GRIGGS UNIVERSITY GLOBAL ADVANCED MASTER OF BUSINESS ADMINISTRATION PROGRAM CAPSTONE PROJECT REPORT CONSTRUCTION OF BUSINESS STRATEGY FOR BAO VIET NGHE AN LIFE INSURANCE Group No.: 01 Student’s name: Tran Xuan Binh Bui Huy Cuong Nguyen Van Dinh Nguyen Quang Thanh Team 1 Strategic administration Class: GaMBA01.V01 HA NOI, 2010 TABLE OF CONTENTS Page Opening part General background, necessity of the research topic…………………………. 5 Purposes, meanings of the research topic……………………………………. 6 Subject and scope of research ………………………………………….… 6 Structure of this assignment …………………………………………….…… 7 Chapter 1: RATIONALES OF STRATEGY CONSTRUCTION 1. Theories on construction of business strategy…………………………….
Definition of business strategy …………………………………………. Role of business strategy to the enterprise/ ………………………………. Classification of business strategies ……………………………………… 10 1. Process of building business strategy ……………………………………… 11 1.
Determination of enterprise's mission, target…………………. Evaluation of external environment ……………………………………. 12 1 Team 1 Strategic administration Class: GaMBA01. Analysis of company's internality ……………………………….
Construction of strategy projects………………. Analysis and selection of strategy …………………………. Specific characteristics of construction of life insurance business strategy 27 Chapter 2: ANALYSIS OF THE COMPANY’S INTERNAL AND BUSINESS ENVIRONMENT 2. Introduction of Bao Viet Nghe An Life Insurance Company ……….
History of establishment and development ………. Situation and results of business activities ……………………………. Analysis of business environment ………………………………………. 35 2 Team 1 Strategic administration Class: GaMBA01.
Political and lawful environment ………………………………………. Established companies on the market …………. Opportunities and challenges……………………………………………… 41 2. Analysis of Bao Viet Nghe An Life Insurance Company's resource ….
Analysis of strengths and weaknesses in administration …………. Analysis of competitive capacity………………………………………. 55 Chapter 3 BUSINESS STRATEGIES AND SOLUTIONS OF THE COMPANY 3. Strategy of business unit level (company level)……………………….
Demands of customers ……………………………………………. Groups of customers and market segments ……………………………… 59 3. Capacity of distinction…………………………………………………. Strategy of distribution channel development …………………….
60 3 Team 1 Strategic administration Class: GaMBA01. Strategy of services ………………………………………. Solution of distribution channels…………………………………. Solutions of products and services ……………………………….
Solutions on human resource and apparatus organization ………………. 66 Reference documents 68 LIST OF TABLES AND CHART Page Tables Table 2.1 Date on the company’s results of business activities in the period 2006-2009.2 Indicators of Vietnam economic growth rate ………….3 Established life insurance companies in Vietnam till December 2009.4 Turnovers and market shares of Life insurance companies in Vietnam - 9 beginning months 2009………………………….1 General chart of industry environment……….2 Process of strategy construction ………………………………….1 Apparatus organization of Bao Viet Nghe An Life Insurance…….1 Vietnam’s average income per capital …………………….……… 32 Turnover of life insurance premium in Vietnam for period 2005- 4 Team 1 Strategic administration Class: GaMBA01. Comparison of total life insurance turnover rate with GDP…….3 33 LIST OF ABBREVIATION - SWOT: Strength, Weakness, Opportunity and Threat - LIMRA: Life Insurance Marketing Research Association; Bao Viet Life Insurance Corporation is a member of LIMRA - LOMA: Life Organizations Management Association. is an international association established in 1924.
Via that above 1,200 insurance and financial services companies in above 80 nations participate research and education activities in order to promote activities of companies Assignment Topic: CONSTRUCTION OF BUSINESS STRATEGY FOR BAO VIET NGHE AN LIFE INSURANCE COMPANY Opening General background, necessity of the study topic Vietnam is developing country with crowded population (about 85. Population structure is young, economic growth rate is high, average income per capita is continuously increased, life of people is improved, demands of people is becoming more and more diversified, especially demands of services of finance, health insurances, etc Last years Bao Viet Nghe An Life Insurance Company has been operating in the fileds of supplying customers with products of life insurance nationwide with Nghe An as core operation area. The company at present occupies the biggest market shares for 5 Team 1 Strategic administration Class: GaMBA01.V01 life insurance in Nghe An (above 60%), and is one of three biggest companies of Bao Viet Life Insurance Corporation. Clearly identifying big development potentials and business opportunities of life insurance in Vietnam, recent years big life insurance companies in the world have been penetrating into Vietnam markets.
In Nghe An - a province with crowded population - political economic center of North Central Vienam there is already presence of famous lie insurance companies in the world (such as Prudential, AIA…) In business environment nowadays competition is harsher and harsher, activities are more and more difficult, if Bao Viet Nghe An Life Insurance company just bases on previous advantages without changes, it is difficult for him to maintain development rate, keep firmly his positions and market shares. With this thinking out team wants to build suitable strategy for the company and agreed to select the topic "CONSTRUCTION OF BUSINESS STRATEGY FOR BAO VIET NGHE AN LIFE INSURANCE" for graduating assignment of Global Master of Business Administration Program (GaMBA) jointly organized by Center for Educational Technology and Career Development - Ha Noi National University and Griggs University - United States of America. Targets and meanings of research topic Factors influencing success of Bao Viet Nghe An Life Insurance Company are specifically analyzed, and then suitable business development strategy for the company is built. Strategies and solutions for successful execution of strategies specified are built.
