance can be defined as a way to reduce risk by combining a number of objects turning a person’s damage to public damage. And it can be foreseen. Vietnam has joined WTO and the participation in the field of insurance will create chances and challenges, to require Vietnam insurance market to operate more competitively and develop according to international standards and rules. The trend of intergration is indispensable, Vietnam can not be out of that process.
The implementation new policies will need time to adapt to new business environment. Opening market is making high pressure of competition, not only for insurance business operating but also insurance business being about operating. Businesses which get foreign investment capital with strong finance and modern management style will be competitors to Vietnam insurance businesses; including large and experienced company, having advantage of traditional customer and sales capability like Bao Viet Insurance company, Petro Insurance company, Thai Son Insurance company… and Petro Vietnam Insurance is the same. Global financial crisis helped to foresee the insurance field facing with difficulties in 2009.
However, it is also a chance for the insurance to enlarge market. When finacial crisis occurs, the interest reduces continuously, people will realise insurance as a reliable presevation. –––––––––––––––––– 4 Group Number: 10 - GaMBA01.N04 To the reasons above, orienting business strategy appropriate to characteristics in market, developing and enhancing competitive potential are necessary needs with insurance company. From the reality, our group choose the subject: “Set up business strategy of Petro Vietnam Insurance join stock company (PVI) from 2011-2015” 1.
Object and the scope of research The object for researching is business strategy of PVI. The scope is business operation of PVI, in comparision with business operation of other competitors in the same place. The purpose of research The purpose of research in this exercise is to systematize, generalise theory issues on setting up and choosing sales strategy, to analyse state of business operation and business strategy at present in PVI. And then, propose the solutions to complete business strategy in 2011-2015 aiming to make PVI become a leading company in Vietnam insurance market.
Methodological research - Because of limitation of time, the major exercise of our group uses the methodological, research: - Do research on paper to collect minor information, aiming to analyse the influence of elements in the business environment to the strategy of the company (the minor information like books, magazine, websites pvi.vn, reports of PVI, Bao Minh, Pjico, Bao Viet). - Use the qualitative method to exchange idea in the group of “experts” aiming to analyse and comment the competitive situation in the industry as well the charactertistic inside environment. - Use the method of statistic to collect data to define and solve problems about building and executing the strategy of the company. Result expected: –––––––––––––––––– 5 Group Number: 10 - GaMBA01.N04 After finishing exercise, our group estimate to get results below: - Show specific characteristics of setting business strategy applied in insurance business.
- Define the state of setting and execute business strategy of PVI. - Set up business strategy for PVI and propose a solutions, plan in detail from 2011- 2015. The group exercise shows up the plan of development in the state of 2011-2015 base on analysing information in the company and forecasting the trend of PVI. Research on reality.
However, the economy today happens complicatedly in the global financial crisis. Therefore, the predictions are long and general strategy but a plan for an operation plan in detail for PVI. The main structure of the exercise: Besides the opening and concluding, the exercise includes 3 chapters: - Chapter 1: Reasoning foundation on strategic management applied in insurance field. - Chapter 2: Setting up business strategy for PVI - Chapter 3: Solutions of executing strategy in PVI –––––––––––––––––– 6 Group Number: 10 - GaMBA01.N04 CHAPTER I BASIC THEORY ISSUES ON STRATEGIC MANAGEMENT APPLIED IN INSURANCE FIELD.
Concept and strategic management process 1. Concept of strategic management Term “strategy” originated from Greek: “Tratos” (army, gather a crowd, link - cooperate) and “agos” (leadership, control). From the 60s, the term “strategy” was used in business and term “business strategy” was born. However, the concept “business strategy” has been more understood in different ways and developed for a long time.
There are many different definition about strategy: - “Strategy is a long orientation and scope of an organization, aims to get the competition to the organization by estimating its human resource in changeable environment to meet the demand of the market and satisfy expectation of related parties. , 1999, Exploring Corporate Strategy. Prentice Hall Europe) - “Strategy is a series of complicated activities aiming to mobilizing human resource of enterprise that it can do to get its purpose”. (GaMBA, 2009, Strategic management course book, Definition of strategy, page 1) - “Strategy can be defined as ideas, plans, supports to the enterprise to compete to succeed before its competitors”.
