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CAPSTONE PROJECT REPORT FORMULATION BUSSINES STRATEGY OF VIETNAM INTERNATIONAL JOINT STOCK BANK IN THE PERIOD 2011-2015 Group 09 Members: 1.Nguyễn Trọng Hải (C) 2.Nguyễn Mạnh Cường 3.Phạm Hải An 4.Phạm Thị Thu Huyền Class: GaMBA01.X0410 H A N O I 1|Page 1 TABLE OF CONTENT: ACKNOWLEDGEMENT LIST OF TABLES LIST OF FIGURES, GRAPHS INTRODUCTION Reason for research selection Research objectives Research methodology 10 Research’s contributions Structure of research CHAPTER 1: GENERALLY LOGICAL ISSUES ON STRATEGY MANAGEMENT 10 10 11 12 1.1 Theoretical background of strategy management 12 1.1.1 Definitions of strategy management 12 1.1.2 Levels of strategy 14 1.1.2.1 Corporate strategy 14 1.1.2.2 Business strategy: 14 1.1.2.3 Functional strategy 14 1.2 The process of strategy formulation 1.2.1 Strategy analysis 1.2.1.1 Analysis of External Environment 16 1.2.1.1.1 Analysis of General environment (PEST Model) 16 1.2.1.1.2 Analysis of Industry Environment (Five forces model) 17 1.2.1.1.3 Matrix of External Factor Evaluation (EFE) 17 1.2.1.1.4 Analysis of Competitive Profile Matrix (CPM) 19 1.2.1.2 Analysis of Internal Factor Environment 16 16 20 1.2.1.2.1 Analysis Basic Value Chain .20 1.2.1.2.2 Internal Factor Evaluation Matrix (IFE) 22 1.2.2 Selection and construction of business strategy 23 1.2.2.1 Evaluation of the opportunities of strategy selection through SWOT matrix 24 1.2.2.2 Strategy selection based on the QSPM matrix 1.2.3 Strategy deployment and evaluation27 1.2.3.1 The determination of Operational structure suitable with strategy 1.2.3.2 The construction and deployment of strategy implementation process and regulation 25 28 1.2.3.3 2|Page The construction of strategy implementation control system 28 27 CHAPTER 2: THE CURRENT SITUATION OF BUSINESS STRATEGIES OF VIETNAM INTERNATIONAL BANK IN RECENT YEARS 29 2.1 Overview of Vietnam International Bank (VIB) 29 2.1.1 Overview of banking industry 2.1.2 Overview of VIB and VIB’s business activities 2.1.2.1 General information: 2.1.2.2 History on the establishment and development 2.1.2.3 Products and Services: 33 2.1.2.4 Network development: 34 2.1.2.5 The current organizational structure of VIB 35 2.1.3 The business performance of VIB 36 2.2 The evaluation on the current business activities of VIB 38 2.2.1 The current business orientation of VIB 2.2.2 Analysis of the current business activities of VIB 2.2.2.1 Analysis of External Environment 40 2.2.2.1.1 Analysis of general environment (PEST +Model) 2.2.2.1.2 Analysis of Industry Environment (The Five Forces of Competition Model) 45 2.2.2.1.3 Matrix of External Factor Evaluation (EFE) 50 2.2.2.1.4 Analysis of Competitive profile matrix (CPM) 2.2.2.2 Analysis of Internal Factor Environment 2.2.2.2.1 Financial Factor: 2.2.2.2.2 Distribution factor: 55 2.2.2.2.3 Human resources management factor: 2.2.2.2.4 Marketing&Branding factor 2.2.2.2.5 Technology 2.2.2.2.6 Research & Development products and services Factor 2.2.2.2.7 Service Quality factor 2.2.2.2.8 Risk management 69 2.2.2.2.9 Analysis of Internal Factor Environment matrix (IFE) 2.3 Evaluation on the feasibility of business strategies of VIB in the period 2011-2015 29 29 29 31 38 39 40 51 53 53 57 60 62 62 68 71 72 CHAPTER 3: THE PROPOSAL OF STRATEGY AND SOLUTIONS TO STRATEGY DEPLOYMENT FOR VIB IN THE PERIOD 2011-2015 73 3.1 The proposal of VIB’s business strategy in the period 2011-2015 73 3.1.1 The orientation of VIB’s business development strategy in the period 2011-2015 73 3.1.2 Evaluation of the opportunities of strategy selection through SWOT matrix 75 3.1.3 Strategy selection based on the QSPM matrix 3|Page 77 3.1.4 Identify business strategy selection in the period 2011-2015 79 3.2 VIB’s businessstrategies in the period 2011-2015 80 3.2.1 Corporate level strategy: 80 3.2.2 Business level strategy 80 3.2.3 Function level strategy 80 3.3 Solutions to the effective implementation of VIB’s business strategies in the period 2011-2015 81 3.3.1 Finance solutions 81 3.3.2 Branchs Transformation system follow new sales& service model 3.3.3 Marketing& Branding solutions 3.3.4 R&D products & service solutions: 88 3.3.5 Channel solutions 90 3.3.6 Technology solutions 3.3.7 Human resources solutions 92 3.3.8 Risk management solutions 94 3.4 The completion of operational structure to the strategy implementation 94 3.4.1 Operational structure re-adjustment in correspondence with business strategies 84 91 94 