Building the strategy to develop international payment services in Vietnam Joint Stock Commercial bank for industry and trade

GRIGGS GLOBAL ADVANCED UNIVERSITY MASTER OF BUSINESS ADMINISTRATION CAPSTONE PROJECT REPORT BUILDING THE STRATEGY TO DEVELOP SERVICES IN VIETNAM PROGRAM INTERNATIONAL PAYMENT JOINT STOCK COMMERCIAL INDUSTRY AND TRADE Group Number: 09 Class: GaMBA01.X0310 Student’s name: Mai Khac Chinh Tieu Thanh Long Pham Kieu Van Dinh Thai Lam HANOI: 2011 BANK FOR C3 _ VietinBanlc=>> CONFIRMATION VIETNAM JOINT STOCK INDUSTRY HUNG OF COMMERCIAL BANK FOR AND TRADE YEN BRANCH We Vietnam Joint Stock Commercial Bank For Industry And Trade - Hungyen Branch confirm that we agree the research group including the members mentioned below to be allowed to get access to the internal documents, data as Well as contact with the operation fact to study about the strategic orientations of Vietnam Joint Stock Commercial Bank For Industry And Trade serving the research purpose of the group to complete the MBA course: Mai Khac Chinh Tieu Thanh Long Pham Kieu Van Dinh Thai Lam Hungyen, November 30" 2011 DEPUTY DIRECTOR fle— Nguyen Thi Ven NTRODUCTION The necessity of topic In the economy January trend of strongly internationalizing is step by step integrating 11" 2007, Vietnam international the regional and economy, international Vietnam’s economy On officially became the 150" member of World Trade Organization (WTO) This was an important event which opened the opportu nities as well as the challenges to Vietnam’ economy so that it integrates in the international economy deeply and widely, continuously promoting the industrializat ion and modernization of country The development of foreign trade and international investment require the nonstopping development of payment, currency relation and international banking services The commercial banks play role as the bridge connecting the above economic relation Export-import payment commercial banks The good is one of the important professions of operation of export-import payment activity of commercial banks contributes to the promotion of business of Vietnam’ enterprises, in particular, and Vietnam’s foreign trade, in general The export-import payment brings the great benefits to the commercial banks External the service fees, commercial banks profession, export-import also develop other financing professions profession, such and_ as foreign international profession, etc currency guarantee Besides, since April 1°' 2007, to implement the process under the commitment when Vietnam joined WTO, the foreign banks are able to establi sh the sub-bank with 100% foreign capital in Vietnam This brought the Vietna m’s commercial banks in general and state commercial challenges of competitiveness banks in particular in great threats and in Vietnam The competitive pressure for State commercial banks is not only from the foreign banks, but also from the joint stock commercial banks Therefore, although the market share of state banks still ———E ễễ_— GaMBAO1.X0310 - Group ễ Page dominates the market, the decrease of market share in this bank block is considered as a dispensable movement Facing to this pressure, in order to survive, develop in competitiveness and well the role of economy’s bridge, Vietnam Joint Stock Commercial Bank for Industry and Trade (Vietinbank), one of the big commercial banks, considered the export-import payment activity as one of the important tasks in upcoming years To survive and develop, Vietinbank need to build a strategy The building of suitable strategy has extremely important meaning; the timely strategy direction and adjustment is the foundation for great benefits of enterprise Understanding the importance of building the business strategy of enterprise as well as the development of Vietinbank in the integration, our group did research and chose the topic: “Building the strategy to develop international payment services in Vietnam Joint Stock Commercial Bank for Industry and Trade” to be research target and hope to choose a right direction for Vietinbank in the future International payment services can be considered as a strategic business unit (SBU) of VietinBank because of the following reasons: - VietinBank just established an International Payment Transaction Office for international payment services which is located in Cua Nam Street, Hanoi This Office is independent and fully functional as both cost and profit center of VietinBank | | - VietinBank_has fully delegates authority and responsibility The International Payment Transaction Office to a senior executive who reports directly to the General Director of VietinBank Purposes of research - Systematize the theories and methodology about business strategy of enterprise - Build the business strategy for international payment services - Define target and propose solutions to develop that SBU Scale of research - RR The theories about business strategies of enterprise EERE RE NEESER GaMBA01.X03 10 - Group — a See] Page - Building the international payment service product business development in Vietinbank and solutions, detailed methods to implement the business strategy Method of research Group does research based on the knowledge