GLOBAL ADVANCED MASTER OF INTERNATIONAL BUSINESS ADMINISTRATION CAPSTONE PROJECT REPORT BUILDING DEVELOPMENT STRATEGY FOR AGRIBANK HOANG MAI FROM 2010 TO 2015 Hanoi – 2011 ACKNOWLEDGEMENT First of all, we would like to send our gratitude to the board of directors, all lecturers and professors of Center for Education Technology & Career Development, Vietnam National University Hanoi and Griggs University – USA for creating best conditions for us to study during the MBA course and to complete this capstone project report. We also would like to thank all other members of Global Advanced, especially the department of class assistants. Without their help, we could not receive positive results from studying. 1 In addition, we would like to express my deep and sincere gratitude to managers and officers of Agribank Hoang Mai.
They supported us so much by providing valuable information and data to complete this report. Although we tried best ourselves the research could not avoid some certain shortcomings. We would like to receive comments and contributions from professors and other students to make the report more precise and practical. TABLE OF CONTENTS LIST OF FIGURES: .6 LIST OF TABLES:.8 CHAPTER 1: THE CORE THEORIES OF CORPORATE STRATEGIES.
Concepts of strategy and corporate strategy:. Concepts of strategy:. Concepts of corporate strategy:. The role and importance of strategy and corporate strategy:.
The levels of corporate strategy:. The process of building strategy:. To identify tasks and business targets. Analysis and assessment of outside environment.
Analysis of macro environment:. Analysis of industry environment:. External factors matrix (EFE). Internal factors analysis.
Resource evaluation analysis. Analysis of functional departments in a corporate. Internal Factors Evaluation Matrix (IFE Matrix). Strategy analysis and choice.
Tools for setting up business strategies:. Nature of strategy implementation process. Contents of strategy implementation. Strategy assessment and adjustment .31 CHAPTER II: STRATEGY IMPLEMENTATION OF AGRIBANK HOÀNG MAI.
Overview of Agribank Hoàng Mai. Establishment and development. Organizing structure of Agribank Hoàng Mai. The income statement of Agribank Hoàng Mai.
External environment analysis:. Micro- environment analysis:. Socio- cultural environment:. The global environment:.
Analysis of business environment (5 competitive forces of M.3 Evaluation of opportunities and challenges .4 Matrix of External Factor Evaluation ( E F E ). Analysis of internal environment of Agribank Hoang Mai. Analysis of resources. Research and Development.
Internal Factor Evaluation Matrix (IFE). General assessment on results in strategy implementation:. Need of establishing business strategy for Agribank Hoang Mai:. 59 CHAPTER 3: BUILDING BUSINESS STRATEGY FOR AGRIBANK HOANG MAI IN THE PERIOD 2010-2015.
Development goals of Agribank Hoàng Mai by 2010:. Vision, tasks and core values:. Common development goals in overall system:. Using matrix SWOT to build strategy:.
Measures to implement strategy:. Enhancing the effectiveness of capital use:. Reducing cost and product price:. Improve quality and competitiveness of products:.
Develop distribution channel (transaction offices) based on customers and market situation:. Banking Management and Risk management:. 76 LIST OF FIGURES Figure 1.1: The tasks of corporate management Figure 1.2: Michael Porter’s model of 5 competitive forces Figure 2.1: Operating model of departments and units of Agribank Hoàng Mai Figure 2.2: The proportion of overdue loans of Agribank Hoang Mai Figure 2.3: Debit balance structure by terms Figure 2.4: Vietnam’s GDP growth rate after years 5 Figure 2.5: Status of capital mobilization in Agribank Hoang Mai as compared to other banks in local area (2008 – 10/2010) LIST OF TABLES Table 1.1: SWOT analysis Table 2.2: The business operating result of Agribank Hoang Mai Table 2.3: Debit balance structure of Agribank Hoang Mai Table 2. Comparison of major competitors with Agribank Hoang Mai in area Table 2.5: External Factor Evaluation matrix Table 2.6: Structure and educational background of staff (updated by Oct 31, 2010) Table 2.7 SWOT Analysis of counterpart Table 2.8: IFE Matrix Table 2.9: IE Matrix Table 2.
