Business strategy for An Binh commercial joint stock bank in the period 2011 - 2015

CAPSTONE PROJECT REPORT BUSINESS STRATEGY FOR AN BINH COMMERCIAL JOINT STOCK BANK IN THE PERIOD 2011 - 2015 Group number: 4 2, NGUYEN THI PHI LOAN... GRIGGS UNIVERSITY GLOBAL ADVANC

CAPSTONE PROJECT REPORT

BUSINESS STRATEGY FOR AN BINH COMMERCIAL

JOINT STOCK BANK

IN THE PERIOD 2011 - 2015

Group number: 4

2, NGUYEN THI PHI LOAN

GRIGGS UNIVERSITY

GLOBAL ADVANCED MASTER OF BUSINESS ADMINISTRATION PRORGAM

CAPSTONE PROJECT REPORT BUSINESS STRATEGY FOR AN BINH COMMERCIAL

JOINT STOCK BANK

HO CHI MINH CITY 2011

We would like to thank sincerely and deeply to all teachers who have enthusiasm to guide us to fulfill the capstone project report as well as big-hearted teaching, assisting, and facilitating for us to complete this course

We also send our sincere thanks to ABBank’s board of leaders, classroom management members, and GaMBA01.C02 classmates had helped, encouraged, and supported our group to complete this capstone project report as well as complete the GaMBA’s program

ON BEHALF OF GROUP 4

GROUP LEADER

VU THU LAP

LETTER OF COMFIRMATION

All data in the project "Business strategy of An Binh joint stock

commercial bank for the period 2011-2015" related to ABBank’ activities

from 2006 to October 2010 is cited in the annual reports of ABBank and it has been approved by ABBank ‘s leader

Ho Chi Minh city, March 1 st 2011

For AN BINH JOINT STOCK COMMERCIAL BANK

Signed by

Mr NGUYEN CONG CANH

DEPUTY DIRECTOR GENERAL

TABLE OF CONTENTS

Page Acknowledgements

Letter of confirmation

Table of contents

INTRODUCTION ……… 1

CHAPTER I ……… 4

I, Theoretical basis 5

1,Concepts, role of strategy and business strategy 5

1.1, Concept of strategy 5

1.2, Strategies at different levels within an organisation …… 6

1.3, The role of business strategy 6

2, The strategic building process 7

2.1, The strategic formulation process ……… 7

2.1.1, Determination of the mission and of the organization …… 8

2.1.2, Determination of the goals of the organization ……… 8

2.1.3, Determination of the strategic objectives ……… 9

2.1.3.1, The internal factors ……… 10

2.1.3.2, The external factors ……… 10

2.1.4, Analysis the business environment of firm 11

2.1.4.1- The impacts of external environment for business strategy 11 2.1.4.1.1, Macro environment 11

2.1.4.1.2, Competiors 12

2.1.4.1.3, The quality and capabilities of companies in the industry 13

2.1.4.1.4, Market demand ……… 13

2.1.4.1.5, Customers 13

2.1.4.1.6, Suppliers 14

2.1.4.2, Assessment of environmental impacts ……… 14

2.1.4.3, Internal analysis ……… 14

2.1.4.4, Value chain of the organisation analysis ……… 15

2.1.5, Financial analysis ……… ……… 15

2.1.6, The rotation index 15

2.1.7, Organizational culture and reputation analysis 15

2.2, Implementation of strategy ……… 16

II, The methods of research 16

1, Method of data collection 16

1.1, By referring to a document 17

1.2, From the experiments 17

1.3- From non-experimental data (questionnaire survey) 17

2, Method of comparison 17

2.1- Comparison of relative movement 17

2.2- Absolute comparison 18

3, Method ofstatistical description 18

4, Method of SWOT analysis 18

5, SWOT Matrix 18

6, Method of Five Forces Analysis 19

7- Method of Quantitative Strategic Planning Matrix (QSPM) …… 20

Summary of Chapter I 20

CHAPTER II ……… 21

I, General introduction of ABBank 22

1, Introduction ……… 22

2, Products and services ……… 22

2.1, For individual customers ……… 22

2.2, For corporate customners 23

2.3, Special customers in electric sector ……… 23

3, The formation and development of ABBank 23

4, Structure of shareholders ……… 24

5, Organization structure of ABBank 25

5.1- Board of Directors ……… 26

5.2, Board of Supervisory 27

5.3, Executive Board 27

5.4, The Council, Committee of the Board 27

5.4.1, Credit Council 27

5.4.2, Assets and Liabilities Management Commitee (ALCO) 27

5.4.3, Risk Monitoring Committee 27

6, Business network ……… 28

II, Results of operations of ABBank in the period 2006 to 2010 28

1- Some key indicators of business from 2006-2010 of ABBank 28

2, Characteristic activities of ABBank 30

III, Analysis ABBank‘s business activity 31

1, SWOT analysis of the current operating environment of ABBank 31

1.1- Opportunities ……… 31

1.1.1, The economy growth is continuous at high speed 31

1.1.2, Globalization and international economic integration 32

1.1.3, The legal environment for banking activities have been increasingly improved 32

