Group 13 – Class GaMBA01.X03 Building Business strategy for BIDV in 2010 – 2015 GRATITUDE Our group would like to express our gratitude to teachers in Global Advanced Master of Business Administration Program co-organized by Training Technology Center – Hanoi National University with Griggs University- The United States of America. They communicated us precious knowledge in the process of learning in the program. We are also thankful to profession group contributing ideas and instructing us during process researching and implementing the topic. Last but not least, we thank boards of Head Office of Bank for Investment and Development of Vietnam, Hung Yen Branch of Bank for Investment and Development of Vietnam, State Bank in Hung Yen province for helping us and creating favorable conditions to have essential information to complete this Capstone Project Report.
Hanoi, December 2010 Author group 1 Group 13 – Class GaMBA01.X03 Building Business strategy for BIDV in 2010 – 2015 TABLE OF CONTENTS Gratitude 1 Table of contents 2 Abbreviation list 4 Diagram list 5 Table list 5 PREFACE 6 CHAPTER 1: SCIENTIFIC FOUNDATION OF RESEARCH TOPIC 8 1. Definition and the role of Business strategy 8 1. Definition of Business strategy 8 1. Definition of the role of Business Strategy 9 1.
The role of Business strategy 9 1. Process of building strategy 10 1. Analysis of external environment 13 1. Analysis of macro environment 13 1.
Analysis of industry environment 14 1. Analysis of internal business 18 1. Strategy in enterprise grade 22 1.2 Strategy in business grade 23 SUMMARY OF CHAPTER I 24 CHAPTER II: ANALYSIS OF BUSINESS ENVIRONMENT OF BIDV 25 2. General introduction about BIDV 25 2.
General information about BIDV 25 2. Functions and missions of BIDV 26 2. Business operations of BIDV 26 2. Organizational structure of BIDV 26 2.
Business performance of BIDV in recent years 28 2. Analysis of external factor affecting to Business operations of BIDV 32 2. Influences from macro environment 32 2. Socio-economy factor 32 2.
Political- law environment 36 2. Influences from culture, society, geography and demographic 39 2. Influences from micro environment 40 2. Providers and customers 40 2.
Competitiveness and competitive image matrix 42 2. Opportunities and challenges of BIDV 49 2.2 Challenges 49 2 Group 13 – Class GaMBA01.X03 Building Business strategy for BIDV in 2010 – 2015 2. Analysis of internal environment factors of BIDV 52 2. Internal environment factors 52 2.
Strengths and weaknesses of BIDV 57 2. Strengths of BIDV 57 2. Weaknesses of BIDV 57 SUMMARY OF CHAPTER 2 58 CHAPTER 3: BUILDING BUSINESS STRATEGY FOR BIDV IN 2010-2015 59 3. Development goals of BIDV to 2015 59 3.
Goals and operation policies 59 3. Development orientation in period of 2010 – 2015 59 3. Building and selecting business strategy for BIDV to 2015 61 3. Foundation for strategy establishment 61 3.
Strategy establishment from SWOT matrix 61 3. Market penetration strategy 61 3. Market development strategy 63 3.Development strategy of new service products 63 3. Product differentiation strategy 63 3.
Financial capacity development strategy 64 3. Human resources management and quality strategy 64 3. Sustainable customer strategy 64 3. Strategy to increase marketing operations 64 3.
Comprehensive solutions for strategies 67 3. Financial capacity increasing 67 3. Net work and distribution system solution 71 3. Rearranging current Business net work 71 3.
Increasing to open dealing spot in super markets 72 3. Opening more banking service counters 72 3. Establishing and widening ATM net work 72 3. Solutions for the completion and development of banking service products 74 3.
Capital mobilizing product group 74 3. Credit product group 74 3. Payment service and other products group 75 3 Group 13 – Class GaMBA01.X03 Building Business strategy for BIDV in 2010 – 2015 3. Marketing policy completion 75 3.
Regular analysis for competitors 75 3. BIDV trademark development 76 3. Increasing risk management capacity of BIDV 77 3. With respect to State 78 3.
With respect to State Bank 79 SUMMARY FOR CHAPTER 3 80 CONCLUSION 80 References 81 Appendixes 82 ABBREVIATION LIST Abbreviation Meanings AFTA ASEAN Free Trade Area BIC BIDV Insurance Company BIDV Bank for Investment and Development of Vietnam BFC Banking Financial Company BSC BIDV Securities Company BTA Bilateral Trade Agreement between Vietnam and America CAR Capital Adequacy Ratio EFE External Factor Evaluation matrix IFE Internal Factor Evaluation matrix GDP Gross Domestic Product R&D Research and Development WTO World Trade Organization 4 Group 13 – Class GaMBA01.X03 Building Business strategy for BIDV in 2010 – 2015 DIAGRAM LIST Diagram 1.1: Five functions of strategy management Diagram 1.2: Basic model of Strategy management Diagram 1.3: Macro environment Diagram 1.4: Development cycle of sector Diagram 1.5: Degree of capacity and demand in sector Diagram 1.6: Value chain Diagram 2.1: GDP growth rate in period of 2005-2009 and estimation for 2010 Diagram 2.2: GDP growth rate and GDP per capita in period of 1998-2007 Diagram 2.3: Fluctuation of USD/VND rate in period of 2006-2010 Diagram 2.4: Capital mobilizing and credit of BIDV and some other banks Diagram 2.5: Safety coefficient of capital and charter capital Diagram 2.6: Bad debt of Banks in 2009 TABLE LIST Table 1.1: SWOT Matrix Table 1.2 : QSPM Matrix Table 2.1: Business results of BIDV from 2005-2009 Table 2.2: The positive fluctuation of criteria of profitability and income structure Table 2.3: Income structure in period of 2006 -2009 Table 2.4: Debt surplus structure according to profession type Table 2.5: Interest rate fluctuation in 2009 Table 2.6: The number of customer in business scale Table 2.7: Comprehensive information about big Banks in Vietnam Table 2.8: First level branch network of big banks Table 2.9: Competitive image matrix Table 2.10: External Factor Evaluation matrix (EFE) Table 2.12: Internal Factor Evaluation matrix (IFE) Table 3.1: SWOT matrix Table 3.3: QSPM for S/T group 5 Group 13 – Class GaMBA01.X03 Building Business strategy for BIDV in 2010 – 2015 PREFACE 1. The reason to choose topic: International economy integration becomes tendency and strongly happens in many aspects. It is the demonstration of objective trend of the economy. Moreover, to catch up with that trend, Vietnam actively participates in the international integration regarding as ASEAN, ASEAN Free Trade Area (AFTA), signing Bilateral Trade Agreement between Vietnam and America (BTA) in 2001, and the participation in World Trade Organization (WTO) in 2007.
