Global Advanced Master of Business Administration GRIGGS UNIVERSITY GLOBAL ADVANCED MASTER OF BUSINESS ADMINISTRATION PROGRAM CAPSTONE PROJECT REPORT “BUILDING AND SELECTING BUSINESS STRATEGY FOR JOINT STOCK COMMERCIAL BANK FOR FOREIGN TRADE OF VIET NAM – BA DINH BRANCH TILL 2015” Group number: 04 - X0210 Student’s name: 1. Nguyen Hoai Trung 2. Nguyen Van Hong 3. Nguyen Anh Thu 4.
Nguyen Thi Thanh Cham HANOI 2011 Group 4 – Class X0210 1 Global Advanced Master of Business Administration TABLE OF CONTENTS Page LIST OF ABBREVIATED WORDS 5 LIST OF TABLES – FIGURES 6 INTRODUCTION 7 CHAPTER 1: GENERAL BASES OF ARGUMENT ABOUT 9 BUSINESS STRATEGY FORMULATION 1.1 Theories about strategy and strategic management 9 1.2 Strategy formulation process 9 1.1 Determination of business assignment 10 1.2 Assessment of external factors 10 1.3 Assessment of internal situation of enterprises 11 1.4 Strategic analysis and choice 11 1.3 Basic steps of strategic management 12 1.1 Period for strategic planning 12 1.2 Period for strategic implementation 12 1.3 Period for strategic check 12 1.2 Business Strategic planning tools 12 1.1 Period for information collection and systematization 12 1.2 Competitive image matrix 13 1.2 Period for combination 14 1.3 Grand Strategy Matrix 15 Group 4 – Class X0210 2 Global Advanced Master of Business Administration 1.3 Decisive period 16 CHAPTER 2: CURRENT SITUATION OF BUSINESS 17 ENVIRONMENT OF VIETCOMBANK-BA DINH BRANCH 2.1 Overview of Vietcombank and Vietcombank-Ba Dinh branch 17 2.1 Overview of Vietcombank 17 2.3 Vision and mission 18 2.2 Overview of Vietcombank-Ba Dinh branch 20 2.1 Process of establishment and development 20 2.2 Main operating activities 21 2.2 Analysis of environmental factors 26 2.1 Analysis of external environmental factors 26 2.1 PEST analysis of macro-environment 28 Analysis of industry environment by M.3 Assessment on opportunities and threats 40 2.4 External Factor Evaluation Matrix (EFE) 41 2.5 Competitive Image Matrix 42 Analysis of internal factors of Vietcombank – Ba Dinh 2.4 Financial capacity 46 Group 4 – Class X0210 3 Global Advanced Master of Business Administration 2.7 Assessment on strong and weak points 47 2.8 Internal Factor Evaluation Matrix (IFE) 48 The necessarity for the formulation of business strategy of 2.3 49 Vietcombank – Ba Dinh Branch CHAPTER 3: BUSINESS STRATEGY OF VIETCOMBANK-BA DINH 50 BRANCH TILL 2015 AND SOLUTIONS FOR IMPLEMENTATION 3.1 Business target of Vietcombank-Ba Dinh branch till 2015 50 3.2 Formulation of matrixes and selection of business strategy 53 2.1 Analysis of SWOT matrix 53 2.2 Analysis of SPACE matrix 55 2.3 Analysis of Great strategy matrix 56 2.4 Determination of alternative-possible business strategy 56 2.3 Solutions to strategy implementation 62 3.1 Solution to human resource development 62 3.2 Solution to Marketing communication 64 3.4 Solution to re-structure of mechanery 67 3.5 Effective implementation of business culture 69 3.6 Solution to facilities building 70 CONCLUSION AND PROPOSAL REFERENCE Group 4 – Class X0210 4 Global Advanced Master of Business Administration LIST OF ABBREVIATED WORDS ACB Asia Commercial Bank Agribank Vietnam Bank for Agriculture and Rural Development BIDV Bank for Investment and Development of Vietnam Eximbank Vietnam Export Import Bank EFE External Factor Evaluation Matrix IFE Internal Factor Evaluation Matrix NHNN The State Bank of Vietnam QSPM Quantitative Strategic Planning Matrix SPACE SPACE matrix (The Strategic Position and Action Evaluation) SWOT matrix (Strengths, Weaknesses, Opportunities, and SWOT Threats) Techcombank Vietnam Technological and Commercial Joint Stock Bank Vietcombank-Ba Đinh Joint Stock Commercial Bank for Foreign Trade of Vietnam – Branch Ba Dinh Branch Vietcombank Joint Stock Commercial Bank for Foreign Trade of Vietnam VP Bank Vietnam Prosperity Joint Stock Commercial Bank VRB Vietnam - Russia Joint Venture Bank Group 4 – Class X0210 5 Global Advanced Master of Business Administration LIST OF TABLES - FIGURES Table 2.1 Operating result of Vietcombank for the 