GLOBAL ADVANCED MASTER OF BUSINESS ADMINISTRATION CASTONE PROJECT REPORT DEVELOPMENT STRATEGY FOR CORPORATE CREDIT AT VIETNAM BANK FOR AGRICULTURE AND RURAL DEVELOPMENT – MY DINH BRANCH IN THE PERIOD OF 2012-2017 Group Number: 07 Student’s name: PHAN HO HAI PHAM THI HUONG GIANG NGUYEN XUAN HANH TRUONG QUAN HA NOI 2011 ii COMMITMENT Our group 7 collective includes four members: PHAN HO HAI PHAM THI HUONG GIANG NGUYEN XUAN HANH TRUONG QUAN We hereby wouldlike commit that what we present on the above capstone project report, the theories and the related data in the report have been studied and referred from sources such as books, magazines, or internet combined with the actual data collected directly at Vietnam Bank for Agriculture and rural Development – My Dinh Branch most correctly and truely. Getting approval from the program, our group works out the corporate credit development strategy at Agribank My Dinh based on the theoretical basis learned combined with experience of the group’s members. The solutions, strategies of the seventh group are provided with the hope to contribute somewhat to the overall development of Agribank My Dinh in the period of 2012-2017. i ACKNOWLEDGEMENTS First of all, our collective group 7 would like to thank most sincerely and deeply to all of teachers, the GaMBA program taught and guided us during the past time.
The course has provided, completed good knowledge and experience to us on all the important areas in business administration. Thank the management staff of ETC Center (Vietnam National University, Hanoi) who has helped us throughout time. Finally, we would like to send sincere thank to the units where we have been working created conditions of time and provided sufficient information for us to complete our report. Please accept our sincere and deep thanks.
Implementation group ii INTRODUCTION. 1 CHAPTER I: THEORETICAL BASIS.1 Concept and role of business strategy.1 Concept of business strategy.2 Role and importance of business strategy. Classification of business strategy.2 Strategic construction process. Analysis of external environment.2 Analysis of internal environment……………………………….1 Analysis of the internal factors in the value chain…………….2 Analysis of external factors in the value chain.3 Strategic test and evaluation:.
14 CHAPTER II: ANALYSIS OF THE BUSINESS ENVIRONMENT FOR CORPORATE CREDIT AT VIETNAM BANK FOR AGRICULTURE AND RURAL DEVELOPMENT – MY DINH BRANCH.1 Outlines on Agribank and Agribank My Dinh.1 Establishment process and organizational structure:.1 Overview on Agribank.2 Overview on Agribank My Dinh.2 Primary activities of the Agribank My Dinh.4 Results after 3 years of operation.2 Corporate credit activity at Agribank My Dinh.1 Types of corporate credit at Agribank My Dinh. Short-term loans for production and business (one loan at a time). Short-term loans for production and business (one loan at a time).2 Short-term working capital loan.3 Fixed assets loan.5 Flexi loan over credit limit.2 Process of corporate credit.1 Customer rating and scoring system.3 Current situation of credit activity at Agribank My Dinh:.3 Analysis of the operating environment of Agribank My Dinh.1 Analysis of internal environment.6 Internal factor evaluation matrix.2 Analysis of external environment.3 External factor evaluation matrix.4 Internal-External matrix (IE). 47 CHAPTER III: CORPORATE CREDIT DEVELOPMENT STRATEGY AT AGRIBANK MY DINH IN THE PERIOD OF 2012 - 2017.1 Development target of Agribank My Dinh in the period of 2012- 2017 49……………………………………………………………………45 3.1 General development objectives in the period of 2012-2017:.2 Specific development objectives of My Dinh Agribank by 2017.2 Strategic plans applied to Agribank My Dinh.1 Basis for developing strategies.2 Corporate credit development in SWOT matrix model.3 Existing difficulties and solutions to perform corporate credit strategy at Agribank My Dinh in the period of 2012-2017.2 Solutions of credit development for Agribank My Dinh in the period of 2012-2017.
Solution of product expansion and development.4 Risk preventing solutions. 64 v Table of Contents Introduction Necessity of research problems Subject of study scope Research methodology Structure of report LIST OF ACRONYMS AND ABBREVIATIONS ARD Agriculture and Rural Development CM Commercial Bank SB State Bank of Vietnam LB Lending Bank FB Foreign Bank BM Board of Management CIC Credit Information Center CAR Capital Adequacy Ratios vi LIST OF TABLES Table 1.1 Quantitative strategic planning matrix QSPM Table 2.1 Some business targets of Agribank My Dinh Table 2.2 Credit activities at My Dinh Agribank Table 2.3 Ratio of bad debt over total debt balance Table 2.4 Structure of staff according to qualification by 31/12/2010 Table 2.5 Financial results achieved in 3 years Table 2.6 Internal factor evaluation matrix IFE Table 2.7 Competition profile matrix Table 2.8 External factor evaluation matrix (EFE) Table 3.1 SWOT Matrix Table 3.2 SPACE matrix scoring table Table 3.3 QSPM matrix table of group S/O Table 3.4 Selected strategy group vii LIST OF FIGURES, CHARTS Figure 1.1 Model of 5competitive forces Figure 1.2 SWOT matrix model Figure 1.3 SPACE matrix model Figure 2.1 Organization Chart of Agribank My Dinh Figure 2.2 Corporate credit process chart Figure 2.3 Chart of the credit market share of Agribank My Dinh by 31/12/2010 viii INTRODUCTION 1. Necessity of studied issue Since the economy of our country has moved to market economy, especially since the banking ordinance in our country was born (1990), the banking sector has also had fundamental shift from the level one banking system to two level banking system. The appearance of a series of domestic commercial banks and the market penetration of the joint-venture banks, branches and representative offices of foreign banks have made the banking business environment in our country “warm up” and the market share of commercial banks in the country is increasingly narrowed.
