Global Advanced Master of Business Administration CAPSTONE FORMULATION OF RETAIL BANKING SYSTEM DEVELOPMENT STRATEGY OF VIETINBANK BA DINH IN THE PERIOD OF 2012 - 2015 Group 10: Nguyen Duc Tu Ha Ngoc Dung Nguyen Van Hieu Nguyen Thi Khanh Chi Ha Noi 2011 Gamba 01.X0810_Strategic Management _group 10 Page 1 Global Advanced Master of Business Administration TABLE OF CONTENT INTRODUCTION. Objectives of the study. Object and scope of the study. Methodology of the study.56 CHAPTER: THEORETICAL BACK GROUND OF BUSINESS STRATEGY FORMULATION.
OVERVIEW OF BUSINESS STRAEGY. Affecting factors to strategies of an enterprise.2 PROCESS OF STRATEGY FORMULATION.1 Strategy formulation by SWOT analysis.2 Tools for strategy formulation.ROLE OF BUSINESS STRATEGY FORMULATION TO ENTERPRISES. CHAPTER II: REAL SITUATION OF RETIAL BANKING BUSINESS AT VIETINBANK BRANCH BA DINH 2. INTRODUCTION OF VIETINBANK BRANCH BA DINH.1 Process of establishment and development.2 Organizational structure of the Branch.3 Products and services.
REAL SITUATION OF RETAIL BANKING BUSINESS ACTIVITIES AT VIETINBANK – BA DINH BRANCH 2.1 Individual mobilization and individual credits 2.2 On card services:.3 Potential of banks in the region.3 ANALYSIS OF ENVIRONMENT FACTORS AFFECTING RETAIL BANKING SERVICE AT VIETINBANK BRANCH BA DINH.1 External environment analysis.2 External Factor Evaluation (EFE) Matrix.3 Competitive profile matrix.X0810_Strategic Management _group 10 Page 2 Global Advanced Master of Business Administration 2.4 Internal factor analysis.5 Internal Factor Evaluation (IFE) Matrix. STRATEGIC CONTENT OF RETAIL BANKING OF VIETINBANK BRANCH BA DINH IN 2012 – 2015 PERIOD 3.1 ORIENTATION ON EXPANDING AND DEVELOPING RETAIL BANKING BUSINESS OF VIETINBANK BRANCH BA DINH IN 2012 – 2015 PERIOD 3.1 Motto of VietinBank Branch Ba Dinh.2 Objective of business strategy by 2015.2 SELECTING STRATEGY ON EXPANDING AND DEVELOPING RETAIL BANKING BUSINESS OF VIETINBANK BRANCH BA DINH IN 2012 – 2015 PERIOD 3.4 Determination on strategy of VietinBank Branch Ba Dinh in 2012 – 2015 period. SOLUTIONS TO IMPLEMENT THE STRATEGY ON RETAIL BANKING BUSINESS IN VIETINBANK BRANCH BA DINH IN 2012 – 2015 PERIOD 3.1 Diversifying the investment portfolios.3 Expanding the network and attracting customers. Improving organizational model and boosting quality of human resources.
Recommendations to the State and the Government. Recommendations to the State Bank of Vietnam (SBV). Recommendations to Vietnam Joint Stock Commercial Bank for Industry and Trade.X0810_Strategic Management _group 10 Page 3 Global Advanced Master of Business Administration LIST OF FIGURE Figure 1.1: Process of strategy formulation by SWOT.3 -Organizational structure of the Head Office. LIST OF ABBREVIATIONS VietinBank Vietnam Joint Stock Commercial Bank for Industry and Trade VietComBank Joint Stock Commercial Bank for Foreign Trade of Vietnam TechcomBank Vietnam Technological and Commercial Joint Stock Bank ATM Automated teller machine CA Competitive Advantage ES Enviroment Environment Stability EFE External Factor Evaluation Matrix FS Financials Strengths GDP Gross domestic product IS Internals Strenghts IFE Internal Factor Evaluation Matrix IE Internal External Matrix QSPM Quantitative Strategic Planning Matrix SWOT Strengths, Weaknesses, Opportunities,Threats SO Strengths , Opportunities ST Strengths, Threats WO Weaknesses, Opportunities WT Weaknesses, Threats SPACE Strategic Position & Action Evaluation matrix Gamba 01.X0810_Strategic Management _group 10 Page 4 Global Advanced Master of Business Administration INTRODUCTION 1.
