VIETNAM NATIONAL UNIVERSITY, HANOI SCHOOL OF BUSINESS NGUYEN THI PHUONG THAO ANALYSIS AND RECOMMENDATIONS IN STRATEGIC ADJUSTMENT FOR VNDIRECT SECURITIES JOINT STOCK COMPANY (2011 – 2016) MASTER OF BUSINESS ADMINISTRATION THESIS Hanoi - December 2010 2010 * Master of Business Administration Thesis * Nguyen Thi Phuong Thao VIETNAM NATIONAL UNIVERSITY, HANOI SCHOOL OF BUSINESS NGUYEN THI PHUONG THAO ANALYSIS AND RECOMMENDATIONS IN STRATEGIC ADJUSTMENT FOR VNDIRECT SECURITIES JOINT STOCK COMPANY (2011 – 2016) Major: Business Administration Code: 60 34 05 MASTER OF BUSINESS ADMINISTRATION OF THESIS Supervisor: Dr. Nguyen Viet Anh Hanoi - December 2010 TABLE OF CONTENT ACKNOWLEDGEMENTS. v TABLE OF CONTENT. viii LIST OF TABLES.xi LIST OF FIGURES.
xii LIST OF ABBREVIATIONS. Necessity of the thesis. Objective of the thesis. Scope of work.
Contributions of the thesis. Further research directions. Limitation of the thesis. 6 CHAPTER 1: LITERATURE REVIEW.
Strategy and role of strategy. Definition of strategy. Role of strategy. Strategic management process.
Strategic vision and business mission. External environment analysis. Macro environment analysis. Industry and competition environment analysis.
Company situation analysis. Analysis of how well the current strategy works. Analysis of company’s roots of competitive advantage. Analysis of company‘s cost structure.
Evaluate the company‘s competitive position. What is SWOT?. Levels of strategy - The Strategy making pyramid. Specific strategy at different levels.
37 CHAPTER 2: CASE STUDY OF VNDIRECT. Over all about VNDIRECT. General information about VNDIRECT. The establishment and development of the company.
The company organizational structure. Analysis of strategic vision and business mission. Analysis of current strategic vision of VNDIRECT. Analysis of current business mission of VNDIRECT.
Objectives of VNDIRECT. External environment analysis. Macro environment analysis. Industry and competition environment analysis.
Situation analysis of VNDIRECT. Analysis of how well the corporate strategy works. Analysis of how well the business strategy works. Analysis of how well the functional strategy works.
Analysis of business result of the company. Analysis of company’s resources and capabilities. The value chain and the company ‘s cost structure. Evaluate the company ‘s competitive position.
113 CHAPTER 3: SUMMARY AND RECOMMENDATIONS. Summary and recommendations for theory development. Summary and recommendations for Government bodies. Findings for VNDIRECT.
SWOT matrix analysis of VNDIRECT. Distinct competencies of VNDIRECT. Recommendations for VNDIRECT company from 2011 – 2016. Recommendations in strategic vision and business mission adjustment 122 3.
Recommendations for corporate strategy adjustments. Recommendations for business strategy adjustments. Recommendations for functional strategy adjustments. Summary of strategic development direction of VNDIRECT.
140 x LIST OF TABLES TABLE 1-1: A MODEL OF WEIGHTED COMPETITIVE STRENGTH ASSESSMENT. 34 TABLE 1-2: MODEL OF SWOT MATRIX. 36 TABLE 2-1: GENERAL INFORMATION ABOUT VNDIRECT. 45 TABLE 2-2: PREDICTION OF GDP OF VIETNAM IN 2010.
51 TABLE 2-3: THE DEVELOPMENT OF SECURITIES INDUSTRY VIA SOME CATEGORIES .58 TABLE 2-4: MINIMUM REQUIRED CAPITAL FOR SECURITIES OPERATIONS. 61 TABLE 2-5: AVERAGE PROFITABILITY INDEX OF SOME MAJOR INDUSTRIES IN 2009 63 TABLE 2-6: DOMINANT ECONOMIC FEATURES OF THE SECURITIES INDUSTRY. 63 TABLE 2-7: TOP 20 COMPANIES IN TERM OF CHARTER CAPITAL. 69 TABLE 2-8: TOP 10 LEADING COMPANIES IN REVENUES IN EACH ACTIVITY IN 2009.70 TABLE 2-9: REVENUE STRUCTURE IN 2009 OF MAJOR COMPANIES IN GROUP 3.
