THE BASIC ACADEMIC QUESTIONS ON
Concept and process of managing strategy
Building effective strategies is crucial for organizational success, as a lack of direction can lead to failure, much like a ship without a rudder Currently, only 16% of the largest U.S companies have maintained their positions since the early 20th century, while a staggering 44,367 businesses have filed for bankruptcy, highlighting the prevalence of strategic failures This underscores the importance of not only having a well-defined strategy but also ensuring its proper implementation, particularly within the banking sector.
"Strategy is a complex series of actions to mobilize resources for an organization to achieve a certain goal (Managing strategy syllabus, GaMBA 2009)
In the banking sector, a bank's strategy serves as a comprehensive long-term plan designed to foster specific growth and development It represents a fundamental commitment to achieving essential objectives and strategically allocating resources to meet future operational challenges.
The term of strategy can be understood to encompass the following meanings:
+Firstly, the strategy is a long-term plan with basic orientation on many different levels:
Enterprise Strategy encompasses the overall objectives and scope of a business, aligning with the expectations of its investors This critical aspect not only reflects the influence of capital contributors but also directs strategic decision-making throughout the organization Typically, the Enterprise Strategy is articulated in the "Mission Statement."
A successful business strategy centers on how an enterprise can effectively compete within a specific market It involves strategic decisions regarding product selection to fulfill customer needs, achieving a competitive edge over rivals, and both exploiting and creating new opportunities for growth.
An operation strategy emphasizes the management of resources, processes, and human capital within an organization It outlines how various departments will align with the company's overall strategic goals Moreover, this strategy is not a fixed, long-term blueprint; rather, it is adaptable and can be modified in response to changing business conditions and environmental factors.
A business strategy is not merely an undefined orientation; it is focused on achieving specific qualitative and quantitative goals that banks must aim for in the future These objectives shape the strategic directions and solutions employed by the bank For instance, growth targets may lead to concentrated strategies aimed at expanding the bank's market presence and scale, while narrower objectives may necessitate focused solutions to reduce scale or withdraw from certain markets.
Managing strategic in the bank - How will the strategy be controlled?
According to the broadest meaning, strategic management in the bank is the process of implementing "strategic decisions" – those decisions can answer the questions:
- Where is the bank in the market?
- Where the banks want to go to in the future? Or what are the specific targets of the bank in the future?
- Which basic directions and methods do the bank administrators reconcile the resources, and how to achieve those?
- How to identify and ensure that the bank will achieve the expected goal, position and image?
A more general way to offer a definition of strategic management as follows:
Strategic business management involves analyzing the current environment and forecasting future trends, while defining the organization's mission, goals, and strategic programs It encompasses directing and implementing these strategies, as well as monitoring their execution to ensure alignment with the established objectives.
In fact, the process of managing strategy includes 3 perfect parts and we would like to map as follows:
Diagram 1: The process of managing strategies
(Source: Nguyen Thanh Thao, "Brand Strategy by Michael Porter theory")
Define vision and mission of the organization
Put strategies into action and reach the integration
Order of content to build the business strategy
The development of a business strategy involves strategic business planning, which can be divided into four key components These components collectively outline the essential elements of an effective strategy, as illustrated in the accompanying diagram.
Diagram 2: The steps to form strategy
(Source: Nguyen Thanh Thao, "Brand Strategy by Michael Porter theory") 1.2.1 Define functions and tasks (in other words mission is to identify business) and business strategic targets
Develop and choose strategyPlan the strategy
The business mission of a bank defines its core purpose and operational goals within the market, addressing the fundamental question of why the bank exists and what objectives it aims to achieve in its business activities.
A well-defined business mission is crucial for aligning with customer needs, as it is ultimately the customers who dictate a bank's viability through their willingness to pay for services The success or failure of a bank hinges on its reputation among customers and its ability to foster and maintain strong relationships with them.
Defining a bank's business mission involves addressing key questions about its customers, products, market presence, technology, growth, and competitive positioning The bank must identify its target customers, whether they are individuals, small and medium enterprises, or large corporations, and clarify the range of products and services offered, including whether it provides multi-services or specializes in one The operational scale should be determined, whether local, national, regional, or global, along with the primary market area Additionally, the bank needs to assess the importance of technology in its strategy, focusing on necessary improvements and upgrades Growth and profitability goals should align with shareholder interests, demonstrated through metrics like asset growth and return on equity (ROE) Understanding the bank's market position and competitive advantages, such as service quality and distribution networks, is crucial Employee relations, including recruitment practices and working conditions, reflect the bank's humanist philosophy Lastly, the bank's relationship with the community plays a significant role in shaping its overall image.
Targets of strategy can be defined as the determined achievement that the bank tries to achieve when do the business mission in a quite long term period.
