PREFACE After participating in Global Advanced Master of Business Administration Program (GaMba) co-organized by Center for Educational Technology and Career Development (ETC) – Vietnam National University, Hanoi with Griggs University – USA in Vietnam, to date, it is the time for making the capstone project report, Group 1 – Class GaMba X0410 consists of the following members: No. Full name Gender Title Office Assistant 1 Nguyễn Mạnh Cường (74) Male Ministry of Finance manager Head of Agribank – Bim 2 Nguyễn Văn Quý (75) Male transaction Son office 3 Dương Anh Sơn Male Director Head of 4 Võ Xuân Linh Male transaction BIDV – Bim Son office Members of group 1 have together formed the topic: "Completing business strategy for the Bank for Investment and Development of Vietnam – Bim Son Branch in 2010 – 2015 period" with the expectation of completing business strategy for the Bank for Investment and Development of Vietnam – Bim Son Branch to find out solutions in order to enhance business performance of the bank in the coming years. Business Strategy for BIDV Bim Son in 2010-2015 period Table of Contents Introduction.6 Chapter 1: Theoretical Background. Concepts related to business strategy.
Levels of business strategy. Strategic management process. External environment analysis. Internal environment analysis.
Strategy selection and approach.26 Chapter 2: Current business situation and analysis of BIDV Bim Son. Summary of business situation in 2006-2010 periods. Business results over years. Analysis of major factors affecting business activities at BIDV Bim Son.
Current business strategy of BIDV Bim Son. Evaluations on BIDV Bim Son’s implementation of business strategy.52 Chapter 3: Completing business strategy in 2010-2015 periods. Business development plan. Business development plan.
Strategic commitments of BIDV Bim Son. Business strategy in the period of 2010 – 2015. Recommended solutions on completing strategy of the Branch. Roadmap for implementing strategic solutions.
72 1 Business Strategy for BIDV Bim Son in 2010-2015 period INTRODUCTION I. Reasons for selecting the topic: 1. The necessity of the study In the current context of international economic integration, different fields of Vietnam’s economy have encountered certain difficulties in competing with the world economy that have developed rapidly for a long time. Especially, in the field of banking-finance, Vietnam’s commercial banks that have not been familiar with “branching out to the big sea” will have to make a lot of efforts in improving capacity to stand firm in these difficult periods.
Bank for Investment and Development of Vietnam (BIDV) is currently one of the leading commercial banks in Vietnam. At present, BIDV plays an important role in the career of the country’s industrialization and modernization; at the same time, makes contributions to implementing the Government’s monetary policy, curbing inflation, stabilizing monetary system and boosting the economy. However, in the face of pressure on equitizing to integrate and fiercer competition in domestic and foreign markets, the bank is required to promote its strengths and grasping business opportunities to sustain its position and develop sustainably. To do that, BIDV in general and Bim Son Branch in particular need to complete business strategies to have the right direction in the integration process.
However, to deploy an effective business strategy, the bank needs to understand itself via business activity analysis, and identify the real market so as to combine strengths and weaknesses as well as opportunities and threats to make business activity more and more developed. Owing to the necessity of completing business strategy of the bank as well as the importance of business strategy in the operation of commercial banks in general and the Bank for Investment and Development of Vietnam – Bim Son Branch (BIDV Bim Son) in particular, group 1 has selected the topic 2 Business Strategy for BIDV Bim Son in 2010-2015 period “Completing business strategy for the Bank for Investment and Development of Vietnam – Bim Son Branch in 2010 – 2015 period” to conduct our capstone project report. Practical background At present, the general trend of the world is economic integration. The reality has proved this via the fact that Vietnam has joined several world economic organizations such as ASEAN, AFTA, APEC, WTO, etc.
This requires Vietnam’s economy observes the “common rules” of the world. Therefore, competitive pressure has become tougher and tougher for enterprises as well commercial banks. If banks previously only bore competition from domestic banks or joint-venture banks, they, at present, have to face tougher competition from foreign financial institutions with strong financial capacity and long-term business experience. This factor has alerted the threat of contracting market for commercial banks of Vietnam.
As a result, it is required that Vietnam’s commercial banks should have sound business strategies because business strategy plays a very important part in the process of leading the banks and helping them to have appropriate steps to achieve their set goals. Objective of the study 1. Systemizing theories on strategic management 2. Analyzing and evaluating the business strategy implementation at BIDV Bim Son recently 3.
Giving out solutions to complete business strategy of BIDV Bim Son in 2010–2015 periods III. Object and Scope of the study 1. Object: Business strategy of the Bank for Investment and Development of Vietnam – Bim Son Branch. Scope of the study: Vietnam market in 2010 –2015 period.
3 Business Strategy for BIDV Bim Son in 2010-2015 period IV. Methodology of the study 1. Method of data collection The data are supplied by BIDV Bim Son and the State Bank of Vietnam – Thanh Hoa Branch, including data on source of capital, assets, and business results over the past years and related information. Information about banking sector and the market of banks operating in Thanh Hoa is collected from the Internet and newspapers.
