Research dissertation “consumer banking business stratergy of abbank period 2010 2015”

RESEARCH DISSERTATION “CONSUMER BANKING BUSINESS STRATERGY OF ABBANK PERIOD 2010 - 2015” Author: Program: 14th Intake: Tutor: Adviser: Hanoi: Ms Phan Thu Hien MBA 2005 – 2007 Mr Vu Tri Dung Mr Pham Anh Dung December 2009 STABLE OF CONTENT COVER TABLE OF CONTENT LIST OF ABBREVIATIONS LIST OF TABLES PREFACE CHAPTER 1: THEORETICAL BACKGROUND ON BUSINESS STRATEGIC MANAGEMENT 1.1 1.1.1 1.1.2 1.2 1.2.1 1.2.2 1.2.3 1.3 1.3.1 1.3.2 1.3.3 1.3.4 1.4 1.4.1 1.4.2 1.5 1.5.1 1.5.2 1.5.3 Overview of strategic management Definition Strategic Management Process Mission, Vision, Core Values Vision Mission Core Values Strategic Analysis Macro Environment Analysis Industry Environment Analysis Internal Environment Analysis SWOT Matrix Strategic Selection Corporate Strategy Business Strategy Implementation and Evaluation Organizational structure Controlling System Building Action Plan 6 8 8 9 11 14 15 16 16 17 19 19 20 20 CHAPTER 2: SITUATION OF BUSINESS STRATEGY OF ABBANK 2.1 2.1.1 2.1.2 2.1.3 2.1.4 2.2 2.2.1 2.2.2 2.2.3 2.2.4 Business Overview General Information Organization structure Product & services Business situtation of year 2008 Influence of macro envirnment factors Political, legal, policy factors Economic factors Social and cultural factors Population & labour force 21 21 21 22 23 25 25 25 26 27 2.2.5 2.2.6 2.3 2.3.1 2.3.2 2.3.3 2.3.4 2.3.5 2.4 Technological factors Integration factors Analysis of industry environment factors Threats from new banks Threats of substitute Threats of customers Threats of suppliers Industry rivalry Comparison of ABBANK’s internal environment with two competitors 27 27 28 28 28 29 29 29 30 CHAPTER 3: IMPROVE THE BUSINESS STRATEGY OF ABBANK, PERIOD 2010-2015 3.1.1 Building and selecting the business strategy: 40 3.1.1 3.1.2 3.2 S.W.O.T Analysis G.R.E.A.T Analysis Implementation orientation and scope of the business strategy for card products and services of ABBANK 3.2.1 Orientation of long term priority strategy 3.2.2 Objectives of the card business strategy of ABBANK 3.2.3 Implementation scope of the strategy 3.3 Detailed action plan 3.3.1 Plan of HR strategy 3.3.2 Plan for R&D team set up 3.3.3 Plan for cards product & services 3.4 Plan of R&D team set up: Supervision and evaluation of the business strategy implementation 3.4.1 Supervision of business strategy implementation 3.4.2 Adjusting the business strategy and the action plan CONCLUSION REFERENCES 40 41 42 42 42 42 48 49 49 50 51 51 52 LIST OF ABBREVIATIONS ACB ADB AFTA ANZ ATM CD GDP HSBC IMF ISO IT Asia Commercial Bank Asia Development Bank Asian Free trade Area Australia and New Zealand Bank Automatic Transfer machine Certification of Deposit Gross Domestic Product Hong Kong Shanghai Bank Corporate International Monetary Fund International Standard Organization Information Technology POS QD-NHNN SBV ODA SIBOR SMS SOCs T.Os WTO USD VND Point of Service Decision of VN State Bank State Bank of Vietnam Official Development Assistance Singapore Interbank offered rate Short Massage Service State owner Companies Transaction Offices World Trade Organization United State Dollar Vietnam dong LIBOR London Interbank Offered rate NPL L/C Letter of Credit ATM POS Point of sale LIST OF TABLES Non Performance Loan Automaticed teller machine Table 2.1 Table 2.2 Table 2.3 Table 2.4 Current organization of ABBANK Table 2.5 Market Opportunities Table 2.6 Population growth rate Table 2.7 Phân tích tổng hợp hội & thách thức từ tác động môi trường vĩ mơ Table 2.8 Phân tích tổng hợp hội & thách thức tác động đến từ môi trường ngành Table 2.9 Table 2.10 Comparison the performance of ABBANK and Competitors Table 2.11 Evaluation and comparison of core competencies among ABBANK and competitors Table 2.12 Evaluation on the overwhelming competencies of ABBANK and competitors Table 3.1 S.W.O.T Analysis of ABBANK Table 3.2 Bảng tổng hợp phân tích mơ hình G.R.E.A.T Table 3.3 Phân tích mơ hình BCG tiềm thị trường thẻ Table 3.4 Phân tích phân khúc khách hàng mục tiêu sử dụng dịch vụ thẻ Table 3.5 Phân tích cấu khách hàng kế hoạch phát triển năm Table 3.6 Bảng xây dựng kế hoạch triển khai nhân R&D cho khối bán lẻ Table 3.7 Bảng xây dựng kế hoạch tổ chức công việc R&D Table 3.8 Kế hoạch phát triển sản phẩm, dịch vụ thẻ 2010 – 2015 Growth of fund mobilization and credit of ABBANK The business result of ABBANK Outlook of Vietnam economic period 2010 – 2013 Comparison of core competencies among ABBANK and its competitors PREFACE The financial market of Vietnam is now more and more developed in terms of scale, formulation, quality and the market participation structure According to the WTO road map and Vietnam American commercial agreement, Vietnam commits to treat fairly among the domestic and foreign banks on banking services, eliminating all limitations of access to the domestic banking market However, in comparison with the foreign banks, the Vietnam banking system is still weak in many aspects such as capital, management experience, business, technology, quality and variety