CAPSTONE PROJECT REPORT CARD DEVELOPMENT STRATEGY OF JOINT STOCK COMMERCIAL BANK FOR FOREIGN TRADE OF VIETNAM UNTILL 2015 Dao Quang Minh Le The Vinh Dam Hai Yen Do Thi Nga Class GaMBA 01.X03 H A N O I 2 0 1 0 GRIGGS UNIVERSITY GLOBAL ADVANCED MASTER OF BUSINESS ADMINISTRATION PROGRAM CAPSTONE PROJECT REPORT CARD DEVELOPMENT STRATEGY OF JOINT STOCK COMMERCIAL BANK FOR FOREIGN TRADE OF VIETNAM UNTILL 2015 Group number: 1 Student’s name: Dao Quang Minh Le The Vinh Dam Hai Yen Do Thi Nga HA NOI 2010 ACKNOWLEDGEMENTS In order to complete this capstone project, group 1 – Class GaMBA01.X03 would like to acknowledge help and support of the following individuals and organizations: Professors, lecturers participating in the Training Program Master of International Business Administration of Griggs University; Cadres, employees of the Center for Educational Technology and Career Development, the School of Graduate Studies, Vietnam National University, Hanoi; The Card Center of Joint Stock Commercial Bank for Foreign Trade of Vietnam; The Board of Directors, the Card Division of the Service Trading and Payment Department, of Joint Stock Commercial Bank for Foreign Trade of Vietnam – Ba Dinh Branch; The group members’ friends, families and colleagues. i TABLE OF CONTENT ACKNOWLEDGEMENTS. i TABLE OF CONTENT.ii LIST OF TABLES. v LIST OF FIGURES, GRAPHS.1 CHAPTER 1: THEORETICAL BASE.
Overview of Strategic Management. The concept of strategy. Foundations of a strategy. Strategic Management Process.
Strategic planning phase. Strategic implementation and inspection:. Introduction to kinds of cards. Roles and positions of cards in banking.
As for the economy. As for banks. As for customers. As for card acceptance organizations.
Present some kinds of Card. Based on the nature of the payment. According to the extent of application.17 CHAPTER 2: GENERAL VIEW OF THE CARD OPERATION AT JOINT STOCK COMMERCIAL BANK FOR FOREIGN TRADE OF VIETNAM (VIETCOMBANK). General view of Joint Stock Commercial Bank For Foreign Trade Of Vietnam.
Brief introduction of Vietcombank. Summarize the operation activities of Vietcombank from 2007 to 2009. Card Trading Operation of Vietcombank in the period of 2007 – 2009. General view of Vietnamese card market.
The foundation and development of Vietcombank. Card Business of Vietcombank in the period of 2007 – 2009:. Analysis of environmental factors:. Macro environmental analysis according to PESTLE model.
Analyzing sector environment according to Michael Porter’s model36 2. SWOT analysis and choosing target strategy. Assessing the opportunity and challenges to card operation of Vietcombank. Assessing the opportunity.
Assessing the challenge. Assess the advantages and disadvantages. 45 CHAPTER 3: VIETCOMBANK CARD OPERATION DEVELOPMENT ORIENTATION IN THE PERIOD OF 2010 – 2015. Vietcombank card operation development orientation in the period of 2010 – 2015.
Oriented products and services. Oriented network development. Oriented Sale Activity. Propose the solutions for implementation.
Formulation of Marketing Strategies and Policies. Completion of card issuing process. Increase in investment to modernize the technology. Improve the quality of card product.
Developing the network of card accepting units. Improve the quality of professional card staff.60 iv LIST OF TABLES Table 2. Operation result of Vietcombank from 2007 to 2009. Number of international credit card issued by Joint Stock Commercial Bank for Foreign Exchange of Vietnam.
Number of issued debit card of Vietcombank through years. The sales of using international credit card issued by Vietcombank28 Table 2.5 The sales of using international debit card issued by Vietcombank 29 Table 2. The sales of using international debit card issued by Vietcombank30 Table 2. The GDP growth rate of Vietnam in the period of 2005-2010.
The position of Vietcombank card in the market (by Dec. 43 v LIST OF FIGURES, GRAPHS Figure 1. The term “Strategy”. Differences among three uses of the term “strategy”.
Three steps of strategic planning process. Michael Porter’s five competitive forces model. Basic steps of strategic management. Total assets of Vietcombank in the period of 2007 - 2009.
Profit before tax of Vietcombank in the period of 2007 – 2009. Number of international credit cards issued by Joint Stock Commercial Bank for Foreign Trade of Vietnam through years. Number of issued debit card of Vietcombank through years. The sales of using international credit card issued by Vietcombank through years.
The sales of using international debit card issued by Vietcombank through years. The sales of using debit card issued by Vietcombank through years30 Figure 3. Market share of Vietcombank card for the years.43 vi INTRODUCTION Importance of the subject choice Competition is inherent in a market economy. It is important for enterprises (economic subjects) to change so that they can have advantages and dominate a given market share.
They must try their best to keep and develop these advantages. That shows their competition capacities. In order to win in competition, it is necessary for them to build an efficient competitive strategy. A card is one of the products which are being developed by commercial banks and competition in this field among them is very harsh.
There have been continuous changes in competitive environment among Vietnamese commercial banks. When the economy was transformed from a centrally planned economy to a market economy, commercial joint stock banks are permitted to open, and foreign banks are permit to operate in Vietnam, competition among banks is more and more harsh. On the other hand, US-Vietnam Trade Agreement is implemented more and more perfect and Vietnam joined the World Trade Organization (WTO), Vietnam must carry out international undertakings on financial service expansion, for example, domestic financial enterprise and foreign ones must have equal opportunities. Because commercial joint stock banks have developed more and more quickly in the recent years and foreign banks have financial potentials, experience and modern technologies, the state commercial banks no longer have a monopoly owing to priorities from the State.
