Luận văn thạc sĩ quản trị kinh doanh quốc tế MBA (223)

GRIGGS UNIVERSITY GLOBAL ADVANCED MASTER OF BUSINESS ADMINISTRATION PROGRAM STRATEGY FOR DEVELOPING RETAIL BANKING SERVICE IN SOUTH EAST ASIA COMMERCIAL JOINT STOCK BANK IN PERIOD OF 2012-2016 Group Number: 01 - Vu Van Khiem - Le Ngoc Diep - Bui Thị Quynh Nga - Nguyen Viet Hung - Do Thi Ngoc Van Class: X0310 HANOI: 2011 ACKNOWLEDGEMENT On behalf of the group, we would like to send gratitude to dedicated support of lecturers in Center for Educational Technology and Career Development ETC, Post University Department – Hanoi National University; Griggs University – The US We also expressed our thanks to General Director of South East Asia Commercial Joint Stock Bank, Manager in Planning – Investment department, Financial – Accounting department providing data for completion of this capstone project Although the group tried our best to well this capstone project, due to limited knowledge, this capstone project has limitations Thus, the group wishes to receive significant contribution of lecturers, colleagues and friends for the most effect COMMITMENT Group 01 Class X0310 commit this is our own research project Data given in this capstone project is honest and has been not published in any scientific projects Hanoi, date 30 month 11 year 2011 Group leader INTRODUCTION 1.1 Context and necessity of the subject 1.2 Context of subject Recently, together with industrialization and modernization, the process of urbanization in Vietnam has strong development According to estimation, growth rate of urbanization in Vietnam is about 30% Furthermore, Vietnam is the nation having stable growth rate of GDP at 6-8% year since the world economy faced up with difficulties resulted from financial crisis Accompany by the economic development is social development Vietnam becomes one of countries the most development of information technology and internet in the world From the above reasons, it creates favorable conditions for development of retail banking services and products Nevertheless, with the existence of more than 100 commercial banks as present, in order to have sustainable development and mark position in market, banks must have right and sustainable development strategies on the basis of analyzing internal factors, influences of external environment to retail banking service business 1.2 The necessity of subject 1.2.1 Reality South East Asia Commercial Joint Stock Bank is one of the largest commercial banks in Vietnam at present After more than years of foundation and development, the bank continuously expands their operations with annual growth rate up to 18% The significant contribution to growth of SeABank over the past year is development of retail banking service In accordance with development of economy, scientific technology; retail banking services become attractive business model for Vietnamese banks In order to maintain this market share, banks also face up with many difficulties and threats resulted from integration process 1.2.2 Reasons to select topic From analysis mentioned above, we can see the role of retail banking service business to development of SeABank in particular and Vietnamese commercial banks in general Having awareness of that importance, there have been some researches and conclusions about this operation such as: Topic: “Developing retail banking service in Vietnam, reality and solutions”, Associate Professor – Doctor Nguyen Dac Hung – Banking Academy This topic provided the general view about operations for developing retail banking service at commercial banks as well as introduced solutions to improve above operations with banks in general Topic: “Retail banking services in Vietnam in integration process”, Doctor Nguyen Van Tien – Vice Dean of Banking Faculty, Banking Academy The topic pointed out risks for retail banking products, the opportunities for banks in integration process Topics had meaningful conclusions about retail banking operations in general In order to apply them into building strategy for a specific bank in this area, the topic “Strategy for developing retail banking service in South East Asia Commercial Joint Stock Bank in period of 2012-2016” was selected with the aims at proposing right strategies for SeABank to expand market share in retail banking area as well as control threats from this business model Objectives of capstone project From analyzing operations of SeABank from 1994 up to now, the subject applied theories of strategic management into business activities in general