analysis and recommendations in strategic adjustment for vndirect securities jont stock company

VIETNAM NATIONAL UNIVERSITY, HANOI SCHOOL OF BUSINESS NGUYEN THI PHUONG THAO ANALYSIS AND RECOMMENDATIONS IN STRATEGIC ADJUSTMENT FOR VNDIRECT SECURITIES JOINT STOCK COMPANY (2011 – 2016) MASTER OF BUSINESS ADMINISTRATION THESIS Hanoi - December 2010 2010 * Master of Business Administration Thesis * Nguyen Thi Phuong Thao VIETNAM NATIONAL UNIVERSITY, HANOI SCHOOL OF BUSINESS NGUYEN THI PHUONG THAO ANALYSIS AND RECOMMENDATIONS IN STRATEGIC ADJUSTMENT FOR VNDIRECT SECURITIES JOINT STOCK COMPANY (2011 – 2016) Major: Business Administration Code: 60 34 05 MASTER OF BUSINESS ADMINISTRATION OF THESIS Supervisor: Dr. Nguyen Viet Anh Hanoi - December 2010 viii TABLE OF CONTENT ACKNOWLEDGEMENTS i ABSTRACT ii TÓM TẮT v TABLE OF CONTENT viii LIST OF TABLES xi LIST OF FIGURES xii LIST OF ABBREVIATIONS xiii INTRODUCTION 1 1. Necessity of the thesis 1 2. Objective of the thesis 3 3. Research questions 3 4. Scope of work 3 5. Methodology 4 6. Contributions of the thesis 5 7. Expected results 5 8. Further research directions 5 9. Limitation of the thesis 6 10. Thesis structure 6 CHAPTER 1: LITERATURE REVIEW 7 1.1. Strategy and role of strategy 7 1.1.1. Definition of strategy 7 1.1.2. Role of strategy 9 1.2. Strategic management process 9 1.3. Strategic vision and business mission 12 1.4. Setting objectives 12 ix 1.5. External environment analysis 13 1.5.1. Macro environment analysis 14 1.5.2. Industry and competition environment analysis 17 1.6. Company situation analysis 26 1.6.1. Analysis of how well the current strategy works 26 1.6.2. Analysis of company’s roots of competitive advantage 27 1.6.3. Analysis of company‘s cost structure 30 1.6.4. Evaluate the company‘s competitive position 33 1.7. SWOT analysis 35 1.7.1. What is SWOT? 35 1.7.2. SWOT matrix 36 1.8. Formulating a strategy 36 1.8.1. Levels of strategy - The Strategy making pyramid 36 1.8.2. Specific strategy at different levels 37 CHAPTER 2: CASE STUDY OF VNDIRECT 45 2.1. Over all about VNDIRECT 45 2.1.1. General information about VNDIRECT 45 2.1.2. The establishment and development of the company 46 2.1.3. The company organizational structure 47 2.2. Analysis of strategic vision and business mission 48 2.2.1. Analysis of current strategic vision of VNDIRECT 48 2.2.2. Analysis of current business mission of VNDIRECT 49 2.3. Objectives of VNDIRECT 50 2.4. External environment analysis 50 2.4.1. Macro environment analysis 50 2.4.2. Industry and competition environment analysis 58 2.5. Situation analysis of VNDIRECT 80 2.5.1. Analysis of how well the corporate strategy works 80 2.5.2. Analysis of how well the business strategy works 82 x 2.5.3. Analysis of how well the functional strategy works 89 2.5.4. Analysis of business result of the company 106 2.5.5. Analysis of company’s resources and capabilities 108 2.5.6. The value chain and the company ‘s cost structure 111 2.5.7. Evaluate the company ‘s competitive position 113 CHAPTER 3: SUMMARY AND RECOMMENDATIONS 116 3.1. Summary and recommendations for theory development 116 3.2. Summary and recommendations for Government bodies 117 3.3. Findings for VNDIRECT 119 3.3.1. SWOT matrix analysis of VNDIRECT 119 3.3.2. Distinct competencies of VNDIRECT 122 3.4. Recommendations for VNDIRECT company from 2011 – 2016 122 3.4.1. Recommendations in strategic vision and business mission adjustment 122 3.4.2. Recommendations for corporate strategy adjustments 123 3.4.3. Recommendations for business strategy adjustments 125 3.4.4. Recommendations for functional strategy adjustments 129 3.4.5. Summary of strategic development direction of VNDIRECT 133 CONCLUSION 135 REFERENCES 137 APPENDICES 140 xi LIST OF TABLES TABLE 1-1: A MODEL OF WEIGHTED COMPETITIVE STRENGTH ASSESSMENT 34 TABLE 1-2: MODEL OF SWOT MATRIX 36 TABLE 2-1: GENERAL INFORMATION ABOUT VNDIRECT 45 TABLE 2-2: PREDICTION OF GDP OF VIETNAM IN 2010 51 TABLE 2-3: THE DEVELOPMENT OF SECURITIES INDUSTRY VIA SOME CATEGORIES . 