( i*J( ;( 5) NTERNATION BUSINESS ADMINISTRATION MASTER
GRIGGS UNIVERSITY GLOBAL ADVANCED MASTER OF BUSINESS ADMINISTRATION PROGRAM
CAPSTONE PROJECT REPORT
BUILDING BUSINESS STRATEGY FOR BANK OF INVESTMENT AND DEVELOPMENT VIETNAM -THANG
LONG BRANCH IN THE PERIOD OF 2012-2016
GaMBA01.X0410 - Group No 03
Group Members: Pham Thu Phuong (Group leader) Vu Hong Phong
Dang Mau Son Pham Duc Anh
HANOI, November 2011
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, C rRIC ;( ` INTERNATION BUSINESS ADMINISTRATION MASTER COMMITMENT
We, the members of the Group No3 would like to commit that this Capstone Project has not submitted to any MBA program, also to any degree-training program
We also would like to commit that this Capstone Project is all ours group’s exertion The analysis results and conclusions in this project (excluding quoted sections) are own ours intelligence product, but not copied from any other available material
ACKNOWLEDGEMENT
This Capstone Project is the last and most important request of our MBA program in finance This project focuses on the business strategy management, which is integrated with others as marketing management, human resource management and corporation finance management This project helped us having an occasion to match
the knowledge and skills of modern business management from MBA program with the practical situations of the medium firm in Vietnam
To full fill this project, we would like to express our deep gratitude for the favor support of Griggs University, Center for Educational Technology and Career Development (ETC) of Hanoi National University and especially to the lecturers,
who have enthusiastically taught, guided and provided us with the valuable knowledge We sincere thanks also to the support and assistance of the leaders and
staffs of BIDV Thang Long branch They have spent highly valuable time on
organizing surveys, providing data and discussing with us about the relation between the project contents and practical situations at the Company; from that, helping to create a close connection between theory and practice and resulting in a highly feasibility in the future
We, the Group No3 members, would like to receive the continual support of the
lectures to help us completing the course with the highest results Particularly, the support of all BIDV Thang Long’s leaders and staffs will be an indispensable motivation for this project coming into the bank’s practice
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CONFIRMATION OF BANK FOR INVESTMENT AND DEVELOPMENT OF VIETNAM - THANG LONG BRANCH
Trang 4unistration ` Bo TRAINING PROGRAM ( rR IC r( 9) INTERNATION BUSINESS ADMINISTRATION MASTER TABLE OF CONTENTS COPAMITMENT sussxxessvusies ss st.ndnsttenentanare cencnansnnanensana cach nh 0g 501501 6051719 10100151776 511101 008824951555 2 ACKNOWLEDGEMENT QQ QQ 2002001211212 1112010111111 1n HT Hà HH HT Tnhh acc 2 TABLE OF CONTENTS Q2 Q.0 202012121121211101111 111110111011 1n H11 HT HH nhe 3 LIST OF SYMBOLS AND ABBREVIATIONS 0 TQ Q.nT 1 HH1 HT HT HH HT HT ng nhac 5 LIST OF FIGURES AND TABLES 2012112111 12101111 111 H11 H HT HT HH TH nh TH T ngay 6 370.11 7 CHAPTER 1: THEORETICAL BASIC ABOUT STRATEGY AND STRATEGIC MANAGEMENT 9 1.1 Concepts and theories ooo ccc ccccccsccseesscsssesesessccsevscvsevsecsssssssasersssesessesescassaeecsecane 9 1.1.1 Strategy and strategic DUSINGSS MANAGEMENS? uo ee cecccscesceccscescscsesscsscstesscssesacsecsecseseees 9 1.1.2 Levels Of DUSINESS STOLE GY .cccecccccesccssssesccscescscescsecscssesacsesssvacsessesssescsucassassecsacaecstsaceeseacs 10 1.1.3 The formulation Of StrOTE GY cccccssessesssessescssessecsccsscsscecacsasesessesausaussessussucasecessesscscessesse 10 1.2 Strategic formulation Analysis 0.2 ccc ccccsccssescscescsecevscsceecscssesesesavssescacsccseaseatsesecseess 11 1.2.1 External environment analysis, EFE matrix and CPM - SH TH ng nen re 12 1.2.1.1 SeC†oridl environrmenl ccsc cv vn H1 10111110 HH TT TT TT He 12 1.2.1.2 Common envirOnrme@nnÏ - ‹ + stcc cv x3 nn 11H TT HT TH TT HH ng nen 12 1.2.1.3 EFE (External Factor Evdluofion mGIiX] - cv HH H10 1011811111 ng ng ng nay 13 1.2.1.4 CPM - Competitive Profile rmQfiX - ác 111918101111 581 58011118 11 5 Ea na cay 14 1.2.2 Internal environment analysis and] IEF rmGIiX tt S3 S393 ES8 553551 568 3E S S3 cszssz 15 1.2.3 Analyze the sttategy and choosing the motrix s†ra†egies 2-2 St tE+EEvEzEzzcs 16 V.2.3.1., SWOT MOBIK 16 1.2.3.2 Quantitative Strategic Planning Matrix — Selecting the strategy - QSPM 17 1.3 Srafegy choosing LH HH HH HH HT TT Hước 17 1.3.1 LOW COST SỈTÍ@QJy ĐT HH TT TH HT HH TT TT HT TT TH TH TT nh nay 17 1.3.2 Produc† specificofion s†ra†@Qy TH HH1 101011111111 11 1111 E1 TT HH nga 17 1.3.3 Centrolizofion $ỈTỌ©Qy HH HH HH ng gan Tang g1 peysgersrs 17 1.3.4 Integrating development strategy .cccccsssssssscscscecessevecsesssessesescatscssstececacsecsesesevacecsess 17 Seo 2o on 17 CHAPTER 2: ANALYSIS OF BUSINESS ENVIRONMENT OF BIDV -THANG LONG BRANCH 20 2.1 Overview of BIDV - Thang Long branch - ĐT HT HH1 TT 1H Tnhh nen re, 20 2.1.1 Establishment and development history .cccescccsesessescesssecscccsecsssscsessesscsaceccesceaceaceeees 20 2.1.2 OFGANIZATION'S SHUCHULS oe seesceeseeeesesessesssecssseseescssscssceesecscsesceacateascausaatssavsesacsateacecsecsees 21 2.].3 Moin business acfivities of BIDV - Thang Long Branch 2S ST nS SE ngay 2) 2.1.4 VISION AN MISSION 0 ceesecesesesesesesesesesessvscseseussevsvscsvscsssssevavavassesevasavasasasutsavavacssssevscavseseeess 21 2.2 Analyzing business environment for investment project appraisal activities in BIDV - Thang Long BIG h nn c cece cece cscs esessscssvasecsevssevevevevsvassavavasavatscsasavasssassevavavavsesacsevavaveeeeves 24
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ROGRAM ¬ TRAINING P ( rik IC iC 9) NTERNATION BUSINESS ADMINISTRATION MASTER nistratior
