CAPSTONE PROJECT REPORT BUILDING BUSINESS STRATEGY FOR VIB’S WHOLESALES BANKING DURING THE YEAR 2011 - 2015 Luong, Trinh Van (Mr) Nga, Pham Minh (Mrs) Thuy, Nguyen Thi (Mrs) Trang, Nguyen Thi Doan (Mrs) Class: GAMBAN04 H A N O I 2 0 1 1 1 Acknowledgements We certify that all the content of this project is the effort during the process of studying, understanding as well as topic selection by the author team members (besides the reference document and data enclosed). We hereby acknowledge that this written project has not been collected by any other studying or training program. Ha noi, 29th November 2010 The Author group 2 INTRODUCTORY 1. Rational: Nowadays, it’s increasingly fierce competition among domestic commercial banks.
The competition between domestic banks and financial institutions is on the same trend. On the financial and banking market, there are more and more investment funds, insurance firms, new urban banks and securities companies., which cause the market more exciting. This will ultimately create more investment channels for corporate and financial services for people. However, these financial institutions will compete directly with banks on fund mobilization and investment, and the industrial rivalry of the banking sector itself will be extremely tough.
On the other hand, according to the WTO integration roadmap and Vietnam – USA trade agreement, Vietnam committed to treat fairly between domestic and foreign banks in banking services by removing the entry barriers to the domestic banking services. According to its WTO commitments regarding the service sector, Vietnam will permit foreign banks to set up wholly foreign-owned banks in the country. The banking sector is expected to be a post-WTO hotspot in terms of development and competition. While, in comparision with foreign banks, Vietnamese commercial banking system is still weak regarding various aspects such as: Capital source, management experience, business skill, technology, services diversification and quality and risk management.
This requires each commercial bank to work out an appropriate solution to develop and enhance the competitive capacity, master the domestic financial market and reach to international markets. With these considerations in mind, for long-term survival and sustainable development, Vietnamese commercial banks should build up a suitable strategy which match well with the bank’s typical features in different development stages. 3 Therefore, our group selected topic “Building business strategy for VIB’s wholesales banking during 2011 – 2015” for our capstone project”. Research objective: - Systematic presentation of literature review on enterprise’s business strategy - Strategic analysis on the wholesales banking market of VIB - Strategic suggestion and implementation solution of VIB during 2011 – 2015.
Research object and scope: - Object: VIB’s business strategy for wholesales banking - Scope: Vietnamese market, duration 2011 – 2015. Research methods: Qualitative method is used with following: - Using secondary information to review the strategic issues and influencing factors on the process of strategy formulation and implementation. - Using analysis, comparision and synthesis. Expected outcomes: Help VIB’s Wholesale banking top leaders to review business strategy, then propose an appropriate business strategy for 2011 – 2015 to expand the market and improve effectiveness.
Research structure: In addition to introductory and conclusion, the main content include 3 chapters: - Chapter 1: Literature review on business strategy. - Chapter 2: VIB’s wholesale banking business strategy analysis. - Chapter 3: Suggestion on a business strategy and implementation solutions for VIB during 2011 – 2015. 4 ABBREVIATED LIST B2B Business to Business B2C Business to Consumer BC&FDI Big clientele and Foreign direct investment enterprises CARG Compound Annual Growth rate CRM Customer Relationship Manager EAT Earning after tax FX Foreign Exchange GDP Gross Domestic product HCMC Hochiminh city HR Humane Resource HSBC Honking Shanghai Banking Corporation IDRC International development research centre JSCB Joint stock commercial bank of Vietnam KPI Key Performance Indicator MB Military Joint stock Bank MFN Most Favored Nation MSB Maritime Joint stock Bank NIM Net interest margin NPL Non - performing loan PEST Political, Economic, Social and Technology R&D Research and Development SBV State Bank of Vietnam SMEs Small and Medium enterprises 5 TABLE OF CONTENT CHAPTER 1: THEORETICAL BACK GROUND ON BUILDING BUSINESS STRATEGY FOR ENTERPRISES.
Definitions on strategy. Roles of strategy. Types of strategies. Business Strategic Planning Process.
Defining the mission and key goals. Macro environment analysis. Industrial Environment Analysis. Internal environment analysis.
SWOT Analysis Matrix. Types of Generic Strategies. GREAT model - Selecting the optimum strategy. Strategy Implementation and Adjustment.30 CHAPTER II: ANALYSIS ON VIB’S WHOLESALE BANKING BUSINESS STRATEGY.
Overview of Vietnam International Bank (VIB). Foundation and Development of VIB. VIB’s organizational structure and franchise network. Some key financial indicator:.34 BUSINESS RESULT OF VIB WHOLESALE BANKING IN 2010.
Business environment analysis of the Bank.37 CHAPTER 3: PROPOSAL OF BUSINESS STRATEGY AND IMPLEMENTATION SOLUTIONS FOR VIB’S WHOLESALE BANKING DURING 2011-2015. Vision, mission and core values. SWOT analysis matrix and strategic orientation by the year 2015. Strategies and selection of optimum business strategies for period 2011 - 2015.
Selection the optimum strategies according to GREAT model. Customer oriented strategy. Technology strategy and facility development:. Human resource strategy:.
Completing organizing structure of corporate client section. Strategic implementing conditions:.87 7 CHAPTER 1: THEORETICAL BACK GROUND ON BUILDING BUSINESS STRATEGY FOR ENTERPRISES 1. Definitions on strategy Quinn1 define strategy as an illustration or plan which integrates key objectives, policies and chain of activities in a whole tight composition.Gluek defined strategy precisely as: “A unified, comprehensive and integrated plan designed to assure that the basic objectives of the enterprise are achieved”. The three adjectives, which Glueck has used to define a plan, make the definition quite adequate.
