GRIGGS UNIVERSITY GLOBAL ADVANCED MASTER BUSINESS ADMINITRATION PROGRAM CAPSTONE PROJECT DEVELOPING BUSINESS STRATEGIES FOR JOINT STOCK COMMERCIAL BANK FOR FOREIGN TRADE OF VIETNAM - QUANG BINH BRANCH IN THE PERIOD OF 2011 - 2015 Group No: 3 – GaMBA01.V0110 Student’s name: Vo Thanh Tan Nguyen Tran Quang Nguyen Thanh Xuan Mai Thi Hai Van HANOI, 2011 DEVELOPING BUSINESS STRATEGIES FOR JOINT STOCK COMMERCIAL BANK FOR FOREIGN TRADE OF VIETNAM - QUANG BINH BRANCH IN THE PERIOD OF 2011 - 2015 TABLE OF CONTENTS LIST OF TABLES AND FIGURES. The necessity of the research. 2 THEORETICAL FOUNDATION OF BUSINESS STRATEGY.1 Concepts of business strategy:. Role of business strategy:.
Generic business strategies. Business strategic management process. Identification of missions and objectives. External environment analysis.
Internal environmental analysis. Strategic analysis models. SWOT Matrix analysis. Analysis of EFE Matrix.
Analysis of IFE Matrix. Analysis of QSPM Matrix.2 ANALYSIS OF THE CURRENT BUSINES OPERATIONS OF VIETCOMBANK QUANG BINH. Establishment and development history. Products and services.
Analysis of factors affecting Vietcombank Quang Binh’s business operations 2 2. Political – legal environment.Group3 1 DEVELOPING BUSINESS STRATEGIES FOR JOINT STOCK COMMERCIAL BANK FOR FOREIGN TRADE OF VIETNAM - QUANG BINH BRANCH IN THE PERIOD OF 2011 - 2015 2. Socio-cultural environment. Evaluation of Opportunities and Threats.
External Factor Evaluation (EFE) Matrix. Internal analysis of Vietcombank - Quang Binh. Research and development. Strengths and weaknesses:.
Internal Factor Evaluation (IFE) Matrix. 2 SELECTION OF BUSINESS STRATEGIES AND IMPLIMENTATION SOLUTIONS OF VIETCOMBANK QUANG BINH.2 IN THE PERIOD OF 2011-2015. The business goal and objectives of Vietcombank Quang Binh. Selection of business strategies.
Selection of business strategies based on SWOT and QSPM matrices. Determination of business strategies. Strategic implementation solutions. Human resource development solutions.Group3 2 DEVELOPING BUSINESS STRATEGIES FOR JOINT STOCK COMMERCIAL BANK FOR FOREIGN TRADE OF VIETNAM - QUANG BINH BRANCH IN THE PERIOD OF 2011 - 2015 3.
Building the organizational culture. Construction of facilities.2 LIST OF TABLES AND FIGURES Figure 1.David’s Model of Strategic Management Table 1.1 Macro-environment factors Figure 1.2 Micro-environment map Figure 1.3 SWOT Matrix Figure 2.1 Organizational chart of Vietcombank Quang Binh Table 2.1 Business performance of Vietcombank Quang Binh Table 2.2 Comparison of Vietcombank Quang Binh’s operation with those of Vietinbank, BIDV, and Agribank branches in Quang Binh Table 2.3 The External Factor Evaluation (EFE) Matrix of Vietcombank Quang Binh Table 2.4 Capital mobilization activities of QuangBinhVietcombank Table 2.5 The Internal Factor Evaluation (IFE) Matrix of Vietcombank Quang Binh Table 2.6 The SWOT Matrix of Vietcombank Quang Binh Table 3.1 QSPM Matrix of Vietcombank Quang Binh Table 3.Group3 3 DEVELOPING BUSINESS STRATEGIES FOR JOINT STOCK COMMERCIAL BANK FOR FOREIGN TRADE OF VIETNAM - QUANG BINH BRANCH IN THE PERIOD OF 2011 - 2015 INTRODUCTION 1. The necessity of the research Entering 2011, the world economy hasn’t been out of the crisis and downturn. The largest economy – The United States – is dealing with many difficulties coming from the government’s debt and unemployment.
