CAPSTONE PROJECT REPORT BUILDING STRATEGY TO DEVELOP PERSONAL CREDIT SERVICE AT VCB Le Quang Hung Nguyen Anh Tuan (1980) Le Tri Dung Tran Hoai Nam Nguyen Quang Hoa Class: GaMBA01.N06 HANOI 2011 Group 4 Graduation Thesis Class: GaMBA01.N06 GRIGGS UNIVERSITY GLOBAL ADVANCED MASTER OF BUSINESS ADMINISTRATION PROGRAM CAPSTONE PROJECT REPORT BUILDING STRATEGY TO DEVELOP PERSONAL CREDIT SERVICE AT JOINT STOCK COMMERCIAL BANK FOR FOREIGN TRADE OF VIETNAM Group Number: 4 Student’s name: Le Quang Hung Nguyen Anh Tuan (1980) Le Tri Dung Tran Hoai Nam Nguyen Quang Hoa HANOI 2011 ii Group 4 Graduation Thesis Class: GaMBA01.N06 Ha Noi, August 20th, 2011 Dear: Management Board of Class GaMBA01.N06 Group 4 Class GaMBA01.N06 Register outline of Graduation Thesis 1. Le Quang Hung - Group leader 2. Nguyen Anh Tuan (1980) 3. Le Tri Dung 4.
Tran Hoai Nam 5. Nguyen Quang Hoa OUTLINE GRADUATION THESIS TASK: Building strategy to develop personal credit service at Joint Stock Commercial Bank For Foreign Trade of Vietnam (Vietcombank). iii Group 4 Graduation Thesis Class: GaMBA01.N06 TABLE OF CONTENTS Page 1. Chapter I: The Basic Theoretical Issues of Strategy to Development Credit Product for Commercial Banks 3 1.
Overview of Strategic Management 3 1. Strategic Management Model 3 1. Process of Planning Strategy 5 1. Analysis of Business Environment 5 1.
Identification of Purpose, Objectives of The Strategy 7 1. Overview of Personal Credit Services in Commercial Banks 9 1. Overview of Commercial Banks and Banking Services 9 1. The Concept of Commercial Banks (CBs) 9 1.
The Concept of Banking Services 10 1. Overview of Personal Credit Service in Commercial Banks 10 1. The Concept of Ceredit Services in Commercial Banks 10 1. The Role of Credit Services (CS) 11 1.
Personal Credit Services (PCS) 12 1. The Tools Used in Planning Strategy 12 1. Matrix Used to Assess Internal Factor Environmental - IFE 13 1. Matrix Used to Assess External Factor Environmental - EFE 13 1.
Michael Porter Model 15 1. Chapter II: The Status of The Development Strategy of iv Group 4 Graduation Thesis Class: GaMBA01.N06 Personal Credit Services of Commercial Banks, Joint-Stock for Foreign Trade of Vietnam 17 2. An Overview of Business Status of Joint-Stock Commercial Banks for Foreign Trade of Vietnam (Vietcombank) 17 2. The Process of Formation and Development of Vietcombank 17 2.
The Organizational Structure of Vietcombank 18 2. Overview of Operations of Vietcombank 21 2. Business Status of Credit Service 23 2. Development Activities of Banking Services 24 2.
The Quality of Credit Fund and Risk Provisions 25 2. Status of The Development Strategy of Personal Credit Services in Vietcombank 25 2. Status Business of Personal Credit Services in Vietcombank 25 2. Types of Product 25 2.
Revenue and Market Share 28 2. Quality of Service 29 2. Assessment of Planning Strategy of Personal Credit Services in Vietcombank 30 2. Analysis of the Impact of Business Environment on Personal Credit Services in Vietcombank 32 2.
Analysis of the Impact of External Factor Environmental - PEST Model 32 2. Institutional Factors - Law 32 2. The Socio-Cultural Factors 33 2. Technological Factors – Technical Factors 34 2.
Analysis of the Impact of Sector Environmental Factor 34 2. Analysis of the Impact of Internal Environmental Factors 36 2. SWOT Synthetic Analysis 36 4. Chapter III: Propose Strategies to Develop Personal Credit v Group 4 Graduation Thesis Class: GaMBA01.N06 Services for Commercial Bank For Foreign Trade of Vietnam 38 3.
