Luận văn thạc sĩ quản trị kinh doanh quốc tế MBA (44)

DELAWARE STATE UNIVERSITY MASTER OF BUSINESS ADMINISTRATION, HANOI, VIETNAM CAPSTONE PROJECT REPORT DEVELOPING A BUSINESS STRATEGY FOR VIETBANK HANOI BRANCH FROM 2011-2015 Prepare by: Nguyen Thi Hong Hanh HANOI 2011 ACKNOWLEDGEMENT First and foremost, I would like to express our gratitude and sincere appreciation to the board of directors, professors and lecturers of Center for Educational Technology and Career Development (Vietnam National University) and Delaware State University for their helpful guidance, inspiration, suggestions and facilitation throughout the course of my research and studies Appreciation is also extended to managers of Vietnam Thuong Tin Joint – Stock Commercial Bank, Hanoi Branch as well as specialized departments for providing me valuable research data and sharing practical experiences and constructive ideas on the subject Last but not least, I would like to show my deepest gratitude to my families and friends for their understanding and supports During the completion of this work, encountered obstacles were overcome thanks to their encouragement and suggestions Although best efforts have been made; the report might have shortcomings due to time limit I truly appreciate professional feedbacks from professors and lecturers on the report in order to put it into practice successfully Developing a business strategy for VietBank Hanoi Branch TABLE OF CONTENT ACKNOWLEDGEMENT .2 INTRODUCTION MAIN REPORT CHAPTER II: BUSINESS OPERATION OF VIETBANK, HANOI BRANCH 10 2.2.1 Strengths 35 2.2.2 Weaknesses 35 REFERENCE 63 Developing a business strategy for VietBank Hanoi Branch LIST OF FIGURES Developing a business strategy for VietBank Hanoi Branch Figure 1: Strategic management tasks .5 Figure 2: Michael Porter’s Five Forces Diagram Figure 3: Strengths – Weaknesses, Opportunities – Threats Matrix (SWOT) Figure 4: Organizational structure of VietBank Hanoi 11 Figure 5: Credit structure classified by industry from 2009 up to June 2011 14 Figure 6: Outstanding loans classified by industry in the first months of 2011 14 Figure 7: The structure of net service incomes .16 Figure 8: Distribution of transaction points in Hanoi (June 2011) 26 Figure 9: Comparison of business results (2010) 27 Developing a business strategy for VietBank Hanoi Branch LIST OF TABLES Table 1: GREAT Matrix Table 2: Capital mobilization from 2009 to June 2011 12 Table 3: Classified Credit Structure 13 Table 4: The structure of net service incomes .15 Table 5: VietBank Hanoi’s income statement 17 Table 6: Criteria for position comparison of VietBank and other competitors 26 Table 7: EFE Matrix .31 Table 8: Employment structure classified by qualifications up to 30/06/2011 33 Table 9: IFE matrix 35 Table 10: SWOT Matrix .39 Table 11: Assessing business strategies by GREAT criteria 46 LIST OF ABBREVIATIONS VIETBANK Vietnam Thuong Tin Joint Stock Commercial Bank SWOT Strengths, Weaknesses, Opportunities, Threats EFE External factor evaluation IFE Internal factor evaluation GREAT Gain, Risk, Expense, Achievability, Time P.E.S.T Policy, Economics, Social, Technological Developing a business strategy for VietBank Hanoi Branch Developing a business strategy for VietBank Hanoi Branch INTRODUCTION I Rationale of the research After Vietnam’s WTO participation, operations of foreign banks and financial institutions in Vietnam have been expanded In 2011, all restrictions imposed on foreign banks’ operations must be removed according to a commitment made by Vietnam as one of conditions to fully acquire WTO membership The increasingly fierce competition from foreign banks would be a “useful kick” for renovation of Vietnamese banks otherwise they might loose in the own playing field So far, joint – venture banks, 100% foreign – owned banks, 48 branches of foreign banks, financial leasing companies, 56 representative offices are operating in Vietnam They are/belong to large and highly accredited and competitive foreign banks and credit institutions Foreign credit institutions serve as a channel for the movement of modern banking technologies and advanced banking management practices to Vietnam while supplying significant capital for Vietnam’s banking and finance sector It is the major motivation for Vietnamese commercial banks to further improve themselves Once Vietnamese banks are not well prepared and remain low competitive, inevitably they will be merged or sold Only banks with high competitiveness and good management system may survive and grow further After years of operation, Vietnam Thuong Tin Joint – Stock Commercial Bank, Hanoi Branch (VietBank Hanoi) has gained certain achievements in terms of human resources, financial resources, technology… The branch, however, still show some weaknesses that must be overcome in order to improve its competitiveness i.e inappropriate organizational structure, ineffective marketing activities, poor corporate culture etc Because of the above – mentioned reasons, it is critical for VietBank Hanoi to conduct a research and propose solutions for operation during the period 2011 – 2015 It will not only help VietBank Hanoi to grow steadily and further promote achievements but also 1|Page Developing a business strategy for VietBank Hanoi Branch to be able to confront with challenges and take advantage of opportunities arising from Vietnam’s regional and international economic integration That’s the reason why we carried out a research on the subject “Developing