Japan is still suffering the heavy damage from the earthquake March, 2011. Especially, the debt crisis has spread over countries in the Euro Zone. The political instability and democratic process in some North African countries which have large oil reserves such as Libya, Egypt also have great influence on the world oil markets. Meanwhile, our country’s socio-economic conditions in the first half of 2011 took place with many difficulties and challenges.
The prices of necessity products in the world are fluctuating with the increasing trend. Although some large economies have recovered from the global financial crisis, they are still carrying some risks and instability. Domestically, the inflation is higher, the weather is complicated and there are many diseases occurring in the plants and animals. As estimated, GDP in the first half of the year increased by 5.57% compared to the same period in 2010.
To the banking industry, when Vietnam joined WTO and committed to open this market, the industry has had some dramatic changes. - Traditional banking activities have the potential to grow stably. - Retailing banking and investment banking activities have high growing potential. The use of personal banking services remains low.
- The competitiveness between the State-owned Commercial Banks and Joint Stock Commercial Banks is increasing significantly. - The operation effectiveness of banks is not uniform - Banks are facing many risks, including credit risk, liquidity risk, interest rate risk, investment risk.Group3 4 DEVELOPING BUSINESS STRATEGIES FOR JOINT STOCK COMMERCIAL BANK FOR FOREIGN TRADE OF VIETNAM - QUANG BINH BRANCH IN THE PERIOD OF 2011 - 2015 In that context, beside the general strategy of Vietnam Vietcombank, QUang Binh Vietcombank Branch should develop its own business strategy based on the analysis of Quang Binh market. Research subject: The research subject is Quang Binh Vietcombank branch. The research scope just limits in the strategic issues and strategic management.
The main source of data is from Quang Binh Vietcombank. Therefore, the topic is only applicable to this bank branch. Research purpose: The purpose of this research is to build a strategy for Quang Binh Vietcombank branch until 2015 and give some recommendations on the strategy implementation in order to help the Quang Binh Vietcombank Joint Stock Commercial Bank branch become one of the strong bank branches in Quang Binh. Research methodology The research, based on the dialectical materialism philosophy combined with the learnt knowledge, aims to evaluate the whole business operation of Quang Binh Vietcombank branch.
Data processing and analysis method: the research uses the method of statistical description, analysis and synthesis to evaluate the business operation results of Quang Binh Vietcombank; it also uses the matrix like EFE, IFE, SWOT, QSPM. Research structure Chapter 1: Theoretical foundation of business strategy Chapter 2: Analysis of the current business operations of Vietcombank Quang Binh Chapter 3: Selection of business strategies and implementation solutions for Quang Binh Vietcombank bank branch (period 2011-2015) V0110.Group3 5 DEVELOPING BUSINESS STRATEGIES FOR JOINT STOCK COMMERCIAL BANK FOR FOREIGN TRADE OF VIETNAM - QUANG BINH BRANCH IN THE PERIOD OF 2011 - 2015 CHAPTER I THEORETICAL FOUNDATION OF BUSINESS STRATEGY 1.1 Concepts of business strategy: In the view of “Strategy business is the art” - Michael Porter said: “ Strategy is the art the build sustainable competitive advantages to defend” In business, strategy is the art of organizing the tools to reach the long term objectives of the company, having the relationships with the changes I the business environment and competition Another view is that: business strategy is a series of commitments and actions that the company uses to gain a competitive advantage by exploiting core competences in a certain market. The purpose of business strategy is to differentiate the company from other competitors to position itself. The company has to decide whether to operate in a different way or perform activities differently from rivals.
Role of business strategy: - Business strategy helps the company to identify the objectives and direction which can be used as the compass for every business operation activity - Business strategy helps the company to grasp and take advantage of opportunities, having active solutions to overcome the threats and risks in the competitive market. - Business strategy helps to improve the efficient use of resources, enhancing the competitive position to ensure the sustainable development of the company. - Business strategy creates a firm basis for policy proposal and decisions on business operation in the case of changing market. Generic business strategies Cost leadership strategy V0110.Group3 6 DEVELOPING BUSINESS STRATEGIES FOR JOINT STOCK COMMERCIAL BANK FOR FOREIGN TRADE OF VIETNAM - QUANG BINH BRANCH IN THE PERIOD OF 2011 - 2015 Cost leadership strategy is providing products and services to the customers at the lowest costs compared to other competitors.
