INTRODUCTION
The urgency of topic
Competitiveness is a fundamental aspect of the economy, particularly during integration periods where internal protectionism gives way to competition among domestic and foreign businesses Every enterprise in the market must adhere to the principles of economic competitiveness, while state-owned enterprises that do not operate within the market framework are increasingly losing their influence.
Globalization has opened significant opportunities for economic and cultural exchange, particularly for WTO member enterprises While this membership allows businesses to engage in a competitive global market, it also presents various challenges Therefore, it is crucial for business entities to assess their strengths, weaknesses, opportunities, and threats (SWOT analysis) before developing their operational strategies.
A SWOT analysis is essential for businesses to accurately assess their resources and market fluctuations before implementing a potentially beneficial strategy or entering the global economy It serves as a foundational tool for companies seeking to establish a new strategic direction by evaluating their strengths, weaknesses, opportunities, and threats By identifying these key factors, businesses can set strategic goals and develop a focused plan that leverages their advantages while addressing their disadvantages, ultimately driving new business growth and achieving their objectives.
The significance of SWOT analysis in business is crucial, particularly for understanding the operations of VCB (Vietnam Joint Stock Commercial Bank) and addressing the challenges faced by the banking sector This article explores the topic "SWOT Analysis in VCB," aiming to offer readers a comprehensive perspective on the business activities of one of Vietnam's largest banks, transitioning from a general overview to specific insights.
Research objects
This thesis focuses on applying SWOT analysis to evaluate business operations and propose strategies for Vietnam Joint Stock Commercial Bank (VCB) It aims to analyze key factors within the banking sector, particularly concerning VCB, by identifying external strengths and opportunities amid market competition The research will help VCB and other banking institutions recognize potential threats and address their weaknesses, ultimately leading to the development of strategies that enhance and maintain their market position.
Research purposes
This thesis presents a qualitative analysis of VCB's banking activities, emphasizing the factors within the business, economic, and marketing environments that influence its competitiveness Key research questions include the definition and application of SWOT analysis in the banking sector, the various businesses VCB engages in, and the internal and external factors impacting VCB's performance Additionally, the study explores the connections between these factors and their effects on transaction volumes, loans, and investments, as well as how VCB maintains a competitive advantage over its rivals The findings are crucial for VCB's management and investors interested in the banking industry.
Research tasks
To accomplish this thesis, the following tasks have been implemented step-by- step:
Figure the theory of SWOT analysis
Research the main operations of VCB
Collect data related to VCB’s competitiveness
Identify and analyze data, set up SWOT matrix
LITERATURE REVIEW
SWOT model
SWOT, an acronym for Strength, Weakness, Opportunity, and Threat, is a vital tool for developing strategic plans across various levels, including companies, markets, and entire economies It serves as a theoretical framework that aids users in making informed decisions, reassessing their business positions, and determining future directions The application of SWOT analysis has become increasingly popular in areas such as business development projections, strategic planning, competitor assessments, market research, and product development, making it an essential component of research reports and enterprise strategies.
The SWOT framework aims to identify and assess the internal strengths and weaknesses, as well as the external opportunities and threats facing an organization By comparing controllable internal factors with uncontrollable external factors, businesses can develop effective strategies Internal strengths and weaknesses relate directly to a company's resources and capabilities, while external opportunities and threats arise from the surrounding environment Organizations should leverage their strengths and opportunities while mitigating threats and weaknesses to enhance performance Strategies that fail to capitalize on opportunities or address threats and weaknesses are unlikely to lead to improved outcomes.
Strengths refer to the internal attributes and resources of an organization that enhance its competitiveness against other entities These strengths manifest as advantages in the market, including brand reputation, product specifications, cost efficiency, design innovation, and overall business quality Understanding strengths is crucial for identifying competitive advantages, evaluating project success, and optimizing resource allocation It's important to assess these strengths not only in isolation but also in comparison to competitors, as true competitive advantages become apparent when evaluating performance relative to other organizations.
Weaknesses refer to attributes that can hinder an organization's performance compared to its competitors For a business to maintain its market position and achieve strategic objectives, it must identify and address these weaknesses Commonly, weaknesses raise critical improvement questions such as, "What areas need enhancement?" and "What factors are detrimental to our success?"
When evaluating what should be avoided, it's essential to assess both internal and external factors Often, others can identify weaknesses that we may overlook ourselves Understanding why competitors may outperform us requires a realistic examination of our own capabilities and an honest confrontation with the truth.
The strengths and weaknesses of a business are key internal elements that influence its competitive position Each element can represent both an advantage and a limitation, making it essential for the enterprise to identify and leverage its internal factors By understanding these dynamics, businesses can formulate strategic solutions aimed at minimizing weaknesses and enhancing strengths, ultimately maximizing their competitive edge in the market.
An internal evaluation analyzes various aspects of an organization, focusing on strategies, objectives, facilities, and system structure to uncover strengths and weaknesses Organizational strengths encompass skills, capabilities, and core competencies that facilitate effective strategy identification and implementation Different strategies require distinct skills and competencies, and organizations that leverage their unique competencies in chosen strategies can achieve a competitive advantage.
