Strategic formulation of Agriculture Bank Insurance Joint – Stock Corporation GRIGGS UNIVERSITY GLOBAL ADVANCED MASTER OF BUSINESS ADMINISTRATION PROGRAM CAPSTONE PROJECT REPORT STRATEGIC FORMULATION OF AGRICULTURE BANK INSURANCE JOINT – STOCK CORPORATION Pham Thanh Son Trinh Thi Trang Pham Thu Hang Lai Huu Phuoc Class: GaMBA01.X01 - Group No: 2 HA NOI 2010 43 Strategic formulation of Agriculture Bank Insurance Joint – Stock Corporation 1 Strategic formulation of Agriculture Bank Insurance Joint – Stock Corporation CONFIRMATION OF AGRICULTURE BANK INSURANCE JOINT – STOCK CORPORATION (ABIC) We, Agriculture Bank Insurance Joint – Stock Corporation confirm that we agree the research group including the members mentioned below to be allowed to get access to the internal documents, data as well as contact with the operation fact to study about the strategic orientations of ABIC, serving the research purpose of the group to complete the MBA course: 1. Pham Thanh Son 2. Trinh Thi Trang 3. Pham Thu Hang 4.
Lai Huu Phuoc Hanoi, July 22nd 2010 DEPUTY CHIEF EXCUTIVE OFFICER ACKNOWLEDGEMENTS 2 Strategic formulation of Agriculture Bank Insurance Joint – Stock Corporation To complete this capstone, we receive precious help of organizations and individuals. We respectably thank the board of managers and experts of Agriculture Bank Insurance Joint – Stock Corporation, particularly Mr. Do Minh Hoang - Deputy General Manager facilitated and help us respecting documents as well as research condition; respectably thank Mr. Phung Dac Loc – the Secretary General of Association of Vietnamese Insurance help us approach valuable information of operation of the Vietnamese insurance market… in order to complete this capstone.
We also respectably thank teachers of the Center for Educational Technology and Career Development - Hanoi National University indoctrinating enthusiastically and considerately useful knowledge to us. We commit that the content of this capstone is our efforts in the process of research, seeking and selecting the title to analyze; and on the base of referencing some documents (quote attached). We also commit that this capstone has not publicized in any research or training program. Hanoi, 2010, July 24 Capstone authors 3 Strategic formulation of Agriculture Bank Insurance Joint – Stock Corporation TABLE OF CONTENTS LIST OF TABLES.
The necessity of the title. Research object and range. The structure of the capstone.9 Chapter 1: THEORY BASIS ABOUT STRATEGIC MANAGEMENT. Concept of Strategy.
Concept of Business strategy. THE STRATEGIC MANAGEMENT PROCESS. MISSION, VISSION, OBJECTIVES, CORE IDEOLOGY. Analysis of the External environments.
Analysis of the internal environments. TOOLS FOR FORMULATING AND SELECTING STRATEGIES. The SWOT matrix. The I-E matrix – Synthesizing internal and external factors.
The Great matrix. Business unit strategy. IMPLEMENTATION ROUTE FORMULATION.35 Chapter 2: BUSINESS OPERATION SITUATION OF AGRICULTURE BANK INSURANCE JOINT-STOCK CORPORATION. INTRODUCTION TO AGRICULTURE BANK INSURANCE JOINT- STOCK CORPORATION.
Organizational structure of ABIC. Relations between ABIC and AGRIBANK. PRESENT BUSINESS OPERATION ANALYSIS AND EVALUATION OF ABIC. Present pledge of ABIC.
Macro-environment effect analysis. Political/Legal environment.44 4 Strategic formulation of Agriculture Bank Insurance Joint – Stock Corporation 2. Analysis of effects from industry environment. Analysis of ABIC’s internal environment.62 Chapter 3: BUSINESS STRATEGY FORMULATION OF ABIC TO 2015.
OBJECTIVES OF ABIC TO 2015. DETERMINING SUSTAINABLE COMPETITIVE ADVANTAGE OF ABIC. ANALYSIS OF THE SWOT MATRIX. ANALYIS OF PROPOSED STRATEGY.5 THE I-E MATRIX ANALYSIS.6 SELECTION OF FEASIBLE STRATEGIES.7 RESOLUTIONS TO IMPLEMENT STRATEGIES.