Theoretical background Under the situation of an increasingly competitive business environment due to the globally economic integration, Vietnamese companies operating in all industries have to face fierce competition of international rivals with high financial capacity and long history. The pressures are much higher as in the banking sector; VietinBank Branch Ba Dinh has not got acquainted with the competition from other commercial banks in the market. Although VietinBank is one of the leading banks in implementing the State’s monetary policies, constraining and reducing inflation, stabilizing monetary market and enhancing economic development, it is required that the bank, under the pressure of competition and capitalization, should obtain the right opportunities to develop sources of competitive advantages. In order to develop a competitive advantage, as well as increase competitiveness in the banking system, VietinBank Branch Ba Dinhshould well create formulate 2.
Objectives of the study - Organizing and reviewing literature and theories of strategic management; - Analyzing and evaluating business performance of VietinBank Branch Ba Dinh; - Proposing strategic solutions for VietinBank Branch Ba Dinh in 2012- 2015 period. Object and scope of the study - Scope: within the Vietnamese market during the period of 2012- 2015. - Objects: Formulation of Retail banking system decelopment strategy of VietinBank Ba Dinh Retail banking can be considered as a strategic business unit (SBU) of VietinBank Ba Dinh because of the following reasons: - Retail Banking department (“Department”) is an independent and fully functional department operated as both cost and profit center of the branch.X0810_Strategic Management _group 10 Page 5 Global Advanced Master of Business Administration - VietInBank Ba Dinh has fully delegates authority and responsibility to a senior director of the department who reports directly to the General Director of VietinBank. The Department has its own budget, marketing plan, competitors as well as manpower.
The contribution in terms of money of the department is clearly calculated and monitored by VietInBank Ba Dinh. Methodology of the study + Data collection method - Data offered by VietinBank Branch Ba Dinh including annual reports, performance reports, equity and liability reports and other related data; - Data collected from financial reports, internet, newspapers and magazines, etc. relating to the banking markets and other commercial banks. + Data analysis method - Research methods of secondary data reviewing the market’s scale, structure and trends; - Comparative method: a popular method.
This method provides an explanation about the extent of relationship between different variables including absolute or relative ones in term of times (one period over another period) or place (one bank over another bank), etc. - Individual evaluation method: analysis of each issue, indicator, and phenomenon; and a comprehensive analysis assessing all the Bank’s activities. Structure of the capstone project report TOPIC “Retail banking system development strategy of VietinBank Ba Dinh in the period of 2012 -2015 ” Chapter 1: Theoretical background of business strategy formulation Chapter 2: Retail banking service business situation at VietinBank Branch Ba Dinh Chapter 3: Strategic content of retail banking of VietinBank Branch Ba Dinh in 2012 - 2015 period.X0810_Strategic Management _group 10 Page 6 Global Advanced Master of Business Administration CHAPTER I THEORETICAL BACKGROUND OF BUSINESS STRATEGY FORMULATION 1. OVERVIEW OF BUSINESS STRAEGY 1.1 Concept of business strategy According to Michael Porter, business strategy is the creation of unique and valuable position including differentiation, selection with exchange characteristics to focus all resources to create advantage for the enterprise.
In doing business, enterprises must have strategies, deploy strategy, make reasonable decisions, control their activities, taking advantages of opportunities and weaknesses, overcome threats and enhance competitive strength.2 Basic characteristics of business strategy - Business strategy is to clearly define basic objectives and business orientations of an enterprise in each period. - The orientativeness objective of strategy aims at ensuring continuous and stable development in the volatile business environment. - Business strategy helps ensure maximum mobilization and optimal combination of resource use of enterprises at present and in the future, promote strengths and grasp opportunities to gain competitive advantage. - Business strategy is reflected in a continuous process.X0810_Strategic Management _group 10 Page 7 Global Advanced Master of Business Administration - Business strategy always has aggressive spirit and gaining victory in the business market.
