GRIGGS UNIVERSITY GLOBAL ADVANCED MASTER OF BUSINESS ADMINISTRATION PROGRAM STRATEGY FOR DEVELOPING RETAIL BANKING SERVICE IN SOUTH EAST ASIA COMMERCIAL JOINT STOCK BANK IN PERIOD OF 2012-2016 Group Number: 01 - Vu Van Khiem - Le Ngoc Diep - Bui Thị Quynh Nga - Nguyen Viet Hung - Do Thi Ngoc Van Class: X0310 HANOI: 2011 ACKNOWLEDGEMENT On behalf of the group, we would like to send gratitude to dedicated support of lecturers in Center for Educational Technology and Career Development ETC, Post University Department – Hanoi National University; Griggs University – The US. We also expressed our thanks to General Director of South East Asia Commercial Joint Stock Bank, Manager in Planning – Investment department, Financial – Accounting department providing data for completion of this capstone project. Although the group tried our best to well do this capstone project, due to limited knowledge, this capstone project has limitations. Thus, the group wishes to receive significant contribution of lecturers, colleagues and friends for the most effect COMMITMENT Group 01 Class X0310 commit this is our own research project.
Data given in this capstone project is honest and has been not published in any scientific projects. Hanoi, date 30 month 11 year 2011 Group leader 1 INTRODUCTION 1.1 Context and necessity of the subject 1.2 Context of subject Recently, together with industrialization and modernization, the process of urbanization in Vietnam has strong development. According to estimation, growth rate of urbanization in Vietnam is about 30%. Furthermore, Vietnam is the nation having stable growth rate of GDP at 6-8% year since the world economy faced up with difficulties resulted from financial crisis.
Accompany by the economic development is social development. Vietnam becomes one of countries the most development of information technology and internet in the world. From the above reasons, it creates favorable conditions for development of retail banking services and products. Nevertheless, with the existence of more than 100 commercial banks as present, in order to have sustainable development and mark position in market, banks must have right and sustainable development strategies on the basis of analyzing internal factors, influences of external environment to retail banking service business.2 The necessity of subject 1.1 Reality South East Asia Commercial Joint Stock Bank is one of the largest commercial banks in Vietnam at present.
After more than 7 years of foundation and development, the bank continuously expands their operations with annual growth rate up to 18%. The significant contribution to growth of SeABank over the past year is development of retail banking service. In accordance with development of economy, scientific technology; retail banking services become attractive business model for Vietnamese banks. In order to maintain this market share, banks also face up with many difficulties and threats resulted from integration process.2 Reasons to select topic From analysis mentioned above, we can see the role of retail banking service business to development of SeABank in particular and Vietnamese 2 commercial banks in general.
Having awareness of that importance, there have been some researches and conclusions about this operation such as: Topic: “Developing retail banking service in Vietnam, reality and solutions”, Associate Professor – Doctor Nguyen Dac Hung – Banking Academy. This topic provided the general view about operations for developing retail banking service at commercial banks as well as introduced solutions to improve above operations with banks in general. Topic: “Retail banking services in Vietnam in integration process”, Doctor Nguyen Van Tien – Vice Dean of Banking Faculty, Banking Academy. The topic pointed out risks for retail banking products, the opportunities for banks in integration process.
Topics had meaningful conclusions about retail banking operations in general. In order to apply them into building strategy for a specific bank in this area, the topic “Strategy for developing retail banking service in South East Asia Commercial Joint Stock Bank in period of 2012-2016” was selected with the aims at proposing right strategies for SeABank to expand market share in retail banking area as well as control threats from this business model. Objectives of capstone project From analyzing operations of SeABank from 1994 up to now, the subject applied theories of strategic management into business activities in general and retail banking in particular. Furthermore, the subject also drives to following three specific objectives: + To manage human resource and capital effectively + To promote quality of retail banking service + To expand market share in retail banking operation In which, human resource and capital management is considered as key factor about service quality and market share expansion in area of retail banking.
Researching objects and scope Topic focused on researching operations of building business strategy of SeABank in general and retail banking in particular. Researching scope is business activity of SeABank with comparison with business activity of other competitors within industry including, Sacombank, ACB, Techcombank and Dong A Bank. Researching methods Topic used theories about strategic management into analyze primary and secondary information. Additionally, provided information comes from following sources: + Consulting ideas of experts in finance and real estate area + Trading result in general and retail banking service in particular from 2001 up to now + Information from newspaper, magazine and internet Information and data from above sources were analyzed and summarized to introduce strategies for SeABank in retail banking service.
In order to have these strategies, capstone project used following tools and methods: + External factor evaluation, internal factor evaluation and SWOT matrix + Michael Porter’s five force model, PEST model 5. Meaning of capstone project This topic is built on the basis of theories relating to strategic management and application of theories to analyze strengths, weaknesses, opportunities and threats of SeABank. From that, identify reality, build, select and propose solution implementing business strategy for SeABank in period of 2012 - 2016. At present, the world and national economy has complex fluctuation.
