GRIGGS UNIVERSITY GLOBAL ADVANCED MASTER OF BUSINESS ADMINISTRATION PROGRAM CAPSTONE PROJECT REPORT DEVELOPING BUSINESS STRATEGIES OF VIETNAM COMMERCIAL JOINT STOCK BANK FOR INDUSTRY AND TRADE – CUA LO BRANCH (VIETINBANK CUA LO) IN THE PERIOD OF 2011 - 2015 Group No. Ho Xuan Bay 2. Nguyen Ngoc Thanh 3. Ha Xuan Quang 4.
Nguyen Tuan Dung Hanoi, 2011 1 TABLE OF CONTENTS INTRODUCTION. General context, the necessity and the urgency of the research. Subject and purpose of the research. Structure of the capstone:.8 THEORETICAL FOUNDATION OF.
Definition of business strategy. Different definitions of business strategy. Basic characteristics of business strategy. The role of business strategy for an enterprise:.
Three competitive strategies. Competitive strategies for enterprises based on market share and position:. Process of developing strategy. Defining the mission and objectives.
Analyzing external environment. Analyzing the enterprise’s internal environment. Developing the strategic alternatives. Analyzing and selecting strategies.
Tools for strategic analysis. Using PEST Method to analyze macro factors. Using Michael Porter’s Five Forces of Competition to analyze micro factors. Using EFE Matrix to analyze the Opportunities and Threats.
Using IFE Matrix to analyze the strengths and weaknesses. Using SWOT Matrix to qualitatively analyzing the strategy. Using QSPM to analyze and select strategies. 19 BUSINESS ENVIRONMENT SITUATIONS OF.19 VIETINBANK CUA LO.
Establishment and development history. Business performance throughout the years. Analysis of factors affecting the operations of VietinBank Cua Lo. Socio-cultural environment.
Political and legal environment. Porter’s Five Forces. Evaluation of opportunities and threats. External Factor Evaluation (EFE) Matrix.
Analysis of internal factors of VietinBank Cua Lo. Evaluation of strengths and weaknesses. Internal Factor Evaluation (IFE) Matrix. SWOT matrix analysis.
Proposed strategies from the SWOT Matrix. 51 BUSINESS STRATEGY SELECTION AND IMPLEMENTATION SOLUTIONS OF VIETINBANK - CUA LO BRANCH FOR THE PERIOD OF 2011 - 2015. Business goals and objectives of VietinBank - Cua Lo Branch. Specific objectives by 2015.
Selection of feasible business strategies. Selection of strategic alternatives. Business strategy determination. Strategic position of Cua Lo Branch in comparison with the system of Vietinbank.
Strategy implementation solutions. Human resource development solutions. Human resource recruitment improvement. Employee training and retraining.
Human resource management and reward & compensation policies. Developing organizational culture. Developing infrastructures and facilities. Potential problems and solutions.67 LIST OF TABLES AND FIGURES Figure 1.David’s Model of Strategic Management Table 1.1 EFE Matrix Table 1.2 IFE Matrix Table 1.3 SWOT Matrix Figure 1.4 Quantitative Strategic Planning Matrix Figure 2.1 Organizational chart of VietinBank system Figure 2.2 Organizational Chart of VietinBank Cua Lo Table 2.1 GDP growth rate of Vietnam and regions including Nghe An and Cua Lo as a function of time Table 2.2 CPI of Nghe An as a function of time Figure 2.3 Summary of the macro factors influencing Vietinbank Cua Lo Table 2.4 Comparison of Vietinbank branches in Nghe An Table 2.5 Comparison of Vietinbank Cua Lo with branches of Vietcombank, BIDV, Agribank in Nghe An Figure 2.6 Summary of micro factors influencing Vietinbank Cua Lo Table 2.7 The EFE Matrix of VietinBank Cua Lo Table 2.8 The IFE Matrix of VietinBank Cua Lo Table 2.9 The SWOT Matrix of VietinBank Cua Lo Figure 3.1 Internal - External Matrix (IE) of VietinBank Cua Lo V0110.
General context, the necessity and the urgency of the research The current context of global economic crisis such as debt ceiling issues in the United States and many European countries have strong impact on the world’s financial market. Because of the fact that Vietnam gradually integrates into the world’s economy, all the fluctuations of global economy also have impacted significantly to the economy of Vietnam. The banking system of Vietnam has faced many difficulties since early 2001 till now. Firstly, it is the force to reach the target of controlling the increasing inflation.
Banking system has to face liquidity difficulties, and it is difficult for every bank, even the biggest ones, which are considered to be the market makers. Secondly, if the interest rate was completely decided by the banks in the past, this role, now, is transferred to customers, especially customers who hold a huge amount of Vietnam Dong (VND). However, it is the state organizations that bargain for interest rate the most. There is institution that organized bidding for capital cost for deposit, and the winner would be the bank that offers the higher payment.
Thirdly, it is merging and acquisition in banking sector. For many years, observing the low liquidity and weak financial situation of many banks, which resulted from unhealthily quick growth, under-standard lending and low safety ratio, many people have asked for, in these cases, to conduct merging and acquisition, resale or announce bankruptcy in order to make the market grow strongly again, however, it has never happened since. Fourthly, the foreign currency exchange market, after few years of chaotic rate variability, it is now settled down through series of decisive action. However, far behind that success was the power of the administration, instead of tools with regulating senses.
