Concept and role of business strategy
Concept of business strategy
A business strategy serves as a comprehensive action plan designed to achieve an enterprise's objectives Unlike specific functional strategies that outline the steps to reach these goals, the overarching strategy focuses on the broader vision and direction of the organization.
A successful business strategy focuses on how a company can effectively compete in its market by making strategic decisions regarding product selection, fulfilling customer needs, and gaining a competitive edge over rivals while also exploring and creating new opportunities.
So far, there are many different concepts about business strategy depending on different approaches.
- According to R.David : "Business strategy is a science of art and establishment, implementation, and evaluation of decisions relating to many functions, allowing an organization to reach set goals”.
- According to Garry D.Smith, Danny R.Arold and Bobby R.Bizzell :
Strategic planning involves analyzing the current and future environment to establish organizational goals It includes setting, implementing, and evaluating decisions to achieve these objectives effectively in both present and future contexts.
Role of business strategy
Firstly, business strategy helps enterprises recognize opportunities and threatens in business, then to make suitable development policies to reach its target.
A well-defined business strategy enables managers to anticipate potential contingencies and risks that may arise both now and in the future, allowing them to proactively develop effective responses to these challenges.
Thirdly, business strategy coordinates with divisions in the enterprise in the best manner; helps members to bring into full play its activeness, creativeness to reach the common goals
Procedure of establishment of strategy
Environmental factors significantly influence strategic management decisions, as strategies must be developed based on the specific conditions surrounding an enterprise The business environment encompasses external factors, forces, and institutions that are beyond managerial control yet greatly impact operational outcomes This environment can be categorized into macro and micro elements, each playing a crucial role in shaping the enterprise's strategy and performance.
- Study macro environment: is a process of studying factors such as economy, politics, culture, society, legal bases, geography, technique, technology and policies of the State…
- Study micron economy: is a process of studying factors such as opponents, consumers, suppliers, and alternative products, units which are going to be merged or retreated from the sector
Analyzing both the macro and micro environments reveals key opportunities and threats that businesses must address This analysis is essential for developing strategies that capitalize on available opportunities while minimizing the impact of potential threats.
After analyzing the individual factors of the macro environment, managers must draw a cohesive conclusion regarding the key opportunities and potential challenges presented by these factors As highlighted by Fred R David, it is essential to establish a clear understanding of these elements for effective strategic planning.
Matrix of external factor evaluation (EFE):
This matrix allows summarizing and assessing outside environment of an enterprise. This is an indispensable matrix in strategy establishment
The External Factor Evaluation (EFE) matrix assigns a total importance score ranging from 1 to 4, with 2.5 as the average A score of 4 indicates that an organization is successfully leveraging current opportunities and mitigating external threats, while a score of 1 suggests that the organization's strategies are ineffective in capitalizing on opportunities and avoiding threats Establishing a competitive image matrix is a crucial component of this evaluation process.
Competitiveness is a crucial factor influencing enterprises, making it essential to understand its impact The competitive image matrix expands on traditional assessments of external factors, ensuring that importance, classification, and overall significance are effectively aligned.
Total mark assessed of opponents is compared with the sample enterprise Factors being listed in this matrix includes: market share, competitiveness, financial position, product’s quality, trustworthy of customers
The classification degree reflects how effectively enterprise strategies address competitive factors, with a rating scale that ranges from 1 to 4 A score of 4 indicates exceptional performance, while a score of 3 represents above-average effectiveness A score of 2 signifies average performance, and a score of 1 denotes poor handling of competitive challenges.
The process of analyzing an enterprise's internal activities allows managers to identify and control various factors, enabling them to recognize the organization's strengths and weaknesses This analysis is crucial for developing strategies that leverage strengths while addressing weaknesses effectively.