3.4.2 The construction of strategy implementation control system 95 3.5 Roadmap of the strategic solution implementation 3.6 Proposal & Recommendation 3.6.1 Proposals to The Vietnam International Bank(VIB) 97 3.6.2 Proposals to The State bank of Vietnam 98 3.6.3 Proposals to Government of Vietnam 98 CONCLUSION REFERENCE 100 4|Page 99 83 97 96 VietnamInternational Commercial Joint stock Bank No 198B, Thai Ha Street, Dong Da District, Ha noi City To: Center for Educational Technology and Career Hanoi National University Global Advanced Master of business Administration Program Griggs University AGREEMENT Company has create favorable conditions to collect and complete this capstone, but ask to keep confidential all information disclosed to concerning Company business and will not make public of such information We will consider such solutions and proposal would useful in actual business strategies for upcoming years 5|Page ACKNOWLEDGEMENT All members of Team 9, Class GaMBA.X0410, in the subject of Strategy Management would like to say sincere thanks to: The teachers who spend time and efforts and enthusiastically impart ideas and instruct is to complete this report They have imparted us useful knowledge and valuable lessons which help us enrich a new understanding of the combination between theory and reality This plays an important role in our completion of this report and our daily dealing with business issues The Board of Managers of Vietnam International Bank has supported and consulted us to complete this report All members of Team 9, Class GaMBA.X0410 6|Page LIST OF TABLES Table 1.1 Overview of general business-level strategies 13 Table 1.2 External Factor Evaluation Matrix (EFE) Table 1.3 Competitive profile Matrix (CPM) 19 Table 1.4 Internal Factor Evaluation Matrix (IFE) Table 1.5 SWOT Matrix 18 22 23 Table 1.6 Quantitative Strategic Planning Matrix (QSPM) Table 2.1 Network of branches/ transaction offices 25 32 Table 2.2 Macroeconomic criteria in the period 2000 -2011(part 1) 37 Table 2.3 Macroeconomic criteria in the period 2000 -2011 (part 2) 37 Table 2.4: Some criteria of credit organization system in Vietnam (on 31/12/2010) Table 2.5 External Factor Evaluation matrix (EFE) 47 Table 2.6 Comparing financial criteria in the top 10 Vietnamese banks 48 Table 2.7 Competitive Profile Matrix (CPM) 49 Table 2.8 Summary result business VIB among five years Table 2.9 Internal Factor Environment matrix (IFE) 68 Table 3.1 SWOT matrix 72 Table 3.2 QSPM matrix 74 Table 3.2 VIB roadmap to implement strategy 92 Table 3.3 Marketing mix for segmentation 85 Table 3.4 Bundle products for each segmentation 86 Table 3.5 Branchs & Alternative channel solution 87 Table 3.6 Compensation policy 90 Table 3.7 VIB roadmap to implement strategy 92 LIST OF FIGURES, GRAPHS Figure 1.1: Strategic management Process model 7|Page 12 51 46 Figure 1.2: PEST Model 16 Figure 1.3: The Five Forces of Competition Model Figure 1.4: Components of Internal Analysis Figure 1.5: The Basic Value Chain 16 20 20 Figure 2.1: Current Organization chart 34 Figure 3.1 Vision, Mission and Core Value Statements 71 Figure 3.2 Functional stratery 78 Figure 3.3 Branch Transformation system follow new sales& service model Figure 3.4 Segmented by age and income 81 83 Figure 3.5 Summary life-stage and appreac stratery Figure 3.6 VIB organization re-structure 91 Figure 3.7 The Priority implement tasks 93 83 INTRODUCTION Reason for research selection  The cooperation and integration is the inevitable trend of the global economy and lay a foundation for each national economy to take part in the common 8|Page tendency of the world economy by taking advantage of the enormous transnational capital flowing through the banking system The growth in the banking integration and the construction of a transparent banking system to become the pillar in capital circulation for the capital-demanding economy like Vietnam are significant strategies to gradually move capital structure based on  the orientation of the industrialization and modernization According to this tendency, since becoming one of WTO’s official members on 11/01/2007, Vietnam is facing with many new challenges and opportunities The banking industry has witnessed a lot of basic changes when many foreign financial organizations can hold shares of Vietnam commercial banks Especially, the emergence of banks with 100% foreign capital in Vietnam will  promisingly cause changes in the percentage of market share The