a business strategy for VietBank Hanoi for 2011 – 2015” II Research objective and application The purpose or the research is to examine the current business strategy of VietBank Hanoi and suggest applicable business strategies and implementation plans for 2011 – 2015 The research topic is practical and might be applied to VietBank Hanoi’s operation III Research methodology Primary and secondary data was collected for the purpose of analysis − Primary data: + Collected from sources such as documents, regulations, guidelines, policies, orientations issued by the State Bank of Vietnam and Vietnam Thuong Tin JSCB − Secondary data + Data extracted from the database of VietBank’s branches and relevant sectors + Statistics published by statistical offices and ministries + In addition to periodical business reports issued by VietBank Hanoi, the data was collected from open sources such as: internet, publications on the subject of classic theories of strategic management E.g.: Marketing Management Book by Philip Kotler IV Report structure − Introduction: General overview of the current context, rationale of research, research objectives and application possibility; research methodology 2|Page Developing a business strategy for VietBank Hanoi Branch − Main report includes chapters + Chapter 1: Basic concepts of Strategic Management + Chapter 2: Analysis of business operation of VietBank Hanoi + Chapter 3: Solutions, recommendations and conclusion 3|Page With respect to employees: − New graduates are interested in large banks with professional working environment as it facilitates them to learn and create their career path − Junior experts and managers expect to be trained and promoted It would not be appropriate if a creative and dynamic person is assigned a stable job without any challenges and no chance for promotion − Senior and high level officials set priority to the level of autonomy and the scope of authority to make decision in their job With respect to the importance of employees’ expectations: It is important to focus on the following factors in order of priority to understand expectations and needs of the employees: − First: VietBank Hanoi should create a fair and transparent system of wage and benefit distribution to avoid internal disunity • An effective staff evaluation system must be able to highlight the difference between the good and bad employees According to this evaluation system, fair and reasonable policies concerning salary raises, promotions and bonuses will be created • The assessment will not only be conducted through available forms of evaluation but also via meetings, interviews, direct assessment between employees, between managers and staff etc − Second, working environment includes facilities, the way of recognize staff’s achievements and opinions; commitment to work and cooperation; professionalism, clarity and transparency etc − Third, career development and promotion opportunities consist of level of attraction and challenge of work, career advancement, training opportunities and work development Career development factors and opportunities for advancement are important elements to retain staff’s loyalty, especially for talented employees 1.2 Recruitment and workforce training To ensure adequate qualified workforce to meet business growth plan, VietBank Hanoi should change the way of recruitment In the past, whenever new employees were needed, VietBank Hanoi used traditional forms of recruitment i.e receving candidate’s dossier, organizing written test and interview This form of recruitment strongly focused on assessment of theoretical knowledge rather than teamwork, soft skills and the ability to response to a real situation That explains for the higher result of written test of new graduates compared to experienced applicants, thereby losing potential candidates To strengthen and further develop human resources, VietBank Hanoi should change the form of recruitment towards: − Develop a strict and scientific recruitment process right from the step of taking records of applicants to ensure the selection of qualified candidates − Publish recruitment information, exam forms and scope of examinations applied to all candidates − Recruitment process must rely on job description for each job vacancy to bring out a proper exam For example, for the recruitment of transaction personnel, in addition to written test, the candidate’s communication skill should also be evaluated etc VietBank Hanoi should also take measures to attract high quality labor force With respect to interns, the bank’s policy is to recruit students with high GPA (above 7.5) to work on probation and get paid during the internship Through the internship, the student’s capability, skills and personality is somehow shown and evaluated Besides VietBank Hanoi should form a good relationship with well – reputed universities to attract outstanding students 1.3 Training and retraining staff − Based on job description and standards for each vacancy, 160 current employees will be examined and classified and divided into groups: qualified and not qualified group Thereby a retraining course for the second group will be planned, specifying the deadline for the self – improvement of working skills − Build up plans for training the labor force, aiming at on – the – job trainings, plans of personnel rotation to ensure that each employee not only has good professional skills but also improves his general understanding of the bank − Short-term training