Businesses today face evolving opportunities driven by market changes, enabling them to supply goods and services, increase revenue, and gain market dominance However, the presence of numerous competitors means that not all opportunities guarantee profitability Identifying opportunities involves addressing questions like "Where is the good chance?" and "Which trends are most relevant?" These opportunities can stem from technological advancements, shifts in domestic and international markets, changes in government policies, or alterations in social patterns and demographics A valuable approach to uncovering opportunities is through self-assessment, determining how existing strengths can create new prospects, or identifying weaknesses that, if addressed, could reveal additional opportunities.
Threats refer to the risks businesses face, encompassing unexpected events that can lead to damage, losses, or negative impacts on operations These threats can manifest as damage to goods or property, reduced market share, and harm to brand reputation Key questions to assess threats include: What challenges are present? What achievements have competitors made? Have the demands for specific products or services changed? Could technological advancements result in adverse effects? Are there issues with delinquency or cash flow? Identifying these weaknesses is crucial, as it allows businesses to transform potential threats into opportunities for growth.
Opportunities and threats are external factors beyond a company's control, with trade integration presenting a chance for free trading through reduced commercial barriers and protectionist regulations This integration facilitates easier access to international markets, yet it also intensifies competition, where only the strongest organizations can thrive.
The external evaluation emphasizes the economic, technological, legislative, social, ethical, political, ecological, and competitive environments to identify potential opportunities and threats for the organization Following this assessment, a SWOT analysis is conducted to determine which factors can aid the organization in reaching its goals and to identify obstacles that must be minimized or overcome to achieve successful outcomes.
SWOT analysis
Effective planning and strategy formulation require identifying priority targets and utilizing SWOT analysis to assess the likelihood of success This involves examining internal strengths and weaknesses that influence goal attainment, as well as analyzing external opportunities and threats to understand their impact on the surrounding environment.
SWOT analysis evaluates the environmental factors affecting an organization, enabling businesses to identify external opportunities and mitigate potential risks Additionally, an internal analysis reveals the company's strengths and weaknesses, providing a comprehensive understanding of its position in the market.
This is a difficult course that require a lot of time, effort, cost and capacity of analyzing and processing information to achieve most effective result
The macro environment significantly impacts every business within the economy, influencing decisions both directly and indirectly Key factors shaping organizations in this environment are categorized under the PESTEL framework, which includes Political, Economic, Social, Technological, Environmental, and Legal elements.
Economic factors encompass key elements of the broader economy, including growth rates, employment levels, raw material costs, interest rates, monetary policies, exchange rates, and inflation, which can differ significantly between countries The economic environment reflects the nature, stability, and growth orientation of the economy and its businesses Analyzing external economic conditions is crucial, as they directly impact purchasing power and consumption patterns, highlighting the dependence of business strategies on market output.
Under the economic environment, a business firm generally researches the following factors and trends:
Trends in gross national product and real income growth
Variations in geographical income distribution and its trends
Consumer savings trends indicate a growing preference for diverse savings methods, including traditional bank accounts, investments in bonds and securities, real estate purchases, and insurance policies As individuals seek to maximize their financial security and returns, they are increasingly exploring various asset classes to hold their savings effectively This shift reflects a broader understanding of financial management, where consumers prioritize both liquidity and long-term growth in their saving strategies.
Borrowing pattern, trends and governmental and legal restrictions
Major economic variables, e.g., cost of living, interest rates, repayment, terms and disposable income
Economic forces significantly influence purchasing power, making it crucial for businesses to address these factors to meet their objectives While no organization is completely shielded from economic fluctuations, some are more resilient than others Therefore, proactively anticipating and strategizing to mitigate the adverse effects of these economic forces remains a top priority for firms.
Political forces encompass the laws, government policies, and groups that influence or restrict organizations and individuals within society Businesses must pay close attention to these regulations due to the close relationship between the business sector and legal limitations In Vietnam, various sectors are subject to multiple laws, and specific restrictions apply to certain territories; for instance, gun sales are prohibited in Vietnam but permitted in the U.S Additionally, there are significant regulations concerning monopolies As laws and regulations frequently change, business managers should prioritize understanding these political forces when planning and monitoring their business strategies.
Technological forces encompass all factors associated with science and technology that significantly influence a business's competitiveness and the market's consumption capacity, particularly through product quality and pricing By integrating modern technology into business operations, companies can enhance their services and products while reducing production costs, ultimately increasing efficiency.
Enterprises should concern to new technologies that can make their products outdated directly or indirectly In addition, managers should take a close look to some negative impacts as:
The pressure and costs associated with technological development vary across different sectors, making it crucial for administrators in rapidly changing industries, such as banking, to effectively evaluate potential opportunities and threats This assessment is vital for managing external factors that influence their operations.
Certain industries can access government incentives and financing for research and development, provided they align with government policies This presents an opportunity to leverage such assistance for operational advantages.
Social and cultural factors, including population demographics, density, living conditions, race, age, gender, education, and religion, significantly influence consumer behavior and, consequently, business marketing strategies, particularly in market segmentation For instance, areas with a high elderly population tend to see increased demand for health services, while regions with many children are more likely to require educational services and toys Changes in these social and cultural factors often result from broader macroeconomic influences and occur gradually, making their long-term effects subtle and sometimes difficult to detect Managers must recognize that these factors shape how individuals live, work, and consume, and understanding them is crucial for effective strategic management.