SWOT Matrix Table 3.1: Activity targets, period 2010-2015 Table 3.2 : Assessment on the ground of GREAT ABBREVIATIONS AGRIBANK HOANG Vietnam bank for Agriculture and Rural MAI Development – Hoang Mai branch 6 SWOT Strengths, Weaknesses, Opportunities, Threats EFE External Factor Evaluation IFE Internal factor evaluation GREAT P.T Policy, Economics, Social, Technological GDP Gross Domestic Product SPACE Strategic Position & ACtion Evaluation INTRODUCTION I. The necessity of the topic Currently, the most highlighted issues world-wide, including globalization trend, internationally economic integration and trade liberalization are already making profound 7 impacts on political, economic and socio-cultural spheres of life. The world has been witnessing the soaring advances of technological science, especially information and biology technology. As a result, this development leads to an increase of production forces, a profound change of production structure, consumption distribution, a push of internationalization, economic socialization as well as every country’s participation in work allocation and global cooperation.
In that context, Vietnam economy has acquired all-rounded and stable development and improvements in people’s living standard. Also, this country has made the substantial progress and achieved important consequences from normalization process with The International Monetary Fund (IMF), The World Bank (WB), and The Asian Development Bank (ADB). Vietnam participated in The Asian Free Trade Area (AFTA), The Asia-Europe Meeting (ASEM) in 1996, and The Asia-Pacific Economic Cooperation (APEC) in 1998. Noticeably, Vietnam officially became the member of The World Trade Organization (WTO) in December 2006.
Opening and integration has brought about Vietnam economy both development opportunities, bridging the economic gaps on regional and international scale step by step. At the same time, challenges are expected which need to be dealt with. In particular, to integrate effectively and stand on its own feet in competition, banking line must strive for the most suitable strategies and boost competition capacity and sustainable development. On the other hand, in the context of economic integration, the banks are coping with the negative influences due to rate fluctuation, interest, etc.
and scientific and technological development. These factors will cause the disadvantages and great pressure on domestic banks in a more and more equitable competitive environment. Moreover, corporate strategy is being regarded as one of the important business philosophies, helping banks obtain success in a long run. In the past years, Vietnam Bank for Agricultural and Rural Development- Hoang Mai branch (short-named as Agribank Hoang Mai) has achieved efficiencies in many fields such as human resource, financial potential, technology, etc.
However, Agribank Hoang Mai has shown several remained deficiencies, for example irrational organization structure. Thus, the short-comings need solving soon so as to increase competition in integration economy. 8 In response to the above requirements, doing research and proposing measures in the development strategy by Agribank Hoang Mai in the period of 2010-2015 is very necessary. This not only paves the way for Hoang Mai’s stable development and promoting the acquired fruits but also helps it face challenges and catch opportunities since Vietnam accessed to regional and global economy.
That is the explanation why our group choose the topic “Building development strategy for Agribank Hoang Mai in period of 2010-2015” as our capstone’s report. Purposes of the research The research focused on following issues: - Fundamental theories of strategy and strategic management. - Useful models to analyze the process of establishing and choosing strategy. - The real situation in which Agribank Hoang Mai has been implementing its strategy.
- Analyze factors of the external and internal environment which affect on Agribank Hoang Mai’s strategy - Appropriate solutions to build the development strategy for Agribank Hoang Mai in the period 2010 - 2015. Objective, scale and methodology Objective and scale: The research focuses on current strategic management activities of Agribank Hoang Mai and provides some solutions for the period of 2010-2015. Methodology: The research used two kinds of information sources: Primary and secondary information. - The primary information: Collected from the documents, rules, regulations guidelines and policy orientation of the actual operation of the State Bank as well as the Vietnam Bank for Agriculture & Rural Development - The secondary information: Getting actual data in the branches and the related industries.
