CAPSTONE PROJECT REPORT PLANNING BUSINESS STRATEGY OF SAIGON J. COMMERCIAL BANK – NGHE AN BRANCH UNTIL 2020 Group 7 - Class: GAMBA 01.V03 Phan Tri Nghia Truong Minh Hung Nguyen Duc Tri Dau Anh Tuan NGHE AN 2011 1 TABLE OF CONTENT ABBREVIATIONS LIST OF DIAGRAMS, CHARTS AND TABLES ASSURANCE ACKNOWLEDGEMENTS……………………………………………………. The necessity of the research topic…………………………………………. Thesis and scope…………………………………………………………….10 CHAPTER 1: THEORETICAL FRAMEWORK FOR BUSINESS STRATEGY …………………………………………………………………12 I.
FUNDAMENTAL GROUNDWORK FOR STRATEGY AND MODERN BUSINESS STRATEGY………………………………………………………12 1.1Concept and role of strategy………………………………………………. Role of strategy………………………………………. Characteristics of business strategies:…………….3 The types of business strategy……………………. Classified as strategic business-level: ………………….
Classified as the content of strategy:. Classified as strategic process. Strategic business practices in the banking activities………………………15 1. Strategic business practices in the banking activities…………….
Strategy to strengthen market share:……………………. Strategy to diversify distribution networks:…………. Strategy formulation proces………………………………………. Strategic plan selection……………………………………….
Monitoring and assessment of strategy realization……………………… 18 1. Strategic analysis tools……………………………………………………. External Factor Evaluation (EFE) Matrix…………………………. Internal Factor Evaluation (IFE) Matrix………………….1 Strategic Position and Action Evaluation matrix-SPACE matrix….…22 CHAPTER II: ANALYSIS OF THE BUSINESS ENVIRONMENT SCB’s NGHE AN BRANCH………………………………………………………….
OVERVIEW OF SCB. The formation and development of SCB’s Nghe An branch. The organizational structure of SCB’s Nghe An branch…………. SCB’s products and services………….
Results of the business operations of the SCB over the 3 years 2008 - 2010 2. Analysis of external environmental factors affecting the business activities of SCB’s Nghe An branch…………………………………………. Macro environment analysis of SCB’s Nghe An branch. Political- legal environment…………………………………………….
Cultural-social environment. Human resources environment………………………………………………41 2. Analysis of micro environment……………………………. Analysis of competitive rival…………………………………………………42 2.
Analysis on customers……………………………………………………. Analysis on alternatives……………………………………………………. Analysis on potential risks of opponents. Opportunities and challenges…………………….
Analysis on the matrix for evaluation of external factors (EFE)……. Analysis of internal environment of SCB’s Nghe An branch…………. Human resource of SCB's Nghe An branch…………………. Financial capability of SCB’s Nghe An branch…………………….
Evaluation on marketing skill……………………………………. Evaluation of core banking software technology of the SCB’s Nghe An branch2. Evaluation of core banking software technology of the SCB’s Nghe An branch………………………………………………………. Strengths and Weaknesses of SCB’s Nghe An branch………….
Matrix on internal factors of SCB’s Nghe An branch (IFE)……………. Analysis on the matrix for evaluation of external factors (EFE). Analysis of internal environment of SCB's Nghe An branch CHAPTER III. SELECTION OF STRATEGY AND SOLUTIONS FOR IMPLEMENTING BUSINESS STRATEGIES OF SAI GON COMMERCIAL JOINT STOCK BANK – NGHE AN BRANCH……….1 Orientation of strategies of SCB……………….
Selection of strategies…………. SWOT matrix of SCB’s Nghe An branch………………. Solutions on manpower…………………………………………………………73 3. Solutions on market…………………………………………………………….
