Luận văn thạc sĩ quản trị kinh doanh quốc tế MBA (4)

TABLE OF CONTENTS Table Table 2.4 Demand for electricity all over the country up to 2025 39 FOREWORD: INTRODUCTION Title: Development strategy of EVNFinance in the period 2010-2015 Significance: Vietnam’s economy is gradually integrating into the regional and the world’s economy where business environments of companies are widen in an increasing fierce competition context This, on the one hand creates new business opportunities but on the other hand contains potential threats to the development of companies In the fast changing maket economy, if contingent factors are ignored, the deciding factors to success of businesses is how to select the right direction and to determine appropriate and timely business strategies For a long time, foreign company have had horizontal and extensive business vision and they demonstrated their success by acquiring a greater part of “the pie” in local markets However, being passive to changes of the market, changing slowly and no horizontal vision are seen in many Vietnamese companies Why are foreign companies so dynamic in doing their business? The answer is that almost all foreign companies when entering a new market are equipped with a certain business strategy Thus, access to knowledge of business strategy is very essential to Vietnamese companies in general and to EVNFinance in particular Objectives Objectives of this research is to contribute to clarification of some main methodologies and arguments related to establishment and implementation of business development strategy of EVNFinance, to analyze impacts of business environment on financial business operations and to be well aware of opportunities and threats, strengths and weaknesses of the Company, based on which to put forwards business strategy solutions that are needed to increase effectiveness of the Company’s business strategy Scope of the topic The topic focuses on “Development strategy of EVNFinance Joint Stock Company in the period 2010 - 2015” Thus, there are insufficient details on analysing rivals , especially illustrative figures Research time from 07 July, 2008 to 3rd Quarter, 2009 Methodology The following methodologies are uses: * Comparision, analysis and consolidation methods: to analyze data from financial statements, then consolidate to deliver comments * SWOT analysis method: is a technique to analyze and process research environmental outcomes to help the company find out strategy in a scientific manner… * Statistic method: total up from tables to draw conclusion on trends that in turn help assessing operation status of the Company and the Sector Structure of the exercise Foreword Chapter I: Methodology to design business strategies for company in the market mechanism Chapter II: Status quo of EVNFinance and the Company’s strategic development Chapter III: Solutions and recommendations Conclusion CHAPTER I METHODOLOGY TO FORM DEVELOPMENT STRATEGY IN THE CURRENT MARKET MECHANISM I.1 Concept: In 1962, strategy is defined by Chandler as “the basic long term goals and objectives of companies , and the adoption of courses of action and the allocation of resources necessary for carrying out goals…” Quinn delivered a more general concept of strategy “ as the pattern or plan that integrates major goals, policies and actions sequences into a cohensive whole” After that, Johnson and Scholes defined strategy in a fast changing environment: “Strategy is the direction and scope of an organisation over the long-term: which achieves advantage for the organisation through its configuration of resources within a challenging environment, to meet the needs of markets and to fulfil stakeholder expectations” We can see that in all definition of strategy, there are phrases that express different aspects containing in the strategy Mintzberg’s P for strategy provides definition strategy as follows: Plan: consciously intended course of action Partern: consistency in behaviour, whether or not intended Position: match between organisation and environment Perspective: an ingrained way of perceiving the world Ploy: a specific manoeuvre intended to outwit an opponent or competitor Not only consisting of different aspects, definition of strategy is different by levels Definition of strategy by levels depends on one’s view There are at least levels that need to be formulated: strategy at company level, strategy at business unit level and functional strategy To continue, let’s investigate definition of strategy management: is a set of management decisions and actions that determine long – term outputs of a company Strategy management consists of continous actions: environmental assessment (internal and external), strategy forming, strategy implementation and strategy assessment and monitoring Thus, strategy study focuses on following and assessing external opportunities and threats in the context of internal strengths and weaknesses Obviously, it is not easy to get a simple definition of strategy However, the issue can be settled if we have a good look into each factor of strategy which has coverage sense for any organization Anyway, these factors closely depend on context of each company, its members as well as organizational structure To have a general definition of strategy, it is necessary to separate concept of strategy out of strategy forming process In the first place, it is necessary to assume that strategy covers all important activities of a company We assume that strategy is integrated, objective and directive and it can react to changes of the changing environment Source: Strategy management - Statistical publishing house 2007 I.2 Specific characteristics of strategy: We can find that there is no general concept of strategy With movement of the economy, strategy