(Strategic management, page 6 - Le the Gioi, Nguyen Thanh Liem, Tran Huu Hai – Statistics Publishing house 2009) - In 1962, Chandler defined: “Define objectives, purposes of the enterprise and the application of a series of actions as well as ditributing human resource necessary to implement this objective.” (Strategic management, page 6 - Le the Gioi, Nguyen Thanh Liem, Tran Huu Hai – Statistics Publishing house 2009) –––––––––––––––––– 7 Group Number: 10 - GaMBA01.N04 - According to Mintzberg, the definition of strategy with 5P generalizes the angles of the strategy: + Plan: A series of consistently planned activities + Partern: Consistence of activities in time + Position: The suitableness between the organization and its environment. + Perspective: The way to recognize the world deeply. + Ploy: Concrete way to deceive the competitor. - According to Alfred Chadler (Harvard university), “Strategy consists of defining long basic objectives of an enterprise.
And it chooses method or action program and distributes necessary human resource to implement that objective”. For many definitions above, strategy is a large concept and complicated comprehension. Therefore, the essense of business strategy is how to find a prospect for the future. It usually includes 3 issues: + Define long business objectives + Propose complete action programs + Select action program, agree and distribute human resource to get the objective.
Strategic management is a selection of decision of management and activity to estimate long term output of the enterprise. - Strategic mangement includes continuous activities - Estimate environments (inside and outside) - Set up strategy - Implement strategy - Estimate and control strategy 1.2 Strategic management process: –––––––––––––––––– 8 Group Number: 10 - GaMBA01.N04 Define vision and mission Analyse inside Analyse outside environment environment Set up objective and strategy Basic strategy: - Company capability - Operating capacity - Function - International business Organise and distribute Carry out strategy and act Organize and manage resource to integrate organization Step 1: Set up strategy on basic agreement to realize mission and objective of the insurance. Step 2: Business analysis Business environment consists of the outsite and inside environments while a insurance operate business activities. These kinds of environments have direct or indirect effect to the operating and development of the insurance.
Therefore, –––––––––––––––––– 9 Group Number: 10 - GaMBA01.N04 researching on the outside or inside environment is so important to set up strategy of the insurance. Analysis outside environment - Analyse macro-environment: Analysing outside environment helps enterprise to realize the risks and get chances and then take them to the strategy properly. They are economic environment, government policy, politics, law principle frame, change of modern technology, social culture, population. - Analyse micro environment: The micro environment includes present and potential competitors ; replacement products, clients.
- According to Michael E. Porter, there are advantages of competition: low price and product differences. The advantages of competition model of Michael E. Porter Resource Advantages: low price Or Product value Special capability Advantages: product differences Abilities Analyse inside environment –––––––––––––––––– 10 Group Number: 10 - GaMBA01.N04 Inside environment of insurance includes elements in control of enterprise such as management, finance, accounting, funtional activities, marketing, PR, research and development, human resource, information system.
Analyse those environments aims to realize weak points to overcome or omit, take advantage of chances, limit challenges, so collecting all the necessary elements to put into the strategy. Step 3: Define long-term objectives and strategy Define long-term objectives need to be defined for 2 years. In the process of carrying out the strategy, it is necessary to set up short-term objectives equivalent to short times. Define objective and purpose is process of combining: valuing and foreseeing.
For instance, the need of products as well as business issue, the ability to get profit. If the need of the market is estimated, it will find out the services for the market in the future. Through estimating the need of the market, board of management can decide to invest how much capital, total property, borrowed funds, charter capital, which will be prepared. And the board of management also can plan to spend finance, income, costing, human resources and other supports to carry out the stratery.
Set up action plan and solution to carry out the strategy This is the process of making policy, plan to distribute the resource of the insurance resonably aiming at making main works of the strategy. These efforts to do the tasks must be made used of the resources to have competition advantage for carrying out the strategy successfully. Step 5: Control, value and modify Because of fast changes in the business environment and estimated unstabilities, in the process of implementation, the insurance need to follow up, value and adjust the way of acting, to come to the planned strategy. Steps to set up business strategy –––––––––––––––––– 11 Group Number: 10 - GaMBA01.