GENERAL INTRODUCTION ABOUT BUSINESS STRATEGY
Attributes of business strategies
- Business strategy identifies basic goals and management direction of enterprises in each period.
- Business strategy is oriented in order to ensure the continuous and constant development for firms in highly fluctuated financial environment.
A well-defined business strategy ensures the effective mobilization and optimal utilization of a company's resources, both now and in the future This strategic approach fosters long-term competitive advantages, positioning the firm for sustained success in the marketplace.
- Business strategy of firms is reflected during the continuous process from the building plan step to implementation step and supervision step.
A successful business strategy focuses on leveraging identified opportunities and competitive advantages to achieve optimal operational efficiency By adopting an offensive approach, firms can effectively navigate the market landscape and enhance their performance.
A business strategy is developed over an extended timeframe, typically ranging from 3.5 to 10 years This long-term approach is characterized by overarching tactics that are further defined through short-term strategies, often referred to as plans.
Role of business strategy
In today's dynamic market, businesses must adopt specific and flexible strategies to effectively navigate changes and seize valuable opportunities Without a well-defined business strategy, companies risk operational inefficiencies and potential bankruptcy Thus, a robust business strategy is essential for the successful operation and growth of any organization.
- Business strategy helps business determine clearly its purpose, direction as a basis for its all business activities.
- Business strategy helps business reach financial chances and, simultaneously, have active measures to overcome risks and threats from competitive market.
- Business strategy contributes to the increase of the efficiency of using resources,
The competition of current businesses
- Business strategy creates solid base for giving policies and determining suitable business activities to market fluctuations.
PROCESS OF BUILDING BUSINESS STRATEGY
Analysis of business environment
Analyzing the business environment involves evaluating various factors that impact a firm, identifying both opportunities and threats This process relies on thorough analysis and assessment, enabling businesses to capitalize on opportunities while effectively managing financial and operational risks.
Chart 1.1: Trading environment of business
Source: Strategic Management, Prof Doc Le The Gioi - Doc Nguyen Thanh
Liem – Ma Tran Huu Hai, Statistics Publication
Negotia -tion capacity of vendors
Negotia -tion capacity of purchaser s Risks of potential competitors
The macro environment plays a crucial role in strategic planning, as its fluctuations generate various opportunities and threats for businesses across different industries Understanding the environmental dynamics of the macro environment is essential, as they serve as a key determinant and driving force behind the overall economy.
The growth rate of the economy reflects its changes over time, following a cycle defined by Marx that includes four phases: Crisis, Recovery, Depression, and Flourishing During periods of crisis or depression, residents experience reduced income, leading to decreased consumption and production losses, which create challenges for businesses Conversely, during economic upswings, companies find numerous opportunities for expansion and development.
Interest rates are a crucial monetary factor that significantly impacts businesses and market demand Both high and low interest rates directly affect a firm's costs, making them a primary concern for companies Additionally, fluctuations in interest rates are heavily influenced by government monetary policy.
The exchange rate significantly impacts businesses engaged in international activities, particularly import-export enterprises and those utilizing foreign inputs or outputs Fluctuations in the exchange rate can directly influence a company's competitiveness in the global market.
Inflation poses a significant threat to business operations by undermining economic stability and hindering growth Over time, it diminishes the investment efficiency of companies, leading to hidden risks that slow down business development Consequently, the overall economic growth rate suffers as a result of persistent inflationary pressures.
Political and legislative factors significantly influence the strategic development of enterprises, presenting both opportunities and challenges A stable political environment fosters healthy competition and establishes a solid legal framework, which is essential for attracting investment Recently, a notable trend has been the shift towards deregulation, reducing import barriers and intensifying competition in various industries Additionally, policies promoting the active involvement of diverse economic entities pose risks for state-owned enterprises while offering significant opportunities for private businesses, enabling them to enter the market more easily.
Technological advancements significantly affect society by transforming products, processes, and materials These changes present opportunities for agile businesses that can quickly adapt and invest, while posing risks for companies reliant on outdated technologies One of the key consequences of evolving technology is its impact on import and export barriers, leading to a complete restructuring of industry sectors and the creation of new job opportunities.
M Porter emphasizes that technological change gains significance primarily when it influences competitive advantages and the structure of sectors As technology advances, it accelerates product life cycles, prompting firms to closely monitor trends in technological innovation Each company interacts with a diverse array of related technologies, which in turn affects its business operations Consequently, technology plays a crucial role in competition when it impacts a firm's competitive advantages or the financial sector's structure.