Target of Strategy is the legitimate target That is the goal meeting the requirements of SMART (specific, measurable, able to perform, specific time, and realistic).
Target of strategy can be classified in banking as follows:
The qualitative target represents the bank's commitment to achieving specific outcomes related to its core attributes, such as specialization, product and service quality, and overall market prestige and positioning, following each business period.
Quantitative targets: expressed in the groups of target:
To achieve market dominance, businesses must focus on key performance indicators such as turnover, operational scale, and sales of loans This includes mobilizing resources effectively, increasing the number of new facilities, and expanding the workforce Additionally, enhancing customer engagement is crucial, as evidenced by the growth in the number of customers and accounts Ultimately, these efforts contribute to improving the market share rate, which is essential for sustained success in a competitive landscape.
The external environment significantly influences the achievement of business targets for enterprises Conducting a thorough analysis of both the macro-environment and the micro-environment allows businesses to understand their current position and the characteristics of their surroundings This analysis helps define how external factors impact the organization and its objectives, ultimately guiding strategic planning decisions.
The macro environment impacts all businesses in various ways, particularly in the banking sector Key factors include the economic environment, which influences financial stability and consumer behavior; the legal and political environment, affecting regulations and compliance; the cultural and social environment, shaping customer expectations and values; the natural environment, which pertains to sustainability practices; and the technological environment, driving innovation and efficiency in banking operations.
Economic factors significantly influence a bank's stability, including the stage of the economic cycle, inflation rates, GDP growth, and the outlook for sectors reliant on bank loans Additionally, price stability and interest rates play crucial roles in shaping the overall economic environment that affects banking operations.
The legal and political environment, along with government policies, must be meticulously analyzed due to the banking sector's role as a financial intermediary, which significantly impacts the national financial system This sector is under stricter state control compared to others, making it essential to continuously monitor government monetary policy Additionally, cultural and societal environmental factors, which often evolve slowly and present long-term challenges, are crucial for strategic analysis Understanding consumer culture, banking service usage habits, and saving practices is vital; a business strategy that fails to align with these cultural and social factors is likely to encounter failure.
Technological factor: In the banking, the technological factor becomes breakthrough in competition Therefore, need to capture new technology to not be outdate and losing competitive advantage.
Natural factors, including the scarcity of resources, varying production capabilities across different regions, and environmental pollution issues, play a crucial role in evaluating investment or loan funding projects.
Micro environment for banking activities
The micro-environment of a specific industry encompasses key factors that influence enterprises within that sector, including competitors, customers, suppliers, latent competitors, and substitute products In the context of the banking industry, these elements play a crucial role in shaping its competitive landscape and operational dynamics.
In the financial sector, competition is influenced by the regulatory environment, the number of participating institutions, industry growth rates, cost trends, and the positioning of banks To effectively analyze competitors, it is essential to consider their objectives, current strategies, market impact, and their strengths and weaknesses Understanding these factors can help in navigating competitive pressures among banks and other financial entities like insurance and finance companies.
Customers play a crucial role in the survival of banks within a competitive landscape, serving both as capital suppliers and users of financial services When analyzing customer relationships, it is essential to consider factors such as customer confidence, historical ties with banks, loyalty levels, attitudes towards banking services, negotiation skills, understanding of service processes, investment capacity, income stability, and sensitivity to interest rates.
In the evolving financial landscape, the boundaries between banks and financial institutions are likely to blur, leading to a subtle overlap in service offerings As a result, it's essential to recognize not only existing competitors but also latent competitors that may emerge in the future These include insurance companies, building associations, and distributors of wholesale and retail goods, all of which could play a significant role in the mutual provision of services to customers.
Analysis SWOT matrix
Analyzing strategies can be complex and demands a high level of expertise, particularly when utilizing the theoretical framework of portfolio capital This involves applying various strategic matrices, including the Boston Consulting Group matrix, GE strategic grid, IE matrix, GS matrix, and SWOT matrix In this discussion, we will specifically concentrate on the SWOT matrix for our analysis.
SWOT, which stands for Strengths, Weaknesses, Opportunities, and Threats, is a valuable tool for understanding organizational challenges and making informed decisions in management and business This theoretical framework allows companies to assess their strategic position and direction, analyze business growth opportunities, and evaluate ideas related to their interests The application of SWOT analysis is increasingly popular among enterprises for building business plans, developing strategies, assessing competitors, conducting market surveys, and reporting research findings.
The SWOT analysis framework provides a structured approach for making informed decisions rather than relying on instinct or habitual reactions It is typically organized in a grid format, highlighting four key components: Strengths, Weaknesses, Opportunities, and Threats Each section can be tailored with specific questions and answers relevant to the analysis subject, which could be a company, product, project, idea, method, or choice It is crucial to clearly define the analysis subject, as SWOT serves as a comprehensive overview of that entity.