courses on the topic of product features and available banking services should be regularly opened for all staff since the professional competence of the staff is reflected in his ability to master banking operations − Through periodical examinations, VietBank Hanoi will be able to evaluate staff’s competencies in different divisions The assessment of weaknesses and strengths will be sent to each employee to motivate them to overcome the weaknesses It also helps managers to discover potential staff to be promoted and prepare a group of qualified staff to avoid business disruption in case current staff is leaving or transferred elsewhere or as new transaction office is about to opened, resulting in increasing demand for new staff 1.4 Develop human resource management, wage and remuneration policy VietBank Hanoi must develop job descriptions and job standards for each position to let the staff know what to and what to offer and which qualifications need to be achieved to be able to take more complicated tasks At the same time, the bank can monitor and evaluate clearly each staff’s performance and assign the right personnel for the right position, avoiding brain – drain The formation of a remuneration policy is not only based on profit generation and length of service but also employee’s advancement in terms of knowledge and supporting skills such as: foreign language, information technology in order to encourage them to self – retraining VietBank Hanoi should offer special incentives such as higher wage rate to attract good personnel from elsewhere to cooperate with the bank Marketing solutions Together with the chosen strategy “Concentration on service quality and reputation of the brand”, it is important to implement Marketing solutions and it is one of the key factors determining the success of the implementation process The following issues must be taken into consideration in execution of marketing solutions: 2.1 Market research On the topic of market research, VietBank Hanoi should pay attention to issues: − Regularly conducting analysis of competitors by comparing products, interest rate, advertising activities, network etc These competitors are joint – stock commercial banks establishing at the same time as VietBank like LienVietBank, BaoVietBank, TienPhongBank Based on the findings, the branch should proactively develop and implement proper business strategies to compete with direct rivals and should avoid indirect ones The branch must understand the local market (import-export activities, foreign investment, remittances ) to launch corresponding services − Customer analysis must be conducted because it is only possible to retain customers by satisfying their needs and attract them by delivering greater value compared to other competitors Therefore, customer’s satisfaction and feedbacks should be collected through questionnaire surveys in order to set up a reasonable customer service policy 2.2 Implement marketing mix Marketing policies take into account the issues: product, distribution, pricing and marketing 2.2.1 Product The branch should keep up with the direction and guidance of VietBank Head Office in developing, expanding and improving the quality of products and services, especially in launching actively and timely new product At this time besides focusing on the exploitation of available products and services that bring the major part of revenues such as payment services, guarantee services and foreign exchange, the branch should concentrate on retail products and services such as payroll, SMS and other new launching products like account checking via Internet, bills payment via ATM and at the counter, online payments for stock trading etc − Implement a policy regarding diversification of banking products and services aligned with the development goal of a multi – purpose bank Provide a package of services to customers of the branch and VietBank system, together with cross selling products and services between the bank and other insurance and securities companies The roadmap for specific types of service launching will be developed accordingly 2.2.2 Distribution It is important to develop a strong network of distribution However, the opening process must be compatible with the financial and business capacity, human resources and scale of operation Currently, VietBank Hanoi can take the following actions: − Strengthen and upgrade 18 transaction offices, existing savings points, and gradually adding functions and conduct more reasonable decentralization for the transaction offices to promote capital mobilization and retail banking service development through the network of transaction points − Establish automated banking transaction offices in shopping malls, residential areas and new urban areas and neighborhoods to deal with shrinkage of card issuance Set up more the card-issuing channels in the forms of cooperation with trade centers, supermarkets to issue cards to customers on the basis of shared costs 2.2.3 Pricing Presently, VietBank Hanoi values its products and services based on VietBank provisions and references to other banks Interest rate and service charges shall not exceed the ceiling rate prescribed by the State Bank of Vietnam Interest rate for deposits and savings is too low to compete with other banks particularly join – stock commercial banks Therefore, VietBank Hanoi should have reasonable pricing policy e.g strategic customers should be offered higher interest rate in compliance