CAPSTONE PROJECT REPORT BUSINESS STRATEGY OF PETROLIMEX GROUP COMMERCIAL JOINT STOCK BANK (PG BANK) IN THE PERIOD OF 2011-2015 -1- GLOBAL ADVANCED MASTER OF BUSINESS ADMINISTRATION CAPSTONE PROJECT REPORT BUSINESS STRATEGY OF PETROLIMEX GROUP COMMERCIAL JOINT STOCK BANK (PG BANK) IN THE PERIOD OF 2021-2025 -2- TABLE OF CONTENTS TABLE OF CONTENTS. 4 LIST OF TABLES AND GRAPHS.5 LIST OF ABBREVIATIONS IN THE CAPSTONE RESEARCH. OVERVIEW AND THE NECESSITY OF THE RESEARCH. The necessity of the research.
The meaning of the research. OBJECTIVES OF THE RESEARCH. SUBJECT AND SCOPE OF THE RESEARCH.1 Subject of the research.2 Scope of the research. STRUCTURE OF THE RESEARCH.10 CHAPTER 1: RATIONAL FOUNDATION AND THE DEVELOPMENT OF AN ENTERPRISE’S BUSINESS STRATEGY.
THE BUSINESS STRATEGY OF AN ENTERPRISE. Definition of business strategy. The role of business strategy. Levels of strategic management.
Some business strategies in the actual banking sector. SETTING UP AND SELECTING THE BUSINESS STRATEGY. Setting up business strategy. Research on the business environment.
The External Factors Evaluation Matrix (EFE). The CPM Matrix. The internal factor evaluation matrix (IFE). Setting up and selecting feasible business strategies.
THE CHARACTERS OF BANKING SECTOR THAT AFFECT DEVELOPING STRATEGY. Potentials and needs of using banking services. The management of State bank. The development level of related and supporting sectors.
Internal factors of the bank.20 CHAPTER 2: STRATEGIC ANALYSIS OF PETROLIMEX GROUP COMMERCIAL JOINT STOCK BANK (PG BANK). GENERAL OVERVIEW OF PETROLIMEX GROUP COMMERCIAL JOINT STOCK BANK (PGBANK).1 History of establishment and development of PG Bank. Vision and Mission of PG Bank. EXTERNAL ENVIRONMENT ANALYSIS.
Political and Legal Factors. Cultural and Social Factors. Pressure from suppliers. Pressure from customers.
Threats of potential competitors’ analysis. Opportunities and Threats. External Factor Evaluation Matrix (EFE). Competitive Profile Matrix.
INTERNAL ENVIRONMENT ANALYSIS OF PG BANK. Human Resources Analysis. Financial ability analysis. Marketing activity analysis.
Technological activities analysis. Research and Development Activities Analysis. Strengths and Weaknesses. Internal Factor Evaluation Matrix (IFE).50 CHAPTER 3: PROPOSED BUSINESS STRATEGIES FOR PETROLIMEX GROUP COMMERCIAL JOINT STOCK BANK (PG BANK) BY THE END OF 2015.
PG BANK’S GOALS BY 2015. General development goals of PG Bank by 2015. Mission and vision of PG Bank by 2015. General development orientation by 2015.
Human Resources Objectives. Objectives of products, services and information technology. BUSINESS STRATEGY ANALYSIS. Internal and External Matrix (IE).
SELECTION OF BUSINESS STRATEGIES. SOLUTIONS FOR IMPLEMENTING THE SELECTED STRATEGIES. Developing corporate culture and core values. Strengthening the financial capability.
Human Resource Development. Modernizing the Information Technology. Strengthening the Marketing Activities. Implementing Marketing Mix.
Improving Processes, Regulations and Organizational Structure. Processes and Regulations.74 -3- ACKNOWLEDGEMENT Our group would like to express our sincere thankfulness to the Directors, the Staffs and the Faculty from Center for Educational Technology and Career Development (ETC) – Vietnam National University (VNU), School of Graduate Studies (VNU); and Griggs University for having created us the best study conditions and have encouraged us in all the time of research and writing this capstone. We have further more to thank PG Bank’s General Director, the Managers from the Headquarter and transaction offices of for their provided relevant information, data and their supports for our Capstone. We understand that due to our lack of experience and limited information, our Capstone would have some shortcomings.
