INTERNATIONAL BUSINESS ADMINISTRATION MASTER PROGRAM COMMITTMENT We confirm the content of the graduation report (Capstone Project) presented in this study is the work of our group which is not copied from other works and the data used in the study are true from the original sources. We will be responsible for any error. Members of the group 1 INTERNATIONAL BUSINESS ADMINISTRATION MASTER PROGRAM ACKNOWLEDGEMENTS We would like to thank the teachers who helped us study the theory and analysis of the business environment of BaoViet insurance and offer Vietnamese and strategic business plans. Based on our group analysis, we strongly suggest strategic business options to BaoViet insurance in next five years and we raised a number of macro and micro solutions.
The solutions show the directions needed to be changed and improved to implement the business strategy of the corporation. However, our degree is limited and these suggestions are our subjective opinions, our graduation subject still has some shortcomings. We look forward to your contributions to the subject. We would like to thank the teachers who have helped our group complete this subject.
2 INTERNATIONAL BUSINESS ADMINISTRATION MASTER PROGRAM TABLE OF CONTENTS CONTENTS PAGE INTRODUCTION 11 12 CHAPTER 1: RATIONALE 12 1. Concept and role of strategic management 12 1. Role of strategic management 13 1. Process of business strategy 14 1.1 Analysis of external environment – PEST model (Politics, Economy, Society, Technology) 15 1.2 Analysis of sector environment - Michael E.
Porter’s 5 competitive force model 16 1. Testing and evaluation 16 1. Matrix used to analyze business strategy 17 1. External factor evaluation matrix (EFE matrix) 17 1.
Internal factor evaluation matrix (IFE matrix) 17 1. Competitive Image Matrix 17 1. SWOT matrix CHAPTER II: ANALYSIS OF BAO VIET INSURANCE SITUATION 18 2. Summary of Finance - Insurance Corporation – Establishment and 18 development process 2.
Finance - Insurance Corporation 18 2. BaoViet Insurance Corporation 19 2. Strategic planning process 22 2. Business environment of non-life insurance in Vietnam 22 2.
External environment 22 3 INTERNATIONAL BUSINESS ADMINISTRATION MASTER PROGRAM 2. Insurance environment and competition 24 2.2 Assessment of five competition factors in insurance 32 2. Situation of Bao Viet Insurance 34 2. Assets and capital 34 2.
Turnover - market shares 34 2. Costs - direct business efficiency 36 2. Main values of non-life insurance 37 2. Existing value line of BaoViet insurance 37 2.
Matrix for choosing business strategy 39 2. Matrix for external factor evaluation (EFE) 40 2. Matrix for Internal Factor Evaluation (IFE) 41 2. Generalized matrix of Internal-External (IE) Factors 41 2.
Competitive Image Matrix 41 2. SWOT matrix 42 CHAPTER III: BUSINESS STRATEGY FOR BAOVIET INSURANCE 46 PERIOD 2011 - 2015 3. Mission, vision and business philosophy 46 3. Strategic objectives to 2015 47 3.6 Human and knowledge resource management 50 3.7 Compliance improvement 51 4 INTERNATIONAL BUSINESS ADMINISTRATION MASTER PROGRAM 3.
Business strategy selection 52 3. Basis for choosing business strategy 52 52 3. Using SWOT matrix 56 3. Quantitative strategic planning matrix (QSPM) 57 3.
Objective value line of BaoViet insurance 57 3. Objective value line1 58 3. Objective value line2 59 3. Objective value line3 59 3.
Forecast to the growth of Vietnam nonlife insurance market 60 3. Applied strategic solutions 60 3.1 Motor vehicle insurance 61 3.2 Health care and Personal accident Insurance 62 3.3 Marine and Inland Cargo Insurance 63 3.4 Hull insurance and Ship-Owner’s civil Liability Insurance 63 3.5 Fire and special Perils insurance 64 3.6 Energy and aviation insurance 64 3. Solutions to develop distribution channels and Marketing 65 3.5 E Commerce and Tele Sales 5 INTERNATIONAL BUSINESS ADMINISTRATION MASTER PROGRAM 3.6 Trade mark building and marketing 66 3. Business supporting solutions 67 3.4 Human and knowledge resource management 68 3.