The analysis framework of SWOT can be interpreted shortly as the below diagram:
Diagram 4: Analysis framework of irreducible SWOT
S- Strengths S-O: promote strengths to take advantage of opportunities, business-oriented
S-T: promote the strengths and limitations to evade risk
W-O: overcome weaknesses to take advantage of opportunities
W-T: overcome difficulties and the need to prepare carefully to overcome challenges from the outside
(Source: Nguyen Thanh Thao, "Brand Strategy by Michael Porter theory")
The basic business strategies in practice
Michael Porter outlines three key strategies that businesses can implement to achieve a competitive advantage at the unit level By utilizing the fit common strategy, companies can enhance their strengths while safeguarding themselves against the impacts of the five market forces.
(1) The needs of customers: what will be satisfied?
(2) The groups of customers: who will be satisfied?
Understanding customer needs is crucial for businesses, as it not only shapes their strategic choices but also helps build competitive advantages over rivals By effectively satisfying these needs, companies can define their competitive approach and enhance their market position.
Understanding customer demand is crucial, as it encompasses their expectations and requirements, which can be fulfilled through specific product or service features Product differentiation plays a vital role in establishing a competitive advantage, as it involves designing goods and services that specifically address customer needs The unique attributes of a company's offerings compared to its competitors serve as a key source of this competitive edge.
The company lacks the ability to differentiate its products based on pricing, which impacts its ability to stand out in the market In contrast, other businesses focus on developing unique features for their products, enabling them to fulfill customer needs in ways that competitors cannot.
Market segmentation involves categorizing customer groups based on their distinct needs and interests, allowing companies to gain a competitive advantage By identifying these segments, businesses can develop tailored competitive strategies Generally, there are three primary strategies for effective market segmentation.
In markets characterized by high uniformity and universal policies, the prevailing strategy for this segment is cost leadership.
The market can be segmented into various parts, allowing for tailored product development that meets the specific needs of each market segment This approach employs a differentiation strategy, focusing on creating unique products for each section of the market.
In a diverse market, companies often adopt a focus strategy by targeting specific segments to better meet customer needs, leading to increased demand and revenue However, in industries where product differentiation is limited, opportunities for competitive advantage through varied offerings diminish In such cases, price becomes the primary factor for customers when evaluating products, favoring companies that operate efficiently and can offer the lowest prices.
In enterprise-level business strategy, a critical decision involves leveraging unique capabilities to effectively meet consumer and market segment needs These special powers enable a company to fulfill customer demands more efficiently than its competitors To establish a strong market position, each company must identify and utilize its inherent advantages According to Michael Porter, a business's competitive edge typically stems from either cost advantages or product differentiation By harnessing these advantages, companies can adopt one of three overarching strategies: cost leadership, differentiation, or focus, which are applicable across various industries.
Competitive advantage Low cost Differentiation of the product
Range Overall Strategy leading cost
Diagram 6: Table of common strategies in the model with 5 competitors of Michael Porter (Source: Nguyen Thanh Thao, "Brand Strategy by Michael
This strategy focuses on establishing the company as the low-cost producer within the industry while maintaining specific quality standards The company plans to either price its products at the industry average to achieve higher profits than competitors or offer lower prices than the average to increase market share.
In the event of a price war, a company can sustain a competitive interest rate while its rivals incur losses Despite fluctuations and inconsistencies in pricing, the sector continues to evolve and expand, leading to decreased prices Companies that manage to maintain lower production costs can remain profitable over the long term This strategic approach is typically employed in larger markets.
Businesses can enhance cost efficiency by optimizing their processes, sourcing affordable raw materials, strategically relocating operations abroad, and making informed decisions regarding vertical mergers or cost reductions By achieving lower costs that competitors cannot match, these enterprises can sustain a competitive advantage in the market.
The enterprises succeed in applying the leading strategy of cost often have the following characteristics:
Ability to access capital well to invest in equipment of product This is also the barriers that many other companies can not overcome.
Capacity of product design to increase production efficiency, for example, created a small detail to shorten the assembly process.
The high level of production, The effective distribution channels
A low-cost strategy in joint ventures carries inherent risks, as competitors may also reduce their production costs Unexpected advancements in technology can enable rivals to enhance their production speed, potentially erasing the competitive edge of cost-leading enterprises.
Some companies are adopting a strategy that targets niche markets, allowing them to achieve lower costs compared to traditional markets This approach enables them to collectively dominate a larger market share.