1.1.4, Population size and structure are favorable for the development of banking services 33

1.1.5, Vietnam's society and politics are stable 33

1.2, Threats ……… 33

1.2.1, The increase in competitive pressure in the banking sector 33

1.2.2, Pressures in keeping and expanding in the local market share 34

1.2.3, Competition labor market is increasingly fierce 34

1.2.4, Pressure on increasing charter capital, the management capabilibity of commercial banks in compliance with the international standards and rules (Basel II) by the State Bank of Viet Nam’s regulations 34

1.2.5, Customers become increasingly more demanding for banking services 35 1.3 - Matrix of environmental factors assessment 35

2, Analysis of the internal ABBank 36

2.1- Strengths ……… 36

2.1.1, The advantage of equity 36 2.1.2, Foreign and domestic trategic partners are financial and economic

2.1.3, A wide distribution network 37

2.1.4, Risk management system and supervision system 37

2.1.5, Employees with force capable, experienced and high qualitified 37

2.1.6, Executive capacity 37

2.2, Weaknesses ……… 37

2.2.1, Low effective of using capital 37

2.2.2, Distribution channels 37

2.2.3, Competitive advantage 37

2.2.4, Service qulity 38

2.2.5, Marketing activities 38

2.3- Matrix of the internal analysis 38

3, Analysis competitors ……… 39

4 - Some forecasts of banking operations from 2010 to 2015 43

4.1- Key issues is addressed in the development period 2011-2020 43

4.1.1- For all commercial banking system of Vietnam 43

4.1.2- For state-owned commercial banks 44

4.1.3- For joint stock comercial Banks ……… 44

4.1.4- For the non-banking institutions 45

4.2-The general direction of Vietnam's banking by 2020 45

4.2.1, Competitions ……… 45

4.2.2, Health and stability ……… 45

4.2.3, Transparency, Disclosure 46

4.2.4, Easy access 46

4.2.5, International integration 46

Summary of Chapter II ……… 47

CHAPTER III …….……… 48

I, Strategies of ABBank in the period 2011 – 2015 49

1, Orientation of business strategy for ABBank in the period 2011 – 2015 49

1.1- General orientations (general goals) 49

1.2- Guideline 49

1.3- Orientation some basic norms in the period 2011-2015 49

1.3.1- Equity 50

1.3.2- Total Assets 50

1.3.3- The total capital mobilization 50

1.3.4- Total outstanding loans to the economy 50

1.3.5- Return on equity (ROE) 50

1.3.6- CAR 50

1.3.7- Number of branch / transaction devisions 50

1.3.8- Strong research and development of products and services 50

1.3.9- Establishment representative offices or branches 50

2, Strategy formulation 52

2.1, Financial capacity stratergy 53

2.2, Technology capacity stratergy ……… 54

2.3, Management capacity stratergy ……… 54

2.4, Stratergy of organizational structure and network development 55

2.4.1, Organizational structure construction ……… 55

2.4.2, Network development ……… 55

2.5, Strategy for products quality and the new products development 56

2.6, Corporation stratergy ……….……… 56

2.7, Branding and marketing stratergy ……… 56

2.8, Human resource stratergy ……… 57

3, Selection of stratergy and specific solutions ……… 58

3.1, QSPM analysis ……… 58

3.2, Some of other main reasons 68

3.2.1, Human resources ……… 68

3.2.2, Products quality ……… 69

3.2.3, Business network ……… 70

3.3, Specific group of solutions ……… 71

3.3.1, Solutions for capital ……… 71

3.3.2, Solutions for network development stratergy 72

3.3.3, Solutions for products quality ……… 75

3.3.4, Solutions of human resources development ……… 76

1, The 1st period 78

2, The second period 79

3, Steps to develop and implement strategies ……… 79

III, Some recommendations 80

1, For Government, State Bank of Vietnam and concerned ministries 80

2, For ABBank 81

Summary of Chapter III ……… 82

CONCLUSION ……… 83

REFERENCES ……… 85

LIST OF TABLES, GRAPHS

No Title of tables, graphs Page

TABLES

1 Table 2-1 Activities of An Binh joint stock commercial bank from 2006 to

2 Table 2-2 GDP growth rate in period 2005-2009 31

3 Table 2-3 Matrix of environmental factors assessment of ABBank 35

4 Table 2-4 Matrix of the internal analysis 38

5 Table 2.5- Position of ABBank in the joint stock commercial bank system 39

6 Table 2-6 Matrix of competitors comparison 41

7 Table 3-1 Orientation of ABBank’s basic norms for the period 2010-2015 50

8 Table 3-2 Table of SWOT matrix and TOWS matrix 52

9 Table 3.3- QSPM for selecting the strategic SO group (intensive growth

1 Some graphs of key activities of An Binh joint stock bank from 2006 to 2010 29

a Graph of total assets 29

b Graph of Equity 29

c Graph of deposits 29

2 Graph of comparison between ABBank, DongABank and ACB 42

3 Some graphs of ABBank’s basic norms from 2011 - 2015 51

a Graph of Equity and Total assets form 2011 – 2015 51

b Graph of Deposits and Loans from 2011 – 2015 51

INTRODUCTION

After the global economic crisis in 2008, many countries are evaluating its socio-economic impact to build a new development model suitable for each country’s actual conditions Restructuring the economy and changing the development strategy and model to meet the competition requirements are urgent issues

