Basic matters related to strategy and business strategy
According to traditional view, strategy is perceived as follows:
Strategy involves identifying a suitable competitive position within an industry and defining the primary operational domain for competitive activities, as emphasized by Michael Porter This perspective highlights the significance of competition in strategic planning Alfred Chandler adds that strategy encompasses the establishment of an enterprise's fundamental long-term objectives, the formulation of action plans, and the allocation of essential resources to achieve these goals.
Jame Quinn at Darmouth University defined, “Strategy is the pattern or plan of an organization to combine main roles, policies and order of action in a united form” 5
Definition by William F.Gluek 6 , “Strategy is a united, comprehensive and cooperative plan designed to ensure that basic goals of enterprises are implemented successfully”.
The traditional approach to strategy formulation through detailed planning has become ineffective, as real-world experiences show that such plans often fail Consequently, businesses must adopt flexible coping strategies to navigate the complexities of the business environment.
3 http://en.wikipedia.org/wiki/Porter_generic_strategies ( June, 10, 2009)
4 http://www.news.harvard.edu/gazette/2007/05.17/27-chandler.html (June, 10, 2009)
5 Quinn, J., B (1980) Strategy for change: Logical Inscrementalism Homewood, Illois, Irwin
Lawrence R Jauch and William F Glueck (1989) highlight that the traditional perspective on business policy and strategic management has revealed significant shortcomings They emphasize that the core of strategy, which combines both scientific and artistic elements to attain objectives, remains inadequately defined.
Modern perspectives on strategy have emerged, shifting away from traditional approaches to adapt to the evolving business landscape These contemporary viewpoints prioritize the selection of strategies that align with organizational goals rather than solely emphasizing calculation and planning.
2.1 Classification of business strategies by levels of strategies
Strategies can be categorized by levels, with corporate-level strategy, also known as master strategy, being the most comprehensive This strategy outlines the overall direction for the entire company, focusing on its engaged fields and defining the ultimate goals the organization aims to achieve It encompasses a thorough examination of all company operations and establishes the orientation and measures necessary to reach those objectives.
+ Business-unit-level strategy (field): is designed for a narrowed specializing business In case, company only trades in one field, business-unit-level strategy is also corporate-level one
A functional-level strategy refers to the specific strategies employed by individual departments within a company, such as finance, marketing, and human resources These strategies serve as supportive frameworks that enable the effective execution of broader business-level and corporate-level strategies.
2.2 Classification of business strategies by their content
Based on content of strategies, French managers assumed that business strategies consist of:
+ Trading strategy: is the one applied to all trading activities of a company from purchasing and supplying inputs to distributing and consuming outputs of that company
+ Human strategy: shows the orientation, method of mobilizing and using human resources to successfully realize above strategies
2.3 Classification of business strategy by processes of strategy
An orientation strategy outlines the overarching goals of a business and the measures necessary to achieve them It is developed through a thorough analysis of the external environment and internal enterprise factors This strategy serves as a guide for the fundamental strategic choices of the organization.
An action strategy refers to the specific approach an enterprise takes in response to particular situations, allowing for adjustments to its overall strategy This strategy can be derived from pre-established plans created during the development of the orientation strategy or may emerge organically during the implementation phase of that strategy.
3 The role of business strategy in modern business environment
In modern business environment, strategy has played an increasing importance role in the existence and development of enterprises, it is presented by:
Strategy serves as a vital tool for defining and achieving the long-term goals of enterprises and organizations By clearly outlining specific objectives within a business strategy, companies ensure that all members understand their intended destination, enabling them to align their efforts effectively This clarity not only fosters awareness among team members but also significantly enhances the likelihood of successfully realizing the organization's goals.
III Content of formulating strategies
Despite having many different viewpoints and methods of approach in terms of the strategy formulation, generally, strategy is often built under following steps:
Diagram 1.1: Process of strategy formulation
Diagram 1.1: Process of strategy formulation
Formation (Deciding what to do) Implementation
Determining resources: materials, technology, finance and management of the enterprise
Human values and determination of board of leaders
Affirming non- economic responsibility to the society
Type of goal and determin ation policy of the company and its business lines
Structure of the enterprises and relations:
Labor distribution, cooperation among departments and information system.