and retail banking in particular Furthermore, the subject also drives to following three specific objectives: + To manage human resource and capital effectively + To promote quality of retail banking service + To expand market share in retail banking operation In which, human resource and capital management is considered as key factor about service quality and market share expansion in area of retail banking Researching objects and scope Topic focused on researching operations of building business strategy of SeABank in general and retail banking in particular Researching scope is business activity of SeABank with comparison with business activity of other competitors within industry including, Sacombank, ACB, Techcombank and Dong A Bank Researching methods Topic used theories about strategic management into analyze primary and secondary information Additionally, provided information comes from following sources: + Consulting ideas of experts in finance and real estate area + Trading result in general and retail banking service in particular from 2001 up to now + Information from newspaper, magazine and internet Information and data from above sources were analyzed and summarized to introduce strategies for SeABank in retail banking service In order to have these strategies, capstone project used following tools and methods: + External factor evaluation, internal factor evaluation and SWOT matrix + Michael Porter’s five force model, PEST model Meaning of capstone project This topic is built on the basis of theories relating to strategic management and application of theories to analyze strengths, weaknesses, opportunities and threats of SeABank From that, identify reality, build, select and propose solution implementing business strategy for SeABank in period of 2012 - 2016 At present, the world and national economy has complex fluctuation Therefore, introduced solutions only have long term orientation not detailed action program for SeABank Structure of capstone project Apart from introduction, conclusion and annex; this capstone project is divided into three chapters as following: Chapter 1: Overview about building business strategy and retail banking service business in commercial banks Chapter 2: Analyzing business environment of retail banking service area in SeABank Chapter 3: Selecting strategies and solutions for implementing retail banking service business strategy of SeABank in period of 2012-2016 TABLE OF CONTENTS TABLE OF CONTENTS .5 LIST OF SYMBOLS AND ABBREVIATIONS LIST OF FIGURE AND TABLE CHAPTER 1: OVERVIEW ABOUT STRATEGIC MANAGEMENT AND RETAIL BUSINESS IN COMMERCIAL BANK 10 1.1Theories about building and managing strategy 10 1.1.1Concept about strategy and strategic management 10 1.1.2The role of building strategy for enterprise 11 1.2.1.1 Gains .11 1.2.1.2 Risks .11 1.2Steps of researching strategy 12 1.2.1Analyzing external environment 12 1.2.1.1 Macro environment 12 1.2.1.2 Micro environment 14 1.2.2Internal environment 16 1.3Tools used to analyze and select strategy 18 1.3.1 Internal Factor Evaluation Matrix (IFE) 18 1.3.2External Factor Evaluation Matrix (EFE) 19 1.3.3 IE Matrix 20 1.3.4SWOT matrix .21 1.4 Retail business operations in commercial bank 22 1.4.1Concept about retail business in commercial bank 22 1.4.2Features of retail banking service .23 CHAPTER 2: ANALYZING OPERATIONAL ENVIRONMENT OF SEA BANK IN RETAIL BANKING SERVICE 25 2.1 General information about Seabank .25 2.1.1 History about foundation and development 25 2.1.2 Structure and organization 25 2.1.3 Retail banking services and products 27 2.1.4 Vision and mission 28 2.2 Analyzing operational environment of SeABank 28 2.2.1 External environment analysis 28 2.2.1.1 Macro environment (PEST model) 28 Political .28 Political condition in general: Vietnam is one country having the most stable politics in the world The stability of politics creates development opportunities enterprises operating in the provinces of Vietnam Together with political stability is the speed of opening and integration to create conditions to attract investment capital, expand market share as well as acquire technology from abroad For SeABank, political stability creates favorable conditions for their operations Besides, speed of opening the economy also provides more opportunities for SeABank to access foreign market and attract investment capital 29 2.2.1.2 Micro environment analysis (Michael Porter’s five forces model) 31 2.2.1.3 External Factor Evaluation Matrix 38 2.2.2 Internal environment analysis 39 2.2.2.1 