CAPSTONE PROJECT REPORT RESTRUCTURING IN THE DEVELOPMENT STRATEGY OF VIETNAM JOINT STOCK COMMERCIAL BANK FOR INDUSTRY AND TRADE COMMITMENT We would like to commit that this report’s content has not been submitted to any master programs as well as others. We also would like to add that this report is our group’s encouragement. And all results, analysis and conclusions (excluding quoted parts) belong to group. 1 2 THANKS The capstone project report “Restructuring in the development strategy of Vietnam Joint Stock Commercial Bank for Trade and Industry” has been completed with the scientific instruction of Assoc.
Vu Tri Dung. We would like to show the truthful thanks to Assoc. Vu Tri Dung who directly help us in completing the report. We would also like to thank all the lecturers in the Global advanced Master of Business Administration Program – Griggs University who have fervently taught, and transformed during all the course and equipped us a knowledge system in business administration for us to complete this report.
We also would like to thank leaders and colleagues in Vietinbank who have supported and advocated us in the research process and completing this report. 3 TABLE OF CONTENT Commitment Page 2 Thanks 3 Table of content 4 List of abbreviations 7 INTRODUCTION 8 1 Topic 8 2 Reasons to choose the topic 8 3 Research purposes 9 4 Scope of research: 9 5 Method of research 9 6 Research data 10 7 Report’s meaning: 10 8 The report’s restructuring 10 9 The planned results of reports: 10 10 Report’s struture: 10 CHAPTER I: THEORETICAL BACKGROUND - SOME ISSUES 11 ABOUT ORGANIZATIONAL STRUCTURE AND RESTRUCTURING SUMMARY 11 I Organizational structure 12 1. Primary contents of organizational structure: 12 2. Roles of organization in business’s organization 14 3.
The relationship between organizational structure with some 15 primary problems in business 4. Typical organizational structure: 19 II Some specialized organizational structure model in Banking 24 industry III Organization restructuring: 31 1. Reasons for restructuring: 31 2. Requirements and conditions about restructuring 32 4 3.
Some problems need to be noticed when Restructuring 33 organization CHAPTER II: STATEMENT OF BUSINESS OPERATION AND 36 ORGANIZATION OF VIETINBANK SUMMARY 36 I Overview about Vietinbank 37 1. Characteristics of business operation: 37 1.1 Summary of establishing and developing process 37 1.3 Results on business operation 38 2. Organizational structure of Vietinbank 42 2.1 Organizational structure of Vietinbank before carrying out the 42 restructure project 2.2 The organizational structure of Vietinbank when carrying out the 46 restructuring project 2.3 Current organizational structure of Vietin bank. 50 II The necessity in restructuring Vietinbank.
Problems in current organization: 54 2. General introduction about new business strategy in Vietinbank: 56 III Primary requirements about the process of restructuring 62 organization 1. Defining goals of organization restructure: 62 2. Defining the influence of new business strategy in the current 62 conditions for restructuring organization: 3.
The contents of the basic restructuring process: 64 4. Role of the Management Board in the process of restructuring the 64 organization and resources of consultants: 5. Define a new organizational structure 65 CHAPTER III NEW ORGANIZATION STRUCTURE AND 66 IMPLEMENTATION PLAN FOR NEW ORGANIZATIONAL 5 STRUCTURE IN VIETINBANK SUMMARY 66 I New organization structure: 67 1. Chart of new organization structure: 67 2.
Evaluation of new organization structure 70 3. Advantages of the Vietinbank new organization structure: 88 II Anticipating basic risks and providing solutions to developm new 90 organization structure 1. For administration of change 95 4. Legal risks 95 III Plan for implementation: 96 1.
Collecting ideas, amending and finishing organization structure: 97 3. Preparing leadership and management human resources according 97 to new organization structure 4. Supports on finance and administration 97 5. Evaluation of result and adjustment 99 6.
Schedule for the implementation of restructuring 99 IV Some proposals 100 1. For Authority Bureax 100 2. For Vietinbank 100 CONCLUSION 102 REFERENCE 104 LIST OF ABBREVIATIONS 6 ALCO Assets & Liabilities Management Committee CRCO Credit Committee ORCO Operational Risk Committee VIETINBANK Vietnam join stock commarcial bank for industry and trade INTRODUCTION 7 1. Topic RESTRUCTURING IN DEVELOMENT STRATEGY OF VIETNAM JOINT STOCK COMMERCIAL BANK FOR INDUSTRY AND TRADE 2.
Reasons to choose the topic Organizational strutucture is the core systems of a business, a background factor to ensure implementation of goals and strategies of its development. The well- organized organizational structure will strengthen the abilities to implement planned business strategies. And on the contrary, when the organizational structure is not suitable, the business’s development will be limited and business strategies can be impossible task. When there are many changes in the business environment and internal business conditions, it is necessay for business to have new business strategies or adjust the current business strategies and restructure the organization for ensuring the perfect implementation.
Banking industry in Vietnam is in the new business period – the period that Vietnam integrates fully with the world. The banking industry is opening according to WTO route and forming an equal and strong competitive environment among Vietnam banks and foreign banks. The internal conditions among Vietnam banks also change strongly from ownership structure, managing mechanism, resources, customer foundation, business network and so on. So Vietnam banks need to buy a business strategy and restrutureing organization in order to ensure the implementation of targets and business strategies.