Strategic solutions of financial investment 69 3.2 Financial investment strategy 69 3.3 Strategic solutions of facility investment 69 3. Implementation process of major measures 70 3. Some recommendations to state management agencies 71 CONCLUSION 73 74 6 INTERNATIONAL BUSINESS ADMINISTRATION MASTER PROGRAM LIST OF FIGURES - TABLES Figure Name Page Chapter 1 Figure 1.1 Processes of business strategy formulation 14 Table 1.2 Pest mode 14 Figure 1.Porter’s Five Forces of Competition Model 15 Figure 1.4 The matrix used for analysis 16 Chapter 2 Table2.1 Structure of BaoViet Finance - Insurance Corporation 18 Table 2.2 Structube of BaoViet insurance 21 Table 2.3 Financial data summary in 2008-2009-2010 22 Table 2.4 Number of non- life insurance companies in Vietnam 24 Table 2.5 Non – life insurance fee and GDP 25 Table 2.6 Market share – main services of competitors 27 Diagram 2.7 Origin insurance fee turn-over market share 6 months-2011 28 Table 2.8 Rising speed in main services of competitors 29 Diagram 2.9 Origin insurance fee turn-over rising in 6 months compare 29 with the same time of 2010 Table 2.10 DOMESTIC INSURANCE COMPANIES 30 Table 2.11 FOREIGN/JOINT-VENTURE INSURANCE COMPANIES 30 Table 2.12 Assets and capital 34 Diagram 2.13 Original insurance turnover and market share of BaoViet 35 insurance through years Table 2.14 Original compensation – market and BaoViet insurance 36 Table 2.15 Costs- business efficience of BaoViet insurance 36 Table 2.16 Existing value line of individual products 38 Table 2.17 Existing value line of business products 39 Table 2.18 Matrix for external factor evaluation (EFE) 39 Table 2.19 IFE Matrix 40 7 INTERNATIONAL BUSINESS ADMINISTRATION MASTER PROGRAM Table 2.20 IE Matrix 41 Table 2.21 Competitive Image Matrix 41 Chapter 3 Table 3.1 Distribution channels 48 Table 3.2 The estimated propotion distribution channel to 2015 48 Table 3.3 SWOT Matrix of BaoViet Insurance 55 Table 3.4 QSPM selects strategies for BaoViet Insurance 56 Figure 3.5 Target 1: The new value line of individual products 58 Figure 3.6 Target 2: The new value line of individual products 59 Figure 3.7 Target 3: The new value line of business products 59 Table 3.8 Forecast to the growth of Vietnam nonlife insurance market 60 8 INTERNATIONAL BUSINESS ADMINISTRATION MASTER PROGRAM INTRODUCTION 1. General context, necessity and importance of the research Insurance is a financial sector which is very important for nations in general and Vietnam in particular.
Insurance is the measure of risk moving and today it has become one of the effective measures of capital mobilization for the economy. In fact, insurance business has shown the continuous growth of the insurance industry and the potential future development. However, Vietnam's insurance market is being diversified with high-speed, market opening pressures and growing challenges of integration. Insurance business is risk business, loss-sharing with customers, insurance products are specific, private and abstract services which are more concrete and practical than other products in the market when the terms of the insurance contract is executed promptly and efficiently.
For customers, paying the premium is to purchase the peace of mind at work and to share concerns about the risks which can happen in life. For the community, insurance contributes to regulating the balance of income, social benefits and stability. Insurance market of our country in recent years has been very dynamic and diverse. The number of insurance companies is rising; there is a diversity of ownership forms in both life insurance and non-life insurance, under three areas of human insurance property insurance and civil liability insurance; the competitiveness of the companies have gradually met the needs of customers.