Cultural values and social attitudes form the bedrock of society, influencing various sectors such as technology, politics, and the economy These foundational elements affect choices in product selection, brand names, colors, and distribution channels Additionally, shifts in societal perceptions of life's meaning and consumption create both opportunities and challenges for businesses.
Natural factors, such as climate change and disasters, pose unpredictable risks to businesses, particularly those in agriculture that are closely tied to the environment Unlike economic, political, cultural, and technological factors, the impact of these natural elements is challenging to anticipate, making it essential for enterprises to be vigilant and prepared for potential fluctuations.
In today's era of strong globalization, internationalization has become an inevitability for businesses rather than a mere option The impact of globalization significantly influences various aspects of enterprise operations, including output markets, input sources, finance, and human resources While globalization offers numerous advantages for companies, it also presents complex challenges stemming from geographical diversity and cultural, societal, and political differences.
The business sector environment encompasses all factors that directly impact firms' decision-making within a specific sector This sector comprises multiple companies offering either supplementary or substitute products and services Therefore, firms must analyze their competitors to identify both opportunities and risks A widely recognized framework for this analysis is Michael Porter's model, which outlines five competitive forces that shape the competitive landscape.
Chart 1.2: Model of Michael Porter with 5 competitive forces
Substitute products/services (of enterprises outside industry
Competition among rivals in industry
Source: Competitve Strategy, Michael E Porter 2009, Youth Publication
Customers play a crucial role as consumers of a firm's products and services, exerting pressure through demands for discounts, higher quality, and improved service These customer requirements can impact a company's profitability The degree of influence customers have is determined by the dynamics between businesses and their clientele Consequently, this relationship can present both threats and opportunities for enterprises within various economic sectors.
Customer pressure depends on the following factors:
+ Concentration of customers: in a field, the higher the quantity of customers is, the more competition they deal with
The purchasing activities ratio, which reflects the proportion of spending on shopping compared to overall customer expenditures, indicates that a higher ratio signifies increased pressure from customers on businesses.
+ The difference of products and transfer cost of this supplier to other, paid by customers The higher the shipping cost, the lower the pressure customers have on firms.
+ Level of information about products and customer services
+ Threat of merge: have bad effect on price and profits of enterprise These
Setting up matrix to select business strategy
1.2.2.1 External factor evaluation matrix (EFE):
The EFE matrix assesses external factors and summarizes key opportunities in the environment that influence enterprise operations This tool enables corporate managers to evaluate the organization's response to opportunities and threats, determining whether external factors present advantages or challenges The process for creating this matrix involves several essential steps.
- Step 1: Make a list of factors as key opportunities and threats which are considered as great impacts on success of enterprises in business sector/industry.
- Step 3: Assign a rating to each factor up to reacting level of enterprises to the factors.
- Step 4: Multiply weight of each factor by its rating to define the weighte score of each factor.
- Step 5: Evaluate effecting level of factors.
1.2.2.2 Internal factor evaluation matrix (IFE):
Internal factors play a crucial role in shaping business strategy and objectives After evaluating these factors, strategic managers should create a matrix to assess the organization's strengths and weaknesses This process enables businesses to leverage their strengths while addressing weaknesses and identifying opportunities for improvement The establishment of the Internal Factors Evaluation (IFE) matrix involves five key steps.
- Step 1: Make a list of factors as basic strengths and weaknesses impacting on companies or their targets established.
- Step 2: Assign weight to each factor, depending on influencing level on industry.
- Step 3: Assign a rating to each factor up to reacting level of enterprises to the factors.
- Step 4: Multiply weight of each factor by its rating to define the weighte score of each factor.
- Step 5: Evaluate effecting level of factors.
The basic form of the general business environment table looks as:
Table 1.1 : The table of General business envirnment of Corporates Environmental factors
Importance levle of factors towards industry (2)
Importance levle of factors towards 22orporate(3)
List factors of Assign Assign Describe Multiply business environment weights of factors towards industry:
High: 3 Medium: 2 Low: 1 weights of factors towards 23orporate:
Much: 3 Normal: 2 Little: 1 nature of influence Good: + Bad: - weights at volumn 2 (importance level) by volumn 3 (influence level) and then put (+) or (-) at the result.
Source: Strategic Management, Prof Doc Le The Gioi – Doc Nguyen Thanh Liem– Ma Tran Huu Hai, Statistics Publication.
SWOT matrix of M Porter analyses opportunities nad threas of external environment toward operation of enterprise as well as its strengths and weaknesses.