Vietnam's economy is not out of that context The country has adopted a and-error approach toward the establishment of the most appropriate development strategies during its 20 years of socio-economic reform In recent years, Vietnam has pursued the width of growth model so long, the elements of capital, labor, natural resources, position and comparative advantages have not been the same as before Therefore, in order to ensure successful competition, it’s necessary that Vietnam must change the research of competition strategy and policy, including changing patterns of growth, restructuring technology, innovation of management and operation in line with the new situation

trial-Amid this context, it is vital that the banking sector change its strategy and restructure the whole system in accordance with the general economic situation It now goes without saying that commercial banks and financial institutions have confirmed their role as the lifeblood of the economy After Vietnam’s integration into the WTO (World Trade Organization), competitive pressures have forced commercial banks to change the way they operate their business Banks now focus on building long-term strategy for improvement of their operations, instead of depending on annual business development plan as before

In general, the prerequisite for success of commercial banks now is to develop specific business strategies corresponding to each bank’s actual conditions

Within this context, An Binh joint-stock commercial bank needs to research, review its operations in order to set up new competitive strategies, as well as restructuring organizational structure and operations, investing in development of human resources and technology, and changing executive management in line with new conditions for powerful breakthroughs

From the aforementioned real situation of Vietnam’s banking system, we

decided to choose the theme “Business strategy of An Binh joint stock commercial

bank (ABBank) for the period 2011-2015”

1 The necessity

Business strategies are required for each development stage Strategies with clearly defined steps and implementation schedule play a very important role in carrying out long-term plans for an enterprise’s operations

The formulation of business strategy is especially of great importance for ABBank in the year 2011 which witnesses Vietnamese banking system’s strong commitments to the roadmap of WTO’s regulations ensuring equality between domestic and foreign financial institutions

With the knowledge acquired during the course of the MBA program, we make research and systematization of the basic theory on business strategy as the premise basis for formulating ABBank’s strategies in the period 2011 - 2015 In addition, by analyzing the actual situation in the internal operations and business environment of the ABBank, the opportunities - and challenges, we have chosen the strategic plan in line with the development of ABBank in the forthcoming years

The data of this capstone project report is extracted and compiled from statistical yearbooks, the annual report of ABBank In addition, we also use some references, books, magazines and other bank documents relating to subjects of the Global Advanced Masters of Business Administration of Griggs University

2 Purposes

2.1- General purposes

The establishment of ABBank’s business strategy for the period 2011 – 2015 is aimed at determining the necessary steps for the bank to achieve specific objectives such as growth, service development, as well as consolidating its brand name in the banking sector

- Analyze market, product and competitive situation

- Propose specific strategies and solutions for business activities of ABBank in the period 2011 - 2015

CHAPTER I

BASIS OF THEORY AND METHODS OF RESEARCH

Business strategy is very important for the existence and activities of the business It identifies major goals necessary for mobilization of short and long term resources It ensures that the plan is not being diverted Business strategy helps the enterprises to gain more profit, maintain a firm foothold in their already well-established business sector, and to proactively adapt to business environment

A prerequisite for any enterprise’s success, therefore, is to build a business strategy suitable for specific conditions

Business strategy is what defines a company’s products and services, its business scale, factors of production, profitability and growth prospects

It is also a series of commitments and actions that a company uses to win a competitive advantage by exploiting its core competencies in a specific market

Strategy is the direction and scale of an organization in the long-term: strategy will bring advantages to the organizations through the optimum arrangement of resources in a competitive environment to meet the market demand and expectations

of stakeholders

In summary, strategy is:

• A place where enterprises try to get to the long-term (direction)

• That enterprises must compete in the market and what kind of business activity is conducted on that market (market size)?

• How the company will work better than competitors on those markets (advantages)?

• What resources (skills, assets, finance, relationships, technical competence, facilities) are needed to be able to compete (resources)?

• The factors from the external environment affecting the competitiveness of enterprises (environment)?

• The values and expectations of those who have power inside and outside the enterprises (stakeholders)?