74 TABLE 2-10: A SUMMARY OF MAIN RIVALS ‘S CHARACTERISTICS AND MOVES. 76 TABLE 2-11: TOTAL SALARY AND BENEFIT FOR BOARD OF MANAGEMENT OF VNDIRECT IN 2009. 102 TABLE 2-12: EMPLOYEES ‘S QUALIFICATION OF VNDIRECT. 103 TABLE 2-13: CAPITAL INCREASING PROCESS OF VNDIRECT.
104 TABLE 2-14: SEVERAL CATEGORIES OF BUSINESS RESULT OF VNDIRECT (2007- 2009). 107 TABLE 2-15: BUSINESS UNIT COST STRUCTURE ANALYSIS AMONG VNDIRECT AND RIVALS IN 2009. 112 TABLE 2-16: A MODEL OF WEIGHTED COMPETITIVE STRENGTH ASSESSMENT OF VNDIRECT, SSI AND TLS. 114 TABLE 3-1: SWOT MATRIX ANALYSIS OF VNDIRECT.
119 TABLE 3-2: RECOMMENDED DEVELOPMENT ROAD MAP OF VNDIRECT FROM 2011- 2016:. 133 xi LIST OF FIGURES FIGURE 1-1: STRATEGIC MANAGEMENT MODEL. 9 FIGURE 1-2: EXTERNAL ENVIRONMENT. 13 FIGURE 1-3: 5 FORCES COMPETITION MODEL.
18 FIGURE 1-4: THE GENERIC BUILDING BLOCKS OF COMPETITIVE ADVANTAGE.27 FIGURE 1-5: A REPRESENTATIVE VALUE CHAIN MODEL. 31 FIGURE 1-6:THE STRATEGIC MAKING PYRAMID MODEL IN A DIVERSIFIED COMPANY 37 FIGURE 1-7: MODEL OF BUSINESS STRATEGIES. 40 FIGURE 2-1: ORGANIZATIONAL STRUCTURE OF VNDIRECT. 47 FIGURE 2-2: INTERNET USERS GROWTH 2000-2009 IN SELECTED ASIAN COUNTRIES 57 FIGURE 2-3: INTERNET USERS IN VIETNAM 2005-2009.
57 FIGURE 2-4: THE VALUE CHAIN OF VNDIRECT. 111 xii LIST OF ABBREVIATIONS GDP : Growth Domestics Product VNDIRECT : VNDIRECT Securities Joint Stock Company HSX : Ho Chi Minh City Securities Exchange HNX : Hanoi Securities Exchange IPO : Initial Product Offering ROA : Return on Asset ROE : Return on Equity KSF : Key Success Factor OTC : Over the counter SSC : State Securities Commission VNNIC : Vietnamese Internet Center ABS : An Binh Securities joint stock company ACBS : ACB securities company Ltd. AGRISECO : Agribank securities joint-stock corporation. BSC : BIDV securities company Ltd.
BVSC : Baoviet securities joint stock company DAS : Dong A securities company Ltd. FPTS : FPT securities joint stock company HBBS : Habubank securities company Ltd. HBS : Hoa Binh securities joint stock company HSC : Hochiminh city securities corporation KLS : Kim Long securities corporation SBS : Sacombank securities joint stock company SHS : Saigon Hanoi securities joint stock company SSI : Saigon securities incorporation TLS : Thang Long securities joint stock company VCBS : Vietcombank securities company Ltd. xiii VIETINBANKSC : Vietnam Bank for Industry and Trade securities Joint stock company xiv INTRODUCTION This part will give an introduction to readers about the thesis.
Firstly, the necessity of the thesis is mentioned, next are objectives of the thesis, then researches questions are raised up, followed by scope of work, methodology, thesis ‘s contributions, expected results, further research directions and. limitations of the thesis. Finally, the thesis structure is presented in order to help readers have an over-all picture of the whole study. Necessity of the thesis The Vietnamese securities market was established in 2000 at a very small initial scale.
