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BUSINESS STRATEGY CONSTRUCTING WITHIN THE PERIOD OF 2011-2015 FOR BANK FOR INVESTMENT AND DEVELOPMENT OF VIET NAM – QUANG BINH BRANCH GRIGGS UNIVERSITY GLOBAL ADVANCED MASTER BUSINESS ADMINITRATION PROGRAM CAPSTONE PROJECT BUSINESS STRATEGY DEVELOPMENT IN THE PERIOD OF 2011-2015 FOR BANK FOR INVESTMENT AND DEVELOPMENT OF VIET NAM – QUANG BINH BRANCH Group No: – GaMBA01.V0110 Group members: Ong Vinh Hoa Dao Van Loi Nguyen Xuan Duc Nguyen Le Quang Tran Dinh Viet HA NOI, 2011 Group2 BUSINESS STRATEGY CONSTRUCTING WITHIN THE PERIOD OF 2011-2015 FOR BANK FOR INVESTMENT AND DEVELOPMENT OF VIET NAM – QUANG BINH BRANCH TABLE OF CONTENTS PREFACE .3 General background, the necessity and importance of the research Research subject, purpose and application .4 Research methodology .5 Structure of capstone project: The capstone project consists of chapters: CHAPTER THEORETICAL BACKGROUND ON BUSINESS STRATEGY 1.1 Definition and role of business strategy 1.1.1 Definition of business strategy .6 1.1.2 Basic characteristics of business strategy .6 1.1.4 Business strategy classification 1.1.4.1 The role of business strategy in the enterprise 1.1.4.2 Cost leadership strategy 1.1.4.3 Differentiation strategy 1.1.4.4 Focus strategy 1.2 Business strategy development process 1.2.1 Defining strategic visions and missions .10 1.2.2 External factor evaluation .10 1.2.2.1 Macro environment 10 1.2.2.2 Industry environment .12 1.2.3 Internal factor evaluation 15 1.2.4 External factor evaluation (EFE) 16 1.2.5 Internal factor evaluation (IFE) 16 1.3 Strategic analysis techniques 17 1.3.1 SWOT matrix .17 1.3.2 Quantitative Strategic Planning Matrix 18 CHAPTER 21 ANALYSIS OF FOUNDATION FOR DEVELOPING BUSINESS STRATEGIES FOR BANK FOR INVESTMENT AND DEVELOPMENT OF VIET NAM QUANG BINH BRANCH 21 2.1 General introduction of Bank for Investment and Development of Viet Nam – Quang Binh branch 21 2.1.1 General introduction .21 2.1.2 The forerunner of BIDV .21 2.1.3 Business field of the bank .21 2.1.4 Strategic vision and mission 22 2.1.4.1 Strategic vision 22 2.1.4.2 Strategic mission 22 2.1.4.3 Strategic goal 22 2.1.5 Organizational structure and distribution networks 23 2.2 Business environment analysis 24 Group2 BUSINESS STRATEGY CONSTRUCTING WITHIN THE PERIOD OF 2011-2015 FOR BANK FOR INVESTMENT AND DEVELOPMENT OF VIET NAM – QUANG BINH BRANCH 2.2.1 Macro environment analysis 24 2.2.1.1 Economic factors analysis 24 2.2.1.2 Analysis of political and legal factors 25 2.2.1.3 Analysis of technological factors 26 2.2.1.4 Analysis of socio-cultural factors 26 2.2.1.5 Analysis of natural factors .28 2.2.2 Analysis of industry environment 28 2.2.2.1 Competitors 28 2.2.2.2 Customers 2.2.2.3 Suppliers 2.2.2.4 Potential entrants .1 2.2.2.5 Substitutes 2.2.3 Table of opportunities and threats evaluation 2.2.4 External factors evaluation (EFE) 2.3 Internal analysis of BIDV Quang Binh 2.3.1 Human resource capacity .4 2.3.2 Technical infrastructure 2.3.2.1 Infrastructure 2.3.2.2 Distribution channel network 2.3.3 Technology .6 2.3.4 Financial capacity 2.3.4.1 Credit activities 2.3.4.2 Capital mobilization 2.3.4.3 Service .9 2.3.5 Marketing capacity .10 2.3.6 Organizational qualification 10 2.3.7 Table of strengths and weaknesses .11 2.3.8 Internal factor evaluation (IFE) 12 2.4 SWOT matrix for BIDV Quang Binh 13 CHAPTER 18 STRATEGY SELECTION AND IMPLEMENTATION SOLUTIONS 18 3.1 Development orientation for BIDV Quang Binh in the period of 2011-201518 3.2 Strategy selection 18 3.2.1 Selection of strategic alternatives based on analyzing QSPM matrix of Quang Binh BIDV 18 3.2.2 The contents of the selected strategies 22 3.2.2.1 Developing network based on improving human resource quality as well as service quality together with improving marketing activities 22 3.2.2.2 Enhancing the task of risk management and internal monitoring to improve credit activities .22 3.3 Strategic solutions .22 3.3.1 Marketing solutions 22 3.3.1.1 Market research .22 Group2 BUSINESS STRATEGY CONSTRUCTING WITHIN THE PERIOD OF 2011-2015 FOR BANK FOR INVESTMENT AND DEVELOPMENT OF VIET NAM – QUANG BINH BRANCH 3.3.1.2 Marketing activity enhancement 23 3.3.2 Investment solutions .23 3.3.2.1 Distribution channel solutions .23 3.3.2.2 Infrastructure construction .24 3.3.2.3 Solutions for products and services 24 3.3.3 Technological solutions 24 3.3.4 Human resource solutions 25 3.3.4.1 Effect human resource recruitment 25 3.3.4.2 Employee training and re-training 25 3.3.4.3 Compensation policy and human resource management .26 3.3.5 Organization solutions 26 3.3.5.1 Restructuring 26 3.3.5.2 Developing corporate culture 26 3.4 Implementation progress .27 3.5 Potential problems and solutions 27 CONCLUSIONS 28 LIST OF REFERENCES .29 PREFACE Group2 BUSINESS STRATEGY CONSTRUCTING WITHIN THE PERIOD OF 2011-2015 FOR BANK FOR INVESTMENT AND DEVELOPMENT OF VIET NAM – QUANG BINH BRANCH General background, the necessity and importance of the research In the context of today’s