ACKNOWLEDGEMENT First of all, we would like to send our gratitude to the board of directors, all lecturers and professors of Center for Education Technology & Career Development, Vietnam National University Hanoi and Griggs University – USA for creating best conditions for us to study during the MBA course and to complete this capstone project report. We also would like to thank all other members of Global Advanced, especially the department of class assistants. Without their help, we could not receive positive results from studying. In addition, we would like to express my deep and sincere gratitude to managers and officers of Quang Minh branch - Vietinbanch.
They supported us so much by providing valuable information and data to complete this report. Although we tried best ourselves the research could not avoid some certain shortcomings. We would like to receive comments and contributions from professors and other students to make the report more precise and practical. 1 CHAPTER I: BASIC THEORIES OF STRATEGIC MANAGEMENT APPLIED IN BANKING INDUSTRY.1 Concepts and process of strategic management.1 Concept of strategy:.3 Strategic management process.
Process of developing business strategy. Defining functions and duties (defining business mission) and objectives of business strategy. Analysis of external environment. Analysis of internal environment………………………………………….
Analysis of SWOT matrix. Selecting best strategy. 23 Conclusion for Chapter 1.25 CHAPTER 2: DEVELOPING BUSINESS STRATEGY PERIOD 2010 – 2015 FOR VIETNAM JOINT STOCK COMMERCIAL BANK FOR INDUSTRY AND TRADE – QUANG MINH BRANCH. Brief information about Vietnam Joint Stock Commercial Bank for Industry and Trade - Quang Minh Branch.
Establishment and Development. Analysis of external environment. Analysis of macro-environment:. Analysis of industry environment (the Five Competitive Forces of Michael E.
Evaluation of opportunities and threats for banks. Analysis of internal environment of Vietinbank Quang Minh. Analysis of resources:. Analysis of sectors and functions of management.Evaluation of Strengths and Weakness.
Analysis of SWOT:. 58 CHAPTER 3: MEASURES OF STRATEGIC EXECUTION PERIOD 2010 -2015 FOR VIETINBANK QUANG MINH. Business objective of Vietinbank Quang Minh vision 2015:.2 Specific objective vision 2015. Identifying alternative strategies:.
Measures for implementing the strategy:.1 Measure of human resource development. Solutions to organizational restructure.5 Building organizational culture.81 Conclusion for Chapter 3.84 4 LIST OF TABLES Table 2.1: Organizational structure model of VietinBank Quang Minh Table 2.2:Vietinbank Quang Minh’s ATM network Table 2.3: Income Statement Table 2.4: Vietnam GDP growth rate period 2002-2009 Table 2.5: Economic Growth Rate of Me Linh District Table 2.6: Export-Import Turnover Table 2.7: Structure of total means of payment period 2004 -2008 Table 2. Comparison of major competitors with VietinBank Quang Minh on Me Linh District Table 2.9 : Capital mobilization of Vietinbank Quang Minh and other bank in Me Linh district period 2007-2009 Table 2.10: SWOT Matrix Table 3.1 : GREAT-based analysis 5 ABBREVIATIONS Vietinbank: Vietnam Joint Stock Commercial Bank for Industry and Trade Vietinbank Quang Minh: Vietnam Joint Stock Commercial Bank for Industry and Trade – Quang Minh branch ROA: Return On Assets ROE: Return On Equity GDP: gross domestic product SWOT: Strengths, Weaknesses, Opportunities, Threats IT: Information technology 6 INTRODUCTION I. Background Vietnam has approached the market economy for over 20 years.
This duration is not too long as well as too short for Vietnamese enterprises to apply management methods of the market economy procedure. Strategic management has been considered as one of the most useful business theories which can help enterprises to achieve successes in a long – term. The way they are using these theories, however, should be re-considered in almost all organizations in Vietnam. Purposes of the research The research focused on following issues: - Fundamental theories of strategy and strategic management.
- Useful models to analyze the process of establishing and choosing strategy. - The real situation in which Vietinbank Quang Minh has been implementing its strategy. - Analyze factors of the external and internal environment which affect on Quang Minh branch’s strategy - Appropriate solutions to build the development strategy for Vietinbank Quang Minh. Objective, scale and methodology - Objective and scale: The research focuses on current strategic management activities of Vietinbank Quang Minh and provides some solutions for the period of 2010-2015.
- Methodology: The research used two kinds of information sources: Primary and secondary information. The secondary information came from various sources. 7 However, a major percentage of them were from reports about current business situations of Vietinbank Quang Minh. Besides, they were also gathered from many opened sources such as internet and books.
Structure of the report Chapter 1: Basic theories of strategic management applied in banking Chapter 2: Building development strategy for Vietinbank – Quang Minh Branch from 2010 to 2015 Chapter 3: Some solutions to perform strategy for Vietinbank Quang Minh from 2010 to 2015 8 CHAPTER I: BASIC THEORIES OF STRATEGIC MANAGEMENT APPLIED IN BANKING INDUSTRY 1.1 Concepts and process of strategic management 1.1 Concept of strategy: “Strategy is a series of complex actions for the purpose of mobilizing organizational resources to achieve a specific target.” (Textbook of strategic management, GaMBA 2009) Business strategy is an overall long-term plan or an overall action plan to deploy organizational resources for the purpose of achieving set targets of the organization in alignment with environmental changes. For banking industry, “Strategy of a bank is an overall and long-term action plan to bring about a certain development for bank, a pre-commitment of basic and comprehensive targets which a bank should achieve, and a deployment of important resources to achieve those targets in future operation environment (Textbook of Banking Management and Business – Banking Academy 2002). Strategic management: Strategic management is the top priority of any senior manager. Sometimes, the task is assigned for not only any individual but also a group of executives in that organization or enterprise.
