Luận văn thạc sĩ quản trị kinh doanh quốc tế MBA (118)

GRIGGS UNIVERSITY GLOBAL ADVANCED MASTER OF BUSINESS ADMINISTRATION PROGRAM CAPSTONE PROJECT REPORT GLOBAL PETRO BANK (GPBANK) - RETAIL BANKING STRATEGY IN PERIOD 2011 - 2015 Group Number: 11 Student's name: Pham Thi Thu Huyen Tran Tuan Minh Nguyen Thi Huong Giang Nguyen Duc Thinh HANOI 2011 ACKNOWLEDGEMENT The special thank goes to the Global Advanced Master of Business Administration Program for providing us a useful Business Administration studying course and an opportunity to our project on RETAIL BANKING OF GLOBAL PETRO BANK Our grateful thanks go to Prof Soren Kirchner and Mr.Vu Thanh Hung for their enthusiastic and responsible guidance By the time now, we have already learned a lot of knowledge and experience about strategy management A big contribution and hard worked from both of them are very great indeed Never forget, a great appreciation go to Global Petro Bank (GP Bank) for their kind co-operation to the completion of our project by providing needed information as well as arranging interviews with key managers of the bank Last but not least, we are indebted to our class managers as well as our many classmates that have encouraged, support and help us in completing this project successfully Our warmest thanks! i TABLE OF CONTENT ii LIST OF ABBREVIATIONS ACB ADB Agribank BIDV CEO FPT GDP KPI MB MHB PEST ROA ROE SBV SMEs TCBS VIB Vietcombank Vietinbank VIP VPB Asia Commercial Bank Asian Development Bank Vietnam Bank for Agriculture and Rural Development Bank for Investment and Development of Vietnam Chief Executive Officer The Corporation for Financing and Promoting Technology Gross Domestic Product Key Performance Indicator Military Joint Stock Bank Mekong Housing Bank Political, Economic, Social and Technology Return On Total Assets Return On Common Equity State Bank of Vietnam Small and Medium Enterprise The Complex Banking Solution Vietnam International Bank Joint Stock Commercial Bank for Foreign trade of Vienam Vietnam Joint Stock Commercial Bank for Industry and Trade Very Important Person Vietnam Prosperity Joint Stock Commercial Bank iv LIST OF FIGURES Figure Fig 1.1 Fig 1.2 Fig 1.3 Fig 2.1 Fig 2.2 Fig 2.3 Fig 2.4 Fig 2.5 Fig 2.6 Fig 2.7 Fig 2.8 Fig 2.9 Fig 2.10 Fig 2.11 Fig 2.12 Fig 2.13 Fig 2.14 Fig 2.15 Fig 2.16 Fig 3.1 Fig 3.2 Name SWOT matrix SPACE matrix IE matrix Organizational Structure of GP Bank Contribution to growth of GDP in Vietnam over years Inflation of Vietnam from 2008 – March 2011 Forecast for economic growth of Vietnam in 2006 - 2010 Data on Vietnam’s inflation from 2007 - 2010 Porter’s Five Forces Total assets (2010) Total revenue before tax(2010) Charter capital (2010) Total loans (2010) Mobilize capital from individuals in 2010 Loans by individuals in 2010 Growth in total assets Growth in earning after tax Growth in total mobilized capital and loans Structure of mobilizing capital and loan by customers Space Matrix of GP Bank IE Matrix of GP Bank v Page 10 14 19 19 20 20 25 32 32 32 32 33 33 36 36 37 37 49 49 LIST OF TABLES Table Tab1.1 Tab 2.1 Tab 2.2 Tab 2.3 Tab 2.4 Tab 2.5 Tab 2.6 Tab 2.7 Tab 2.8 Tab 2.9 Tab 2.10 Tab 2.11 Tab 3.1 Tab 3.2 Tab 3.3 Tab 3.4 Tab 3.5 Name SWOT matrix Ownership structure Targeted activities in 2008-2009-2010 Data on Vietnam’s GDP from 2007 - 2010 Data on Vietnam’s population growth from 2007 - 2010 Opportunities and threats for GP Bank EFE Matrix Strengths and weaknesses of direct competitors of GP Bank Competitive Profile Matrix The data on deposit and loans by customers GPBank’s strengths and weaknesses IFE Matrix Annual goals SWOT Matrix SPACE Matrix QSPM Matrix Annual cost planning vi Page 13 16 18 21 28 29 33 35 38 40 41 44 44 48 51 57 INTRODUCTION Rationale of selected topic As can be seen, 2011 is the second year of the economic innovation after the global economic crisis from 2008 to 2009 At the present, even though the world economy have already changed positively but there are still some difficulties such as public debt crisis in Europe, earthquakes and tsunamis in Japan or the slow recovery of United States’economy, etc Thus, in that difficult general background, the economy of Vietnam also would not avoid the corollaries On the other hand, when the markets become more dynamic to both local firms and foreign firms that participate in the round and the customers increasingly clear their ‘God’ position, it is also when the firms need to create more values to maintain and improve customer relationship Therefore, in recent years, the Finance and Banking area becomes more vibrant than