Natural forces significantly influence business dynamics, particularly in tropical-monsoon countries like Vietnam Key natural conditions, including geographic location, climate, and landscape, are vital to the livelihoods of people and serve as essential inputs for various economic sectors such as agriculture, mining, tourism, and transportation Moreover, these natural conditions often create competitive advantages for products and services, underscoring their importance in the marketplace.
The macro environment significantly influences enterprises over the long term, as changes in this broader context can lead to shifts within the micro-environment of individual businesses These macroeconomic changes impact the development of enterprises across various sectors, with each element exerting unique effects While individual macro environment factors can independently influence businesses, they often interact with one another, creating a complex web of influences that shape organizational outcomes.
In today's globalized world, no country or business operates in isolation, making international environmental analysis crucial for companies This analysis encompasses various factors, including the economic, political-legal, cultural-social, technological, and natural environments Understanding these macro-environmental elements is essential, as changes in the international landscape significantly impact strategic decision-making for businesses.
The microenvironment encompasses the immediate surroundings that influence the key activities and competitiveness of businesses According to Michael Porter, five critical factors shape this micro business environment: Supplier Power, Buyer Power, Competitive Rivalry, Threat of Substitution, and Threat of New Entry Understanding these elements is essential for companies to navigate their competitive landscape effectively.
Figure 3: Porter’s Five Forces Model
RESEARCH METHODOLOGY AND DATA ANALYSIS
Research Methodology
The thesis research process involves three key steps: first, an in-depth study of Vietcombank; second, an analysis of the internal and external environment to identify the bank's strengths, weaknesses, opportunities, and threats; and finally, the formulation of strategic recommendations aimed at enhancing financial and banking operations.
SWOT analysis and strategic proposals at VCB is conducted according to a specific procedure, and can be generalized across the diagram:
Collect and process the given primary and secondary information
Analyze and synthesize the strengths, weaknesses, opportunities and threats
Analyze the given primary and secondary information
Strategic analysis aims to collect information about both internal and external environments to identify opportunities, threats, strengths, and weaknesses, commonly known as SWOT analysis While SWOT is a widely used management tool, it has limitations, including lengthy lists, ambiguous terminology, a single level of analysis, and lack of prioritization To address these criticisms, the EFAS (External Factors Analysis Summary) and IFAS (Internal Factors Analysis Summary) have been introduced as complementary tools, creating a robust analytical framework for effective strategic analysis.
2 EFAS and IFAS supporting method
EFAS factors are categorized into opportunities and threats, and an organization’s ability to respond to these factors is analyzed based on their significance Up to 10 relevant opportunities and threats are identified and listed, with each factor's importance rated on a scale from 0 (no importance) to 1 (great importance), reflecting their impact on the organization's strategic positioning The factors with higher ratings indicate a greater influence on the company's future success Similarly, the internal analysis, known as IFAS or organizational analysis, focuses on identifying and developing organizational resources, following a process akin to that of EFAS.
3 Gather and process information methods
The authors employ a comprehensive method to analyze and forecast the business environment of VCB, focusing on the macro, competitive, and banking environments, as well as the internal dynamics They gather information from both primary and secondary sources, with primary data derived directly from studies and previous surveys conducted by VCB This data is then processed to identify the strengths, weaknesses, opportunities, and challenges facing the organization.
Secondary information is gathered from a variety of sources, including reports and studies from government entities, data from the General Statistics Office of Vietnam, publications such as newspapers and magazines, as well as insights from both existing and potential customers of VCB.
Figure 5: Information gathering technique (Source: studygs.net)
Due to many limits in researching, the chosen information gathering model is infrequently Such simple and easy-to-use method has been though widely applied in studies.
General overview of JSC Bank for Foreign Trade of Vietnam (VietcomBank)
Vietnamese full name : Ngân hàng Thương mại Cổ phần
Ngoại thương Việt Nam English full name : Joint Stock Commercial Bank for
Foreign Trade of Vietnam Trading name : Vietcombank- VCB
Headquarter : 198 Trần Quang Khải, Hoàn Kiếm,
Sss Hà Nội, Việt Nam
Website : www.Vietcombank.com.vn
Tax code :0100112437, Hanoi Tax Department
Business Registration : Business license no 105922 date 03/04/1993
The main operations are commercial banking activities, specifically in traditional wholesale banking (businesses to serve corporate customers)
Savings and transactional accounts, mortgages, personal loans, debit cards, and credit cards for individuals
Financial business services in favor of individuals
Business of managing assets and investment funds
Business of real-estate investment
Investment in the construction of infrastructure projects
III Strategic business units (SBU) of VCB
In banking operations, credit is provided through various means, including loans, the discounting of commercial bills and valuable papers, as well as commercial bank guarantees and financial leasing, all in accordance with regulations set by the State Bank of Vietnam.