2.2.1 Fundamental basic to build business strategy in the period of 2012- 2014 24 2.2.2 External FACtOrs Œn\QlySÌS L1 21 11110110 11 51H TT Tnhh nho 25 2.2.2.1 Mqcro environment fac†tors (PEST mocdel) ác c set ct c2 11113 1115115155111 55 151151551 te 25 2.2.2.2 Micro environment (Michael Por†ter's five force model) :-ccc cac cv 2sEszssszca 28 2.2.2.3 Ex†ernol fac†ors evdlUofion rmGIX ác 1 n1 H11 111111111 g1 TT na rệc 38 2.2.3 In†erndl faC†Ors œniQlySÏS - - S1 111121 5111111108111 0111111111 11 1111111 Hx HT HH 40 2.2.3.1 The bank's voluogble ChOïm c1 1211 1H H1 H ng HT T111 TH Han rệc 40 2.2.3.1.1 Safety banking DrOC©SS ác SH HT HH TT HH TH TH TH TH TH Tư cờ 40 2.2.3.1.2 Humeœn resOUrCe mOfiVGÌOFi c2 2121 1n 11H T121 11T HH1 H115 g5 ngày 40 Dedvdd PINGNGIO! CPONYSIS ws scxesricsncnssnsatsontersnnsnnsnsuneonnncsnceneos eseansenypyneasentexenteeenosseustexnensaysynanannsanws 44 2.2.3.3 The bank's CUITUFE AN FEPUTATION cc eeeceessssceecesceseescsecsecscsecsecsesacsacsevscsssscseseceeseseess 5] 2.2.3.4 Internol fac†ors evdlUd†iOn rmQÌX . - - + Sa S4 v3 v1 11 111 11 1111111581181 3n rsec 53 2.2.4 SWOT ANALYSIS nh .ảảằ 55 2.2.4.) SHENG 55 5 VN 592 ốc cố Sĩ 2.2.4.3 ODDOr†Uniifi©S LH 2211 10110 HH HH TH ng TH HT TT nến 57 2.2.4.4 Thr@CÏS HH1 1110111101011 HH TH TT S9 2.2.4.5 SWOT mIÌX St 1211121111111 11 1 1 HH TH TH TT TT ưệc 61 CHAPTER 3: CHOOSING BUSINESS STRATEGIES AND SOLUTIONS TO APPLY STRATEGIES FOR BIDV - THANG LONG BRANCH IN THE PERIOD OF TIME 2012-2016 o.oo cccececcccsccesscseecseeeeees 63 3.1 Long-term development trend of BIDV Thang Long 0 ce ccccccccccesscescscscesescscescscesees 63 4.1.1 Long †erm target 2020.0 ceecccscsesscsscscssescsscsscscsssssssecscsaceaesaesccssacacesesacsucaecasssessessaceasceeses 63 3.1.2 Short term target through financial strategy during from 2012-2015 cccccscscssssseseseseees 63 3.2 Choosing strategy and solutions to apply strategy ooo cccccccccecscscsseccccscscscsesescesseesees 66 3.2.1 CHOOSING SHOE GY eeeceescccsscsesescsesescscsvscscscssssvavavscecsevsvassesssesasavssasussavavasssiceessvavasscecsevaveses 66 3.2.1.1 Choosing strategy Vid SWOT Matix c.cccscscsscsesesescesscscscscscssscssscacsvscscacacatacstststesvassessaes 66 3.2.1.2 Choosing strategy Vid QSPM Matrix cccccccscscscscsescscscecscsescacscsesescatacacasacavscsesssssevesceasees 67 3.2.2 SOIUPIONS TO APPly StATEGIES ec eeccscscesescscescscsesecscsecsesecsesessesesacsssasacsessssssscscsesesassececseees 69 3.2.2.1 Solutions to diversify DANKING SEPVICES c.ccccscessscssssecsescecscscssscscstscscsescasscseseevevevecevseees 69 3.2.2.2 Solutions to diversify DANKING Credit SEPVICES oo cecesecesesescsesesesssescseecscscecseeveuseeveveees 72 3.2.2.3 HUMAN FESOUFCE SOLUTION 2 eececcesescsessesesesescscsescscscscscssssasacasscavscasscacaacassvavasatsavacevavavavaes 73 3.2.2.4 Morke†ting develoDmen† s†rQ†@Qy - TT HH TH TT TH TH TH TH Tnhh re 7ĩ 3.3 Conclusion 2212112111 111 eo 77 Ree ES ES vcr svssrrennssesesptstebeosEHU 0107803588138 Kt denanmnmnnnnanneoununererecexinesamurncepmmsanueergeraveremmeneesvavesseesues 78 PPE LO A CŸ trynisgagipdiidfii2i8.8/6:81090501900108.2U801 lu, 2s ụcgọ E710 -20,-4240101200.11L81-71E-00TT7-17T2T 7717 TT T7 TT 07177787 78
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GRIGC 9 INTER N/ NG PROGRAM SINESS ADMINISTRATION MASTER LIST OF SYMBOLS AND ABBREVIATIONS No Symbol Meaning
l ADB Asia Development Bank
2 ATM Automated teller machine
3 BIDV | Bank oflnvestmentand Development of VN
4 EFE External factor evaluation matrix an
5 GDP —_| Gross domestic product 7 _
6 IFE Internal factor evaluation matrix
7 NHBL Retail banking
8 NHTM Commercial bank
9 MIC Ministry of Information and Communications
10 POS Point of sale
II PPP Purchasing power parity
12 QSPM Quantitative Strategic Planning Matrix
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LIST OF FIGURES AND TABLES
1 List of figures
[Figure 2.1: Organization chart of BIDV - Thang Long branch ¿5-5 sscscvsa 2
ligure 2.2: Credit mechanism chart according customer type .c.cccccccscsseessseceeeeeseeees 36
Figure 2.3: Credit structure according to borrowing time .c.ccccceccccessseceeseeeeecseeseseees 49 Figure 2.4: Opening coefficient of Vietnam economy (%) .cccccccsscsesesecesseseeeecsceceees 58 Figure 2.5: The number of transaction offices of some commercial banks 6 - 60
2 List of tables
Table 2.1: Matrix of competitive picture .0.0 cccccccceccseeseccscescescscesssscsseseeacsecaseecsees 30 Table 2.2: Credit mechanism according to CUStOMET .c.cccceseseeceeeseesesescesescsceseseees 36 Table 2.3: EEE, mafFIX S1 1S 1n HH n TH Hà TH TH HT Tnhh TH ngư 38 Table 2.4: Assessment prOC€dUre - - SE S1 03 011211201 5 11T ngan 42
Table 2.5: Some operation crteria of BIDV — Thang Long Branch during from 2008 Z) 44
Table 2.6: Income from credit activities of BIDV Thang Long branch from 2008-
DLO sessccrenenexesninsi nen tas aiisichousnenensneonnenvemesnecny goveysustee 0 Y0 996315000015025001079EX5E39TS95.7010450702013 913560 X6 50
Table 2.7: Long -Medium term overdue debts are assessed in BIDV —Thang Long
Branch o cc ececeesescscscsceesessseseseessnesssenssesesessseesasasessusvesesssesscsevevscscscsasavavacacecessasacacansesavaces 51
Table 2.8: Assessment matrix of internal factor .0.ccccccccccccscssesescscescecceseseeecscseeseseees 53 Table 2.9: SWOT matrix for BIDV — Thang Long 5-5-6 5S 3v t£zEsEzEsecez ĩ] Table 3.1: Development target of main financial indexes till 2015 -sccscs=a 63 Table 3.2: Development target for credit activity till 2015 oo cccccesccsscsesecsescsecesseees 65 Table 3.3: QSPM matrix of BIDV - Thang Long c.c.ccccccccsscscsseseseeeseseseseseestecseseseeees 68
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⁄ ( I R IC 5 9) (TERNATION BUSINESS ADMINISTRATION MASTER 3 PREAMBLE 1 Reason for theme selection:
The year of 2010 is the fourth year, Vietnam joined World Trade Organization After 20 of innovation, our economy has achieved a lot of great achievement as well as growth speed of Gross National Products (GNP) is over proposed plan Although, the economy has not been developing strongly as economy of other countries in the area, our economy has been proved to develop higher and higher The contribution of Commercial Bank system in our country for our economic development is significant The banking activities have been actively
contributed in capital mobilization and increasing investment capital for production and create favorable condition to attract foreign capital for national economic growth