58 TABLE 2-4: MINIMUM REQUIRED CAPITAL FOR SECURITIES OPERATIONS 61 TABLE 2-5: AVERAGE PROFITABILITY INDEX OF SOME MAJOR INDUSTRIES IN 2009 63 TABLE 2-6: DOMINANT ECONOMIC FEATURES OF THE SECURITIES INDUSTRY 63 TABLE 2-7: TOP 20 COMPANIES IN TERM OF CHARTER CAPITAL 69 TABLE 2-8: TOP 10 LEADING COMPANIES IN REVENUES IN EACH ACTIVITY IN 2009. 70 TABLE 2-9: REVENUE STRUCTURE IN 2009 OF MAJOR COMPANIES IN GROUP 3 74 TABLE 2-10: A SUMMARY OF MAIN RIVALS ‘S CHARACTERISTICS AND MOVES 76 TABLE 2-11: TOTAL SALARY AND BENEFIT FOR BOARD OF MANAGEMENT OF VNDIRECT IN 2009 102 TABLE 2-12: EMPLOYEES ‘S QUALIFICATION OF VNDIRECT 103 TABLE 2-13: CAPITAL INCREASING PROCESS OF VNDIRECT 104 TABLE 2-14: SEVERAL CATEGORIES OF BUSINESS RESULT OF VNDIRECT (2007- 2009) 107 TABLE 2-15: BUSINESS UNIT COST STRUCTURE ANALYSIS AMONG VNDIRECT AND RIVALS IN 2009 112 TABLE 2-16: A MODEL OF WEIGHTED COMPETITIVE STRENGTH ASSESSMENT OF VNDIRECT, SSI AND TLS 114 TABLE 3-1: SWOT MATRIX ANALYSIS OF VNDIRECT 119 TABLE 3-2: RECOMMENDED DEVELOPMENT ROAD MAP OF VNDIRECT FROM 2011- 2016: 133 xii LIST OF FIGURES FIGURE 1-1: STRATEGIC MANAGEMENT MODEL 9 FIGURE 1-2: EXTERNAL ENVIRONMENT 13 FIGURE 1-3: 5 FORCES COMPETITION MODEL 18 FIGURE 1-4: THE GENERIC BUILDING BLOCKS OF COMPETITIVE ADVANTAGE 27 FIGURE 1-5: A REPRESENTATIVE VALUE CHAIN MODEL 31 FIGURE 1-6:THE STRATEGIC MAKING PYRAMID MODEL IN A DIVERSIFIED COMPANY 37 FIGURE 1-7: MODEL OF BUSINESS STRATEGIES 40 FIGURE 2-1: ORGANIZATIONAL STRUCTURE OF VNDIRECT 47 FIGURE 2-2: INTERNET USERS GROWTH 2000-2009 IN SELECTED ASIAN COUNTRIES 57 FIGURE 2-3: INTERNET USERS IN VIETNAM 2005-2009 57 FIGURE 2-4: THE VALUE CHAIN OF VNDIRECT 111 xiii LIST OF ABBREVIATIONS GDP : Growth Domestics Product VNDIRECT : VNDIRECT Securities Joint Stock Company HSX : Ho Chi Minh City Securities Exchange HNX : Hanoi Securities Exchange IPO : Initial Product Offering ROA : Return on Asset ROE : Return on Equity KSF : Key Success Factor OTC : Over the counter SSC : State Securities Commission VNNIC : Vietnamese Internet Center ABS : An Binh Securities joint stock company ACBS : ACB securities company Ltd. AGRISECO : Agribank securities joint-stock corporation. BSC : BIDV securities company Ltd. BVSC : Baoviet securities joint stock company DAS : Dong A securities company Ltd. FPTS : FPT securities joint stock company HBBS : Habubank securities company Ltd. HBS : Hoa Binh securities joint stock company HSC : Hochiminh city securities corporation KLS : Kim Long securities corporation SBS : Sacombank securities joint stock company SHS : Saigon Hanoi securities joint stock company SSI : Saigon securities incorporation TLS : Thang Long securities joint stock company VCBS : Vietcombank securities company Ltd. xiv VIETINBANKSC : Vietnam Bank for Industry and Trade securities Joint stock company [...]... defined “strategy” as a “game plan” management has for positioning the company in its chosen market arena, competing successfully, satisfying customers, and achieving good business performance In this definition, the term of “positioning” is emphasized, as Thompson saw the importance of identifying clearly the positioning of the company in the market Dr Erica Olsen, in her book Strategic Planning for. .. technology and the Internet), marketing innovation, increase globalization of the industry, entry or exit of major firms, changes in cost and efficiency, changes in buyer preferences for standardized versus differentiated products or services, changes in regulatory influences and government policy, changes in societal factors, attitude and lifestyle; and reductions in uncertainty and business risk This analysis. .. may choose to simply