Vietcombank effectively mobilizes funds through various means, including accepting deposits, issuing certificates of deposit, bonds, promissory notes, and other financial instruments Additionally, the bank secures loans from both domestic and international credit institutions, as well as from the central bank and other prescribed financing arrangements.
Those activities include opening accounts, providing means of payment across countries, implementing international payment services, paying foreign bill, applying documentary collection for logistics and cash payment for customers
The article discusses various financial activities, including joining capital and purchasing shares, participating in the currency market, and trading foreign exchange and gold It also highlights the provision of insurance services, securities operations through subsidiaries, and financial advisory services Additionally, it covers the preservation of precious objects and valuable papers, as well as leasing safes for secure storage.
IV Vision and future goals for Vietcombank
Vietcombank aims to become Vietnam's leading bank with significant regional influence and is ranked 300th among the world's top 1,000 largest banking financial groups The bank is committed to delivering exceptional services while balancing the interests of customers, shareholders, and employees Additionally, Vietcombank is implementing international risk management standards in accordance with Basel II as of 2015.
2 Medium and long term strategic goals
To achieve the top position in Retail Banking and rank among the top two in Wholesale Banking, it is essential to enhance wholesale operations while promoting retail as a key foundation for sustainable growth This involves not only maintaining and expanding our current domestic market presence but also strategically developing opportunities in international markets.
To be the Bank which achieves the highest profitability performance and maintain a minimum ROE of 15%:
To optimize the operating cost ratio and enhance return on sales, it is essential to improve the efficiency of managing and operating costs across divisions This involves effectively restructuring capital through a rational allocation of both VND and foreign currency, while ensuring balanced credit growth and maturity management to minimize interest rate risks Compliance with security ratios set by the State Bank of Vietnam and alignment with Vietcombank's targets is crucial Additionally, enhancing the quality of budget planning and monitoring in accordance with advanced regulations is necessary for sustainable financial management.
To be the leading bank in terms of customer satisfaction:
Vietcombank is focused on boosting customer turnover by emphasizing target customers, while also promoting product diversification and the development of advanced banking services By leveraging modern technologies, the bank aims to meet customer needs at the highest level.
To be the leading bank in terms of human resources quality :
To improve the quality of human resources, the bank focuses on innovative recruitment, effective maintenance, comprehensive training, and strategic staff rotation This approach aims to foster a culture of cooperation while enhancing staff cohesion and overall effectiveness.
To be the best bank in risk management :
To maintain its competitive edge in key business sectors, the company leverages modern technology and adheres to international standards, including the implementation of risk management practices aligned with Basel II and the enhancement of risk management culture.
According to the VCB 2015 financial statement, key financial indicators reveal significant insights into the bank's performance The interest and similar income reached 31.36 trillion VND, while the net income stood at 21.20 trillion VND The profit before tax was recorded at 6.83 trillion VND, and the profit after tax amounted to 5.33 trillion VND The total asset value of the bank was 674.39 trillion VND, with a return on equity (ROE) of 12.03% and a return on assets (ROA) of 0.85% Additionally, outstanding credit growth was impressive at 22%, and mobilizing growth was reported at 18.52% The bad debt ratio was maintained at 1.84%, and the dividend payment rate was set at 10% of the par value.
External environment analysis of VietcomBank
I The overview of banking and finance development
Since 1990, the Vietnamese banking system has been structured into two levels: the State Bank of Vietnam, which serves as the central bank, and the commercial banking system This period marked a significant milestone in the development of the commercial banking sector in Vietnam.
Commercial banks serve dual roles as business entities and tools for state banks to regulate the economy Since the 1990 reforms, the banking system has experienced significant growth, with banking revenue growth rates reaching 19.47% in 2007, which is three times higher than the average GDP growth rate of 6.14% from 2007 to 2014.
Table 2: Revenue and revenue growth rate of banking sector
The banking sector's significance within the economy has grown substantially over time, with the credit-to-GDP ratio consistently exceeding 80% since 2007.
Figure 6: Vietnamese Credit/GDP and credit growth rate
(Source: VCB annual financial report)
Since 2001, the banking sector's credit to GDP ratio has shown consistent annual growth, peaking in 2010 before declining from 2011 to 2014 due to rising bad debt Despite these challenges, the sector's return on equity (ROE) has remained robust, consistently exceeding the industry average of 10% This resilience highlights the banking system's capacity to thrive even amid economic fluctuations and industry downturns.
GDP growth rate Banking revenue growth rate
In conclusion, the banking system is currently in a growth phase, as evidenced by its revenue growth rate exceeding both the GDP and the return on equity (ROE) of other sectors in the economy.
The commercial banking system in Vietnam serves as both a business entity and a vital instrument for the State Bank of Vietnam (SBV) in executing its monetary policy to regulate the macroeconomy As a key player in this policy implementation, the banking sector is significantly influenced by macro-regulatory measures and is closely monitored by the SBV to ensure systemic stability Since 1989, Vietnam's economy has experienced two distinct development cycles: the first from 1989 to 1999 and the second from 1999 to 2012 Throughout these economic phases, particularly at the peaks and troughs, the SBV has consistently adjusted its monetary policy to either tighten or expand, profoundly affecting the banking sector.
