OVERVIEW ON THEORIOTICAL ISSUES ON
Strategy and Management strategy
1.1.1 Concept on Strategy and Management strategy :
Strategy and management strategy are viewed through various lenses, with some experts considering them an art form Alain Threlart asserts that "strategy is the art that enterprises use to combat competition and achieve victory." Similarly, M Porter emphasizes that strategy involves "establishing competitive advantages firmly for defense."
From a management perspective, business strategy is viewed as a structured plan aimed at achieving specific objectives G Arlleret defines strategy as the identification of pathways and resources necessary to reach established goals through effective policies Similarly, Glueci emphasizes the importance of strategic planning in guiding organizations toward their targets.
Strategy is a comprehensive plan designed to guide an enterprise towards achieving its goals According to D Bizrell and colleagues, it serves as a foundational framework for establishing policies and operational procedures, ensuring that all efforts align with the organization's objectives.
In addition to the previously mentioned schools of thought, some believe that business strategy is an art that combines various activities and their management to achieve long-term enterprise goals Chandle defines strategy as the establishment of fundamental long-term objectives while selecting methods and allocating essential resources to implement these goals Thus, business strategy is seen as a creative process that organizes resources effectively to meet long-term objectives while adapting to changes in the business environment and competition.
In essence, both perspectives emphasize the crucial link between an enterprise's strategy and its objectives, where strategy serves as a vital tool for achieving these goals Every effective strategy must align with the enterprise's targets while balancing available resources, strengths, and the conditions of the business environment According to Wikipedia, strategy is defined as the long-term direction and scope of an organization aimed at achieving competitive advantages by identifying and utilizing current resources within a specific business environment to meet market needs and benefit all stakeholders.
Management strategy refers to the science and art of formulating strategies to set organizational direction and business objectives It involves the deployment and implementation of both short-term and long-term plans based on available resources, enabling organizations to achieve their long-term goals effectively.
1.1.2 The role of Business Strategy and necessity of Management strategy in the organization
1.1.2.1 The role of business strategy
- Business Strategy helps enterprise recognize clearly targets, orientation of the organization to be foundation and guidelines for every manuafacturing business activity of enterprise
- Business Strategy helps enterprise to seize and take advantages business opportunities, silmutaneously having active measurements to overcome risks and threats on competition market.
- Business Strategy contributes to strengthen using efficiency of resources, strengthen competition status of enterprise to ensure the sustainable development of enterprise
- Business Strategy creates firm foundations for the setting out of policies and decisions on business manufacturing sufficiently to the changes of the market
1.1.2.2 The necessity of Management strategy
A well-defined management strategy is essential for organizations to clearly identify their targets and direction while outlining a feasible path for optimal resource utilization This strategic approach ensures that fixed goals are achieved according to plan Without a solid management strategy, organizations may navigate blindly, akin to walking in the dark without anticipating potential challenges In today's competitive business environment, enterprises that lack systematic planning and management of their strategies face significant risks to their sustainability and growth.
Duty of management strategy
Management strategy operation in one organization in order to implement following concrete duties:
- To establish one future strategy, describe impages of enterprise’s future, specify expectations that enterprise aims at.
- Establish targets - convert long sighted strategy to concrete results that the company should attain.
- Establish strategy to attain expected target.
Each organization need a suitable strategy to be successful Each organization need a suitable strategy to be successful
- Implement and direct selected strategies effectively and efficiently.
- Evaluation the implementation and carry out adjustments on long term far sighted , orientation.
Management strategy process
Management strategy process is implemented via four main phases:
- Phase to establish and select suitable strategy for organization (strategy formulation): comprises the identification of Mission, Vision, Core value of organization, target identification, setting out strategies, policies.
The initial phase of situational analysis involves a comprehensive evaluation of both external and internal environments This includes a PEST analysis, which examines political, environmental, social, and technological factors, as well as an assessment of Porter’s Five Forces that influence the organization Additionally, conducting a SWOT analysis helps identify the organization’s strengths, weaknesses, opportunities, and challenges, providing a well-rounded perspective for strategic planning.
- Phase to deploy Strategy (strategy implementation): comprises acting programs, budgets, processes.