Process of organization and action Standards and methods to measure and motivation system Control system Selection and promotion Highest leader of the company Deciding strategy – Organizing human resource
1 Determining missions and objectives of the organization
1.1 Determining mission of the organization
The objectives of an organization often define its purpose, shaping the strategic direction and influencing the content of the strategy Consequently, the approach taken by strategists in addressing these objectives is crucial for guiding the strategy formation process.
Normally, the formation of a mission announcement is a constant process that undergoes six fundamental steps:
Step 1: Forming initial idea on business mission.
Step 2: Investigating external environment and perceiving internal conditions. Step 3: Re-determining the idea on business strategy.
Step 4: Re-designing the mission of the company.
Step5: Organizing the implementation of the company’s mission.
Step 6: Reviewing and revising the mission.
When crafting a mission announcement, it is essential to consider both the expectations of the owner and leadership, as well as the internal and external factors influencing the company.
Clear objectives guide an enterprise's direction and influence its activities For instance, achieving a 10% increase in market share necessitates specific actions to boost productivity Additionally, ambitious goals, such as generating $1 billion in revenue within a year, can serve as a motivating challenge for the organization Moreover, objectives function as essential tools for evaluation and monitoring, enabling businesses to assess the alignment of their goals with requirements, implement necessary actions to achieve desired outcomes, and reinforce accountability within the team.
The goal of an enterprise plays a crucial role and is determined through comparison, varying in time frame as long-term, medium-term, or short-term Economists identify four primary areas where businesses establish their objectives: market position, innovation, productivity, and finance; employee development and performance; workforce attitude; and social responsibility.
Neglecting any of the eight essential fields can lead to significant repercussions for the entire organization To ensure that short-term objectives do not compromise long-term success, it is crucial to maintain a balanced approach among these goals.
2 Analyzing business environment of the enterprise (external environment)
2.1 Influence of external environment on business strategies
The external environment significantly impacts the achievement of an enterprise's goals Conducting an analysis of both the macro-environment and the sectorial (micro) environment allows businesses to assess their position and the unique characteristics of their operating context This comprehensive evaluation helps enterprises understand how external factors influence their objectives, enabling them to make informed strategic decisions.
FORMULATING BUSINESS DEVELOPMENT STRATEGY OF
Establishment and development
VietinBank Securities Joint Stock Company, also known as VietinBankSc, was established as VietinBank Securities Limited Company on September 1, 2000, under Decision No 126/QD-HDQT-NHCT1 by the Management Board of VietinBank The company primarily focuses on trading securities and providing financial advisory services On July 1, 2009, it transitioned to a joint stock commercial model, officially operating as VietinBank Securities Joint Stock Company under business license No 107/UBCK-GP.
2009 granted by the State Securities Commission of Vietnam
VietinBank Securities Company, with a charter capital of VND 789,934,000,000, leverages the extensive nationwide network of VietinBank to provide exceptional support to customers in the securities market Committed to fostering long-term relationships, the company delivers high-quality services that promptly address customer needs.
VietinBank Securities Company, a pioneer in the securities industry, prioritizes customer interests and builds trust through high-quality professional services It has established itself as a reliable partner for businesses seeking financial advisory services and securities issuance to raise capital, as well as for individuals and organizations looking for effective investment opportunities.
Giving advisory on restructuring, acquisition & merger, selling & dissolving company Table 2.1: Important milestones:
2000 VietinBank Securities Limited Company was established with the chartered capital of VND 55 billion
2004 The company raised chartered capital to VND 105 billion
2007 The company raised chartered capital to VND 300 billion
2008 The company raised chartered capital to VND 500 billion
The Company was converted to VietinBank Securities Joint Stock Company and officially listed at Hanoi Stock Exchange with the chartered capital of VND 789 billion
Organizational structure : Diagram
(Source: www.VietinBankSc.com.vn)
Issues on the company’s formulation of business development strategy
The global economy is recovering, but at a slower pace than anticipated, leading economic experts to caution about the possibility of a double-dip recession, though it seems unlikely for 2010 While Vietnam has seen improved export activities due to this recovery, its heavy reliance on exports, coupled with a gradual decline in labor and capital advantages, may hinder the pace of its economic recovery To address these challenges and foster growth, Vietnam's economy must implement strategic changes.