1.2- Strategies at different levels within an organisation

• In any organization, strategies have a multi-level presence stretching from each working individual to the entire organization

• Corporate Strategy - relating to the overall purpose and scope of enterprises

to meet the expectations of the contributors This is an important level because it has strong influence on investors in the enterprise and at the same time it also guides the process of making strategic decisions throughout the enterprise Corpotate strategy is often presented in a clear "mission statement"

• Business strategy - more related to how a company can compete successfully

in a specific market It concerns strategic decisions about choice of products to meet customer needs and to gain competitive advantages over competitors, to exploit or to create new opportunities etc

• Operational Strategy - relating to each department in the enterprise as regards how to implement strategic direction at the enterprise level and each department level within the company Therefore, the operational strategies focus on the issues of resources, processes and people, etc

1.3- The role of business strategy:

Being a business manager, it’s necessary to have a strategy for success The manager is easy to forget and ignore the business strategy because they are very busy with their current job In this case, he/she can not know where his/her work is located With good strategic skills, he/she will set real goals and know clearly how to achieve them in the future In addition, he/she can not authorise others to build his/her business strategy He/she has to decide the future of their enterprise or they will lose their market position to competitors

It’s necessary to determine the strategy for the survival and growth of any enterprise Strategy is interpreted as a general plan of the enterprise It gives the growing trend in the long term; confirms the major objectives and outlines the basic

environment So the strategy is a basic foundation which is responsible for determining (locating) the resources, creating a unified resource focusing on the objectives, using the power of institutions to implement of that goal

Competitive strategy helps enterprises to capture the market opportunities and

to create competitive advantage in the market by applying limited resources of the enterprises for superior results in order to achieve targets and to help enterprises to consider and to determine the best orientation as well

The rapid changes of business environment always create opportunities and risks in the future (business strategy will help businesses to use opportunities and to reduce risks relating to the business environment)

Business strategy not only helps organisations to cope and to better master the changing market but also reduces risks and strengthens the organisations’ ability to take business opportunities when they appear

2 The strategic building process

The strategic building process is conducted by several separate steps, commencing from the internal and external firm’s factors of which strategy is held under the special characteristics of the enterprise

These two factors seem to be related but in fact they completely separate from the purpose of analysis The strategic formation is related to the former whereas the deployment of strategy is concerned with the later The strategy should determine the thinking and the analysis of strategic development of the company board

There are many different opinions and approaches to strategic building process, but in general strategy is usually done through the following steps:

2.1- The strategic formulation process

The strategic formulation process is accomplished through the identification of opportunities and risks; resources, materials, engineering, finance and management of the business Human values and determination of the leadership affirm the corporate social responsibility through the strategy, objectives and policies and also industrial areas of the company; structure of the enterprise and relationships; the division of labor, coordination between departments, information systems; organizational process

and behavior; standards and methods of measurement, powerful systems; control, selection and promotion systems etc

2.1.1- Determination of the mission organization

When searching for solutions and deciding the choice, firm’s leaders must base

on clear goals that they want to achieve They ought to face many different demands in order to serve their interests These requirements are derived from the shareholders, employees, suppliers, customers, governments, and communities Therefore, they must

be evaluated, arranged in priority order, so its role is the orientation of making process of the organization

decision-2.1.2- Determination of the goals of the organization:

Identifying goals of the organization is not only a theoretical issue but it is also what the strategy must regularly confront Therefore, it’s essential to understand such goals to establish the strategy and also for researche purposes

It’s said that the organization's main goals are its existence Therefore, the approach to strategic objectives will determine the orientation for the formation of strategy and having influence on strategy content

Some views of the organization's mission:

According to Latin Mittere to send; Cumming and Davies, 1994: The mission

of the organization includes all the basic point of departure and the period that it will guide the organization in a certain direction

According to Mc Coy, 1985, Collins and Porras, 1994: The goal of the organization is the most important point of the opening period for the formation of strategy, and it is strongly influenced by the organisation’s cultural values

Some other views are that ambition and intention are an important part of the organization’s mission According to Campbell and Yeung, the mission brings together all the factors into a unified framework

Normally the establishment of a mission statement is an ongoing process through six basic steps:

Step 1: Establishing the initial idea for the business mission

Step 2: Surveying the external environment and identify internal conditions Step 3: Defining the idea on the business mission

Step 5: Implementing of the company's mission

Step 6: Reviewing and adjusting the mission

When a mission is set up, the next step is not only concerned with the leader’s wishes, but also with internal and external factors relating to the company

2.1.3- Determination of the strategic objectives:

Objectives affect all kinds of business activities They are also a source of irritation So it is used as a tool to assess and control these activities

They allow the checking of whether the result is consistent with the requirements given or not so that the leaders maytake appropriate action to achieve desired results, and consolidate responsibilities with work The central role of target is the result of the comparison For each enterprise, there are long-term, medium term or short term goals

Economists assume that the business goals are set in the following eight main areas:

- Development and performance of staff

- The attitude and performance of workers

- Responsibilities to society

If It exists a lack of any one in eight areas, it will directly affect the overall operation of the enterprise Determination of the short-term objectives is useful for long-term goals of the enterprises

In any corporate, a specific job’s goals can be a constraint for other work However, the implementation of a goal may conflict with other targets

Targets must satisfy one of the following factors :

Goal is really clear An obvious target would not adversely affect the operation

of the collective Target must have its own characteristics If a goal is uneffective, it’ll reduce interests of all members of the organization

Goals for each stage must be based on the recently announced mission and have moderate impact on the impact of other objective factors These are internal and external factors of the company:

2.1.3.1- The internal factors

+ The ability of companies is of great importance for the consideration of the objectives of an organization Calculation capabilities of talent and material resources

is the premise for target selection Target system should be developed so as to make the most of curent ability but not exceed it