global economic integration, there have been rapid and strong development in the Vietnamese economy in which the financial and banking sector has developed constantly in terms of scale, quantity of credit organizations as well as service and product quality However, coping with intensive competition, banks must strive to survive and develop in increasingly competitive conditions Developing suitable business strategy for the survival and development of each individual bank has become an urgent demand Only this can enable banks to occupy and increase their market share, improve competitiveness, expand and promote banking products and services With the willingness to make Quang Binh branch of BIDV develop stronger and become specially ranked enterprise, as well as consolidate and improve its position and competitiveness in the financial-banking market of Quang Binh province, “developing business strategies for BIDV - Quang Binh in the period of 2011 2015” is a currently urgent issue Completing this task will help the branch increase its business performance and successfully accomplish the given targets and business plans Research subject, purpose and application Research object is the issues regarding the development and implementation of business strategy which will be applied to analyze business activities of BIDV – Quang Binh Research purpose is to analyze and evaluate the bank’s operations and business situations to develop business strategies for BIDV – Quang Binh in the period of 2011-2015; and recommend some strategy implementation solutions in order to take the branch to the top position in BIDV system as well as the strongest and highest market share branch in all aspects within Quang Binh province The research is completed based on accurate and valid data from reliable database of The State Bank of Quang Binh Province, together with objective Group2 BUSINESS STRATEGY CONSTRUCTING WITHIN THE PERIOD OF 2011-2015 FOR BANK FOR INVESTMENT AND DEVELOPMENT OF VIET NAM – QUANG BINH BRANCH problem analysis and evaluation which are suitable to practice as well as common social trend; therefore the research is highly applicable Research methodology The research applies various methods such as analysis, synthesis combined with the learnt matrix tools as well as quantitative and qualitative analysis methods to conduct research on developing business strategies for BIDV - Quang Binh Data resources are secondary data collected from reports of BIDV – Quang Binh branch and The State Bank of Quang Binh, books, articles and internet materials Analysis techniques to be used include SWOT matrix, IE matrix and five – force model of Michael Porter Structure of capstone project: The capstone project consists of chapters: Chapter 1: Theoretical background on business strategy Chapter 2: Analysis of foundation for developing business strategies of BIDV – Quang Binh Chapter 3: Strategy selection and implementation solutions Group2 BUSINESS STRATEGY CONSTRUCTING WITHIN THE PERIOD OF 2011-2015 FOR BANK FOR INVESTMENT AND DEVELOPMENT OF VIET NAM – QUANG BINH BRANCH CHAPTER THEORETICAL BACKGROUND ON BUSINESS STRATEGY 1.1 Definition and role of business strategy 1.1.1 Definition of business strategy Strategy is a series of complex actions to mobilize the whole organizational or individual resources to reach a defined purpose Business strategy is a series of commitment and actions that a company uses to create a competitive advantage by exploiting core capacity within a defined market There are many different definitions of business strategy depending on the viewpoints of each author: According to Michael Porter, business strategy is an art to compete within the market and develop enterprise 1.1.2 Basic characteristics of business strategy Business strategy will define basic targets and business orientation of an enterprise in each period Strategic orientation is to ensure the enterprise’s constant and firm development in a constantly changing business environment Business strategy is to ensure the maximum mobilization, optimal combination and exploitation of an enterprise’s resources in the present and future, promote strengths and take opportunities to achieve competitive advantages Business strategy of an enterprise is reflected during a constant process Business strategy always has the thought of attacking to win in the business environment Business strategy is constructed during a long period (3, 5, 10 years) 1.1.4 Business strategy classification 1.1.4.1 The role of business strategy in the enterprise Business strategy helps enterprises to identify the purpose and its basic direction as the guideline for all manufacturing and business activities of the enterprise Group2 BUSINESS STRATEGY CONSTRUCTING WITHIN THE PERIOD OF 2011-2015 FOR BANK FOR INVESTMENT AND DEVELOPMENT OF VIET NAM – QUANG BINH BRANCH Business strategy helps the enterprise understand and take advantage of business opportunities, and in the same time take measures to overcome the risks and