Commercial bank system in Vietnam has great and strong development in economy in all fields including quantity, scale, content and quality, which is really
pioneered in innovation of economic mechanism and deserves to be efficient tool to
support Government in limiting and driving back inflation and stabilize price
For above reasons, our team decided to select the theme “Building business strategy for BIDV — Thang Long branch in the period of 2012-2016”
2 Researching target:
To study the business environment of Thang Long Investment and Development bank branch, from that could propose to set up the business strategy for
BIDV — Thang Long branch during period 2012 - 2016 3 Researching method:
- Data collection: Reports and documents of Vietnam Investment and Development Bank, Thang Long Investment and Development branch, Vietnam Joint Stock Commercial Bank for Industry and Trade, Vietnam Bank of Agriculture and Rural Development is stated in newspaper and internet
- Analysis method: Statistic, interpretation, inductiveness
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- Data analysis and appraisal about absolute and relative numbers of criteria to analyze available documents So that, our group could give comment on banking activities
4 Theme contribution:
Great homework is based on theoretical basis relating to strategic
administration and applies that theory to analyze the strong and weak points, chance and challenges of BIDV- Thang Long branch By the way, could determine the business strategy and propose solution to implement these strategies, especially in the background that Vietnam joined WTO and will completely implement commitment in banking until 2016
5 Structure of great homework:
A part from opening, conclusion, appendix and list of referent documents, the essay includes the following chapters:
Chapter 1: Theoretical basis about strategy and strategic management Chapter 2: Analysis business environment of BIDV — Thang Long branch
Chapter 3: Choosing business strategy and solutions to apply strategy for BIDV — Thang Long from 2012-2016
Source: https://InforMap.vn
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RAM
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CHAPTER 1: THEORETICAL BASIC ABOUT STRATEGY AND STRATEGIC MANAGEMENT
1.1 Concepts and theories
1.1.1 Strategy and strategic business management The overview about management
Management is a process aiming at achieving the success of desired goals and
objectives by using available resources efficiently and effectively From this concept,
we can see that management is a series of necessary and constant activities for the existence and development of all organizations
The goals of management are create surplus value, which means finding out suitable
methods to implement the jobs in order to accomplish the highest efficiency at the
most acceptable cost of resources Management comprises 4 basic functions: planning,
organizing, leading (or directing), and controlling an organization
Concept about strategy:
Strategy is a range of scheduled goals and policies implemented in a long term
based on exploiting the most of the resources of the organization to meet the
development goals Therefore, the strategy should be formulated as detailed plan or
general operational diagram to drive the company to the expected goals
Concept about business:
According to our country’s Article 9 of Business Law promulgated on February 2" 1991 “Business means the continuous conduct of one, several or all of the stages of the investment process, from the production to sales of the products or provision of
services in the market for profits.” Therefore, we can understand that Business is a range of activities aiming at producing profits of the economic subjects in the market
Strategic business management:
Strategic management is a process in which managers determine the long-term goals and formulate great oriented methods to achieve these goals on basis of using the most of existing resources and possibly mobilized resources of the enterprise The goal of a strategy is find out opportunities; or in other words, increase opportunities and look for competitive position Therefore, strategic management is a process including 3 main phrases:
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RAM ⁄ TRAINID DY C rR IC s( 5) INTERNATION BUSINESS ADMINISTRATION MASTER - Formulation phrase - Implementation phrase - Evaluation phrase
1.1.2 Levels of business strategy
Previously, strategic system in an enterprise was normally divided into 3
levels:
- Corporate strategy
- Strategic Business Unit — SBU - Functional strategies
Today, with the globalization trend, many companies have quickly led their
business operations get out of the nation’s border and now people start to mention
about the fourth strategy: - Global strategy
1.1.3 The formulation of strategy
The generic business strategy is mapped out on basis of the vision of the enterprise; it is the orientation for all of the operations of the enterprise; therefore, it is considered long-term strategic The formulation of the strategy can be divided into
5 main steps:
- Set up organization’s missions and objectives
- Analyze the external environment to recognize opportunities and threats
- Analyze the internal environment to recognize strengths and weaknesses of the organization
- Select fundamental strategies to find out resources, abilities and core
competences; then develop them to dispel threats and make use of opportunities from the external environment
- Implement the strategy
The analysis of internal and external environment of the enterprise and the selection of the strategy is known as the formulation of strategy The implementation of strategy includes the set-up of organizational structure and suitable controlling system to bring the strategy into practice
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GRIGGS) we SINESS ADMINISTRATION MASTER tration Basic strategic formulation model Mission and goal
External analysis Choosing and Internal analysis
(opportunities and | formulating strategies (abilities and core threats) | competences) Functional strategy Business strategy Global strategy Ỳ Business unit strategy | i" |