Method of data analysis - Method of studying secondary data to consider the scale, structure and movement trend of the market. - Comparison method is a popular method in analyzing problem. The content of this method is considering each criterion both absolute and relative ones in the order of time (this period compared to the previous period) or in terms of space (this bank compared to other bank), etc. - Special evaluation method is applied when analyzing by each issue, criterion, phenomenon (having unusual changes) in order to evaluate and investigate the nature of each issue.
- Comprehensive evaluation method is general evaluation on all aspects of operation of the bank. This method also follows the time, phenomenon, separate issue and comprehensive evaluation. Phenomena and issues are put separately, but in a general correlation. Contribution of the Capstone Project report We expect that the study will help the Board of leaders of BIDV – Bim Son to reconsider the real business and production situation of the Branch; on that basis, formulate business strategy in the 2010–2015 periods completely to help the Branch gain better business results in the coming years.
Owning to shortcomings in the process of collecting information, the content of the study has only focused on the scope of the Branch and has not 4 Business Strategy for BIDV Bim Son in 2010-2015 period been expanded to the whole system of the Bank for Investment and Development of Vietnam. Structute of the Capstone Project Report Apart from the introduction and conclusion, the major content of the study includes three chapters: Chapter 1: Theoretical background Chapter 2: Current business situation and strategy analysis of the Bank for Investment and Development of Vietnam – Bim Son Branch Chapter 3: Completing business strategy of the Bank for Investment and Development of Vietnam – Bim Son Branch VII. Division of tasks to all members in the group With the above content and structure of the report, group 1 has divided tasks to members as follows: Group’s members Chapter Item Introduction Chapter 1 I.2 Nguyễn Mạnh Cường Chapter 2 II.3 Võ Xuân Linh Chapter 3 II.3 Nguyễn Văn Quý Chapter 3 III.1 Chapter 3 Dương Anh Sơn I.3 Conclusion 5 Business Strategy for BIDV Bim Son in 2010-2015 period CONTENT CHAPTER 1: THEORETICAL BACKGROUND I. Concepts related to business strategy 1.1 Strategy According to normal definition, the term “strategy, originated from the Greek word “strategos”, is a term used in the field of military to indicate the way to arrange the battle field and allocate forces with the objective of winning over the enemy.
Carl von Clausewitz – who studied the art of war in the 19th century – described strategy as “making plan for the war and formulating combating strategies. Those strategies decide the participation of each individual”. More recently, the historian Edward Mead Earle described strategy as “The art to control and use resources of a nation or a union of countries in order to ensure and raise efficiency for their indispensible interests.” Nowadays, business organizations also apply the concept of strategy similar to in the army. Strategy is the plan to control and use an organization’s resources such as the people, assets, finance, etc.
with the aim to raise and ensure its essential interests. Kenneth Andrews is the first person giving out these outstanding ideas in the classic book titled “The Concept of Corporate Strategy”. In his opinion, strategy is what an organization needs to do base on their strengths and weaknesses in the context containing both opportunities and threats. Strategy is the orientation and scope of action of an organization in the long-term to achieve business advantages via the determination of existing resources to satisfy the market demand and ensure interests for all stakeholders.
6 Business Strategy for BIDV Bim Son in 2010-2015 period More specifically, strategy aims at: - Sustainably achieving the enterprise’s objectives (business and social responsibility) in the long-term. - The market or market segment that the company will do business in and business strategies to be applied. - What will the enterprise have to do to gain advantages over its competitors in that market with specific types of customers? - What are the needed resources (human resources, skills, assets, finance, technological secret, etc.) to achieve that goal - Potential external threats that can affect the implementation of strategies such as environment, competition, politics, resources, etc. and plans to prevent risks.
- The value that the enterprise will bring to owners and the society in which the enterprise is a member. The formulation and selection of strategy by objective is not enough. Strategy must give out specific actions in specific time with certain resources to realize objectives. Strategy must be a series of actions and decisions that have close relation with each other.
All strategies aim at the business’ objectives and are established based on internal resources (strengths and weaknesses) and external factors (opportunities and threats). In other words, strategy is: - Where is the business striving to reach in the long-term (orientation). - Which market is the business competing in and which types of activities does the business perform in such market. - What the business will do to operate better than its competitors in these markets (advantages).
7 Business Strategy for BIDV Bim Son in 2010-2015 period - Which resources (skills, assets, finance, relations, technological capacity and equipment) that the business needs to be able to compete (resources). - Which external factors affecting competitiveness of the business (environment). - Which value and expectation that managers inside and outside the business needs (stakeholders). In any organization, strategies exist at several different levels – from the whole business (or a group of businesses) to individuals working in that environment.
Corporate strategy relates to the overall strategy and scale of the business to meet the expectation of the stakeholders. This is an important level as it is heavily influenced by investors in the business; and at the same time, it also guides the strategic decision-making process in the whole business. Corporate strategy is often clearly stated in the “mission statement”. Business strategy is more related to how a business can compete successfully in a particular market.
It concerns strategic decisions on selecting products, meeting customers’ needs, gaining competitive advantages over its competitors and hence creating new opportunities.