From 1989, Vietnam banking industry is divided into 2 levels – State banks and Commercial bank. With the characteristics about historical conditions, economic development, finance, managing level, Vietnam Commercial Banks has considerably underdeveloped organizational structure compared to the growth rate of the world banking system and industry’s business development requirements in the conditions of opening Vietnam economu. In general, the insufficient organizational struture is one of the main reasons which can restrict the development strategis of Vietnam Commercial Banking system. 8 The primary insufficient factors can be summerized in the Vietnam Commercial Banks system as following: The organizational structure focuses on functions, while the focus toward the business customers and the market segment is not focused.
The organization structure in multi-levels can slow the speed to make decisions in managing and business strategies. The organization structure refers supporting functions, so the bussiness tasks are not located in the center position. The operation mechanism is severe and create conditions to develop the authorative, powerful and formalism administrative system. The organization structure is bound hardly and slow in changing and difficult to change.
So, organization restructuring become a indispensable and urgent problems in Vietnam Banks in current period. This is also the key requirements for Vietinbank, and so we decide to choose this topic to research and apply the knowlege in GaMBA program which contribute in building the theoretical foundation in restructuring Vietinbank. Research purposes: Defining the theoretical and real foundation, systematizing the organizational structure and choosing the modern organizational structure in order to develop Banks in new business period. And from that, applying these knowlege in Vietinbank.
Scope of research: The research scope of the project including the problems about organization, business strategies, organizational behavior, human resources management. Method of research This report uses the research methods on events in Vietnam Banks and some world banks, and it uses the analysing and collecting method. Research data 9 The report uses some secondary data which is the statistical data in Vietnam Banks and business operation data in Vietinbank 7. Report’s meaning: Building some perfect organizational scale for Vietinbank to develop banks in the new business period and carry out the efficiencies on new business strategies, is the pioneer sample as the reference for Vietnam banks in the process of restructuring their organization.
The report’s restructuring: The topic only focus on restructuring Vietinbank’s organization in the business scope, and not yet solved the organizational structure problem in subsidiary companies and joint ventures of Vietinbank. The planned results of reports: Contributing partly theoretical foundation to carry out the organization restructure in Vietinbank. Report’s struture: Introduction Chapter 1: Theoretical background – some issues about organizational structure and organizational restructure. Chapter 2: Statement in business operation, organizational structure of Vietinbank and the process to choose new organizational structure.
Chapter 3: New organizational structure and plans to carry out the organizational restructure of Vietinbank. Conclusion 10 CHAPTER I THEORETICAL BACKGROUND SOME ISSUES ABOUT ORGANIZATIONAL STRUCTURE AND RESTRUCTURING SUMMARY Chapter 1 will mention some theoretical background of organizational structure and organizational restructure. The writer group will deeply research the definitions, contents and roles of organizational structure for business operations. Next, we will analyse in the theoretical aspect in order to make the problems which have organic relation which organizational structure and restructure clear, they are problems about: business strategy, organization behavior, human resources management.
In this chapter, we also focus on describing organizational structure forms and giving out some organizational structures for banking industry. Finally, we will make clear some primary contents about organizational restructure such as reasons, requirements and conditions of restructuring as well as necessary attentions in the restructuring process in Vietnam business. Primary contents of organizational structure: There are many meanings about organizational structure and a definition is consideres as mostly exact in “Handbook of businessmen” which is collected and shown by Business Forum Magazine: “Organizational structure is the ways that busines allocates, arranges units, departments and individuals in roles, specific functions in order to be suitable with business’s characteristics”. According to Peter S.
Rose (Rose, Peter S., 1987 – “The Changing Structure of American Banking”, New York, Columbia Universtity) – on the system management perspective, organizational structure includes following three levels: Macro organizational structure level: is the way to arrange, organize postitions and roles of each unit and individual in business Micro organizational structure level: is the way to regulate rights and obligations of each unit and individual in business. Supporting system: includes the administration system, the process to manage the business developement, Hanoi cultural system and managing system. Business will not carry out its functions efficiently if these three levels are not established rightly in order to ensure the operation thouroughly. In the organizational structure, there are two primary contents: division of labor and work mix.
These two contents are shown in the four main components, they are: controlling structure, bulky and light structure, centralized and decentralized structure, formalized structure. Division of labor: The division of labor is the way to divide big problems into smaller ones for each individual. The division of labor can easily lead to specialization and increase in labor productivity. Work mix: When the work is divided among staff, the combination methods are still necessary to ensure that everyone will work in agreement.
All big or small organizations use one or more than combination methods: normal communication, formal and standardized level system,. 12 The combination by normal communication: this way appears in all organization and it is an important combination. It shares information in the missions which need the combination, as well as create the general thinking for staff and it is synchronized by the map of thought as following. Normal communication allows great flexibility because staffs communicate with others by information directly or by the other plentiful channels.
The combination by the formal level system: When an organization is larger, it will develop the formal level system. The level system centralizes power for each individual who will use this power to decide their works and allocate resources. Otherwise, works are combined by the supervision. The formal level system will also combine works between business administrators basing on organization’s division of operation.
The combination by the standardization: The standardization is to create general rules in behaviors and working results. The standardization is carried out by standardizing individual targets or group targets, standardizing process and results, job descriptions. Divisions of labor and work mix are two primary factors of any organization. The problems like: how to divide works? Who will decide? Which are methods paid attention to? They are related to four components of a structure.