‘Unified’ means that the plan joins all the parts of an enterprise together; ‘comprehensive’ means it covers all the major aspects of the enterprise, and ‘integrated’ means that all parts of the plan are compatible with each other. In summary, strategy is an orientation and scope of an organization in long term in order to gain the competitive advantage for institution by defining all resources in a changing environment to meet the market demand and satisfy expectations of relate parties. Roles of strategy - Create the relation between strengths and weakness of the company, the mutual supporting relation between opportunities and challenges outside the company, and then create the competitive advantage for enterprise. - Help the manager to see the opportunities and threats that may happen in current and future business in order to make analysis and forecast the future market, take full advantage of opportunities, reduce the threats, improve the competitiveness of enterprise, and achieve great success.
8 - Help the enterprises to create better business strategy via using systematic approach, creating base for and increase the connection among internal members in realizing the common target of the enterprise. Types of strategies. - Classification by strategy level: +/Corporate strategy (General strategy refers to the overarching strategy of the diversified firm. Such a corporate strategy answers the questions of "which businesses should we be in?" and "how does being in these businesses create synergy and/or add to the competitive advantage of the corporation as a whole?" +/Business strategy (sector): Business strategy refers to the aggregated strategies of single business firm or a strategic business unit (SBU) in a diversified corporation +/ Functional Strategy: include marketing strategies, new product development strategies, human resource strategies, financial strategies, legal strategies, supply-chain strategies, and information technology management strategies.
- Classification by the strategy content. Regarding the strategy content, the managers can define strategy in different types: +/ Marketing, commercial strategy +/ Financial Strategy +/ HR Strategy +/ Technology Strategy 1. Business Strategic Planning Process. The business strategic planning is regular task which requires the involvement of all enterpirse memebers.
It includes following steps. 9 THE MANAGING THE STRATERGY PROCESS Determine visibility and its mission Analysis outside Analysis internally (Opportunities & (Strengths & Threats) Weaknesses) Determine the main targets Set-up strategy on levels of - corporate leader - marketing network - government authority - global worldwide Define and Distribute Implement the strategy Corporate Structural the sources on actual business to organization & internal reach the integration control 10 Figures 1.1: Process of managing the strategy. Source: Le The Gioi, Nguyen Thanh Liem and Tran Huu Hai, “Strategic Management”, Statistical Publishing House, 2009) 1. Defining the mission and key goals - Defining the organizational mission: While a business must continually adapt to its competitive environment, there are certain core ideals that remain relatively steady and provide guidance in the process of strategic decision-making.
These unchanging ideals form the business vision and are expressed in the company mission statement. - Defining the strategic goals: In strategic planning all parts of the process are important, but perhaps the most important part involves developing your strategic, corporate goals, objectives and business goals. Much of the analysis you do in strategic planning is designed to help you develop achievable goals that reflect the business realities in your sector and environment. Macro environment analysis PEST analysis is a technique used to identify, assess and evaluate external factors affecting the performance of an organization.
A PEST analysis is undertaken to help an organization gain an understanding of the wider business environment and may be carried out as part of an ongoing process of environmental analysis or scanning. The aim is to provide information to assist those responsible for strategy development and decision making. PEST analysis may be used in the context of overall organizational strategy or more specifically to evaluate the feasibility of a new product or service, or expansion into a new market. To facilitate the analysis, environmental scanning has traditionally focused on four types of factors which may have an impact on the success of an organization: political, economic, social (or sociological) and technological factors.
These four areas form a simple framework for the analysis, although it should be borne in mind that there will be varying degrees of overlap and interrelation between them. Economic environment In the economic environment, the organizational analysis should centre on those aspects of the economic system that directly impact the type of project being considered. For example, inflation, labor laws, and opportunity costs for researchers in public institutions directly impact organizational activities.2: Macro Environment Political - Legal Economic Threat from new entrants Global Supplier power Rivalry Buyer power Threats of Technological substitutes Demographical Cultural Social (Source: « Strategic Management: Concepts and Cases: Competitiveness and Globalization »’ Micheal Hitt and all, 2010) Clearly, a country under a structural adjustment regime or one that is expecting to undergo restructuring presents an investment context that IDRC needs to understand. Countries with foreign currency restrictions represent different environments for institutions than countries without them, for such restrictions have ramifications for research, e.
for equipment procurement and maintenance. It is important for IDRC to know how the organization the Centre is supporting is affected by these and other economic forces. Governmental, Legal, Political environment. At a general level, IDRC needs to understand the relationship between governmental strategy or development plans and the institution.
Several specific dimensions of the political context should be scrutinized: - The extent to which government and its bureaucracy supports and contributes resources to the institution: It is imperative that IDRC and other funding agencies know whether significant governmental inputs are anticipated to support increased staffing, maintenance, or other recurring costs typical in research projects. The political context usually entails resource trade-off decisions at the government level. - The extent to which the political system is stable or poised to undergo significant change: This factor is vital; the foreign policy context and its effect on IDRC should also be considered. - Whether the political context of the institution directly involves the legal context: Some institutions require specific legal status to operate, to receive external funding, and to import equipment in support of research.
- The administrative and legal environment in a country provides a framework within which an organization operates. In some countries this environment is very restrictive and has significant impact on all aspects of the organization; in other countries the administrative/legal context is more permissive.