Solutions on marketing…………………………………………………………77 3. Solutions on finance……………………………………………………………. Solutions on organization…………………………………………………….85 Names and assignments of members…………………………………………86 ABBREVIATIONS SWOT SWOT Matrix: Strengths, Weaknesses, Opportunities and Threats EFE Matrix of the external factors IFE Matrix of the internal factors QSPM QSPM Matrix SPACE Matrix of strategic position GDP Gross domestic product SCB’s Nghe Saigon J. Commercial Bank - Nghe An Branch An branch State Bank of State Bank of Vietnam Vietnam 6 LIST OF DIAGRAMS, CHARTS AND TABLES 1.1: Process of forming a business strategy 18 Diagram 1.2: Organizational structure of SCB’s Nghe An branch 27 2.1: The business operating results of SCB’s Nghe An branch 28 over 3 years of 2008, 2009, 2010 Table 1.2: Some financial Criteria s of SCB’s Nghe An branch during 33 2008-2010 period Table 1.3: Criteria of SCB’s Nghe An branch and other opponents 42 Table 1.
Picture matrix of competition 45 Table 1.5: Matrix for evaluation of external factors (EFE) 51 Table 1.6: Personnel structure of SCB NA 52 7 Table 1.7: Indicators finance SCB Nghe An Branch 54 Table 1.8: Some operational of criterias of the payment services of SCB’s 58 Nghe An branch Table 1.9: Matrix on internal factors (IFE) 63 Table 1.10: SWOT Matrix 67 Table 1.11: Space Matrix 70 Table 1.12: QSPM Matrix 71 ASSURANCE We assure: Theme “Planning business strategy of Saigon J. Commercial Bank - Nghe An Branch until 2020” is the theme performed by our Research Team The data relating to Saigon Commercial Bank - Nghe An Branch were provided by the own unit. Vinh, March, 2011 THE IMPLEMENTATION AUTHORS TEAM 8 ACKNOWLEDGEMENTS We would like to extend our sincere thanks to SCB’s Nghe An branch which supported us enthusiastically during the process of providing data as well as held the working sessions in order to make business strategy for the enterprise. Besides, we would like extend our sincere thank to the professors and doctors - who have given us the skills and knowledge of the corporate governance throughout the entire course.
THE AUTHORS TEAM INTRODUCTION 1. The necessity of the research topic On implementing Vietnam’s policy toward developing a multi-component socialist-oriented economy in the period of industrialization and modernization, commercial banking system in Vietnam has constantly renewed and grown, particularly in recent years, Vietnam's banking sector has seen a great development. Banking structure is becoming more various, including National Commercial Bank under the central bank, Commercial Joint-Stock Bank, Joint- Venture Bank, representative offices and branches of foreign banks, Bank for Social Policy. New types of services provided by such banks for Vietnam’s economy are becoming more modern, which has significantly contributed to bringing the banking system more and more competitiveness.
Currently, the system of Joint Stock Commercial Banks is the leader in the strategies for modernization, competitiveness improvement and market domination in Vietnam. In present-day context, commitment to integration into the WTO must be complied rigorously, the modernization and the enhancement of the domestic banks’ competitiveness are a very important condition. Saigon 9 Commercial Joint Stock Bank’s branch in Nghe An (SCB’s Nghe An branch) is based in this province in early time. By harnessing the potential of the location as well as taking advantage of it, the branch have achieved positive business results and gradually asserted its position compared to other units in the same industry.
However, in current context, the size of the network and affiliates of banks has been increased as well as gradually penetrateby many branches of foreign banks which created a very competitive pressure on all banks operating in Nghe An, among which is SCB. Therefore, the formulation of business strategies in line with the evolution of SCB’s Nghe An branch is becoming an essential and urgent issue. Therefore, the Team selected the theme “Planning a business strategy of Nghe An Branch of Saigon J. Commercial Bank until 2020” as the theme of dissertation - the big Assignment of the Team.
Research objectives: The study will focus on business results at SCB’s Nghe An branch in recent years and the results of performance of business strategy, then it will recommend various solutions to expand its business banking services. Thesis and scope The research’s thesis is the result of business operations as well as its implementation of business strategies in the past years SCB’s Nghe An branch. Its theme focuses on theoretical and practical aspect of business results, it will also recommend many strategies which need implementing in the coming period in order to improve SCB and competitiveness of SCB’s Nghe An branch The study’s scope: limited to Vietnam's banking sector, the characteristics and the operations of SCB as well as its main rivals in recent years. Research methodology The study will mainly use synthetic methods of analysis, statistics, comparison: business activities of SCB’s Nghe An branch will be broken down into separate parts, the study will use overviewing methods associated with systematic manner 10 to make out a full image of its common business stuation and to outline its own strengths and weaknesses so that the study can assess competitiveness of SCB’s Nghe An branch in the current time and devise its orientation for future growth.