Source: Strategic Management, Prof Doc Le The Gioi - Doc Nguyen Thanh
Liem – Ma Tran Huu Hai, Statistics Publication
∗ Steps of setting up SWOT matrix:
Step 1: Selectively make a list of opportunities and threats of external environment from the table of general external environment.
Make good internal weaknesses by taking advantage of external opportunites.
Reduce internal weaknesses and avoid external threats.
Using internal force to gain upper hand against external opportunities.
Utilize strengths of company to avoid or reduce external threats.
Step 2: Selectively list strengths and weaknesses of internal climate from the table of synthesizing and analyzing corporate internal climate.
Step 3: Build up possibilities baing on combining factors as strength, weaknesses, opportunities and threats There are 4 ways of combination:
- Combination of SO: Utilize strengths to explore opportunities from external buniess climate.
- Combination of ST: Utilize internal strengths to reduce and watch for impacts of threats from external environment.
- Combination of WO: Take advantage of external opportunities to make good internal shortcomings of companies.
- Combination of WT: Is the defensive strategy which tries to overcome weaknesses and reduce (or avoid) external threats.
The BCG Matrix, developed by the Boston Consulting Group, is a strategic tool designed to help large corporations assess the performance of their strategic business units (SBUs) By analyzing the market growth rate and the competitive share of each SBU, administrators can make informed decisions regarding capital investments and gain insights into the overall financial health of the organization The matrix is divided into four distinct quadrants, each representing different strategic positions for the SBUs.
- Vertical axis: revealing competitive market shares of SBU defined by the propotion of SBU’s revenue and that of the competitors.
(1) Given that such SBU is not the market leader in term of revenue, its market competitive share will equivalent to its revenues divided by that of the leading player.
(2) If that SBU is the market leader in term of revenue, its market competitive share is SBU’ revenue divided by that of the follower.
- Horizontal axis: revealing market growth rate over years If MGR over 10% is considered high.
- The circle: illustrating the ranking of that SBU in the market in term of market share The bigger the circle is, the higher achived its sales revenue
Chart 1.4: BCG matrix low high Relative market share
Source: Annual Report 2009 of Agribank
The position of the circles in each square indicates the following:
The "Star" group represents companies with significant growth and a strong market share, enabling them to invest in sustaining or enhancing their market position Strategies such as vertical and horizontal integration, market penetration, market development, product development, and joint ventures are essential for maintaining their competitive edge.
The group "the two directions" consists of companies experiencing high growth but possessing low market share, which often necessitates additional funding to sustain and enhance their market position The board has resolved to invest strategically to elevate these companies into "star" status This approach involves focusing on strategies such as market penetration, market development, and product development to drive growth and increase market share effectively.
Star Two directions dairy dead point
The Dairy group, characterized by low growth yet a significant market share, generates credits that support other companies, exemplifying the "two directions equilibrium" strategy To enhance their competitive edge, they focus on research and development, applying strategies for product diversification or development as necessary, particularly when a business unit experiences growth or needs to reduce expenditures for larger corporations.
The "dead point" group refers to a company experiencing minimal market growth and a low market share, resulting in unprofitable or less profitable products To address these challenges, strategies such as cost-cutting, liquidation, and dissolution may be necessary.
The BCG Matrix utilizes historical business data and various factors to forecast future growth, but it has notable limitations It is primarily effective for companies employing a low-cost strategy and does not guarantee increased market share or profits unless scale advantages are present Additionally, the matrix relies on just two criteria, overlooking other critical factors and the unique positions of each Strategic Business Unit (SBU) It also fails to account for cyclical industries and the interdependencies among SBUs.
Trading strategy selection
Choosing the right trading strategy is crucial for determining a business's success or failure A well-defined strategy can secure a company's future, while a poor choice may lead to losing market position to competitors Regardless of the economic climate—whether in times of growth or crisis—it's essential to develop a trading strategy that aligns with the business's strengths and weaknesses, as well as the opportunities and challenges present in the trading environment.
Before choosing a trading strategy, businesses must carefully assess their current strategy to establish a solid foundation for future decisions and to validate their strategic direction.
+ Re-consider results of techniques ananlyzing strategy.
+ Consider main factors affecting directly to strategy regarding as: strength of sector and business; objectives of managing director; financial sources Financial sources usually cause pressure to selecting strategy.
Strategy implementing
Formulating a strategy is just the first step for employees in an organization; they must also take action to effectively implement it This involves transforming various strategies into tangible results The execution of these strategies at different levels is essential for successful strategy implementation.