In this context, many banks have to develop or adjust their business strategies to suit the market conditions. Vietnam Joint Stock Commercial Bank for Industry and V0110.Group11 6 Trade - Cua Lo Branch (Vietinbank Cua Lo) is one of the best-operated branches in the Vietin Bank system of Nghe An province and the whole Vietin Bank in general. However, in the volatile situation of the market and severe competition, Vietinbank Cua Lo has to build their own business strategy to develop and compatible with the strategy of the Bank’s overall system. Subject and purpose of the research - Subject of the research: Vietinbank - Cua Lo Branch - Purpose of the research: Developing business Strategies for Vietin Bank Cua Lo in the period of 2011 – 2015 and propose solutions to make it become the 1st ranking branch in the Vietinbank system.
Research methodology - References: primary and secondary data, data of Vietinbank Vietnam, Vietinbank Cua Lo, Reports of the People’s Committee of Nghe An Province - Analyzing technique: IFE, EFE, SWOT and QSPM matrices, Michael Porter’s five forces model of competition 4. Structure of the capstone: Chapter 1: Rational foundation of business strategy Chapter 2: Business Environment situations of Vietin Bank Cua Lo Chapter 3: Business strategy selection and implementation solutions of VietinBank – Cua Lo for the period of 2011 - 2015.Group11 7 THEORETICAL FOUNDATION OF BUSINESS STRATEGY 1. Definition of business strategy 1. Different definitions of business strategy Alain Threlart stated that "Strategy is the art that an enterprise uses to stand against competition and win" According to M.
Porter, "Strategy is the art of building solid competitive advantages to defense" For these reasons, the authors considered business strategy as a kind of art to compete in the market and develop the enterprise. According to the viewpoint of management, business strategy is a kind of plan: - G. Arlleret stated that "Strategy is the determination of the roads and the means to achieve the objectives defined by the policy" - D. Bizrell et al defined strategy “as a general plan or direction that leads the enterprise to the desired goal.
It is the basis for the elaboration of the policies and operational measures. " - Gluecl stated that: "The strategy is consistent, comprehensive and integrated plan designed to ensure that the enterprise’s objectives will be implemented. According to the perspective of consistency: - "Strategy is the art of coordinating activities and controlling them to achieve long-term goals of the enterprise". - Chandler defined that “strategy involves defining basic long-term goals of the enterprise and in the same time choosing the mode or courses of actions and allocate the necessary resources and implement those goals” In an enterprise: "Strategy is the art of organizational design aimed to facilitate long-term goals of the business and it has the relationship with the change of business environment and competitiveness”.Group11 8 There are many definitions of Business strategy and each scholar has his own approach and research method.
However, it can be seen that all of these definitions have a common point “Business strategy involves competing to achieve business goals”. In this capstone project, we synthetize and apply the concept of business strategy through its characteristics and role. Basic characteristics of business strategy - Business strategy determines the basic objectives and business direction of the enterprise in a specific period. - The orientation of the strategy is to ensure the continuity and firm of the development in the constantly fluctuating business environment.
- Business strategy ensures to mobilize at het maximum and combines at the optimal of extraction and use of enterprise resources at the present and in the future. It also promotes the advantages and seizes the opportunity to competition. - Business strategy an enterprise is reflected throughout a continuous process. - Business strategy always peruses attacking thoughts in order to win in the marketplace.
- Business strategies are often built in a long period of time (3, 5 to 10 years). The role of business strategy for an enterprise: - Business strategy helps the enterprise to identify the purpose and its basic direction as the guideline for all manufacturing and business activities of the enterprise. Business strategy plays an orienting role in the long-term operation of the business; it is a solid basis for the deployment of the operation. The lack of strategy or when strategy is unclear or when there is no solid argument will make the operation of the enterprise lost its way.
There are many problems that can only be seen in the immediate future but could not be associated with long-term plan and cannot be seen as the main role in the whole activities of the enterprise. - Business strategy helps the enterprise understand and take advantage of business opportunities, and in the same time take measures to overcome the risks and threats in the competitive marketplace.Group11 9 - Business strategy contributes to improve the efficient use of resources, enhance the competitive position of the enterprise and ensure its sustainable development. - Business strategy creates a solid basis for the proposal of policies and decisions for suitable production that work in accordance with the fluctuation of the market. It forms a solid basis for research and development, investment and development of personnel training, expanding the market and product development.
In fact, most of the mistakes in investment, technology, markets come from developing strategy or any problems in determining strategic objectives. The foundation for success or failure depends on an important factor of how the enterprise’s business strategy looks like. Focusing development This strategy is to improve the competitive position of enterprises in comparison with the existing products based on enhancing marketing activities or changing the existing market strategy without changing the product. It comes in three main strategies: - Market penetration: increase the market share for available products and services available in the market through marketing activities.
- Market development: Provide products and services available in the new area. - Product development: Increasing in sales, innovating in available products and services. Three competitive strategies 1. Cost-leading strategy Cost-leading strategy is driven by the overall action to provide products or services that have the characteristics accepted by customers with the lowest cost compare to all competitors.
Product differentiation The objective of the differentiation strategy is to gain the competitive advantage for the enterprise through creating products (goods or services) that is unique in some features to the customers. Enterprise that tries to make the V0110.Group11 10 difference to satisfy the customers in a way that no competitors cannot offer higher price (a significantly price that is above the industry’s average) 3. Focus strategy Focus strategy is the third among three generic competitive strategies. The main difference with the two strategies is that it is directed to serve the needs of a group of customers.
A focus strategy will work on a specific market gap that can be determined in terms of geography, customer type, or by product segment.