with the regulation of VietBank 2.2.4 Marketing − Increasingly convey the bank’s message to the public through leaflets in which shortly introduce product and service features in order to update and impress customers with available products and services providing by VietBank By then customers may know how to use the products and services and the benefits they bring − VietBank Hanoi’s staff should encourage individuals and companies having deposit or lending relationship with the bank to use the branch’s banking services Employees who understand most the nature and characteristics of products and services of their bank and who have direct contact with customers could be able to successfully communicate, guide and persuade the customers better than any other form of advertising − Customer meetings should be organized periodically Through this direct channel of communication, VietBank Hanoi could learn more about customers’ needs along with their feedbacks on product and service quality Solutions to overcome the shortcomings to better serve customers and enhance the brand name of VietBank Hanoi will be formed accordingly Marketing in banking sector belong to business Marketing, a specialized part of service industry Therefore in addition to 4P solutions mentioned above, Marketing in banking sector must involve the following P: − Process: VietBank Hanoi should develop a system of specific operational processes applied to each activity from direct transaction with customers such as: deposits, lending, guarantee service to supporting activities like recruitment, staff assessment, record filing etc − Person: Technology of all banks is almost the same and the major factor differs one bank to another is manpower Therefore, VietBank should equip the staff with a professional working style The staff should not only master technical knowledge and skills but also ensure all matters of professional ethics Technological solutions Given the selected strategy, technological improvement and innovation is inevitable Technology strengthens competitiveness and enhances the advantages of the product Technological solutions are considered under angles: System (software, hardware) and in – charge personnel for information technology 3.1 System − Software: T h e p rogram management software applied from the beginning has brought many benefits to the bank and customers through the management and online connectivity system (where depositors in one place can withdraw elsewhere) However, VietBank Hanoi must ensure high security for electronic banking services because these services are built on the public telecommunications network, resulting in high level of risks Thus, the system should ensure high security of customer’s data transmission, focuse thoroughly on implementation of network security solutions e.g there must be surveilance cameras in server room, and doors must be locked whenever technical staff leaves to avoid possible damages − Hardware: • All computers from the head office to the transaction points must be synchronized with each other in terms of configuration and transaction points must not be equipped with low configuration computers that prevent them from running modern applications • Besides a main system, VietBank Hanoi should have backup systems In addition to online system, an offline system must always be ready to ensure the smooth operation of internal transactions between branches in the case of telecommunications congestion • The technological system must be expandable to ensure the need of network expansion, avoiding interruptions to the operation of VietBank Hanoi in case the branch conducts additional system connectivity 3.2 IT personnel − The effective performance of the technological system and the introduction of new products rely heavily on IT staff Therefore the branch should select and offer rational remuneration to IT staff Requirements made by other business units, implementation progress of each unit should be recorded to avoid irresponsibility and controversy − Facilitate employees to join necessary IT courses as well as get access to information technology in banking and finance sector Solutions for organizational restructuring According to the chosen strategy, organizational restructuring is one of the key objectives Restructuring is to match international practices, while reducing risk and improving management capacity The organizational formulation and improvement towards forming specialized blocks helps the branch to overcome weaknesses since risk management block is separated from other divisions and customers’ transactions are operated via one door, the relationship between different divisions is coordination relationship guided by specific business processes and job descriptions The relationship between departments of the head office and transaction offices is reflected in guiding, testing and supporting activities to perform the common tasks In order to realize the goals, VietBank Hanoi should separate divisions into blocks 4.1 Customer relationship block − Corporate relationship department: is partly separated from corporate department with major tasks of marketing, promoting the relation between the branch and companies and conducting credit activities − Individual relationship department: is partly come from Individual customer Department, focusing on conducting marketing activities, promoting relationship between the branch and individual customers, selling retail banking services and providing