GRIGGS UNIVERSITY GLOBAL ADVANCED MASTER BUSINESS ADMINITRATION PROGRAM CAPSTONE PROJECT BUSINESS STRATEGY DEVELOPMENT IN THE PERIOD OF 2011-2015 FOR BANK FOR INVESTMENT AND DEVELOPMENT OF VIET NAM – QUANG BINH BRANCH Group No: 2 – GaMBA01.V0110 Group members: Ong Vinh Hoa Dao Van Loi Nguyen Xuan Duc Nguyen Le Quang Tran Dinh Viet HA NOI, 2011 BUSINESS STRATEGY CONSTRUCTING WITHIN THE PERIOD OF 2011-2015 FOR BANK FOR INVESTMENT AND DEVELOPMENT OF VIET NAM – QUANG BINH BRANCH TABLE OF CONTENTS PREFACE. General background, the necessity and importance of the research. Research subject, purpose and application. Structure of capstone project:.5 The capstone project consists of 3 chapters:.
6 THEORETICAL BACKGROUND ON BUSINESS STRATEGY. Definition and role of business strategy. Definition of business strategy. Basic characteristics of business strategy.
Business strategy classification. The role of business strategy in the enterprise. Cost leadership strategy. Business strategy development process.
Defining strategic visions and missions. External factor evaluation. Internal factor evaluation. External factor evaluation (EFE).
Internal factor evaluation (IFE). Strategic analysis techniques. Quantitative Strategic Planning Matrix. 21 ANALYSIS OF FOUNDATION FOR DEVELOPING BUSINESS STRATEGIES FOR BANK FOR INVESTMENT AND DEVELOPMENT OF VIET NAM - QUANG BINH BRANCH.
General introduction of Bank for Investment and Development of Viet Nam – Quang Binh branch. The forerunner of BIDV. Business field of the bank. Strategic vision and mission.
Organizational structure and distribution networks. Business environment analysis.24 1 Group2 BUSINESS STRATEGY CONSTRUCTING WITHIN THE PERIOD OF 2011-2015 FOR BANK FOR INVESTMENT AND DEVELOPMENT OF VIET NAM – QUANG BINH BRANCH 2. Macro environment analysis. Economic factors analysis.
Analysis of political and legal factors. Analysis of technological factors. Analysis of socio-cultural factors. Analysis of natural factors.
Analysis of industry environment. Table of opportunities and threats evaluation. External factors evaluation (EFE). Internal analysis of BIDV Quang Binh.
Human resource capacity. Distribution channel network. Table of strengths and weaknesses. Internal factor evaluation (IFE).
SWOT matrix for BIDV Quang Binh. 18 STRATEGY SELECTION AND IMPLEMENTATION SOLUTIONS. Development orientation for BIDV Quang Binh in the period of 2011-2015. Selection of strategic alternatives based on analyzing QSPM matrix of Quang Binh BIDV.
The contents of the selected strategies. Developing network based on improving human resource quality as well as service quality together with improving marketing activities. Enhancing the task of risk management and internal monitoring to improve credit activities.22 2 Group2 BUSINESS STRATEGY CONSTRUCTING WITHIN THE PERIOD OF 2011-2015 FOR BANK FOR INVESTMENT AND DEVELOPMENT OF VIET NAM – QUANG BINH BRANCH 3. Marketing activity enhancement.
Distribution channel solutions. Solutions for products and services. Human resource solutions. Effect human resource recruitment.
Employee training and re-training. Compensation policy and human resource management. Developing corporate culture. Potential problems and solutions.28 LIST OF REFERENCES.
29 3 Group2 BUSINESS STRATEGY CONSTRUCTING WITHIN THE PERIOD OF 2011-2015 FOR BANK FOR INVESTMENT AND DEVELOPMENT OF VIET NAM – QUANG BINH BRANCH PREFACE 1. General background, the necessity and importance of the research In the context of today’s global economic integration, there have been rapid and strong development in the Vietnamese economy in which the financial and banking sector has developed constantly in terms of scale, quantity of credit organizations as well as service and product quality. However, coping with intensive competition, banks must strive to survive and develop in increasingly competitive conditions. Developing suitable business strategy for the survival and development of each individual bank has become an urgent demand.