The analysis of the environment requires enterprises to collect, process information about: production, management, financial activities, personnel, study for development, and market and information system of the enterprise
The final step in the internal analysis is the establishment of matrix for internal factor evaluation (IFE):
It is a tool to summarize and evaluate strengths and weaknesses of functional business divisions and it also provides basis to identify and evaluate the relationship among those divisions
The importance rating in this matrix ranges from 1 to 4, with an average score of 2.5 A total score below 2.5 indicates that an enterprise is weak in its internal activities, while a score above 2.5 signifies strength in these areas.
• Step 3: Identify goals of an enterprise
Goals of an enterprise identify results which the enterprise wishes to reach after some certain years.
The goals must ensure the scientific features, the consistency, continuousness, advancement, practicality and flexibility
It’s needed for goals to include implementation time and need to be identified in quantitative targets.
Goals are classified in terms of time, including: short term and long term goals.
Goals are classified in terms of properties, including: rapid growth goals, stable growth goals and declination growth goals
The establishment process of a general strategy includes 3 stages:
The emerging stage involves the establishment of the External Factor Evaluation (EFE) matrix, Internal Factor Evaluation (IFE) matrix, and competitive image matrix When an internal factor appears twice in a matrix, it indicates that it serves as both a strength and a weakness Similarly, if an external factor is repeated, it signifies that it represents both an opportunity and a threat.
Use strengths to take advantages of opportunities
Use strengths to minimize affects of threatens
Minimize weaknesses to take advantages of opportunities
Minimize weaknesses and avoid threatens
Use strengths to take advantages of opportunities
Use strengths to minimize affects of threatens
Minimize weaknesses to take advantages of opportunities
Minimize weaknesses and avoid threatens
The combination stage involves integrating both internal and external factors of an enterprise to create a SWOT matrix, identifying strengths, weaknesses, opportunities, and threats This process is challenging, as it demands keen judgment and does not yield a singular optimal combination Typically, businesses focus on WO, WT, or ST strategies, which ultimately enables them to implement an SO strategy effectively.
- The decisive stage: After analyzing matrix SWOT to give feasible strategies, the Quantitative Strategic Planning Matrix QSPM will be taken into usage
Table 1.2 QSPM will be as follow:
Main factors Changeable strategy Basis of attractive marks
The Attractive Score (AS) ranges from 1 (unattractive) to 4 (attractive), while the Total Attractive Score (TAS) is calculated by multiplying the attractive marks Factors within the External Factor Evaluation (EFE) and Internal Factor Evaluation (IFE) must be classified at the same level Strategies are developed by analyzing the business environment, focusing on key internal and external success factors, and identifying approaches to achieve established goals The selection of strategies necessitates sound judgment and intuition.
Each enterprise has different strategies in different periods in order to implement its goals.
+ Market penetration strategy: the purpose is to increase market share of current services and products of the enterprise.
+ Market development strategy: Expand additional markers to consume current services and products.
- Product development strategy: Improve or amend current products and services to increase its competitiveness.
+ Diversification of singleness activities: adding new products and services which relate to one another
+ Horizontal diversification of activities: Adding new products and services which do not relate with one another for current customers.
- Diversification of mixed activities: adding new products and services which do not relate with one another
Basis of strategy at business level is established from the combination of products, market and competence of the enterprise to gain competitive advantage compared with its opponents
A difference-making strategy focuses on producing unique and superior products targeted at price-insensitive customers This approach provides a significant advantage for businesses, as the distinctiveness of their offerings enhances attractiveness and captivates consumers, leaving a lasting impression on them.
The focus-making strategy is designed to introduce products and services that cater to a specific group of customers or a distinct market segment This approach targets areas with sufficient scale and promising growth potential, while remaining less critical to the success of competing businesses.
Chapter 2 ANALYSIS OF BUSINESS ENVIRONMENT 2.1 Overview of Tien Phong Commercial Joint Stock Bank
The 5 th May 2008 has become a pillar in the establishment and development of TienPhong Bank when the banking project received official license from State Bank of Vietnam SBV with initial charter capital of 1.000 billion VND With the careful preparation, and investment for over 1 year, with staffs from more than 300 members from many financial institutions with high determination to establish a new model bank with modern technology and management, a motivating working environment.