threats in the competitive marketplace Business strategy contributes to improve the efficient use of resources, enhance the competitive position of the enterprise and ensure its sustainable development Business strategy creates a solid basis for the proposal of policies and decisions for suitable production that work in accordance with the fluctuation of the market Three generic competitive strategies 1.1.4.2 Cost leadership strategy A set of actions aim at producing products or services that have the characteristics accepted by customers with the lowest cost compare to all competitors - Relatively standardized products - Many acceptable distinctive features - The lowest competitive price Actions to save costs: - Invest in equipment system to take advantage of the economies of scale - Closely monitor production and management costs - Minimize sales, service and research & development costs - Develop effective production equipment - Control the costs of outsourced activities - Simplify the production process Competitive threats: - Processes used to produce and distribute products and services may become outdated and obsolete due to the innovation of competitors - Focusing on reducing costs may trade-off customers’ awareness of differentiation - Competitors will imitate the company’s cost leadership strategy by using their own core competences Group2 BUSINESS STRATEGY CONSTRUCTING WITHIN THE PERIOD OF 2011-2015 FOR BANK FOR INVESTMENT AND DEVELOPMENT OF VIET NAM – QUANG BINH BRANCH 1.1.4.3 Differentiation strategy It is a series of necessary actions to produce products and services (at an acceptable price) provided that customers suppose the products are different and this difference is very important for them - Usually unstandardized products - It will be suitable when customers prefer difference to low price Competitive threats of differentiation strategy: - The difference between the product prices of a differentiation company and a cost leadership company is so big - To a certain time, differentiated products cannot create values that customers are willing to pay for - When having more experience, customers will have different awareness of the values of distinctive features - Counterfeit products can imitate the differentiated features of the company’s products 1.1.4.4 Focus strategy It is a series of actions to be done to produce products and services to serve the demand of a specific competitive market segment - Specific groups of customers – the youth or the elderly - Different segments of a product line – professional aircrafts and amateur makers - Different markets – The East compared to the West Focus strategies: - Cost leadership focus strategy - Differentiation focus strategy To follow the focus strategy, companies must implement a series of basic and supportive activities in an outstanding way to create and maintain competitive advantages in order to achieve above average profitability Factors that promote the focus strategy: Group2 BUSINESS STRATEGY CONSTRUCTING WITHIN THE PERIOD OF 2011-2015 FOR BANK FOR INVESTMENT AND DEVELOPMENT OF VIET NAM – QUANG BINH BRANCH - Big companies may skip small markets (niche markets) - A company may lack necessary human resource to compete in a larger market - A company may serve a small market segment more effectively than a big-scale competitor - Focus strategy allows companies to allocate resources to some activities of the value chain and develop competitive advantages Competitive threats of focus strategy: - A company implementing focus strategy can be “disturbed” by competitors - A big competitor can pay attention the company’s niche market - Preference of customers in a niche market can be transferred to similar products of a larger market 1.2 Business strategy development process Functions, duties and strategic targets of the enterprise (1) Internal analysis of the enterprise (S,W) (3) Business environment analysis (O,T) (2) Strategy selection (4) Corporate level strategy (5) Business units and functional divisions Strategy implementation (6) Evaluation of implementation results (7) Feedback Figure 1.1 Strategy development process Group2 BUSINESS STRATEGY CONSTRUCTING WITHIN THE PERIOD OF 2011-2015 FOR BANK FOR INVESTMENT AND DEVELOPMENT OF VIET NAM – QUANG BINH BRANCH activities Corporate governance and The development of information management improvement technology will be applied into strategy new product development Apply high technology to modern improvement and marketing activity enhancement Combine W3,W5,W6 + O1,O2,O5,O10: Network development strategy professional banking practices GDP per capita increases fast with more savings Payment habit of people will be changed, people will use less cash The number of working labor occupies high percentage which is a capital mobilization channel to develop important banking products and services The industry has good conditions to develop; many projects have been implementing which is good for credit activities With strong development, it