Luận văn thạc sĩ quản trị kinh doanh quốc tế MBA (90)

GRIGGS UNIVERSITY GLOBAL ADVANCED MASTER OF BUSINESS ADMINISTRATION PROGRAM CAPSTONE PROJECT REPORT THE BUSINESS STRATEGY ON NON - CREDIT SERVICE IN VIET NAM BANK FOR AGRICULTURE AND RULAR DEVELOPMENT (AGRIBANK) IN CONDITION OF INTEGRATION GUARANTEE TABLE OF CONTENTS ABBREVIATION LIST LIST OF TABLE – DIAGRAM – CHART PREFACE: CHAPTER 1: SEVERAL BASIC THEROIES ON BUSINESS STRATEGY 11 1.1 GENERAL INTRODUCTION ABOUT BUSINESS STRATEGY 11 1.1.1 Definition of business strategy 11 1.1.2 Attributes of business strategies 12 1.1.3 Role of business strategy 12 1.2 PROCESS OF BUILDING BUSINESS STRATEGY 13 1.2.1 Analysis of business environment .13 1.2.1.1.Macro environment 14 1.2.1.2.Business sector environment 16 1.2.1.3.Internal environment 20 1.2.1.4.Competitive environment 21 1.2.1.5.SWOT analysis 22 1.2.2 Setting up matrix to select business strategy .23 1.2.2.1.External factor evaluation matrix (EFE) .23 1.2.2.2.Internal factor evaluation matrix (IFE) .23 1.2.2.3.SWOT matrix .25 1.2.2.4.BCG matrix 26 1.2.3 Trading strategy selection 28 1.2.4 Strategy implementing 29 1.2.5 Evaluating effectiveness of established strategy 29 CONCLUSION OF CHAPTER I 30 CHAPTER 2: THE BUSINESS REALITY OF NON-CREDIT SERVICE IN AGRIBANK 31 2.1 GENERAL VIEW ABOUT THE BUSINESS OPERATION OF AGRIBANK 31 2.1.1 Formation and development process .31 2.1.2 Organizatrional structure and operating network 31 2.1.3 The current types of services in the bank .33 2.1.4 The business statement of Agribank 34 2.1.4.1 Activity of capital mobilization 35 2.1.4.2 Credit activity 35 2.1.4.3 Financial outcome 36 2.1.4.4 Activity of non-credit business 37 2.2 ANALYSIS OF NON – CREDIT SERVICES OF AGRIBANK 38 2.2.1 Analysis of outside environment 38 2.2.1.1.Macro environment .38 2.2.1.2.Sector environment .45 2.2.2 Analyse internal environment 51 2.2.3 Strength, weakness 65 2.2.4 Trading strategy matrix 66 CONCLUSION OF CHAPTER II 78 CHAPTER 3: THE GOALS AND SOLUTIONS FOR TRADING NON-CREDIT SERVICE IN AGRIBANK 79 3.1 OBJECTIVES OF STRATEGY .79 3.1.1 The foundation for setting up objectives 79 3.1.2 Vision, mission, core value 79 3.1.3 Trading strategy selection 80 3.2 STRATEGY IMPLEMENTATION SOLUTIONS 84 3.2.1 Solution groups for development, service quality diversification and improvement strategy .84 3.2.2 Solution group for information technology development .86 3.2.3 Solution group for human resources management .87 3.2.4 Solution group about Marketing management 89 3.2.5 Solution group about banking service pricing .91 3.2.6 Solution group about financial management 93 3.3 SOME RECOMMENDATIONS: 93 3.3.1 Recommendations with Government 93 3.3.2 Recommendations with Ministry of Finance 94 3.3.3 Recommendations with State Bank 94 CONCLUSION OF CHAPTER III .96 CONCLUSION 97 REFERENCES .98 ABBREVIATION LIST Abbreviation Full meaning AFTA ASEAN Free Trade Area ANZ Australia – Newzeland Bank ATM Automated Teller Machine EDC Electronic Data Capture GDP Gross Domestic Products HSBC Hongkong – Shanghai Bank IPCAS International Payment and Customer Accounting System BIDV Bank for Investment and Development AGRIBANK VIETTINBANK VIETCOMBANK Bank for Agriculture and Rural Development Joint Stock Commercial Bank for Industry and Trading Joint Stock Commercial Bank For Foreign Trade of Vietnam POS Point of Sale USD USD WTO World Trade Organization VND VND LIST OF TABLE – DIAGRAM – CHART Table list Number sign Content 1.1 The table of General business envirnment of Corporates 2.1 Several business criteria of Agribank 2.2 The table of comparision of basic criteria of State Page 24 34 46 owned commercial banks (As of 31/12/2009) Customers in economic sectors Qualification of the staff of Agribank Result of training in Agribank Average income of labourer Volume of products and services of Agribank until 49 51 52 53 53 2.8 2.9 2.10 2.11 2.12 2.13 31/12/2009 Volume of transaction in the non-credit group Revenue from non-credit service Rate of Income – Cost from non-credit service Market share of domestic payment of Agribank Structure of sales of domestic payment service Revenues from international payment services and 54 56 50 57 58 59 2.14 2.15 2.16 2.17 3.1 foreign currency business Performance guarantee service at Agribank Revenue from card services of Agribank External factors in summary of Agribank Internal factors in summary of Agribank Strategy analysis according to GREAT model 60 61 67 70 84 2.3 2.4 2.5 2.6 2.7 Diagram list Number sign Content 2.1 Capital growth in years 2.2 Profit growth in years 2.3 Structure of service fee in 2009 Page 35 36 37 Chart list Number sign 1.1 1.2 1.3 1.4 2.1 2.2 Content Trading environment of business Model of Michael Porter with five competitive forces Model SWOT matrix BCG matrix Organization system of Agribank Matrix BCG growth share applicable to Agribank Page 13 17 25 27 32 76 PREFACE The imperativeness of the Capstone Project Report: In recent years, the system of Vietnam commercial banks is in progress