Selection of strategy
Strategy at company level
Each enterprise has different strategies in different periods in order to implement its goals.
+ Market penetration strategy: the purpose is to increase market share of current services and products of the enterprise.
+ Market development strategy: Expand additional markers to consume current services and products.
- Product development strategy: Improve or amend current products and services to increase its competitiveness.
+ Diversification of singleness activities: adding new products and services which relate to one another
+ Horizontal diversification of activities: Adding new products and services which do not relate with one another for current customers.
- Diversification of mixed activities: adding new products and services which do not relate with one another.
ANALYSIS OF BUSINESS ENVIRONMENT
Analysis of impacts of external factors on business of TPB
In 2010, despite global and national economic complexities, Vietnam's economy achieved positive results across various sectors However, significant shortcomings and challenges persisted Evaluating Vietnam's economic performance in 2010 is crucial for policymakers to identify obstacles and develop strategies for 2011 This analysis takes a macroeconomic perspective, focusing on the economic conditions of the year and key macroeconomic indicators to provide a comprehensive overview of Vietnam's economic landscape.
In 2010, Vietnam's economy experienced a robust recovery following the global crisis, with GDP growth rates showing significant quarterly increases: 5.83% in Q1, 6.4% in Q2, 7.14% in Q3, and an estimated 7.41% in Q4 The overall GDP growth for the year was projected at 6.7%, surpassing the target of 6.5% Despite global economic challenges, this achievement highlights Vietnam's economic resilience From 2006 to 2010, the average GDP growth rate was 7% per year, with the national income per capita estimated at $1,160.
The recovery of the economy significantly boosted development investment in 2010, with total societal investment reaching an estimated 800 trillion dong, marking a 12.9% increase from 2009 and representing 41% of GDP Private sector and individual investments accounted for 31.2% of this total, while state investment, including budget allocations and government bonds, constituted 22.5%, reflecting a 4.7% rise from the previous year These figures highlight the successful mobilization of domestic resources Additionally, by the end of November, Vietnam attracted 833 new foreign direct investment (FDI) projects with a registered capital of 13.3 billion USD, which, although lower than in 2009, saw a 9.9% increase in implementation capital reaching 10 billion USD This trend indicates a strong commitment from foreign investors in Vietnam's market.
In 2010, inflation became a significant concern, particularly from September onwards, when the Consumer Price Index (CPI) rose to 9.58%, making it impossible to meet the National Assembly's annual inflation target of below 8% Several factors contributed to this inflationary trend, including increased demand for goods due to economic recovery, natural disasters in central provinces that raised the demand for food and construction materials, and rising import costs driven by a recovering global economy Additionally, the devaluation of the domestic currency due to exchange rate adjustments increased import expenses and prices of various goods Persistent issues from previous years, such as a lack of financial discipline in public investment and operations of state enterprises, further fueled inflation The stimulation of investment through relaxed credit for state enterprises and inadequate oversight also played a role, alongside adjustments to basic interest rates by the State Bank of Vietnam, which led to higher loan interest rates.
Source: General Statistical Department of commercial banks in late months 2010 will continue to increase inflation not only in late months of the year but also in the year 2011.
In recent years, the State Bank of Vietnam (SBV) has focused on stabilizing the Vietnamese dong against the US dollar, navigating a complex exchange rate environment in 2010 Despite two increases in the inter-bank exchange rate in February and October, a significant gap persists between the official rate and the free market rate, with the official rate sometimes being as much as 10% lower By late November 2010, the free market exchange rate had surged to 21,500 dong per USD.