thought changes always in order to ensure its match with business environment However, in whatever aspect and period, strategy has its typical characteristics that reflect nature of business strategy of company The typical characteristics are as follows: + Business strategy should clarify the most basic targets that need to be achieved in a certain period of time to be grasped thoroughly in all aspects and all levels of business and production activities of company + Business strategy of company is presented in a continuous process from design, implementation, assessment, adjustment… of status of implementing the set targets + Business strategy ensures optimal mobilization and making the best uses and exploitation of resources of companies (labor, capital, techniques and technologies, etc), making the best uses of advantages, catching opportunities to gain competitive advantage in the market + Strategy is a tool to establish long - term targets of companies : Traditional views show that: strategy is means to formulate long-term targets, design main action programs to meet the targets and deploy necessary resources This feature will have more sense if long-term targets of companies are clarified Because if these targets changes, this feature will make no sense Different from plan, strategy does not intend to clarify which will be done and which will not in the planning time While plan is designed for a short-term based on specific grounds with specific data and relatively precise forecasts, strategy is designed for a long period of time which is difficult to forecast Moreover, in such a modern economic era, business environment changes always, it is impossible to identify precisely what should be done in a certain point of time Thus, strategy is directive only When deploying an intended strategy, unintended one can arise during business process There will be strategic targets and band-aid ones Deploying strategy should be flexible but not rigid + Business strategy aims to attack to win in the business world Strategy is designed and implemented based on findings and uses of business opportunities and comparative advantages of company to gain high economic values + Business strategy clarifies competitive scope of company Obviously, the most concern in designing strategy is to determine which business sector companies are going to involve It requires strategy makers to point out issues such as growth rate, diversification and implementation of investment activities A core issue of this character is to determine business scope of companies This is an important step of companies in analyzing business environment, making strategic orientations, resource allocation and investment portfolio management There are two main questions: What are we trading? And what should we trade? This is a relatively complex issue because market segmenting has a big impact on organizational structure of company + Business strategy creates mutual relations for external opportunities and challenges, weaknesses and strengths of company based on which to set its competitive position This character bring outs an essential issue of strategy is to set sustainable longterm competitive position against main rivals in business sector that company involve in This is a modern approach to study competitive position of company + Business strategy is a clear determination of economic and non-economic contributions that company intend to bring in to its shareholders In recent years, shareholders play a really important role in business strategy of every company This terminology implies all parties which have direct or indirect relation with profit sharing process of company and have financial contributions to maintain company ’ activities as well I.3 Roles of business strategy in modern market economy: Business environment has big impacts on existence and development of company It on the one hand creates opportunities for company but on the other hand forces them to face with new challenges It forces company if desire to survive to find out a new management method, i.e strategy management In which, strategy is a basic ground for this management In a modern business environment, strategy plays an increasing important role existence and development of company This role is reflected by: + Strategy is a tool presenting consolidation of long-term target of business organizations or companies Targets are specific goals that companies desire to meet in their business process Concretization and documentation of targets through strategy will help their members be aware of destination that they are aiming at, thus they know what should be done This helps company to implement their targets in an easier way + Strategy has close connect with short-term development target in a long-term context In a modern business environment, company need to change flexibly to adapt to the environment However, the changes can dephase and annul long-term development Strategy with its strategic targets will bring in long-term orientations to managers And thus, settlement of short-term issues within scope of long-term orientations will ensure sustainable development for company Long-term targets are important basis of short-term targets + Strategy helps consolidate and orient activities of company In existence and development period, with increasingly horizontal and vertical labor centralization, business is organized and implemented by different parts Specialization helps increase effectiveness and efficiency, however, parts tend to pay attention only to increase their effectiveness, and thus there is lack of general linkage to direct all parts to go towards the common targets of company Thus, to some extents, activities obstacle one another and cause damages to targets of company This is