-----------------*T *---------------- CAPSTONE PROJECT TOPIC: FORMULATING STRATEGY AT VIETINBANK SECURITIES JOINT STOCK COMPANY IN 2011 – 2015 PERIOD Group: 03 Chu Manh Hien Nguyen Thi Thu Phuong Le Hai Dang Dam Cong Loi Class: GaMBA01.X03 HANOI, November, 2010 APPENDIX THANK-YOU. 3 LIST OF DIAGRAM AND TABLE………. 3 Some basic concepts on securities activity. Basic matters related to strategy and business strategy.
Viewpoints on strategy. Types of business strategies. The role of business strategy in modern business environment. Determining missions and objectives of the organization.
Determining mission of the organization. Influence of external environment on business strategies. Business-unit-level strategy. FORMULATING BUSINESS DEVELOPMENT STRATEGY OF VIETINBANK SECURITIES JOINT STOCK COMPANY.
Establishment and development. Organizational structure : Diagram 2. Issues on the company’s formulation of business development strategy. External environment analysis.
Sectorial environment analysis. Internal environment analysis. Professional activities: Diagram 2. Potential competitive edge analysis.
Forming orientation on business strategy of VietinBankSc via SWOT matrix. STRATEGIC MEASURES AND RECOMMENDATIONS. Concretizing strategic measures. Designing new products.
Completing implementation strategy.6 Completing apparatus structure.8 Seriously implementing checking activity. To sectorial environment.56 2 THANK-YOU We would like to thank Center for Technology Educational and Career Development (ETC) – Vietnam National University, and all the teachers, doctors, professors, and other staffs of the Department has dedicated teaching and guiding us during the term in GaMBA01.X03, and helped us complete the course successfully. The teachers gave us the skills and knowledge of business administration, this is the basic foundation necessary for us to write this topic as applied in practical work. We would like to thank Vietnam Industrial and Commercial Bank Securities Corporation has supported us in providing data as well as working sessions to get an overview and practical strategies for planning out the activity strategy.
And We also thank the colleagues, friends and family for giving us their encouragement. Respectfully yours! Group 03 3 LIST OF DIAGRAM AND TABLE Diagram 1.1: Process of strategy formulation.2: Five forces model by M.Value chain of organization.4: Table of SWOT analysis of the company.5: Table of changing concentrated growth strategy.6: Table of changing integrated growth strategy.3 List of 10 securities companies having highest chartered capital in Vietnam securities market.4: Top 10 securities companies in brokerage market share in quarter III, 2010.5: The number of customers of VietinBankSc by the end of September 2010.6: Book value on December 31, 2009.7 : Main financial criteria.8: Professional Activties ……………………………………………………39 Table 2.11: Comparing some criteria of VietinBankSc with rivals and the whole sector.12: SWOT matrix applied for VietinBankSc.1: Projected revenue structure by 2015.51 4 PREFACE The year 2000 marked the establishment of Vietnam securities market with four securities companies. In recent years, the upheavals of Vietnam securities market have associated by the formation of many securities companies. From 4 securities companies in 2000, up to now, securities market has consisted of over 100 securities companies.
The sudden change in the number of securities companies in this period has made securities market become eventful and facilitated their representative companies to participate in securities market. However, that there are over 100 securities companies also has a great influence on business activities of securities companies because their market shares have been increasingly contracted. In addition, the completely abolishment of protection barriers to finance sector in the integration trend in to the world and regional economic organizations have brought huge challenges to the system of domestic securities companies, even some companies will have to accept to be acquisited, merged or retreated from the market due to lack of competitiveness, typically the retreat of Northern securities market of Vincom Securities Joint Stock Company and followed by being acquisited by one of the company’s partners. Heading into the final months of 2010, but the severe effect of the global financial crisis seems to remain.
The world securities markets have not been stabilized. Meanwhile, Vietnam Securities market is amid a difficult time when securities codes on the electric board are always flooded in red and VN index have kept on decreasing for the past months. Accordingly, transaction price also dropped dramatically and at the same time, HNX index is also below 100 points (the benchmark when Hanoi Stock Exchange officially came into operation). In that context, the search and formation of a stable measure and business strategy for securities companies are very essential.
An effective business strategy not only helps companies be stable and develop sustainably, but also is sound measure to stabilize to establishing securities market amid current post-crisis period. For above reasons, the topic “Formulating strategy at VietinBank Securities Company” was selected by our group with a significant objective and implication to the company as well as the whole securities market. 5 CHAPTER 1: OVERVIEW ON THEORETICAL BASE I. Basic concepts of securities and securities market Some basic concepts on securities activity1 Securities Securities mean evidence certifying the holder’s legal rights and benefits over the relevant part of assets or capital of the issuer.
Securities shall be in the form of share certificates, book-entries or electronic data and shall include: Shares, bonds, fund certificates; Rights to purchase shares, warrants, call options, put options, future contracts or groups of securities or securities indexes. Securities market Vietnam securities market is a channel to mobilize capital for the economy, provides investment environment for the public, creates liquidity for securities and creates condition helping the Government implement macro policies. Securities companies On theory, securities companies are intermediary financial institution carrying out tasks in securities market for listed, issued organizations, and investors. Under the law, securities companies are perceived as joint stock companies or limited companies established in accordance with Vietnamese Law to trade under the business license issued by the State Securities Commission of Vietnam.2 Role of securities companies Creating capital mobilization mechanism for issuers Raising efficiency for investors, saving time and minimizing risks via consultancy Making contribution to establishing the market and regulating price Making contribution to enhancing liquidity of financial products Providing information for management agencies to monitor the market Fields of operation of securities companies 1 Securities Law No 70/2006/QH11, Chapter 1, Article 6.