of restructuring in the condition of integrating, opening the market of bank service under international commitments This is the opportunity to develop, expand bank serevices, change income structure, increase dendity of service income in the total earnings of Vietnam commercial banks However, they are considerable obstacles and challenges for Vietnam commercial banks In order to exist and develop, commercial banks need to form a strategy for themselves A suitable strategy has such significant meaning Timely strategy orienting and adjusting are foundation to gain great interest for enterprise According to the common process of restructuring bank system above, Vietnam bank for agriculture and rural development has been implementing many solutions to develop and diversify and increase quality of bank serevices, in which non-credit services are concentrated as: foreign and domestic payment service, card service, money transfer, oversees currency exchange, foreign currency, stock business, so as to meet the increasing needs of customers in integrating period Starting from importance of setting up business strategy for enterprise as well as the development of Vietnam bank agriculture and rural development in integration, our group has found out and chosed the Capstone Project Report: “The business strategy on non-credit service in Vietnam bank for agriculture and rural development (Agribank) in condition of integration” as target of study, aiming to along with the bank getting a right way for the future time The studying goals and scope: 2.1 The studing goals: The Capstone Project Report to: - Systematize theories and methodologies on business strategy of company - Establish business strategy on non-credit service for Agribank in the condition of integration - Form goals and suggest solutions to complete non-credit service in Agribank in integrating period 2.2 Studying scope: - Theories on business strategy of company - Set up serevice business strategy for the whole Agribank system in short term, long term and concrete resolutions, measures to make reak the business strategy Studying method of Capstone Project Report: The group carrying out the study bases on taught knowledge to evaluate the whole outcome of operation of Agribank Furthermore, the group applies measures as statistics, analysis, predication and synthesis from the collected data to appraise activity of Agribank on trading non-credit service and suggests business strategies for the bank in conditions of integration Organization of the Capstone Project Report: Beside the preface, conclusion and references, the main content of the Capstone Project Report includes chapters: Chapter 1:Several basic theories on business strategy Chapter 2: The business reality of non-credit service in Agribank Chapter 3:The goals and solutions for trading non-credit service in Agribank in integration context CHAPTER 1: SEVERAL BASIC THEROIES ON BUSINESS STRATEGY 1.1 General introduction about business strategy: 1.1.1 Definition of business strategy: Business stratergy is reaserched by a lot of economist and they have bought out many definitions of the term “business strategy” like: 1.1.1.1 Business strategy is the art: - Alain Threlart assumes that “The strategy is the art that enterprise uses against competition and wins” - M.Porter thinks that “The strategy is the art setting up steady competitive advantages to defend” Hence, those authors belived that business strategy is a type of art to compete in market and develop enterprise 1.1.1.2 According to comcept in management aspect, business strategy is a type of plan - G.Arlleret thinks that “Strategy is defining ways and means to reach established targets through policies” - D.Bizrell and the author team assert that “Strategy is likely a general plan directing and orienting enterprise towards expected goals It is the basis to form policies and operating methods” - Gluecl assumes that: “Strategy is a consistent, comprehensive, and genera kind of plan which is designed to ensure performance of enterprise’s goals 1.1.1.3 According to concept of combining unity: - “Business strategy is the art of combining and controlling activities to get longterm goals of enterprise” - Chandler considers strategy consists of defining long-term basic goals of company; selecting measures or action process; distributing essential forces and carrying out those targets In business, “Business strategy is the art of designing, organizing means to reach lonh-term goals of company and it connects with changes of business and competitive environment” 1.1.2 Attributes of business strategies: 10 information technology system and product quality when providing for customers; setting up Security Management System – ISMS to cover operations of the bank - Gradually setting up procedure system and basic procedure standardization of information technology system Deploying a general information technology property orientation in the bank to ensure that all of information technology