cause of lacking a strategy of company Therefore, strategy contributes to a comprehensive and systematic view in settling issues that arise in business practices to create resonance strengths of all parts and individuals in company to go towards a unique direction, i.e common targets of company + Strategy helps company and organizations grasp market opportunities and create competitive position in business world, unify action process aiming at targets and strategic tasks of company , thus facilitate company to use their limited resources in the most efficient manner Therefore, company need to catch opportunities in business world the fastest and make the best uses of their availabilities to create new competitive position Basic roles of strategy affirm objective necessary of management activities in general and business management in particular in a modern economy Thus, access to and apply of strategy is a must now I.4 Contents of strategy forming process: As we may know, strategy of company is a process of organization which is carried out through many separate methods from structure, behavior and culture of company where strategy is taken place However, we can draw out the most important aspects of strategy forming process These two aspects have organic relation in reality but are totally separate in analysis objectives One is formation and the other is deployment of strategy Decision about how strategy should be can be accessed rationally Thus, formation of strategy consists of the following activities: analyzing opportunities and challenges of business environment of company in close connection with risks of estimated alternations Before selecting, it is necessary to analyze strengths and weaknesses of company based on their available resources Besides, objective assessment of ability of company in accessing market demands and their capacity to cope with related risks is very important Selection of strategy comes from combination of opportunities and capacity of company in a certain acceptable risk called economic strategy Even though there are many different points of view and aproaches to strategy formation, strategy is normally designed by the following steps • Experience: Being a newly established, short of accumulated experiences, so transactions in the market are not regular due to system and organizational structure stability are now being firstly focused • Market share: Market share is still small, mainly focused on supporting Power sector • Financial capability: Low usable capital, not correlative with the role of clue financial institution for Power sector; total assets are still low due to newly establishment … • Operation risk: Risk management system is being built in accordance with international standards and practices Operating risks, market risks and legal risks are potential The company is directly affected by macroeconomics (economic recession) … • Network: No widespread network, just Head office (all over the country) • Technology : Core finance supporting operation, business management not meet development demand, needs new investment research… • Development orientation: Research and finding an appropriate way are in progress so Company’s activities in this period are still case by case, no synchronization for system link Therefore, construction of development strategy is necessary • Products and services: Some products can not be implemented due to regulations of the State Bank , competitiveness of products, services is still low, undiversified.… • Organizational structure: Current model has shown many shortcomings because overlapped functions, coordinating mechanism between Departments are not unified, and did not meet development requirements The weak points listed above are unavoidable to a new-born company in such a fiercely competitive and sensitive profession as currency Finding these weak points, EVNFinance ever needs to head in the right direction in system set up 69 process and operation to shorten the gap to the competitors, especially to reach the goal of keeping page with great domestic financing institutions Based on assessment of macro environment with oppotunities, threats affecting EVN Finance’s business as well as status quo of internal environment, especially definition of its role as the most important support to EVN in implementation of financial polilies, our group hereby suggest the strategies correlative to following matrix: Table 2.11 SWOT matrix SWOT a) Strong points (S): • Structure of • Charter capital shareholders • Experience • Charter capital • Market share • a) Opportunities(O): • International economic structure • Financial capability and quality • Operation risk • Management Board • Network • Workforce • Technology • Policies for employees • Development • Organizational orientation structure • Products and services • Organizational structure Strategy W-O labour - Strategy of improvement Strategy S-O - Strategy of construct, • Legal environment develop high- set out schedule of raising qualified labour workforce Charter Business environment competitiveness Operation workforce development: To of financial capability: To integration Improvement b) Weak points (W): of to meet international 70 demand of optimum capital, structure economic shareholders, to select of invite development and reputable foreign partners integration; b) Threats (T): Strategy S-T - Strategy of • Competitive pressure • Substitute products • Business environment • Legal regulations, State policies • Policies, employees Strategy W-T products - Strategy of information and services: To define technology: targeted customers, select modern to build technological core activities for products system in order to meet and services development Strategy incentives to be shareholders of development