Although the term is widely used and discussed, not every manager fully understands its meaning, which may cause mistakes, even at expense of that enterprise’s survival. Strategic management is a process of analyzing current environment, predicting future conditions, identifying missions, targets and strategic programs, implementing, measuring actual performance of such targets and strategic programs. 9 Strategic plan is an important part of strategic management process of banks. It is resulted from the bank’s long-term development goals and outlines action plan of the bank’s management to achieve these goals.
Therefore, the plan is described to be strategic management that banks will implement through categorizing specific goals. The bank’s plan also describes strategies it pursues in the form of management of action plan in order to change business operation under the management’s control. Strategic management includes five basic and closely-related tasks, which can be described as follows: Figure 1: The five tasks of strategic management Evaluating performance, Crafting a Implementing Developing a reviewing Setting Strategy to and executing Vision and a situation and objectives achieve selected Mission initiating performance strategies corrective adjustments Adjust, if Adjust, if Improve/ Improve/ Recover 1, required required change, if change, if 2, 3, 4 required required If required 10 (Source: “The five tasks of strategic management”, Textbook of Strategic management – Statistics Publishing House 2009). Necessity of Corporate strategic management: Strategic management now becomes more and more important to the survival and development of an enterprise.
If strategic management is not applied, enterprises will develop their plans by analyzing resources, crafting subjunctive plans of sustainable conditions. Therefore, their long-term plans will be ineffective. Especially today competitiveness level is harder than ever, those enterprises can’t react flexibly against changing environmental conditions. Good strategic management will bring about good opportunities and pro-active competitive position for all enterprises.
Good strategic management should be essential to the survival of each enterprise. - Strategic management will help enterprises have a clear overview of their objectives and directions. Strategic management will show enterprises their position on the road to achieve objectives. - All organizations, including enterprises are operating under their own environmental conditions, which change continuously.
Besides new opportunities from such changes, they also bring new challenges for enterprises, especially under abrupt and sudden change. Therefore, how we can exploit those opportunities and moderate such challenges concerns all managers. Obviously, those opportunities and challenges can be identified in advance based on strategic management, which pays special attention to future conditions. Managers are required to analyze and predict possible conditions with strategic management.
Therefore, enterprises can imagine and forecast future to exploit opportunities and mitigate possible risks and bad influences. Enterprises applying strategic management can react actively and positively against environmental changes. In contrast, enterprises not applying strategic management 11 always deals with environmental change in a passive way or after changes have taken place. - Strategic management helps enterprises implement their strategies effectively, so they can achieve best objectives.
In conclusion, today strategic management is one integral part in corporate management. Without strategic management, enterprises will work ineffectively, not under any action framework, which makes them unable to survive for a long time to achieve their set targets. However, enterprises will obviously achieve success using good strategic management activities. Unsuitable strategic management may cause enterprises stray from its objectives and deviate from essential requirements.
Most enterprises now concentrate on developing strategies only, rather than methods of implementing them. Although, strategic planning is the most important stage during strategic management, it will become useless if those strategies are not executed effectively.3 Strategic management process Strategic management process includes commitments, decisions and actions which companies should develop to achieve strategic competitive advantages, sustainable competitive advantages and above-average profit. Strategic competitive advantage is obtained while companies develop and execute its value-creation strategies. Sustainable competitive advantage is obtained while company can develop unique strategies which other companies don’t have.
This advantage can bring about other advantages which both existing and potential competitors can’t have access. Above-average profit is the amount of profit beyond expectation of investors obtained from a similarly risky investment. 12 Figure 2: Strategic management process Input Internal environment Strategic intention Strategic External mission environment Developing strategy Implementing strategy Strategic Action Corporate- Active Corporation Corporate Structure level strategy competition -level governance and strategy management Acquisition International Cooperation Leadership Corporate and re- strategy strategy strategy start-up and structuring innovation Strategic outcome Feedback Above-average profit strategy (Source: “Strategic management process” – Textbook of strategic management – Griggs University) 13 1. Process of developing business strategy Process of developing business strategy is also process of business strategy planning.
Business strategy development is the process of identifying missions, basic objectives of company’s business activities; and best methods and practices to achieve such missions and objectives. Strategy development is considered as the most important stage of strategic management, because specific strategy with specific objectives and actions will be developed after this. Results from this stage will directly determine success or failure of company. This stage also takes biggest amount of time and resources.
Therefore, strategic planning capacity is the top requirement will all managers. A process of building strategy includes: - Determining functions and duties - Assessing external environment, including micro- and macro-environment - Assessing internal environment (internal sector environment) - Analyzing and selecting strategies. Defining functions and duties (defining business mission) and objectives of business strategy Business mission: Business mission of a bank is the very business objective of that bank, also the reason for its establishment, existence and development. Bank’s business mission will answer the question: For what a bank is established and exist? Qualified business mission firstly must be customer-oriented because they are considered as a determinant for bank’s existence, which use and pay for bank’s products and services.
Customer’s satisfaction will decide bank’s business 14 performance. Banks can control the situation through maintaining and developing customer relation. Important components of a business strategy: Customer: who are bank’s customers? Are they corporate customers, retail customers or both of the? Each bank will have different “target customers”. Some banks focus on wholesales activities for big projects, big customer.
While some other banks concentrate on retail activities for individual customer, households, small and medium enterprises, etc. Products and services: What are bank’s products and services?