THE BUSINESS REALITY OF NON-CREDIT SERVICE IN
GENERAL VIEW ABOUT THE BUSINESS OPERATION OF AGRIBANK
The Vietnam Bank for Agriculture and Rural Development, commonly known as Agribank, was established on March 26, 1988 It was renamed Vietnam Bank for Agriculture on November 14, 1990, following Decision No 400/CT issued by the President of the Council of Ministers The bank officially adopted its current name on October 15, 1996, through Decision No 80/QĐ-NHNN issued by the Governor of the State Bank of Vietnam.
As of March 31, 2010, Agribank holds the largest charter capital among Vietnamese banks, amounting to 20.592 billion VND Additionally, it boasts total assets of 492.738 billion VND, securing its position as the leading commercial bank in Vietnam.
- Customers: Agribank has the the biggest number of customers in Vietnam; as of 31/12/2009, Agribank formed relationship with 30.000 enterprises, 10 million individuals and households.
- Employees: As of 31/12/2009, Agribank had 35.135 people, 70% of them had got bachelor degree and over
The bank boasts a leading information technology system that excels in scope, processing speed, and transaction volume, positioning it at the forefront of modern banking technology nationwide.
- Products and services: Agribank is a multi-tasked bank, supplying not only traditional products but also modern banking services which are convenient for every objective inside and outside the country.
- Relationship of foreign affairs: Agribank is maintaining the relation as an agency with more than 1,034 foreign banks and financial organizations in 96 nations and territories over the world.
Agribank, a unique State-owned enterprise and one of the five State-owned commercial banks in Vietnam, operates under a corporate model It is fully governed by the Law of Credit Organizations and is directly managed by the State Bank of Vietnam.
Agribank boasts the largest branch network in Vietnam, with its headquarters located in Hanoi The bank operates three representative offices in key regions: one in Da Nang for the Central region, another in Ho Chi Minh City for the Southern region, and a third in Cambodia With over 2,300 branches and transaction offices at various provincial, city, district, and commune levels, Agribank also manages eight sub-banking service subsidiaries, ensuring extensive coverage and accessibility for its customers.
Chart 2.1: Organizational structure of the Viet Nam bank for
BOARD OF DIRECTORS BOARD OF DIRECTORS
Chief Acountant Deputy General DirectorDeputy General Director Internal Inspection and supervision system
Internal Inspection and supervision system
Tier-1, tier-2 branches Repressentative offices
Transaction offices Tier-3 branchesTier-3 branches
2.1.3 The current types of services in the bank:
Banking operations are a vital part of the service industry, with banks offering a range of services classified in various ways Globally, the professional activities of commercial banks are collectively referred to as banking services, which serve as the foundation for the expansion and development of these services.
2.1.3.1 If classification bases on kinds of customers: banking services are divided into 3 kinds:
Individual banking services encompass a variety of offerings designed to meet customer needs, including cheques, open credit, and credit cards Customers can access funds conveniently through ATMs and enjoy banking services from the comfort of their homes Additional services include travel assistance, hire-purchase options, investment management, maintenance and consignment services, as well as insurance and comprehensive credit management solutions.
- Banking service for enterprise customer: There are 7 forms:
Business loan and guarantee; Money transfer; Foreign affairs; Investment; Insurance; Accounting; Consultancy.
Banking services play a crucial role for importers and exporters, offering tailored solutions for exporters that include managing contract items and facilitating international commercial vouchers These services also encompass measures that ensure payment security in international trade, addressing vital financial issues related to exports Additionally, export financing options are available to support businesses in navigating the complexities of global commerce.
2.1.3.2 If classification bases on aspect of speciality: Banking service is divided into 02 main kinds:
Credit serevice: Deposit and business loan.
- Traditional non-credit service: Payment by cash and non-cash; Payment by cheque; Traditional international payment; Guarantee; Budget; Safe-hiring.
Traditional non-credit services are characterized by their long-standing features, often relying on manual or semi-manual techniques These services typically incur high unexpected costs due to time and labor requirements They involve direct customer transactions and the use of rudimentary means for transporting and handling vouchers and jewelry Additionally, these services encompass consulting, stock brokerage, and various electronic services, including call centers, phone banking, mobile banking, home banking, and internet banking.
Modern non-credit services are characterized by their reliance on advanced technology, enabling quick, accurate, and secure transactions Customers can conveniently access these services without needing to visit a bank, resulting in lower costs while maintaining high profit margins.