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1.2 Strategic formulation analysis
1.2.1 External environment analysis, EFE matrix and CPM 1.2.1.1 Sectorial environment
Michael Porter, a well-known strategic manager from Harvard University wrote in “Competitive Strategy: Techniques Analyzing Industries and Competitors” about competitive forces in all business industries including:
- Bargaining power of suppliers
- Bargaining power of buyers - Threats of new competition
- Threats of substitute produces and services - Intensity of competitive rivalry
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Stration
1.2.1.2 Common environment
While M.Porter’s five forces focus on the analysis of factors in business environment, PEST concentrates its attention on the impacts of factors in macro- environment They are:
Political Economics Socio-cultural Technological
These 4 factors have direct influences on the business; they are considered the external factors of the enterprises; their impacts on the enterprise are objective factors The enterprises base on these impacts to decide suitable policies and business Operations Economic Changes Political Changes % Opportunity Jỡ ce Technological Changes Social Changes
Source: https://www.google.com.vn/ PEST model
1.2.1.3 EFE (External Factor Evaluation matrix)
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external factors whether they are advantages or disadvantages for the enterprises To set up this matrix, it is needed to implement these five following steps:
\ Step 1: Set up a list of 10 to 20 main opportunities and threats that you think can possibly have main influences on the success of the enterprises in the industry or business field
\ Step 2: Classify the importance according to the marking scheme from 0.0 (not important) to 1.0 (very important) for each factor The importance of each factor depends on the influence of that factor on the fields/business sectors your enterprise is doing business on Total weighted score of all factors is equal to 1.0
V Step 3: Determine weighted number from 1 to 4 for each factor: the weight of each factor depends on the reaction of each enterprise to each factor; in which 4 is
the best reaction, 3 is above-medium, 2 is medium and 1 is weak
v Step 4: Multiply the importance of each factor with by its weight to
determine the score of each factor
V Step 5: Plus the scores of all factors to determine the total score of the
matrix
Evaluation: total score of the matrix does not depend on the number of factors in the matrix; the highest score is four and the lowest one is one If the total score is
four, the company has good reaction to opportunities and threats If the total score is 2.5, the Company has medium reaction to opportunities and threats If the total score
is one, the Company has weak reaction to opportunities and threats 1.2.1.4 CPM — Competitive Profile matrix
The formulation of this matrix aims at introducing evaluation and comparison between the enterprise and its major competitors in the same industry; the
comparison relies on factors that influence on the competitive ability of the enterprises in the same industry Thanks to that, the Managers can understand the strengths and weaknesses of the enterprises over its competitors, and determine its competitive advantages and make good weaknesses To formulate a competitive profile matrix, we need to implement 05 steps:
¢ Step 1: Set up a list of 10 main factors that have important influences on the competitive abilities of the enterprise in the industry
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¢ Step 2: Classify the importance from 0.0 (not important) to 1.0 (very important) for each factor The importance of each factor depends on the influence of that factor on the competitive ability of the enterprise in the industry Total important
score of all factors is equal to 1.0
¢ Step 3: Determine weighted number from | to 4 for each factor; the weight of each factor depends on the reaction of each enterprise to each factor; in which 4 is
the best reaction, 3 is above-medium, 2 is medium and 1 is weak
e Step 4: Multiply the importance of each factor with by its weigkt to
determine the score of each factor
¢ Step 5: Plus the scores of all factors to determine the total score of the matrix
Evaluation: Compare the total score of the enterprise with that of its major
competitors in the same industry to evaluate the competitive ability of the enterprise 1.2.2 Internal environment analysis and IEF matrix
The internal situation of the enterprise is normally evaluated by means of functional fields as: Finance; Human resources; Management; Organizational structure; Marketing; Research/Development; Information Technology
IFE (Internal Factor Evaluation matrix)
Internal factor is thought to be very important in each business strategy and in the goals of the enterprise After considering internal factors, the strategic managers need to set up internal factor matrix to examine the ability of reaction and recognize the strengths and weaknesses Since then, help the enterprises make the most of the strengths and exploit and prepare inner forces to face up with weaknesses and find out ways to improve these weaknesses To form an IEF matrix, it is necessary to
implement 5 steps as below:
e Step 1: Set up a list of 10 to 20 main factors including the strengths and weaknesses that influence on the enterprise and its goals
¢ Step 2: Classify the importance from 0.0 (not important) to 1.0 (very important) for each factor The importance of each factor depends on the influence of that factor on the success of the enterprise in the industry Total important score of all factors is equal to 1.0
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¢ Step 3: Determine weighted number from | to 4 for each factor; the weight of each factor depends on the reaction of each enterprise to each factor; in which 4 is the best reaction, 3 is above-medium, 2 is medium and | is weak
¢ Step 4: Multiply the importance of each factor with by its weight to determine the score of each factor