+ Management perspective : It is the company management team who set up strategic objectives for any enterprise Their viewpoints, therefore, is of great importance for the establishment of strategic objectives

+ The results of the company in the past provide conditions for implementation

of the present target system, because the result always comes with the extremely valuable experiences

+ The owner or the employees of the company: Making the goal has always been dominated and influenced by this group Owners financing the activities of the company are responsible for the assets of the company, they always eager to quickly increase the company's assets Employees of the company are those who make it their goal, always wish that the performance of targets will contribute to add value and quality to their lives

2.1.3.2- The external factors

+ Business environment: it affects all activities of the enterprise So it can govern successful implementation of objectives For smooth operation of the enterprise For advantaged operation of the enterprises, business targets must be consistent with the enterprise’s business environment

+ Customers, competitors and other objects are the factors that directly affect the survival of the company The company's goal is to satisfy the needs of customer, social subjects and to limit the strength of competitors by creating superior competitive advantage for themselves

2.1.4- Analysis the business environment of enterprise:

2.1.4.1- The impacts of external environment for business strategy:

Any enterprise exists in a certain business environment Its existence and development are influenced by the external business environment The impact of the external business environment can be positive or the negative In order to survive and develop, firms must develop in line with the external environment

Business environment, includes the economic environment or macro environment; industry environment or operational environment Operational environment is the key factor affecting daily operations of the enterprise while the macro environment does not have a direct effect, but a long term impact on the development process

2.1.4.1.1, Macro environment:

Macro environment consists of many different factors indirectly influencing the activities of the business through its impact on the industry environment, in which there are five elements considered the most powerful factors such as economy, institution, law, technology and society and nature

a, Economic factors:

Economic factors have great influence on the business as well as a mobilizing factor, the most unpredictable of the macro factors Its movement is always involves both opportunities and challenges Which is more prominent trends of:

- The trend of total domestic product and gross national product: This direct impact on the rate of economic growth, the growth of disposable income of residents

It will change consumer demand, the size of the market, and affect the balance of supply and demand of products

- Interest rate is a key factor affecting the trend of consumer savings and investment, it makes the demand go up or down, stimulate or restrict investment to expand production

- Rate of inflation: It influences predictability of investors when inflation increases, their predictation becomes more difficult and investment will bring more risks

- Balance of payments, exchange rate: influence market and external economic relations of enterprises, sometimes it leads to change in the general economic status

- The economic policies reflect the views of government in the development of industry

b, Institutional and legal factors:

Institutional and legal factors include the systems of views, policies, regulations, rules and procedures It affects the survival and development of the sector, the economic status and so it will affect the operation of enterprises

c, Tecnological factors:

With the growth of scientific technology, the life cycle of technology increasingly shortened The advent of new technology will destroy the old one and will increase the advantages of alternative products; products becomes better, price becomes cheaper and the new market will be set up Enterprises therefore need to increase capacity in utilization and research new technology

d, Social factors ( population, customs, hobbies .) are direct factors

influencing consumer needs of society

e, Natural factors: a significant factor in people's life, are considered less

volatile elements, however in recent decades, the natural environment is being

seriously degraded That may have great influence on business trends

f, Operational environment: It is associated with the operation of enterprises,

the elements of the operational environment decide the investment environment, the

intensity of competition and profitability in the industry

2.1.4.1.2- Competiors

a, Potential competitors are companies which are not involved in the industry

yet but will enter the industry The appearance of such competitors will intensify competition, reduce profits in the industry Their penetration depends on the barriers

to enter the industry The greater the barriers are, the less feasible penetration is According to Joe Bain, the three main barriers are: the loyalty of customers for the company's products, an absolute advantage in costs and the economic advantages of scale

b, The current competitors: they are pressure and direct threat to the

company Competition from curent companies in the industry is more growing

more threaten Due to this competition, the company is forrced to increase investment costs in order to differentiate products and services; to access market or to reduce cost Intensity of competition in the sector often depends on factors:

2.1.4.1.3- The quality and capabilities of companies in the industry:

The quality and capabilities of companies in the industry decide the nature and intensity of competition in the industry For an industry with a large number of companies and similar ability, competition takes place with the war of price In the case of a few powerful companies, they often have links with each other to dominate the market and companies with less force must comply with rules that the lead companies set out

As costs increase, enterprises will have to fight for survival so as not to get out

of business That increases the intensity of competition, especially for the sectors in the period of maturation or degradation Conversely, if barriers are lower, the level of competition in the industry tends to decrease

Besides, the intensity of competition also depends on other factors such as the difference in products and services between companies in the industry, the growth of the industry, betting on the sector, fixed cost

2.1.4.1.5- Customers:

The pressure from major customers is derived from the customer’s ability of bargain which is mainly expressed in two forms namely price reduction and quality improvement When the bargaining ability of buyers increase and profits will be reduced This pressure will increase as products and services are of little variety, consumers purchase use large numbers ect

2.1.4.1.6- Suppliers:

Suppliers may pressure the company by price or quality of the inputs It directly affects the cost and quality of products and services of the company so it will impact customers' responses

+ Alternative products aredifferent products but meets the same demands of the consummers The emergence of these products creates the risk of competitive price

and profitability for the company

2.1.4.2- Assessment of environmental impacts:

To assess the impact of the environment, people often use the method of quantifying the impact of environmental factors on the operation of the enterprises, then they synthesize all of the elements The process is conducted through five steps:

Step 1: To make a list of factors that play a decisive role for the success of the

enterprise

Step 2: To determine the importance of each factor to the industry

Step 3: To determine the weight of each factor in relation to the reactivity of

the current strategy of the company or the importance for enterprises

Step 4: To calculate each element point

Step 5: Calculation of total points.