ever before Despite of the influence of global economic crisis, it has to be admitted that the degree of the impact to Vietnam banking system is not as big as expected It is the good news that the commercial bank in Vietnam have already started to build and rebuild the vision and strategies to be survival and develop in the condition of intense competition as same as during the economic crisis period The Global Petro Joint Stock Commercial Bank (GP Bank) officially becomes Joint Stock Commercial Urban Bank which has operated in Hanoi from 7th November, 2005 Originally, GP Bank is an organization that just switched to operating model, organized the structure with a compact of the staffs who are less than 10 Until now, GP Bank has already an intense improvement in both organization scope and internal network The annual operational targets have growth over 200% Based on the research and analysis, it is clearly seen that the operation of GP Bank even achieved the organization targets However, due to the impact of the economic crisis as well as the difficulties in financial and monetary markets, it also has revealed certain limits, especially in determining long-term strategy Therefore, in our opinion, the construction and creating a new goal for GP Bank is necessary This is also the reason to organize the Retail Banking of GP Bank in 2011- 2015 Objective and scope of project - Objective of project: GP Bank’s business strategy for retail banking - Scope of project: All systems of GP Bank in Vietnam Statement of purpose - Research into the rationale for banking operations; understand retail operations of commercial banks - Based on the analysis of GP Bank operation, recognize its strengths and weaknesses which serve as basis for the appropriate solution - Recommend a new strategy which is about retail strategy and solutions of implement, petition to the government agencies and the Bank to develop sustainably and stably Methodology - The topic is analyzed based on the analysis of quantitative and qualitative activities in retail banking of GP Bank - In addition, the interviews, group discussion, observation and statistics are also used to supplement the analysis for the project - Through the research, the data related to macroeconomic as well as the forecast of relevant organizations such as World Bank, Government Bank of Vietnam, the intensive research into the field of local and foreign banks and the financial statements of Joint Stock Commercial banks in Vietnam Structure of report Besides the introduction, conclusion and reference list, the project includes main following parts: - CHAPTER I: BUSINESS STRATEGY DEVELOPMENT THEORY - CHAPTER II: BUSINESS STATUS OF GPBANK - CHAPTER III: GP BANK’S BUSINESS STRATEGY FORMATION AND EXECUTING SOLUTIONS CHAPTER I: BUSINESS STRATEGY DEVELOPMENT THEORY 1.1 Business strategy 1.1.1 Definition Strategy is a combination of planning and directing all the operations to achieve a certain goals Business strategy is the art and science of organizing the company’s goals and objectives, integrating organizational activities, utilizing and allocating needed resources over the basis long-term within the internal environment to meet the markets’ needs and to fulfill stakeholder’s expectations Thus, the content of business strategy must follow these two following aspects: - Setting organizational goals and ensuring that they would be achieved by effective organizational tools - Providing a clear guidance for the organization business activities 1.1.2 Classification Based on the scope of strategy, there are three main categories: overall strategy, unit strategy and operational strategy - Corporate strategy: is concerned with the overall purpose and of the business in order for the long-term significance to compete and gain competitive advantages including growth strategy, joint ventures strategy and outward strategy - Unit strategy: is concerned with particular units of the organization These functional units would be product strategy, financial strategy, human resources strategy, marketing strategy, etc - Operational strategy: is concerned with delivery the corporate and business unit level strategic direction policy product and services with high of each transaction period (4) Employees are young, technological content dynamic, enthusiastic, (2) Focus on improving quality, receptive to new standardized process of knowledge and ready to delivering products and services build a banking to professional customers, creating competitive advantage (5) Business operations (3) Develop marketing following