GRIGGS UNIVERSITY GLOBAL ADVANCED MASTER OF BUSINESS ADMINISTRATION PROGRAM CAPSTONE PROJECT REPORT BUILDING BUSINESS STRATEGY FOR OPERATIONS CENTER OF VIETNAM BANK FOR AGRICULTURE AND RURAL DEVELOPMENT TO 2015 HA NOI 2011 1 GUARANTEE We underatake that this is our research topic. Used data and result in topic are honest with clear orgirin. We have researched, discussed and applied leaned knowledge together to clarify issues is our selected topic. AUTHOR GROUP 04 TABLE OF CONTENTS 2 LIST OF ABBREVIATIONS.3 LIST OF TALBES.
3 LIST OF FIGURES. 3 CHAPTER I: THEORETICAL BASES OF ENTERPRISE’S BUSINESS STRATEGY. Business strategy of enterprise. Strategy in business unit.
Concentrated growth strategy. Competitive strategies under M. Competitive strategies for business units by position of market share in the market. Process of building business strategy.
Determining business missions. Evaluating external factors. Analyzing internal factors of enterprises. Analyzing strategies and selecting.
Tools to build business strategy. Stage of collecting and systemizing information. Competitive profile matrix. Big strategy matrix.
Stage of decision-making. Influence of banking sector’s characteristics on strategy management. Potential demand for banking services. The management of the State Bank of Vietnam.
The development level of related and supporting fields. Internal factors of banks.3 CHAPTER II: BUSINESS ENVIRONMENTAL FACTS OF OPERATIONS CENTER OF VIETNAM BANK FOR AGRICULTURE AND RURAL DEVELOPMENT. Overview of Operations center of Vietnam Bank for Agriculture and Rural Development. About Vietnam Bank for Agriculture and Rural Development.
The formation and development of Agribank operations center. Organization system of Agribank Operations Center. Functions and missions of the Operations Centre. Missions of the Operations Centre.
Products and services. Direct business outcome of the OC. The business result of 9 months of 2010. Analyse environmental factors affecting operations of the OC.
Culture and society environment. Environment of the law, Government and politics. Evaluate opportunities and threats. Matrix of external factor evaluation (EFE).
Matrix of competitive imagine. Analyse internal factors of the OC. Capacity of management. Research and development.
Evaluate Strengths and weaknesses. Necessity of establishing business strategy for the Operations Centre.3 4 CHAPTER III: BUSINESS STRATEGY OF AGRIBANK OPERATIONS CENTER UNTIL 2015. Business target of the operations center until 2015. The specific goals to 2015.
Analyse feasible business strategies. Analyse SWOT matrix. Analyse matrix of large strategy. Define business strategic alternatives.
The solutions for performing strategies. The solution for developing human capital. The process of recruiting and attracting human resource. Train and retrain employees.
Policy of personnel management, salary and treatment. Policy of promotion, appointment. Marketing Mix performance. Solutions of technology.
Human resource of Information technology (IT). Solutions to restructure the organizational mechanism. Building enterprise culture. Building infrustructure and facility.
3 5 LIST OF ABBREVIATIONS SBV State Bank of Vietnam CB Commercial bank JCB Joint stock commercial bank SOCB State-owned commercial bank Vietcombank Joint Stock Commercial Bank for Foreign Trade of Vietnam Vietinbank Vietnam Bank for Industry and Trade Agribank Vietnam Bank for Agriculture and Rural Development BIDV Bank for Investment and Development of Vietnam ATM Automated Teller Machine SMS Short Messaging Service EFE External Factor Evaluation Matrix IFE Internal Factor Evaluation Matrix SWOT Strengths-Weaknesses, Opportunities-Threats Matrix IE Internal-External Matrix SME Small and Medium-sized Enterprise OC Agribank Operations Centre 6 LIST OF TALBES Table 2.1: Direct business outcome…………………………………………………….2: GDP growth rate…………………………………………………………….3: Export-import turnover …………………………………………………….4: Population scale and structure …………………………………………….5: Structure of total payment means of the period 2002-2006 ………… 45 Table 2.7: Matrix of competitive imagine ……………………………………………. 79 LIST OF FIGURES Figure 1.2: Big strategy matrix………………………………………………………… 20 Figure 2.1: Organizational structure of the Operations Centre…………………… 30 Figure 2.2: GDP growth rate…………………………………………………………….3: Export-import turnover…………………………………………………….4: Population scale and structure…………………………………………….5: Structure of total payment means of the period 2002-2006………… 45 Figure 2. The necessity of the topic selection According to the commitment with the World Trade Organization (WTO) and bilateral agreements, Vietnam is responsible for removing barriers in trade and finance to foreign investors in domestic market. Therefore, in the coming time, Vietnam’s enterprises will have to face a lot of difficulties rooted in fierce competition when the market is opened.
By the end of 2011, foreign banks will be treated as domestic ones; Vietnam’s banks will have to face tough competition from these rivals. At present, banks are pushing up the establishment and expansion in scale to form a certain status for themselves. Making appropriate business strategy suiting specific characteristics of each bank to survive, developing and raising competitive capacity are urgent needs of each bank. From that fact, we choose the topic “Making business strategy for Operations Center of Vietnam Bank for Agriculture and Rural Development (Agribank) to 2015” as the group’s Capstone Project Report.
Object and scope of the study - Object of the capstone project is business strategy of Agribank’s Operations Center. - Scope of the study is business activities of the Operations Center with comparison to those of other competitors in the sector including: Joint Stock Commercial Bank for Foreign Trade of Vietnam (Vietcombank), Vietnam Bank for Industry and Trade (Vietinbank) and Bank for Investment and Development of Vietnam (BIDV). Purpose and objective of the study Purpose of the thesis is making business strategy for the Operations Center to 2015 and recommending solutions to implement this strategy to make the OC the strongest branch in Agribank system. Objective of the study: 8 - Generalizing basic theories on business strategy, process of building strategy, tools for building strategy and the influence of banking characteristics on strategy management.