After calculating the total points, we will see the impact of the environment on business, so we can identify opportunities and challenges that enterprises need to overcome This is the basis for business strategy to ensure compatibility of strategies with environmental advocacy

2.1.4.3- Internal analysis:

Ability of the enterprises is fundamentals to decide what they can do, wherther the strategy has successfully implemented or not To ensure the viability of the strategy, we have to assess the actual situation, identify strengths and weaknesses thereby determine the capacity of discrimination or competitive advantages of enterprises Internal analysis was conducted on the following aspects:

2.1.4.4- Value chain of the organisation analysis:

Value chain is all activities that increase business value Organization's value chain is composed of two activities: primary and support activities

2.1.4.4.1- The primary activities:

The activities associated with products and services of the enterprises It is the purchasing operations and management of inputs, services marketing and customer care operations later These activities are evaluated as regards whether it contribute to cost savings, enhance product quality satisfy customer requirements the best or not When these activities are sucessful, the company's value chain is increasingly appreciated and competitive advantage will be powerful

2.1.4.4.2- Support activities:

These activities indirectly impact to the products and services They help to

support the primary activities of the enterprises better and more effective It is the human resources management, technology development, acquisition ect

2.1.5- Financial analysis:

Financial situation and indicators reflect the financial performance and capability of the organization Financial situation of the company reflects not only the operational capacity of the company in the past but also the ability of the company's development in the future The financial ratios are often interested in performing the financial analysis and strategic formulation include:

2.1.6- The rotation index: reflects the company's ability to meet financial

obligations in the short-term , it is only the ability of the current and quick liquidity, in addition to other indicators such as debt indicators, ROA, ROE,

2.1.7- Organizational culture and reputation analysis: Organizational culture

plays an important role in the formation of the organization Every company needs to make its members understand the operation objectives and views of their companies That will boost the company's members commitments to common objectives of the

company

The company's reputation also contributes significantly to the successful implementation of the objectives of the company Reputation is a form of intangible value that the company has formed in the process of long-term development

A company with a good reputation in the market will more easily reach new markets, and their new products are easy to accept However, it’s very difficult to creat a reputation as well as to maintain and strengthen that reputation

In addition to internal company analysis, we also care other factors such as the legality of the company's activities, cultural leaders

After analyzing the internal capacity of the company, the planners make meaningful comparisons That comparison reflects the company's growth and its strength in relation to competitors in the industry

2.2- Implementation of strategy

This is often the hardest content When a strategy has been analyzed and selected, then the task is to convert it into action in the organization, including the following steps:

- Preparing resources for strategy implementation By this step, enterprise

must plan detailed resources such as: human resource, technology, finance, facilities ect for adapting to the implementation

- Strategic selection This step is related to understanding the nature of the

expectations of the capital contributors ("basic principles") to identify strategic

options, and then evaluating and selecting strategies

- Setting up the targets for every year This step is based on the strategy of

enterprise to make the specific annual plan

II - The methods of research

1, Method of data collection: Data collection plays an important role in

scientific research activities Its purpose is the basis of scientific reasoning or

argument to prove the hypothesis or to find a problem that needs study

There are three methods of data collection:

1.1- By referring to a document: This is based on primary sources and

secondary sources collected from the research materials available for construction of arguments to prove the hypothesis

1.2- From the experiments (the laboratory experiments, field experiments, ):

With this method, the data is formed by observing, monitoring and measuring through the experiments To collect data, researchers often set out to make observations and measurements (data collection)

1.3- From non-experimental data (questionnaire survey): There are two

common types of variables in the experiment, which is the independent and dependent

variable

+ Independent variable (also called treatments) is factors, conditions by which change on the subject of research will affect test results Thus, subjects contain one or more variable factors and conditions In other words, the results of the dependent variable data collected by the independent variable changes

In the independent variable, there are usually a certificate or degree of control treatment (containing the factors, conditions at normal levels) or treatment has been determined that the studiers do not predict their effects These treatments will be compared with the control treatment or compared between pairs of treatments with each other

+ The dependent variable (also called the target of collection) is the measurement indicators affected during the experiment, or the results of measurement depends on the change of independent variables

2- Method of comparison:

2.1- Comparison of relative movement (time,%)

It’s a result of comparison between the two levels of the same indicators in two different points or periods , as determined by the formula:

