CAPSTONE PROJECT REPORT SOME CONTRIBUTIONS BUILDING DEVELOPMENT STRATEGY FOR THE VIETNAM BANK FOR AGRICULTURE AND RURAL DEVELOPMENT TO 2015 Tang Truong Quang Le Van Anh Le Hong Son Nguyen Van Tinh CLASS: GaMBA01.N05 1 Ha Noi 2011 TABLE OF CONTENTS CHAPTER I: 8 THEORETICAL BASIS OF BUSINESSES’ STRATEGY DEVELOPMENT 8 1. Strategy and the role of strategy:. Definition of strategy: 8 1. The role of strategy 8 1.
The classification of strategy 9 1. Strategy at company level. Strategic business unit (SBU). Strategy of functional organs.
The process of setting up strategy:. Targets of strategy 11 1. Analysis on strategy 11 1. Analysis of external climate.
Analysis on macro environment. Analysis on sectoral environment. The selection of strategy 16 1. Basis of selection.
Model of selection. Methods to evaluate plans of strategy. Tools to analyze strategies. Methods to analyse external environment 20 CHAPTER II: 23 ANALYSIS OF STRENGTHS, WEAKNESSES, OPPORTUNITIES, THREATS OF AGRIBANK 23 2.
Overview on Vietnam Bank for Agriculture and Rural Development. The foundation and development 23 2. Business characteristics of Agribank 25 2. Macro environment analysis.
Social and cultural factors 27 2. Elements of information technology and telecommunications 27 2. Political factors and laws 28 2. Environmental analysis banking sector 28 2.
Analyzing the internal environment of Agribank. Elements of information technology and modernization of the banking30 2. About the organization and business network. International cooperation relation, development trade in foreign 2 exchange.
About products and services 45 2. About the training and retraining 55 2. Analyze opportunities, threats, strengths, weaknesses (SWOT). Weaknesses 61 CHAPTER III: 63 STRATEGIC SELECTION FOR AGRIBANK TILL 2015 63 3.
Development orientations of Agribank. Development target of Agribank till 2015 63 3. Specific objectives of the strategy. Strategic choices for Agribank till 2015.
Building strategies from SWOT matrix 65 3. Development strategy based on market segment. Strategy-building for sustainable target customer. Products and services banking development strategy.
Model of organization, personnel and training strategy. Brand development and corporate culture strategy. Information technology development strategy. Financial and operating safe strategy.
Advanced risk management capacity of Agribank. Implementing strategies solutions of Agribank in 2011-2015 period 75 3. Improve financial capability. Solutions for problems of organizational structure and human resources.
Solutions for innovative information technology:. Complete solutions and development of banking products and services. Solution for improve risk management. Complete marketing policy.83 3 LIST OF ABBREVIATIONS ABIC Agriculture Bank Insurance Joint-Stock Corporation ALCO Asset-Liability Management Committee APEC Asia-Pacific Economic Cooperation ATM Automatic Teller Machine BIDV Bank for Investment and Development of Vietnam CAR Capital Adequacy Rate EU European Union FDI Foreign Direct Investment GATS General Agreement on Trade in Services GDP Gross Domestic Product IMF International Monetary Fund IPCAS Interbank Payment and Customer SBV State Bank of Vietnam NHNo&PTNT Việt Nam Agribank NHTM Commercial Bank TCTD Credit Organization Vietcombank Joint Stock Commercial Bank for Foreign Trade of Vietnam 4 PREFACE World economic integration is an indispensable trend and an objective requirement with any countries during their development process.
This trend becomes clearer and clearer, especially when the market economy is becoming a common playing field for all countries and the financial markets are expanding the range of activities almost without borders, which helps create cooperation strengthening and makes competitive process more intense and deeper. In the banking sector, it can be understood that international integration is the opening of the banking operations of the economy with the international financial community as the credit relations, monetary and other banking service activities as well as the removal of barriers separating this area from the rest of the world. In the process of integration, it is required that all banks and other non-bank financial institutions must compete directly with each other to survive and grow. Banks that want to maintain profitability and competitiveness need to innovate and develop in all aspects: capital, technology, services, organizational structures, management level, risk controlling quality as well as continuously enhance their credibility and brand.
5 After more than 20 years of renovation, Vietnam Bank for Agriculture and Rural Development, has achieved some results: The increase in mobilization of capital and levels of credit has promoted economic growth; The expansion and development in supply of banking services facilitates customer attraction, contributing to fasten capital flow, save the cost of social circulation and network structure is more diverse, expanding and developing. Upon entering the integration, Vietnam Bank for Agriculture and Rural Development will face more severe competition, so the continuation of giving a development strategy in the period 2011-2015 is urgently needed. As a group of students who have members working in the financial sector and particularly have two students working in the Vietnam Bank for Agriculture and Rural Development, we decide to choose a research topic named: "Some contributions Building development strategy for the Vietnam Bank for Agriculture and Rural Development to 2015" Our research objective is that: derived from the theoretical basis of strategy management science, research and systematization of the theory as a basis for formulating strategies for the Vietnam Bank for Agriculture and Rural Development ; Analysis and assessment of the activities, business environment of the Vietnam Bank for Agriculture and Rural Development, from which analysis and selection of appropriate strategy options for the development of the Vietnam Bank for Agriculture and Rural Development until 2015, building the solutions for strategy implementation Besides the introduction, conclusion, appendices and a list of reference material, our research topic includes the following chapters: Chapter I: Theoretical basis for the construction of the business strategy Chapter II: Analysis of strengths, weaknesses, opportunities and challenges of Arian Chapter III: Strategic Options for Arian to 2015 6 CHAPTER I: THEORETICAL BASIS OF BUSINESSES’ STRATEGY DEVELOPMENT 1. Strategy and the role of strategy: 1.