According to these agreements, Vietnam will open the market for subsidiary banks with 100% foreign capital and eliminate limitations for the operations of foreign bank branches. Furthermore, to respond to more and more increasing pressure, a transformation period is applied in national banking sector, from the middle of 2005 when Vietnam made decision to restructure and capitalize State Commercial Joint Stock Banks. Government also introduced new rules about the increasing capital of banks. National Assembly also approved the law for credit organizations in 2010.
In that general context of the economy, how do Vietnam Commercial Banks have to face up with challenges and make use of opportunities as well as change challenges to opportunities not to have loss in ground. This requires the commercial bank system has to be active and ready to take part in this integration and competition. Business strategy is always an important factor affecting to the survival and development of a business. Especially, in violent competition period after economic crisis as present, the future of a business will mostly depend on the Business strategy whether good or bad.
Taking part in the more and more violent competition, BIDV will have to face up with challenges to the survival and development of the bank. Therefore, BIDV has to set up the Business strategy in following years – an extremely difficult phase after global economic crisis. With above reasons – we – managers in BIDV system including four members choose the topic in line with the theme “Building Business Strategy for BIDV in 2010-2015. We hope that this topic will have significant contribution to BIDV Hung Yen in particular and BIDV system in general.
Furthermore, each individual will gain more 6 Group 13 – Class GaMBA01.X03 Building Business strategy for BIDV in 2010 – 2015 comprehensive information about banking market to have the most suitable Business strategy in total business operations. The research objective Our group researches the Business environment of Bank for Investment and Development of Vietnam including external and internal factors. From that, we can catch opportunities, avoid challenges and development orientation for the bank in period of 2010 - 2015, the result of research will help BIDV to keep the competitive position in market and is more and more developing in integration context. Research subject and scope The research subject of this exercise in Bank for Investment and Development of Vietnam and the research scope is Banking industry in Vietnam.
Research method Secondary data collection method Data is extracted and collected from statistics yearbook, report from website of banks and annual reports of banks. Besides, the exercise also uses some references, newspapers, magazines and lectures. Comparison method, general method and other relating methods During the process of analyzing, the author group uses comparison and general method for data of BIDV in the past and at present as well as compares criteria, Business results between BIDV with other Commercial Banks. Additionally, we also consult the ideas of experts in BIDV with the evaluation of matrixes.
Structure of the essay The essay includes the preface, conclusion, and appendix and reference list. The essay has following chapters: Chapter 1: SCIENTIFIC FOUNDATION OF RESEARCH TOPIC Chapter 2: ANALYSIS OF BUSINESS ENVIRONMENT OF BIDV Chapter 3: BUILDING BUSINESS STRATEGY OF BIDV TO 2015 CHAPTER 1: 7 Group 13 – Class GaMBA01.X03 Building Business strategy for BIDV in 2010 – 2015 SCIENTIFIC FOUNDATION OF RESEARCH TOPIC 1. Definition and the role of Business strategy 1. Definition about Business strategy The concept of strategy existed from the Ancient Greek.
This terminology originated from military with the name of “Strategos”, it means the role of commander in military, A.Chandler defined it as “the determination of objectives, long term basic goals of applying a range of actions as well as the distribution of essential resources to implement these objectives ”(1) Until 1980, when the subject of Strategy Management became mature, Quinn.B introduced more general definition “Strategy is a pattern or plan integrating major objectives of policies or a range of actions to a close overall”(2) After that, Johnson and Scholes defined the term of strategy in the environment conditions with many quick changes “Strategy is orientation and scope of an organization in long term to gain the competitive advantages for the organization by means of formatting its resources in changed environment and meet the demands of market as well as satisfy expectations of relating parties ”(3) Until now, there are many different concepts about Business strategy depending on different research approaches, strategy is defined as “a train of complex actions to mobilize resources in an organization with a certain objective”(4) We see that all definitions about strategy have phrases expressing different aspects with the implication. In order to have a polyhedral view with clearer understanding, in definition of strategy with five letters P, Mintzberg generalizes aspects of Strategy Management as following: Plan: An action chain with consistently predetermined (1), (2), (3) Associate Professor - Doctor Le The Gioi, Doctor Nguyen Thanh Liem, Master Tran Huu Hai (2009), Strategy Management, Statistics Publisher, page 10 (4) Slides of the subject of Strategy Management MBA Griggs in 2010 Pattern: The consistency about behavior over times, it may have the intention 8 Group 13 – Class GaMBA01.X03 Building Business strategy for BIDV in 2010 – 2015 of not Position: The suitability between organization and its environment Perspective: The deep awareness of the world Ploy: Specific ways to cheat the competitors (1) Therefore, Strategy Management similar to other management processes, includes the plan, implementation and implementation investigation.