Figure 7: Vietnamese GDP growth rate
The State Bank of Vietnam's monetary policy significantly impacts the banking sector through three key channels: the percentage of marginal interest income, revenue growth, and overall GDP growth As GDP increases, it enhances the economy's capacity for loan repayment, thereby influencing the financial stability of banks.
2010 2011 2012 2013 2014 debts of economic entities that affects the business results of banking system in terms of bad debt increase and / or credit extent
As the present time, the income from interest of banking system accounts for 75%
- 80%, and this resulted in the bank’s business cyclical fluctuations of the economy and monetary policies of the central bank
Figure 8: Sector revenue and GDP growth rate
The revenue growth rate of the banking sector is significantly influenced by fluctuations in GDP growth During economic recessions, banking system revenues experience a sharp decline, while rapid economic growth results in a swift recovery of sector revenues These cyclical economic changes directly affect the business cycle within the banking industry.
In 2014, when GDP growth rate showed its recovery, banking’s sales began to recover in a great increase of 8% compared with 0.8% and 0.9% for respectively 2012 and 2013
The performance of the banking sector is closely tied to the economic cycle and monetary policy As the economy improves, banks typically see an increase in revenue and a reduction in the ratio of bad loans to total assets, while the opposite occurs during economic downturns.
Banking revenue growth rate GDP growth rate
The number of banks in Vietnam market: There are 5 state-owned commercial banks (SCBs), 31 joint-stock commercial banks (JSB), 6 joint venture bank (JVB) and
The growing competition among banks is intensifying, compelling them to adopt more effective business strategies to maintain their market share and ensure future growth.
The JSB group has strengthened its position in Vietnam's credit and deposit market, reflecting a decrease in sector concentration due to shifts in the economy that favor industrial and service growth over reliance on state-owned enterprises This trend suggests that future concentration levels may continue to decline as the economy develops Entry barriers for new banks are influenced by two main factors: legal regulations, which dictate capital requirements and operational restrictions such as reserve ratios and credit growth limits, and scale, which necessitates a minimum customer base to cover fixed costs Consequently, these factors make it nearly impossible for new organizations or individuals to enter the Vietnamese banking sector, which has evolved into an oligopolistic market structure characterized by a limited number of banks and high entry barriers.
Oligopolistic structure leads to implications:
The banking sector does not rely on a single institution to drive market price signals; instead, it receives these signals primarily from the State Bank of Vietnam (SBV) Traditional credit service providers may struggle to achieve competitive business results compared to their peers To thrive, banks must focus on two main strategies: product differentiation and effective marketing that highlights service quality Enhancing service quality and introducing innovative products, such as unsecured personal loans, can create new market opportunities beyond conventional banking offerings that typically require collateral.
In the long run, banks must actively innovate and develop their products and services to meet the evolving market demands in order to sustain significant economic returns However, the interplay between expected returns and associated risks will significantly influence their strategic decisions.
II The evaluation of macro economy impacts to Vietcombank
Figure 9: Macro-factors affect VCB operations
Politics in Vietnam is regarded as the most stable institution in the world This is a favorable factor for the development VCB and banking sector as well:
As enterprises grow, it is assured for foreign businesses to invest into the domestic business sector, thus provide banking sector opportunities to develop
Investment from foreign financial corporations in banking sector result in the intense competition among banks which facilitate VCB to improve their strategies
Politics stabilization helps reduce the risk of crisis, thereby help organizations avoid risks posed by external factors
The banking sector is significantly impacted by legal regulations, which play a crucial role in shaping the operations of businesses within this industry Commercial banks, in particular, are heavily influenced by the policies set forth by the State Bank of Vietnam, highlighting the intricate relationship between law and economic stability.
For example, in the business of interest trading, commercial banks must always closely monitor the provisions of the State Bank on interest rate policy:
Policy of fixed rate enforcement (1989-1992)
Operating through framework of interest (1992-1995)
Ceiling interest rate management mechanism (1996-2000)
Mechanism of operating through base rate margin (2000-2002)
Base rate managing mechanism (2008-now)
Vietnam has successfully implemented the Law on Credit Institutions, along with the Business Law and Investment Law, to enhance the banking sector This framework provides banks with clear guidelines and transparent business conditions, promoting a conducive environment for financial operations.
Internal environment analysis of VietcomBank
I Resource and capacity assessment on the basis of Porter’s value chain
Inbound logistics serve as a key method for capital raising at Vietcombank, primarily through increasing charter capital by selling shares to investors, attracting idle capital from residential and economic sectors, and securing loans from the State Bank.
Vietnam and other credit institutions
(Source: VCB annual financial report)
As the chart implicated, capital mobilization of Vietcombank has sustainable grown, with the turnover reached 503.007 trillion VND in 2015, 18.52% higher than
In 2014, Vietcombank's mobilization efforts exceeded the sector average of 14.4%, reflecting a strategic restructuring to align with market demands and the bank's development goals The focus was on enhancing mobilization from residential areas and utilizing low-cost capital sources.
Vietcombank's core business revolves around credit operations, which are essential for profit generation through capital mobilization and lending The bank provides tailored interest rates to meet the specific needs of its borrowers Acknowledging the risks associated with currency market volatility, Vietcombank prioritizes the enhancement of its credit services alongside robust risk management strategies This approach aligns with the evolving trends in the capital market.