Value chain of organization 39 2.2.2.2 Human resource 47 2.2.2.3 Finance 48 2.2.2.4 Culture and reputation of bank .50 2.2.2.5 Internal Factor Evaluation Matrix IFE 52 2.2.3 SWOT analysis for retail banking operation in SeABank 53 2.2.3.1 Strengths 53 SeABank has strong shareholders and wide as well as close relationship with large groups 53 2.2.3.2 Weaknesses .57 2.2.3.3 Opportunities 58 - Develop retail banking service based modern technology and in accordance with orientation of state 58 2.2.3.4 Threats 60 2.2.3.5 SWOT matrix of SeABank .62 S1: SeABank has strong shareholders and wide as well as close relationship with large groups 63 CHAPTER 3: SELETING STRATEGIES AND SOLUTIONS FOR IMPLEMENTING BUSINESS STRATEGY IN TERM OF RETAIL BANKING SERVICE OF SEABANK IN PERIOD OF 2012-2016 .69 3.1 The long term development orientation of SeABank 69 3.2 Selecting business strategy in term of retail banking service .71 3.2.1 SWOT matrix based strategy selection .71 3.2.2 IE matrix based strategy selection .73 3.3 Solutions for implementing strategies 77 3.3.1 Complete organization structure for retail banking service 77 3.3.2 Promote researching, diversifying and developing retail banking service 78 3.3.3 Diversify distribution channel and enhance efficiency .80 3.3.4 Strengthen communication and marketing for retail banking service .81 3.4 Roadmap for implementing strategy 82 CONCLUSION 87 REFERENCES 88 ANNEX 90 LIST OF SYMBOLS AND ABBREVIATIONS No 10 11 12 13 Symbol ADB ATM EFE GDP IFE NHBL NHTM MIC POS PPP SeABank WB WTO Meaning Asia Development Bank Automated teller machine External factor evaluation matrix Gross domestic product Internal factor evaluation matrix Retail banking Commercial bank Ministry of Information and Communications Point of sale Purchasing power parity South East Asia Commercial Joint Stock Bank World Bank World Trade Organization LIST OF FIGURE AND TABLE List of figure Figure 1.1 PETS model 14 Figure 1.2: Michael Porter’s five force model 15 Figure 2.1: Organization structure of SeABank 26 Figure 2.2: Retail banking products of SeABank .27 Chart 2.3: Growth rate of customers in period of 2008-2010 34 Chart 2.4: Growth rate of customers using card in 2008-2010 40 Chart 2.5: Growth rate of active cards in period of 2008-2010 41 Chart 2.6: Growth rate of loan and deposit in period of 2008-2010 42 Figure 2.7: Charter capital of commercial banks up to June 2011 .56 Figure 2.8: Opening coefficient of Vietnam economy (%) 59 List of table Table1.1: IE Combined matrix 20 Table 1.2: SWOT matrix 21 Table 2.1: External Factor Evaluation Matrix EFE 38 Table 2.2: Tradition condition of 2010 .49 Table 2.3: Financial condition in 2009-2010 50 Table 2.4: Internal Factor Evaluation Matrix .52 Table 2.6: SWOT matrix of SeABank 63 Table 3.1: IE Matrix of SeABank .73 Table 3.2 Roadmap for implementing retail banking service in period of 2012-2016 .84 + Develop bank phone model, this is popular one with significantly low cost and convenient for both customers and banks Customers can perform transactions any time, any place + Expand distribution channels through agents as agents for remittance payments, ATM card issuing agent, payment agent Improve efficiency and selfservice capabilities of ATM system to provide in cheaper and cheaper, upgrade ATM system into "miniature bank" spread throughout the provinces At the same time, develop a network of POS and strengthen the link between the branches to improve efficiency and expand the ability to use ATM and POS card Develop a network of merchants and strengthen links between banks to improve efficiency and expand the ability to use ATM cards and POS cards On the other hand, strengthen the management of distribution channels to maximize the role of each channel and meet requirements of customers Process of developing and completing retail banking service must be done gradually, steadily, and had breakthrough to create a momentum of rapid development on the basis of market share maintained and expanded in market Furthermore, it also creates more utility to users, combines interests of customers to the one of bank and has benefit for the economy The key of retail banking strategy is to information technology as foundation for trading and expanding new service model Enhance application of advanced technology, develop online transaction system and gradually deploy one door transaction model, modernize all banking procedures and ensure integration to international banks in all sectors In the process of diversifying distribution channels, SeABank