safety standpoint activities to expand the product (6) Process transactions market and attract more that are over counters with customers to use products and customers are standardized services of the bank, prior focus and uniform system from on clientele and potential the first place (gate 01 customers processes the transaction (4) Focus on market entering => fast, terms of convenient in strategies science technology and segmenting and customers who are individual customers, diversifying products and services to serve this audience segment WO: using Weakness (1) Inefficient using equity strengths of avoid threats (1) Construction to WT: minimize weaknesses to avoid threats worker (1) Issue shares, convertible (2) Lack of personnel in incentive mechanisms to attract bonds to foreign partners (2) Construction recruitment the field key as chief and retain talent marketing mode, good training to financial officer (CFO), (2) Promote marketing (including activities, Public relation (PR) improve staff of employees marketing products), services and to build and brand development (3) Additional personnel for develop (3) Complete MIS strategies for banks, and management, for 46 system these the research, areas: marketing, product key personnel in product administration of the bank's development, research and development activities and (3) Networks systems have administration, not developed yet to retail management risk operations (4) Senior personnel constantly change, thus, the direction of business development have problems (5) Products and services for individuals are even adequate but outstanding to not attract customers (6) No consistent policy to develop marketing products and services (7) The mechanism of operation of banks is still limited by the historical development from rural banks (8) The capacity of the staff is limited leading to difficulties the management financial in implementing business 3.1.3 SPACE Matrix analysis 47 staff SPACE Matrix can help business to decide in choosing strategies: aggressive, conservative, defensive or competitive The team's strategic positioning GP Bank through the following SPACE model: Tab 3.3 SPACE Matrix Rate FS variables Financial ability Business risk CA variables Number of distribution channels Number of potential plan Technology ES variables Political environment Legislation systems Inflation, exchange rate, interest rates Barriers to entry IS variables Industry growth rate Importance of economy Size of market capital Average rate 4 -2.67 -3 -3 -2 -2.67 -1 -3 -3 -1 5.66 6 Therefore, we have: FS + ES = – 2.67 = 1.33 IS + CA = 5.66 – 2.67 = 2.99 Fig: 3.1: SPACE Matrix of GP Bank 48 Remark Aggressive 1.33 CA -6 -5 -4 -3 -2 -1 - -1.33 3.1.4 IE matrix analysis From EFE Matrix and IFE above, we have: - Total marks of EFE matrix - is calculated on the y-axis is 2.5 - Total marks of the IFE matrix - is based on x-axis is 2.65 Fig: 3.2: IE matrix of GP Bank: 49 IS Thus, we can see GP Bank should choose the strategy "hold and maintain" In which market penetration and product development are two strategies commonly used for parts in this category 3.1.5 Alternative strategies for GP Bank Through SPACE analysis, an IE strategy shows GP Bank should have "Hold and maintain" strategy and aggressive strategies Therefore, by SWOT matrix, we can define SO alternative strategies as follows: (SO) 3.1.6 QSPM matrix analysis to select the best alternative strategy QSPM Matrix is a useful tool for professionals to be able to assess alternative strategies Selecting strategies through QSPM Matrix for SO to be presented as below: (1) Focus on strategic product development by designing outstanding products and diversified products and services, especially, focusing on the services of high technological content (2) Focus on improving quality, standardization of process of delivering products and services to customers, creating competitive advantage Develop marketing activities to expand the product market and attract more customers to use banking products and services, firstly, focusing on clientele and potential customers (3) Focus on market entry strategies with customer segments that are individual customers, SME customers (Retail banking) diversification of products and services to serve this audience segment 50 Tab 3.4: QSPM Matrix Factors Alternative strategies Improving quality and exploiting Retail Weight current and Product banking potential strategies science and technology AS TAS AS TAS AS TAS Internal factors (1) Financial ability 1.53 2.5 3.756 22 63.75 22 63.75 13 93 124 124 12 63 31.5 