In 2010, positive domestic economic changes led to an estimated State budget revenue of 520.1 trillion dong, exceeding expectations by 12.7% and showing a 17.6% increase from 2009, achieving a budget motivation rate of 26.7% The budget deficit for the year is projected at 117.1 trillion dong, or 5.95% of GDP, which marks a decrease of 6.9% compared to 2009 and falls short of the target of 6.2% While these results are promising in the context of an emerging economy, the high budget deficit remains a concern, contributing to inflation and raising warnings about the sustainability of the budget in the coming years without measures to enhance revenue and enforce financial discipline.
Export, import and trade balance
In 2010, Vietnam experienced significant growth in its export and import sectors, achieving a total export turnover of approximately 70.8 billion USD, which marked a 24.9% increase from 2009 This positive trend occurred despite slow economic conditions in key markets such as the US, Japan, and the EU The rise in exports was largely driven by the processing industry's contributions, reflecting a recovery in the global economy.
Page 32 making the export of agricultural, forestry and aquatic products get advantage in term of price The greatest remaining problem of export revealed past years is dependence on mineral, agricultural, forestry, sea products, garment and textile products and footwear…Moreover, goods of processing industry remains outworking Thus, export still mainly depends on exploitation of available advantage without establishing industries having close connection with one another to establish export addition value chain of great value
Table 1: Export-import period 2006-2010 (billion USD)
In 2009, the balance of payments experienced a deficit of $8.8 billion, but by 2010, there was notable improvement The current account deficit for that year was offset by a surplus in the capital account Nevertheless, the overall balance of payments in 2010 was projected to face a deficit exceeding $2 billion.
The ongoing volatility in the foreign currency market and rising gold prices have led both enterprises and individuals to speculate on dollars and gold, resulting in "faults and mistakes" within the capital account balance This shift in investment strategies will likely contribute to continued deficits in the balance of payments throughout 2010 While there has been some improvement in the balance of payments, foreign currency reserves have not seen an increase, largely due to the State Bank of Vietnam's interventions aimed at stabilizing exchange rates.
Source: General Statistical Department and Report of Ministry of Industry and Trade exchange, and also there is a big amount of foreign currency circulating outside banking system.
Table 2: Balance payment period 2008 – 2010 (Billion USD)
-Medium and long term loan
By 2010, Vietnam's foreign debt reached 42.2% of GDP, while total public debt exceeded 50% of GDP The IMF's analysis indicated that Vietnam's foreign debts were relatively low; however, it is important to note that this figure did not include debts from state-owned enterprises that lack government guarantees The critical issue lies not in the debt-to-GDP ratio, but in the alarming increase in both foreign and public debt levels in recent years For instance, in 2001, the public debt per capita was significantly lower, highlighting the growing financial concerns.
By 2010, Vietnam's public debt surged from 144 USD to 600 USD, reflecting an annual growth rate of 18% This rapid increase in public debt, coupled with a high budget deficit and low effectiveness of public investment, raises significant concerns about the sustainability of both short- and long-term debt Consequently, there is an urgent need to enhance the management and oversight of public debt while promoting the effective utilization of borrowed funds in Vietnam.
Vietnam's economy, while relatively small compared to others, shows significant potential for growth In 2006, the IMF reported that Vietnam's GDP was only 50 billion USD, with an average income per capita of just 720 USD, placing it among lower-income countries in the region This low income has a substantial impact on consumer demand and banking services However, with a population of 84 million, predominantly of working age, there is a promising outlook for the finance and banking sector as living standards and income levels improve.
Despite improvements in education levels in Vietnam, the financial capacity of both economic organizations and individuals remains weak This limitation affects their ability to meet integration requirements and reflects a general lack of understanding of the banking system among many citizens Additionally, the prevalent habit of using cash contributes to a limited demand for banking services, which in turn exposes the banking sector to various operational risks.
Vietnam's political landscape is poised for significant evolution, which will play a crucial role in shaping the nation's economic development and specifically impact Tien Phong Bank's growth trajectory.