- Method of comparison: comparison between theory and practice to identity and solve the challenges SCB faced when it was expanding the types of new services and improving the quality of customer service, it also will compare SCB’s competitiveness with that of others in the same province to find out differences, which helps to assess SCB’s current capabilities. - Methods of statistics on the basis of data collection and data analysis: Based on SCB’s actual documents, the study will also refer to other data from the documents from the State Bank of Vietnam as well as other commercial banks and other relevant documents. Using the theoretical models of strategic management in a business in order to apply into the specific conditions of the bank with an aim of making strategy planning for the bank. Using the historical methods in combination to analyze, synthesize, combining with the matrix tools such as SWOT, QSPM… which have been learned in the course of the Program and applied them in the research of the business characteristics, financial data at SCB’s Nghe An branch and a number of the banks of the same sector.
Structure: The research theme is designed and presented in three chapters. CHAPTER I: Basic theories about setting up a business strategy CHAPTER II: Analysis of the business environment of the SCB’s Nghe An branch CHAPTER III: Strategy selection and solutions for strategy implementation of SCB’s Nghe An branch 11 CHAPTER 1 THEORETICAL FRAMEWORK FOR SETTING UP BUSINESS STRATEGY I. FUNDAMENTAL GROUNDWORK FOR STRATEGY AND MODERN BUSINESS STRATEGY 1. Concept and role of strategy 1.
Concept Until now there are many definitions of strategy. According to Michael Porter "Strategy is a process to find out an appropriate position in a competitive industry, it contains a range of activities in which competitiveness occur”1. According to Alfred Chandler "Strategy is the determination of basic and long- term goals for business, action plans along with the allocation of resources needed to accomplish those goals”2. The contribution of Industrial Organization to Strategic Management.
New York: Wiley. Gluek said: "The strategy is a unanimous, comprehensive, coordinated plan designed to ensure that the basic objectives of a enterprise are done successfully3. Minzberg sums up the meanings of strategy used by such authors and offers five words to describe strategy, which is called "5P", including Plan, Ploy, Pattern, Position, Perspective. Within the meaning of such words, strategy is a plan or an action plan drafted in a conscious way.
From such viewpoints, it can be seen that the business strategy is associated with the business objectives. The establishment of strategies helps businesses implement their objectives. Strategies are not separate actions but a series of actions or decisions which have intimate relationship with each other. All strategies should aim to enterprises’ goal, which is set on the basis of internal resources within an enterprise as well as external factors affecting business.
In summary, we can offer a broad definition of strategy as follows: Strategy is a complex series of actions to mobilize resources of an organization to achieve a certain goal. Business strategy of a enterprise is a series of commitments and actions that the enterprise uses to win a competitive advantage by exploiting its core competencies in a specific market. The role of strategy First, the business strategy helps enterprises clearly realize the purpose, its direction, as a guideline for all actions of enterprises in their business. The second, business strategy enables businesses to capture and take advantage of business opportunities and actively seek solutions to surmount, overcome dangers and pitfalls of the market.
The third, business strategies contributes to improve the efficiency in the use of the enterprise's resources, strengthen the competitive position, ensure the continuous and sustainable growth of the businesses in the long term. 3 Lawrence R Jauch and William F Gluek(1989)Business Policy and Strategic Management 13 The fourth, the construction and implementation of a business strategy creates a solid basis for enterprises to set forth policies and decisions in line with market fluctuations. Characteristics of business strategies: Business strategies often determine enterprise’s basic objectives and their business style in each business cycle and is sufficiently thorough in all aspects of its production and business activities to ensure its business continuity and sustainable development (more than 1 year).