Definition of strategy: The term “strategy” rooted from the military sector referring to large-scale and long-term plans on the basis of the guarantee on what the opposite side can do and can not do. The term “strategy” was born with a traditional viewpoint that strategy is indentifying long-term fundamental targets of an organisation, based on that to map out specific plans of action and use resources effectively in order to fulfill set targets. According to Alfred Chandler: “Strategy includes long-term fundamental targets of an organisation while selecting methods or progress of action and dispatching essential sources to fulfill the targets.Glueck said: “Strategy is a united, comprehensive and combinative plan designed to ensure that fundamental targets of an organisation will be fulfilled.” 7 According to Fred R. David: “Strategy refers means to reach long-term targets.
A business strategy may comprise geographical development, diversification of actions, propertization, product development, market penetration, cut on expenditures, liquidation and joint venture.” According to Michel E. Porter: “Strategy is an art of building firm competitiveness advantages for defence. The role of strategy Helping to raise businesses’ awareness of their targets and orientations to choose measures to translate the targets while pointing out businesses’ position in fulfilling the targets. Helping businesses recognize opportunities and risks posed by external environment as well as their strengths and weaknesses to bring into play the strengths, reduce weaknesses, grasp opportunities and put forth preventive measures against external threats.
Helping businesses set out decisions suitable with business environment to raise business ffectiveness and productivity. Helping businesses choose suitable competitive advantages in changeable business environment, find out ways to exist and gain growth in order to elevate their competitiveness advantages. The classification of strategy In an organisation, strategy administration is divided into three basic levels: company, business units and functional branches. The administration of strategy at each level has similar forms, including such stages as: analysing the environment to define targets and tasks, analysing and selecting strategy, organising and inspecting strategy.
However, the content of each stage and the way to make decisions depend on different administrators. Strategy at company level 8 The strategy at company level defines orientations of an organization in the long term with the aim of fulfilling tasks and reaching growth targets, for example: focused growth strategy (market penetration and development, and new product development), integration growth strategy (ahead and beyond), diversification growth strategy (concentric, horizontal, and mixed), joint venture strategy etc. Based on the strategy at company level, organizations will deploy their own strategies. Strategic business unit (SBU) SBU strategy (SBU _ Strategic Business Unit) in a company may refer to a sector or a genre of products etc.
The strategy aims to direct the development of each sector or each kind of products, contributing to completing the strategy at company level. It is necessary to identify each sector’s advantages compared with rivals to lay out a strategy suitable with the strategy at company level, for example: strategy to create difference, low-cost strategy, defensive strategy for market consolidation, offensive strategy for market development. In the market economy with fierce competitiveness, marketing strategy is considered a key one of business units, connecting with strategies of other functional organs. Strategy of functional organs Each company has its own functional departments such as: marketing, personnel, production, research and development etc.
Such departments need strategies to back the SBU strategy and the strategy at company level, for example: marketing department has 4Ps strategy, personnel department has a strategy on attracting talented people, financial department has a strategy on reducing expenditures and investing in new products etc. The strategy at functional levels often shows its values at each stage during the implementation of SBU and company strategies. Thus, strategies of the three fundamental levels are not independent but have a close ties and follow a rule that the lower-level strategies must conform to the upper-level ones to ensure the success and effectiveness of implementation. The process of setting up strategy: An enterprise’s strategy is laid out in order to reach businesses’ future targets.
However, sometimes, they don’t fully acknowledge their tasks, leading to incorrect decisions and the fact that already-done jobs bring about low effectiveness meanwhile jobs to be carried out later become worthless. Therefore, businesses need to fully grasp steps to materialize their set targets. Enterprises’ strategy is set up with three steps as follows: No. 1: The process of building a strategy for an enterprise Targets of strategy Analysis on strategy Selection of strategy Source: Competitive Strategy M.
Targets of strategy The term targets of “strategy” is used to refer to standards or specific achievements a business need to reach when implementing business strategies. Strategic targets, generally, is the business’ expectations for the future. Indexes often present in strategies include benefits, sale turnover, market share, risks and renewal. Normally, enterprises divide targets into long-term and short-term targets.
Long-term targets are outcomes of expectations outlined for a rather long time period. The number of specific years may be different but it often longer than a cycle of a decision (starting from a time when the decision is make until it is carried out). Short-term targets must be specific and define detailed outcomes during a cycle of a decision. Short-term targets are usually implemented within a year.
10 Targets must be strictly developed as they play a decisive role in putting forth business strategy. A sound target must be passed by managers and relevant key people. The acceptance is shown indirectly and leads to commitments pledged by both leaders and the staff. The two objects perform a decisive role in fulfilling set targets.
Analysis on strategy Before going to the selection of strategy, businesses need to analyse factors that may affect the selection. Such factors are included in both external and internal environment of each business. In an effort to have a deep viewpoint, businesses need to carefully analyse each factor in the two kinds of environment. Analysis of external climate The analysis on external environment is a process conducted by strategists, during which they evaluate different factors (economic environment, socio-cultural environment, technological environment, providers and distributors.) and define opportunities and potential risks to their company.