Level of public research Relative movement (y) = - x 100%

Base level

- If y fixed over the years when we compare the fixed base period

- If y changed in study period when we compare the base period to complete

2.2- Absolute comparison: is a result of subtraction of the period of analysis

from the original period of economic indicators

3- Method of statistical description: Synthesis of indicators in the tables to identify trends and overview of research indicators

4- Method of SWOT analysis: To analyze the strengths, weaknesses, opportunities and challenges of the bank which the strategy concerned best suited

5- SWOT Matrix

SWOT matrix analysis provides useful information regarding the harmony of company’s resources for the competitive environment where companies are operating

So, this is a tool used in strategic selection

a, Strengths: The strength of enterprises is the resources and capabilities that

can be used as a basis for developing competitive advantage

b, Weaknesses: None of the above strengths can be seen as the weaknesses of

the enterprises

c, Opportunities: external context can create new opportunities for business

growth and development

d, Challenges: The change of external environment can also bring many

challenges for enterprises

e, S-O strategies: pursue opportunities that best suits the strengths of the

enterprises

f, W-O strategies: overcome weaknesses to pursue opportunities.

g, S-T strategies: identify ways that enterprises can use to its advantage to

reduce damage to the external challenges

h, W-T strategies: to set up a defense plan in order to prevent weaknesses of

the enterprises from the influence of external environment

Relationship between SWOT factors are stated in the diagram below:

SWOT S (STRENGTHS) W (WEAKNESSES)

O (OPPTUNITIES) SO WO

T (THREATS) ST WT

SWOT matrix diagram

6- Method of Five Forces Analysis

Porter said that in order to develop an effective strategy it’s needed to know the factors that determine the level of attractiveness of different sectors Attraction along with the ability to profit depends on the structure of that industry and especially the following five major forces:

- The power of suppliers: In some cases suppliers are women in the consumer banking operation

- Strength of users of banking services

- The threat of new members on the market

- The competitiveness of alternative products

- The relationship between the banks

These Five forces will determine the attractiveness of an industry due to their effects on costs, prices, or both The development of an effective marketing strategy depends on careful consideration of the market to identify measures to balance the influence of the above- mentioned forces

Five forces model of competition of M Porter

Potential competitors Competitors

Alternative products

Consummers Suppliers

7- Method of Quantitative Strategic Planning Matrix (QSPM)

This method is made by 06 steps:

Step 1: Listing the opportunities / threats of external factors, strengths and

weaknesses of internal factors of the enterprise

Step 2: Classification (Rating) for the main factors from 1 to 4

Step 3: Identifying possible alternative strategies that enterprises look to

implement

Step 4: Determining the attractive scores (AS)

Step 5: Calculating the total attractive scores (TAS)

Step 6: Calculating all total actractive scores

SUMMARY OF CHAPTER I

To enhance competitiveness, enterprises need to assess their power, to know how to apply and develop strength, how to overcome disadvantages and to turn weaknesses into strengths From there, we can find out the basic advantages to enhance the competitiveness of enterprises in the market.

In Chapter 1, we focused on introduction of the concepts, views on business strategy, processes and business strategies of the enterprise and also some main methods of analysis as a basis for more effective analysis of business strategy of ABBank for the period 2011 – 2015

CHAPTER 2

ACTUAL SITUATION AND POSITION

OF AN BINH JOINT STOCK COMMERCIAL BANK

IN THE CURRENT VIETNAMESE

BANKING SYSTEM

I General introduction of ABBank

1- Introduction:

- Bank’s name: An Binh joint stock commercial Bank of Viet nam

- Transaction name: An Binh Bank

- Abbreviated name: ABBank

- Head office’s address: 170 Hai Ba Trung Street, District 1, Ho Chi Minh city, Viet Nam

+ Increasing benefits for the shareholders

+ Moving towards the comprehensive and sustainable development of the bank

+ Investing in the human resources as the basis for long term development

2- Products and services

2.1- For individual customers

o Deposit:

+ Account service

+ Promissory notes

+ Valuable paper issuance

+ Saving deposit (Proper savings – Life Insurance – YOUlife)

+ Saving with bonus

+ Periodic payment at demands

o Loans

+ Unsecured and secured consumption loan (Home erection/renovation; Car )

+ Secured consumption loan

+ Business and production loan

o Services

+ Invoice/Bills settlement

+ Domestic and International remittance

+ Cards (Debit, Credit, Visa ect )

Transaction visa fax

2.3- Special customers in electric sector

+ Guarantee services

+ Credit products

+ Account services

3- The formation and development of ABBank:

ABBank – formerly An Binh joint stock rural bank with professional activities merely relating to mobilizing deposits and lending in rural areas of Binh Chanh district, Ho Chi Minh City - was established under the License no 77/QD-NH5 dated

April, 15th 1993 by the State Bank of Vietnam (SBV) with initial capital of 1 billion VND

In 2002, ABBank had a strong reform of personnel structure to focus on specialized commercial banks On May, 24th 2005, ABBank has officially converted from a joint stock rural bank into a joint stock commercial bank under Decision No 505/NHNN-CNH of the Governor of SBV