2.1.4 The business statement of Agribank.
Table 2.1: Several business criteria of Agribank
- Ratio of Bad debts/total outstanding loans (%)
Resource: The annual statement of Agribank 2.1.4.1 Activity of capital mobilization :
In the period of 2007-2009, the growth of mobilized capital has been quite
(Vietcombank: 9,3%; BIDV: 11,7%; Vietinbank: 8,7%; Other credit organizations: 51,3%).
To enhance its competitive capacity, Agribank has effectively implemented a variety of mobilization strategies, including laddering savings, deposit savings, gold savings, and premium savings programs like “3A gold” and schooling savings This diversified approach has led to a significant increase in mobilized capital, which rose from 305.671 billion VND at the end of 2007 to 434.331 billion VND by the end of 2009, marking a 1.4-fold growth in just two years.
Diagram 2.1: Capital growth in years
Source: The annual statement of Agribank
Average growth rate reaches 22.9%/year In 31/12/2007, total outstanding loans was 242,180, to the moment of 31/12/2009, the total got 354,112 billionVND, 146.2% increase in comparison with 2007
Quality of credit activity is being improved step by step Bad debt is low (as of 31/12/2009 dropping 2.6%), contributing importance part in strengthening financial capacity and quality of credit operation
Credit is a crucial component of a bank's earnings structure, serving as the primary source of revenue Between 2007 and 2009, credit accounted for over 90% of Agribank's total income, highlighting its significance in the bank's financial performance.
From 2007 to 2009, Agribank experienced consistent annual interest growth, with an impressive average growth rate of 21.2% Notably, in 2009, this rate peaked at 35.8%, reflecting the bank's robust performance Additionally, the wages of staff have been significantly ensured and improved during this period.
Diagram 2.2: Profit growth in years
Source: The annual financial statement of Agribank
Agribank has archieved remarkable advances From the position of the weakest bank ampng 5 State owned commercial banks, the bank has strived to become that
2.1.4.4 Activity of non-credit business:
For recent years, development of Agribank’s services has gained considerable archievements, marking a new stage in service development, especially in area of non-credit
Diagram 2.3: Structure of service fee in 2009
Source: The Agribank’s statement of service development in 2009
The chart illustrates that domestic payments are the primary source of service fees for Agribank, accounting for 40% of service activity and 34.6% of total earnings This highlights Agribank's strength in providing services through an extensive network and modern technology for each transaction International payments and guarantees follow closely, contributing 40.5% to service fees and 34.4% to total service earnings Consequently, Agribank's service fee structure remains heavily focused on traditional services, which make up 80% of the total.
THE GOALS AND SOLUTIONS FOR TRADING NON-CREDIT
OBJECTIVES OF STRATEGY
3.1.1 The foundation for setting up objectives:
Setting up trading strategy of business has to base on objective system of business and some following basic factors:
- Matching to the development of environment and general development trend of the sector.
- Basing on available material and non-material sources of business to establish specific strategy for business and invest to the development of banking services, non-credit service.
- Meeting the non-credit service expansion and development requirements of Vietnamese banks in current market economy From that, setting up trading development objectives of Agribank.
∗ Vision: become a leading multi-sector, multi-area, multi-property financial banking group in Vietnam; operate in three foundations: Banking – Insurance – Securities.
Agribank's mission is to enhance the safety and development of the banking system while fostering national economic growth This is achieved by addressing the diverse needs of customers in production, business, and service development through modern solutions and innovative services By prioritizing professionalism and dedicated service, Agribank aims to secure the highest level of customer satisfaction and trust.
- Sustainable development – Ceaseless enhancing position;
- Create the connection, share value;
- Forward to Agribank trade mark bringing prosperity to customers.
Agribank plays a crucial role in the rural finance market while successfully expanding its presence in urban areas By catering to diverse customer segments and leveraging modern information technology, Agribank aims to address core issues and enhance its product and service offerings This commitment to improving service quality and developing innovative, professional services is designed to attract more customers, gradually dominate the market, and increase Agribank's share in Vietnam's banking sector.
The evolving understanding of banking operations within the Agribank system highlights the significance of service products in modern banking This shift in awareness is crucial for enhancing competitiveness and facilitating successful integration in the financial sector.
The primary objective of the technology system is to leverage government mechanisms and policies to establish a modern and scalable information technology framework that addresses the challenges faced by a major regional bank Agribank's information technology consistently positions it as a leader in the national market, enhancing its competitive advantages and overall capacity across various dimensions.