e Step 5: Plus the scores of all factors to determine the total score of the matrix Evaluation: total score of the matrix ranging from 1 to 4 does not depend on the number of factors in the matrix If the total score is below 2.5, the Company is weak at internal factors If the total score is above 2.5, the Company is strong at internal factors
1.2.3 Analyze the strategy and choosing the matrix strategies 1.2.3.1 SWOT matrix
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‘Total attracting score —«|_~*t ft
Quantitative strategic planning matrix uses input information from IFE matrix, EFE matrix, SWOT matrix and main strategy to make the best objective evaluation of substitute strategies The following is six steps to develop a QSPM matrix:
Step 1: List important external opportunities and threats, and internal strengths and weaknesses of the enterprise
Step 2: Classify each important success factor of the internal and external of the enterprise
Step 3: List strategic projects the enterprise should consider Collect the strategies into specific groups if possible
Step 4: Determine the attracted score of each strategy Only strategies in the same
group can be compared together The attracted scores are classified as below: | = not
attractive; 2 = less attractive; 3 = rather attractive; 4 = very attractive
Step 5: Calculate the total attracted scores by multiplying classified scores in step 3 with the attracted scores in step 4
Step 6: Calculate the total attracted scores for each strategy The higher the score is, the more attractive the strategy is
1.3 Strategy choosing
1.3.1 Low cost strategy
Low cost strategy aims at the target to become the lowest cost producers with certain quality standard In which, the company will sell its products with industry averages price to obtain bigger profit and share than competitors
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In the case of a “price war” happens, the company still can achieve a certain profit Meanwhile, competitors are all lost Even when there is a confliction in prices, industry is expanded and price’s down, companies with low production cost still can achieve profit in a long term This strategy is always applied for wide market
Enterprise can base on some main method to obtain advantage in reducing cost such as: improve productivity search for big material source with low price utilize comparative advantages between countries or reduce unnecessary expense If the competitors cannot cut the same expense level the company can keep its comparative advantage by leading in cost reduction
1.3.2 Product specification strategy
The company aims at developing products and services with special and unit characteristic in this strategy These characteristics are highly appreciated by customers, benefit of the product specification allow the company set a higher price level than competitors When applying this strategy, the company must evaluate suitable price so that this price gap can cover additional cost arise in production and
distribution Moreover, this additional cost can be transferred to customers because
they cannot find the same product to replace 1.3.3 Centralization strategy
Centralization strategy aims at a narrow market, in which, enterprise tries to achieve competitive advantage in low cost or product specification by using theory “the group demand can be better serve by totally focus on this group” Enterprise using this strategy can keep customers’ loyalty This loyalty makes others competitors discouraged and they do not want to compete directly
Because of focusing on a narrow market, enterprises apply this strategy have lower turnover Then it makes them hard in negotiating with suppliers Anyway, the company can transfer this advantage to customers by setting them a higher price level
Enterprises in centralization strategy can change their advantage in product development so that it is suitable for the market segment that they investigate thoroughly and know clearly One of major risk that created by this strategy is the
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imitation technology of competitors Moreover, producers with leading cost in a imajor market can easily compete directly to company using centralization strategy Other company with the same strategy also can attach this market segment to take out a number of customers in this narrow market
1.3.4 Integrating development strategy
Company follows this strategy can find the way to produce material or distribute its products internally Applying integrating development the company can use reverse integration or positive integration, partly or tota! integration, internal or external integration
Integrating development strategy can help the company reduce its expense and market cost, better quality controlling and utilizing business opportunities and be active in set up production plan This strategy can be applied for companies which have ability to catch up with opportunities which are suitable for company’s vision
1.3.5 Mixed strategy
A company can apply many different strategies in a period The company can
pay much attention to development in this area while cut down in others Those
activities aim at implementing successfully the company’s general objective during the strategy implementation period
The strategic choice out of strategies above depends on the company’s
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CHAPTER 2: ANALYSIS OF BUSINESS ENVIRONMENT OF BIDV — THANG LONG BRANCH
2.1 Overview of BIDV — Thang Long branch 2.1.1 Establishment and development history
BIDV — Thang Long branch is one branch under Investment and Development Bank of Vietnam Forerunner of the branch is one Administration Department under Central Construction Bank in accordance with Decision No 103/TC-QD/TCCB dated 03/4/1974, the main duties is to issue, check and pay basic construction investment capital to build Thang Long Bridge This Department locates in Dong Ngac Commune - Tu liem — Hanoi and the seal named “Central Construction Bank — Administration Dept
Of Thang Long Bridge”
Since the time of having Decision No 75/NH-QD dated 17/7/1981 of General Director of State Bank of Vietnam, the department is renamed “Branch of Main Point