In the first 5 years, the market developed slowly with low market capitalization and low number of listed stocks, which leads to the small number of securities companies and the slow activity of these companies. Since 2006, with the stronger implementation of State owned enterprises, the supply of stock in the market is bigger, which creates a motivation for the development of the market in term of both market volume, demand and growth rate and therefore, helps the market to become one of the most interested industry by the whole society. The total number of securities companies, therefore, has also increased accordingly in the peak period of the market in 2007. However, in 2008, due to the world crisis, the Vietnamese securities market had been continually slowed down and reached the bottom at the beginning of 2009, which created main difficulties for companies within the industry.
Although after that, the market had a sign to recover in 2009, but the recovery trend was not quite clear and at present, the market is still in fluctuation period. In the hard time of the economy with a decrease of the demand, securities companies have to cope with many difficulties relating to the existence, such as big loss in investment and dealing activities, high overhead and personnel costs, low brokerage revenue, and the severe price war in cutting down brokerage fees. Moreover, the threats of foreign rivals also exist. This leads to hidden risks for 1 securities companies in coping with severe competition pressure to find out an effective strategy to sustainable exist and develop in the market.
Established in 2006 with a very small initial investment capital, only 50 billions dong, VNDIRECT securities joint stock Company has also passed nearly all periods (developing and recession) of the market. VNDIRECT had a comparatively effective strategy in the starting period aiming at online customers and focus on technology development and gained a comparative high earning and return on equity (earning after tax in 2007 was nearly billions dong, ROE was 21. The economic crisis and the recession of the stock market has put VNDIRECT to cope with very difficult strategic issues, which are a big loss of more than 86 billions dong in 2008, low trading value and the serious lack of operating capital. Before these big pressures, the board of management had comparatively relevant steps which are restructuring to cut cost, separate the brokerage activity and dealing activity, implementing to be listed to increase capital.
These steps helped to recover the activities of the company and regain the belief of investors, which create a base for the following developing periods. However, before the severe and changing business environment like today, it is required that the company must have some certain adjustment in the strategy which is more effective to take advantage of all resources and capabilities of the company, to create a sustainable competitive to cope with opportunities and threats of the market. With the research and analysis of the macro environment, the securities industry and securities companies, as well as the situation of VNDIRECT Company, this thesis has shown out a necessity in strategic adjustments to effectively compete in the market. The purpose of this thesis was to analyze the macro environment, analyze the security industry and competitive pressure among securities companies, analyze the specific situation of VNDIRECT Company, and from the above analyses, giving out several recommendations in strategic adjustment for VNDIRECT in the upcoming time 2011-2016 to enhance the competitiveness in the market.
Objective of the thesis The objectives of this thesis focus on: Review the theory in strategy and strategic management Analyze the Vietnamese securities industry and competitive pressure among securities companies in Vietnam. Analyze the specific situation of VNDIRECT company Give out several recommendations in strategic adjustment for VNDIRECT in the upcoming time 2011-2016 to enhance the competitiveness in the market 3. Research questions The research‘s author seeks answers for the following questions: What is strategy and what is the role of strategy? What are major steps in a strategic management process in formulating a strategy? How does the external environment (including macro and the industry) affect to the activity of VNDIRECT? How well does the current strategy of VNDIRECT work? (Corporate strategy, business strategies, functional strategy)? What are roots of competitive advantage of VNDIRECT? What is the competitive position of VNDIRECT? What is needed to be developed in the theory for strategic management in finance and securities industry? What are suggested for Government bodies to stimulate the Vietnamese securities market? How does the strategy of VNDIRECT should be adjusted in order to be competitive in the market within the next few years? 4. Scope of work The research areas are limited to analysis and adjust a strategy for a specific securities company (VNDIRECT).
To do this, macro environment and securities 3 industry environment are included in the research. The period of time for past analysis in securities industry environment is from 2000-2010. It is taken since the time of establishing the securities market in Vietnam. For the analysis of VNDIRECT, the period of time for past analysis is from 2007, as VNDIRECT was established in late 2006.
The time for future strategy is from 2011-2016. This is partly because of the fast development of the industry; it should take short-term to mid-term time to review this strategy.1 Research method Qualitative methods: Qualitative methods were used when reviewing the theory and the general remarks of the fact as results of direct interview or observation/collecting data from secondary resources. The typical used method is expert interview, which helps a lot in analysis in Chapter 2 (industry and company situation analysis). Quantitative methods: Quantitative methods (together with statistic data) were used widely in some parts like comparison on some specific figures (market share, revenue growth development, etc).