Analysis of internal environmental factors of TPB
4 The good operation quality has been maintained every years
6 The charter capital is still low, much lower than other banks in the region
7 The effect of marketing is not high 0.08 2 0.16
8 Human resources are in shortage in terms of quantity and quality
9 The effect of research and development is low
10 The quality of banking service products is not good and the scope of applying the new service products is still limited
The total important mark is 2.83, higher than the the average mark of 2.5, showing thatTien Phong Bank is quite strong at internal factors in mobilizing its internal forces.
BUILD THE DEVELOPMENT STRATEGY OF TPBank TILL 2015
Build and select the development strategy of TPB till 2015
3.2.1 Foundation to build the strategy
This article examines TPBank's strategic position by analyzing the macroeconomic environment, operational landscape, and competitive landscape, while also assessing its strengths and weaknesses Additionally, it identifies potential opportunities and challenges for TPBank based on forecasts from international organizations like the World Bank, IMF, and Moody's Investors Service regarding Vietnam's socioeconomic development from 2008 to 2010.
3.2.2 Form strategies from SWOT matrix
1 Political and social stability of Vietnam
2 Continuous growth with high speed of Vietnam economy
3 International globalization and economic integration
4 Legal documents in the field of finance, banking is more and more complete
5 Population scale and structure is favorable for the development of banking services
1 Carry out international commitments in the field of banking
2 Competition between banks and financial institutions becomes more and more severe
3 Cash habit is still popular
4 Customers has increasingly become more and more prissy and they have more expectations in banking services
1 Be prestigious on the market
3 Distribution channel system operates effectively
5 Products and services are abundant
1.Development strategy for new products (S1, S2, S3,T1, T2, T3, T4)
1.Charter capital is still low
3 Human resource is short of quantity and quality
4.The efficiency of development study is low
5 The quality of banking products and services isn’t high
1 Improvement strategy for financial capacity (W1, O1, O2,O3)
1 Establishment strategy for sustainable customers ( W2, W3, W5, T4)
2 Promotion strategy for marketing operations ( W2, W4, T1, T2, T3, T4)
Between 2011 and 2015, analysts emphasized the necessity for TPBank to develop clear strategies for market entry Many consumers remain unaware of TPBank, often confusing it with other financial institutions To address this, TPBank's customer service staff, initially part of the FTP group, must adapt to effectively promote their products and services as the bank seeks to expand its presence in the financial market.
TPBank leverages its reputation and operational quality to capitalize on market demands, economic growth, and social stability By targeting the domestic customer segment, TPBank aims to enhance its financial investment operations, including insurance, securities, real estate investment, and fund management, while also engaging in mergers and acquisitions To strengthen its market position, TPBank focuses on improving products and services, expanding its sales network, reducing input costs for competitive pricing, adjusting advertising strategies, building customer trust in its offerings, and developing effective sales strategies.
TPBank leverages its strong brand reputation and advanced technology to explore new market opportunities, aiming to maximize untapped potential within the domestic market while also expanding its reach into international markets.
3.2.2.3 Development strategy for new products and services
To enhance its offerings, TPBank should evaluate and potentially eliminate less effective products and services By leveraging its technological strengths, the bank can capitalize on opportunities to develop new products and services This development process will necessitate significant investment in both financial resources and human capital However, before launching new products, TPBank must assess the target market's size, the implementation timeline, and the accompanying marketing strategy to ensure success.
TPBank adopts a strategic approach to navigate challenges and competition in the banking sector The focus is on providing comprehensive products and services tailored for large, VIP clients to ensure effective business operations and sustainable growth Additionally, TPBank aims to anticipate the needs of dynamic small and medium enterprises, as well as efficiently run privatized state-owned enterprises.
TPBank should conduct a thorough assessment to create a comprehensive inventory of both current and potential products and services for the upcoming years This initiative should include a detailed development roadmap for each product category, aligned with the necessary human resources and technological requirements.
Be aware of the role of technology, TPBank continues to invest and upgrade server system,
TPBank is enhancing its IT infrastructure by advancing technical software and applications within its business operations This strategic development aims to transform TPBank into a leading high-tech bank, focusing on product diversification and significantly improving the productivity, quality, and efficiency of its banking services.