Resolution of organizational structure. Resolution of strategy implementation to reinforce internal control and supervision system. Resolution of Marketing. Strategic resolutions to improve and promote customer service quality94 3.
Brand name formulation. Resolutions of human resources. Resolution of information technology. 102 5 Strategic formulation of Agriculture Bank Insurance Joint – Stock Corporation LIST OF ABBREVIATIONS Agriculture Bank Insurance Joint – Stock Corporation ABIC Vietnam Bank for Agriculture and Rural Development AGRIBANK Vietnam Joint Stock Commercial Bank for Industry VIETINBANK and Trade Bao Minh Insurance Corporation Petrolimex Joint-Stock Insurance Company PJICO VIETINBANK Insurance Company Limited VIC Strengths, Weakness, Opportunities, Threat SWOT Order Number ON External Factor Evaluation EFE Internal Factor Evaluation IFE Synthesizing internal and external factors IE Public relations PR 6 Strategic formulation of Agriculture Bank Insurance Joint – Stock Corporation LIST OF FIGURES Figure 1.1 Model of comprehensive management strategy Figure 1.2 Five competitive forces Figure 1.3 The value chain of the firm Figure 1.4 The I-E matrix – Synthesizing internal and external factors Figure 2.1 Relations between ABIC and AGRIBANK Figure 3.1 The I-E matrix of ABIC LIST OF TABLES Table 1.1 The Competitive photo matrix Table 1.2 The External Factor Evaluation matrix Table 1.3 The Internal Factor Evaluation matrix Table 1.4 The SWOT analysis synthesis Table 1.5 Quantitative matrix according to GREAT criteria Table 2.1 Business outcomes in three years from 2007 to 2009 Table 2.2 The growth rate of Vietnamese economy Table 2.3 The number of insurance firms in Vietnam on 12/31/2009 Table 2.4 The competitive photo matrix of ABIC Table 2.5 Opportunities and threats from the external environment Table 2.6 The External Factor Evaluation of ABIC Table 2.7 Some financial norms of ABIC between 2007 and 2009 Table 2.8 Labor force synthesis of ABIC between 2007 and 2009 Table 2.9 The Internal Factor Evaluation of ABIC Table 2.10 Strengths and weaknesses of ABIC from internal environment Table 3.1 Determining sustainable competitive advantage of ABIC Table 3.2 SWOT analysis synthesis table Table 3.3 The route to implement resolutions 7 Strategic formulation of Agriculture Bank Insurance Joint – Stock Corporation INTRODUCTION 1.
The necessity of the title In recent years, Vietnamese insurance industry has affirmed great effect as well as indispensable role in the society. The effect of insurance is clearly shown in many aspects, apart from helping compensate for the damage and overcome loss, insurance utilizes effectively free money, creates large source of capital to invest in different fields. In 2009, Vietnam was affected by the global economic crisis. However, Vietnamese insurance industry reached the average growth rate that was 16% compared to in 2008.
In particular, in the situation that Vietnamese economy had difficulties, especially in source of capital, the insurance industry created medium- and long-term capital that was 69.000 billion dong and invested in the domestic economy in 2009 (in 2008 was 57.000 billion dong), created jobs for 15.000 insurance employees and nearly 150. The total capital of the insurance industry invested in the domestic economy in 2010 is anticipated to increase to 75. In 2010, the world economic situation which has slowly recovered, particularly some developing countries that have large public debt, has had economic regression continuous sign, thereby influencing negatively Vietnamese economy. Therefore, operation of the insurance industry has had many difficulties and challenges.
Insurance firms should check business operations, diversify products, consolidate competencies and network, attach special importance to implement suitable development strategies as well as risk reservation, exploit potential market, organize and select types suitable to Vietnamese economic conditions. Agriculture Bank Insurance Joint – Stock Corporation (ABIC) directly belonging to Vietnam Bank for Agriculture and Rural Development (AGRIBANK) - the biggest commercial bank in Vietnam, plays backbone role in the economy, is 8 Strategic formulation of Agriculture Bank Insurance Joint – Stock Corporation the main force in the agricultural and rural financial market. It has network covering the whole of the country with 2.300 braches and transaction departments that are connected online. ABIC has many advantages in business operations that are to exploit and uphold potentialities and advantages of AGRIBANK compared to different investors, advantages of distribution network, financial situation, customer base, and prestige of brand name AGRIBANK in the market.