The primary objective of product differentiation is to enhance the unique characteristics of each service offering, thereby attracting customers through clear competitive advantages By leveraging technology and systematic advantages, the bank aims to deliver high-quality, distinct products Additionally, the bank boasts a more extensive range of service products compared to other national banks, solidifying its leadership in the provision and implementation of modern service solutions.
Since 2010, non-credit gains have constituted a minimum of 22% of total revenue, reflecting a growing trend in bank operations where service revenue is increasingly significant This stability in service revenue enhances operational safety and efficiency Traditional banking products, such as credit granting and capital mobilization, serve as the foundation, while the introduction of new service offerings strengthens the overall operations of modern banks, establishing a dual foundation for development.
+ With respect to traditional products, the bank needs to improve, increase quality and supplement products
+ With respect to non-traditional products, the bank has to supplement new service products with high quality and applications matching to the general trend of a modern bank
- Objectives about market, market penetration
Agribank holds a dominant position in the rural banking sector, achieving a market penetration of at least 70% To leverage this potential, the bank aims to maintain its leadership by introducing tailored credit products and banking services that meet the specific needs of rural customers Utilizing its extensive experience and existing advantages, Agribank is committed to enhancing its market presence in these areas.
+ With respect to urban area, industrial zone, processing and open economy zones:
In these areas, Agribank is“ Competitive option” and occupies market penetration from 20% - 30% in service products
To enhance international trade and financial interactions, we establish branches and representative offices in various countries across the region and globally, facilitating numerous commercial and credit transactions with Vietnam.
Agribank's primary goal is to attract more customers by implementing innovative service and trading models With a vision to become a leading multi-sector financial group in Vietnam by 2020, Agribank focuses on expanding its customer base, particularly in agricultural and rural areas, which represent over 70% of its market penetration in commercial banking Additionally, the bank is committed to developing its customer presence in urban areas.
Besides, the bank also approaches and gradually develops customers in regional and international markets the most safely and effectively.
Based on the SWOT analysis presented in chapter 2, we develop strategic groups to leverage strengths for S-O opportunities, address weaknesses to capitalize on W-O opportunities, enhance strengths to mitigate S-T threats, and resolve challenges to overcome W-T obstacles Specifically, for Agribank, we identify the following strategic situations.
∗ SO strategy: Make use of opportunities by means of using strengths
- Diversify service list to increase competitive capacity.
- Cooperate, research, receive, transfer modern technology to increase quality of banking products and services.
- Increase operation scale in national and international market
Determine strategy 1: Diverdify products, develop advanced and modern non-credit services.
∗ ST strategy: Use strengths to overcome threats
- Promote advantages to increase competitive capacity.
Determine strategy 2: Set up market, expand effective trading system, promote competitive advantages.
∗ WO strategy: Make use of opportunities to recover weaknesses
- Invest to the technology renovation and modern banking products.
- Set up market and Marketing work.
Determine strategy 3: Invest to the technology renovation and modern banking products.
∗ WT strategy: Mitigate weaknesses to avoid threats
- Pay attention to research and develop advanced as well as modern products
- Increase the quality of officer training to meet the development, technology and integration requirements.
- Expand the effective trading system and promote competitive advantages.
Determine strategy 4: Increase the quality of officer training to meet the development, technology and integration requirements.
By means of using GREAT model, we select the optimal trading strategy by means of evaluating and analyzing as well as marking criteria as following steps:
Step 1: Mark each strategic project according to level of 1-4, and 5 criteria as:
G: More and more gain of business is, the higher and higher of score R: More and more risks of business are, the lower and lower of score E: The bigger and bigger expense of strategy is, the lower and lower of score A: The higher and higher achieveble of strategy is, the higher and higher of score
T: More and more suitable time of strategy is, the higher and higher of score Point 4 = high; Point 3 = good; Point 2 = average; Point 1 = weak.
Step 2: Connect wieght for evaluation criteria basing on the importance to trading operations of business.
- Criterion 5: Time 0.20 Summarize score for each strategic project to select optimal strategy The result of strategy evaluation of Agribank is demonstrated as following:
Table 3.1: Strategy analysis according to GREAT model
Criteira Weight Strategy 1 Strategy 2 Strategy 3 Strategy 4
Evalu Result Evalu Result Evalu Result Evalua Result
Souce: Evaluation of experts in Financial Banking sector
Strategy 1 is highly valued for its focus on product diversification and the development of advanced non-credit services, emphasizing product quality as a key value Following closely is Strategy 3, which prioritizes investment in technology and the modernization of banking services Additionally, there is a strategy aimed at establishing a market and system that offers competitive advantages Lastly, the strategy for training human resources is also considered important.