has created good conditions to cooperate with strategic partners in domestic and foreign markets 10 Good conditions to expand the distribution network according to the development orientation THREATS - T Economic scale is small; GDP per capita is low Information technology requires support and direct consultancy form foreign partners, leading to passive technological application and cost increase Most of people live in rural area ; therefore, it is difficult STRATEGIES ST: use STRATEGIES WT: strengths to avoid threats minimize weaknesses and S2,S5,S6,S9,S11 + T2,T4,T6: Human resource avoid threats CombineW2,W4,W8 + development strategy T2,T4:Risk S2,S3,S6,S10 + T5,T7: management strategy Credit activity improvement strategy to approaching banking services Quang Binh province is small with 14 Group2 BUSINESS STRATEGY CONSTRUCTING WITHIN THE PERIOD OF 2011-2015 FOR BANK FOR INVESTMENT AND DEVELOPMENT OF VIET NAM – QUANG BINH BRANCH many competitors Customers can be attracted by competitors Many competitors financial with strong and technological potentials will be established which can make the competition more intensive There are so many banks which can bring customers and many advantages There are many replacing traditional suppliers substitutes banking activities Based on analyzing SWOT matrix, we will have the following strategic alternatives: Network development strategy: Based on high economic development, the bank is provided with many conditions to expand its distribution channel according to the development orientation with stable political, social and legal conditions It can make use of its prestige, young and active human resources and financial capacity to implement the network development policy based on high competitiveness and effective business experience Product development strategy: The bank can make use of its brand name, young employees with high qualification to meet the market demand It can continue to research, apply modern technology to developing new banking products and services to serve higher demand of customers and the society Corporate governance and management improvement strategy: The bank should implement the organizational model according to the orientation in which all employees will have function and duty to check, monitor and steer; innovate business management according to international standards; 15 Group2 BUSINESS STRATEGY CONSTRUCTING WITHIN THE PERIOD OF 2011-2015 FOR BANK FOR INVESTMENT AND DEVELOPMENT OF VIET NAM – QUANG BINH BRANCH improve the capacity of management for management employees from the Head office to transaction offices; maintain system of quality management, increase internal control, create legal corridor for credit activities; develop and improve management regulations Human resource development strategy: This strategy is to change the viewpoints and method in recruitment with requirements to supplement qualified employees and limit potential negative sides The bank should constantly train and retrain employees of the whole branch; improve the professional skills, foreign language, and IT skill of banking employees in order to increase the working output, increase competitiveness and meet the integration demand The bank should develop the compensation policy for labors (salary, bonus) and other encouragement policies (training, promotion) to keep talented people Credit activity improvement strategy: This strategy involves improving the task of credit growth control connected with operational effectiveness, improving the organizational structure of TA2, changing to suitable lending structure, developing retail system, implementing credit ranking system Marketing activity enhancement strategy: This strategy is to focus on researching and developing services, creating differentiated and outstanding quality of products and services; defining target markets, increasing the task of card services, improving and improving the quality to create new utilities for existing products, improving documents according to the regulations of professional processes, developing banking tele- service to explain all queries and consult customers about the bank’s products The bank should promote existing products and services as well as new products and services which can create trust for customers then attract them to use the products and services of BIDV Quang Binh Risk management strategy: 16 Group2 BUSINESS STRATEGY CONSTRUCTING WITHIN THE PERIOD OF 2011-2015 FOR BANK FOR INVESTMENT AND DEVELOPMENT OF VIET NAM – QUANG BINH BRANCH Banking is a risky activity; in which credit activity can create the most damages which can impact on banking activities Therefore, the bank should strengthen the risk management and internal control such as: establishing and strengthening the risk management council, increasing the task of periodic verification, evaluation and control; develop and improve risk management policies for each type of risk CHAPTER STRATEGY SELECTION AND IMPLEMENTATION SOLUTIONS 3.1 Development