GRADUATION ASSIGNMENT BUILDING UP BUSINESS STRATEGY OF FINANCIAL SERVICE OF AGRIBANK NGHE AN WITHIN THE PERIOD OF 2011 -2020 Tran Thi Viet Anh Nguyen Kim Khanh Nguyen Thac Chinh Vi Van Quynh HANOI - 2011 Class GaMBA01.8 TABLE OF CONTENTS COVER PAGE 1 TABLE OF CONTENTS 2 LIST OF ABBREVIATIONS 6 LIST OF TABLES 7 LIST OF FIGURES 7 INTRODUCTION 8 CHAPTER I: THEORETICAL BACKGROUND TO FORMING CORPORATE BUSINESS STRATEGY 10 1.1 Concept and role of business strategy 10 1.1 Concept of business strategy 10 1.2 Role of business strategy 10 1.3 Strategic system in business 11 1.2 Steps to build-up business strategy 11 1.1 Mission and objectives of the organization 11 1.2 Analysis of external environment 12 1.2 Cultural-Social factors 13 1.3 Political-Legal factors 13 1.3 Analysis of internal factors 14 1.3 Techniques to analysize strategy 16 1.1 Competitive Profile Matrix 18 1.1 IE matrix 19 CHAPTER II: ANALYSIS OF THE BASIS FOR BUILDING UP STRATEGY FOR AGRIBANK NGHE AN 21 2.1 Overview of Agribank Nghe An 21 2.1 History of Establishment and Development 21 2.1 Vertical Organizational Structure 23 2.2 Horizontal Organizational Structure 24 2.3 Mission and Vision, Core Value, Strategic objective 25 2.1 Mission and Vision 25 2.2 Analysis of Agribank Nghe An's business environment 25 2.1 Political-legal factors (P) 26 2.3 Cultural - Social factors (S) 26 2.2 Analysis of sector environment (5 Forces Model of Michael Porter) 27 2.1 Competitive rivalry within an industry 28 2.2 Threat of potential rivals 28 2.3 Bargaining Power of Customers 28 2.4 Threat of Substitute Products 29 2.5 Bargaining Power of Suppliers 30 2.3 Analysis of Agribank Nghe An's internal environment 31 2.1 Assessment of infrastructure and Technique 31 2.2 Assessment of financial condition 32 2.4 Other business activities 36 2.3 Assessment of Human Resource 39 2.4 Assessment of Marketing 40 2.4 Analysis of SWOT matrix 41 2.1 Strengths, Weaknesses, Opportunities and Threats of the organization 41 2.2 SWOT Matrix of the organization 45 CHAPTER III: RECOMMENDATION OF SOME STRATEGIES AND SOLUTIONS FOR AGRIBANK NGHE AN 46 3.1 Development orientation of Agribank Nghe An in the future 46 3.2 Business objectives of Agribank Nghe An in 2015 47 3.2 Selecting financial service strategy for the period of 2011-2020 49 3.1 Selecting general strategic options of the organization from SWOT matrix 49 3.1 Distribution channel development strategy 49 3.2 Product development strategy 49 3.3 Key item focusing strategy 49 3.4Financial condition improvement strategy 49 3.2 Selecting financial services strategy 49 3.1 Integrated strategy of cost leader and difference 49 3.1 Charter capital increase 54 3.2 Improvement of credit-debit management 54 3.3 Processing bad-debts, strengthening financial condition 55 3.4 Improving credit operation 55 3.2 Human resource solution 56 3.1 Changing conception of modern bank 56 3.2 Improving qualification of staff 56 3.3 Changing customer service styles 57 3.1 Finishing IPCAS2 application 58 3.2 Improving safety and stabilizing CTTT system 58 3.3 Improving automaticity of processing system 58 3.4 Solution to improve management of the leaders 58 3.1 As for the branch 58 3.2 As for the Head Office 58 3.3 Using service development fund 58 3.5 Competitive competency solution 59 3.1 Promoting system network advantage 59 3.2 Diversifying traditional products and developing new products 59 3.3 Improving marketing and advertisement 60 3.1 Updating customer information 61 3.2 Updating new customer information 61 3.3 Opening payment account, advertising products and issuing card 62 CONCLUSION 63 REFERENCE 64 LIST OF ABBREVIATIONS Order Content Abbreviations 1 Information Techniqur IT 2 Board of Managers HĐQT 3 State Bank NHNN 4 Agricultural Bank NHNo 5 Rural Development PTNT 6 Bank for Agriculture and Rural Development Agribank 7 Bank for Agriculture and Rural Development NHNo & PTNT 8 Commercial Bank NHTM 9 Joint Stock Commercial Bank NHTMCP 10 Service and product SPDV LIST OF TABLES Order Content Page Table 2.1: Capital mobilizing results of Agribank Nghe An in the period of 2008-2010 Table 2.2: Lending operation performance of Agribank Nghe An in the period of 2008-2010 Table 2.3: Credit operation of Agribank Nghe An in the period of 2008- 2010 Table 2.4: Business Performance in the period of 2008-2010 LIST OF FIGURES Order Content Page Figure 1.1: SWTO matrix Figure 1.2: IE matrix Figure 2.1: Organizational structure of Agribank Nghệ An Figure 2.2: PEST model Figure 2.Porter’s Five Forces INTRODUCTION 1. General context and role of the research topic Starting from the actual operation of Vietnam bank for Agriculture and Rural Development, finance showed many challenges before the competitive demands to integrate into… AGRIBANK is the top commercial bank in Vietnam and in the course of the business has also built up many specific development strategies. Beside the general difficulties of economic-social environment, there are many reasons that the bank governance, the management of business operations also have many problems need to be researched, and solved in order to adjust strategies and provide the solutions of safe and effective development. The scope of the study is business, the strategic management of Nghe An AGRIBANK in financial services in recent years and then proposing strategies in the next years.