Brokera ge an escrowi ng Depart ment
Financi al Advisor y Depart ment
Financi al Account ing Depart ment
Hanoi's branch has been restructured to prioritize innovation and initiatives for growth, moving away from a reliance on imported technologies and raw materials Despite Vietnam's GDP potentially reaching 6.6% for the year, the economy faces significant hidden risks, particularly the resurgence of high inflation As a result, curbing inflation will be a key focus of macroeconomic policies in the final quarter of the year Additionally, while the trade balance has shown improvement, it remains in deficit, and a decline in undisbursed foreign direct investment (FDI) could lead to a projected balance of payments deficit of $4 billion for 2010, putting further pressure on the exchange rate as the year concludes.
According to the most recent studies, the cultural environment in Vietnam has been diverse, dynamic, encouraging and attractive with numerous opportunities and challenges than ever before 12
Vietnam's cultural environment is rich and diverse, fostering comprehensive development for its people and positively influencing the business landscape This diversity has provided significant advantages for trade, promoting flexibility and openness However, cultural values can also hinder the business environment, particularly in finance, where stagnation, individualism, and emotional decision-making often overshadow scientific approaches Despite improved client understanding of the stock market, many still struggle with analysis and evaluation, leading to a prevalence of speculative behavior and majority-driven investment strategies This poses risks to market stability and can trigger chain reactions during downturns Currently, brokerage services represent a substantial revenue stream for many companies, with individual clients accounting for over 95% of securities accounts, primarily in major cities Therefore, securities firms should focus on customer research, analysis, and classification to enhance their services.
At the Vietnam Studies Conference on December 5, Ass Prof Ho Si Quy emphasized the importance of implementing effective customer care strategies and proactive planning in developing distribution channels to attract customers and enhance economic efficiency Companies should explore cross-selling options, utilize service networks, and analyze market details regarding investment capabilities and demands As a crucial component of the securities market, firms must prioritize advising clients to mitigate investment risks, counteract herd psychology, and adopt strategies to manage price-related risks, ultimately fostering a sustainable securities market in Vietnam.
Vietnam's cultural environment is robust, supporting long-term development However, to foster integration and growth, it is essential to address the stagnation and lack of organization in certain companies and institutions, as well as the prevailing crowd-pleasing mentality.
Information technology and telecommunication environment
Vietnam is significantly investing in its telecommunications sector, leading to rapid development and increased competition among state-owned enterprises, joint-stock companies, and foreign firms, which has sharply reduced telecom charges This has resulted in a surge in mobile phone and internet subscriptions, particularly among the youth While the network readiness index has shown some improvement, the legal framework for e-commerce is still being finalized Enhanced information technology levels are paving the way for better investment and application in finance, banking, and securities, allowing securities companies to offer faster, safer, and more accurate online services However, challenges remain in the securities field, as investment in infrastructure and technology applications is still low and inconsistent, with stock exchange centers facing limitations in processing capacity and system suitability Despite these challenges, the rapid advancement of information technology presents numerous opportunities for the sector, providing convenience for clients and enabling them to maximize investment opportunities.
The rapid pursuit of new software by companies, despite not recouping investments from outdated systems, leads to inefficient capital utilization To gain a competitive edge and prevent wasteful spending in information technology, securities firms must conduct thorough research and establish a clear strategic plan, roadmap, and timely investment strategy in IT.
