Sustaining competitive advantage for priority banking of Standard Chartered bank Vietnam

TRệễỉNG ẹAẽI HOẽC Mễ TP. HCM UNIVERSITE LIBRE DE BRUXELLES HO CHI MINH CITY OPEN UNIVERSITY SOLVAY BRUSSELS SCHOOL MBAVB4 NGUYEN HUYNH HONG ANH SUSTAINING COMPETITIVE ADVANTAGE FOR PRIORITY BANKING OF STANDARD CHARTERED BANK VIETNAM MASTER PROJECT MASTER IN BUSINESS ADMINISTRATION (PART-TIME) Tutors Name: Dr. Tran Ha Minh Quan Ho Chi Minh City 2011 i COMMITMENT I hereby, Nguyen Huynh Hong Anh, committed all material presented in this paper is my own work or fully and specifically acknowledged whenever adapted from other sources. All statements and information contained here are true, correct and accurate to the best of my knowledge and belief. Name: Nguyen Huynh Hong Anh Date: 30 November, 2011 ii ACKNOWLEDGEMENT Firstly, I would like to present a sincere thank to all the professors, teachers, tutors and Solvay Brussels School of Economics and Management and Open University of Ho Chi Minh City for bringing to me a huge volume of useful academic knowledge. I would like to express my sincere thanks to Prof. Tran Ha Minh Quan who is my research supervisor. His valid comments and advices contributed a lot to the completion of my research. Secondly, I would like to say thank the board of director and all my colleagues of Standard Chartered Bank (Ltd) VN, who sponsored my Master program and provided much useful information for me to finish the research. Lastly, I would also express my special thank you all my classmates, friends, and my beloved family who provided me la plenty of encouragement and support during Part time MBA program in general and through this research in particular. iv EXECUTIVE SUMMARY Standard Chartered Bank (SCB) has about one hundred and fifty year’s history with seventy five thousand employees of over one thousand branches all over the world. SCB is leading the way in Asia, Africa and the Middle East, etc. with optimally financial solutions about wholesale and retail. With strong global experience, SCB has established its presence in the two most dynamic cities in Vietnam is Ha Noi - the capital and Ho Chi Minh City - the economic hub, focusing on Priority banking – high value segment. Priority banking is designed to provide the most select customers with highly personalized retail products and service. Besides offering a high level of expertise and commitment, all banking transactions will be handled with utmost care and confidentiality. This thesis firstly conducts the retail banking environment in Vietnam and competitors analysis to understand more about the strength and the weakness of SCB when joining this market. By determining the market segmentation, targeting and positioning; using the quantitative and qualitative combination methodology, the information is conducted from survey, in-depth interviews and focus group discussions to collect data from customers and bank’s staff in order to explore and identify the competitive advantage of Priority banking of SCB. With the result from analysis, recommendations are proposed for the bank to achieve and sustain the competitive advantage in this particular area. v TABLE OF CONTENTS COMMITMENT i ACKNOWLEDGEMENT ii EXECUTIVE SUMMARY iv TABLE OF CONTENTS v LIST OF ABRIEVIATIONS viii LIST OF FIGURES ix LIST OF TABLES x Chapter 1 INTRODUCTION 1 1.1 Statement of the problem 1 1.2 Questions and objectives 2 1.2.1 Questions 2 1.2.2 Objectives 2 1.3 Date collection method 3 1.3.1 Desk research (secondary data) 3 1.3.2 Quantitative research (primary data) 3 1.4 Scope and limitation of the study 3 1.5 Structure of the study 4 Chapter 2 LITERATURE REVIEW 5 2.1 Market segmentation 5 2.2 Targeting at the right segmentation 5 2.3 Positioning to build competitive advantage 6 2.3.1 The close link between positioning and competitive advantage 6 2.3.2 Competitive advantage 7 2.4 Porter’s generic strategies 8 2.4.1 Cost leadership strategy 9 vi 2.4.2 Differentiation strategy 10 2.4.3 Focus strategy 11 2.4.4 Hybrid (Combination) strategy 12 2.5. Achieving