of services and risk management as well This requires each commercial bank to have suitable solution for development and competitiveness enhancement, mastering the domestic market and reaching to the international financial market Among which, the formation of big banks with multi-functions and diversified business, which can adapt well to quick changes in the modern world is now becoming a rational demand and an indispensible tendency On the other hand, the competition among the domestic commercial banks as well as the rivalry between domestic banks and financial institutions are aggressive now On the banking and finance market, more and more investment funds, insurance companies, urban banks are founded and the Vietnam stock market is exciting All those phenomenon result in many financial investment channels which are of choice to the enterprises and individuals Financial institution is fighting directly with banks on fund mobilization and investment and the competition in the banking sectors is tougher and tougher In the light of the above practice, for sustainable survival and development, Vietnamese banks need to build up a suitable development strategy which is matching well with the practical features in every development stages Besides, the world financial crisis and the global economic downturn since end of 2007 has given considerable impacts on Vietnam’s banking sector This crisis is also a chance for us to have a broader and more practical view on all the threats, opportunities, strengths and weaknesses of the commercial banking sectors, which posed a critical need of commercial banks for reviewing and planning their own development strategy With the topic of “Strategic Management”, I conducted this study on a bank, where I am now working for, in an aim to apply knowledge obtained during the training program in analyzing and suggesting solutions on business strategic management With the above reasons, I decided to select the title: “Improving the business strategy, duration 2010-2015 of the An Binh Joint Stock Commercial Bank” in a wish to contribute to the sustainable development of the An Binh Joint Stock Commercial Bank in such a trend of regional and global integration CHAPTER I THEORETICAL BACKGROUND ON STRATEGIC MANAGEMENT ACTIVITIES OF AN ORGANIZATION 1.1 Overview of strategy and business strategy 1.1.1 Definition 1.1.1.1 What is a strategy? The definition of strategy is a long term plan of action designed to achieve a particular goal or set of goals or objectives Strategy is management's game plan for strengthening the performance of the enterprise It states how business should be conduct to achieve the desired goals Without a strategy management has no roadmap to guide them Creating a strategy is a core management function It must be said that having a good strategy and executing the strategy well, does not guarantee success Organizations can face unforeseen circumstances and adverse conditions through no fault of their own Strategy can be simply defined as a plan aiming at achieving competitive advantage that cannot be replicated by competitors A good strategy with effective implementation can help managers and staffs of all levels well define the objective, recognize the action orientation and contribute to the success of the organization On contras, an organization without a clear strategy and direction will be a boat without the monitor In order to better understand definitions of strategy, we can go through some view points of famous economists: View point 1: Strategy is a special plan - G Arlleret - “Strategy is the definition of roads and means to reach to an established objectives through policies” - Gluecl - “Strategy is a type of comprehensive and general plan which is designed to ensure the achievements of organization’s objectives” View point 2: Strategy is an art - Alain Threlart said “Strategy is an art which the enterprise use to fight against competition and win” - M.Porter said “Strategy is the art of building sustainable competitive advantage to self defense” So, these authors consider strategy as an art of competition and business development Viewpoint 3: Strategy is both a plan and an art - “Business strategy is an art of coordinating all the activities and controlling them in order to achieve the long term objectives of the enterprise” - “Business strategy is an art of designing and organizing means in order to reach to long term objectives of the enterprises, ensuring the adaptation to the change of business environment” Via above viewpoints, we can realize that the strategy relates to objectives of an organization, strategies must be of helpful to the organization in obtaining established objectives However, the formulation and decision of strategy according to the objectives are not enough; the strategy should put the concrete action into the right time with certain resources in order to realize the objectives The strategy of the organization includes not only what the organization wants to perform, but also the approaches to complete the task A separate action is