Vietnam's political environment is regarded as one of the most stable globally, evidenced by its successful hosting of significant international events like ASEM 5 and APEC Notably, Vietnam's election as a non-permanent member of the United Nations Security Council in 2008 marked a pivotal moment in affirming its position on the world stage This development presents a promising opportunity for attracting both foreign direct and indirect investment, particularly in the capital and securities markets, which are known for their high sensitivity and psychological dynamics.
Prior to its accession to the WTO, Vietnam's legal system faced challenges, including overlapping regulations and a lack of synchronization To meet the requirements for WTO membership, Vietnam has worked diligently to enhance its legal framework, gaining acceptance from negotiating parties The country has successfully issued legal documents and commitments related to market opening and associated details.
To securities market, the National Assembly has promulgated Securities Law in
In 2006, Vietnam established a legal framework for securities and the securities market, allowing both domestic and foreign organizations and individuals to participate This development has significantly improved the legal environment in Vietnam, creating opportunities for increased foreign investment and fostering new cooperation mechanisms across various sectors, particularly in securities However, the legal system requires further refinement and clarity to ensure that foreign entities can easily access the domestic market.
13 Report of the working group on WTO accession of Vietnam/ part II: commitments on services, the list of excluding MFNs according to article I
The world economy has rebounded from the 2010 crisis, with the IMF projecting a growth rate of 4.6%, surpassing the average growth of 4.2% seen between 2000 and 2007 Additionally, global trade is on the mend after experiencing a significant decline of 12.2% in 2009 According to the World Trade Organization (WTO) forecast on September 20, the global export value is expected to rise.
In 2010, global economic growth is projected to reach approximately 13.5%, surpassing the earlier estimate of 9.5% made by the organization in April 2010 Developed countries are expected to see an 11.5% increase in exports, while developing nations and the Commonwealth of Independent States are anticipated to experience a significant rise of 16.5%, marking a notable recovery from the 7.8% decline observed in 2009.
In its "Asian Development Outlook, September 2010" report, the Asian Development Bank (ADB) upgraded its 2010 economic growth forecast for Asia to 8.2%, up from the previous estimate of 7.9%, primarily due to a robust post-crisis recovery in trade In contrast to developed countries, Asia's recovery prospects appear more promising; however, the global economic recovery may face sustainability challenges.
In the second quarter, global economic growth slowed to a year-on-year increase of 4.4%, down from 5% in the first quarter This decline is attributed to waning public optimism amid a potential downturn in the U.S housing market Consequently, the IMF projects that economic growth in 2011 will be lower than in 2010, with an anticipated rate of just 4.3%.
U.S property market was still in a gloomy situation by September 24, 2010 with the sales of new houses dropped to a record level while land price in the U.S kept on falling in August 2010 According to Clear Capital, housing price will stay still in the coming time and even decline in the remaining if the year as well as in 2011 However, this organization assumed that it is likely that double-dip recession will not happen in 2010.
Public debt and budget deficit keep on rising Total public debt of industrial countries is estimated to surpass 100% GDP in 2011.
FDI capital flow into emerging and developing countries recovered slowly meanwhile the investment capital according to portfolio changes unexpectedly.
* The phased-out economic stimulate policy
STRATEGIC MEASURES AND RECOMMENDATIONS
Strategic measures
In the face of a global crisis and intense competition, a diversified growth strategy emerges as the most suitable approach for VietinbankSc, as identified through a thorough SWOT analysis of internal and external factors This strategy aims to enhance company value by enabling business units to implement targeted strategies that increase revenue and reduce costs, while also strengthening market power against competitors However, the current sustainable standards of VietinbankSc are only at an average level, and in a highly competitive environment, these standards can be easily undermined Therefore, it is crucial to implement measures that elevate the company's value to avoid the decline of these already average standards.
Moreover, resources of the Company such as tangible and intangible resources are not strengths for it to compete equally to its rivals in the context of crisis
The SWOT analysis of VietinbankSc highlights its strengths, weaknesses, opportunities, and threats, revealing key features such as product development, value generation from excess resources, and operational expansion These elements align with a diversified growth strategy, emphasizing the bank's commitment to leveraging its capabilities for sustainable growth.