services are connected closely to general trading initiatives matching to policies and standards about information technology of Agribank 3.2.3 Solution group for human resources management: 3.2.3.1 Increase efficiency of managing administration Restructuring managing administration model according to the project of Agribank restructure to increase active rights for administrator board of the bank in selecting methods and means of given objective implementation Quickly formulating international standards in managing and providing banking services on the foundation of developing profession, widening and developing operation system to be able to become the multi-purpose financial group 3.2.3.2 Increase the quality of human resources * Change awareness about banking service - Regularly organizing awareness feedback course to deeply understand about service product system of the bank for managers in branches at first Introducing current service products, shortage and needed servives in the future Recognizing clearly the role and necessarity of service development to banking business in violent competition environment at present - Changing awareness of banking operations, the foundation and the most important is to match to indespensible trend of current banking operation as modern bank model In field of banking service, the banking service in new trend as service to create and increase revenue from non-credit services - Recruiting officers needs paying attention to trained profession standard, training quality, and graduation level The following is foreign language, information level, 85 communication and behavior capacity In the context of integration and competition of service operation in locals, officers are required to have standard, skill, experience and good communication capacity - Training, practicing profession have to connect closely to service product as profession and service product have the same content with different approaches The objective of this solution is to make officer get used to accessing service product instead of traditional accessment in the past - Evaluating officers closely to their gained achievements with transparent commending and rewarding, clear treatment system for good officers and the ones being loved and praised by customers - Appointing officers survey, learn experience in national and foreign countries about services, especially new services Encouraging officers self-study, research and learn experience from other banks about the application and deployment in branches in system - Having polices to attract talents with capacity in service operation from other banks, industries and graduating from national and international universities about Agribank The attractive policies mainly focus on treatment policy, compensation policy and creating favorable conditions - Peridocially organize the examinations for testing and profession in providing customers, transacting with customer procedure among officials in all systems - Having mechanism to encourage officials improving standard, completing profession and increasing service quality * Change customer service style and behavior according to the motto as the bank delivery services for customers instead of customers coming to bank for being served Officials have responsibility for consulting customers about service product, as a result, the bank will attract more and more customers * Determine obviously the new service product deployment as the responsibility of every official, and the head is branch director * Complete organization model 86 - In head office, upgrade service development research department to a new service development research center Supplement functions, human resources and expense Therefore, this center will promote and well implement given tasks - In first and secondary level branches, they shoul change the organization model to formulate according to multi-purpose trading branch in service product - In the third level branches and dealing rooms, they have to supplement marketing officers to develop new service products or assign each officer to undertake this work to customers since these units are the ones directly transacting with customers 3.2.4 Solution group about Marketing management Marketing has particularly important role, therefore, apart from increasing quality and quantity of service product, Agribank should promote this operation by many forms regarding as: propagandizing, advertising in public communication media, increasing the donor activities to popularize trade mark and deploy current as well as potential customers Service product propaganda is an operation making service product attract the most attention of customers and market Marketing and service product propaganda of Agribank orient not only to new service products but also current ones Since most of customers or even banking officers have not understood carefully about service products provided by the bank Thus, Agribank should implement some solutions