- Analyzing external and internal factors to find out strengths-weaknesses, opportunities-threats of TC. - Identifying business goals basing on strengths-weaknesses, opportunities- threats, making business strategies and working out solutions to implement those strategies. Method of the study - Sources of information: The Capstone Project Report uses secondary information from books, newspapers, banking magazines, websites (asset.vn…), and statements released by Agribank, Vietcombank, Vietinbank and BIDVbank. - Method of approach: the Capstone Project Report uses a collective of approaching method.
When analyzing business situation of the Operations Center, we use particular approaching method, when analyzing external and internal factors, we use historical approaching combining with qualifying and quantifying. - Method of collecting primary information: The Capstone Project Report uses the methods of observing and interviewing experts. - Method of processing information: The Capstone Project Report uses the methods of modeling, analyzing causes and effects, descriptive statistics when analyzing business activities of OC combining with methods from the subjects of Strategic Management, Human Resource Management, Marketing Management, Finance Management, Operations Management, etc. Implications of the study This Capstone Project Report has based on the theories related to strategic management and applied those theories to analyze strengths-weaknesses, opportunities-threats of the OC to make business strategies and work out solutions 9 to implement these strategies, especial amid Vietnam joining WTO and will fully carry out commitments on banking in 2015.
CHAPTER I: THEORETICAL BASES OF ENTERPRISE’S BUSINESS STRATEGY 1. Business strategy of enterprise 1.1 Concept The concept of "strategy" (strategy) is from ancient Greek, derived from the military field (strategos) with the basic argument that a party could crush competitors, including larger and stronger rivals, if they could lead the game and putting opponents on the battle-field that is favorable for the deployment of its capabilities (advantages). Currently, in the business world with full of competition, the concept is increasingly studied and development, concentrating on four main categories: plan, model, location, and vision. According to these viewpoints, strategy is: "A unified, comprehensive and coordinated plan is designed to ensure that the basic objectives of an enterprise are carried out successfully" (Lawrence R.
Jauch and William F. "Identifying basic and long-term goals of the enterprise, the action plans along with the allocation of resources needed to accomplish those objectives” (http://www.html January 10th, 2010). “Business strategy of an enterprise is an overall action plan aiming at the implementation of enterprises’ goals” Business strategy does not target to work out a specific method to achieve that goal because it is the task of numerous supporting programs and other relevant strategies. It only creates framework to maintain action.
a) Business strategy is often defined under three levels 10 - Corporate level: Identifying and clarifying objectives, goals and business strategy for the company, creating basic policies and plan to achieve company’s goals. - Business unit level: Indentifying the selection of product and specific form of the market for private business strategies in the company, determining the methods each business unit will try to complete its goals to contribute to the shared goals of the company. - Functional level: Identifying solutions and plans for each business field. b) There are closely related concepts around the concept on business strategy - Mission statement: reports long-term goals representing the mission of the company's business with products and services that the company will provide to customers, helping distinguish this organization to other organizations.
It describes the values and priorities of the organization, identify overall trend of the organization’s development. - Annual Goals: The milestones that an organization must achieve to reach long-term goals. It comes under the form of achievements in management, marketing, finance/accounting, production/operations, research and development and information system. Annual goals are important in the stage of strategy implementation.
- Long-term goals: Certain achievements that an organization tries to attain when pursuing its primary mission. Long-term goal lasts for more than one year. It must be challenging, measurable, appropriate, rational and clear. It is set for the entire company and for each department.
Important long-term goals are those set in strategy formation stage. - Policies: Means to achieve the set goals, the guides for decision making and implementation of regularly repeated situations or cyclical situations. Policies are important in the stage of strategy implementation. - The opportunities and challenges: This is the impact of external environmental factors, beyond the control of the organization and may be beneficial or harmful to the organization.
11 - The strengths and weaknesses: This is the impact of internal elements of organizations within the control of the organization. It is determined in the relation to competitors. Strategy in business unit 1. Concentrated growth strategy Every strategy of a company can be applied at business unit level.
However, at business unit level, the concentrated growth strategy should be noticed firstly because the focused objects of this strategy are products and markets. This group of strategies is mainly aiming at improving competitive position of the company with existing products on the basis of enhancing marketing activity or changing existing market strategy without changing any products. This type has three main types of strategies: - Penetrating into the market: Finding increasing market share for current products and services in the existing markets via marketing effort. - Developing the market: Taking existing products and services into new areas.
- Developing products: Increasing sales by improving and renovating existing products and services. Competitive strategies under M.Porter’s viewpoint Michael E.Poter – Professor at Harvard University put forth basic competitive strategies in the book “Competitive strategies”: a) Low-cost leadership strategy This strategy creates competitive status by two methods: - Setting price lower than rivals in the sector to attract targeted customers who are sensitive with price in order to raise total profit. This strategy is suitable with large-scaled businesses having capacity to reduce cost in operation process. - Constraining not to cut price completely and satisfying with the current market share and use lower cost to attain higher actual profit margin on each unit of sold product.
12 b) Differentiation strategy Business unit will concentrate on creating visibly different product varieties and marketing program compared with that of rivals to take the lead in the sector. From that, fixing the price higher than that of other normal products, increasing sales thanks to attract customers with the taste for unique brands such as unique smell, the capacity of stockpiling products to distribute to customers at any place, application of science and technology in designing and managing the implementation, optimal services, high-quality, reputation and easy to differentiate, etc. c) Strategy to concentrate on focal point According to this strategy, business units focus their attention on narrow segments in the entire market.