To successfully implement a diversified growth strategy, a company must focus on developing innovative products to gain a competitive advantage and capture market share Additionally, enhancing research and forecasting capabilities is essential to establish a robust risk management system for investment activities Lastly, synchronizing the execution of this strategy requires effective organizational structures to ensure successful implementation.
23 Ass Dr Le The Gioi,(2007), Strategy management, pp 445, Statistical Publishing House be well implemented, in which, paying attention to the processes, regulations and human resource
To establish a competitive edge in the market, enterprises must leverage low-cost advantages and product differentiation For VietinBankSc, achieving a low-cost advantage is challenging due to its long-standing presence in the securities market and its status as one of the largest securities firms The company's focus on technological innovation aims to meet the growing demands of existing clients and attract new customers However, despite a substantial customer base, the transaction volume remains low, particularly among major domestic and international clients, as VietinBankSc's offerings lack differentiation compared to competitors Therefore, it is recommended that the company adopt a product differentiation strategy to enhance its competitive position.
VietinBankSc's product differentiation strategy focuses on offering unique products that stand out from competitors, particularly targeting large and foreign clients To enhance this approach, the bank plans to establish specialized broker teams tailored to the needs of these key customer segments, ensuring brokers are proficient in foreign languages and well-versed in the cultural preferences of international clients Additionally, VietinBankSc aims to introduce innovative products that are currently lacking in the market, such as business acquisitions, mergers, escrow services, and backdoor listings, thereby further distinguishing its offerings and enhancing customer satisfaction.
To do this, companies need to take a number of steps as follows:
Leveraging the expertise of partners is essential for enhancing a company's knowledge base, especially in the securities field where the current workforce, despite being highly qualified, lacks extensive experience To address this gap, the company should prioritize the development of specialized staff while simultaneously fostering innovative practices that transform partner experience into valuable in-house expertise.
Integrating information technology into management and technical operations is essential for enhancing company promotion and service advertising To achieve this effectively, a comprehensive human resource strategy must be implemented.
While pursuing a competitive strategy based on differentiation, companies must not overlook the importance of minimizing operational costs A truly effective differentiation strategy is only realized when production expenses are kept low To achieve this, businesses should focus on enhancing labor productivity and optimizing their management structures for greater efficiency.
To achieve a position among the top five securities companies in Vietnam's brokerage market, it is essential to implement a product differentiation strategy alongside other strategic initiatives.
Designing new products is a key strategy for achieving diversified growth, as it enhances product uniqueness and broadens the company's offerings This approach not only attracts customers away from competitors but also boosts profitability In the upcoming year, the company plans to develop several new products in line with government schedules.
The demand for advisory services in mergers and acquisitions (M&A) is on the rise, with average transaction values ranging between US$ 5 to 10 million Given the relatively straightforward administrative procedures involved, it is essential for companies to swiftly enhance their M&A advisory services to seize market opportunities and address the growing needs of clients.
Developing other services such as escrowing service and short sales after being approved by the sector management agency
Table 3.1: Projected revenue structure by 2015 (Unit: VND billion)
Advisory on acquisition and merger
Our group's revenue projection emphasizes a strong focus on advisory and merger & acquisition services over the next three years, driven by the development of new products and the performance of existing services within the sector VietinbankSc benefits significantly from its parent bank's support, particularly in underwriting securities and facilitating the issuance of nearly VND 60,000 billion in bonds, positioning advisory services as the company's primary income source during this period However, as time progresses, we anticipate a gradual decline in the proportion of revenue from these services, while the company's overall value is expected to rise, allowing previous primary services to contribute significantly to revenue generation.
To effectively implement a diversified growth strategy, a robust marketing approach is essential for introducing new and differentiated products to customers The current marketing strategy lacks synchronization and decisive execution, as highlighted in the SWOT analysis Therefore, the company must focus on enhancing its marketing efforts to achieve successful growth in the future.