The highest target is to help the company to continue maintaining development rate, keeping firmly his position and market shares as well as occupying markets in the business fields of life insurance Study object and scope Study object is Bao Viet Nghe An Life Insurance Company under management of Bao Viet Life Insurance Corporation. This company specializes in only 01 business 6 Team 1 Strategic administration Class: GaMBA01. supply of life insurance services. Accordingly this assignment also only study activities of life insurance business at the company.
Research methodologies Data collected include: Preliminary/primary and secondary data Secondary data: are collected from many sources such as Bao Viet Nghe An Life Insurance Company, Bao Viet Life Insurance Corporation, Vietnam Insurance Association, Ministry, Ministry of Planning and Investment, Nghe An Statistics Department, Newspaper and Internet. Primary database: directly exchanging, dealing and interviewing leaders of the company in order to know more about contents not shown in yearly reports and getting some strategic orientations in next years (these information are presented in chapter 3) Analysis techniques: Data are treated by methods of comparison, analysis, generalization, using SWOT model and Michael Porter's model - 5 competition forces Structure of this assignment This assignment includes 03 chapters Chapter 1: Rationales of strategy construction Chapter 2: Analysis of the company's business and internal environment. Chapter 3: Business strategies and solutions of the company 7 Team 1 Strategic administration Class: GaMBA01.V01 Chapter 1: RATIONALES OF STRATEGY CONSTRUCTION 1. Theories on construction of business strategy 1.
Definition of business strategy Term "strategy" is a plan of action designed to achieve a particular goal. The word strategy has military connotations, because it derives from the Greek word for general. In aspect of the history, term "strategy" is used in military with meaning as long term and big plan made basing on sure foundations about what opponents can or can't do. Usually people understand that strategy is military plan and art.
Nowadays term "strategy" is widely used in many different fields. In business field, there are also many way for approach to the strategy. According to traditional approach, business strategy is considered as general long term plan of 01 organization to achieve long term target. Management history researcher Alfred D.
Chandler thinks that “strategy is to define long term basic targets of one enterprise and together to perform operation program and distribute necessary resources in order to achieve these targets”. Thus, this ideology shows clearly that strategy is a clear-sighted planning 8 Team 1 Strategic administration Class: GaMBA01.V01 process, in which enterprise selects targets for himself, defines action program so as to complete the best the targets and find the way to distribute corresponding resources. Traditional approach has advantage of helping enterprises to imagine easily works, which need to be done for strategy planning, and to see benefits of strategy in aspect of long term plan. However in the business environment, which is always changes as now we can see limit of traditional approach, because it is impossible to adjust flexible to changes of business environment.
According to current approach, strategy can be wider than what enterprise intends or plans to do. According to Mintzberg, strategy is a model in flow of decisions and action programs. Model can be any type of strategy: previously designed strategy or sudden strategy. He proposed the model: Modem approach helps the enterprise to deal easily and flexible with changes of business environment, and develop creativeness of members in the enterprise.
Yet it requires leaders, managers that they must have good professional level, capacity of predicting conditions for execution of strategy and evaluation of sudden strategy. Via above approach we can understand business strategy of one enterprise is an art of building long term targets and execution policies in order to create orientation and competitive advantages to enterprise. Business strategy is to analyze, study and specify basic road, development process outline in business and production activities. That is comprehensive, coordinative and united plan carefully trained in order to lead the business unit ensuring targets of business unit.
Business strategy is definition of business unit's basic targets, selection of action means and mode, distribution of necessary resources for execution of business targets. Term “strategy” is usually used with 03 popular meanings. Firstly, It is general action programs and execution of main resources for achieving targets. 9 Team 1 Strategic administration Class: GaMBA01.V01 Secondly, It is target programs of the organization, resources, which need to be used to achieve this target, policies of managing collection, use and arrangement of these resources.
Thirdly, It defines long term targets, selects action policies and distributes necessary resources to achieve these targets. Role of business strategy to the enterprise/ company In conditions of market fluctuation only one thing above all others companies can know surely is the change. Strategic administration is as a direction, an orientation helping companies, organizations to overcome market ups and downs/changes, to reach the future by their efforts and capacity. Business strategy is built to aim at helping companies adjusting the best to changes in long term.
Strategic administration helps one organization or unit to be more active in stead of passive in his future determination, it permits one organization or unit to take pioneer's pition and cause influence in his operation environment, thus makes use of all his capacity to control himself from changes/ups and downs. Strategic administration creates very important awareness to everyone. Both directorate and employees understand thoroughly and guarantee to execute target of the company. Once everybody in the company understands what are that company doing and why does that, they will feel they are one part of the company, they shall commit to support all activities of the company.
Classification of business strategies There are many approaches to classification of business strategies - According to strategy scope, there are types of strategies as follows + General strategy (or overall strategy): mention the most important, coverable and long term meaningful matter. This strategy decides vital matters of the company. + Partial strategy is the kind of second grade. Usually in the company this kind of strategy includes the one of products, prices, distribution and sale promotion.
10 Team 1 Strategic administration Class: GaMBA01.V01 Two above mentioned strategies are closely linked together into complete business strategy. One business strategy can't exist without one of 02 above mentioned strategies, because they complement each other for settlement of important vital targets of the company. - According to strategy contents, there are types of strategies as follows + Trade strategy + Finance strategy + Technology and technique strategy + Human resource strategy - According to strategy nature, there are types of strategies as follows + Product strategy + Market strategy + Competition strategy. + Investment strategy - According to strategy process, there are types of strategies as follows + Orientation strategy mentions orientations and measures to achieve given targets.