- Phase to evaluate and control (evaluation and control): comprises the evaluation of results and bring about necessary adjustments
This process may be schematized as below:
Table 1.1: Diagram for strategy planning (excerpted documentary “StrategicManagement” - Program Global Advanced MBA – Griggs University)
Important factors in Management strategy process
1.4.1 Identification of Mission; Vision; Core value.
Every organization is founded with a specific mission, which serves as its purpose in the market This mission defines what the organization aims to deliver to its clients and the community, including the types of products and services it offers When an organization ceases to exist or shifts its focus, its mission effectively disappears.
A mission announcement is a crucial document that informs stakeholders about an organization's existence It clearly outlines the values and principles that guide the organization, playing a vital role in the strategic planning process This announcement effectively communicates the company's purposes and values to clients and the community, reinforcing its commitment to its mission.
Mintzberg emphasizes that an organization's mission outlines its fundamental functions within society, highlighting the types of goods and services it produces to effectively meet the needs of its clients.
The identification of one correct mission first of all would create important foundation for Company’s target and strategy.
The Announcement on Vision serves as a crucial foundation for a company's strategic planning, outlining the desired future position the company aims to achieve It is essential for guiding the strategy plan, as it vividly illustrates the company's future upon reaching its goals While the length of the vision statement may vary, whether concise or elaborate, it must clearly define the ultimate targets A well-articulated vision is vital for steering the strategic planning process effectively.
In other words, vision is considered as sketching images of one organization in the future, it forms criteria, ideal value and ideals which organization wishes to aim at.
Core values represent the unique capabilities that a company excels in, setting it apart from competitors and creating market advantages By accurately identifying these core values, organizations can strategically focus their resources on key activities, enhancing their competitive edge while conserving resources This foundation of efficiency allows organizations to explore new opportunities when conditions are favorable Core values also provide stability in a changing environment, enabling organizations to navigate challenging situations effectively Typically, organizations identify 4 to 5 core values, with one being particularly vital, guiding operations in alignment with their vision While the business landscape may shift, core values remain largely unchanged, prompting companies to adapt to market changes while upholding their fundamental principles.
1.4.2 Analyzing internal and external environment
Every organization possesses distinct strengths and weaknesses that can manifest across various activities, including administration, finance, accounting, manufacturing, research and development, and marketing A key objective in establishing a strategy is to enhance these weaknesses, transforming them into strengths and, ideally, into unique competencies Typically, organizations prioritize identifying and ranking their top 10 to 20 strengths and weaknesses, as these factors significantly influence their success or failure.
Analyzing the internal environment is crucial for effective management strategy, as it enables organizations to accurately identify their strengths and weaknesses Without a thorough assessment of these internal factors, it becomes challenging to develop a successful strategy.
Analyzing the internal environment is crucial for organizational members, including CEOs, department leaders, and implementation employees, as it enhances their understanding of their roles and the significance of their contributions This understanding fosters increased individual effectiveness, positively impacting the overall operational efficiency of the organization The analysis involves collaboration among leaders, employees, and clients, utilizing both primary and secondary data to identify the organization's key strengths and weaknesses.
Analyzing the internal environment leads to the identification of resources, capacities, and core competencies, which are essential for establishing competitive advantages and formulating effective competitive strategies for the enterprise A key tool in this process is the Internal Factor Evaluation (IFE) matrix.
The IFE matrix is a crucial tool for enterprises, as it identifies, summarizes, and assesses their key strengths and weaknesses By highlighting areas that require enhancement and those that should be leveraged, the matrix aids in improving business performance and strengthening competitive advantage Developing an IFE matrix involves five essential steps that guide strategic planning for organizations.
- Step 1: Making a list of factors, including the basic strong and weak points, with great influence on the development of the enterprise.
In Step 2, each factor is assigned an importance rating from 0.0 (not important) to 1.0 (very important), reflecting its influence on the enterprise's success or failure within its sector The factors deemed most impactful to the enterprise's operations receive the highest ratings, while those with lesser influence are rated lower It is essential that the total importance ratings for all factors sum to 1.0.