The strategy of different products
This strategy focuses on developing products or services with unique features that are highly valued by customers, setting them apart from competitors By offering distinctive qualities, businesses can justify higher prices without risking customer backlash The goal is to not only cover rising supply costs but also to pass on price increases to customers, as the uniqueness of the product makes it difficult for them to find alternatives.
The successful enterprises in this strategy often have the following strengths: Ability to research and access to leading scientific achievements
Select the optimal strategy
Enterprises must choose an optimal strategy, as executing all strategies simultaneously would require excessive time, financial resources, and human capital Therefore, it is crucial for businesses to select a set of strategies that are most effective for development while carefully weighing the potential benefits and drawbacks associated with each option.
On the basis of a set of strategies has been pointed out by combining
Strengths - Opportunities, Strengths - Threats, Weaknesses - Opportunities,
In the context of the GREAT matrix, identifying weaknesses and threats is crucial for enterprises to develop effective business strategies By analyzing these factors, businesses can pinpoint their limitations and external challenges, allowing them to focus on strategies that align with their capabilities This strategic approach enables organizations to leverage their strengths while mitigating risks, ultimately guiding them toward sustainable growth and competitive advantage.
Diagram 5: Matrix by quantitative criteria GREAT
Total points 1 xx xx xx
Step 1: identify the main categories to analyze or the criteria in column 1
Step 2: assessing the impact of the factors (criteria) to the overall strategy; use of multiplier showing the importance and influence of these factors to the strategy. (calculated by the score from 0 to 1 so that the total is 1)
Step 3: assessing and scoring each analyzed factor in each strategy Assessed points are evaluated from 1 to 5 with levels: weak, medium, medium pretty, pretty, good.
Step 4: converting coefficients are the result of composition of two columns (columns 2 and columns at each assessed point of each strategy), then plus all the results to give the final result.
Finally, highlight 1 or 3 best results and that is the focus strategy should focus to implementing
The mini conclusion of Chapter 1
This article outlines the theoretical foundations and terminology essential for developing effective business strategies in enterprises It covers key theories and methods, including understanding strategy, steps for strategy formulation, evaluation techniques, integrated assessment methods, and approaches for proposing and filtering advantageous strategies These concepts will be applied specifically to the Quang Minh branch of Vietinbank, while allowing for flexible adaptation to the unique characteristics of the banking and financial sector during the analysis process.
BUILD AND CHOOSE BUSINESS STRATEGY
Overview of Quang Minh Industrial and Commercial Bank branch
2.1.1 Process of formation and development
Full Name in Vietnamese: Joint Stock Commercial Bank for Industry and Trade of Vietnam - Quang Minh Branch.
Full name in English: Vietnam Joint Stock Commercial Bank for Industry and Trade
Abbreviation in English: Vietinbank - Quang Minh.
Address: Km 9 highway Thang Long - Noi Bai, Me Linh, Hanoi.
Email: Wedmaster@vietinbank.vn; Website: www.vietinbank.vn
Vietinbank Quang Minh, established in August 2004, is a first-level branch of the Vietnam Joint Stock Commercial Bank for Industry and Trade (Vietinbank), registered under business number 0113025185 on August 14, 2009 Located in Me Linh District, Vinh Phuc province, now part of Hanoi, the bank offers a diverse range of financial services, including banking and non-banking solutions Committed to enhancing profitability and adhering to legal regulations, Vietinbank Quang Minh plays a vital role in supporting the national monetary policy and contributing to the economic development of Vietnam.
At the time of Vietinbank’s foundation, Quang Minh had 50 billion in total assets with 22 staffs; the office was located in Quang Minh, Me Linh, Hanoi.
The Quang Minh branch of the Industrial and Commercial Bank boasts a highly educated workforce, with 90% of its staff holding university degrees or higher With an average age of under 30, the team is dynamic and passionate about their profession Despite facing challenges, the branch has successfully established itself as a leader in the local banking sector.
In recent years, the Branch has experienced significant growth, achieving an average capital increase of 70% and outstanding loans exceeding 40% In addition to the main office, the network has expanded to include four additional transaction offices, contributing to a robust and sustainable customer base.
The branch is dedicated to the motto "For the development of the bank and customers," consistently striving to fulfill tasks and plans set by the Vietnamese Industrial and Commercial Bank, ultimately achieving excellence within the system.
Vietinbank Quang Minh headquarters is situated in the Quang Minh Industrial Zone in Me Linh, Hanoi The bank operates four trading rooms located in the commercial areas of Dai Thinh, Tien Phong, and Me Linh Plaza, which serve as satellite branches supporting the main headquarters.