orientation for BIDV Quang Binh in the period of 2011-2015 The bank continues to develop, expand its scale and market share, and maintain the position of the biggest bank in the area accounting for the biggest proportion in terms of capital mobilization, net service income, credit debt balance In which the bank will focus on service quality, providing inclusive banking services with modern technology, diversified products and services with high quality The bank will follow a flexible operational method; expand the network to favorable and advantageous business locations in Dong Hoi city and Quang Binh province in order to strive to become special ranked enterprise as follows: - Continue to develop and improve modern banking products and services such as home banking, Internet banking, SMS Banking, VNTopup - Promote the advertisement and marketing of banking products and services such such as payment, internal debt card, international credit card, ect - Focus on developing retail customers based on customer care programs designed for potential customers, customers with high deposit balance, customers using many banking services; at the same time, promote consuming lending for customers with stable income, ect - Construct projects to develop the network of transaction offices such as Cong Doan transaction office, Con transaction office, Quan Hau transaction office , Le Thuy transaction office and assemble new ATMs, POS, ect 17 Group2 BUSINESS STRATEGY CONSTRUCTING WITHIN THE PERIOD OF 2011-2015 FOR BANK FOR INVESTMENT AND DEVELOPMENT OF VIET NAM – QUANG BINH BRANCH - Improve management capability; improve human resource quality; increase internal control and risk management 3.2 Strategy selection 3.2.1 Selection of strategic alternatives based on analyzing QSPM matrix of Quang Binh BIDV Key factors Strengths The bank has high market prestige Young, intelligent and flexible human resources Traditional and loyal customers Infrastructure is comprehensive with modern equipment The financial capacity and profits are good enough to meet the requirement of expanding and improving technological capacity Modern banking technology Various products and services Effective business performance The management capacity of the leadership board is good High competitiveness Flexibility and responsiveness to the market changes Weaknesses Some employees have limited professional knowledge The number of qualified employees is limited Operational network is rather narrow which cannot approach Weight Strategic Alternatives Market Network Risk Development Development management AS TAS AS TAS AS TAS 0.08 0.06 0.24 0.24 0.16 - 0.18 0.18 0.04 0.12 0.08 0.08 0.03 0.06 0.09 0.09 0.09 0.27 0.27 0.36 0.08 0.08 0.32 0.24 0.16 - 0.24 - 0.04 0.16 0.12 - 0.15 0.14 - - - - - 0.05 0.07 0.28 0.03 0.09 0.02 0.10 - 0.06 0.02 0.04 0.04 0.08 0.04 0.05 0.10 0.15 0.10 18 Group2 BUSINESS STRATEGY CONSTRUCTING WITHIN THE PERIOD OF 2011-2015 FOR BANK FOR INVESTMENT AND DEVELOPMENT OF VIET NAM – QUANG BINH BRANCH Key factors Weight Strategic Alternatives Market Network Risk Development Development management AS TAS AS TAS AS TAS some customers The capacity to apply information technology is limited which cannot meet the working requirements The proportion of service income is small Marketing activities are ineffective Products and services are not diversified Risk management capacity is limited Have not developed the bank’s corporate culture Sum weights Opportunities High economic growth rate leads to increased demand of banking services Stable political, social and legal situation can create good conditions for investment activities The development of information technology will be applied into new product development Apply high technology to modern professional banking practices GDP per capita increases fast with more savings Payment habit of people will be changed, people will use less cash The number of working labor occupies high percentage which is a capital mobilization channel to develop important banking products and services 0.04 0.04 0.08 0.04 0.08 - 0.04 0.04 0.06 - 0.06 0.06 0.03 0.06 - - - - - 0.02 - - - 0.05 0.02 1.00 0.02 - 0.10 0.30 0.30 0.20 0.07 0.14 0.28 0.14 0.09 - 0.27 0.27 0.04 - 0.08 0.08 0.15 0.15 - 0.15 0.04 0.04 0.05 0.05 0.02 19 0.10 - Group2 BUSINESS STRATEGY CONSTRUCTING WITHIN THE PERIOD OF 2011-2015 FOR BANK FOR INVESTMENT AND DEVELOPMENT OF VIET NAM – QUANG BINH BRANCH Key factors The industry has good conditions to develop; many projects have been implementing which is good for credit activities With strong development, it has created good conditions to cooperate with strategic partners in domestic and foreign markets Good conditions to expand the distribution network according to the development orientation Threats Economic scale is small; GDP per capita is low Information technology requires support and direct consultancy form foreign partners, leading to passive technological application and cost increase Most of people live in rural area ; therefore, it is difficult to approaching banking services Quang Binh province is small with many competitors Customers can be attracted by competitors Many competitors with strong financial and technological potentials will be established which can make the competition more intensive There are so many banks which can bring customers and suppliers many advantages There are many substitutes replacing traditional banking activities Sum weights Weight Strategic Alternatives Market Network Risk Development Development management AS TAS AS TAS AS TAS 0.03 0.09 0.09 - 0.05 0.15 0.15 - 0.05 0.10 0.15 0.05 2 0.10 - - 0.10 0.10 0.05 0.07 - 0.14 0.14 0.07 - 0.07 0.07 0.05 0.10 0.10 0.05 0.05 0.15 0.15 0.10 0.05 0.10 0.10 0.05 0.06 0.12 0.18 0.12 0.05 0.15 - 0.10 1.00 20 Group2 BUSINESS STRATEGY CONSTRUCTING WITHIN THE PERIOD OF 2011-2015 FOR BANK FOR INVESTMENT AND DEVELOPMENT OF VIET NAM – QUANG BINH BRANCH Key factors Strategic Alternatives Market Network Risk Development Development management AS TAS AS TAS AS TAS Weight Sum Total Attractiveness score 3.83 3.22 3.08 Through the above matrix, it can be seen that service quality improvement strategy and marketing activity improvement strategy are the ones with the highest total attractiveness score Therefore, we will select these strategies for BIDV Quang Binh in the period of 2011-2015, combined with the network development strategy 3.2.2 The contents of the selected strategies 3.2.2.1 Developing network based on improving human resource quality as well as service quality together with improving marketing activities The bank should be willing to innovate, arrange human resources, and train high quality human resources to replace the ones which cannot meet the working requirement The bank can improve existing product and service quality and launch new products, diversify products and services The bank will promote marketing and advertisement activities; attract new customers as well as keep the existing customers Based on that, the bank can research, evaluate and find good locations to set up transaction offices to expand network 3.2.2.2 Enhancing the task of risk management and internal monitoring to improve credit activities The bank will improve the task of checking, monitoring and implementing periodic inspection for lending, guarantee and related professional activities Moreover, it should constantly adjust and promote the credit implementation process according to common standards in order to consolidate and improve the bank’s credit quality 3.3 Strategic solutions 21 Group2 BUSINESS STRATEGY CONSTRUCTING WITHIN THE PERIOD OF 2011-2015 FOR BANK FOR INVESTMENT AND DEVELOPMENT OF VIET NAM – QUANG BINH BRANCH 3.3.1 Marketing solutions 3.3.1.1 Market research It is required to analyze and evaluate market potential to understand the needs and tastes of customers; at the same time, research and evaluate competitors in the same region based on the comparison of service quality, products and services, interest rate, loans, advertisement and promotion activities, distribution network Based on this research, we can evaluate strengths, weaknesses of the branch to develop appropriate business strategies 3.3.1.2 Marketing activity enhancement It is recommended that the bank should strengthen marketing and advertisement activities to promote the products to customer via various channels such as advertisement in Quang Binh Television Station, Quang Binh newspapers, leaflets, and posters Through these advertisements, the bank introduces briefly and clearly the characteristics, utilities as well as outstanding features of the products and services that the branch is providing The purpose is to make customers be aware of and understand the utilities when using banking products and services The bank should use its staff and loyal customers to attract and persuade other potential customers who have the needs for the bank’s products and services This “words of mouth” method is a low-cost and effective form of advertising because the staffs and loyal customers understand about the advantages and disadvantages of the bank’s products and services This can be considered as a good method to create chain reactions on the bank's reputation The bank should constantly research the wants and opinions of customers to create trust and prestige from them Annual customer conferences should be organized for the bank to honor its customers and learn more about the customers’ needs and wants in order to satisfy and delight them 3.3.2 Investment solutions 3.3.2.1 Distribution channel solutions 22 Group2 BUSINESS STRATEGY CONSTRUCTING WITHIN THE PERIOD OF 2011-2015 FOR BANK FOR INVESTMENT AND DEVELOPMENT OF VIET NAM – QUANG BINH BRANCH The bank should continue to develop, expand the scale and market share as well as maintain the position of the biggest bank within the area in all terms of capital mobilization, net service income, credit debt balance Therefore, it must develop a network of favorable and advantageous business locations