simply not a strategy All strategies should heading for the objectives of the organization and are established on the basis of internal resources (strengths, weaknesses), external factors (opportunities, threats) So, in conclusion, we can define generally the strategy as followed: “Strategy is a wide range of complex actions in order to mobilize all the resources of the organization to achieve a certain goal” 1.1.1.2 What is business strategy? Business Strategy is a term used in business planning that implies a careful selection and application of resources to obtain a competitive advantage in anticipation of future events or trends Business Strategy is concerned more with how a business competes successfully in a particular market It concerns strategic decisions about choice of products, meeting needs of customers, gaining advantage over competitors, exploiting or creating new opportunities etc According to Fred R.David “Business strategy is a mean to achieve long term objectives” We can say that the business strategy is actually means which enable the enterprise to achieve long term goals Business strategy does not aim at mapping out detailed action plan, but they are general program, solutions on efficient mobilization of all resources in order to realized defined goals In general, business strategy can be defined as followed: Business strategy is a range of commitments and actions that a company uses to achieve a competitive advantage by exploiting core competencies on a certain market 1.1.1.3 Fundamental issues of business strategy: Business strategy needs to define critical issues which are: - Who to serve - Which demand to satisfy - How to satisfy the above demand 1.1.1.4 Role of business strategy: - Business strategy help the enterprise to realize clearly their goals, objectives, direction which will serve as the premises and lodestar for all the business and production activities of the enterprise - Business strategy enables the enterprise to realize and capture all the business opportunities, at and at the same time proactively overcome all the threats on the competitive market; working out policies and determinations on business and production activities which are going along with the market movements - The business strategy should contribute to the enhancement of efficiency in using resources; strengthen the competitive position of the enterprise for the long term sustainable development of the enterprise 1.1.2 Strategic Management Process: Strategic management process is a chain of activities, including commitments, determinations and actions of an enterprise in order to obtain the strategic competitive advantage; sustainable competitive advantage with the above average profit Strategic management process can be divided into stages: - Stage 1: Defining the objectives of an enterprise on the basic of building Mission, Vision, and Core Value by reviewing and analyzing environment factors to identify threats, opportunities, weaknesses, strengths, core competencies and competitive advantage - Stage 2: Building and Selecting suitable strategy for the enterprise - Stage 3: Implementing the strategy - Stage 4: Reviewing and evaluating the strategic management 1.2 Vision; Mission; Core Values 1.2.1 Vision: Vision is a mental image of the possible and desirable future state of the organization This image, which we call a vision, may be as vague as a dream or as precise as a goal or a mission statement Vision which elevates the energy, enthusiasm and self-esteem of everyone in the company while ensuring that everybody sees a benefit in following the vision So what is a vision? : Corporate vision is a short, succinct, and inspiring statement of what the organization intends to become and to achieve at some point in the future, often stated in competitive terms Vision refers to the category of intentions that are broad, all-inclusive and forward-thinking It is the image that a business must have of its goals before it sets out to reach them It describes aspirations for the future, without specifying the means that will be used to achieve those desired ends.” 1.2.2 Mission: A mission statement is an organization's vision translated into written form It makes concrete the leader's view of the direction and purpose of the organization For many corporate leaders it is a vital element in any attempt to motivate employees and to give them a sense of priorities A mission statement should be a short and concise statement of goals and priorities In turn, goals are specific objectives that relate to specific time periods and are stated in terms of facts The primary goal of any business is to increase stakeholder value The most important stakeholders are shareholders who own the business, employees who work for the business and clients or customers who purchase products and/or services from the business So what is the mission? : The mission defines the fundamental purpose of an organization or an enterprise, basically describing why it exists and what it does to achieve its Vision A corporate Mission can last for