Strategic Orientation for Development of Personal Credit Services of Commercial Banks, Joint-Stock Bank for Foreign Trade of Vietnam 38 3. Orientations for Development of Vietcombank 38 3. Orientations for Development of Personal Credit Services of Vietcombank 38 3. The Strategic Solution Strategy of Personal Credit Services of Vietcombank 39 3.
Strategic Feasible Proposal 39 3. The Solution to Implement Strategy 41 3. Solution to Complete Product Category 43 3. Strengthening Risk Management Competence 46 3.
Roadmap for Implementation of Strategic Solutions 47 3. Prediction of Arising Situations and Proposal Solutions 48 5. REFERENCES 51 vi Group 4 Graduation Thesis Class: GaMBA01.N06 LIST OF ABBREVIATIONS Vietcombank Joint Stock Commercial Bank For Foreign Trade of Vietnam VCB Joint Stock Commercial Bank For Foreign Trade of Vietnam CB Commercial Bank PC Personal Credit SE Social Economy VND Vietnam Dong ACB Asia Commercial Bank HSBC Hong Kong and Shanghai Banking Corporation OCB Oceanbank TCB Techcombank SMS Short Message Service vii Group 4 Graduation Thesis Class: GaMBA01.N06 LIST OF TABLES Table 1. Matrix Used to Assess Internal Factor Environmental 13 Table 1.
Matrix Used to Assess External Factor Environmental 13 Table 2. Labour Structure According to Working Years 19 Table 2. Labor Structure by Degree 19 Table 2. Mobilizing Capital Activities 21 Table 2.
The Structure of Mobilizing Capital Between Foreign Currency and VND 22 Table 2. Credit Activities Over Years 23 Table 2. Personal Loans of Some Banks 27 Table 2. Structure of Credit According to Customers 28 viii Group 4 Graduation Thesis Class: GaMBA01.N06 LIST OF FIGURES Figure 1.
Strategic Management Model 4 Figure 1. External Environment 6 Figure 1. SWOT Matrix 14 Figure 1. BCG Matrix 15 Figure 1.
Michael Porter Matrix 15 Figure 2. Organization of VIETCOMBANK 20 Figure 2. SWOT Matrix of Vietcombank 37 ix INTRODUCTION The term "Retail Bank" shall be understood and applied in practice in many developed countries around the world. Retail bank includes banking services for customers who are households and individuals.
In developed countries, a retail bank is a good business because it brings huge benefits to both consumers and banks. Personal Credit Services is a main array of activities of a retail bank. Personal Credit Service (also known as credit services for individual customers) has a strong influence on production, consumption and promotion for economic development. Therefore, personal credit service is a main business of banks, even some banks, financial institutions only deploy personal credit service.
In Vietnam, personal credit service has been implemented for a long time. However, personal credit service of banks is very limited and is not focused much. For almost 10 years, mainstream deployment of retail banking activities appeared and have developed strongly and led to the development of personal credit service. Joint Stock Commercial Bank For Foreign Trade of Vietnam is one of three major banks, which has diverse operations, higher business performance, but not focused on developing personal credit services.
Developing and implementing strategy to develop personal credit services in Vietcombank may help the bank develop diversely, sustainably and strongly. Based on the practical development of Vietnam's financial market situation and the status of deployment of personal credit services in Vietcombank, the co- authors decided to choose the theme: Building strategy to develop personal credit service at Joint Stock Commercial Bank For Foreign Trade of Vietnam (Vietcombank) for graduation thesis. Group 4 Graduation Thesis Class: GaMBA01.N06 - The organization of the graduation thesis: Chapter I: The Basic Theoretical Issues of Strategy to Development Credit Product for Commercial Banks Chapter II: Status of the Development Strategy of Personal Credit Services of Commercial Banks, Joint-Stock for Foreign Trade of Vietnam Chapter III: Propose Strategies to Develop Personal Credit Services for Commercial Bank For Foreign Trade of Vietnam 2 Group 4 Graduation Thesis Class: GaMBA01.N06 Chapter I: The Basic Theoretical Issues of Strategy to Development Credit Product for Commercial Banks 1. Overview of Strategic Management The strategy is a concept emerged a long time ago in the history of human development.