Thus, ABIC determines its targeted market in the first period is to exploit through customer system of AGRIBANK with Bank-Insurance association products. To build ABIC to become strong brand name in the non-life insurance industry in Vietnam, to serve maximally insurance needs, particularly to cement ABIC’s business operations and that of AGRIBANK, with the desire of formulating and completing business strategy suitable to ABIC, our group choose the subject: “Business strategy formulation of ABIC” for the capstone of Global Advanced Master of Business Administration program (GaMBA) organized by Center for Educational Technology and Career Development - Hanoi National University and Griggs - The United States. Research objective Researching about theory matters of business strategy, analyzing and evaluating business situation of ABIC, formulating business strategy of ABIC between 2010 and 2015, posing resolutions and recommendations. Research object and range Researching and formulating business strategy of ABIC between 2010 and 2015.
Research method - Using qualitative method: on the base of theoretical issues about strategy and strategic management, our group compare and collate with the reality in ABIC to propose consideration, assessment and conclusions. 9 Strategic formulation of Agriculture Bank Insurance Joint – Stock Corporation - Using quantitative methods: based on statistics and collected data, we use tools - models in strategic management as a basis for consideration, assessment and conclusions. - Methods of data collection: + Primary data: we survey, collect and synthesize ourselves. + Secondary data: collected from financial statements, annual reports, the documents available provided by ABIC, simultaneously synthesized from newspapers, Internet.
The structure of the capstone Chapter 1: Theory basis about Strategic management Chapter 2: Business operation situation of ABIC Chapter 3: Chapter 3: Business strategy formulation of ABIC to 2015 Chapter 1: THEORY BASIS ABOUT STRATEGIC MANAGEMENT 1. Concept of Strategy There are a lot of views about strategy; in this capstone, we will present some symbolic concepts through the development periods of Strategic management theory: - Alfred Chandler described strategy as the determination of long-term goals and objectives, the adoption of courses of action and associated allocation of resources required to achieve these goals.I identified strategy as “a corporate spring” between a company's activities and the market. It had four key strategy components: product-market scop , growth vector (this offers a way of exploring how growth may be attempted),competitive advantage, and synergy.(1965) - Harvard Business School defined it as the art and science of formulating , implementing and evaluating cross-functional decisions that enables an organization to achieve its’ objectives.(1965) - According to James B. Quinn, the total strategy is largely defined by the 10 Strategic formulation of Agriculture Bank Insurance Joint – Stock Corporation development and interaction of certain major goals, policies and a chain of activities.
(1980) - William Glueck defined strategy precisely as: “A easily understandable and synthetic plan drafted so as to achieve goals” or “A unified, comprehensive and integrated plan designed to assure that the basic objectives of the enterprise are achieved”. David described it as tools to achieve long-term targets. Business strategy consist of geographic development, diversifying activities, proprietary form, product development, entering the market, reducing cost, liquidation, joint venture. - Michael Porter claimed that strategy was the creation of a unique and valuable position, involving diversity, trade-off selection to concentrate sources to create advantages for an organization.
Thompson announced that strategy was coordination all sources - environment and goals needed to achieve. From all views above, we can see that strategy relate to long-term fundamental targets of a company. However, implementing and making decision strategy following objectives is not sufficient. Strategies are identified to fit with vision and mission of an organization and methods, tools to achieve these objectives best, in order to uphold strengths, surmount weaknesses, accept opportunities, avoid or minimize damages due to threats of external environment.
Therefore, we can generally define strategy as below: “A coordinated series of actions which involve the deployment of resources to which one has access for the achievement of a given purpose”. Concept of Business strategy As mentioned above, strategies relate to objectives of a firm, strategies are formulated to help the company achieve given goals. However, business strategies relate more to how a company can successfully compete in the market. They relate to strategic decision about selecting products, meeting the customers' needs, gaining 11 Strategic formulation of Agriculture Bank Insurance Joint – Stock Corporation competitiveness, creating new opportunities.
According to Fred R. David, business strategy is tools to achieve long-term objectives. It may be said that business strategy is tools which help a company achieve long-term objectives. Business strategies do not draw detailed activities.