3.2.2.6 Development strategy for financial capacity
In order to repair weaknesses in financial capacity, TPBank should focus on:
- Implement the method of increasing own funds and bad debts settlement
3.2.2.7 Improvement strategy for human resource quality and management
Human resources play a crucial role in determining the success or failure of businesses, and for TPBank, they are a key competitive advantage To enhance its position in the market, TPBank should focus on modernizing its organizational model by reinforcing central management at its main headquarters.
3.2.2.8 Establishment strategy for sustainable customers
In recent years, TPBank has maintained a stable customer base due to its strong brand reputation, significant investment in basic construction, and comprehensive product and service offerings tailored for enterprises To effectively compete and secure its market position, TPBank must prioritize a strategy focused on nurturing sustainable customer relationships while simultaneously attracting new clients.
3.2.2.9 Promotion strategy for marketing operations:
TPBank should prioritize the development of a robust marketing strategy by systematically evaluating competitors to inform effective strategy formulation This evaluation will serve as a foundation for building a strong brand and implementing professional marketing and sales programs To select the most suitable strategies, TPBank should utilize the Quantitative Strategic Planning Matrix (QSPM), as outlined in Table 3.2.
Main factors Alternative strategies Basis of attraction mark
1.Be prestigious on the market 4 4 16 4 16 Advantage
3 Distribution channel system operates effectively
4 Operation quality is good 3 4 12 3 9 Unfavorable
5 Products and services are abundant
6 Charter capital is still low 2 2 4 2 4 Unfavorable
8 Human resource is short of quantity and quality
9 The efficiency of development study is low
10 The quality of banking products and services isn’t high
1 Political and social stability of
2 Continuous growth with high 4 3 3 12 Favorable speed of Vietnam economy.
3 International globalization and economic integration.
4 Legal documents in the field of finance, banking is more and more complete
5 Population scale and structure is favorable for the development of banking services.
6 IT develops very fast 3 3 9 3 9 Favorable
7 Carry out international commitments in the field of banking
8 Competition between banks and financial institutions becomes more and more severe
9 Cash habit is still popular 2 3 6 3 6 Unfavorable
10 Customers has increasingly become more and more prissy and they have more expectations in banking services
Source: the author’s analysis based on study data of Department of Network Development
The analysis indicates that the market penetration strategy received a total attraction score of 177, whereas the market development strategy scored 161 Based on these findings, we believe that TPBank will prioritize a market development strategy during the 2010-2015 period, aligning with the bank's future growth trends.
Main factors Alternative strategies Basis of attraction mark
1.Be prestigious on the market 4 3 12 4 16 Advantage
3 Distribution channel system operates effectively
4 Operation quality is good 3 3 9 4 12 Advantage
5 Products and services are abundant
6 Charter capital is still low 2 2 4 2 4 Unfavorable
8 Human resource is short of quantity and quality
2 3 6 2 4 Unfavorable development study is low
10 The quality of banking products and services isn’t high
1 Political and social stability of
2 Continuous growth with high speed of Vietnam economy.
3 International globalization and economic integration.
4 Legal documents in the field of finance, banking is more and more complete
5 Population scale and structure is favorable for the development of banking services.
6 IT develops very fast 3 3 9 2 6 Favorable
7 Carry out international commitments in the field of banking
8 Competition between banks and financial institutions becomes more and more severe
9 Cash habit is still popular 2 4 8 1 2 Unfavorable
10 Customers has increasingly become more and more prissy and they have more expectations
The analysis reveals that TPBank's product differentiation strategy scores 161, while the development of new products scores 177, indicating that both strategies are crucial for the bank's growth In the short term, TPBank should prioritize enhancing product differentiation to boost its market share The QSPM matrix analysis suggests that TPBank should first focus on market penetration, followed by market expansion strategies Although TPBank aims to become a multifunctional modern bank, it should leverage its existing strengths to penetrate the market and maintain its market share in credit services and banking operations.