As for the above-mentioned changes, commercial banks in general and Joint Stock Commercial Bank for Foreign Trade of Vietnam in particular must improve their operation efficiencies and competitive capacities in order to keep advantages of operation scales, experience and great customers. After implementing the reconstruction project of the State Bank of Vietnam with the World Bank’s help and support since 2001, Joint Stock Commercial Bank for Foreign Trade of Vietnam has gained encouraging achievements: Basic implementation of asset reconstruction, overall technological renovation…, especially its profit has continuously been the largest and stable (continuously voted the best bank of 1 Vietnam by the Banker). However, in order to meet international economic integration requirements, it is vital for Joint Stock Commercial Bank for Foreign Trade of Vietnam to carry out revocation and reform continuously so that it can adapt to changes in the world economy. It implemented its equalization (this is change in the quality) to form a multipurpose financial corporation with an important position in the region and in the world.
Based on the above-mentioned reasons, group 1 decided to choose the subject: “Card development strategy of Joint Stock Commercial Bank for Foreign Trade of Vietnam until 2015” with a view to contributing to solutions to improve general competitive capacities of Joint Stock Commercial Bank for Foreign Trade of Vietnam Study purpose Competition in banking operations in general and cards in particular has ever been studied by many experts and scholars in/out of the field of banking. However, with this subject (no longer new), group 1 wants to systemize theoretical matters on business strategy building and choice, business reality analysis, and strategic orientation for card development of Vietcombank, and then business strategy choice and giving solutions and proposals for improving competitive capacities of Joint Stock Commercial Bank for Foreign Trade of Vietnam in the field of card operation until 2015. Study method Argument foundations for study are theory of the subjects: Strategic Management, Operations Management, Human Resources Management, Marketing Management… During our study progress, we have used the methods: comparison, general analysis, statistics, etc. to analyze argument and practice for improving competitive capacities of Joint Stock Commercial Bank for Foreign Trade of Vietnam in the field of card operation.
Layout of the capstone project In addition to the introduction, conclusion, reference and appendices, the report consists of 3 chapters: Chapter 1: Theoretical base 2 Chapter 2: General View of the Card Operation at Joint Stock Commercial Bank for Foreign Trade of Vietnam Chapter 3: Card Operation Development Orientation of Vietcombank, phase 2010 - 2015 3 CHAPTER 1: THEORETICAL BASE 1. Overview of Strategic Management 1. The concept of strategy The concept “Strategy” dated from the Ancient Greece and originated from the field of military (strategos). A basic theoretical point is that a side can beat its enemy, even more powerful enemy with more soldiers if it can control the posture and attract its enemy to the battlefield in which it can practice its capacities (advantages).
In the world of business with harsh completion today, the concept of strategy is studied and developed more and more; however, its study concentrates on 4 main categories: plan, model, position and vision. According to these opinions, the concept of strategy means: "A unified, comprehensive and coordinated plan, is designed to ensure that the basic objectives of the business are carried out successfully" (Lawrence R. “A model or plan of an organization for coordinate the main objectives, policies and actions in the order of a unified uniform" (Quinn, J., B (1980) Strategy for change: Logical Inscrementalism. Homewood, Illois, Irwin).
"Studying to find out a suitable competitive position in an industry, a range of main activities in which competitive activities took place". (1981) The contribution of Industrial Organization to Strategic Management. "Identify the basic goals of the business long term, the action programs along with the allocation of resources needed to accomplish those objectives".html January 10th, 2010). The term “Strategy” 4 In most business environments, the “strategy” derives from basic rules and there are three normal uses: Strategy or normal strategy; Company strategy (Corporate strategy); and Competitive strategy (Business strategy).
A normal strategy reflects ways to gain targets. Therefore, it relates final targets to ways built on the basis of implementing an organization’s resources. Meanwhile, a competitive strategy or business strategy determines business foundations for competition (organization’s potentials and correlative relations in business environment); a company strategy determines an organization’s missions and vision, i. introduce yourself (Who are you?), reason for your establishment and development trends in the future.
It is possible to say that a strategy is one bridge which links targets to ways of implementation. Differences in the application of the term and among exact meanings of three uses of “strategy” are the most specific as the following figure: Figure 1. Differences among three uses of the term “strategy” 5 Generally, when a strategy is built, it is necessary to meet all the following factors: worked out for a long time; bringing growth to an organization; using an organization’s resources the most efficiently; creating the most competitive position to an organization in the future. Therefore, it is possible to say that a strategy “is a series of long-term activities built to make an organization from current position reach a desired position in the future through the establishment of competitive capacities in comparison with advantages of other organizations in the market”.
Foundations of a strategy A strategy is an organization’s long-term direction and scope of activities for gaining business advantages through the determination of available resources used in a specific environment in order to meet market requirements and guarantee benefits for all stakeholders. Specifically, targets of a strategy are: Gain an enterprise’s long-term targets (business & social responsibilities) in a sustainable manner Markets or market segmentations which the company will trade in, business tactics will be applied. How to gain advantages in comparison with competitors at these markets for specific customers? What resources (human, skills, assets, finance, technological secrets…) will be used to gain these targets? Latent externalities can affect the strategy implementation: environment, competition, political factors, resources…; risk prevention plans. Values taken by the enterprise to owners and the society in which the enterprise is a member.