For an insurance company, the capacity of capital, technology, management skills and business. are very important elements to create power. If insurance companies in the country do not make any improvement and strengthen the capacity, today it will be hard for them to survive and succeed in severely competitive. Right now, domestic insurance companies need to create their own firm position, to maintain and to expand market shares, to create confidence from consumers.
Insurance companies should diversify products, improve service quality, focus on customer care and make quick and reasonable compensation in case of 9 INTERNATIONAL BUSINESS ADMINISTRATION MASTER PROGRAM insurance risks. Train and professional improvement, service style, enhancing professional ethics for business officials and insurance agents are essential. Insurance companies need to grasp and apply quickly achievements of technology science, especially information technology to the process of business exploration and management to improve business efficiency, to save management cost and to lower premiums appropriately. Investment activities should be promoted effectively by utilizing financial investment instruments and participating actively in the stock market.
When companies invest in projects with large capital, they should focus on evaluation to ensure the safety and the profitability from the capital. In the context of increasingly fierce competition, trade promotion is one of the basic elements to the success of a business. In the insurance sector, this factor plays a very important role, especially in Vietnam today, people's awareness of the role of insurance for the economy and social life is still limited. This is a good opportunity for insurance businesses to increase people’s awareness of insurance and to build their companies' image among potential customers.
With the current economy, the strategic direction of business in accordance with the specific characteristics of each company to survive, to develop and to improve competitiveness is the most urgent need at present. Research purposes The purposes of the subject are to analyze and to evaluate the level of competition in the insurance sector in order to build a competitive strategy consistent with the planned strategic objectives to create differences of BaoViet Insurance and to offer solutions to improve competitiveness. Research Methodology - Based on research models such as PEST model, Michael Porter's five force model and SWOT matrix model combined with the theory of competitive advantages to build the business strategy of the enterprise. 10 INTERNATIONAL BUSINESS ADMINISTRATION MASTER PROGRAM - Data collection method: Using data from published documents; surveys of insurance market research made by professional market research companies, Association of Vietnamese Insurers, on magazines and on the Internet.
combined with analysis, synthesis and comparison. to clarify and specify the research content of the subject. The structure of the research The research is structured as follows: Preamble Chapter I: Rationale Chapter II Analysis of BaoViet insurance situation Chapter III Business strategy for BaoViet insurance period 2011 - 2015 Conclusion 11 INTERNATIONAL BUSINESS ADMINISTRATION MASTER PROGRAM CHAPTER I RATIONALE 1. Concept and role of strategic management 1.
Concept According to Fredr. David: Strategic Management can be defined as an art and science establishing, implementing and evaluating decisions relating to many functions that allows an organization to achieve its goals. David, concepts of strategic management ) The important feature is that all business strategies used to distinguish business plans are "competitive advantages". In fact, no competitor does not need a strategy because strategies help businesses find and win sustainable advantages.
Role of strategic management Strategic management process helps organizations find their purposes and directions. It makes managers consider and determine which directions their organizations should follow and when they will reach certain positions. The awareness of desired results and future goals helps managers and employees understand what needs to be done to achieve success. This will encourage both objects to achieve short-term performances to improve long-term interests of the organization.
Environmental conditions that organizations face always changes. These rapid changes normally create opportunities and risks. Using strategic management helps managers see opportunities and risks in the future. The planning processes include managers’ predictions of environmental conditions in the future.
Meanwhile, the strategic management process forces managers to analyze and predict the environmental conditions in the near future as well as in the far future. Therefore, managers can see clearly the future environment and they will be able to grasp opportunities, take advantages of the opportunities and reduce risks relating to environmental conditions. Based on the strategic management process, enterprises will be attached to proposed decisions with relevant environmental conditions. Companies try to 12 INTERNATIONAL BUSINESS ADMINISTRATION MASTER PROGRAM achieve an active position or a attacking passive one because the variation and complexity of the environment is increasing more and more.