42 32 32 63 21.5 32 32 22 63 0.51 32 32 22 23 12 42 63 84 12 42 63 84 (2) Qualifications, skills, employee’s qualification (3) GP Bank’s reputation on the market (4) Marketing strategies 13 (5) Leadership 1.53 (6) Benefits and compensation 0.51 (7) Network 13 (8) Recruitment and training (9) Product development (value) for science and technology (10) Number of potential customers 92.5 93.75 21 62.5 92.5 93.75 31.5 62.5 122.5 93.75 42 92.5 42 External factors 0 (1) Political environment (2) Legislation (3) Economic growth (4) Urban population and urbanization rate (5) Customer requirement (6) Technology development (7) Number of banks in the market (8) Need of using products (9) Substitutes products and services 0.51 11 13 0.51 24 0.53 13 23 0.53 51 3 3 2.5 31.5 42 42 44 4 4 93 93 93 31.5 31.5 42 126 126 168 91.5 122 122 93 93 93 64 96 128 61.25 32.5 91.25 32.5 91.25 (10) New bank’s market entry 12 63 53.75 124 Total attraction scores 63 60.2 5143 63 67.75 163 In which AS is the attractive score, TAS is the total attractive score The development strategy of retail banking is prior by total points of this section that is 68.75163 and being the highest point A strategy is selected for GP Bank: Focus on market entry strategies with customer segments of customers that are individuals and SME customers, diversifying products and services to serve audience segment It is possible to conclude that retailing banks oriented- business strategy is applied by plenty of banks It is because their clients shall be large-sized enterprises if they develop toward whole selling banks or investment banks The revenue of the banks, in short term, may be higher if serving the objects It is assumed that more than one large clients withdraw their capital or close their loans at the same time, how down the banks’ revenue is According to the evaluation of consulting organization of MCKinsey&Company, retailing segment is potential at present, therefore most of the banks select to develop individual and SMEs based- their business to secure sustainable revenue In addition, the selection of developing under retail banking strategy is suitable with the current GP Bank direction It is also the direction that many banks are following now because this brings more revenue and profits Moreover, the revenue and profits from this customers segmentation is more sustainable than others (large business customers) 3.2 Some solutions for business strategy execution GP Bank 3.2.1 Model / Structure building solution Analyze the operations, particularly with mass retailers include: - Product development Department 52 - Product Marketing Department - Research and development of non-physical distribution channels department - Direct sales department Create a concentrated credit mechanism for allowing the processing of loans to be professionalized, speed up the approval and minimize risks in the process of providing credit to customers Building a team of retail banking business in each business unit to deploy to sell the products and services to targeted customers 3.2.2 Capacity building solution GP Bank should have mechanisms to control costs through appropriate financial management, avoid that input costs and operating expenses are costly, which bring in revenue, higher profits Cost controlling activities are conducted through the reporting system for operational costs for all goods, operating cost/01 staff costs during the period, the performance effectiveness of 01 sale GP Bank should immediately build management information system (MIS) to serve the management, administration and risk management for banks This activity requires the participation of all departments to improve business reporting systems in accordance with the requirements of leadership, the business units, which for practical work in each unit Continue to expand branches/counters but must ensure quality of personnel as well as the performances Just opening and maintaining counters/branches when branches/counters are also really effective and profitable for banks people/transistors and efficient operation of transaction offices, salaries Making a retail selling team serves for sales activities more efficiently Assigning (KPI) to each official business employees instead of assigned to each business unit today 53 The mechanism of recruitment, training and development, should apply appropriate policies to recruit highly qualified personnel and have appropriate benefits and compensation Regularly organize training lessons to improve the management for managers, professional qualifications and skills