Initially, this concept was used for the operation of the military. Business strategy concept is derived from war strategy, military but this concept had been developped in compliance with characteristics of business. In 1962, Chandler initiated to develop the concept of business strategy and strategic business management. According to Chandler: Business strategy is the identification of objectives and long-term goals of the enterprise and the adoption of chain of action as well as allocattion of the necessary resources to implement these goals.
Through the concept of business strategy, we can see, Strategic Management is a set of management decisions and activities to achieve long-term goals of the company. Strategic management consists of a sery of operations: firstly, research activities on business environment, identifying goals, objectives for the company, then strategic design activities, implementing strategy; adjusting strategy and finally testing and controlling strategies. In the scope of this thesis, the authors focus only on mentioning strategic planning activities including from research on the business environment to strategic designing activities. Strategic Management Model Strategic management model is a collection of all the stages of forming and implementing strategy as well as other factors affecting the operations strategy.
Through this model, the administrator will see the various impating factors then from that they can determine starategic Intention, strategic Mission and then they can imagine strategy formation stage, implementation of strategy,… 3 Group 4 Graduation Thesis Class: GaMBA01.N06 Input External Strategic activities environment Strategic Intention Internal environment Making strategy Implimenting strategy Strategy at level Active Strategy at Company Structure of enterprise competence level management and control of cooperation Merger International Co-operation Strategic Initiation and and strategy Strategy leadership Innovation Restructuring Result of strategy Competence strategy with above-average Feedback profitability Figure 1. Strategic Management Model Input of strategic planning process is the state of the inside and outside environment of the enterprise (named the business environment of enterprises). On the basis of determining the environmental impact of business environment business, enterprises will conduct an examination of strategic intent (purpose), strategic mission (target) of the enterprise in implementation of the strategy. Strategic action consists of two activities are: Developing strategy and implementing strategy.
4 Group 4 Graduation Thesis Class: GaMBA01.N06 Final stage in a process of strategic management is to evaluate results of the strategy. However, due to the changing conditions of the enterprises themselves and the business environment, in the process of implementing the strategy usually somewhat lose accuracy, reasonableness so that in each each stage of the strategy, business still have to regularly adjust the activities in each phase of the strategic management process or perform some repetitive steps in the strategic management process. Process of Planning Strategy Strategic planning activities include many activities which are closely linked together, in a certain sequence. Strategic planning process includes the following activities: Analyzing the environmental impact of business objectives, ditermining goals of the enterprise, designing (build) the feasibile strategy and choose the fisible strategy.
Analyze of Business Environment The business environment of enterprises including: external business environment and internal business environment. External business environment, including: general environment (also called macro-environment forces), industry environment and competitive environment. Internal environment (internal environment) of enterprises formed on the basis of factors such as: resources, capabilities, core capabilities. External Environment Analyzing external environment helps businesses identify market opportunities, target market, thereby determining the types of products, quality level, product level as well as to predict potential market.
General environment (macro-environment) is a broad social sphere, which affect an industry and the business sector. General environmental factors, including: Demographics, Economics, Politics/Law, Culture - Social Engineering - Technology and Globalization. 5 Group 4 Graduation Thesis Class: GaMBA01.N06 Environment of sector directly affects the operation of the business. This is the most typical activities significantly affected the competitive actions and reactions of business competition.
The key factors in the environment sector affecting the business activities include: threat of new companies, the power of supplier, power of buyers, threat of substitutes, intensity of competition in the industry. Economy Environment Culture Demographics of sector - Society Threat of new companies, the power of supplier, power of buyers Threat of substitutes Intensity of competition Competitive Political- law environment Global Technology Figure 1. External Environment Regarding the competitive environment, this is essentially part of environment of sector. However, this environmental impacts directly and strongly to business and competition of the enterprise.
So it is considered as an independent 6 Group 4 Graduation Thesis Class: GaMBA01. Analyzing competitive environment shows relative position of the enterprise compared with competitors’s one in the industry as well as for each specific opponent.