as following: Firstly, providing service More and more divided demand of customers together with the socioeconomic development make customers require the most suitable services Therefore, the bank has to always research and survey the demand and hobby of customers as well as find out service renovation to create reputation and be leading position in renovation as well as outstanding difference in comparison with other Image and prestige of servces are more and more important than visible products In purchasing services, it is difficult for customers to evaluate services 87 Therefore, one of foundations which customers use to evaluate as image and prestige of the bank in market Secondly, setting up the relationship with customers and internal bank One of important factors in developing banking services is the responsiblity awareness as well as skillfulness of officials communicating to customers, supporting ones during the process of supplying services and manager levels Therefore, apart from communicating with customers, the bank has to communicate inside and well coordinate among different departments of system with the aims of organizing and managing production process as well as service supplying homogeneously Service is invsible, so the communication has an important role in setting up prestige as well as increasing awareness of service quality of customers It is difficult to evaluate and recognize services, so introducing about service is not enough, officials have to give evidences about providing services Furthermore, the bank can illustrate service by the skillfulness, uniform of officers, service supplying environment and other policies The bank not only communicates by traditional means but also can use all of visible things connected closely to service production and supplying process to transact with customers The invisblity makes the oral information have important role Since customers usually believe in experience of previous ones in comparison with visible products Provided information has to be designed in order to ensure the reality and clearity with the aims of increasing the satisfaction of customers and fostering the image about quality and services of the bank Thirdly, market and customer policies - Focusing on make use of some customers and individuals with average and high income, production consumer, small and medium enterprises operating in all areas especially in agricultural and rural areas; farms; co-operative society with big and close production scale 88 - Investing to market segment especially rural market This market is being ignored by other Agricultural Commercial Banks and Commercial Joint Stock Banks Nevertheless, this market will develop strongly in the future as saving rate and growth rate of income are more and more increasing in residential areas In this market, the bank has to concentrate on developing retail banking operations - Researching, deploying and analyzing market in each operation area (urban, rural, some countries, regions in the world) to establish banking service, product list matching to each local, market segment as well as select distribution system and organize suitable system - Setting up isolated customer polices for each subject: groups, corporations, small and medium enterprises; individuals having from average income (public customer segment); farmers, so on - Developing the system in depth, promoting strength of officials, making use of resources with low operation cost to compete and approach customers Upgrading systems in urban areas to increase competitive capcity and occupy market share 3.2.5 Solution group about banking service pricing Agribank uses economic resources to provide many non-credit services Despite objective of supplying service as satisfying customers’ demand, with requirements of economic accounting, the bank has to have minimum revenue to compensate costs, risks with earnings Therefore, the bank needs to determine service pricing It is complicated to determined services as the diversified trading and different service types From the past, the most important objective of customers when selecting service product was price Curently, when selecting and determining to purchase a service, customers base on not only price but also the correlation between quality and price, the awareness of consumers about quality as well as value of service Moreover, the competition in market also remarkably affects to price of marketing service Therefore, to price for a service, people have to base on cost, competitiveness and awareness of customers 89 - Production cost and service supplying are foundation to form the price To price suitably, the bank has to analyze the correlation between cost and output at first Additionally, the bank also considers the correlation among their cost with competitors’ in market, as well as the acceptable price in market Depending on different services, the cost reduction for production amount is also different It mostly depends on fix