to evaluate all the results of international payment service product business of Vietinbank Otherwise, we also use methods of statistic, analysis, predictability and collection based on the collected data to analyze the service business of bank and propose the business strategies for Vietinbank in integration condition Structure of report External the introduction, conclusion and reference, main content of the report includes chapters: - Chapter |: Several basic theories on business strategies - Chapter 2: Real situation about activities of doing business the international payment service products in Vietinbank - Chapter 3: Targets and solutions to develop the international payment service products business in Vietinbank aera renames omer ne a GaMBA01.X03 10 - Group TERA SEL nesses we: Page CHAPTER 1: INTRODUCTION OF BUSINESS STRATEGY INTERNATIONAL PAYMENT AND SERVICE 1.1 General introduction about business strategy 1.1.1 Definition of business strategy Business strategy is researched by a lot of economist and they have bought out many definitions of the term “business strategy” like: Business strategy is the art: - Alain Threlart assumes that “The strategy is the art that enterprise uses against competition and wins” - M.Porter thinks that “The strategy is the art setting up steady competitive advantages to defend” - Hence, those authors believed that business strategy is a type of art to compete in market and develop enterprise According to concept in management aspect, business strategy is a type of plan - G.Arlleret thinks that “Strategy is defining ways and means to reach established targets through policies” - D.Bizrell and the author team assert that “Strategy is likely a general plan directing and orienting enterprise towards expected goals It is the basis to form policies and operating methods” - Gluecl assumes that: “Strategy is a consistent, comprehensive, and genera kind of plan which is designed to ensure performance of enterprise’s goals According to concept of combining unity: - “Business strategy is the art of combining and controlling activities to get long-term goals of enterprise” - Chandler considers strategy consists of defining long-term basic goals of company; selecting measures or action process; distributing essential forces and carrying out those targets SA RTE PT EE ‘GaMBA01.X0310 - Group OE ET TTT TE SEDO ET EE, Page In business, “Business strategy is the art of designing, organizing means to reach long-term goals of company and it connects with changes of business and competitive environment” 1.1.2 Attributes of business strategies - Business strategy identifies basic goals and management direction of enterprises in each period - Business strategy is oriented in order to ensure the continuous and constant development for firms in highly fluctuated financial environment - Business strategy optimal combination is the guarantee for the maximum mobilization and of exploitation and utilization of firm’s resources in current and future Therefore, it can encourage competitive advantages in long run - Business strategy of firms is reflected during the continuous process from the building plan step to implementation step and supervision step - Business strategy is often the offensive strategy It is established and built up on the basis of detecting and taking advantages of business opportunities, competitive advantages of firms to gain the highest operation efficiency - Business strategy is built up through a long period of time (3.5 to 10 years) Therefore, business strategy has characteristics of long term tactic and is specified in short term strategies, which are also called plans 1.1.3 Role of business strategy According to modern business strategy, it is incapable to hedge changes of market without specific and flexible business strategy, which is really offensive Only by this way, firms can detect worthy opportunities or risks in order to give out suitable policies Lack of business strategy, firms is unable to run its business effectively, even lead to bankruptcy Therefore, business strategy has really important role in the operation and development of a business: - Business strategy helps business determine clearly its purpose, direction as a basis for its all business activities RE EER i PRT GaMBA01.X0310 - Group PR SON IND ES EE ETE Page - Business simultaneously, strategy have active helps business measures to reach overcome financial risks and chances and, threats from competitive market - Business resources, strategy consolidates contributes competitive to the increase of the efficiency of using position of firm, ensures for its constant development in the future - Business strategy creates solid base for giving policies and determining suitable business activities to market fluctuations 1.2 Process of building business strategy 1.2.1 Analysis of business environment Analysis of business different environmental environment of firms is the process of considering factors and determining influential level of opportunities and threats to firm The expectation is based on reliable analysis and assessment basis in order to take advantages of opportunities or to be active with financial and business risks