period 2007-2011 provides the most obvious picture of opportunities and challenges with Vietnam banking system The capital rapidly heated growth and dramatic decline, high inflation, the fluctuation in exchange rate, unemployment and business inequality,… the competition among domestic nag foreign banks, the increasing trend of dissolution and mergence, a lack of efficiency in the operation of small banks, large banks under the pressure of the growth in capital, human and infrastructure to ensure their competitiveness in comparison with foreign banks All these factors are putting a great pressure on the local banking system, forcing domestic banks to quickly conduct plans in order to increase  their competitiveness to deal with challenges Before these difficulties and challenges, Vietnamese commercial banks, especially joint stock banks, including Vietnam International Bank, need to have strategies and detailed orientation to enhance their competitiveness in order to  sustain and develop in the new period In this common trend, the Vietnam International Bank is step-by-step making efforts to affirm its position in the top Vietnamese commercial banks and  strengthen its competitiveness in the financial and banking market From this reality, our team has researched and finally decided the project “ The construction of business strategies of Vietnam International Bank in the period 9|Page 2011-2015” with hope of contributing to the evaluation of the current business strategy deployment in recent years and the construction of the business strategies of Vietnam International Bank in the period 2011-2015 Research objectives  Systemize the generally logical issues on strategy management  Analyze and evaluate the situation of strategy implementation at Vietnam International Bank in the period 2008-2011 through achievements and obstacles  Propose solutions to construct and complete strategies of Vietnam International Bank in the period 2011 – 2015 Research methodology The project uses quantitative and qualitative methods and comparison and statistical methodology combined with diagrams and tables to present the theoretical and factual contents Then, we draw a conclusion and select business strategies at Vietnam International Bank (VIB) Research’s contributions  Analyze and evaluate the current business strategy deployment of Vietnam International Bank  Propose solutions and business strategies for Board of Managers of Vietnam International Bank (VIB) to have an overview of the current business in order to make more efficient policies in the period 2011-2015 Structure of research CHAPTER 1: GENERALLY LOGICAL ISSUES ON STRATEGY MANAGEMENT CHAPTER 2: THE CURRENT SITUATION OF BUSINESS STRATEGIES OF VIETNAM INTERNATIONAL BANK IN RECENT YEARS CHAPTER 3: THE PROPOSAL OF STRATEGY AND SOLUTIONS TO STRATEGY DEPLOYMENT FOR VIB IN THE PERIOD 2011-2015 10 | P a g e People Channels Pricing Promotion Core Value Proposition Communication 84 | P a g e Mobile Banking Fee based products Co - brands Wealth Management Separated RM Flexible Dedicated / Caring Professional Branch RM ATM/POS E Banking Mobile Banking Co-brands Partner Telephone X-selling/ Payroll Home/priority bank Competitive Competitive on quality of service Free added value Join interactive events Discount co- brands products Campaign with co- brand products Referral Campaign Customer Care / Loyalty programs Added value with consultancy Prestigious Wide network Convenient Modern Dynamic Professional Good service bank TV Radio Prints Online SMS/Email OOH Frame POSM at ATM Sponsor Activation Table 3.3Marketing mix for segmentation 3.3.4 R&D products & service solutions: Tofully exploitthe potential market and to createdifferentproducts, it isnecessaryto invest heavily inResearch and Development of customers, competitors, specific features of the industry Deployinga professional team taking responsibility for researchmarket informationandcompetitors and conducting regularsurveys on needs ofinternal andexternal customers to identifyeach target customer group Developingspecialpackageswithindividualizedpolicieson prices andincentivestofully exploitcustomers ineachtarget market.Packagesfocus onkeystagesof customers’ lifewithparticular demandgroupssuch as - Packageforyoungsingles - Packageforyoung families - Packageforyoung familieswith1-2children - Packagefor families withchildrengoingto college - Packagefor families withadultchildren - Package for retired customers Income/Age