In Step 3, it is essential to determine the classification coefficient for each factor, which reflects the strength of the enterprise The coefficients are rated on a scale from 1 to 4, with 4 indicating a very strong factor, 3 a strong factor, 2 a relatively weak factor, and 1 a very weak factor These coefficients are established using expert assessment and are based on the Internal Factor Evaluation conducted within the enterprise.
- Step 4: Multiplying the importance of each factor with its coefficient to determine the importance score.
- Step 5: Adding the total points about the importance of all factors to determine the total points of the importance of the enterprise.
In evaluating an enterprise's strengths and weaknesses, the scoring system allows for a maximum total of 4.0 points and a minimum of 1.0 point, with an average importance score of 2.5.
ON Internal Factors Importance level Classification Importance score xxx xxxx xxxxx xxx xxx
(Excerpted: Doan Thi Hong Van, “Strategic Management”, Statitics House
The Competitive Image Matrix is a valuable tool for comparing a business against its key competitors by analyzing factors that impact competitiveness This matrix enables strategy managers to pinpoint competitors' strengths and weaknesses, allowing for a clearer understanding of their own competitive advantages and areas needing improvement Additionally, it incorporates essential internal elements, such as financial stability and marketing effectiveness, that significantly influence the enterprise's growth and development.
Five steps to build competitive image matrix:
- Step 1: Making a list of importantly influential factors to the competitiveness of enterprises in the business.
In Step 2, each factor is assigned an importance rating ranging from 0.0 (not important) to 1.0 (very important) This rating reflects the factor's influence on the success or failure of the enterprise within its sector It is essential that the total importance ratings for all factors sum to 1.0.
- Step 3: Classifying from 1 to 4 for each element, type of each element depending on the respond level of the enterprise to such factor, including: 4 - good response, 3
- respond above average, 2 - average response, 1 - weak respond.
- Step 4: Multiplying the importance of each factor with its type to determine the importance score
- Step 5: Adding the total points about the importance of all factors to determine the total points of competitive image matrix for each enterprise.
Table 1.3: Competitive image matrix’s sample
Main elements influencing competitive ability
Importa -nce score xx xx xx xx xx xxx xx xxx xx
(Excerpted: Doan Thi Hong Van,
1.4.2.2 Analyzing external environment a Analyzing macro environment
REAL STATUS OF BUSINESS STRATEGY OF
Introduction of global petrol commercial joint stock bank
Global Petrol Commercial Joint Stock Bank (GP.Bank) transitioned its operational model from Ninh Binh Rural Commercial Joint Stock Bank, establishing a nationwide presence As of June 30, 2010, GP.Bank's network comprises 63 branches and transaction offices strategically located in key economic cities and provinces, including Hanoi, Ho Chi Minh City, Ninh Binh, Hai Phong, Vung Tau, and Da Nang.
Name : Global Petrol commercial joint stock bank
: Global Petrol Commercial Joint Stock Bank
Head office : 109 Tran Hung Dao, Hoan Kiem District, Hanoi City
Website : www.gpbank.com.vn
Operation certificate : 0043/NH-GP issued by Bank Governor dated
Governance model of GP Bank is built under the following model:
Office of Board of Directors Office of Board of Directors
HUMAN RESOURCES COMMITTEE HUMAN RESOURCES COMMITTEE
Table 2.1: Governance model of GPBank
Shareholder’s Congress: is the highest authority organization of GP.Bank, that decide issues belonging to duty and rights regulated by Law and GP Bank’s
The Administration Council serves as the Bank's administrative body, holding the authority to make decisions on all matters related to the Bank's objectives and rights, excluding those reserved for the Shareholders' Congress The Board of Directors is responsible for shaping the Bank's strategy and annual operational plans, as well as directing and overseeing its activities through the Operating Committee and various Councils.
The Controlling Committee, elected by the Shareholders’ Congress, is responsible for overseeing the Bank's financial operations Their duties include ensuring compliance with accounting regulations, monitoring the internal auditing system, and verifying annual financial reports They are tasked with reporting to the Shareholders’ Congress on the accuracy, integrity, and legality of the Bank's financial statements.