The QSPM matrix of group ST indicates that market penetration should be bolstered by a product differentiation strategy This involves enhancing the utility of existing products and services for customers while also introducing new products to establish a distinct competitive edge.
Overall solution for the strategy
The financial capacity of TPBank, along with other commercial joint stock banks in Vietnam, is relatively weak, with performance indicators falling short compared to ASEAN and international banks The technological modernization roadmap necessitates significant investment in equipment, hardware, and software licenses, making it challenging for banks with limited capital to adopt modern technology and establish a competitive edge Furthermore, participation in the WTO's competitive landscape poses additional challenges for banks lacking robust financial resources Therefore, enhancing financial capacity is crucial for TPBank's growth and competitiveness.
Increase chartered capital: supplement from the founding shareholder; increase committed capital with the State Bank of Vietnam; collect the liabilities from group 2
TPBank is set to significantly enhance its level 1 capital by re-evaluating fixed assets and invested securities, alongside issuing bonds to boost capital This strategic move aims to establish a provision fund dedicated to investing in and developing professional skills within the finance sector.
To enhance financial stability and improve business effectiveness, it is crucial to maintain a provision fund to mitigate risks and prevent liabilities that cannot be collected.
Besides that, in order to reduce the bad debt, TPBank must implement seriously the supervision and management of credit growth rate, focusing on the followed matters:
Regularly assess and categorize your debt situation to gain a clear understanding of your credit status Consistently monitor and manage your credit list to ensure alignment with the targets and structure approved by the Executive Board.
Secondly, it is essential to carefully assess and consider before determining new credit amounts, with a key focus on evaluating and forecasting potential risks.
To effectively manage credit files, it is essential to implement comprehensive regulations for their archiving, preservation, and management Treating credit files as vital assets is crucial, as they serve as the foundation for establishing the bank's ownership of these assets.
To effectively manage credit flow and secure secondary revenue from debt collection, it is essential to seriously implement strategies for increasing assets and diversifying loan offerings.
To effectively meet the demands of integration, it is essential to prioritize the training of human resources Additionally, hiring foreign specialists can significantly enhance the development, management, training, and knowledge transfer in emerging and critical business sectors.
Define the leaders; key officials to send to train in foreign countries under the programs, contents which TPBank wants to promote.
For domestic training: follow the programs which trained for all officials; improve training for the officials who were trained basically; periodically update and systematize teaching documents.
Develop the system of encouragement for the labor (policy for salary, recommendation, right to buy the preferential securities)
For recruitment activity: TPBank needs to be professional in recruitment, particularly:
• For management level: degree of argument and professional skill of doing business on the bank, management skills, negotiation skill, skills of communication, presentation, work group…
A comprehensive understanding of both domestic and international economics, politics, and societal issues is essential It is important to be well-versed in Vietnam's guidelines, policies, and laws, as well as those of other countries Additionally, possessing strong research skills and the ability to propose solutions within one's professional field is crucial for effective decision-making.
To ensure high-quality banking products and services, it is essential for professional staff to possess a strong foundation in political economics, microeconomics, macroeconomics, informatics, and foreign languages Additionally, they should demonstrate the ability to resolve professional challenges independently and creatively while adhering to legal standards and maintaining cultural awareness Effective teamwork is crucial, as the successful implementation of banking processes relies on close coordination among employees both within and across different units.
In Vietnam, the average number of people served by a single bank is 100,000, which is significantly lower than in developed countries, where the ratio is 10 to 15 times higher, and in comparison to other developing nations, it is 2.5 to 5 times greater This limited distribution of banking locations fails to adequately meet customer needs for capital mobilization and lending services.
Home banking services in Vietnam are gaining traction, particularly with TPBank, which connects customer computers to its system for seamless transactions From 2008 to 2010, banking technology was insufficient to meet societal demands, prompting TPBank to expand physical locations to better serve the community and businesses However, between 2010 and 2015, advancements in banking technology are expected to lead to a shift from traditional branches to more efficient home banking solutions.