The selected topic called: “Building up business strategies of financial service products of Vietnam bank for Agriculture and rural development from 2011- 2020. Purpose and significance of the study The research purpose of the topic is to apply the knowledge gained and some experience in strategic management subject, to analyze and evaluate the current business development strategies of branches of Nghe An AGRIBANK in financial service business. On that basis, to give some ideas to improve the strategic management of the bank in the next time. Methodology In building financial service business strategies of Nge An AGRIBANK, there are the data collection method as follows: * The secondary data collection Using The table methodology: Analyzing information for this study came from a lot of sources including annual reports of Nghe An AGRIBANK and data of Nghe An AGRIBANK, articles on magazines or newspapers, etc.
Besides, the study group also reviews general directions of Vietnam AGRIBANK up to 2020. The secondary data is identified by the annual statistical methods and analyzing methods of AGRIBANK: The internal data of the bank includes: - The financial reports - Reports of bank business results - The research reports of the bank + The external data of the bank includes: - State bank information - The public media (television, newspapers, internet) - Website: http://www.vn - Website: http://www.vn * The primary data collection - The method of collecting opinions through group discussions Group discussion will be conducted with groups of 4 members. Each group has 2 times of discussion within a week. - Interviewing method: The author of this topic directly interviewed some key officials and employees as well as had direct discussion with the leaders of Nghe An Agribank about the current situation and the development orientation in the next years.
Theoretical models such as PEST analysis, Porter, SWOT. The structure of the study includes three chapters: Chapter 1: THEORETICAL BACKGROUND TO FORMING CORPORATE BUSINESS STRATEGY Chapter 2: ANALYSIS OF THE BASIS FOR BUILDING UP STRATEGY FOR AGRIBANK NGHE AN Chapter 3: RECOMMENDATION OF SOME STRATEGIES AND SOLUTIONS FOR AGRIBANK NGHE AN CHAPTER I: THEORETICAL BACKGROUND TO FORMING CORPORATE BUSINESS STRATEGY 1.1 Concept and role of business strategy 1.1 Concept of business strategy The term of “strategy” is used firstly in military and from the 60s (XX century), it is applied in business and called “business strategy.’ However, the concept of business strategy is also developed over time and approached in many ways. According to the traditional approach of Alfred Chandler, a professor of Harvard University, “Strategy is the process of identifying basic long-term objectives of enterprises, selecting the way or the direction of operation and allocation of necessary resources to perform these objectives.” According to Fred R. David, the author of Concepts of Strategic Management book, “Strategy is the means to achieve long term goals.” Although approached in any way, business strategy is a system of long-term solutions for enterprises to develop production and business.
And as we understand: “Business strategy of a enterprise is a general program of actions towards the performance of enterprises’ goals. Thus, strategy only creates frames to guide action thinking. Business strategy is not to show specifically how to achieve these goals because it is the task of a multitude of support programs, other functional strategies 1.2 Role of business strategy - Business strategy helps bank managers realize clearly opportunities and advantages in business, make use of them to make suitable strategies, and policies to achieve the proposed objectives. - Business strategy helps managers to predict the difficulties and risks happening at present as well as in the future.
Then, based on their resources, it is easy for banks to actively deal with these unforeseen situations. - Business strategy helps managers to use effectively the current resources of banks and allocate them properly. - Business strategy combines the functions in a organization in the best way on the basis of achieving common goals of the organization.3 Strategic system in business + Global strategy: a tool to search for the ways to penetrate globally. The company will review benefits and costs of expanding operation on a global scale, on the basis of 4 different strategies, including: multidomestic strategy, international strategy, global strategy, and transnational strategy, which companies can approve to compete on the global market.
+ Identify and define clearly goals, objectives and business activities of a company, make policies and basic plans to achieve goals of the company. + Business unit strategy: It is planned to identify the selection of products and specific types of the market for private business activities within the company, identify the ways each business unit tries to use to complete its goals to contribute to the fulfillment of the company’s general goals. + Function strategy: Identify solutions, and plans for each business field.2 Steps to build-up business strategy 1.1 Mission and objectives of the organization Mission is considered as statements which have long-term value of the future direction of banks to differentiate this bank with other one. In the process of strategic management, mission helps an organization realize long-term directions, and since then, they can approve of the actions of individuals and departments in an organization.
Mission is the basis to allocate properly and use effectively banks’ resources, helping banks actively scope with internal changes as well as changes from outside environment. It is also the basis to determine long-term objectives, encourage spirit, and promote the dynamism and creativity of members in banks. Researching objectives is the first stage and the foundation to build up strategies. Objectives are set out in order to show specific results that banks expect in a certain period.
Objectives have to be scientific, united, and continuous. Objectives need to be identified the time to fulfill and by quantitative targets.2 Analysis of external environment All enterprises are affected by external environment factors. These factors can be divided into 5 main categories: (1) Economic environment, (2) culture, society, geography, and demography, (3) Law, government, and politics, (4) Technology, (5) Competitive environment. Analysis of external factors allows enterprises to identify clearly opportunities (O) which they can take advantage of and threats or challenges they have to face with.
Identifying and evaluating opportunities and threats from external environment affecting enterprises will allow them to build clear business tasks, determine feasible long-term goals, make suitable strategies, and set appropriate policies in order to annual objectives. Some features need to be paid attention when analyzing external environment: - The influence of these factors is so big and long on enterprises, and they cannot control these environmental factors. The level of impact and the impact direction are different for each field and enterprise. - A change of external environment is completely able to affect the elements of the internal environment of an enterprise.
- Every factor of external environment can directly impact on enterprises or indirectly impact on them through the link of other external environmental factors.