Committee and Councils: Established by Board of Directors, to be advisors for
Board of Directors in the administration of the Bank, implement strategy, business plan; ensure the development effectively, safety and in accordance with set out targets
The Operating Committee is led by the General Director, who is accountable to the Board of Directors Supporting the General Director are the Deputy General Director, Heads of Business Departments, the Head of the Accounting Department, and the Professional Competence System.
As of June 30, 2010, GP.Bank employs a total of 958 staff members, with an impressive 78% holding university or postgraduate qualifications The bank plans to expand its workforce in the near future, driven by a strong focus on extending its operating network and implementing policies aimed at growth in major cities.
2.1.3 Some targets for operation of 2008, 2009 and 3 first months of 2010
Table 2.2: Some targets for operation of GPBank (Calculated: million VND)
Safe rate of minimum capital 27,82% 18,37% 21,38%
Rate of post-tax profit/ average owner’s capital
Rate of bad debt/ Total debt balance
Financial Report in 2008, 2009 and business operation Financial Report of the 1 st quarter of 2010)
2.1.4 General evaluation on of GPBank
A comparison of GP Bank's operational performance between 2008 and 2009 reveals significant growth, with profits, total assets, chartered capital, and capital mobilization all increasing by over 100% compared to the end of 2008 Additionally, credit debt surged by 90%, a notably high figure when contrasted with the overall banking sector's average growth rates of 28.7% in credit and 37.4% in capital mobilization This remarkable growth can be attributed to GP Bank's status as a new entity within Vietnam’s commercial joint stock banking system, starting from a zero baseline, which accounts for its exceptional performance.
GP Bank still belongs to the group of banks with average scope in the system of joint stock bank when being cacluated under absolute figure
By the end of 2009, GPBank achieved a significant reduction in its bad debt ratio, decreasing over fourfold compared to the end of 2008, marking a positive step in addressing longstanding bad debt issues However, by the first quarter of 2010, the bad debt ratio began to rise again, signaling a need for GPBank to remain vigilant This concern is compounded by the potential risks associated with credit growth at the end of 2009, particularly regarding capital investments in the real estate market.
By the first quarter of 2010, key operational targets such as capital mobilization and lending showed a declining trend compared to the end of 2009 Our research indicates that this is a widespread issue within the commercial banking system, primarily due to banks regulating credit growth to mitigate risks associated with a real estate market bubble Additionally, high capital mobilization costs have led to loan interest rates exceeding the economy's balance capacity, resulting in a disconnect between banks and enterprises regarding interest rates By the end of March 2010, total credit debt in the sector had only increased by 2.95% compared to the end of 2009 In response, the Government and the State Bank of Vietnam have implemented strong measures to influence credit growth, aiming to support economic expansion through increased money supply, stabilization of basic interest rates, and control of interest rate ceilings on mobilization.
Analyze & evaluate on current business strategy of GP Bank
GPBank, a young and medium-sized joint stock commercial bank, aims to establish itself as a strong market brand by leveraging modern technology infrastructure and providing high-quality, professional services.
The Leadership of GPBanh has established four key commitments that focus on four critical areas deemed essential for the bank's operations and success.
- Benefit of CUSTOMERS at first;
- Benefit of THE LABOR is paid the attention;
- Benefit of SHAREHOLDERS is paid the special attention;
- Making the effective contribution to the development of COMMUNITY.
GPBank set the development target towards the mutil-functional bank, try by 2015 to become one of 10 banks with completed and the most modern technology system
The core value of GPBank is built on both intangible elements, such as strong internal solidarity and a robust corporate culture, as well as tangible factors like high-quality human resources and an advanced technological infrastructure, benefiting from the advantages of being a newer bank.
2.2.2 Analyze internal environment of GP Bank:
- Collected data about the situation of the personnel in years of GPBank is aggregated as follows:
Table 2.3: Datas of GPBank’s human resource
In 2009, GPBank experienced significant personnel growth, aligning with its network expansion, which saw the addition of 29 branches and transactional offices The bank recruited 312 new employees, averaging about 10 staff members per new branch or office, indicating that the newly opened locations were of medium and small scale.