requirements customers of one financial institution for care: in order to ensure in international economic stable, loyal customers and integration • Technology and products, develop many services rapidly developed customers new Selection of strategy for EVNFinance From above mentioned strategies being built from EVNFinance’s SWOT analysis, we give out assessment of importance of each strategy based on table 2.12: Based on the assessment, the group has choosen all the solutions Table 2.12 Evaluation of Gain and Expense of Strategies: Labour workforce developmen Gain Expense Achievable Time Total t -4 Improvemen Products t of financial and capability services -3 -3 4 71 Customer Information s care Technology -4 -3 CHAPTER III SOLLUTIONS AND RECOMMENDATIONS III.1 Corporate level Strategy and the Vision Based on EVNFinance’s mission and analyses of SWOTs, the group proposes the Corporate Level Strategy is Concentrated Growed Strategy Strategies focus on product renovation, directing to the customers relating to Vietnam Electricity Insdustry The Company tries to exploit any opportunities of the potential market The company’s vision for development period of 2010 – 2015 as follows: “ In year of 2015, EVNFinance shall be one of the leading financial companies in Vietnam, operating under model of investment financial institution, playing the decisive role in capital arrangement, credit and bond issuance, providing financial services products for EVN and power; shall be one of ten of the best holding financial institutions in Vietnam” III.2 The Company’s operation target III.2.1 General target in year of 2015 1- To build organizational structure toward model of modern investment financial institution, focusing on customers as main priority based on Company’s high qualified human resources 2- To select EVN, its members and power producers, traders as targeted customers To develop foreign affairs and strengthen the cooperation of customer diversification based on on mutual benefit 3- To set out the schedule for increasing charter capital, select potential and prestigious overseass financial institutions in the international financial market as its own strategic partners 4- To create competitiveness by investing in modern technology system This ensures the best assistance to all company’s operation as well as the company’s business development 72 5- To be credit provider and capital arranger for power development projects 6- To become professional financial service provider in order to support effective operations of EVN and its members, to meet demand of customers of all business sections 7- To effectively invest power development projects, become the investment channel attracting the investment funds pumping into power sector To diversify investment activities based on selection of potential, effective and safe business fields 8- To register in Vietnam stock market by late of 2011 to early of 2012 in order to attract foreign and domestic investments III.2.2 Main financial figures Table 3.1 Financial figures to 2015 Figures 2015 (billion VND) 40.000 35.000 16.000 21.000 - Assets - Mobilised capital - Credit - Investment - Service 1.2 Structure - Current liabilities / 40% total liabilities - Current liabilities asset assurance/ Total liabilities 1.3 Quality - Bad debt rate: 10% 1.6 Effectiveness - ROA: 2% - 2,6% -ROE: 15% - 22% 1.7 Domestic marketshare - Mobilized capital : 0,5% - Credit: 0,4% - Investment: 1% - Service: 0,2% 73 III.3 Solutions for development III.3.1 Solutions for human resource - Improving administrative regulations on personnel management (recruitment, training, appointment, dismissal, assessment of working effectiveness, bonus and welfare, distribution of salary and other income ) in order to establish legal procedures orientating personnel management, create equal, transparant working environment for the company - Studying to improve salary mechanism and income distribution to encourage staffs to their best to contribute to the Company’s development - Taking care of staff’s material and spiritual life, creating favourable conditions for development of collective activities to enrich the staff’s culture and this is shall be working motivation for them - Creating helpful mechanism to make the staff loyal to company such as stock bonus, give them chances to attending training courses - Recruiting professional and experienced staffs to meet the demand of working and international intergration - Implementing staff promoting policy showing target, criterion, method of training, changing staff within framework of company’s departments This policy enables staff to adapt to professional and diversified working environment in order to meet the Company’s development and expansion requirements and avoid shortage of personnel resources - Focusing on training staffs in order to build a group of professional, modern, high qualified and virtuous employees Establishing a training center which help company in training staffs to meet the requirement of development process III.3.2 Solutions for improvement of financial capability - Planning schedule of increasing charter capital in compliance with Company’s development and requirements Choosing potential and prestigious overseass financial institutions to be the strategic shareholders in order to obtain a stable 74 development and get experience from them in term of technological and managerial skills Schedule of increasing charter capital: 2011: 3,000 billion VND, 2013: 4,000 billion VND and 2015: 5,000 billion VND, - Improving financial capability by expanding Company’s business from main activities Planning to issue the company’s treasury notes in order to meet the scope and capital development requirements III.3.3 Solutions for products and services strategy i Selection