SELECTION STRATEGY FOR VCB BACNINH BY 2015
SOME BASIC THEORIES ON DEVELOPING THE STRATEGY FOR
1.1 BASIC MATTERS ON STRATEGY AND BUSINESS STRATEGY
Strategy can be defined in various ways, reflecting the unique perspectives of different authors According to Chandler's 1962 definition, strategy involves establishing goals, defining the long-term fundamental purpose of an organization, and executing a series of actions while allocating the necessary resources to achieve these objectives.
Until the 1980s when the strategic management course had become ripe, Quinn given more general definition:
"Strategy is the pattern or plan to integrate the major goals, policies, and the sequence of actions into an overall which is cohesive rigorously."
Then, Johnson and Scholes redefined the strategy in the environmental conditions which were much in rapid changes:
A successful organizational strategy focuses on long-term orientation and scope to achieve a competitive advantage By effectively aligning resources with the evolving environment, organizations can better meet market demands and satisfy the expectations of stakeholders.
1.1.2.1 The concept of business strategy
A well-defined business strategy outlines an organization's long-term direction and scale, enabling it to gain a competitive edge By optimally arranging resources, businesses can effectively respond to market demands and fulfill stakeholder expectations, ensuring sustained growth and success.
1.1.2.2 Basic characteristics of the business strategy
Business strategy clearly defines the basic objectives and business direction of the firm in each period
The strategic crystal orientation focuses on enabling the firm to achieve sustainable growth in a dynamic business environment Its primary goal is to maximize resource mobilization and optimize the utilization of the enterprise's assets, both now and in the future By leveraging its strengths and capitalizing on opportunities, the strategy aims to secure a competitive advantage.
Business strategy clearly defines the basic objectives and business direction of the firm in each period
The strategic crystal orientation focuses on enabling a firm to achieve sustainable growth within a dynamic business environment This business strategy emphasizes the effective mobilization and optimal utilization of the enterprise's resources, both now and in the future, to leverage advantages and capitalize on opportunities for competitive success.
1.1.2.3 The types of business strategy
According to different approaches, there are different business strategies.
Corporate governance encompasses both firm-level strategy and the business strategies of functional divisions The firm-level strategy represents the overarching business approach of the entire organization, while various business strategies can be employed, including focused growth, integration-driven growth, and diversification In challenging circumstances, firms may adopt a degradation strategy, which involves cost reductions, optimizing return on investment, or even considering options like selling or dissolving the enterprise to navigate bankruptcy and ensure survival.
* According to the scope, business strategies can be divided into: general business strategy, strategy of business factors and strategy of components
Business strategies can be categorized into several types, including the strategy of key factors, which focuses on essential elements for success; the strategy of comparative advantage, which leverages unique strengths over competitors; the strategy to create attack, aimed at proactively challenging market rivals; and the strategy to exploit degrees of freedom, which involves maximizing opportunities within a flexible framework.
1.1.2.4 The role of business strategy
Business strategies help companies define clearly their purpose, direction as a base, guideline for all production business activities of the firm.
Business strategies help companies capture and take advantage of business opportunities, and simultaneously having proactive measures to overcome the risks and threats on the competition market
Business strategies contribute to improving the efficiency of using resources, enhancing the competitive position of the firms to ensure the sustainable development of the firms
Business strategies create stable bases for setting out policies and decisions on production and business to suit the changes of the market.
1.2 Process to develop the strategy
Developing a successful strategy involves strategic thinking and addressing three critical questions: "Where are we now? Where do we need to go? And how do we get there?" This process can be effectively navigated through seven essential steps.
1 Current assessment: mission, objectives and strategies.
2.Analyzing the business environment: market structure, development situation, competitive analysis and positioning the firm.
3 Macro environment analysis: demographic ,economic, social, technological and political environment
4 Internal analysis at the enterprise: Structure, resources, processes, personnel and corporate culture.
5 Analyzing strengths, weaknesses, opportunities and threats
6 Analyzing strategic choices: Generally or in sector.
7 Evaluation and implementation: requirements on resources, risks and benefits.
Where do we need to go to?
How do we get there?
Source: Lecturing documents of strategic management - Griggs University
The strategic management process involves analyzing the external environment to identify opportunities and threats, while concurrently assessing the internal environment to uncover strengths and weaknesses This comprehensive analysis, grounded in the organization's mission and vision, facilitates the development of effective strategies and strategic choices Continuous performance evaluation and strategy adjustments ensure that organizations remain aligned with their strategic goals The process is visually represented in Figure 1.1 below.
Figure 1.1: Process to business strategy
Source: Lecturing documents of strategic management - Griggs University
* Strategic vision mentions to the future business direction of the company -
"where we will go": The markets need to pursue, focus in the future on technologies
- products - customers, the type of the company management board tries to create.
* The mission statement of most companies focus on current business activities -
"who we are and what we do": These current products and services; customers' needs are being served ; capacity of technology and business.
+ Micro-analysis: the model of five competitive forces.
Implementation and adjustment for strategy Monitoring and evaluation for strategy implementation
Make the organizational structure appropriate with strategy
The proposed strategy should focus on aligning the company's objectives with environmental requirements and internal challenges, leveraging the firm's potential and resources Key goals include revenue, profit, budgeting, and average employee income Additionally, for institutions like the Joint Stock Commercial Bank for Foreign Trade of Vietnam, objectives also encompass service-related targets such as retail density, service radius, and overall service effectiveness.
The analysis of the external environment aims to pinpoint opportunities and threats for businesses, focusing on strategies to leverage environmental opportunities while mitigating potential risks.
The scope and content of environmental analysis includes the macro- environment analysis (general environment) and micro environmental analysis, also known as sector environmen
To ensure survival and growth, firms must analyze and synthesize external factors that significantly impact their operations It is crucial for businesses to recognize the opportunities and challenges presented by their external environment, as they must not only adapt to these conditions but also actively influence changes within it The components of the macro environment are illustrated in Figure 1.2 below.
(Source: Strategic Management, Prof Dr Le The Gioi, Dr Nguyen Thanh Liem, MA Tran Huu Hai (2009), Statistical Publishing House)
The changing demographics of population size underscore its significance in addressing global challenges in the 21st century As the expected population continues to rise, it presents both obstacles and opportunities for entrepreneurs to innovate and adapt to these shifts Understanding these trends is crucial for developing effective strategies that cater to the evolving needs of society.
Age structure : Showing the opportunities of the elderly care services, insurance services But it is one also implicit threat for enterprises on the issues of labor resources.
Geographic distribution: Possibly causing the advantages for communications technology By computer, human can perform work at home and communicate with others via telecommunications networks
Analysis of the political and legal environment
The political environment encompasses the political factors and circumstances that influence a company's operations Key elements include the political regime, the ruling party, and the policies and guidelines set forth by both the Party and the State, as well as the overall political climate within society.
The legal environment encompasses the legal framework governing a company, which includes state regulations, the legal awareness of judicial and executive bodies, and the firms themselves The political and legal environment significantly impacts a company's operations, often determining its success In countries characterized by political stability, transparent policies, a positive political atmosphere, and strict legal enforcement, businesses are more likely to thrive and grow sustainably.