should enhance automation process in receiving all customer requirements, evaluating and processing information, improving service quality, and ensuring security and safety in business 3.3.4 Strengthen communication and marketing for retail banking service 81 Because most objects of retail banking are individuals, therefore, communication and marketing for products play particularly important role which benefits both banks and customers Enhance the transmission of information to the public to help customers update capability and reputation of bank, have basic understanding about retail banking service, learn the usage and benefit of banking products Furthermore, branch should establish specialized marketing departments to agree and link marketing activities into whole system Strengthen trade promotion activities associated with construction, advertising and brand development, reputation in business and highlighting the advantages of product quality offered to customers Also, with advertising and promotion activities, the branch should have PR strategy (PR-Public Relations) specifically and clearly SeABank needs to strengthen public relations activities to raise the image and reputation of ban prior to community since banking sector always hides direct risks and arising risks from other areas of socio-economy In to the bargain, branches may publish publications include internal reports, financial reports, brochure Organize press release when necessary, promote public activities by contributing money and time for the work of regeneration and the appropriate benefits to community In summary, SeABank should have united PR program with organization and efficiency to promote retail brand This action will make public understand more about advantages of branch, see friendly image and orient to PR and marketing programs 3.4 Roadmap for implementing strategy With a selected strategy as diversifying retail service products, enhancing service quality to expand market and increase market share in area of retail banking business; the key solutions that SeABank selects in strategic period 2012-2016 are: restructuring organization, diversifying retail banking product, diversifying distribution channel and promoting efficiency of marketing activity To maximize 82 the effectiveness of strategies during above period, SeABank also has taken necessary action plans with specific steps The roadmap for implementing strategies to develop retail banking service is summarized via following table: 83 Table 3.2 Roadmap for implementing retail banking service in period of 20122016 Solution Responsibl Action Estimated Estimated Restructure e unit Establish departments in Director of cost time 500 million months organization and retail VND (cost (From promote training development paid for 15 January201 employees in retail market research dept, Human block analysis of rivals product retail such as block, employees) to June resource 2012) Select experienced retail dept sellers with good achievements to add to unit building policies, products and research of retail block Recruit experience and knowledgeable applicants banks in with retail good services Diversify retail banking Appoint the task force Director of 700 12 products and services, with each retail area of retail million months++ promote quality bank to promote block, VND (From diversifying products director of (including January Implement strategy “ branches in cost for 2012 to build SeAbank smile” retail employees, January for customers always to block, gift for 2013) be satisfied about Informatio customers, service quality n research of Cooperate with Technology IT) information technology Center 84 Solution Action Responsibl Estimated Estimated e unit cost time center to research products of foreign countries, increase Diversify distribution utility for e-products Enhance utility of ATM, IT center, 300 36 months channels POS and benefit of retail million (from using bank cards block, Card VND / year March Expand distribution via center 2012 to agencies, part-time March experts 2015) Develop utility of available distribution channel as Internet banking, mobile Promote Marketing banking, Promote marketing Communic 10 billion 48 months activity for retail cooperation with ation center VND/year (T3/2012 – banking service magazines specializing of retail T3/2015) on providing consuming block information such as consuming magazine, woman magazine, student in order to introduce retail products Fund events with participation and concern of crowd