in Dong Hoi city and Quang Binh province so that the bank can occupy the market and serve many types of customers In short term, it must construct a transaction office in Cong Doan market After that, the bank will conduct market research and evaluate the development potential to establish transactional offices in Con, Quan Hau, Le Thuy; at the same time assemble some ATM, POS in important locations with high population density, at supermarkets, hotels, restaurants, etc 3.3.2.2 Infrastructure construction Currently, apart from the Head Office of the branch, Nguyen Trai transaction office and Bo Trach transaction office are well constructed but Dong Hoi and Bac Ly transaction office still have obsolete and outdated infrastructures and facilities which are not equivalent to the potential as well as current scale of such transaction offices The bank should gradually upgrade, modernize and replace the old equipments and machines to serve working demand 3.3.2.3 Solutions for products and services Increasing product and service quality to bring high profits such as capital mobilization, payment, credit guarantee is extremely significant It is also important to create attractive promotion programs for banking products and services such as capital mobilization, payment…at the same time cross-sale of banking products and other products and services such as consuming lending together with insurance sale, lending for buying car together with insurance sale 3.3.3 Technological solutions BIDV has been modernized since 2004 and until now the entire system has been operated smoothly and brought about many benefits to the bank and customers 23 Group2 BUSINESS STRATEGY CONSTRUCTING WITHIN THE PERIOD OF 2011-2015 FOR BANK FOR INVESTMENT AND DEVELOPMENT OF VIET NAM – QUANG BINH BRANCH through the online management and connection of the whole system However, currently transmission line system cannot reach the best condition, sometimes it can have slow transmission line which cannot register into administration computer especially in transactional office; then it must upgrade and modernize transmission line to ensure the tasks to be well done Personnel of the information technology department must research, create programs with high application to support and serve activities of the branch This task is to hire many transmission lines with higher speed to replace computer, printing machine by new ones with high quality IT employees must research and create programs with high application to support the activities of the branch, such as program to monitor guaranteeing cost, changes of guaranteed asset for lending debt 3.3.4 Human resource solutions 3.3.4.1 Effect human resource recruitment Together with recruiting newly graduated students with good academic results, based on the requirement of each period, the branch should have favorable policies to attract experienced employees from other units to work for the bank in appropriate positions and with good reward and compensation policies During the recruitment process, it must eliminate the case of recruiting for the sake of maintaining relationships Recruitment examinations should be carried out fairly and transparently Theoretical questions should be limited and the examinations should focus on practical skills such as team work skill, communication skill 3.3.4.2 Employee training and re-training The bank should test and evaluate the capabilities and qualifications of employees Based on this, the bank then organize additional training for unqualified employees Besides, it should regularly send employees to attend training programs to improve the qualifications However, in some cases, the appointment of employees to participate in such courses is not really effective Therefore, the 24 Group2 BUSINESS STRATEGY CONSTRUCTING WITHIN THE PERIOD OF 2011-2015 FOR BANK FOR INVESTMENT AND DEVELOPMENT OF VIET NAM – QUANG BINH BRANCH branch must have regulations according to which trained employees must report the training results to the management board and retrain the related employees in the branch The bank encourages and creates good condition as well as supporting policies for all employees in BIDV Quang Binh who want to improve their qualifications by participating in postgraduate training, English and IT courses 3.3.4.3 Compensation policy and human resource management The bank should allocate and arrange employees suitable to the capacity, qualifications and morality of each person; discharge unqualified employees out of the branch to receive employees that can meet the working requirements For employees who have highly practical initiatives and research, employees who have good achievements and bring huge benefits to the branch, there must be timely and appropriate reward policies in terms of both material and spirit The bank should consider and evaluate accurately and timely the capabilities and morality of each employee This will be the basis for appointment and promotion of employees Employee promotion plans