The gender structure of GPBank's workforce shows a notable trend: while the percentage of male employees has decreased by an average of 2% annually, the proportion of female employees is steadily increasing This shift is particularly significant in the service-oriented banking sector, where effective communication with customers is crucial The growing presence of female staff is essential, as they tend to excel in customer engagement and satisfaction Consequently, many banks, including GPBank, strategically employ more women in transactional roles to enhance direct customer interactions.
As of June 30, 2010, GPBank employed a total of 954 individuals, with 79.4% holding postgraduate or graduate degrees The management positions constituted 12% of the workforce, resulting in an average ratio of 8 employees per management official This ratio is notably lower than the average of 25% found in larger banks, indicating that GPBank's management officials oversee more employees than the industry standard This situation presents both advantages and disadvantages for GPBank's personnel management.
The bank benefits from cost savings by reducing salary payments for management officials, whose salaries are typically 1.5 to 2 times higher than the minimum wage of regular employees, while maximizing the capabilities of management staff However, challenges arise as the increasing number of employees can overwhelm management officials if tasks are not organized effectively, resulting in diminished performance and underutilization of their skills During GPBank's network expansion, the growing number of new recruits has required management to focus not only on their professional responsibilities but also on training these new employees, ultimately impacting overall work efficiency.
GPBank has recently enhanced its workforce by recruiting experienced personnel from other banks, allowing for rapid onboarding without incurring training costs However, this approach presents challenges, as the new employees have yet to fully adopt the bank's core values and culture Consequently, the integration process is not seamless, with varying working styles requiring time to align with the overall environment Additionally, the stability of the workforce remains a concern.
Many employees possess limited effective working skills, such as sales, customer care, teamwork, and product knowledge within the banking sector Most staff members primarily focus on their specific professional areas, resulting in a weak capability for cross-selling bank products.
GPBank aims to become one of the top ten modern and advanced technology banks by 2015, focusing on significant investments in its technology infrastructure The bank is establishing a data management center and upgrading its Core Banking system to the latest R9 version of Temenos, a Swiss company whose products are utilized by over 400 banks globally, including major institutions like HSBC and the Industrial Bank of Korea While around ten banks in Vietnam currently use this system, GPBank is well-positioned with several competitive advantages.
In 2006, GPBank became one of the first two banks in Vietnam to successfully implement the T24 system during its transition to an urban commercial joint stock bank This early adoption allowed GPBank to establish a database information system organized according to international standards, ensuring a "clean" database from the outset This streamlined approach facilitated efficient management, deployment, and future upgrades In contrast, many other banks faced challenges as they transitioned to T24, often struggling with un-homogeneous databases created by converting data from various legacy systems Some banks even operated dual software systems for years, leading to significant resource wastage and operational inefficiencies.
GPBank has recruited a team of five experts from FIBI, the leading consultancy for deploying Temenos' T24 in Vietnam This team will provide consultancy and oversight for the upgrading of GPBank's Core Banking T24 system Their expertise will not only ensure a successful system upgrade but also empower GPBank to effectively manage and operate the system in the future, leveraging high-quality human resources for optimal performance.
The internal communication system at GPBank includes an email system, an internal telephone system, and a chat system, all designed to enhance information conveyance efficiently and cost-effectively Additionally, GPBank has implemented Tele&Video Conferencing projects to reduce costs while improving the effectiveness and quality of meetings and conferences.
GPBank's current technology system faces weaknesses due to slow investment in building a data center, primarily caused by challenges in location selection Additionally, the connectivity between the host computer and transactional locations lacks comprehensive technology integration; while some sites utilize fiber optics, many still rely on outdated copper cables This inconsistency in equipment technology complicates replacements and troubleshooting when issues arise.
2.2.2.3 About the issue of enterprise culture
GPBank fosters a positive communication culture characterized by straight speaking and honesty in addressing daily challenges This culture is supported by various platforms, including email, forums, and chat, allowing individuals to express their views openly while using their formal nicknames.
IMPLEMENTATION SOLUTION FOR BUSINESS
Development orientation of the bank
3.1.1 Target and vision up to 2015
By 2015, GPBank aims to position itself among the top ten banks in Vietnam, leveraging modern technology and advanced systems The bank is focused on evolving into a multifunctional institution with an emphasis on retail sales, aligning with its current scale while minimizing risk.
