SOLVAY BRUSSELS SCHOOL OF ECONOMICS AND MANAGEMENT SOLVAY BRUSSELS SCHOOL OF ECONOMICS AND MANAGEMENT NATIONAL ECONOMICS UNIVERSITY Vietnam – Belgium Master Programmes MASTERS IN BUSINESS MANAGEMENT T[.]
SOLVAY-BRUSSELS SCHOOL OF NATIONAL ECONOMICS ECONOMICS AND MANAGEMENT UNIVERSITY Vietnam – Belgium Master Programmes MASTERS IN BUSINESS MANAGEMENT THESIS Formulate Strategy for Techcombank Retail Banking Supervised by: Associate Prof Ngo Kim Thanh Prepared by: Nguyen Van Van – MBM7 Hanoi, October 2010 Acknowledgements I would like to express my deepest gratitude to my research supervisor, Ms Ngo Kim Thanh, for her intensive support, valuable suggestions, guidance and encouragement during the course of my study I would like to express my sincere gratitude to all of my teachers at Solvay Business School and National Economics University for their teaching and guidance during my course I would like to extend my thanks to the board of managers and my colleagues at Techcombank for their support and assistance during my research study I am very thankful to all individuals for providing me with the necessary information and supporting me with advice during the period of my data collection for this research study Last but not least, I would like to express my loving thanks to my parents, my wife, my sister for their love and encouragement throughout my studying Contents Acknowledgements Executive Summary Chapter – Introduction I.1 Background I.2 Problems Statement I.3 Research Objectives 11 I.4 Research Questions 11 I.5 The importance of the research 11 I.6 Scope of Limitation 12 I.7 Structure of Thesis 12 Chapter – Literature Review .13 II.1 Theoretical framework 13 II.1.1 Corporate strategy & role of corporate strategy in organization 13 II.1.2 Corporate strategy formulation 14 Chapter – Research Methodology .25 III.1 Research background 25 III.2 Research objective 25 III.3 Research methods 25 III.4 Data collection 25 III.4.1 Primary data 25 III.4.2 Secondary data 26 Chapter – Research analysis 27 IV.1 Environment analysis 27 IV.1.1 The societal environment (PEST Analysis) 27 IV.1.2 Banking industry analysis (Five Forces Analysis) .33 IV.1.3 Opportunities and Threats 38 IV.2 Techcombank internal environment analysis .39 IV.2.1 Brief Information 39 IV.2.2 Business structure 40 IV.2.3 Internal Resources 48 IV.3 SWOT analysis 56 Chapter 5: Recommendations 58 V.1 Strategy selection 58 V.2 Vision, Mission and Goals 58 V.3 Recommendations in Detail 59 Human Resource .59 Technical 61 Risk Management 61 Products 62 Customer services 64 V.4 Timeline 68 Chapter 6: Conclusion, limitation and further researches 70 VI.1 Conclusion 70 VI.2 Contribution 71 VI.3 Further researches 71 VI.4 Limitations 71 Reference 72 Table of figures Figure 1: Breakdown of staff graduate 10 Figure 2: Vietnam Inflation 31 Figure 3: Vietnam GDP 32 Figure 4: Organizational Chart of Techcombank 40 Figure 5: personal customer deposits (BLN VND) 43 Figure 6: Breakdown of personal customer deposits .43 Figure 7: Retail outstanding loans (BLN VND) 44 Figure 8: Number of issued card in 2009 .45 Figure 9: Payment turnover via POS (VND BLN) 46 Figure 10: Structure of coporate customers 47 Figure 11: Deposits by economic institution (BLN VND) 48 Figure 12: Customer service circle 64 List of tables Table 1: Corporate strategy formulation process 15 Table 2: SWOT/ TOWS matrix 22 Table 3: Opportunities and Threats of Techcombank 38 Table 4: Number of branches 40 Table 5: Charter Capital of Techcombank .40 Table 6: Finalcial Highlights 49 Table 7: Strengths and Weakness 55 Table 8: SWOT/TOWS matrix of Techcombank 56 Table 9: Timeline for Recommendations of Techcombank retail banking 68 Executive Summary Today, integration into the world economic is the general trend of developing countries to approach the developed countries economic For Vietnam, global integration is a right and important direction which is the premise for making Vietnam economic grows fast and stable However, global integration also makes Vietnamese companies, especially Join Stock Banks – which deal with monetary, finance, credit … business – facing with many challenges To overcome these challenges and take full advantage of chance, Join Stock Banks must analyze their strength and weakness to bring out the suitable strategies for each period, phase of their development progress According to State Bank statistical, there are only about 15 million bank accounts It’s a very small amount in about 85 million Vietnamese people Therefore, foreign banks like ANZ, HSBC, Standard Chattered… are focusing on developing retails banking in Vietnam International banks, only for retail banking, have thousands of products/services But, local banks have very limited products/services, only about 200 The provision of new bank services is an internal requirement for local bank because, estimately, the cost for an ATM transaction is only 1/8 and an Internet transaction is only 1/12 in compare with traditional transaction (face to face) "The best retail bank in Vietnam" title is the dream of many banks In order to achieve this title, each bank has its own strategies Taking advantage of the wide network, especially transaction offices, state-owned commercial banks have detailed plans to push sales in retail segment, in which focus on credit area They are strengthening organisation structure and retail customer-relation staff and transforming the transaction offices to be official retail banking units In the near future, the retail service competition will have to delve into service quality This creates pressures on banks to raise financial