To implement above strategies, Agribank needs to operate following solution groups:
STRATEGY IMPLEMENTATION SOLUTIONS
3.2.1 Solution groups for development, service quality diversification and improvement strategy:
3.2.1.1 Set up non-credit service development closely to trading strategy in long term
Agribank currently lacks long-term strategies for non-credit service development, relying instead on annual or temporary plans To address this limitation, the bank should establish comprehensive service development strategies that prioritize non-credit services, grounded in overall economic demand forecasts as well as specific predictions tailored to each customer group and service type.
Agribank should focus on providing specialized banking services tailored for agricultural and rural areas, particularly in remote regions and islands, where it holds a leading position with an extensive national network This strategic approach aligns with the government's goal of promoting balanced and harmonious development in these underserved areas over the coming decades While Vietnam remains an agricultural nation, Agribank must also adapt to the needs of urban markets and consider regional and international opportunities to ensure sustainable growth.
3.2.1.2 Set up service product procedure, management and development comprehensively from head office to branches, dealing rooms, from selecting ideas, designing products, testing and introducing to market Furthermore, the implementation of new service products has to be comprehensive in over system and easy to apply information technology
To enhance competitiveness, the bank must assess customer satisfaction and efficiency for each service product This ongoing evaluation will provide insights into the performance of each offering, identifying areas for improvement and ensuring that the bank remains responsive to customer needs.
3.2.1.4 Increase quality of current non-credit services
To thrive in the competitive landscape of financial banking services, Agribank must focus on enhancing service quality through several key strategies These include refining professional procedures, improving the skills and attitudes of staff, and elevating customer care standards Additionally, it is essential for Agribank to strengthen risk management practices and invest in technological advancements By examining the professional procedures of other national banks and the operational practices of international banks, Agribank can identify challenges and adapt its strategies to align with national realities, ensuring continuous improvement and customer satisfaction.
The continuous growth in applications and the enhancement of services related to national accounts, payment services, guarantee services, and e-banking, particularly in international payment products, highlight the increasing importance of foreign exchange trading for banks As it generates substantial revenue, Agribank must focus on expanding and developing its forex trading capabilities to stay competitive in the financial market.
The development of new non-credit service products is a crucial aspect of a bank's product strategy To effectively introduce these services, it is essential to establish a clear product strategy, generate innovative ideas, and select suitable products for market introduction through thorough testing and verification Agribank, with its strategic location, ample staff, and large customer base, is well-positioned to expand its service offerings and meet customer demands efficiently.
3.2.2 Solution group for information technology development:
The development depends on the tecnology standard It is also the foundation for developing advanced banking products and services
Information technology systems play a crucial role in enhancing competitive advantage and aligning with Agribank's strategic development goals for the next decade In conjunction with the overarching trading strategy, Agribank aims to implement effective methods to expand and strengthen its information technology infrastructure, ensuring a robust, reliable, and secure operational environment.
To achieve objectives of information technology development next period, the information technology system must centralize on following basic solutions:
- Setting up consistent information technology foundation to change the bank becoming a leading multi-purpose bank in Vietnam
- Completing information technology system to meet requirements about operation and management, especially direct e-banking services with customers and supported systems for making decisions
To enhance information security management and safeguard technology systems and assets for banks and customers, it is essential to establish a Security Operation Center (SOC) across all systems Implementing international information standards, such as ISO for information technology systems and product quality, will ensure high-quality service delivery to customers Additionally, setting up a comprehensive Security Management System (ISMS) will effectively cover all operational aspects of the bank, reinforcing its commitment to security and customer trust.
The implementation of a systematic procedure and standardization for the information technology system is being gradually established This includes the deployment of a comprehensive IT asset management approach within the bank, ensuring that all IT services are effectively aligned with the overarching trading initiatives This alignment adheres to the policies and standards set forth by Agribank regarding information technology.
3.2.3 Solution group for human resources management:
3.2.3.1 Increase efficiency of managing administration
The restructuring of Agribank's management model aims to enhance the authority of the board of administrators in selecting effective methods for achieving objectives This initiative focuses on rapidly establishing international standards for banking management and service provision, while also developing professional capabilities and expanding operational systems to transform Agribank into a multi-purpose financial group.