such as game shows With specific action program, estimated cost for each unit and department in the bank, predetermined strategies for SeABank are willing to gain feasible 85 achievements that make the bank become leading retail bank in Vietnam in 2016 and provide utility for customers as well as improve retail banking business quality for banking sector in Vietnam 86 CONCLUSION From application of models in strategic management theory into analyzing business conditions for retail banking service in SeABank, this subject suggested many options to further develop these potential services for the bank The result of analyzing external factors, internal factors, opportunities as well as threats for retail banking business showed that: SeABank has been having many advantages to develop retail banking service Advantages come from ceaseless development of demand, achievements of information technology and internal factors in bank In order to make use of these opportunities and strengths, SeABank selected the strategy of diversifying retail banking service, developing distribution channels based organization restructure and expanding, promoting efficiency of marketing activity Above strategies will have been gradually completed in strategic period 2012-2016 The subject introduced strategy, general action programs for SeABank in period of 2012-2016 In order to take strategies into effect and gain long term development goals in retail banking service business, it is a must for SeABank to have further researches for each specific strategy as marketing, distribution channel expansion and product diversification Together with these strategies, the subject “Developing retail banking service in SeABank in period of 2012-2016” will actually bring feasibility and make SeABank become one of leading developed banks in Vietnam in area of retail banking service 87 REFERENCES In English ADB, Commercialization and Poverty Reduction, 2008, page – Jay Barney; William Hesterly (2008), Strategic Management and Competitive Advantage: Concepts, Prentice HallJay Barney (2007), Gaining and Sustaining Competitive Advantage, Prentice Hall Herrington Bryce ( 2007), Financial and Strategic Management for Nonprofit Organizations: A Comprehensive Reference to Legal, Financial, Management, and Operations Rules and Gu, Jossey-Bass Nonprofit & Public Management Series Porter M On Competition Harvard Business Review Boston 1998 Porter Michael (1990); The Competitive Advantage of Nations London Robert E Ankli, Michael Porter’s competitive advantage and business history, University of Guelph, 1992, trang 288 – 300 Porter M, The competitive advantage of Nations, Harvard Business Magazine, March 1990, page 73 – 93 Fred R.David (2008), Strategic Management: Concepts and Cases (12th Edition) Schmuck Roland (2008); “Measuring Company Competitiveness”; Proceedings Papers of Business Sciences: Symposium for Young Researchers (FIKUSZ) 2008.Trang: 199-208 Budapest Tech Keleti Faculty of Economics In Vietnamese Vietnam Bank Association, Developing retail banking service in Vietnam South East Asia Commercial Joint Stock Bank, Trading report in 20062010 South East Asia Commercial Joint Stock Bank, Consuming and market plan in 2011-2016 Nguyen Viet Nga, Developing retail banking service in integration process, in 2010, Vietnam Bank Association Statistics Directory 1995 – 2010, Statistics Publishing Vietnamese consumer research center, rank the first five banking service in Vietnam in 2010 88 Nguyen Van Tien, Competitive tendency of commercial banks in Vietnam, Banking Academy Nguyen Hoang Viet, Strategic Management, Hanoi University of Commerce, in 2008 Website http://www.seabank.com.vn http://www.vnba.org.vn http://www.vsa.com.vn http://www.moit.gov.vn http://www.mof.gov.vn 89 ANNEX Annex 1: Some financial criteria in 2006-2010 Unit: Billion VND Criteria 2006 2007 2008 2009 2010 500 3,000 4,068 5,068 5,335 Total asset 10,200 26,241 22,269 30,597 55,242 Total outstanding loan 6,680 19,626 16,746 24,009 20,189 Total raised capital 8,346 20,249 16,730 24,644 39,685 Earnings (before tax) 136.88 408.75 238.19 600.32 828.68 Charter capital Annex 2: Growth rate of charter capital in 2006-2010 Unit: Billion VND 90 Annex 3: Raised capital and total outstanding loan in 2006-2010 Unit: Billion VND Annex 4: Overdue outstanding loan 2006-2010 (%) 91 ... comparison with business activity of other competitors within industry including, Sacombank, ACB, Techcombank and Dong A Bank Researching methods Topic used theories about strategic management