capacity, invest more in technology, and diversify services and finding more customers Even though foreign banks currently still focus on high-level customers, in the long term, they may push up service developments for lower income customers The race in Vietnam retail banking would then become severer Techcombank, with its objective to be the best retail bank in Vietnam, has built its own strategy to obtain the proposed goal But, in the hard competition and unstable economic environment, bank strategy must be evaluated and adjusted to make it more effective and make the bank success on their target Firstly, this study aims to review company’s business, finance statement and organization, to evaluate suitability of the current strategy in context of unstable changing environment Valuating & Adjusting Strategy for Techcombank Secondly, base on technical of Strategy Formulation process including SWOT and BCG analysis this study shall give out the suggestions to formulate Techcombank’s retail banking strategy in order to improve Weakness to reduce Threats from changing environment and to take full advantages of Strengths to catch Opportunities Chapter – Introduction I.1 Background Since the economy changes from a command economy to a market-oriented economy, there has been a competition among companies to win more customers by providing better goods or services Most of companies in Vietnam now become aware of the importance of “better taking care of customers” as one of their strategy to grow in the competitive market Customer relation management activities therefore has been emphasized as a necessity for the existence and thrive of a company Under pressure of the competition on providing bank services and the rapid growing of information technology, year 2010 is considered as a “explosion year” of retail banking services, intensification on approaching the personal customers and small enterprises Vietnam trade banks have been focused on modernization, applied new technology in to their systems to develop the retail market When moving to the retail market, banks will have a larger market, development opportunities and disperse their business risks Vietnamese population is estimated to increase to 88 million by this year with higher income The average density of using bank service in Vietnam is about 1516%, higher in some big cities, about 32% Meanwhile, this density in Thailand or Malaysia is 70-80% In next 10 year, the estimate grow speed of Vietnam retail banking is 30-40% This show that retail banking in Vietnam is a potential market for trade banks According to financial experts’ assessment, the competition among local trade banks are more and more severe to get their market share and attract customers Beside, as Vietnam joined WTO, the government must follow the agreement to open the bank industry to foreign banks It will increase the number of foreign banks with strong financial power, diversified of services, new technologies and good management Therefore, local banks will little by little lose their advantage on scale, customers and distribution channels, especially after 2010, when most limitation for foreign banks are removed In that context, local banks cannot base on their traditional advantage as previously and most of them identify to develop their retail banking services as an important part in their strategy The research object of this study is Techcombank – a local bank which has been founded in 1993 With its vision to become the best retail bank of Viet Nam, Techcombank is now serving about 600.000 individual customers, 25,000 Small and Medium Enterprises (SMEs), providing many products and services to meet the particular needs of this customer group at various stages in their lives which ultimately supports business activities locally and internationally The structure of business, together with changes in the world economy and the industry environment, has created difficulties and imposed threats on the company This will be the main content of “Problem Statement” I.2 Problems Statement Currently, Techcombank has main Banking services : personal banking services (retail banking service) and Corporate Banking services Techcombank Board of Management want to use retail banking services are key product of the bank But the size of the customers for this service is still very small, about 600.000, with the contribution only about 20% to total revenue Techcombank Board of Management want to step up their retail banking services but they are on some difficulties Retail banking services are under many pressures from external environment forces as well as inside bank Macroeconomic issues such as political, economical, social and technology seems not create favorable conditions for the development of Retail Banking Being the WTO member with many advantages but the fact shows that Retail Banking also have to cope with many difficulties such as the backward technology, lack of legal procedure, few services Together with the serious lack of human resource, ... The intensity of rivalry is different in each industry In Internet Banking business, the intensity of rivalry is influenced by the following characteristics: (1) A large number of firms increase... making Vietnam economic grows fast and stable However, global integration also makes Vietnamese companies, especially Join Stock Banks – which deal with monetary, finance, credit … business –. .. resource, management capacity, world economic turmoil in 2008, it is obvious that Retail Banking service in Vietnam in general also in Techcombank is facing many issues Micro economic forces inside