Work Investment and Construction of Thang Long Bridge ”, this bank is assigned to
control capital sources for basic construction and investment of Thang Long bridge, to enter in the account and lend, issue, pay and control cash, control incomings and outcoming of salary budget in basic construction and investment for construction enterprises setting up the accounts in the branch, implement according to policies,
regulation and plan of Government On 27/6/1988 in accordance with Decision No
52/NH-QD of General Director of State Bank of Vietnam about changing name from “ Branch of Main Point Work Investment and Construction of Thang Long Bridge” to be “Branch of Investment and Construction Bank for Thang Long Bridge”
To be suitable with organization chart of Investment and Development Bank
of Vietnam, in 1991 in accordance with Decision No 38/NH-QD on 2/4/1991 of
Governor of State Bank of Vietnam, the branch is renamed to be “Investment and
Development Bank — Thang Long branch” under Investment and Development Bank of Vietnam and move the head office to Pham Hung highway in Tu Liem district- Hanoi
Up to 1994, Governor of State Bank of Vietnam already promulgated the Decision No 38 NH/QD-NH9 dated 10/11/1994 to adjust the function and duties of Investment and Development Bank- Thang Long branch under Investment and
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Development Bank of Vietnam and allow the Branch to operate as one Commercial Bank
Source: www.infomap.vn
2.1.2 Organization’s structure
In 1991, the branch consisted of 22 employees and was divided into 3 Depts including: Business and allocation Credit Dept., Permanent Accounting Dept., Budget-Administration-Organization Dept
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Up to 31/12/2010, the Branch consisted of 13 Departments and Sections; including 120 employees and there are 64 female employees and 56 male employees, 24 employees are key persons including 3 management people (one Manager and two vice Managers)
Organization chart of Investment and Development Bank — Thang Long Branch is summarized in the following chart:
Source: Administration dept BIDV Thang Long Branch Figure 2.1: Organization chart of BIDV — Thang Long branch
2.1.3 Main business activities of BIDV — Thang Long Branch
Similar to many units in finance sector, BIDV Thang Long supplies different services and products meeting diversified and ceaseless demands of customers In particular with retail banking service, BIDV Thang Long focused on the two main market segments name individual customers and small and medium enterprise
Strategic Management Capstone Report Assessment Group 3
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Global Advanced Master of Business Administration
cistomers Products and services in retail banking area of BIDV Thang Long are siown on following figure: Banking products For individual custome: s For SMEs ———
Source: Administrative department, BIDV Thang Long Figure 2.2: Banking products of BIDV Thang Long
With the main products mentioned above, in 2011, BIDV Thang Long has
provided services to more than one hundred thousand individual customers and made
mre than two hundred thousand commercial transactions for customers as small and m:dium enterprises The next time, along with the development of market economy ard economic integration, retail banking products and services of BIDV Thang Long wll continue to be developed and upgraded matching to overall strategy of the bank
2.1.4 Vision and mission
With the guideline to become the leading retail bank in Vietnam, to provide
se:ure financial services for consumers as well as to contribute expanding market shire and profitability, BIDV Thang Long has a clear vision and mission for the coning years
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Vision: To develop the bank based retail-banking model, gradually create a specified investment-banking model and become multi-function, modern financial banking with outstanding features about product quality and trademark prestige
Mission: BIDV Thang Long strives to become typical retail financial banking group in Vietnam with the aims of maintaining the outstanding values about reputation, brand and quality of product and service, committing to bring customers a set of products and services with high professionalism to meet the needs of individuals, optimizing value for customers, shareholders and sustainable development of group, contributing to general development of community and society
2.2 Analyzing business environment for investment project appraisal activities in BIDV — Thang Long branch
2.2.1 Fundamental basic to build business strategy in the period of 2012-
2016
On the base of long term general development strategy of BIDV to be one of the leading commercial bank in Vietnam to provide diversified services which is
leading in wholesale and retail bank, Thang Long branch already self-set up the detailed plan to have their owned successful system In which, development for
project lending is the first priority of the Branch Lending orientation according to project of Thang Long branch includes the following main content:
- Branch intended to diversify the lending types and field Enlarge credit relationship with personal customers and private enterprises — which previously is active with high demand in capital
- The bank is active in finding high economic benefit project with short time
capital collect for funding
- When lend the project, it is absolutely to follow regulation about credit organization and relevant legal documents Besides that, internal decisive documents of BIDV and BIDV- Thang Long branch includes credit manual, project assessment manual procedure and assessment content is basic documents in assessment step for project lending
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- Keep checking mechanism, check internal control in the Branch to find out tte problems and solution
- Active in opening co-operation relationship, joint support to be profitable for binking partners
2.2.2 External factors analysis