Firstly, the company needs to restructure the organizational and separate PR &Marketing division from Research& Development Department into Marketing
Department and divide functions to working groups Apart from traditional tasks, the Department needs to implement following tasks:
The Marketing Intelligence System involves a series of activities designed to track external trends and emerging events To effectively implement this system, the Head of the Marketing Department must organize staff to closely observe competitor actions Training personnel to become key customers of competitors is essential, utilizing indirect investigation methods as well as insights gathered from workshops, seminars, and interactions with customers and shareholders.
Analyzing competitors' job announcements can provide valuable insights into their strategies and operations However, it is essential to combine this information with other data sources to verify the accuracy of your findings.
Making market diagram and revenue forecast
Recommendations
Needing to implement a flexible monetary policy
Timely adjustments to the exchange rate, along with a gradual implementation of each step, are essential to mitigate psychological impacts on exchange rate perceptions Additionally, a gradual reduction in interest rates can support businesses in overcoming challenges, fostering job creation, and boosting exports This process should be executed step-by-step to ensure that commercial banks are not adversely affected.
To attract direct investment and disbursement of direct investment
Strengthening investment promotion, minimizing administrative procedures in site clearance, disbursing direct investment capital, deploying training programs and upgrading infrastructure in industrial zones.
To advance the equitization program, it is essential to implement reforms that enhance the company's operations and produce high-quality products for the stock market, thereby attracting foreign investment This can be achieved by utilizing agreement methods with strategic partners or conducting auctions among them, while simultaneously minimizing the percentage of external sales.
Switching to ownership can enhance company management while ensuring that the State does not incur losses This approach also aims to attract foreign direct investment, which requires that capital used to purchase shares be held for a minimum of 2-3 years.
To enhance financial capability and boost foreign currency inflows, banks will be permitted to sell shares to foreign institutions at a rate below 5% without needing approval from the State Bank Additionally, the foreign ownership limit in banks will be raised to 35%, aiming to attract dwindling investment capital.
Vietinbank Securities Company, one of the pioneering firms in Vietnam's complex and dynamic securities market, is committed to becoming a leading player in the industry As the market evolves amid economic development and regional integration, Vietinbank Securities is focused on solid growth and enhancing its market position In collaboration with other financial institutions under the Vietnam Joint Stock Commercial Bank for Industry and Trading (Vietinbank), including branches, insurance companies, financial companies, and asset management firms, Vietinbank Securities aims to establish a premier financial banking group in Vietnam.
The current securities trading environment is highly accessible; however, VietinBankSc's leadership has established a comprehensive trading strategy that adheres to modern principles and regulations both in Vietnam and globally This approach aims to enhance the company's value for shareholders and society while strengthening its competitive position in the financial and currency markets.
The trading strategy at VietinBankSc is a dynamic document integral to strategy management, incorporating essential components that are reviewed and updated annually.
Analysis of trading environment and competitive capacity: through the determining and pricing direct or indirect strategic factors affecting to the development in the future of VietinBankSC.
Choosing and implementing an effective business strategy is essential for addressing weaknesses, leveraging strengths, and capitalizing on competitive advantages This approach helps businesses adapt to market conditions, seize opportunities, and mitigate external threats and risks, all while striving to achieve their defined objectives and strategic vision.
To effectively implement a trading strategy, it is essential to develop a detailed plan tailored to specific sectors, which includes an action program, a clear timetable, and a budget This comprehensive trading plan should encompass both a short-term annual strategy and a medium-term plan spanning three years, ensuring a structured approach to achieve trading goals.
Deploying, supervising and evaluating the implementation to timely introduce essential methods and adjustment The strategy will be considered, updated and adjusted annually matching to the reality
Group 3 of Gamba01 X03 is pleased to study and hopes that our report analysis mentioned above will consult and support VietinBankSc in the fluctuated market condition in Vietnam and VietinBankSc is also developing quickly, therefore, our evaluation can be not entirely accurate Nevertheless, we hope that, this document will have significant contribution in introducing right policies as well as orientation forVietinBankSc As a result, VietinBankSc will become the leading securities company inVietnam.