many years, or for the life of the organization It is not an objective with a timeline, but rather the overall goal that is accomplished over the years as objectives are achieved that are aligned with the corporate mission” Mission can be different about the length, business values and business objectives The mission is the reason for the existence of the company on the market, who you are and which product or service you will bring to the customer and public All the decision during the process of strategic planning and the management of company should be always aligned with the mission statement” The mission statement can be the motivation for the employees when the objectives and core values of the company are communicated with the customer and public 1.2.3 Core Value: Core values are all for which the company can not pay with money or change All core values will create a premise to formulate the regulations of the company The core values can be defined as followed: - A system of beliefs influencing the behaviors among people and groups of people - Core values are the soul of the organization; - Efficient values which has been attached deeply within the organization - Core values are necessary and long term regulations:  Working out decision and action of an organization;  Not a cultural or detailed action;  Do not serve the financial objectives and short term advantages;  The organization will want to keep the core values even when the mission has been changed Core values don’t care the population; they got the true value and huge importance for the insiders of the organization 1.3 Strategic Analysis All the activities of the organization are influenced by factors of macro environment (general environment) and micro environment (industry environment and internal environment), so in order to plan a strategy for the organization, we will need to analyze all the environmental factors and their impact on the activities of the organization 1.3.1 Macro environment analysis Macro environment analysis will help the organization to realize and evaluate: Opportunities (O) of the environment which the organization can exploit and the Threats (T) which the organization can overcome Then, it enables the organization to build a clear business mission, identify the long-term feasible objectives and design a suitable strategy with the business objectives We can use the PEST model to analyze the macro environment This model use factors such as Political, Economics, Socio cultural & Technological They are four factors which affect directly economic sectors, these are external elements of the enterprise and the industry, and the industry must be affected as a natural element Enterprises which are based on the impacts will give out suitable policies and business activities 1.3.1.1 Political and legal factors: These are factors which can affect all the business sectors in a region, political and legal factors can create danger for the survival and development of any industry When doing business on an administrative unit, enterprises will be forced to follow all the political and legal factors at that region - Stability (politics, foreign affair): The regime with high stability will create good favor for the business activities and on the other hand, it will give bad affect on the business performance on its region - Tax policies (Import-export tariff, consumption tax, income tax…): will affect the revenue and profit of the enterprise - Laws (Law of investment, Trade law, Labor law, Anti-monopoly law, anti-dumping law…): which can have big affect on the enterprise? - The government’s policy can have influence on the enterprise in a way that it can create advantages or challenges for the enterprise For example: trade policies, industry development policies, economic development policies, tax policies, competition management policies, consumer protection policies… 1.3.1.2 Economic factors: Enterprise needs to pay attention to the economic factors in both long-term and short term and the government’s intervention in the economy Normally, enterprise will base on the economic factors to decide investments on industries and regions - State of the economy: Every economy has its own circle, in certain stage of the economic circle; the enterprise will have their own suitable decisions - Factors influencing the economy: interest, inflation… - Government economic policies: law of basic salary, government economic development policies, and preferential policies for industries: tax reduces assistance… - Economic future prospects: GDP, GDP growth, GDP growth on investment… 1.3.1.3 Cultural and social factors: Each nation or territory has its own cultural and social factors which are the features of the consumers in that region, Cultural factors are value which formulates the society, which can facilitate the survival and development of the society However, we can not deny the cultural exchanges of different cultures and nations, which can change the consumption psychology, lifestyle and create the development prospective for the industries