maintain its present position and exploit it, reduce investing and looking for opportunities in other more attractive industries If an industry is considered as unattractive to a weak company, it might want to exit the industry by selling its business unit to other company 1.6 Company situation analysis The analysis of a company s situation begins from the analysis of how well the... as driving forces There are two phases in analyzing driving forces: The first is to define these forces, the second is to define the impact they have on the industry The most common driving forces include, but are not limited to changes in the long-term industry growth rate, changes in buyer characters and behaviour, product innovation, changes in technology applications (especially in Information technology... previous publishing, official information in internet and in electronics newspapers, and some industry reports of several investment funds and securities companies 4 6 Contributions of the thesis The thesis contributes to:  Approach systematically strategic theory applying in securities industry  Give out an overall analysis in macro environment and in securities industry, especially the key success... develop in the market Established in 2006 with a very small initial investment capital, only 50 billions dong, VNDIRECT securities joint stock Company has also passed nearly all periods (developing and recession) of the market VNDIRECT had a comparatively effective strategy in the starting period aiming at online customers and focus on technology development and gained a comparative high earning and return... requirements, and so on Analyzing the industry economic features is important, as it will help much for planning the strategy For example, a company deals in an industry which requires a lot of capital investment, might have to consider the strategy of raising capital by equitization or look for a strategic investor to pour capital in, a company deals in an industry with fast pace of technological change and innovation... changes, 5 forces model analysis  Study the case of a specific securities company (VNDIRECT)  Recommend in strategic adjustments for VNDIRECT Securities Company This can also be a reference source for other securities companies 7 Expected results Expected results of the study are:  Giving out a whole picture of the securities industry: macro environment, dominant economics features and industry environment... competitive in the market within the next few years? 4 Scope of work The research areas are limited to analysis and adjust a strategy for a specific securities company (VNDIRECT) To do this, macro environment and securities 3 industry environment are included in the research The period of time for past analysis in securities industry environment is from 2000-2010 It is taken since the time of establishing... Developing a Strategic Vision and Business Mission Setting objectives External analysis SWOT Internal analysis Opportunities & Threats Analysis Strengths & Weaknesses Formulating a strategy Implementing the Strategy Organizational Combine strategy, Organizational Structure structure, organization Control Evaluating, Monitoring and Adjustment 10 Source: Based on Arthur Thompson and Strickland, Strategic . Baoviet securities joint stock company DAS : Dong A securities company Ltd. FPTS : FPT securities joint stock company HBBS : Habubank securities company Ltd. HBS : Hoa Binh securities joint stock. UNIVERSITY, HANOI SCHOOL OF BUSINESS NGUYEN THI PHUONG THAO ANALYSIS AND RECOMMENDATIONS IN STRATEGIC ADJUSTMENT FOR VNDIRECT SECURITIES JOINT STOCK COMPANY (2011 – 2016) . Distinct competencies of VNDIRECT 122 3.4. Recommendations for VNDIRECT company from 2011 – 2016 122 3.4.1. Recommendations in strategic vision and business mission adjustment 122 3.4.2. Recommendations