In addition, Quang Minh Vietinbank has eight automatic teller machine (ATM) located at these locations:
Places order the machines Number of machine
Headquarter (Quang Minh town, Me Linh, Ha Noi) 02
(Source: Vietinbank Quang minh annual reports year 2008)
VietinBank has successfully integrated the Banknetvn payment system with several prominent banks in Vietnam, including the Bank for Investment and Development of Vietnam (BIDV), Saigon Bank for Industry and Commerce (Saigonbank), An Binh Commercial Joint Stock Bank (ABBank), Agribank, Habubank, Mekong Delta Housing Development Commercial Joint Stock Bank (MHB), Technical Commercial Joint Stock Bank Vietnam (Techcombank), and Vietcombank.
Vietinbank Quang Minh is actively working to diversify its financial banking services beyond traditional deposit and lending practices, aiming to introduce a range of modern products and services These offerings can be categorized into three main groups.
Group 1: Deposit products such as payment deposit, non-term savings, term, project bonuses, ATM payments, inter-bank deposit
Group 2: Credit, international payment products such as loans, guarantees, discounting export documents, currency trading, trading the currency market (Spot, Forward, Option)
Group 3: The banking services such as financial package services for economic organization, import / export payment, Internet banking, Home banking, SMS banking , combined services such as phone recharge Previous paid VnTOPUP, cross-sell insurance Bancasurance, automatic brick debt Viettel, electricity bill payments, water fee
Vietinbank Quang Minh, like other branches of the Vietinbank system, adheres to the accounting regime set by the central office The business results reported accurately reflect the branch's performance, as it is responsible for covering all incurred costs and reaping the benefits from its business operations.
Table 2 : Report on business results
1 The proportion of over debt /Total business 43% 45% 41% 39% - - -
2 The proportion of expire loans/Total debt balance 0% 0,4% 0,35% 0,75% - - -
The proportion of debt balance with guarantee properties/Total debt balance
( Source: Vietinbank Quang minh annual reports year 2006,2007,2008,6months 2009)
In 2007, total assets surged to 475 billion, marking a 54% increase from the previous year By 2008, total assets soared to 1,051 billion, a remarkable 213% rise compared to 2007, with profitability reaching VND 1,000 billion, accounting for 95% of total assets The property debt structure improved positively, and despite an industry-wide excess of capital and lack of output, the branch significantly boosted credit activities, resulting in a notable growth in income disparity and enhancing the quality and efficiency of its operations In the first half of 2009, despite the economic crisis, the branch achieved production of 1,483 billion, reflecting a 41% increase from 2008.
Total capital mobilization in the last 2008 is 811 billion, up 292% compared to
In 2007, deposits from economic organizations surged by 488 billion, reflecting a remarkable 207% increase to reach 728 billion Household deposits also saw significant growth, increasing by 218% to total 83 billion By June 30, 2009, total mobilized capital reached 1,295 billion, an increase of 484 billion compared to 2008 The deposit structure comprised 80% from economic organizations and financial institutions, while individual deposits rose by 20 billion, marking a 24% increase from late 2008 Although capital mobilization from subsidiaries grew substantially, it remained unstable, with 80% of deposits being non-term and heavily reliant on a few companies Household capital mobilization increased by 20 billion compared to December 31, 2008, but the overall contribution from households remained low due to a limited population in the branch Additionally, competition among commercial Joint Stock banks to raise interest rates prompted customers to withdraw deposits, posing challenges in maintaining and developing capital mobilization sources amidst fluctuating interest rates.
In 2008, Branch successfully met its credit limit of 490 billion set by Vietinbank, achieving 100% of its annual plan and marking a 1.3-fold increase compared to 2007 By the first half of 2009, the Branch further escalated its performance, reaching 900 billion, which represents an impressive 84% growth over the previous year.
The implementation of the assigned credit structure targets has been strictly adhered to, with foreign enterprise debt constituting 100% of the total debt balance In 2008, the medium and long-term debt balance was 41% of the total, but this figure decreased to 39% in the first half of 2009, slightly below the maximum target of 40% Additionally, the outstanding loan rate secured by collateral reached an impressive 99.7% of total outstanding loans.
Credit quality: In the time of operation, by working actively to control risks in lending, branch controlled not to generate data on overdue debts.
Credit growth speed : The office locations of the branch are at the Quang Minh
Me Linh district, home to the largest concentration of businesses in Hanoi, presents significant opportunities for credit development Recently, the branch has experienced rapid growth in credit, bolstered by the Government's short-term and medium-long term interest support programs within its stimulus package As a result, there has been a remarkable increase in outstanding loans at the branch during the first six months.
Total net service revenue: 3.000 million VND, up 1.76 times compared to
In the first half of 2009, net service revenue reached 2.5 billion, with foreign currency trading contributing 45%, payment service charges making up 35%, and guarantee operations accounting for 15% Consequently, traditional services represented 95% of the total net service revenue.