to firm _ Rotate ee Changes of GDP elle UTE NG pi meer TU ỐC ' Cultural and education Customs and traditions Jdhecyclesofeconomy ỗ Population, NI _ distribution | echnological Ola dai 00) ' Technology transfr Source: Strategic Management: Concepts and Cases (12th Edition) Fred R David Figure Error! No text of specified style in document 1: P.E.S.T Model RE Am GaMBA01.X0310 - Group RE Page 1.2.1.1 Macro environment Economic environment: Macro environment is a really important factor which can not be ignored by strategy planners It changes create different opportunities as well as threats to each firm in different fields Environmental positions of macro environment are the main decisive factor and become the power of the whole economy: - Growth rate of economy indicates the economic variation by the time Marx says that economic circle includes steps: Crisis - Recovery — Depression and Flourishing When the economy is in the depression or crisis, income of residents decreases, consumption decreases and production is loss This is a difficult period to firms Vice versa, in the economic upward, enterprises have many opportunities to expand their scale and develop - Interest rate: is one of monetary factors and is the typical factor which every firm makes concern Both high or low interest rate affect directly to business and market demand because it is the contributing factor of firm’s cost Interest rate fluctuation is influenced dramatically by the monetary policy of the Government - Exchange foreign elements rate: always has direct effect on activities of enterprises with such as import — export enterprise, enterprises using direct or indirect foreign input or output The change of exchange rate directly affects the company competition in the international market - Inflation: is always threat to business activities One of bad effects inflation to the whole economy is that it can decrease the stability of the economy and reduce economic growth In long run, inflation reduces investment efficiency of firms and brings hidden risks, thus, businesses develop slowly, growth rate of economy is negatively affected Politic and legislation environment: Politic and different directions legislation They may factors affect developing be opportunities strategy of enterprises in to this firm but in contrast, be disadvantage to other firms Stable politic brings good condition ESET ED A GaMBA01.X0310 - Group AT for developing — Page economy, vice versa, unstable politic will have negative influences on economy Besides, running in an economy which are adjusted by strict law system, enterprises may face both advantages and disadvantages because a clear and full law system will create healthy competitive environment and be a foundation for an attractive environment in the future One of the typical trends in recent years is the redirection to deregulation The eradication of exhibitions and regulations makes the import barrier become industry lessen and In addition, creates the policy an intensive competition of encouraging various in some economic fields of elements to include actively in business activities is the risk for state owned firms but the great opportunity for private enterprises because they can participate in the market more conveniently and easily Technical environment: Technical progressions have influence on many aspects of the whole society These impacts are through products, technical process and new materials Directions and fluctuations in technology may be chance for enterprises which are able to mobilize capital quickly and effectively, but vice versa, it is threat for firms fixed with old technologies and slow to adjust One of the most important effects of changing technology is on barriers of import and export and the restructuring thoroughly sector’s structure as well as on the creation of new jobs According technological advantages to benefit and M Porter, itself, but sector’s technological change it is important structure On the is not if it impacts other hand, the important on to competitive development of technology will shorten product circle, thus, firms should pay attention to the trend of technological innovation Every firm has relation with many different and related kinds of technology Its business activities also have that various relation Therefore, an technology is very important to competition if it impacts on firm’s competitive advantages or on structure of financial sectors Cultural and social environment: SR ASE ESE AR RE LET SEL GaMBA01.X0310 - Group TE EET IO DN TOO EET SMU ES TNE MOE EE EE OT TE OT LEO TET MT IO Page ... strategy to develop international payment services in Vietnam Joint Stock Commercial Bank for Industry and Trade? ?? to be research target and hope to choose a right direction for Vietinbank in the future...C3 _ VietinBanlc=>> CONFIRMATION VIETNAM JOINT STOCK INDUSTRY HUNG OF COMMERCIAL BANK FOR AND TRADE YEN BRANCH We Vietnam Joint Stock Commercial Bank For Industry And Trade - Hungyen Branch... Understanding the importance of building the business strategy of enterprise as well as the development of Vietinbank in the integration, our group did research and chose the topic: ? ?Building the strategy