and variable cost rate Thus, the bank needs to research market to predict demands to give exact pricing At the same time, the bank also has to learn experience and analyze service production cost to research variable cost - The price competitiveness and attitude of competitors about price should be considered in service price The higher and higher competitive price is, the bank cannot price higher than cost price, if the competitors have strong response to sale off of the other, the bank has to consider carefully when changing price, if not, there will be a price war and total interest will be reduced - The evaluation of customers and the correlation between service price and quality decide the policies of the bank If the bank uses high price and quality strategy, they have to implement the high pricing Coversely, if the bank use low price and quality strategy, they have to implement the low pricing But the bank needs to pay attention that customers usually think that the higher and higher price means higher and higher quality Therefore, if the bank supplies many different services, they have to decide the relationship among price levels with service groups Moreover, marketing price also depends on the remaining policy as the awareness of customers about service policies, human resources policies, environment policies and service supplying process policies, so on 3.2.6 Solution group about financial management Increasing charter capital, widening the equity scale by every solution to achieve CAR coefficient above 8% Maintaining the annual average growth rate not lower than 20%, supplementing the equity from annual post-tax interest distribution, 62% net interest for each year in maximum If Agribank wants to 90 increase financial capacity, expand operation scale and increase service supplying capacity, they have to solve three problems regarding as: firstly, increasing equity; profitability and solving difficulties to stop the accrued liability and clean the asset balance table Secondly, continuing to implement the project of Agricultural Bank restructure approved by Government, applying advanced technology to makes use of capital of customers and developing payment forms without using cash connected closely to application improvement of each banking service for customers Lastly, increasing the market forecasting capacity to be able to expand business capacitu as well as ensure safety for banking operations 3.3 Some recommendations: 3.3.1 Recommendations with Government - In current context, it is essential to set up law in competition in banking sector It ensures the rights of free trading, equality without discrimination with participants in banking operations Furthermore, the state protects legal competitiveness operation, prevents and solves violances to ensure the safety for operations and banking system - Improving socio-economic environment, developing infrastructure and creating favorable conditions for banking system in general and Agribank in particular Gradually dismantling limitations with respect to foreign banks according to integration commitment contributing to the development of national economy Government also have supporting policies to encourage Commercial banks modernize technology meeting the requirements of national economy development and integration - Government also supplements the charter capital for State Commercial Banks in general and Agribank in particular, as a result, these banks will have more modern technology investment foundation to develop banking service products On the other hands, Government also has to have suitably financial policies promoting Commercial Banks with the fiels of banking service development 3.3.2 Recommendations with Ministry of Finance 91 - Banking system and financial units, especialy State Tresury, Tax, Customs are units having big expenditure and payment in cash And other organizations need to have close coordination to develop comprehensively in banking service development and deployment - The tax rate for banking service should be adjusted and reduced with respect to Commercial bank branches or Commercial banks operating in rural, mountainous areas to encourage Commercial banks promote the investment, technology modernization and banking service expansion That reduced tax rate will be spent for modernizing banking technology and payment service 3.3.3 Recommendations with State Bank - State Bank must have guidelines for establishing united national finance switching center in over country, allow the network connection, use joint ATM for Comercial Banks As a result, account service in Vietnam will be developed quickly and the payment in cash in economy will be also reduced - Vietnam State Bank needs to have policies focusing on ensuring safety, preventing financial transaction risks in general and finance for agricultural, rural areas in particular - State Bank has strategic solution to ensure the effective cooperation among Vietnamese Commercial Banks in banking service