for staff Also in this period, GP Bank needs to focus on developing services to increase revenues from fees to limit risks and reduce the proportion of revenue from interest rates as now 3.2.3 Marketing solution 3.2.3.1 Branding: GP Bank should have plans to change the reputation, the brand identity maximum in next 01 years to create a new image for customers and improve professionalism in providing products and services to customers Now, most of customers are confused about GP Bank which has a strategic shareholder that is Petro leading to name called Global Petro & Gas Bank Thus the name does not create the impression, even lead to misleading for customers Logo also lacks of attraction and memorable factor for customers So the plan to change the brand identity of the GP is consists of as follows: - Change the logo icon - Change the name of bank - Change the print and publications related to transactions with customers - Change the form of counters, and uniforms of staff to fit the new brand identity - Also must have strong communications so that customers have the impression of the bank's new brand name 54 Market segment that GP Bank is toward is households with good income (about VND 200 million/ year) Apart from construction of new trade name to GP Bank, the GP Bank – characterized-product development is one of plans to create specific traits to GP Bank At present, GP Bank is construct life stage based- product line plan but the target objects are children We may see several products in the target object basedmarket segment somewhere such as saving account or deposit to children, giving loans for study abroad, or insurance for children, etc However, no bank designs the product package (bundle) to the target objects at present GP Bank shall focus on development of product packages to kids and the whole products to the target objects – in fact, it is to provide them to parents – the actually target objects of banks, for example, supply of products on accounts, savings, payment services and value added service to the product lines With the prominent product line, the image and brand name of GP Bank shall be pushed to new height and making impression to clients 3.2.3.2 Marketing policy: GP Bank needs to separate its own marketing activities into 02 following areas: - PR, branding - Banking products and services marketing programs The clearly defining into areas helps marketing activities ensured to be more effective In addition, the budget for marketing activities, including research, products and services development are essential to ensure that the better response as well as a sales tool for team business staff at GP Bank Developing tools to support sales, sales promotion methods (incentive scheme) to motivate staffs in the sales business 3.2.4 Good service solution 55 In short, most of the products, services of banks are naturally similar Therefore, the competition among banks and identification of good or bad banks depends on service quality provided by them The service quality is not only good layout but also good infrastructure that is mainly the product and service supply method to clients Clients only work with one bank, even with good infrastructure but bad quality, once and never return, which is understandable Therefore, GP Bank should point out solutions to improve service quality to serve its clients better Investment in construction of customer relationship management (CRM) allows the introducing of customer care policies to be better Developing loyalty customer caring plan (Loyalties) to take care customer better in the form of discounts, gifts, cash or other incentives Completing the process of delivering products and services to facilitate shorter transaction time, create satisfaction to customers Providing better training programs on selling skills, customer caring skills 3.3 Execution plan The period under 2011 - 2012: - Establish a vision and clear objectives for the bank At least, the organizational goal have to be clear: until 2015, GP Bank becomes one of top 10 banks for retail banking in Vietnam - Strengthen the process of delivering products and services to ensure reducing transaction time and increase customer satisfaction - Change the organizational structure, ensuring appropriate operational procedures between the departments in the bank - Changing of the brand identity and communication to customers - Change the recruitment system, benefits and compensation to attract talented people and be the basis to arrange new organizational structure 56 - Create a health competitive work environment, and