3.1.2 Plan to strengthen and improve financial capacity
In addition to adhering to the regulations outlined in Decree 141/2006/NĐ-CP regarding the legislative capital list for credit and finance, the increase in chartered capital is driven by the bank's development needs to enhance its operational capacity and competitive edge The planned increase in chartered capital for the period from 2010 to 2015 is detailed as follows (unit: billion dong).
Table 3.1: Target of charter capital from 2010 to 2015 (excerpted from restructure project which is ratified at the end of 2009 of GPBank)
Table 3.2: Target of plan 2010 - 2015 period (Calculated unit: billion dong )
(excerpted from restructure project which is ratified at the end of 2009 of GPBank)
- Total transaction points all over the country estimated up to 2015: 150 points
- Staff and employees increase additional from 300 to 500 persons /1 year
- Average long term and medium loan proportion does not exceed beyond 40% total debt surplus.
To effectively reduce debt in real estate and stock investments while diversifying credit risk, it is essential to restructure the loan portfolio As of December 31, 2009, the proportion of surplus credit loans accounted for 21.7% of total debt surplus, reflecting an 8% decrease from the end of 2008 Projections indicate that this ratio will stabilize at approximately 15% of total loan debt surplus by 2015.
- To establish Stock company with initial chartered capital is 300 billion dong
- Latest at the end of 2012 the selection of foreign partners would be accomplished.
SWOT analyzing summary table of GPBank
Table 3.3: Result of SWOT analyzing
O1 Social and political status is stable; investment environment is stable and attractive.
O2 Macro management systems are gradually adjusted to be suitable to integration trends and international commitment of Vietnam
O3 The economy is soon to overcome over crisis and starts to have stable growth.
O4 Legislative system gradually is accomplished.
O5 The potential of the market is great
O6 Capacity to approach capital sources, human resource, management experiences, and the partnership extension from outside is high.
O8 Needs to use banking services gradually increases and very diversify
The lack of a long-term policy from the government and state-owned banks to regulate the macroeconomy has resulted in insufficient and frequently changing measures Consequently, the economy faces numerous hidden risks, particularly as the global financial and economic crisis remains unresolved Additionally, inflation is on the rise due to the effects of bailout packages and flexible monetary policies, while competitive pressures continue to mount As a result, public confidence in the stability of the economy is notably low.
T6 The power of clients gradually increases. T7 Consummation culture by cash has not been changed.
T8 Human resource is gradually scarce.
S1 The leaders have many relationships with many major partners.
S2 Overall technology system, technology management staff has many experiences
S3 Financial capacity of stakeholders is strong.
S4 Flexible policies to clients Good customers service manners
S5 Enterprise’s culture has been established with special characteristics.
S6 Human resource is young; capacity to learn and perceive new knowledge is high.
S7 There are clear policies in human resources: recruitment, assignment.
W1 Operation regime, management has not been accomplished.
W2 Trade marks of GPBank have not been one key branch name in the market.
W3 Transaction network is limited due to it only focus to develop key areas.
W4 Experience of staff and employees is restricted. W5 The work to develop products is not really effective.
W6 Financial capacity is not really strong
Table 3.4: SWOT’s coordination summary table
S6+O7: To create learning opportunity, contacting to new technology for staff and employees
S1,S4+O5,O6: Focus to develop and exploit the market ( Market development strategy)
In the context of a recovering economy, leveraging modern technology and flexible customer policies is essential to meet the growing demand for banking services.
(strategy of the product development)
S7+T8: Attract qualified human resources S4+T4,T6: Apply flexible client policies to satisfy maximum clients’ needs, from then to attract clients do transaction to the bank
W1, W3, W4, W6+O5, O6, O7: To take advantage opportunity of potential market to strengthen financial capacity, develop products on technology foundation.
W3+O3, O5: enhance to expand the network of transaction to take the advantage of opportunities about the big market potential and the economy is stable step by step
(strategy of the market development)
W3, W6+T4: Strengthen financial capacity ,to extend transaction net work to face with increasing competitive pressure.