development in general and banking service for agricultural and rural areas in particular when Vietnam implements the sustainable growth model until 2020 and vision to 2030 which the clue may be Agricultural Bank and Vietnam Bank Association The development process of banks in Vietnam (including integration) shows that Commercial Banks have tendency not to invest in agricultural and rural or remote areas as high operation cost Many Agricultural Commercial Joint Stock Banks have been established since 1990s, and currently, there are not any banks having commitments to connect to Agricultural – Rural areas These banks increase charter capital, become good banks and are keeping away from Agricultural – Rural areas Prior to 92 such situation, State should have policies to reorient credit, banking services for Agricultural – Rural areas to ensure the sustainable growth rate CONCLUSION OF CHAPTER The chapter presents objectives of non-credit service development of Agribank prior to requirements of international integration We also propose strategic solutions to develop non-credit service and select the most suitable trading strategy Additionally, we propose some relating recommendations for 93 Government, Ministry of Finance, Vietnam State Bank to support and create favorable conditions implementing given solutions CONCLUSION Together with meaningful trading strategy in the business development orientation, right trading strategy will promote resources of business and adapt to influences from external environment It plays as guideline for trading operations of business during the development process 94 Basing on analysis and trading strategies of Agribank, we hope that Agribank will have a sustainable develoment strategy in the context of integration, increase competitiveness in market From that, Agribank will be multi-function bank, focusing on developing modern banking services and products apart from traditional banking procedure Service product is one of potential trading sector and indespensible as well as suitable trend with integration and development process of banks in region and all over the world At last, we hope to receive the remarkable contribution of teachers, manager board of Agribank, therefore, the thesis can give real solutions for developing noncredit service in Agribank in the context of integration Thanks and best regard./ REFERENCES Vietnamese: [1] Harvard Business Essentials, Effective trading strategy, Ho Chi Minh City Comprehensive Publisher [2] Michael E Porter (2009), Competitive strategy, Youth Publisher [3] Bank for Investment and Development of Vietnam, annual report over years 95 [4] [5] [6] Vietnam Bank for Industry and Trading, annual report over years Vietnam State Bank, annual report over years Vietnam State Bank (2005), Banking service development strategy to 2010 and vision to 2020, Eastern Publisher, Hanoi [7] Vietnam Bank for Agriculture and Rural Development, Trading result reports, from 2007 to 2010 [8] Vietnam Bank for Agriculture and Rural Development (2007), The report in summary of implementing restructure project for Vietnam Bank for Agriculture and Rural Development [9] Vietnam Bank for Agriculture and Rural Development (2002), Development strategy of Vietnam Bank for Agriculture and Rural Development to 2010, Hanoi [10] Vietnam Bank for Agriculture and Rural Development (2009) The general project for service development in computerization environement, Document number 1764/NHNo-NCPT [11] Vietnam Bank for Agriculture and Rural Development (2010), The development draft of Vietnam Bank for Agriculture and Rural Development to 2020, Hanoi [12] Vietnam Bank for Agriculture and Rural Development, annual report over years [13] Meritorious teacher -Doctor Nguyen Thi Minh Hien (2003), Banking Marketing Curriculum, Statistics Publisher, Hanoi [14] Associate Professor.Doctor Le The Gioi – Doctor Nguyen Thanh Liem – Master Tran Huu Hai (2009), Strategy Management, Statistics Publisher, Hanoi [15] Associate Professor.Doctor Ngo Kim Thanh, Business Strategy [16] Associate Professor.Doctor Nguyen Ngoc Son, Strategy Management Curriculum, Vietnam Education Publisher 96 Websites: [11] www.agribank.com.vn [12] www.bidv.com.vn [13] www.cpv.org.vn [14] www.icb.com.vn [15] www.kinhtenongthon.com.vn [16] http://my.opera.com [17] www.sbv.gov.vn [18] www.sohuutritue.thv.vn [19] www.vcb.com.vn [20] www.vneconomy.com.vn 97 ... products is the highest compared to Vietcombank, BIDV, Vietinbank But with the outstanding feature of Vietcombank, BIDV in term of international payment, Vietcombank, actually are the leading bank... commercial banks and state own banks includes: Vietnam Foreign Trade bank (Vietcombank), Vietnamese industrial bank (Vietcombank), bank of investment and development of Vietnam (BIDV), bank of Me kong... affect the business environment of foreign currency of Agribank Expected to pressure the economic imbalance between domestic and foreign, in 2010, down USD price point is inevitable and to decrease