- Business strategy is often built in a long period (3,5,10 years).2 Strategy classification Many types of strategies are used in an organization; however, there are three levels of strategies used: - Corporate level strategy: sets out objectives and business activities of a company, making policies and basic plans to realize these objectives. - Business level strategy: determines business environment of the Company, market segment and products for each type of market. - Functional level strategy: Determines solutions and plans for each business fields. Affecting factors to strategies of an enterprise 1.
Macro-environment (1) Macro-economic environment: Macro-economic environment always has influence on enterprises and the industry, and strong influence on banking sector. Macro-economic environment concentrates on some influential variables such as GDP, inflation rate, base interest rate, the availability of credit system, income and consumption capacity. (2) Technological environment: Technological environment has a strong influence on business activities of banking system because technology can support bank by quickly, favorably and accurately supplying services. (3) Socio-cultural environment: includes socio-cultural factors having influence on the life and behavior of the people, via that affecting the structure of demand, consumer behaviors and consumption trend of customers.
(4) Demographic environment: Population, gender, age, geographical distribution, community of ethnic groups and income distribution. (5) Political – legal environment: includes a system of viewports, policies of the state, legal system, especially the laws related to business, political movement within the country and in the world.X0810_Strategic Management _group 10 Page 8 Global Advanced Master of Business Administration (6) Global environment: includes important international political events, characteristics of institutions and basic culture in the global markets, related global markets, current changing markets, regionalization trend, economic relation among countries, regions are factors having direct influence on strategic management. Micro-environment/industry environment: Applying five forces model by Michael E. Porter is a theorist and practician of strategy at Harvard Business School, he set out a framework to help managers to recognize opportunities and threats facing enterprises in an industry (Michael E.
Porter, Competitive Strategy, New York: Freepress, 1980). The framework of Michael E. Porter is called five forces model represented via following diagram: Table 1-1: Five Forces Model by Michael E. Porter Threat of new entrants Bargaining Competitive power of Bargaining power rivalry among of buyers suppliers existing firms Threat of substitute products M.Porter indicates that the stronger these forces are, the more they will constrain the capacity of existing enterprises in raising price and gaining higher profit.
The strength of five forces may be changed over time when industry conditions change. (1) Threat of new entrants: new entrants with a number of potentials: advantages in terms of scale, capital, product differentiation, cost advantage, access to distribution system always appear and gain market share and the market. (2) Bargaining power of suppliers: Bargaining power of suppliers includes scale, monopoly and bargaining power in the market and capacity of supplying products and prices.X0810_Strategic Management _group 10 Page 9 Global Advanced Master of Business Administration (3) Bargaining power of buyers: Business activity of an enterprise depends on the number of buyers and the influence of some individual buyers to the enterprise and their bargaining power over products and services. (4) The appearance of substitute products and services: The strengths of an enterprise will be influenced when customers find out different methods to implement the work that should have been done by the enterprise.
(5) Industry competitors: The core of this factor is the number and competitive capacity of competitors in the same market. The strong or weak levels of competition concern following criteria: scale of the industry, structure of the industry, competitors, etc. Internal environment (1) Financial resource analysis: Finance, the most basic resource of an enterprise includes equity, mobilized capital, liquidity, revenue, profit, etc. (2) Marketing capacity analysis: Structure of customers, potentiality of product and service consumption, diversification of quality, market share, customers’ preference, post-sale services, customer care services, etc.
(3) Human resource analysis: Quality of human resources is represented by the degree of professional qualification, work process, soft skills such as foreign language competence, computing skill, communication skill, presentation, decision-making, etc. (4) Organizational level analysis: Organizational structure; organization of internal communication system; control system; internal inspecting and auditing; strategy planning system; capacity, interest and conscience of managers and administrators; strategic management capacity; reasonable distribution and arrangement of resources, etc. (5) Infrastructure: Transaction center, points-of-sales; customer serving equipments; internal facilities; payment system, computer system, etc. (6) Technological and scientific capacity: Technology includes machine, equipment, information management system, payment system, etc.
help reduce the time for operation and raise accuracy.X0810_Strategic Management _group 10 Page 10 Global Advanced Master of Business Administration (7) Diversification of products and services serving customers: The diversification of products and services both creates opportunities to use products of customers and satisfy their demand.2 PROCESS OF STRATEGY FORMULATION 1.