Only this can enable banks to occupy and increase their market share, improve competitiveness, expand and promote banking products and services. With the willingness to make Quang Binh branch of BIDV develop stronger and become specially ranked enterprise, as well as consolidate and improve its position and competitiveness in the financial-banking market of Quang Binh province, “developing business strategies for BIDV - Quang Binh in the period of 2011 - 2015” is a currently urgent issue. Completing this task will help the branch increase its business performance and successfully accomplish the given targets and business plans. Research subject, purpose and application Research object is the issues regarding the development and implementation of business strategy which will be applied to analyze business activities of BIDV – Quang Binh.
Research purpose is to analyze and evaluate the bank’s operations and business situations to develop business strategies for BIDV – Quang Binh in the period of 2011-2015; and recommend some strategy implementation solutions in order to take the branch to the top 5 position in BIDV system as well as the strongest and highest market share branch in all aspects within Quang Binh province. The research is completed based on accurate and valid data from reliable database of The State Bank of Quang Binh Province, together with objective 4 Group2 BUSINESS STRATEGY CONSTRUCTING WITHIN THE PERIOD OF 2011-2015 FOR BANK FOR INVESTMENT AND DEVELOPMENT OF VIET NAM – QUANG BINH BRANCH problem analysis and evaluation which are suitable to practice as well as common social trend; therefore the research is highly applicable. Research methodology The research applies various methods such as analysis, synthesis combined with the learnt matrix tools as well as quantitative and qualitative analysis methods to conduct research on developing business strategies for BIDV - Quang Binh Data resources are secondary data collected from reports of BIDV – Quang Binh branch and The State Bank of Quang Binh, books, articles and internet materials. Analysis techniques to be used include SWOT matrix, IE matrix and five – force model of Michael Porter.
Structure of capstone project: The capstone project consists of 3 chapters: Chapter 1: Theoretical background on business strategy. Chapter 2: Analysis of foundation for developing business strategies of BIDV – Quang Binh Chapter 3: Strategy selection and implementation solutions. 5 Group2 BUSINESS STRATEGY CONSTRUCTING WITHIN THE PERIOD OF 2011-2015 FOR BANK FOR INVESTMENT AND DEVELOPMENT OF VIET NAM – QUANG BINH BRANCH CHAPTER 1 THEORETICAL BACKGROUND ON BUSINESS STRATEGY 1. Definition and role of business strategy 1.
Definition of business strategy Strategy is a series of complex actions to mobilize the whole organizational or individual resources to reach a defined purpose. Business strategy is a series of commitment and actions that a company uses to create a competitive advantage by exploiting core capacity within a defined market. There are many different definitions of business strategy depending on the viewpoints of each author: According to Michael Porter, business strategy is an art to compete within the market and develop enterprise. Basic characteristics of business strategy Business strategy will define basic targets and business orientation of an enterprise in each period.
Strategic orientation is to ensure the enterprise’s constant and firm development in a constantly changing business environment. Business strategy is to ensure the maximum mobilization, optimal combination and exploitation of an enterprise’s resources in the present and future, promote strengths and take opportunities to achieve competitive advantages. Business strategy of an enterprise is reflected during a constant process. Business strategy always has the thought of attacking to win in the business environment.
Business strategy is constructed during a long period (3, 5, 10 years). Business strategy classification 1. The role of business strategy in the enterprise Business strategy helps enterprises to identify the purpose and its basic direction as the guideline for all manufacturing and business activities of the enterprise. 6 Group2 BUSINESS STRATEGY CONSTRUCTING WITHIN THE PERIOD OF 2011-2015 FOR BANK FOR INVESTMENT AND DEVELOPMENT OF VIET NAM – QUANG BINH BRANCH Business strategy helps the enterprise understand and take advantage of business opportunities, and in the same time take measures to overcome the risks and threats in the competitive marketplace.