However, we would really appreciate all comments and suggestions for improvement in order to make the Capstone become, somehow, more applicable and more meaningful to the current context. We affirm that the work of this Capstone is our own independent research. All information and data used are true and with traceable sources. -4- LIST OF TABLES AND GRAPHS.
Unit Contain Page Table 1-1 Different phases in developing the strategy 13 Table 1-2 The SWOT Matrix 17 Table 1-3 The SWAT Matrix 18 Table 1- 4 The GREAT Matrix 18 Chart 2-1 PG Bank Organizational Chart 23 Table 2-2 Structure of shareholders 23 Table 2-3 Main Shareholders 23 Graph 2-4 Quarterly GDP Growth in the period of 2008-2010 26 Graph 2-5 Monthly Inflation Rate of 2010 27 Graph 2-6 Fluctuations of Exchange Rate VND/USD in 2010 28 Graph 2-7 Government Budget Deficit in the Period of 2005-2010 29 Table 2-8 Typical competitors 32 Graph 2-9 Banking product and service classification in Vietnam 35 Table 2-10 PG Bank’s External Factor Evaluation Matrix 38 Table 2-11 PG Bank’s Competitive Profile Matrix 38 Graph 2-12 The situation of increase in liabilities of banking system. 41 Table 2-5 The business situation of PG Bank from 2008 to 2010 41 Table 2-14 Capital mobilization situation of PG Bank from 2008 to 2010 42 Table 2-15 Situation of liabilities based on debt quality from 2008 to 2010 42 Table 2-16 The situation of liabilities in time series from 2008 to 2010. 43 Table 2-17 Loan situation in monetary units from 2008 to 2010 43 Table 2-18 Loan situation for corporate outside of Petrolimex 43 Table 2-19 Foreign Currency Trading Situation from 2008 to 2010. 44 Graph 2-20 ROA; ROE of some banks in the last few years.
45 Graph 2-21 Yearly ROA of PG Bank 46 Graph 2-22 ROE of PG Bank throughout the years 46 Graph 2-23 CAR of PG Bank throughout years 46 Graph 2-24 PG Bank’s Internal Evaluation Factors. 50 Graph 3-1 PG Bank’s IF Matrix 55 -5- Table 3-2 PG Bank’s SWOT Matrix 56 Table 3-3 PG Bank’s SPACE Matrix 57 Table 3-4 GREAT elements matrix of PG Bank. 58 Table 3-5 Selections of prior strategies of PG Bank 59 -6- LIST OF ABBREVIATIONS IN THE CAPSTONE RESEARCH PG Bank Petrolimex Group Commercial Joint Stock Bank (PG Bank) WTO World Trade Organization WB World Bank AFTA ASIAN Free Trade Area CJS Commercial Joint Stock Petrolimex Vietnam National Petroleum Corporation IFE The Internal Factor Evaluation Matrix EFE The External Factor Evaluation Matrix SPACE The Strategic Position and Action Evaluation Matrix GDP Gross Domestic Product ROA Return on Assets ROE Return on Equity SB State Bank SOE State Owned Enterprises IT Information Technology ATM Automated Teller Machine BA Business Activity CITAD Inter-Bank Payment System SWIFT Society for Worldwide Interbank Financial Telecommunication CAR Capital Adequacy Ratio USD United States Dollar FDI Foreign Direct Investment ICOR Incremental Capital-Output Ratio LienVietBank LienViet Joint Stock Commercial Bank Ocean Bank Ocean Commercial Joint Stock Bank GP Bank Global Petro Commercial Joint Stock Bank -7- FOREWORD. OVERVIEW AND THE NECESSITY OF THE RESEARCH.
Nowadays, globalization, international economic integration, trade liberalization together with the rapid development of science and information technology, indeed information technology, has spurred the development of every country’s economy. Since its integration into the WTO (7th November 2006), the Vietnam has increasingly emerged into the world’s economy. The integration has opened up with many opportunities for Vietnam, but in the same time it poses many challenges as well. Moreover, in order to survive and develop in the competitive market, an enterprise needs to have long- and short-term strategic business plans.