2.2.2.1 Macro environment factors (PEST model) PEST Analysis Political factors Source: https://www.google.com.vn/ PEST model e Economic environment
Economic growth: When economy grows, enterprises with demand in capital for investment in modern equipment to serve for opening and developing business production activities, investment not only stops in national scale but also foreign ccuntries .which leads to arising long term and medium term investment project
leading demand Therefore, when economy grows, which could affect to
investment project assessment
Investment activities: During recent years, there is positive change in atracting domestic and foreign investment Government already step by step iproves investment environment to create favorable condition for activities of enerprises From that, there is significant increase in whole society investment
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capital There are a lot of new import and export markets such as United State market which has become one of the great commercial partners of Vietnam
Total investment capital of the whole society in 2010 increased more and more This is good signal for our country economy with stable politic, law path is
improved more and more, which make Vietnam, become destination of foreign
investors as safe and interesting investment place
When investment activities increase, which leads to increase in demand of
long term and medium term funding Therefore investment also affects to investment project assessment at Commercial Banks
e Socio-cultural environment
Population scale and mechanism: It is estimated to be 86 million people in 2010 There is increase in urban population due to quick speed of urbanization recently
Increasing population scale and mechanism leads to increase in social demand At that time, investment demand for projects increases which leads to
increase in borrowing to invest in long term and medium term projects Therefore,
population scale also affects to assessment on investment project at bank
Income of people: Like affect by population mechanism and scale, when average income of the Vietnamese increases, living standard increases, which will
make people think about investment by their income to have benefit, as well as
demand in borrowing for consumption All of them have to find down the financial service market from consultation too investment channel, investment management,
help people to invest Therefore, that could have increasing demand in long term
and medium term capital
Education and training: Besides, education and training also develop strongly A part from State Owned School, more and more private schools has been set up, there are banking education in almost Universities Banking Association and banking training center always opens training courses to help staffs of Commercial Bank to update the knowledge usually
e Political and law environment
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Politic: In general, socio-political situation of Vietnam is very stable International Organization as the most stable country in Asia accepts Vietnam
Law for banking activities: awful frame for banking activities is improved more and more to meet the demand in internationally economic integration such as State Bank law and law of Credit organization have been complemented and revised in 2010 These revisions are to set up modern banking system to be more suitable with usual regulation and international standard to decrease interference of authorities in banking operation Lawful frame nonstop being perfected and
innovated according to orientation to lose the control of banking service and
financial market
Currency policy management and administration: In management and administration, State Bank already succeeded in controlling currency policy, stabilizing currency value, speeding up economic growth, guaranteeing stability and development of banking system Tools of currency policy are used as indirect toll such as opening market profession, exchange foreign currency are replaced for administrative tools Interest is gradually to be free, exchange rate is changed from stable exchange rate to be flexible exchange rate adjusted based on the market Mechanism about foreign currency management and payment activities become more and more feasible, more open to increase self-responsibility of Bank
e Technological environment
Informatics technology (IT) in Vietnam develops with high speed Application of informatics technology in life and business activities becomes
more and more popular: Website for production introduction, electronic mail
transaction, ADSL data transaction line
Recently, Vietnamese bank system pay a lot of attention to investment in technology: Interbank electronic transference system allows receiver to be able to receive money within some seconds, ATM system allows to have 24/24 automatic service, global SWIFT payment system, treasury bill bidding It could be said that technological knowledge of bank belongs to high senior and the most modern group of economy At this moment, operation and professional stage are handled
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on the computer, handling through internet has been done in almost banks, and a lot of online handling has been done with modernization
Informatics application into analysis of investment projects has been applied Bank for Investment and Development of Vietnam already invests one automatic analysis of investment project to support analysis staffs of project in the most
correct way
During 3 recent years, from 2010 up to now, due to effect of global economic crisis Vietnamese economy could not avoid degradation which leads to difficulties in credit activities of the branch as well as currency tightening policy of Government, price inflation increases which leads to difficulties in approaching funding source of customer and in debt repayment for bank which makes banks lack capital Affected by degraded economy, a lot of projects previously has been assessed and
guaranteed to be able to repay the debt well but could not implement in the progress,
even a lot of projects stops or change the other investors However, BIDV is one great bank with variety of capital, which is not much affected to payment but