2008 – 2010 period Table 2.2 Operating results of Vietcombank – Ba Dinh branch Table 2.3 Data sheet of mobilization of customers’ deposit Surplus debt and structure of surplus debt on credit for the 2008-2010 Table 2.5 Increase in quantity in banking industry Table 2.6 Growth of capital and capital mobilization and credit Table 2.7 EFE matrix Table 2.8 Competitive image matrix Table 2.9 IFE matrix Table 3.1 SWOT matrix for Vietcombank Ba Dinh Table 3.2 SPACE matrix for Vietcombank Ba Dinh Table 3.3 QSPM matrix for Vietcombank Ba Dinh Table 3.4 Budget for target strategy implementation up to 2015 Figure 1.1 Business strategy establishment process Figure 1.2 SWOT Matrix Figure 1.3 SPACE Matrix Figure 1.4 Grand Strategy Matrix Figure 2.1 Organizational structure of Vietcombank-Ba Dinh branch Figure 2.2 Growth rate of after-tax profit of banking Figure 2.3 Growth rate of GDP and inflation in the 2002 – 2010 period Figure 2.4 GDP per capita in the 2000 – 2010 period Figure 2.5 Foreign Direct Investment (FDI) Figure 2.6 Import-export turnover for the 2000 – 2010 period Figure 3.1 SPACE matrix for Vietcombank Ba Dinh Group 4 – Class X0210 6 Global Advanced Master of Business Administration INTRODUCTION 1. Reasons for topic With the current trend of global economic integration, banking is one of industries which are influenced the most strongly and clearly. Integration can bring about many opportunities for development and risks, threats and challenges for the banking. At present, Vietnamese banking system has a nationwide branch network and more banks are established, leading to more severe competitive rate than ever.
For overcome threats and making use of good opportunity in order to improve their competitive positions in the market, banks have to lay out business strategies suitable for individual periods of development; appropriate to global trend based on the ensured balance between the country’s benefits and banks’. Therefore, planning of business strategy is a necessary demand for individual banks. From that reality, Group 4 decided to choose the topic: ”Building and selecting business strategy for Vietcombank-Ba Dinh branch till 2015”. Subject and scope of research Scope of research is business strategy of Vietcombank- Ba Dinh branch, and those of some bank branches in Hanoi.
Scope of research is business operation of Vietcombank-Ba Dinh branch, in comparison with that of competitors on its area and within the industry. Purpose of research and applicability: The topic is with a view to establish and select business strategy for Vietcombank- Ba Dinh branch till 2015 and propose solutions to implement this strategy, aiming at leading Vietcombank-Ba Dinh branch to be one of great branches among Vietcombank system and on the its area. Below are steps for implementation: - Systematizing bases of argument about business strategy, choosing analysis models which are effective for the formulation of business strategy. - Applying system of bases of argument to the reality so as to analyze and assess Group 4 – Class X0210 7 Global Advanced Master of Business Administration internal and external enviroments, advantages – disavantages and then build up business strategy for Vietcombank- Ba Dinh branch.
- Proposing solutions for implementing business strategy of Vietcombank – Ba Dinh branch. The great assignment is done by a group of most members who are working in banking and is investigated, analyzed based on the reality, therefore business strategy set up for Vietcombank- Ba Dinh branch by this group must make a positive contribution to the branch’s activitites in the following years. However, in the current extremely-complicated context of economy, proposals made by the Group are for long-term strategic oritentation only, not for detailed plan or flexible short-term plan. Research method The great assignment of the group uses three research methodoligies including: - Approach method: Using summary of particular approach methods and historic approach method, associated with qualitative and quantitative approach methods.