and sustaining competitive advantage 12 Chapter 3 RETAIL BANKING ENVIRONMENT AND OVERVIEW ABOUT PRIORITY BANKING OF STANDARD CHARTERED BANK VIETNAM 14 3.1 Retail banking environment in Vietnam 14 3.1.1 Overview 14 3.1.2 Competitors 18 3.2 Overview about Priority banking - Standard Chartered bank Vietnam 23 3.2.1 Standard Chartered Bank 23 3.2.2 - Priority Banking of Standard Chartered Bank in Vietnam 24 Chapter 4 FINDING AND ANALYSIS 26 4.1 Competitive strategy 26 4.2. Quantitative research – Questionnaires survey 29 4.2.1 Customer segmentation and Targeting at the right segmentation 29 4.2.2 Customer’s satisfaction 32 4.3. In-depth interview and Focus group discussion 38 4.3.1 In-depth interview with SCB Premium Segment Manager 38 4.3.2 Focus group discussion 40 4.3.3 SWOT analysis 43 Chapter 5 CONCLUSION AND RECOMMENDATIONS 44 5.1 Conclusion 44 5.2 Recommendations 45 REFERENCE i vii APPENDIX 1: List of managers, staff were interviewed and questions iii APPENDIX 2: Questionnaire to customers iv APPENDIX 3: Questionnaire survey result vi viii LIST OF ABREVIATIONS ACB Asia Commercial Bank Agribank Bank for Agriculture and Rural Development ANZ Australia and New Zealand Bank ATM Automated Teller Machines BIDV Bank for Investment and Development CIP Consumer Index Inflation EAB Eastern Asia bank FB Foreign bank GDP Gross Domestic Product GSO General Statistics Office HSBC Hongkong and Shanghai Consumer Bank JSCB Joint stock commercial banks MHB Mekong House bank POS Point of Sales Sacombank Saigon Thuong Tin Commercial Joint Stock Bank SBV State Bank of Vietnam SCB Standard Chartered Bank SOCB State – Owned commercial banks Techombank Technological and Commercial Joint- stock Bank USD United State Dollars VCB Bank for Foreign Trade of Vietnam Vietinbank Bank for Industry and Commerce VN Vietnam VND Vietnam Dong WTO World Trade Organization ix LIST OF FIGURES Figure 2.1: Porter’s Generic Strategies 8 Figure 3.2: Urban population growth in Vietnam 1990 – 2010 17 Figure 3.3: Market share of Vietnamese banks in 2009 19 Figure 4.1: Revenue from business section of personal banking in 2007 27 Figure 4.2: Number of Personal Financial Services/Products per Person and percentage of willing to pay for financial advice 28 Figure 4.3: Standard Chartered Bank – Segmentation classification 29 Figure 4.4: Age range of Priority customers 31 Figure 4.5: Nationality of Priority customers 31 Figure 4.6: Working industry field of Priority customers 31 Figure 4.7: Customer’s satisfaction with Priority package 34 Figure 4.8: Customer’s satisfaction with SCB products 35 Figure 4.9: Customer’s satisfaction with Priority center 35 Figure 4.10: Customer’s satisfaction with SCB service quality 36 Figure 4.11: Customer’s satisfaction with staff’s soft skill and knowledge 36 Figure 4.12: Customer’s expectation from Priority banking 37 Figure 4.13: What should SCB improve? 37 x LIST OF TABLES Table 3.1: GDP growth rate of Vietnam 2008 – 2011 15 Table 3.2: Inflation rate of Vietnam 2006 – 2011 15 Table 3.3: Major Vietnamese banking sector 19 Table 3.4: Capitalization of selected major SOCB and JSCB in 2010 21 Table 3.5: Charter capital of foreign banks in 2010 22 Table 3.6: Bank capability profiles 23 Table 4.1: Segment population in Hanoi and Ho Chi Minh city 30 Table 4.2: Evaluation of customer experience by service elements - Personal banking 38 Table 4.3: SWOT analysis 43 [...]... limitation of the study and structure of the study Chapter 2: LITERATURE REVIEW This chapter will describe the theoretical framework for this study Chapter 3: RETAIL BANKING ENVIRONMENT AND OVERVIEW ABOUT PRIORITY BANKING OF STANDARD CHARTERED BANK VIETNAM In this chapter, we can see the retail banking environment, the competitors and the overview about Priority banking of Standard Chartered bank in Vietnam. .. focusing Priority segment? - How to identify the potential customer of Priority segment? - How to explore a variety of options in approaching Priority segment? - How to explore the competitive advantage of SCB Priority banking? - What