2 Securities Law No. 70/2006/QH11 6 Securities brokerage means the operation of a securities company acting as an intermediary to carry out securities buying or selling orders on behalf of the customers. Securities proprietary dealing means the securities company’s engagement in buying and selling securities for its own account. Underwriting means the commitment made by an underwriter to the issuer to complete procedures prior to a securities offering, to buy a part or all the securities of the issuer for resale or to buy the remaining undistributed portion of securities from the issuer; or to assist the issuer in distribution of securities to the public.
Securities investment advisory means the services provided by the securities companies to investors regarding securities analysis results, or announcement of analysis reports and recommendations relating to securities. Basic matters related to strategy and business strategy 1. Viewpoints on strategy According to traditional view, strategy is perceived as follows: “Strategy is the research to find out an appropriate competitive position for an industry and a main field of operation in which competitive activities happen.”- According to Michael Porter. Strategy under this viewpoint focuses on competition.
3 According to Alfred Chandler4, “Strategy is the determination of enterprises’ basic and long-term goals as well as action programs along with the distribution of necessary resources to realize those goals”. Jame Quinn at Darmouth University defined, “Strategy is the pattern or plan of an organization to combine main roles, policies and order of action in a united form”.org/wiki/Porter_generic_strategies ( June, 10, 2009) 4 http://www. Strategy for change: Logical Inscrementalism. Homewood, Illois, Irwin.
7 Definition by William F.Gluek6, “Strategy is a united, comprehensive and cooperative plan designed to ensure that basic goals of enterprises are implemented successfully”. The formulation of strategy according to planning method is no longer suitable because the reality has proved that official and detailed plans are sometimes not successful; therefore, there must be coping plans in business process. Thus, the traditional viewpoint has shown its weaknesses. The essence of strategy that is a science and an art to achieve goals is also undefined.
In that context, modern viewpoints on strategy were formed and replaced traditional ones. Modern viewpoints try to return to the changing business environment. Therefore, modern viewpoints on strategy do not emphasize the calculating and planning but focusing on the selection of strategies that fit the set goals of the organizations. Types of business strategies 2.
Classification of business strategies by levels of strategies When classifying strategies according to levels, people often divide them into: + Corporate-level strategy (or master strategy): this strategy is designed to the whole company on its engaged fields. The goal of this strategy shows the destination that a company wants to reach and it is viewed thoroughly on all operations that the company pursues as well as the orientation or measure to reach that destination. + Business-unit-level strategy (field): is designed for a narrowed specializing business. In case, company only trades in one field, business-unit-level strategy is also corporate-level one.
+ Functional-level strategy: is the strategy of each separate function of the company such as finance, marketing, human resource. Functional-level strategy can be viewed as supporting strategy to successfully implement business-level and corporate- level strategies. Classification of business strategies by their content Based on content of strategies, French managers assumed that business strategies consist of: 6 Lawrence R Jauch and William F Gluek(1989)Business Policy and Strategic Management 8 + Trading strategy: is the one applied to all trading activities of a company from purchasing and supplying inputs to distributing and consuming outputs of that company. + Technological and technical strategy + Financial strategy + Human strategy: shows the orientation, method of mobilizing and using human resources to successfully realize above strategies.
Classification of business strategy by processes of strategy Business strategies include: + Orientation strategy mentions the big orientation of goals of an enterprise, orientation and measures to achieve those goals. It is built based on the result of environmental analysis and inter-enterprise analysis. The strategy orients basic the basic strategy options of the enterprise. + Action strategy: is the action option of an enterprise in each specific situation and projection on adjusting strategy.
Action strategy can be selected from the strategies that were built while forming orientation strategy or may be selected from emerging strategy in the process of implementing orientation strategy. The role of business strategy in modern business environment In modern business environment, strategy has played an increasing importance role in the existence and development of enterprises, it is presented by: Strategy is the tool to generalize long-term goals of enterprises or organizations. Goals of enterprises are specific destination that the enterprises want to reach in its business strategy. The specification and documentation of enterprises’ goals via strategy will help members in enterprises and organization well-aware of the destination, so they know what to do.
It helps enterprises realize their goals. Content of formulating strategies Despite having many different viewpoints and methods of approach in terms of the strategy formulation, generally, strategy is often built under following steps: 9 Diagram 1.1: Process of strategy formulation Diagram 1.1: Process of strategy formulation Formation Implementation (Deciding what to do) (Reaching the result) Indentifying Structure of the opportunities and COMPANY enterprises and relations: risks sTrategy Labor distribution, cooperation among Determining Type of departments and resources: materials, goal and information system. technology, finance determinat and management of ion policy Process of organization the enterprise of the and action company Standards and methods to and its measure and motivation Human values and business system determination of lines Control system board of leaders Selection and Highest leader of the company promotion Affirming non- Deciding strategy – Organizing human resource economic responsibility to the society 1. Determining missions and objectives of the organization 1.
Determining mission of the organization People may think that the objectives of an organization can be considered as the reason for existence of that organization.