3.2.3.2 Increase the quality of human resources
* Change awareness about banking service
To enhance the understanding of the bank's service product system, we will regularly conduct awareness feedback courses for branch managers These sessions will introduce current service offerings, identify gaps, and discuss future service needs It is essential to clearly recognize the critical role of service development in the banking sector, especially in today's highly competitive environment.
The evolving landscape of banking operations necessitates a shift towards modern banking models that prioritize non-credit services to enhance revenue generation In this competitive environment, banking professionals must possess the necessary skills, experience, and effective communication abilities to meet the demands of integrated service operations.
Training and professional practice must be closely aligned with service products, as they share similar content but differ in approach This strategy aims to familiarize officers with service products, moving away from traditional assessment methods used 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
To enhance service delivery, it is essential to appoint officers who will conduct surveys and gather insights from both domestic and international practices, particularly focusing on innovative services Encouraging officers to engage in self-study and research will facilitate the exchange of knowledge and experiences from other banks, ultimately improving the application and implementation of these services across branches within the system.
SOME RECOMMENDATIONS
Establishing competition laws in the banking sector is crucial to uphold the principles of free trade and equality among all participants in banking operations These regulations not only safeguard legal competitiveness but also prevent and address violations, ensuring the safety and integrity of the banking system.
Enhancing the socio-economic landscape and developing infrastructure are essential for fostering a favorable banking environment, particularly for Agribank Gradual removal of restrictions on foreign banks, in line with integration commitments, will further support national economic growth Additionally, government policies aimed at encouraging commercial banks to modernize their technology are crucial for meeting the evolving demands of the national economy and promoting integration.
The government enhances the charter capital for State Commercial Banks, especially Agribank, enabling these institutions to invest in modern technology and develop innovative banking service products Additionally, the government must implement appropriate financial policies to promote sustainable growth in the banking sector.
The banking system, along with financial units such as the State Treasury, Tax, and Customs, involves significant cash expenditures and payments To foster comprehensive development in banking services, it is essential for these organizations to maintain close coordination and collaboration.
To foster investment and technological modernization in rural and mountainous areas, the tax rate for banking services should be lowered for commercial banks This reduction will incentivize banks to expand their services and enhance payment technologies, ultimately benefiting the communities they serve.
The State Bank should establish guidelines for creating a unified national finance switching center across the country, facilitating network connections and the use of joint ATMs for commercial banks This initiative will accelerate the development of account services in Vietnam and contribute to a reduction in cash transactions within the economy.
- 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
The State Bank of Vietnam is implementing strategic solutions to enhance collaboration among Vietnamese Commercial Banks in developing banking services, particularly for agricultural and rural sectors, as part of the country’s sustainable growth model through 2020 and its vision for 2030 Despite the establishment of numerous Agricultural Commercial Joint Stock Banks since the 1990s, there remains a reluctance among Commercial Banks to invest in agricultural and rural areas due to high operational costs, leading to a lack of commitment to these vital regions To address this issue, the government must introduce policies that reorient credit and banking services towards agricultural and rural areas, ensuring sustainable growth and support for these communities.
Chapter 3 outlines Agribank's objectives for developing non-credit services in alignment with international integration demands Additionally, it presents strategic solutions aimed at enhancing these services and identifies the most appropriate options for implementation.
Government, Ministry of Finance, Vietnam State Bank to support and create favorable conditions implementing given solutions
A well-defined trading strategy is essential for business development, as it not only optimizes resource utilization but also enables adaptability to external influences This strategic approach serves as a guiding framework for trading operations, ensuring alignment with market dynamics and fostering sustainable growth.
Based on Agribank's trading strategies and analysis, we anticipate the bank will adopt a sustainable development strategy to enhance its competitiveness in the market As a multifunctional bank, Agribank aims to prioritize the development of modern banking services and products, moving beyond traditional banking practices This focus on service products is essential and aligns with the ongoing integration and development trends within the banking sector both regionally and globally.
We anticipate valuable insights from teachers and the management board of Agribank, enabling this thesis to propose effective solutions for enhancing non-credit services at Agribank in the context of integration.
[1] Harvard Business Essentials, Effective trading strategy, Ho Chi Minh CityComprehensive Publisher.
[4] Vietnam Bank for Industry and Trading, annual report over years.
[5] Vietnam State Bank, annual report over years.
[6] 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,
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[11] Vietnam Bank for Agriculture and Rural Development (2010), The development draft of Vietnam Bank for Agriculture and Rural Development to
[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