is the gap between the expectation from Priority banking of customer and the current package of SCB? - How to evaluate and sustain the competitive advantage of SCB Priority banking? ... Owned commercial banks (SOCB): 20 The six SOCB are the Vietnam Bank for Agriculture and Rural Development – the largest in terms of assets, the Bank for Foreign Trade of Vietnam, the Bank for Investment and Development of Vietnam, the Bank for Industry and Commerce, Mekong Housing Bank and the Vietnam Development Bank remain the principal credit institutions in Vietnam Market share of deposit in 2010... Various banks and news from Website 2011 Foreign Bank: Comparing with others SOCB and JSCB, the scale of charter capital of foreign banks is quite small but it is just a start in Vietnamese banking market 22 100% Foreign Capital Banks Charter Capital (billion VND) 1 HSBC (Vietnam) 3000 2 Standard Chartered Bank (Vietnam) Limited 1000 3 ANZ (Vietnam) 2500 4 Shinhan Vietnam Bank Limited 1670 5 Hong Leong Bank. .. p.524 3.2 Overview about Priority banking - Standard Chartered bank Vietnam 3.2.1 Standard Chartered Bank Standard Chartered Bank (SCB) originates from England and has over one hundred fifty years old history Standard Chartered was formed in 1969 through a merger of two banks: The Standard Bank of British South Africa, founded in 1863, and the Chartered Bank of India, Australia and China, founded in... foreign banks, which shows attraction of Vietnam banking with domestic investors and international financial institutions According to State Bank of Vietnam, up to June 2011, Vietnam has five state commercial banks, one bank for social policies, one development bank, thirty seven private joint stock commercial bank, five joint venture banks, five wholly foreign-invested banks, forty eight branches of foreign... and the opportunity of business from priority segment - Identifying the competitive advantage of SCB Priority banking - Evaluating the competitive advantage of SCB from the customer perception and understand the gap between the competitive advantage and customer evaluation - Proposing recommendations to sustain the competitive advantage of SCB Priority banking based on the suitable competitive strategy... position itself in the market as the Priority banking specialist 3.2.2 - Priority Banking of Standard Chartered Bank in Vietnam Priority banking is a personal banking service offer to high net worth client It is a comprehensive relationship program that delivers a distinct advantage in serving wealth management need of individual clients These clients are served by dedicated bankers with their own customized... trade corridors of Asia, Africa and the Middle East Throughout this time, Standard Chartered bank has been driven by a unique philosophy - to be the right partner, leading by example Standard Chartered Priority Banking is a more personalized expression of that philosophy This research aims to identify the most appropriate approach for Priority banking of Standard Chartered Bank in Vietnam Conducted... banks, but not too much Vietnamese banks care so much about this kind of service The “war” of market share holding between foreign banks and local banks start to break out when the concept of Priority Banking standard is implemented in Vietnam to sniff the potentiality of this sprouting market With a banking heritage spanning more than one hundred and fifty years, Standard Chartered has developed extensive . 18 3.2 Overview about Priority banking - Standard Chartered bank Vietnam 23 3.2.1 Standard Chartered Bank 23 3.2.2 - Priority Banking of Standard Chartered Bank in Vietnam 24 Chapter 4. and sustaining competitive advantage 12 Chapter 3 RETAIL BANKING ENVIRONMENT AND OVERVIEW ABOUT PRIORITY BANKING OF STANDARD CHARTERED BANK VIETNAM 14 3.1 Retail banking environment in Vietnam. theoretical framework for this study. Chapter 3 : RETAIL BANKING ENVIRONMENT AND OVERVIEW ABOUT PRIORITY BANKING OF STANDARD CHARTERED BANK VIETNAM In this chapter, we can see the retail banking environment,