of central products and services - Investment: Focusing on power production and trading; especially VN’s projects and companies… Dealing as trustee for domestic and foreign organizations in EVN’s projects Besides, it should look for investing to other fields’ projects which establish the safe and effective business relationship to other partners - Credit: + Concentrating on supporting the power sector, deploying effective capital arrangement for EVN and its members; building good business relationship with domestic and foreign investors and financial institutions; paying attention on power market in general and Vietnamese market in particular to arrange capital for EVN and companies who are in need of capital… ; dealing as controller, releaser of credit funds borrowed international organizations such as ADB, WB + Selecting other potential companies , major projects for granting credit - Capital and investment management + Concentrating in capital mobilization, closely cooperating with EVN’s members, choosing potential domestic and foreign customers + Providing financial services to increase profit and funds through activities such as cash flow management, payment of electricity and communication invoices, managing the payment for overseas loans of EVN and members + Managing trust capital invested in power sector by international institutions and domestic financial institution, managing ODA and funds from ADB, WB 75 ii Designing financial and accounting mechanism which reflects income and expense to in acordance with products, customers flows, strengthening planning its operation - This mechanism is used to assess the effectiveness of each product, customer and company’s department in order to adjust the structure of customer, products lines to optimize business operation III.3.4 Solutions for customer care strategy i Setting up specialized staff group - Planning and Marketing Department shall set up a team of staffs who are in charge of customer care and market development In addition, EVNFinance should have training plans in marketing and CRM to other department’s staffs in order to have professional working team - Designing working process, detailed job description, estimation of personnel number and report schedule for officers ii Setting up customer data system - Setting up customer data system from which identify the customer and criterion for VIP customers, close customers, potential customers, current customers…There are different customer care services for each kind of customer iii Setting up regulations, designing forms - Setting up regulations of customers care, useful services provided by company - Each department shall have specific plans of customer care which are suitable to their specific business activity and company’s activity - Cooperating with other departments in the Comoany, branches… to deploy customer care services in compliance with defined regulations (designing form for each each product and service, questionnaire to assess product and service quality, customer’s satisfaction….) 76 iv Upgrading informatics technology - Upgrading company’s website by updating informations such as legal documents, banking and finance news and introduction of company’s services to potential customers - Designing company’s website containing the question and answer between company and customers relating to professional knowledge, services, Government’s regulations … - Periodically posting to website forms valuating customer’s satisfaction for using company’s services and finding the reasons of stop using services From that, company shall have plan to adjust suitable method for customer care v Information supply - Supplying analytical products as (weekly/monthly/quarterly/yearly) report of market, sectorial report and analysis of the company - Information might be conveyed to customers through telephone or direct consultancy (Only applied to VIP customers) vi Distribution network and channel - Product distribution network helps customers can approach EVNFinance’s products in most convenient way in terms of geography This network is also a helpful factor to improve the company’s image and trade mark However, the development of distribution network shall depend on legal procedures as well as investment into the company’s manpower, infrastructure structure… Otherwise, company must establish an organizational structure and professional regulations to control and supervise distribution network and channels - At the beginning time, EVNFinance should have plans to develop network in big cities as Hanoi, HCMC, Da Nang which are developed financial markets and potential customers 77 III.3.5 Solutions information technology strategy The company should have a specific strategy of information technology defining technology as an important and decisive factor to company’s development - Applying modern technology in Company’s business activties: investment in new and advanced core banking system to adapt to EVN technology and banking technological environment - Applying information technology in company’s management by designing software and programmes to support development of productsand system management This shall help minimize time duration of processing, increasing speed of processing and accuracy, transparancy of management information - Applying information technology in products and services development III.3.6 Solutions for completion of organization structure and control system i Designing new organizational structure Based on analysis of EVNFinance’s status quo, its existences and shortcomings in implementaion of the Company’s overall strategy, and studying models of three financial institutions such as PetroVietnam Finance Company (PVFC), Bank for Investment and Development of Vietnam (BIDV), Techcombank, the