Therefore, introduced solutions only have long term orientation not detailed action program for SeABank. Structure of capstone project Apart from introduction, conclusion and annex; this capstone project is divided into three chapters as following: Chapter 1: Overview about building business strategy and retail banking service business in commercial banks Chapter 2: Analyzing business environment of retail banking service area in SeABank Chapter 3: Selecting strategies and solutions for implementing retail banking service business strategy of SeABank in period of 2012-2016 5 TABLE OF CONTENTS TABLE OF CONTENTS LIST OF SYMBOLS AND ABBREVIATIONS LIST OF FIGURE AND TABLE10 CHAPTER 1: OVERVIEW ABOUT STRATEGIC MANAGEMENT AND RETAIL BUSINESS IN COMMERCIAL BANK.1 Theories about building and managing strategy.1 Concept about strategy and strategic management.2 The role of building strategy for enterprise.2 Steps of researching strategy.1 Analyzing external environment.3 Tools used to analyze and select strategy.1 Internal Factor Evaluation Matrix (IFE).2 External Factor Evaluation Matrix (EFE).4 Retail business operations in commercial bank.1 Concept about retail business in commercial bank.2 Features of retail banking service.24 CHAPTER 2: ANALYZING OPERATIONAL ENVIRONMENT OF SEA BANK IN RETAIL BANKING SERVICE.1 General information about Seabank.1 History about foundation and development.2 Structure and organization.3 Retail banking services and products.4 Vision and mission.2 Analyzing operational environment of SeABank.1 External environment analysis.2 Micro environment analysis (Michael Porter’s five forces model).3 External Factor Evaluation Matrix.2 Internal environment analysis.1 Value chain of organization.4 Culture and reputation of bank.5 Internal Factor Evaluation Matrix IFE.3 SWOT analysis for retail banking operation in SeABank.5 SWOT matrix of SeABank.64 CHAPTER 3: SELETING STRATEGIES AND SOLUTIONS FOR IMPLEMENTING BUSINESS STRATEGY IN TERM OF RETAIL BANKING SERVICE OF SEABANK IN PERIOD OF 2012-2016.1 The long term development orientation of SeABank.2 Selecting business strategy in term of retail banking service.1 SWOT matrix based strategy selection.2 IE matrix based strategy selection.3 Solutions for implementing strategies.1 Complete organization structure for retail banking service.2 Promote researching, diversifying and developing retail banking service.3 Diversify distribution channel and enhance efficiency.4 Strengthen communication and marketing for retail banking service.4 Roadmap for implementing strategy.90 8 LIST OF SYMBOLS AND ABBREVIATIONS No Symbol Meaning 1 ADB Asia Development Bank 2 ATM Automated teller machine 3 EFE External factor evaluation matrix 4 GDP Gross domestic product 5 IFE Internal factor evaluation matrix 6 NHBL Retail banking 7 NHTM Commercial bank 8 MIC Ministry of Information and Communications 9 POS Point of sale 10 PPP Purchasing power parity 11 SeABank South East Asia Commercial Joint Stock Bank 12 WB World Bank 13 WTO World Trade Organization 9 LIST OF FIGURE AND TABLE List of figure Figure 1.2: Michael Porter’s five forces model.1: Organization structure of SeABank.2: Retail banking products of SeABank.3: Growth rate of customers in period of 2008-2010.4: Growth rate of customers in 2008-2010.5: Growth rate of active cards in period of 2008-2010.6: Credit growth rate in period of 2008-2010.7: Charter capital of commercial banks in 2010.8: Open coefficienct of Vietnam economy (%).61 List of table Table1.1: IE Combined matrix.1: External Factor Evaluation Matrix EFE.2: Tradition condition of 2010.3: Financial condition in 2009-2010.4: Internal Factor Evaluation Matrix.6: SWOT matrix of SeABank.1: IE Matrix of SeABank.2 Roadmap for implementing retail banking service in period of 2012-201684 10 CHAPTER 1: OVERVIEW ABOUT STRATEGIC MANAGEMENT AND RETAIL BUSINESS IN COMMERCIAL BANK 1.1 Theories about building and managing strategy 1.1 Concept about strategy and strategic management "Strategy" is a concept having been presented and widely used in many areas for a long time. “Strategy” was first used in military filed, then moved to politics. Since 50-60s of the 20 century, the concept of strategy was used in socio-economy area.
"Strategy" is usually understood as the way and methods solving given tasks in comprehension, overall and long term. United Industry Development Organization (UNIDO) said that: "Normally, a development strategy may be described as a draft for development process in order to gained defined goals for a term from 10 – 20 years; it drives strategy planners in mobilizing and distributing resources. In general, we can say that strategy provides a vision of an expected development process and consistency in methods of implementation. Furthermore, strategy may be foundation for comprehensive development plan in short term, midterm or a general recognition without binding of insiders in that term about outlook, challenges and satisfaction".
There are many definitions about strategy. David, in his view, (2003) strategy consists of means reaching long term goals. According to Michael E. Porter (1996), strategy is creation of valuable and unique position including different operations.
Generally, concepts and definitions about strategy, despite being different in expression, always cover following contents: + To define short term and long term goals of enterprise. + To propose and select predetermined plans. + To conduct and distribute resources aimed at implementing those goals. In addition to the understanding about strategy, leaders in company also need to know to manage it and make right decisions.
If applicable, their company will well do strategy known as strategic management. In general way: "Strategic management 11 is defined as a collection of decisions and actions implemented via results of planning, enforcing and evaluating strategies. It is designed to gain long term.2 The role of building strategy for enterprise 1.1 Gains Many researches show that: if enterprises have obvious business strategy, they will have more feasible action program rather than the ones not having strategy or obvious one. Business strategy is guideline for action of enterprise.
As a result, enterprise will gained predetermined goals. Furthermore, business strategy is bridge to make short term goals deviated from long term ones. The development of enterprise is compatible and comprehensive. Thus, gains of strategy and strategic management have been surveyed in many nations, industries and the new companies with different size.
In summary, we have following three features: - Business strategy and strategic management help enterprise have specific action program to gained predetermined goals. - Business strategy helps enterprise define central goals. - Business strategy helps enterprise have specific and in time measures meeting changes in business environment. Nevertheless, in order to achieve above gains, it is a must for enterprise to have thorough analysis about their position, role, internal features as well as opportunities and threats coming from business environment.