At the end of 2015, outstanding loans to customers totaled 387 trillion VND, reflecting a 19.74% increase from 2014, surpassing the planned growth of 13% and the sector average of 17.3% This growth aligns with Vietcombank's strategic focus, as lending to residential customers surged by 50.41%, while the share of loans to enterprises and individuals rose from 30.9% in 2014 to 35.7%.
Vietcombank has implemented a concentrated credit risk management system that distinctly separates business functions, risk management, and operations to minimize risks and enhance the professional skills of its credit management staff In 2015, the bank adopted Basel II standards for risk management, establishing a governance model along with comprehensive policy documents, procedures, and regulations Regular training in both basic and advanced operational risk methods is conducted to enhance loan quality and strengthen risk management practices at Vietcombank.
In recent years, Vietcombank has actively engaged in marketing activities to meet customer demands through various strategies such as card promotions, brand advertising, and competitive interest rates By understanding customer psychology and their interest in promotions, the bank has implemented diverse promotional offers, including ATM openings at transaction offices, tiered interest rates, festive gifts, and incentives for targeted groups like students Additionally, Vietcombank's extensive distribution network and collaboration with other banks enhance service convenience for customers.
Vietcombank is recognized as a trustworthy financial institution offering a wide range of modern retail services, including flexible loan options, payment cards, ATMs, deposit products, online banking, and remittance services.
Vietcombank holds a strong position in the wholesale sector, catering primarily to corporations and large enterprises The bank has established a comprehensive and diversified distribution system that enhances its retail operations and delivers modern, high-quality products and services to customers Additionally, Vietcombank invests in various sectors, including securities, investment fund management, life insurance, and real estate, with the aim of becoming the leading bank in Vietnam with significant influence.
As of the end of 2015, Vietcombank operates a comprehensive network that includes a head office, 96 branches, and 368 transaction offices across 50 out of 63 provinces in Vietnam The distribution of its operations is as follows: North Central Coast (8.3%), North East (7.3%), Red River Delta (10.4%), Hanoi area (15.6%), Mekong River Delta (14.6%), South East (11.5%), Ho Chi Minh City (17.7%), South Central Coast (10.4%), and Central Highlands (4.2%) Additionally, Vietcombank has established relationships with 1,856 correspondent banks in 176 countries and territories worldwide.
In 2015, Vietcombank added 6 new branches and 17 transaction offices to boost supply modern products and utility services to customers to increase business efficiency
Vietcombank is focused on rapidly advancing the development of its headquarters, branches, and transaction offices, with numerous modern business offices recently inaugurated Additionally, the bank is proactively working on establishing a Consumer Credit Company, a subsidiary remittance company, and overseas representative offices to enhance its service offerings.
In 2015, Vietcombank employed a total workforce of 14,755 individuals, including affiliates, emphasizing human resource development as a cornerstone of its operational strategy The bank implements a rigorous employment policy to ensure high staff quality and offers comprehensive training programs both locally and internationally to enhance employee skills Additionally, Vietcombank aligns salaries and bonuses with performance outcomes, fostering motivation and linking work efficiency to increased income, while also prioritizing the development of officers' knowledge and experience.
Vietcombank is committed to enhancing human resource development by improving recruitment policies, training programs, compensation structures, and employee rights and responsibilities, all aimed at increasing work efficiency.
With nearly $ 20 million investment in technology every year and approximately
Vietcombank is enhancing its information technology platform with a dedicated team of 200 IT staff to support the transition to a modern business management model The bank aims to develop advanced banking services and improve existing products by leveraging revolutionary technologies such as mobile, social networking, and cloud computing This strategic initiative is designed to create breakthroughs in the banking sector and maintain Vietcombank's leadership in technology.
II Assessment of Strengths and Weaknesses
Vietcombank has embraced advanced global technologies for its card products, positioning itself as a pioneer in introducing new card types and leading the way in modern technology for cardholder information security As one of the first banks in Vietnam to implement EMV card technology standards for international payments, Vietcombank's innovations are estimated to reduce card counterfeiting by up to 70% Since 2010, the bank has invested millions in IT systems, including Temenos's T24 core banking system, One Way's Way4, and Opteva's ATM system.
Vietcombank has established a strong presence in every province and city across the country, offering a diverse range of products and services The bank aims to be more accessible to individuals, businesses, and organizations, positioning itself as a trusted partner and reliable resource for all banking needs.
SWOT MODEL AND REVIEW
- Strong brand and high reputation
- Large scale of total assets
- Highly experienced staff and officers
- Lack of risk management strategies
- International trading and payment with large organizations
Vietcombank demonstrates strong competitiveness, with an EFAS score of 3 and an internal score of 2.45, positioning it among the top 10 banks in Vietnam The bank's achievements result from significant efforts in both business operations and non-profit activities As a state-owned institution, Vietcombank benefits from a robust background in banking, particularly in international payments However, the upcoming economic integration poses challenges, as state protectionism will diminish, potentially exposing weaker banks to elimination Despite its strengths and opportunities, Vietcombank must navigate various challenges to maintain its leading market position.