group hereby suggests new organizational structure (as attached annex 1) in which: - Determining clearly profit creating divisions and supporting divisions to determine exactly effectiveness for each division and concentrate on the profitable activities - Restructuring the organisation to avoid overlapped functions, establishing Customer Relation Department which is reponsible for finding, contacting new customers and customer care - Assigning Strategy and Development Department to perform duities of totalling up, supervising strategy impelementation process 78 - Setting up a Training Center to train professional and active staffs in order to meet the demand of integration, diversification in business activities, and strong rivalry in financial banking field ii Choosing and applying the method of business and management administration in accordance with international standards and practices of a professional financial company - The company should pay attention to applying international standards in management Now, company is applying management system by ISO 9000:2001 system The Company’s management is implemented publicly, transparently and complied with system standards The company’s regulations aims to all business activities operating in safety and stability without depending on any staff’s activities All operations must be checked and controlled tightly to ensure that business operation compliesg with Vietnamese law and international practices iii Strengthening risk management, internal control to improve management effectiveness - Using specialized risk management department, standardized risk controlling system, effective operation of …to improve effectiveness of risk controlling activities and adjust suitably to changes of business environment - Strengthening internal control by improving regulations, and usually checking regulation implementation of departments iv Assigning Planning and Strategy Department to control and supervise strategy implementation Apart from function of making overall plans for Company’s operation, Planning and Strategy Department shall control the strategy implementation by monthly/quartely reports and collect reports of departments Based on periodical general reports, Board of Directors shall assess the result of strategy implementation to adjust to complete business plans timely 79 CONCLUSION In the context of complicated changes in the world’s economy and Vietnam’s economy, financing and banking operation in Vietnam is coping with many difficulties, our economy is still facing dangers of high inflation Being entrusted to become important capital arranger for EVN, EVNFinance shall have to try its best supply enough power for the social and economic development and ensure the optimum benefit for shareholders For reaching target of sustainable development, EVNFinanace should well implement these decisive strategies In addition, during operational process, arising problems required Boad of Directors to timely adjust policies in accordance with changes in business environment, ensuring all EVNFinance’s operations going in the right way Finally, due to limit of time for studying and completing (only weeks), this report still has some shortcomings as follows: - Studying of market and statistic data is not enough and diversified This causes difficulties in studying - Operation of EVNFinance is too short to get experiences from practical lessons Some released problems are still supposed, unpractical From these shortcomings, group defined research orientation in the future as follows: - Development and operation of EVNFinance should be continued to keep track to have suitable adjustment in acordance with current status and changes in process of implementing company’s strategies - Need more practical data from power sector, banks, direct rivals to make more realistic analysis and suitable competitive strategies - In order to make this report more effective, the group should learn experience from financing professors, lecturers and experienced staffs in the field of banking and finance, strategic management as well as our colleagues 80 Our group want sto express our sincerely thanks to: - Board of Directors of EVN who create favorable conditions for us to attend this MBA course and complete this report - Postgraduate Training Center of Hanoi National University combining with The Griggs University which enthusiastically supports us to organise this course - Our lecturers who are enthusiastic to teach us practical knowleges - The support of Board of Directors of EVNFinance to help us complete this capstone project report We hope that this group exercise shall contribute to implementation and development of EVNFinance’s strategies in order to help the company to become the best in banking and financing market 81 REFERENCES - Strategy management – Statistical publishing house 2009 - ” Business strategy and policy” - Statistical publishing house Lien Diep and Pham Van Lam 1998 - Website of State bank: www.sbv.gov.vn - Report analysis of MHB Stock Company - Reports from EVNFinance Shareholder’s Meetings 2008 and other documents - Sources from Internet: tinkinhte.com, vnexpress.net, and so on 82 83 ... Commercial Banks (Vietcombank and Vietinbank) (hereinafter called as State owned commercial banks) ii) Joint stock commercial banks (37 banks), in which ACB, STB, Techombank, Eximbank, are listed... liabilities, this group is now playing important role in banking and financial market ACB, Sacombank, Techcombank, Eximbank are predominent These trade marks were well-known and they play leading role in... rate in surburban area is up to 6,1% while this rate in urban area is 2,3% (sourced from www.tinkinhte.com) b) Social environment Vietnam is always high appriciated by foreign investers thanking