Business strategy contributes to improve the efficient use of resources, enhance the competitive position of the enterprise and ensure its sustainable development. Business strategy creates a solid basis for the proposal of policies and decisions for suitable production that work in accordance with the fluctuation of the market. Three generic competitive strategies 1. Cost leadership strategy A set of actions aim at producing products or services that have the characteristics accepted by customers with the lowest cost compare to all competitors.
- Relatively standardized products. - Many acceptable distinctive features. - The lowest competitive price. Actions to save costs: - Invest in equipment system to take advantage of the economies of scale - Closely monitor production and management costs.
- Minimize sales, service and research & development costs - Develop effective production equipment. - Control the costs of outsourced activities - Simplify the production process. Competitive threats: - Processes used to produce and distribute products and services may become outdated and obsolete due to the innovation of competitors. - Focusing on reducing costs may trade-off customers’ awareness of differentiation - Competitors will imitate the company’s cost leadership strategy by using their own core competences.
7 Group2 BUSINESS STRATEGY CONSTRUCTING WITHIN THE PERIOD OF 2011-2015 FOR BANK FOR INVESTMENT AND DEVELOPMENT OF VIET NAM – QUANG BINH BRANCH 1. Differentiation strategy It is a series of necessary actions to produce products and services (at an acceptable price) provided that customers suppose the products are different and this difference is very important for them. - Usually unstandardized products. - It will be suitable when customers prefer difference to low price.
Competitive threats of differentiation strategy: - The difference between the product prices of a differentiation company and a cost leadership company is so big. - To a certain time, differentiated products cannot create values that customers are willing to pay for. - When having more experience, customers will have different awareness of the values of distinctive features. - Counterfeit products can imitate the differentiated features of the company’s products.
Focus strategy It is a series of actions to be done to produce products and services to serve the demand of a specific competitive market segment. - Specific groups of customers – the youth or the elderly. - Different segments of a product line – professional aircrafts and amateur makers. - Different markets – The East compared to the West.
Focus strategies: - Cost leadership focus strategy. - Differentiation focus strategy. To follow the focus strategy, companies must implement a series of basic and supportive activities in an outstanding way to create and maintain competitive advantages in order to achieve above average profitability. Factors that promote the focus strategy: 8 Group2 BUSINESS STRATEGY CONSTRUCTING WITHIN THE PERIOD OF 2011-2015 FOR BANK FOR INVESTMENT AND DEVELOPMENT OF VIET NAM – QUANG BINH BRANCH - Big companies may skip small markets (niche markets) - A company may lack necessary human resource to compete in a larger market.
- A company may serve a small market segment more effectively than a big-scale competitor. - Focus strategy allows companies to allocate resources to some activities of the value chain and develop competitive advantages. Competitive threats of focus strategy: - A company implementing focus strategy can be “disturbed” by competitors. - A big competitor can pay attention the company’s niche market.
- Preference of customers in a niche market can be transferred to similar products of a larger market. Business strategy development process Functions, duties and strategic targets of the enterprise (1) Internal analysis of the Business environment enterprise (S,W) (3) analysis (O,T) (2) Strategy selection (4) Corporate level strategy (5) Business units and functional divisions Strategy implementation (6) Evaluation of implementation results (7) Feedback Figure 1. Strategy development process 9 Group2 BUSINESS STRATEGY CONSTRUCTING WITHIN THE PERIOD OF 2011-2015 FOR BANK FOR INVESTMENT AND DEVELOPMENT OF VIET NAM – QUANG BINH BRANCH 1. Defining strategic visions and missions Strategic vision addresses the future business orientation of a company: “where should we go?” - Markets to pursue - Future concentration on technology, products and customers.
- The form of company that management board is trying to establish. The mission statements of most companies focus on current business activities: “who we are and what we are doing” - Current products and services. - Demand of existing customers. - Technological and business capabilities Strategic objectives are the desired targets that companies want to achieve.
Strategic objectives concretize the company’s long-term goals in terms of scale, structure and implementation progress.