must be transparent, open and democratic Moreover, the bank should apply appropriate compensation and reward policies to attract talented people 3.3.5 Organization solutions 3.3.5.1 Restructuring It involves re-arranging divisions and departments by allocating suitable employees according to their capabilities and strengths; especially for credit staff Therefore, it is important to consolidate and improve the quality of staff members performing credit activities by training new employees to be qualified and meet the working requirements, and re-allocating unqualified credit employees to work in other departments that are more suitable to their strengths 25 Group2 BUSINESS STRATEGY CONSTRUCTING WITHIN THE PERIOD OF 2011-2015 FOR BANK FOR INVESTMENT AND DEVELOPMENT OF VIET NAM – QUANG BINH BRANCH 3.3.5.2 Developing corporate culture The company should continue to learn and follow two sets of BIDV’s codes of professional ethics; develop behavioral culture in life and work between staff members as well as between staff members and customers Besides, it is important to develop an image of BIDV’s corporate culture to look forwards to a pure, healthy, friendly and hospitality environment of BIDV 3.4 Implementation progress Table 3.2 Strategy implementation progress Time By quarter I of 2012 Contents Cong Doan transaction office will be finished and put into operations Implementing the regulations of By quarter IV of 2012 uniform for the brand identity of BIDV Upgrading, modernizing and replacing the whole obsolete machines, equipment as well as upgrading By quarter IV of 2013 transmission lines Completing the employee retraining activities as well as By quarter IV of 2015 reallocation of credit personnel Con, Quan Hau, Le Thuy transactional offices will be completed and put into operations; at the same time assemble 10 ATMs and 50 POS 3.5 Potential problems and solutions One of the potential problems is the brain drain of qualified employees; therefore, the bank must evaluate accurately and appoint employees with attractive compensation policy to keep good employees The second problem is the situation in which employees not follow the regulations and processes due to individual purposes Thus, the branch must constantly check, monitor employees especially credit employees 26 Group2 BUSINESS STRATEGY CONSTRUCTING WITHIN THE PERIOD OF 2011-2015 FOR BANK FOR INVESTMENT AND DEVELOPMENT OF VIET NAM – QUANG BINH BRANCH CONCLUSIONS In current economic development, the banking sector is facing many opportunities and fortunes Being one of the essential and basic services of the economy, the development of banking services will be related to the economic growth and people’s living standards However, in today’s increasingly competitive environment of the banking industry, we must cope with many problems and challenges Therefore, it requires banks to have technology innovation, increase financial capacity, train high -quality human resources, develop the network to expand market share in order to increase the competitiveness To this, banks must develop an appropriate business strategy to survive and develop After more than 50 years of formation and development, BIDV Quang Binh has made important progress However, compared to big branches inside and outside the system, BIDV Quang Binh is not a really big bank which also lacks of management experience of a modern bank Therefore, the period from now to 2015 will be a relatively important period for BIDV Quang Binh Developing solutions to improve the competitiveness of BIDV Quang Binh in this period will determine the success and failure of BIDV Quang Binh in the future 27 Group2 BUSINESS STRATEGY CONSTRUCTING WITHIN THE PERIOD OF 2011-2015 FOR BANK FOR INVESTMENT AND DEVELOPMENT OF VIET NAM – QUANG BINH BRANCH LIST OF REFERENCES Statistics Office of Quang Binh (2011), Quang Binh statistical yearbook in 2010, Statistics Publishing House, Ho Chi Minh City Fredr.David (2006), The concept of strategic management, Statistics Publishing House, Ho Chi Minh City Griggs University (2011), Strategic Management Ha Noi BIDV Quang Binh (2011), Business report in 2010 and the period of 20062010, Quang Binh State Bank of Quang Binh (2011), Monitoring Report, Quang Binh The people’s committee of Quang Binh Province (2010), report on the implementation of socio-economic development plan in the period of 20062010, Quang Binh 28 Group2 ... Vietcombank Vietinbank BIDV - North of Quang Binh Sacombank Vpbank Northern Asia bank Total No Bank Agribank Policy bank BIDV – Quang Binh branch Central credit funds Local credit funds Vietcombank... can classify competitors as follows: firstly Sacombank, secondly Agribank, Vietcombank, Vietinbank The total weighted score can show us that Sacombank and Agribank are the biggest competitors which... North of Quang Binh Sacombank Vpbank Northern Asia bank Total 10 11 No Bank Agribank Policy bank BIDV – Quang Binh branch Central credit funds Local credit funds Vietcombank Vietinbank 3.76 4.05