loans for individuals 4.2 Operation block − Credit management department: is formed by one part from Corporate Department and Individual Customer Deparment The department performs management activities regarding lending and guarantees; calculations of provisions for bad debt according to debt classification provided by customer relationship department − International payment department: is partly come from Corporate Department, dealing directly with trade finance transactions, marketing and being responsible for improving efficiency of external coordination of the branch − Rename treasury department to treasury management and services department, being directly in charge of implementation of fund management, including in and out transactions and advising the Board of directors on taking necessary measures to ensure high safety of cash box, funds and currency security − Customer service department: is responsible for customer’s account and transaction management, detection and timely reporting of suspicious transactions to managers, checking the legality, adequacy, correctness of the transaction documents, record and maintain customer’s information 4.3 Risk management block − Risk management department is responsible for proposing policies and measures to develop and improve credit quality, conducting risk assessment for loans proposals in accordance with regulations; handling non – performing loans, providing guidelines to prevent operational risks, preventing money laundering, managing ISO quality management system, conducting internal control activities etc 4.4.Internal control block − General and planning department is in charge of collecting, synthesizing, analyzing and evaluating economic, political and social information in the areas as well as information on partners, competitors that may affect the branch’s operation; taking part in the development, implementation and assessment of development plans, assisting directors in managing and assessing overall business operations of the branch − Rename Administration Department into Human resources and administration Department: advises and recommends board of directors in human resource allocation and development; manage emulation and reward activities; accomplishing legal procedures related to the establishment of transaction offices − Finance and accounting department: manage and implement detailed accounting and general accounting; conduct accounting document controlling, financial supervision; propose mechanism for asset management, finance and internal spending; manage entire accounting data; prepare financial statements etc − IT unit: perform duties in compliance with scope of competence and regulations and IT processes applied for the branch; provide guidance, training, support and control staff to proficiently manage the equipment aligning with IT regulations Develop business culture Facing global integration, creating a business culture is the urgent requirement of any bank Business culture is not only reflected in the outside appearance such as costumes, office decoration, traditional greetings “to please customers from the first step in to the last step out” but it is also ethical standards, transparency and accountability, culture of leadership, culture of management and communication etc These factors create the reputation and brand name of all commercial banks including VietBank Hanoi Referring to business culture, "the 3P philosophy” is often mentioned with P: People; P: Product and P: Profit (1) There are different perspectives on the importance of these factors As a result each commercial bank may have different reaction in doing business VietBank Hanoi not only focuses on profit but also service quality and service diversification etc in which workforce is considered as the top concern (2) VietBank Hanoi is always interested in improving staff’s physical and spiritual life, encouraging imitative and creativity of each person As a result, profit is increasing; traditional customers have strong attachment to the branch while new clients are coming to VietBank Hanoi Thus business culture of VietBank Hanoi refers to business ethics and behaviors of employees As soon as all staff of VietBank Hanoi understands thoroughly what business culture is, professional ethics and business behaviors will be formed and VietBank Hanoi is no longer facing the risk of brain drain, the risk of losing key customers and business partners Accordingly business culture will help VietBank Hanoi to overcome challenges of economic integration and it becomes the determining factor contributing to the sustainable growth of the branch In recent years, doing business with culture has been the board of director and staff’s top concern, being improved towards the true, good and beautiful values and the common objective of sustainable growth Together with the new model as a joint – stock commercial bank towards a strong finance and banking group in the next few years, each staff must be thoroughly aware of business culture and translate the culture in daily activities It should be noted that, the development of business culture in VietBank Hanoi also faces difficulties such as: incomplete legal system while people’s awareness on law abiding is still low; negative effects of market economy have strong impact on bank’s business behavior so it is not easy to change outdated transaction practices like easy - going or “cutting edge” transactions These are obstacles to the development