PROPOSAL AND RECOMMENDATION
Strategy proposal for Vietcombank
Below are the specific presentation of solutions and strategies from the result table (Appendix B):
Vietcombank is a highly reputable and legitimate financial institution, recognized both locally and globally The bank's operations are closely monitored by the government and the State Bank of Vietnam Leveraging its well-known brand, extensive operational scale, and distribution network, Vietcombank is well-positioned to build, develop, and expand its business areas in the context of international integration.
Vietcombank stands out as a leading name in the import and export sector, renowned for its professionalism and strong reputation in providing payment consulting and support for businesses, both locally and internationally As the ASEAN Free Trade Area (AFTA) progresses and import-export barriers diminish, the logistics industry is poised for growth in regional and global markets Leveraging its robust relationships with reputable banks, Vietcombank is well-equipped to develop international products that cater to the needs of even the most discerning partners.
The ASEAN market boasts approximately 600 million consumers, with two-thirds identified as potential customers for banking products and services To effectively penetrate this regional market, Vietcombank must diversify its portfolio significantly Research indicates that Vietcombank should concentrate on the retail banking sector in Cambodia, Myanmar, and the Philippines, as these economies currently require substantial capital to leverage the "rising tide" effect, while local businesses are increasingly losing confidence in Chinese investors.
To enhance its competitive edge, Vietcombank must not only focus on expanding into regional and international markets but also solidify its presence in the Vietnamese market, where rival commercial banks are rapidly improving to capture market share.
Since its equitization, Vietcombank has consistently ranked among the leading banks in the market However, data shows that its branch network is primarily located in developed banking and finance regions, leaving rural areas underserved In contrast, Agribank has established a more extensive presence and holds a significant market share in these rural locales To effectively tap into the retail market, Vietcombank must expand its branch network to include these underserved rural areas.
Vietcombank stands out as a financially robust institution in the Vietnamese market, yet it faces significant disparities in resources compared to foreign banks Engaging in the international market necessitates a comprehensive understanding of various institutions, the legislative framework, and potential risks, which are often less demanding for commercial banks To enhance its development and capitalize on substantial opportunities, Vietcombank must address these weaknesses effectively.
Vietcombank has consistently focused on seizing opportunities as a key strategy for growth Recently, the bank established a strategic partnership with Mizuho Corporation, the 17th largest bank globally by assets This collaboration will provide Vietcombank with guidance on strategic development and investments in technology and human resources Through this partnership, Vietcombank aims to enhance its management and operational capabilities by learning from international market policies, leveraging the relationship for further development.
Technological advancement is crucial for enhancing labor productivity in the banking industry, exemplified by Vietcombank's substantial annual investments in banking technology This extensive operational network fosters a strong community presence, while technology-driven banking products enhance professionalism and differentiation among banks Additionally, the integration of internet services in product offerings promises significant breakthroughs, delivering greater efficiency and savings for customers.
The cumbersome working structure of state-owned commercial banks, particularly after equitization, poses significant challenges for Vietcombank With a large workforce and extensive infrastructure, the bank struggles to effectively manage its various divisions, which can result in stagnation within its management processes To enhance operational efficiency, Vietcombank should leverage support from major institutions to restructure its external frameworks and improve staff productivity.
Economic integration has opened the Vietnamese banking sector to numerous foreign companies, granting them access to this lucrative market With their substantial capital and operational expertise, these foreign enterprises often outshine local banks in competitiveness If not carefully managed, major Vietnamese banks risk being overshadowed in their own market Additionally, Vietcombank must remain vigilant against threats from substitute products like insurance and securities, as well as potential mergers and acquisitions by large corporations aiming to dominate the domestic landscape Furthermore, it is crucial for banks to adopt a proactive approach to risk management to navigate these challenges effectively.
To effectively compete with foreign banks, Vietcombank must leverage its strengths, including a dynamic and ideal working environment and years of accumulated experience By implementing policies aimed at attracting high-quality talent, Vietcombank can secure the skilled workforce that foreign businesses are targeting as they seek to enter new markets.
Vietcombank benefits from the continuous development and upgrading of technology systems However, it is essential for the bank to strategically allocate resources to enhance the quality of innovative products and services while also investing in internal management systems and operational risk assessment.
Vietcombank can enhance its competitive edge against indirect competitors offering substitute products by adopting a cooperative strategy with specific product lines For instance, alongside its international payment services, Vietcombank could cross-sell Prudential's insurance products, fostering collaboration and boosting sales opportunities.
Vietcombank is committed to enhancing its business quality and addressing internal weaknesses, yet certain gaps persist that pose risks to its growth A significant concern is the potential for mergers with larger financial conglomerates, which presents a survival challenge in a competitive landscape Additionally, entering external markets demands substantial financial resources to effectively compete with international firms Addressing these two threats is essential for Vietcombank to transform its banking operations.
To solidify its position, Vietcombank must focus on enhancing its financial capacity, a key long-term goal established during its restructuring phase However, significant improvements in financial capacity cannot be achieved quickly; instead, they require gradual advancements through strategic restructuring efforts This includes diversifying capital mobilization methods, reducing reliance on short-term loans, and expanding the consumer lending sector.