W5+T4: enhance the activity of research and developing the products to attract the customers, increase the competitiveness (strategy of product development)
Based on the strategic groups identified through SWOT analysis and the findings from the internal-external (IE) matrix, GPBank should focus on market-oriented strategies to enhance its competitive position in the upcoming period.
To effectively implement a Market Development strategy, GPBank should prioritize two key factors: expanding its presence in regions where the brand is already established and penetrating potential markets to enhance brand recognition This proactive approach will position GPBank to capitalize on opportunities as the economy stabilizes.
To enhance its product development strategy, GPBank should leverage modern technology and infrastructure to create high-tech offerings that not only diversify its product lineup but also serve as an effective branding tool Although GPBank's current centralized growth strategy has led to significant achievements, including a twofold increase in key targets in 2009, it requires reevaluation due to market fluctuations and rapid expansion The bank's growth may be hindered by the lag in essential areas such as human resources, technology, and management skills.
So, the issues that GPBank orients to implement following policies in phase 2010 -
Increasing chartered capital is essential for enhancing financial capacity and meeting high-level financial and safety standards This adjustment ensures compliance with the regulations set forth by State-Owned Banks and aligns with international guidelines.
- Extend scales and diversify activity
- Accomplish and upgrade banking technology information system.
- Develop products due to diversify orientation, strengthen quality and effectiveness of activity.
- Strengthen and improve to advertise trade marks, extend public relationships.
- Strengthen and improve the human resource development.
- Accomplish and strengthen capacity of risk monitoring and risk management.
- Posting on stock market at the beginning of the beginning of 2012
Solutions to implement business strategy phase 2010-2015
Recent results indicate that GPBank's chosen growth strategy aligns well with market conditions and its available resources To sustain and enhance the effectiveness of this strategy, we propose several solutions addressing key issues.
GPBank is currently positioned among banking groups with average operational scale and financial capacity within the Commercial Joint Stock banking system To seize opportunities and effectively navigate business pressures, enhancing financial capacity is not just a necessity but an imperative, driven by the demands of technological modernization and development Limited financial resources hinder the modernization efforts and the development of new business types, resulting in missed opportunities Moreover, the intense competition in the international integration landscape risks marginalizing weaker banks Strengthening financial capacity serves as a foundational principle for implementing growth strategies and developing integration plans, which is essential for GPBank to pursue potential foreign strategic partnerships.
Some solution recommendation to implement:
3.3.1.1 Strengthen risk management capacity, accomplish controlling system and monitoring quality of Credit asset by some measurements
To enhance credit management and re-evaluation processes, it is crucial for GPBank to prioritize training and upskilling its staff Currently, training initiatives are infrequent, and there are no organized workshops or forums for professional staff to exchange knowledge and experiences This lack of internal training not only hinders employee development but also limits the bank's operational efficiency By investing in comprehensive training programs, GPBank can ensure that employees are well-equipped with practical skills, ultimately leading to cost savings for the bank.
+ Bank does not have to the lecturer of training places (with the minimum expense level of 100 USD/ 1 person/ course for 3 – 4 days with the requirement of the minimum 15 people/ class)
Implementing effective on-site training for new employees significantly reduces their learning curve and accelerates their adaptation to the bank's working environment This efficiency can lead to substantial cost savings; for instance, each new employee who quickly acclimates can save the bank approximately half a month’s salary With an average monthly salary of 3 million VND and around 300 new hires in 2009, excluding 12% of managers and 30% of experienced staff who adapt immediately, the bank could save about 270 million VND monthly from 180 employees.
The professional qualifications of staff in the credit sector are inadequate, leading to a low credit growth rate across the GPBank network in 2009, with no increase in credit balance during the first half of 2010 This stagnation is partly due to GDP's strategy to restructure credit distribution, focusing on increasing consumer credit while reducing loans for the real estate sector, which has a significant share Additionally, the uneven qualifications of staff pose a risk of rising bad debts if credit growth accelerates too quickly To address these challenges, GPBank should leverage the expertise of experienced managers from other banks to enhance training and improve the skills of its younger team, fostering their learning ability and enthusiasm.