Development of operation network of TPBank in the next time is essential However, it must select the method of expanding the distribution channel suitably under followed methods:
3.3.3.1 Re-arrange the available business network
By the end of 2009, the network expanded to include 10 level 1 branches and 50 transactional offices, highlighting its significant role in the growth of traditional banking Moving forward, banking activities will focus on delivering services universally, transforming branches into not just deposit mobilization points but also hubs for emerging profit services Consequently, banking branches will evolve into retail outlets aimed at offering customers an increasing variety of products.
3.3.3.2 Enhance to open the transactional locations at the supermarket
In recent years, the supermarket system in Vietnam has rapidly expanded in major cities and provinces, leading to a shift in consumer habits from traditional markets to supermarkets This transition is driven by the numerous advantages offered by supermarkets, including convenience, a wider variety of products, and enhanced shopping experiences.
Cost for investment and safety protection is low
Operation time is longer (including the days-off at the weekend and the holiday)
Contact with more customers comparing with the normal branch
3.3.3.3 Open more banking service office:
To effectively cater to areas with low demand for banking services, TPBank should consider establishing banking service offices This approach typically involves significantly lower investment costs compared to setting up a full bank branch Ideal locations for these transactional offices include supermarkets, transaction centers, airports, and tourist attractions.
3.3.3.4 Establish and expand ATM network
Suggestion
Implementing personal income tax on savings interest could negatively impact banks' capital mobilization, especially given the current high demand for capital in the economy Furthermore, a significant portion of total bank capital mobilization comes from citizen accounts, making it crucial to maintain favorable conditions for savings.
Take the consideration of reducing the import tax of the technological equipments applied in the bank’s operation, creating the condition to promote the banking operation, payment activity
3.4.2 For the State Bank of Vietnam
Implement indirect policies within market mechanisms and international regulations while minimizing the use of direct tools, particularly administrative methods, in managing monetary policy and banking operations.
Continue to build and complete the legal environment about the suitable activities for sales with the international rules and norms.
The regulation of foreign currency management in Vietnam is being modified to promote liberalization of current transactions and selectively manage capital account transactions This approach aims to allow the Vietnamese currency to be exchanged freely, gradually eliminating restrictions on foreign currency buying and selling Additionally, it facilitates the opening of foreign currency payment accounts abroad and permits the use of foreign currency for domestic payments and savings.
Establish a modern financial information system that enables banks to operate efficiently and securely while facilitating easy supervision Implement an integrated online platform to provide real-time updates on global financial and monetary information.
To strengthen international cooperation in banking, it is essential to foster relationships that leverage capital resources, technology, and information exchange This collaboration should focus on training and sharing knowledge, particularly for officials at the State Bank of Vietnam and various commercial joint-stock banks, to enhance their integration experience and expertise in the banking sector.
In 3 last years, the whole system of TPBank is proud of the contribution and building most of the important projects, improving the effectiveness of invested capital The investment strategies of TPBank define right orientation such as technological renovation of the bank, renovation of management… to improve the competitiveness Therefore, the result of the TPBank system which has achieved in last years is high growth rate about monetary business, productivity, effective quality, improving financial capacity to create the prerequisite step in developing the system of TPBank towards building the multi- functional financial group and international integration
2010 – 2015 is the important period for TPBank Building a right development strategy for this period has the decisive meaning for the existence and development of TPBank in the future.
The capstone project report focuses on developing a strategic framework for TPBank by 2015, addressing essential arguments related to its growth Based on these strategies, the author suggests practical solutions for successful implementation Additionally, due to the ever-changing business environment, TPBank must regularly assess and adjust its strategies to ensure they remain effective.
Despite our best efforts, the capstone project report may still contain certain mistakes due to time constraints and limited personal experience I welcome feedback and insights from both lecturers and peers to enhance the quality of the report.