of business culture To achieve a real business culture, each staff is expected to improve awareness and take action accordingly In business culture development process, employees in each business section must be respected It is important to create a favorable environment for the staff to promote their strengths, creativity and contribution Also the staff and their family should be taken care of To form a basic foundation for business culture, training (culture of leadership and management) should be provided to managers As long as managers of all levels are able to show culture of leadership and management in their daily activities, the business unit/department/branch has their own business culture Clearly business culture of a bank/branch depends largely on the working style of the leaders, manager because it attracts sympathy and participation of a large number of employees One of business philosophies of VietBank Hanoi is “Customer’s prosperity is VietBank’s success” To translate the philosophy into daily operations, each staff of VietBank Hanoi must improve the relationship with customers, partners and the community by combining harmoniously the present and future benefits It is never easy to understand the matter since culture does not come along with qualifications Staff with specialist knowledge is not necessary a real cultured one Employees have to learn and practice all their life to form a cultural foundation Daily behaviors and communications can have strong impact on creating a specific image of VietBank Hanoi in the eyes of its customers For example: despite the luxurious look, staff of VietBank Hanoi is very friendly; respect customers but not flattering; serious but not cold – faced; friendly and gentle but not talkative; comply with business process but not rigid; able to refuse customer if needed Turning down a customer does not necessarily mean the relationship is ended The staff should show the customer that he could not find a better service elsewhere but in VietBank and the customer would come back when the bank could meet requirements posed by safety regulations Culture is not labor regulations that staff are required to perform accordingly To business with culture, it is required more than propaganda It is important that staff should be equipped with knowledge, improving their awareness and understanding of the nature and requirements of building a business culture in banking operations There will be a change from perception to action and from dissemination to practices At that time business culture will be the determining factor to the sustainable development of VietBank Hanoi Improve infrastructure The current headquarters of VietBank Hanoi is leased; the total area is not large enough for the establishment of new divisions after restructuring the organization In the next years, VietBank Hanoi will purchase the building to ensure stability and modernization of infrastructure Conclusion of Chapter III: To promote strengths, VietBank Hanoi should select the strategy “Concentration on service quality and reputation of the brand” To address the weaknesses, VietBank Hanoi should implement a set of solutions which focus on five measures i.e human resource development, marketing solutions, business culture development and organizational restructuring CONCLUSIONS The analysis has shown strengths – weaknesses, opportunities – threats of VietBank Hanoi business strategies have been introduced and the strategy “Concentration on service quality and reputation of the brand” has been selected as the key business strategy for VietBank Hanoi In order to implement the strategy, VietBank Hanoi should focus on sets of solutions including: solutions for human resource development, distribution network, marketing, technology, restructuring, business culture development, enhancing infrastructure Facing rapid changing business environment, VietBank Hanoi must regularly control and evaluate the results of strategy implementation in order to take proper adjustments Due to time limit, the report might not provide a wider choice of strategies and may not meet expectations of VietBank Hanoi However, the team hopes that the analysis and suggestions might contribute actively to the bank’s current operation and its growth and success in the future REFERENCE Fredr David (2006), Strategic Management Overview, Statistics Publishing House, Vietnam Philip Kotler (2010), Marketing Management, Pearson, United State of America Michael Porter (2010), Competitive Strategy, Youth Publishing House, Vietnam Mason Carpenter, Gerry Sanders (2009), Strategic Management, Pearson, United State of America Course materials related to Strategic Management provided by International MBA Program (Hanoi – 2011) VietBank Hanoi’s business reports for the year 2007, 2008, 2009 and up to October 10/2011 Website of General Statistic Office of Vietnam: http://www.gso.gov.vn/default.aspx?tabid=217 Website of LienViet Bank: http://www.lienvietpostbank.com.vn/ Website of Bao Viet Bank: http://www.baovietbank.vn/ 10 Website of Tien Phong Bank: http://www.tpb.com.vn/vn/ ... creating fit among a company’s activities According to the text book “Strategic Management” by GaMBA (Sept 2009), Business Strategy is defined as an overall long-term plan or a general plan of... bank’s market share − The supply and quality of labor force in banking sector is insufficient and imbalanced Challenges for VietBank Hanoi: − Direct competitors have developed a relatively solid