The management structure and responsibilities of the Credit Management, Re-evaluation, Internal Control, and Risk Management Departments are clearly defined; however, overlapping duties among these departments lead to resource waste and reduced operational efficiency To enhance effectiveness, it may be beneficial to consider integrating the functions of the Credit and Risk Management Departments.
3.3.1.2 Completely solve relating issues to bad debt and pending account receivables
The Bank has established a department for processing debt and collecting account receivables; however, due to a limited number of personnel in human resources, the processing speed for bad debts is slow This prolonged issue not only affects the Bank's financial capacity but also risks damaging its image Consequently, the Bank is considering collaborating with a professional unit to expedite debt collection As of December 31, 2009, the total overdue debt amounted to 125 billion VND, which is equivalent to 95% of the Bank's after-tax profits.
In 2009, GPBank faced significant financial losses due to overdue debts, which, if assessed at the conventional deposit rate of 10% per year, resulted in a revenue loss of at least 12.5 billion VND annually This amount equated to two months' worth of the bank's wage fund for that year.
GPBank must prioritize the early identification of potential bad debts by closely monitoring clients' payment schedules and gathering relevant information about their business situations By proactively recognizing these risks, GPBank can enhance its debt collection strategies and engage in effective communication with clients, offering guidance and warnings that encourage them to adjust their business activities before issues escalate Assisting clients in avoiding business failures is often more valuable than simply recovering a single bad debt.
3.3.1.3 To solve the issue on increasing chartered capital
In the current landscape, banks are under significant pressure to increase their chartered capital to meet both business needs and government regulations, particularly as the stock market remains challenging and banking stocks lack investor appeal GPBank is moving forward with a plan to raise its chartered capital to 3,000 billion dong, with strategies in place to achieve this by October 31, 2010 However, it is crucial for GPBank to also set new targets for chartered capital increases in the upcoming years.
The Management Board of GPBank has set an ambitious target of 12,000 billion dong in chartered capital for 2015 However, they must consider the current market dynamics, where the potential for capital increases among various banks could dilute banking stocks, impacting investor interest Notably, banks like Eximbank, ACB, and Techcombank are facing challenges in raising capital, which adds pressure on shareholders For GPBank, timely adjustments to its capital increase strategy are crucial, as they directly affect business capacity expansion and other investment plans.
Adjusting the capital increase plan is essential as it directly impacts business expansion and investment strategies, particularly since the number of bank branches is contingent on the scale of charter capital—specifically, one branch can be opened for every 20 billion VND in charter capital Accurately determining the appropriate charter capital scale will serve as a foundation for developing network strategies, enabling effective management of recruitment, media planning, and investment policies.
As competition intensifies among banks for skilled human resources, GPBank must focus on key characteristics to attract and retain a qualified workforce that meets its developmental needs.
Currently, GPBank's recruitment strategy emphasizes hiring experienced professionals from other banks, which offers the advantage of quickly acquiring skilled human resources at a lower training cost However, this approach may present challenges that the bank needs to address.
To attract the necessary talent for GPBank, it is essential to offer competitive salaries that meet industry standards High salary levels are crucial for drawing skilled professionals, ensuring that the bank can build a capable workforce Investing in adequate compensation not only enhances recruitment efforts but also contributes to employee retention and overall organizational success.
+Linkage level of these human resources is not high and the bank should always face to pressure to increase salary to keep staff.
+ Culture of the bank may be dilute because of the influence of other banks, even if there is no suitable adjustment, working environment may arise many hidden unstable factors.
To overcome this situation, GPBank should consider some issues:
List 10 Banks are using T24 system
Vietnam Techonological and Commercial Techcombank
AnBinh Joint Stock Commercial Bank AnBinh Bank
South East Asia Joint Stock Commercial
Military Joint Stock Commercial Bank MB
Global Petro Joint Stock Commercial Bank GPBank
VietNam Joint Stock Commercial Bank for
Orient Joint Stock Commercial Bank OCB
BaoViet Joint Stock Commercial Bank BaoViet Bank
SaiGon Joint Stock Commercial Bank SCB
The order of the Bank charter capital from large to small
No Name of banks Chartered Capital
35 Việt Nam Thương Tín Bank 1,000