Getting the statistics of the statistical offices, ministries 9 The secondary information came from various sources. However, a major percentage of them were from reports about current business situations of Agribank Hoang Mai. Besides, they were also gathered from many opened sources such as internet and books. Specially, we werw referenced the famous international theriories about strategic management such as Philip Kotler, M Porter, Fred R.
Structure of the report CHAPTER 1 : THE CORE THEORIES OF CORPORATE STRATEGIES CHAPTER 2: STRATEGY IMPLEMENTATION OF AGRIBANK HOÀNG MAI CHAPTER 3: BUILDING BUSINESS STRATEGY FOR HOANG MAI IN THE PERIOD 2010-2015 10 CHAPTER 1: THE CORE THEORIES OF CORPORATE STRATEGIES 1. Concepts of strategy and corporate strategy: 1. Concepts of strategy: Kenneth Andrews was the first person who initiated these highlighted ideas in the classic book “The concept of Corporate Strategy”. In his opinion, strategy is what an organization must do based on its strengths and weaknesses in the context of both opportunities and threats.
Bruce Henderson, a strategist and the founder of Boston Consultative Group linked the concepts of strategy and competitive advantage. Competitive advantage refers to a situation when a company is laid inferior than its rival so as to create economic values for customers. “Strategy is long-term orientation and scope of an organization to obtain competitive advantage by identifying its resources in a changing environment, then to meet the demands of market and expectation from skate holders. Porter- the father of competitive theory- said: Firstly, strategy is the creation of valuable and unique positions, including miscellaneous activities.
Secondly, strategy is the selection and swap in competition. Thirdly, strategy is the creation of compatibility among all activities of a company. Business strategy is a comprehensive and long-term plan or a thorough action program for promoting all resources to achieve an enterprise’s planned goals and ensure compatibility with the changes of environment. (Text book “Corporate management” GaMBA September, 2009) Thus, it is said that strategy involves in the targets of enterprises.
Strategy is the way of carrying out actions and decisions which are closely linked together and then selecting combined measures from them. Strategy of businesses should make full use of the basic 11 strengths (resources and capacity) and should project the opportunities and challenges from outside environment. Concepts of corporate strategy: Corporate strategy is a process of analyzing the current environment, predicting the future one, identifying tasks, goals and strategic plan, implementing, assessing strategy to make effective use of resources and reach the expected goals. Tasks of corporate strategy, including 5 closely-related ones, are described as following: Figure 1.1: Tasks of corporate strategy Developing Implement Assess the Setting up and implementation, panorama Selecting strategies manage supervise, and of the strategies to reach selected rectify strategies the targets strategies adjustment and missions Adjustmen Adjustment Innovatabl Innovatabl Renewabl t e/ e/ e 1, 2, 3, 4 adjustment adjustment (Source: “Task year of corporate strategy”, Text book on “Corporate strategy”- Statistics Publishing House, 2009) This is a continuous plan to establish and maintain strategic orientation, business activities of an organization and process of making daily decisions to deal with changing situations and challenges in a business environment.
The role and importance of strategy and corporate strategy: Strategy makes a contribution to making an economic organization get more acumen and more active. Consequently, that enterprise can make rational decisions and control its operation, strengthen competition and gradually ensure its firm position in a market-driven mechanism. In the book “Competitive Strategy” by Michael Porter, he asserted that “Competitive Strategy is included in the relation between a company and its market”. Lacking a proper development strategy, the enterprises are at risk of facing the economic slowdown and even bankruptcy.
A specific strategy will facilitate the enterprises and organizations in grasping the market chances, creating competitive position in the market and uniting operation process towards their goals and tasks. Therefore, the most effective use of limited resources will be promoted.