The necessity of the research. In the recent years’ economic context, Vietnam's economy has seen breakthrough growth in many aspects. It gradually stabilizes and opens up to the world’s market, as well as normalizes relations with different organizations such as the International Monetary Fund (IMF); the World Bank (WB) and joined the ASEAN Free Trade Area etc. The banking sector, with its specific business role, has an important influence on the development of the country's economy and simultaneously it is also very sensitive to the changes of economy, politics and society both domestically and internationally.
On the other hand, the competitive pressure is fiercely increasing that requires each bank to have its own strategies to sustain its market share and takes advantage of opportunities and avoid the risks in the process of opening and integration. More than ever, it requires every bank to make great efforts to develop an appropriate strategic orientation in order to overcome challenges, improve competitiveness and develop sustainable. In short, strategic management is regarded as the basic business philosophy to help the bank achieve success in the long run. PG Bank is one of the Commercial Joint Stock Banks in Vietnam with a wide network of branches all over the country and has affirmed its position and reputation in the market.
However, the bank still exposes some shortcomings that need to be overcome and improved to increase its competitive advantage. Therefore, researches -8- and suggestions are extremely necessary for the strategic development of PG Bank in the period of 2010-2015. Those will help PG Bank develop stably, overcome challenges and seize opportunities especially when Vietnamese economy is in the transition of regional to international integration Moreover, this is also the concern of PG Bank’s Board of Directors in order to develop the bank according to the planned orientation: Secure-Trust-Effectiveness, as much as maintain and strengthen its brand and recognition. For these reasons, our group has chosen the title “PG Bank’s Business Strategy in the period of 2011-2015” as our capstone research.
The study summarizes the development and strategic management of PG Bank from its humble beginning, identifies the current strengths and weaknesses, and recognizes the opportunities and threats for the future development. Our group has our research done with the information and data from previous strategic implementations, forecast of the world’s economy, the country’s situation in the period 2011-2015 and future orientation of PG Bank to develop strategy for it in the period of 2011-2015 1. The meaning of the research. Setting up an overall orientation in the period of 2011-2015 with clear objectives to announce broadly within the bank and mobilize the inputs to successfully perform the assigned goals.
OBJECTIVES OF THE RESEARCH. Overall objectives Creating PG Bank a rationale for sustainable development and becoming one of the leading financial institutions in Vietnam. Concrete objectives Forming and developing breakthrough strategies for PG Bank in the period of 2011-2015, namely in the below listed solutions: Developing the bank’s culture philosophy Heightening the financial capacity Bettering the service’s quality. Investment for development and increase the market share.
SUBJECT AND SCOPE OF THE RESEARCH 3.1 Subject of the research The capstone focused on researching the business of PG Bank in the last few years, based on the factors that affected the business strategy, and completing the strategic business for the bank as well as solution to accomplish the set goals.2 Scope of the research Scope of the research is mainly the business activities of PG Bank and some competitor in the same industry. RESEARCHING METHODOLOGY Rational foundation for this capstone research deprived from the guidelines, policies, practice-oriented activities of banking sector in Vietnam, theory of strategic management, marketing management, information and data from different websites, magazines, and reports of many banks. STRUCTURE OF THE RESEARCH Apart from the foreword and conclusion, the capstone is structured as follows: Chapter I: Rational Foundation and the Development of an enterprise’s business strategy Chapter II: Analyzing PG Bank current business strategy Chapter III: Business strategy of PG Bank by 2015. - 10 - CHAPTER 1: RATIONAL FOUNDATION AND THE DEVELOPMENT OF AN ENTERPRISE’S BUSINESS STRATEGY.
THE BUSINESS STRATEGY OF AN ENTERPRISE. Definition of business strategy. According to the Strategic Management textbook issued by Griggs University: “Business strategy is a set of goals and policies set up by a group of people. It decides methods and locates the business to improve profitability, create economic value for the owners and shareholders.
Strategy helps to answer two key questions: “What industry we should be involved in?” “How will we compete?” According to Michael Porter, strategy is to create a unique position and value, including the differentiation, the choices with changing-will to extract the most of all resources, from which creates advantages for the company. In other words, strategic is direction and scope of an organization in the long term to gain a competitive advantage through mobilizing and formatting its resources in a changing environment in order to achieve a certain purpose, to meet the market’s demand and satisfy the expectations of different parties. Thus, the strategy relates to the objectives of the enterprise.