Analysis of outside environmental factors
Of macro environmental factors typically affect Vietinbank Quang Minh are usually the following main elements:
In 2007, the world economic growth slowdown, had signs of crisis September
The 2008 financial crisis, originating in the United States, had a widespread global impact In response, the Vietnamese government implemented a series of stimulus packages, including interest rate support and loan guarantees, to boost economic production While GDP growth had been robust in prior years, it has significantly slowed in the past two years.
Table 3: GDP growth speed of Vietnam during the period 2002-2008
Me Linh District, the primary operational area of Vietinbank Quang Minh, has experienced significant economic growth, averaging 25% from 2006 to 2008 The district's industrial production and basic construction sectors have particularly thrived, achieving an impressive growth rate exceeding 30% during the same period, and contributing approximately 80% to the district's overall production value.
Table 4: Economic growth speed of Me Linh District during the period
2006-2008 divided according to economic branches
Target Year 2006 Year 2007 Year 2008 First 6 months of
% growth over the same period
% growth over the same period
% growth over the same period
% growth over the same period
(Source: Report on the years, the task orientation of Me Linh District
As economies expand, businesses require capital to invest in modern equipment and enhance their production and operations This investment often extends beyond national borders, creating a robust demand for various banking services, including payment processing, guarantees, leasing, and foreign currency conversion Consequently, the growth of the economy directly correlates with an increased demand for banking services.
Over the years, the total import-export turnover has shown consistent growth, with exports rising from 32.4 billion USD in 2005 to 80.7 billion USD in 2008 Similarly, imports increased from 36.8 billion USD in 2005 to 62.7 billion USD in 2008 This upward trend highlights the expanding trade dynamics and economic development during this period.
USD in 2008 Export activities increase the demand for banking services such as negotiation of documents, foreign currency exchange, loans for production
In recent years, Vietnam has experienced positive changes due to increased capital investment, both domestic and foreign The government has made significant improvements to the investment environment, creating favorable conditions for businesses to thrive Consequently, social capital has risen substantially, and new import/export markets have emerged, with the U.S becoming one of Vietnam's largest trade partners.
In geographical areas of Vietinbank Quang Minh operation, by the end of 2007
Me Linh has successfully attracted 148 investment projects in Quang Minh Industrial Zone 1, comprising 20 foreign and 128 domestic projects, with a total investment exceeding 4,900 billion VND and over 100 million USD These projects utilize more than 2,300 hectares and are expected to generate over 34,000 jobs Notably, five significant foreign projects are now operational, including garment production by Vit-Gament and furniture manufacturing by Woodsland Additionally, 11 domestic projects focus on glass, plastic components, electronics, and wood products Currently, 15 foreign and 117 domestic projects are accelerating construction and site clearance Me Linh plans to expand the Quang Minh Industrial Zone 2 and enhance facilities to attract further investments, particularly in agro-food production and traditional industries.
Population size and structure of the population
As of 2004, Me Linh district had a population of 181,299, resulting in a population density of 1,288 people per square kilometer, which is moderate compared to Hanoi and higher than Vinh Phuc Province's average of 847 people per square kilometer The district's population is substantial compared to neighboring districts in Vinh Phuc Between 2001 and 2004, Me Linh experienced a population growth rate of 1.15%, but this rate has declined in recent years due to a low and decreasing natural increase and a reduction in mechanical population movement.
Me Linh population forecasts to 2010 and orientation to 2020
Forecast Me Linh district’s population will be 29 ten thousand in 2010 and 35 ten thousand in 2020, the rate of population growth was 8.14% in the period 2005-
2010, the period from 2011 to 2020 will be l, 9% The population growth is mainly mechanical one The mechanical population growth is for policies to attract talents and create more jobs.
In 2004, the workforce in Me Linh district numbered 104,153 individuals, with 102,597 employed Among these, 79,044 were engaged in agriculture, representing 77.04% of the workforce, while 12,382 worked in industry and construction, accounting for 12.07% Additionally, 11,171 individuals were employed in the service sector, making up 10.89% of the total workforce.
Labor quality has seen significant improvement, with the percentage of skilled workers rising from 7.2% in 2000 to 14.4% in 2004 Currently, there are approximately 14,774 trained employees, primarily concentrated in state management, education, and training sectors.
As population growth and demographic trends evolve, the projected workforce in the district is expected to reach 70,000 by 2010 and approximately 201,000 by 2020 for individuals aged 16 and older.
The population size and structure significantly influence the demand for banking services in Vietnam, a developing country where banking usage remains low, particularly in rural regions Vietinbank Quang Minh operates in these areas, primarily focused on agricultural activities However, the high percentage of young individuals in the workforce presents promising opportunities for the bank Additionally, as the population increasingly shifts towards urbanization, the demand for banking services is expected to rise correspondingly.