Recommendations for Vietcombank
After conducting a thorough SWOT analysis of the banking system and specifically Vietcombank, several strategic recommendations emerge for enhancing future banking operations.
In the upcoming period, Vietcombank should prioritize its top products and services to capitalize on market share growth and attract more customers Additionally, the bank must persist in restructuring its management to improve operational efficiency and governance capabilities.
Vietcombank has outlined its mission, vision, and business philosophy; however, it lacks clearly defined core activities To enhance its business approach, it is recommended that Vietcombank adopts a philosophy centered on sustainable growth, effective risk management, high profitability, and strong financial indicators, alongside a commitment to investing in human resources and technology.
The bank should focus on their strong fields such as finance and banking- insurance- international payment Vietcombank should take advantage of scale and market share to attract more customers
- Research and develop new products and services with the application of advanced technologies into business operations
- Strive to become leading financial group in Vietnam while expanding market to developed countries such as China, Malaysia, Singapore,
- Minimize operating costs to reduce lending rates to expand the scope of the customer
- Increased efficiency of capital using
- Minimize risks and provide benefits to customers
Define target customer groups: large financial conglomerates, import/export businesses, people with high consuming demands
- Bring customers new products and services with high differentiation
- Research and supply modern technology to shorten processing services
- Process of managing activities should be clear, transparent, scientific, efficient, time and cost saving
- Customer management procedure: To help find and expand customers more efficient and to serve customer‘s demands That procedure is determined by examining information on customer’s income, age,
- Innovation process: Application of improvement and development of products and services that can help penetrate new market and customer of Vietcombank
Vietcombank should prioritize comprehensive solutions and high-quality products and services to attract new customers and expand its business network Clearly identifying target customers is essential for achieving development goals Additionally, building a strong reputation will enhance credibility and foster customer loyalty.
In addition, providing services for particular customers at home would be a wise strategy for expressing appreciation to their loyalty
- It is obligatory to manage banking risks and reduce operating costs Besides, bank should focus on renewing and improving working condition to maximize customer value
- Increase equity and keep the safe operations
- Working resources: Training high quality staff with good skills in market reaction, quick adept to new knowledge and technologies to support strategies for the bank in time
- For information: Information systems, networks and infrastructure need synchronous investment to support the ability to develop competitive advantage
Vietcombank should prioritize the creation of a friendly working environment to enhance brand development and identify future opportunities This approach will foster teamwork and improve interaction among various departments within the company.
The SWOT analysis model is a valuable tool for businesses to assess external factors (opportunities and threats) and internal elements (strengths and weaknesses) that influence their operations It is a crucial step in the five-step process of forming a business strategy, which includes identifying strategic objectives, conducting the SWOT analysis, analyzing strategy implementation, executing strategies, and evaluating for adjustments By utilizing SWOT analysis, businesses can develop effective strategies for growth and build a strong, sustainable brand reputation.
Vietnam's banking market has evolved significantly over the past 70 years, driven by increasing market demands and enhanced by international free trade agreements that provide opportunities for global business expansion The advancement of banking technology has also positively impacted the sector, enabling seamless connections among economic entities through internet banking systems This growth allows banks to forge valuable relationships, while businesses benefit from foreign investment when engaging with partner banks Despite the active nature of international economic trading, the banking system remains a crucial economic leader, as it inherently carries hidden risks While numerous opportunities for development exist, the threats of competition and potential takeovers are substantial Therefore, capitalizing on opportunities while mitigating business risks must be a top priority in strategic planning today.
Vietcombank, a pioneer in establishing Vietnam's banking network, has consistently led the country's cash services sector While facing operational and management challenges, the bank is committed to self-improvement during its restructuring phase To address these weaknesses, Vietcombank aims to invest more in resource development, enhance the quality of local services, and boost marketing, advertising, and sales efforts These strategies are well within reach, supported by the bank's substantial capital and robust financial resources.
This thesis provides an in-depth analysis of the SWOT model in the context of Vietcombank's management and business banking services; however, it falls short of thoroughly addressing all strengths, weaknesses, opportunities, and threats associated with its banking operations Additionally, the challenge of obtaining internal information about Vietcombank has hindered a comprehensive examination As a result, the research's scope and depth are limited, leading to occasional subjectivity Addressing these issues could enhance the findings and yield more accurate strategies for Vietcombank's competitive positioning in the banking market.
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2 Báo cáo tổng kết các năm của Phòng nhân sự Ngân hàng Vietcombank
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9 Số liệu của tổng cục thống kê Việt Nam
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6 Risk of interest, liquidity, credit, 0.1 4 0.4
1 Small scale and weak financial capacity
IE SYNTHETIC MODEL OF VIETCOMBANK
- (S1) Strong brand and high reputation
- (S2) Large scale of total assets
- (S6) Highly experienced staff and officers
- (W1) Weaknesses in international financial capacity
- (W4) Lack of risk management strategies
- (S1)+(S2) +(S3)+(O2): diversification strategies to international businesses
- (W2)+ (W5)+ (O4): Diversify high technological products and