Besides, due to the weakness in business, inconsistent and unreasonable policy mechanisms have caused the condition of serious loss of capital, bad debts rise. This has pushed the commercial banks of our country into a state of avoidance, clustering in business while the amount of loans has been stagnant for many years. So it has set out Vietnam's banking system a lot of difficulties and many challenges must be dealt with as capital, technology, staff capacity. especially, weak financial situation of the commercial banks (CBs) have caused large effect to the business activities of the bank, making competitiveness decline.
This has posed challenges for the State Bank (SB) in providing policies and solutions to improve business performance through that to promote stable business activities of commercial banks and sustainable development firms in the competitive environment in the country. In recent years, commercial banks in general and Vietnam Bank for ARD in particular is still insufficient and efficient use of capital is high, competition is low, making directly impact on the business results of the Bank. Currently, Vietnam is implementing renovation policies on state enterprises, especially the commercial banks. The focus of this renovation is to promote high corporate credit development strategy in VNCBs.
From those problems, our group has chosen the thesis: "Corporate credit development strategy at Vietnam Bank for Agriculture and Rural Development – My Dinh branch in the period of 2012 - 2017" as our research thesis. Object and scope of research - Study object: Strategy for corporate credit activity in the commercial banks. - Scope of research: Corporate credit research at Vietnam Bank for ARD – Agribank My Dinh in the period of 2008-2010. Research methodology - SWOT analysis method: analysis of external factors the business must face (opportunities and threats) as well as the factors of the internal environment (strengths, weaknesses).
As technique to analyze and process the results of environmental research to help the business work out scientific strategy. - Analysis method of Porter's five forces: the impact analysis of the five forces includes power of supplier, power of the users of banking services, the threat of new entrants on the market, competition from substitute products, the relationship between banks. - Analysis method through SPACE Matrix (strategic positioning and action evaluation matrix): This method shows that competitive, conservative, aggressive and defensive strategies are most appropriate for an organization. With FS is financial strength, CA is competitive advantage, ES is environmental stability and IS is industry strength.
- Method of analysis by QSPM Matrix (Quantitative strategy planning matrix): This analysis technique will show objectively what alternative strategies are the best. QSPM matrix use inputs by the EFE matrix analysis, competitive profile matrix, IFE matrix. Then the necessary information will be gotten to establish QSPM matrix from the SWOT matrix, SPACE matrix. Structure of the report The thesis is divided into three major chapters Chapter I: Theoretical basis Chapter II: Current situation of corporate credit at Vietnam Bank for Agriculture and Rural Development - My Dinh Branch Chapter III: Measures and Recommendations on improving the efficiency of corporate credit at Agribank My Dinh in the period of 2012-2017 2 CHAPTER I: THEORETICAL BASIS 1.1 Concept and role of business strategy 1.1 Concept of business strategy "The business strategy of a company is direction and size of an organization in the long-term: strategy will bring advantages to the organization through optimal placement of resources in a competitive environment to meet market demands and expectations of stakeholders ".
Either strategy can be understood as follows: - Where the enterprise tries to reach out in the long term (direction) - Which market the business must compete and what kinds of business activity does the enterprise conduct on that market (market, size)? - How will the business do to work better than the competitors on those markets (advantages)? - What resources (skills, assets, finances, relationships, technical competence, facilities) should have to be competitive (resources)? - What factors from the external environment affect the competitiveness of the enterprise (environment)? - What values and expectations of those who have power inside or outside the business need (stakeholders)? Strategy at different levels in a business In any organization, the strategy will exist at several different levels - ranging from the entire enterprise (or a business group) to each of the individuals who work in it. Corporate strategy - is concerned with the overall objective and scope of business to meet the expectations of stakeholders. This is an important level because it is heavily influenced from investors in the business and it also guides the process of strategic decision making across the enterprise. Corporate strategy is often presented clearly in "mission statement".
Business strategy - is concerned more with how a business can compete successfully on a specific market. It involves in the right strategic decisions about 3 product selection, to meet the needs customers, gaining competitive advantage over competitors, exploiting or creating new opportunities etc. Operational strategy - related to how each department within the enterprise will be held as to implement the strategic direction at corporate level and each department within the business. Hence, the operational strategy focuses on the issues of resources, processes and people, etc.2 Role and importance of business strategy - Strategic identification is a necessary target for the survival and growth of any business, because to survive and thrive in the market mechanism should know clearly existing environment of the enterprise.
- The strategy is understood as a comprehensive general, unified plan of the enterprise. It provides the trends in the long run, confirming the major objectives of the business, outlining the key resources of the enterprise, it suggests ways to deal with the uncertainties which usually occur in competitive environment. So, the strategy is a basic, foundation plan responsible for identifying resources, creating unity between the resources to focus on the target, using the strength of the organization to achieve that objective. - Competitive strategy helps the commercial business understand the market opportunities, creating competitive advantage in the market by applying limited resources of the firm to achieve high results.
It helps the enterprise consider and decide what direction to go? - Rapidly changing business environment always creates opportunities and risks in the future, business strategy will help the business capitalize on the opportunities and reduce the risk in the business. - Business strategy helps the business better prepare to cope and master changes in the market.