As Vietnam experiences rising income per capita and improved living standards, residents are accumulating wealth and seeking to invest their earnings for profitability This growing interest in investment, coupled with an increasing demand for consumer loans, drives individuals to explore various financial services, including investment consulting, portfolio management, investment protection, brokerage, fund management, and insurance Consequently, the demand for banking and financial services is set to rise significantly.
In recent years, our country has experienced significant macroeconomic stability and growth, leading to a continuous increase in both annual GDP and GDP per capita Notably, in 2006, the GDP per person was estimated at 11,578 trillion VND, which represents a twofold increase compared to previous years.
In 2001, the GDP per labor was estimated at 22,419 thousand dong, doubling the figure from the previous year This significant increase in GDP per person and GDP per labor serves as a crucial indicator of improved living standards and higher income for residents As social conditions continue to advance, this progress will further support the growth of the financial and banking sector.
The habit of using cash payments of residents has improved but not much.
Table 6 : Structure of total payment during the period 2004-2008
Payment through the banking system
The data indicates a significant shift in the payment landscape, with a declining trend in cash usage across society This evolution highlights the growing adoption of cashless payment methods, particularly through banking systems like ATM cards Such trends create a favorable environment for banks to enhance their payment offerings, including the introduction of ATM cards and payment accounts.
Analysis of internal factors Vietinbank Quang Minh
Total staff of Vietinbank Quang Minh till December 31, 2008 is 50 people, including: structure by gender: 24 males (48%), 26 females (52%)
Structure by level: Postgraduate 02 people, university 35 people, and 13 people of different levels
Human resource of Vietinbank Quang Minh can be analyzed from two levels: senior managers and local managers.
Senior managers: Board of Directors include: A director and two vice directors have many– years- experience in profession.
Grassroots level managers, comprising ministers and deputy professional offices, play a crucial role in overseeing professional subjects within their respective transaction offices However, the consistency of their performance varies, as their primary focus is directed towards the Director Board.
Administrative admitting staff: This is a enthusiastic, dynamic, young team having professional qualifications and dedicated service attitude.
Quang Minh Viettinbank offers a competitive compensation structure based on business performance, job position, and title, ensuring fair income distribution and higher average salaries compared to local standards The bank prioritizes employee development by facilitating learning opportunities and enhancing expertise As a result, joint-stock commercial banks face a labor shortage, leading them to recruit higher-level management from the state bank with attractive compensation packages Consequently, the turnover rate at Quang Minh Viettinbank remains low.
Existing competitive position and future in market
In the highly competitive landscape of capital mobilization and lending activities, particularly with the rise of Joint-stock commercial banks, Vietinbank Quang Minh has consistently maintained its leading position in the Me Linh locality The bank commands approximately 50% of the loan market share and around 40-45% of the capital mobilization market, demonstrating its commitment to sustaining and enhancing its market presence in the future.
Graph 1: The situation of bank capital rising on Me Linh district 2007-2009
(Source: Years 2006,2007,2008, 6 months 2009- summation report, the task orientation of Me Linh Commission District)
Graph 2: The loan situation of the banks on Me Linh district 2007-2009
(Source: Years 2006,2007,2008, 6 months 2009- summation report, the task orientation of Me Linh Commission District)
Quang Minh is strategically attracting numerous investment projects, with Quang Minh Industrial Zone I already operational and expansions underway for Quang Minh IZ II Vietinbank has identified its primary target customers as businesses and production enterprises within the Quang Minh Industrial Zone, particularly those engaged in export activities and trade at Me Linh Plaza Additionally, the bank aims to serve small and medium enterprises operating effectively in the area, as well as individual customers with stable incomes.
Diverse level of products and new development of product
Vietinbank has developed a diverse range of products under the Quang Minh brand, ensuring they are tailored to meet the needs of various professionals This comprehensive product system is strategically researched and implemented across branches, highlighting its richness and adaptability.
- Card service product: E partner cards, visa and master card, e partner and 12 animal designations
- Remittance services: Partners include 800 reseller banks and RemittanceCompany, transfer systems with 140 branches and transaction offices
- Services related to personal account, limited- term deposit service with individual customers, business account services, business deposit account overdraft
- Export and import payment products
- Personal loan products: loan to study aboard, financial demonstration, business development, buying cars, building and repairing houses, the loans to buy project houses, office employees , advance cash selling securities
Comparing products of Quang Minh Vietinbank with other banks in the area shows:
-Advantages: The richness of the product category
The lack of specialized products in areas such as construction lending and loan document negotiation is a significant disadvantage Current offerings are limited to basic products without any additional features, such as insurance or deposit options For instance, construction loans and export receipt discount loans do not come with enhanced benefits, which could better serve customers' diverse financial needs.