- Method of primary information collection: Using summary of observation, interview and specialist methods. - Information processing method: Using modelling method, analysis of causes and effects, descriptive statistics when analyzing business operation of Vietcombank-Ba Dinh branch, associated with use of subjects method: Strategic management, Human resources management, Marketing, Operational management, etc. Lay-out of the great assignment Apart from introduction, conclusion, reference materials, the great assignment includes 3 chapters: Chapter 1: General bases of arguments about business strategy formulation Chapter 2: Current situation of business environment of Vietcombank-Ba Dinh branch Chapter 3: Business strategy of Vietcombank-Ba Dinh branch till 2015 and solutions to implement Group 4 – Class X0210 8 Global Advanced Master of Business Administration CHAPTER 1 GENERAL BASES OF ARGUMENT ABOUT BUSINESS STRATEGY FORMULATION 1.1 Theories about strategy and strategic management 1.1 Strategic definition Definition of the strategy appeared in the Ancient Greece, this term of military origin derives from the word ”Strategos” refering to a leader of commander of an army. In most cases, the strategy is a military term used to refer to the plan of disposing and distributing forces for the purpose of beating enermies or achieving its military target.
Nowadays, definition of the strategy is used very widely and considered as base for operation of enterprises. Accurate definition of the strategy according to natural levels depends on point of view. In general, a strategy when set up must satisfy all the followings requirements: - Being mapped out for a long time; - Creating the growth of the organization; - Using all resources that the organization has in the best effective way; - Creating the best competitive position for the organization in the future. Hence, it can be said that, the strategy "is a series of activities of the long term, built up to enable an organization to achieve its desired position from current position through its formulation of competitiveness in comparision with other organizations’ advantages on the market.
Strategic management is the process of analyzing current environment, forecasting future environment, determining mission, target and strategic program, carrying out, inspecting and evaluating the implementation of targets, strategic program in reality.2 Strategy formulation process Firgure 1.1: Business strategy formulation process Group 4 – Class X0210 9 Global Advanced Master of Business Administration Internal analysis Mission, vision External analysis + Model: + Macro analysis: - Value series, external analysis. - Competive + Micreo analysis: advantage Construction & Five competitive + Conclusion: choice of strategy forces model. - Strong points (SWOT) + Conclusion: - Weak points - Opportunity - Threat Chosen strategy - Lead on expenses - Product differentiation - Concentration Supervision and Accord apparatus assessment of organization with strategy Implementation and strategy implementation adjustment of strategy source: document of Strategic management book 1.1 Determination of business assignment The report of business assignment is a statement of ”reason for existence” of an organization. It responds to the central question” what is our business?”.
It is obvious that the report of business assignment is extremely neccessary for establishing and drafting strategies in an effective way” (Peter Drucker,1970).2 Assessment of external factors Figure 1.2: External environment Source: Teaching materials on strategic management Group 4 – Class X0210 10 Global Advanced Master of Business Administration Environment of an organization refers to external factors impacting on the operation and operational result of that organization. Environment of the organization can be divided into two levels: macro and micro environments (industrial environment). Analysis of macro environment (comprising 06 segments according to widen PEST model): Economic, Technological, Sociocultural, Demographic, Political-Legal and Global environments. Analysis of industrial environment (Five competitive forces model of Micheal Porter): Potential competiors; Competition between competitors within the industry; Right to negotiate from customers; Right to negotiate from supplier; Threat from substitute products.
Analysis of environmental factors shall enable enterprises to identify Opportunities (O) which can be used or Threats (T) which must be face with. Accordingly, enterprises build up clear business assignment, determine long-term feasible target, design suitable strategies and lay out reasonable policies for achieving anual targets.3 Assessment of internal situation of enterprises Internal situation of the enterprise is often assessed via functional areas such as: Finance, Human resources; Organizational structure, Marketing, Research/Development; Information Technology, etc. Purpose of analyzing internal environment is to identify existing and potential resources, key capability, generating competitive advantages of the enterprise; and to recognize obstacles in remaining sustainable competitive advantages. Analysis of internal affairs of the enterprise shall help identify strengths (S) and weaknesses (W) of the enterprise.