In 2005, Electricity Corporation of Vietnam (EVN) has become a strategic shareholder of ABBank Other major shareholders include Petro Vietnam financial corporation (PVFC), Hanoi General Import Export Corporation (Geleximco)

With the investment by above-mentioned strategic shareholders, in 2006 ABBank's charter capital has increased dramatically from 165 billion VND to 1,131 billion VND and in 2007 by 2,300 billion VND In 2007, the ABBank has also signed

a strategic cooperation with the Bank for Agriculture and Rural Development of Vietnam (Agribank) and the member companies of EVN

In 2008, Maybank (the largest bank in Malaysia) has become a strategic shareholder of ABBank with ownership rate of 15% on capital ABBank that increase the charter capital up to 2,705 billion VND

In 2009, ABBank’s charter capital was up to 3,482 billion VND with 20% owned by Maybank, and it also announced strategic partnership with Prudential Vietnam and Deutsche Bank (Germany)

To date, ABBank is a successful joint stock commercial bank in bringing its image of modern retail banking to the masses with increasingly wider scope, greater extent, and in creating understanding and being close to the public through funding programs and community activities

ABBank’s structure of shareholders :

65.08%

20.00% 24.25% 34.92%

Source: Report of ABBank on October 2010

5- Organization structure of ABBank

ABBank’s operation is carried out under the management, control and administration of the Board of Directors, Supervisory Board and Executive Board

ABBank has established an executive management structure consistent with the conditions and criteria stipulated in Decrees of the Government on organization and operation of joint stock commercial banks

Specifically, the operating administration system of ABBank include:

CHART OF ORGANISATION STRUCTURE

Councils, Committees

Centers, Departments, Devisions

BOARD OF SUPERVISORY

5.1- Board of Directors:

Board of Directors of ABBank consists of seven members who each have extensive experiences in banking operations in the country and abroad Board has quarterly meetings to discuss and to update business operation and economic news at home and abroad, and then to decide issues related to the orientation activities of the bank They also make the internal activities approved at the shareholders meeting In the necessary cases, the Board will have an extraordinary session to address the urgent issues

Board has the role in the formulation of the overall strategy and long-term orientation for the Bank; in setting financial goals assigned to the Executive Board Board directs and supervises the activities of the Executive Board through a number

CENTERS, DEPARTMENTS, DEVISIONS OF HEAD OFFICE

Individual

Customers

Credit Administration

Treasury Dept

Corporate

Customers

International payment center

Credit Risk Management

Operational Risk Management

Foreign

Relationship

Human Resources

Payment Center

Card Center

Internal Control

Legal Affairs

Strategic

Customers

development

Customer services Center

Accounting and Finance

Branch

Management

Administration office

Information Management

Informatic Technology Center

of professional councils founded by the Board as the Internal audit committee, Credit council, Assets and Liabilities management Commitee, and Investment council

5.2- Board of Supervisory:

Board of Supervisory consists of five members, responsible on conducting supervision of management activities of the entire operating system of ABBank to prevent risks and to ensure the safety of bank assets

5.3- Executive Board:

Executive Board consists of Chief Executive General and six (06) Vice Presidents who are in charge of each business segment Executive Board has specific functions of the overall strategy and objectives proposed by the Board; advises the Board of Directors on strategic issues, key policies, dand administrate directly all activities of the Bank

5.4- The Council, Committee of the Board:

5.4.1- Credit Council is responsible for granting credit, approved deposit

limits and applying of measures to handle debt policy, and making decisions about credit and credit risks management of the whole Bank The Council's functions is to contribute to limit the credit risks in general; to monitor the evolution of the market and to make the appropriate interest rate policy

5.4.2- Assets and Liabilities Management Commitee (ALCO) is a senior

management supporting for the Board of Directors in monitoring the market and liquidity risk management ALCO is responsible for the development, implementation and evaluation mechanisms, strategies and policies of management the balance sheets

of Bank; fund management; market and liquidity risk management

5.4.3- Risk Monitoring Committee established in June 2009, was appointed

monitor risk levels to examine all issues except market risks and liquidity risks

Besides, ABBank sets up a system of centers, departments and devisions in Head Office for management of the whole business activities

6- Business network:

So far, business network of ABBank has reached 110 units, including Head Office, 1 transaction center, 21 branches and 88 transaction offices in all of the provinces and cities nationwide

II Results of operations of ABBank in the period 2006 to 2010

After 17 years of operation, ABBank had the boom economies of scale and efficient operations Specifically, the year 2009 and 2010 marked the most successful

in the course of their development activities Total assets of ABBank to October 2010 reached nearly 2 billion USD (36,796 billion VND), exceeding the plan of 2010 (36,000 billion VND)

1- Some key indicators of business over the years from 2006-2010 of ABBank

Table 2-1 ACTIVITIES OF AN BINH JOINT STOCK COMMERCIAL BANK

SOME GRAPHS OF KEY ACTIVITIES

OF AN BINH JOINT STOCK COMMERCIAL BANK FROM 2006 TO 2010