Service quality and the ability to assess the level of customer satisfaction, customer care system
Quality of banking services can be easily seen through the serving attitude of bank staff, processing file time, other documents, banking procedures, and consulting services quality
In recent years, Quang Minh Vietinbank has focused on meeting customer needs through dedicated and enthusiastic service from its staff However, the complexity of service records and procedures can deter customers, and varying qualifications among officers may lead to inconsistencies in service and consulting quality.
Quang Minh Vietinbank conducts biannual customer satisfaction surveys to gather valuable feedback and make necessary adjustments Additionally, they provide suggestion mailboxes for regular customers to share their comments and insights.
Vietinbank Quang Minh prioritizes customer care by designating officers as the main point of contact for professional service These officers are responsible for gathering detailed feedback from customers, ensuring a cohesive and attentive approach to handling client needs.
Quang Minh Vietinbank features a comprehensive distribution network that includes its headquarters and four transaction rooms, along with eight ATMs The bank's partnership with the Banknetvn payment network enhances accessibility for customers by reducing geographical barriers In addition to the promotions offered by Vietinbank, Quang Minh also implements special programs, such as rewarding savings initiatives, gifting for International Women's Day, and providing birthday gifts for VIP customers.
The brand : Viet tin bank is one of the four largest state commercial banks of
Vietnam's NHCT holds over 25% of the country's banking market share, demonstrating significant capital growth since 1996, with an impressive average increase of over 20% annually, including a remarkable 35% rise last year Throughout its history, NHTC has embraced modernization to align with regional and international standards, engaging in capitalization and forming partnerships with major domestic and international corporations to enhance its business and market position Vietinbank Quang Minh not only benefits from the strong Vietinbank brand but has also focused on improving service quality over the past five years, fostering customer trust and further elevating the Vietinbank brand's reputation.
Vietinbank Quang Minh operates with a specialized organizational structure focused on various product service categories, including Finance and Accounting, personal credit, credit business, risk management, and administrative functions This model allows employees and leaders to deepen their expertise in specific areas, enhancing their skills and improving service delivery.
The expansion of the branch network has led to a rise in customer numbers and a growing demand for a diverse range of products and services However, this organizational model presents certain disadvantages that must be addressed.
- The management of customers is not close because of without clear distribution of responsibilities between the offices of managing the same customers.
- The organization of the professional office will make it difficult and time consuming for customers to rank because of having to connect with many professional offices
The division of responsibilities among professional staff often leads to misunderstandings and errors in client interactions, as employees may lack knowledge about the roles and expertise of their colleagues This communication gap not only hampers effective service delivery but also complicates the marketing of banking products to customers.
-Therefore, Quang Minh Vietinbank needs restructuring its organization.
Quang Minh Vietinbank goes up to level 2 branch with the branch target for a class
1 level 2 of Vietinbank system During three years, all of the leaders and staff of the
Quang Minh Vietinbank has successfully achieved its targets, demonstrating significant growth in branch operations This strong performance not only solidifies its position within the local area but also enhances its standing within the banking system as a whole.
However, there are still many difficulties that Quang Minh Vietinbank needs to complete such as:
SWOT matrix analysis
To effectively guide Quang Minh Vietinbank towards optimal performance, it is crucial to assess both internal and external environmental factors Utilizing the SWOT matrix introduced in previous sections, we can analyze strategic options for the bank By examining the strengths, weaknesses, opportunities, and threats outlined in Chapter II, we can propose targeted strategies for Quang Minh Vietinbank's strategic planning.
Table 7: SWOT Matrix of Quang Minh Vietinbank
1 Activities to attract investment in Quang Minh Development Industrial Zone
3 The development of science and technology
4 Open financial markets to promote self-renewal of bank
5 Demand for products and services
6 High speed of GDP growth of locality
1.The market penetration of foreign banks
2 Substitute products 3.The exceeded banking system
4 Risk of bankruptcy of the enterprises in the integration process
5 Unity of act and will
Differentiate based on product and brand.
Focus on quality and brand
2 Human resource usage and training
“ Restructuring” Strategy in the branch range
Chapter 2 has analyzed the factors related to the selection of business strategies for Quang Minh Vietinbank, including: macro-environment, micro- environment, enterprise's internal and the general analysis of strengths, weaknesses, opportunities and threats, competitive advantages
Vietinbank Quang Minh is identified as a leading bank in the Me Linh area, according to recent analysis Through a comprehensive SWOT analysis, we have established four strategic groups for the bank and evaluated the leaders of each group In Chapter III, we will outline interchangeable business strategies and identify the most suitable approach for Vietinbank Quang Minh, along with actionable solutions for effective implementation.