create more motivation to employees - Focus on research and development of products and services according to individual client classification, client SMEs - Complete MIS systems - To improve cost control mechanism To the above business plan well, GP Bank needs to hire prestigious consulting company to advise the overall implementing steps to achieve GP Bank goals in 2015 In addition, GP Bank needs to orientation on finding foreign strategic partners to develop more powerful and comprehensive Period 2012 - 2013 - This period focuses on retail selling team with the allocation of quotas to sell retail products and services - An outstanding product design is necessary, especially with good customer service to create product differentiation GP Bank with other banks - Completing the mechanism focused credit approval - Improving the mechanism of recruitment and training - Improving development of the network Period 2013 - 2015 Developing business, network development and improve customer services Tab 3.5: Annual cost planning Unit: Billion VND No Item Profit cost and others PR & marketing cost Operating cost 2011 2012 2013 2014 2015 3,000 150 350 5,000 200 500 7,500 250 700 8,800 280 800 10,000 300 950 57 Redundancy cost for credit risk Total cost Revenue before tax 50 3,550 500 60 5,760 1,000 75 8,525 1,500 90 9,970 1,950 100 11,350 2,300 Source: Group discussion with GP Bank management 58 CONCLUSION It can be said that nowadays, strategy has an important role to the businesses in Vietnam due to the trend of integration and development It creates not only more opportunities for the businesses but also challenges equally Based on the above analysis, it is clearly seen that when the world becomes more “flat”, the businesses have more opportunities in expanding markets and accessing to the advances of technology and management skills However, precisely because of this trend, the businesses today compete more and more fiercely And building strategy is the key factor determining success or failure of such businesses Not out of this rule, these banks has already more and more realized the importance of developing strategy and orienting long-term development for their organizations It is more important to GP Bank which is a new commercial bank and still facing many difficulties in orienting the future development Moreover, developing strategy has been already difficult for a business, the implementing strategy that is correct to the orientation and plan has been more difficult With GP Bank, this must be take very seriously and monitored closely to be match with the vision outlined With the knowledge and experience learned in our works, our group has built basically the development strategies oriented on retail banking for GP Bank This report is completed based on the valuable guidance as well as comments of professors, lectures teaching Strategic Management Nonetheless, the group also would like to receive more additional comments from lectures and our peers to be more completed the strategies set for GP Bank Thanks and best regards! 59 REFERENCES Vietnamese: Truong Cong Minh, Tran Tuan Thac, Tran Thi Tuong Nhu, Concepts of strategic management, Statistics publisher, Hanoi Nguyen Thanh Hoi (1999), Human Resources Management, Statistics publisher, Hanoi Vu Trong Khai, Lam Ngoc Diep (1996), Company organization and management, Statistics publisher, Hanoi Website: http://gpbank.com.vn Website: http://adb.org Website: http://sbv.gov.vn Website: http://kynang.7pop.net English: Fred R.David, Strategic Management, Concepts and Cases, Thirteenth Edition Chandler, A (1962), Strategy and Structure, Cambridge, Massachusetts MIT Press M.E.Porter (1980), Competitive Strategy, Free Press New York GP Bank Annual Report 2010 Dominic Mellor, Chu Hong Minh and Nguyen Luu Thuc Phuong of the Vietnam Resident Mission, Asian Development Outlook 2011, Vietnam, ADB J.David Hunger & Thomas L.Wheelen (2001), Essentials of Strategic management 60 ... activities For examples: Symbol System (VIB); Teminos (VPB, Techcombank, MB ); Iflex (OceanBank, Habubank ); Sylverlake (Vietcombank, BIDV, Vietinbank ); TCBS (complex banking solutions applicable... for the owned commercial banks classified in tier 1; the joint stock banks like ACB, Sacombank, Techcombank, MB is placed in tier GP Bank and some other banks fall in tier We have the classification... Competitive Strategy 2.2.2.1 Industry rivalry Currently, Vietnam has state-owned commercial banks (Vietcombank, Vietinbank, BIDV, Agribank and MHB), 37 joint stock commercial banks, 48 branches of foreign