The purpose of this strategy is to out-compete the others by reducing the costs of production and supplying the products to customers at lower prices than the rivals. Differentiation strategy The purpose of the differentiation strategy is to gain the competitive advantage by providing the customers with the products or services that are perceived to be unique in terms of some aspects by the customers. The company following this strategy tries to create products with features that the competitors cannot match and charges the customers premium price (that is higher than the average price of the industry). The ability to create profit by charging the premium price (rather than reducing the costs as in the cost leadership strategy) helps the differentiators outperform their competitors and gain the profit that is higher than the average level of the industry.
The price charged by the differentiator is higher than that of cost leaders; however, the customers are still willing to pay because they believe that the differentiating products do have unique features. Focused strategy Focused strategy is the third strategy. The difference from two above strategies is that it aims at specific segment of market to serve customers’ needs. A focused strategy will direct to specific market gaps that can be determined based on geography, customers, or product lines.
For instance, a market gap of geography can be defined according to regions or even locations. The company can choose the market segment of upper, middle or low income customers or the young people V0110.Group3 7 DEVELOPING BUSINESS STRATEGIES FOR JOINT STOCK COMMERCIAL BANK FOR FOREIGN TRADE OF VIETNAM - QUANG BINH BRANCH IN THE PERIOD OF 2011 - 2015 1. Business strategic management process Strategic Management Process is summarized by the following model: External Establish Establish analysis to long term Specific identify the objectives objectives main opportunities and threats. Identify Identify current Review Allocate and missions, business resources evaluate objectives and goals achieveme strategies.
nts Internal analysis to identify the main Choose the Propose strengths and strategy policies weakneses. Planning Implementing Evaluating strategy strategy strategy Figure 1.David’s strategic management model V0110.Group3 8 DEVELOPING BUSINESS STRATEGIES FOR JOINT STOCK COMMERCIAL BANK FOR FOREIGN TRADE OF VIETNAM - QUANG BINH BRANCH IN THE PERIOD OF 2011 - 2015 1. Identification of Vision, Mission(s) and Objectives A company’s main mission and objectives provide the context for the strategy. Mission statement shows why the company exists and what it will do.
Main objectives identify what the company hopes to do in the medium and long term. Vision: Claims of enterprise on their position in business environment in a certain period of time – is guidelines for company’s action in all the times and circumstances. Mission: Reflecting the important tasks of the business in business environment and is often expressed through brief philosophies of business. Mission shows the reasons for the formulation and existing of a business.
Businesses can change their strategy to carry out the mission but hardly change the reason of their existing. Objective: is the final goal the enterprise wants to achieve. Objectives show the directions for all the decisions and forming criteria for measuring performance in practice. External environment analysis PEST analysis stands for "Political, Economic, Social, and Technological analysis" and describes a framework of macro-environmental factors used in the environmental scanning component of strategic management.
It is a part of the external analysis when conducting a strategic analysis or doing market research, and gives an overview of the different macroenvironmental factors that the company has to take into consideration. It is a useful strategic tool for understanding market Enterprises identify the opportunities and threats by using the data analysis on the changes of the market that they are currently in or intend to enter. The opportunities can be market development, market gap, near supply or skill-matching and cheap labors. The threats to the companies can be the shrinking market, stronger competition, policy changes, political instability in the main markets or the V0110.Group3 9 DEVELOPING BUSINESS STRATEGIES FOR JOINT STOCK COMMERCIAL BANK FOR FOREIGN TRADE OF VIETNAM - QUANG BINH BRANCH IN THE PERIOD OF 2011 - 2015 technology development making the facilities and production lines probably become obsolete.
Macro-environment analysis involves the consideration of macro- environment factors, political and legal factors, socio-cultural factors, natural factor and technology factors.