difficulties of economy, also affects to benefit target of the bank greatly
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In 2010, McKinsey predicted sales of the retail banking sector in Vietnam is expected to grow to 25% within 5-10 years, making Vietnam become one of the retail banking market with fastest growth rate in Asia Though economic crisis has slowed economic growth rate and affected banking sector, Vietnamese market has not been fuily exploited and still contained great potential Temporary impact of the economic crisis will cause difficulties for banks in finding new customers, resulting iil increasingly competitive intensity Nevertheiess, when the economic crisis passes, with a huge potential markets such as Vietnam, banks will focus on exploiting market, seeking new customers, reducing competitive intensity In addition, the banking network also continued to expand over the years In 2009 -2010, commercial banks with the same size constantly expanded branches, transaction offices and developed credit operation
In Pham Hung Street of Tu Liem district, there are many bank branches, therefore, competition is fierce However, Thang Long branch is State
Commercial Bank and consider capital interrelation, network, customers, Thang Long branch have direct competition with Vietcombank, Agribank, Vietinbank This homework selects Vietcombank to be sample bank to compare with
remaining banks Banks not only evaluate according to branch but also evaluated
according to system of each bank
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BUSINESS ADMINISTRATION MASTER Table 2.1: Competitive Profile Matrix VietcomBank Cau : Importa Giay ~ CompetltveReters- Í,ssievellCleside[Imperta Ì iũc | Importa | Classific | Imperta + -2 -3 (4) = -5 (6)= -7 (8) = -9 (10) = (3)*(2) (5)*(2) (7)*(2) (9)*(2) |.Chartered capital 5% 4 0,2 4 0,2 4 0,2 4 0,2 2.Distribution channel 15% 2 0.3 3 0,45 4 0,6 3 0,45 3 Ivestment Project 20% 4 0.8 4 0.8 4 0.8 4 0.8 assessment quality i 4 Total available asset 5% 4 0,2 4 0,2 4 0,2 4 0,2) 5 Branch name 10% 4 0,4 2 0,2 3 0,3 3 0.3) 6 Bad debt rate 10% 4 0,4 4 0,4 4 0,4 4 0.4) 7 Strategic administration 15% 3 0.45 2 03 2 0,3 3 0.45 attention | 8 Investment for human 5% 3 0.15 3 0,15 2 0.1 3 0,15) resource | 9 Service diversification 5% 4 0,2 4 0,2 3 0,15 4 0,2!
10 Foreign affair business 10% 4 0,4 3 0,3 3 0,3 3 0,3)
Total important point Column (1): Criteria affect to bank activities 35 | s4 | s3 348
Column (2): Total affecting rate of criteria in column (1) is 100% The essay
evaluates the affecting rate of each criterion to banking activities
Column (3), (5), (7), (9): Systematically is reaction of VietcomBank, VietinBank, AgriBank, BIDV to that criteria Accordingly: point 1: Little reaction, point 2: average reaction Point 3: Above average reaction, Point 4: Good reaction
Based on information and survey, we could find out that each bank reacts
with criteria in different level:
(1) Chartered capital: All 4 banks have annual increasing self-funding with good reaction with criteria of self-funding is marked 4 points
(2) Distribution channel: There are few transaction points in VietcomBank, averagely there are about 3 transaction points with average reaction, 2 points; AgriBank is age-old bank with national wide scale network with good reaction, therefore, it is marked 4 point; there are 5 transaction place of BIDV with above average reaction, therefore, it marked 3 points; there are 5 transaction places with above reaction in VietinBank and it marked 3 points
(3) Service quality: Enterprise and consumer Researching center already declares list of 10 Commercial banks of Vietnam which are most satisfied by
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consumers in 2010 based on 3 groups of product of budget, payment and funding (Source: Asset.com.vn) including VietcomBank, BIDV, AgriBank, Vietinbank The essay evaluates service quality of banks with good reaction to be marked 4 points
(4) Total available asset: All of four banks try the best to increase total asset to be higher than previous year, therefore, they are evaluated to have same reaction and they are marked 4 points
(5) Name awareness: VietcomBank is selected to be “the best bank of Vietnam” by “the Banker” magazine for many continuous years, is the foreign payment center of interbank of more than 100 domestic banks and foreign bank branches in Vietnam To be selected as the main bank in management and service for borrowings and funding of government as well as many ODA projects in
Vietnam Therefore, the author already evaluated VietcomBank to have good reaction about name awareness and is marked 4 points
BIDV is the first bank with success in brand name registration in United State market (2005) BIDV is a member of Asian Bank Association (ABA), ASEAN and is member of Management Board of ADFIAP BIDV has above average reaction
and marked 3 points
AgriBank is offered the prize named “Lighthouse”, “Sao Vang Dat Viet 2006” AGRIBANK brand name gets the prize of Sao Vang Dat Viet in 2004
However, AgriBank had not enlarged to international market; therefore, the author
evaluated that Agribank gets average reaction for this brand name and marked 3 points
In 2006, Vietinbank already got the prize “Lighthouse”, Golden cup “for stable development and social improvement”, Vietinbank brand name- gets the prize Sao Vang Dat Viet in 2010 However, Vietinbank brand name is similar with bank of Russia that already registered the brand name in many countries in the world
Therefore, in order to have international integration, at the beginning of 2008,
Vietinbank rename brand name and logo to be VietinBank, therefore, the author evaluates that VietinBank gets average reaction and marked 2 points
(6) Bad debt rate: All of 4 banks are trying the best to decrease overdue debt to implement privatization, therefore, this banks gets good reaction with this criteria
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and marked 4 points
(7) Attention to strategic administration: VietcomBank and BIDV pay attention to their strategy averagely, | marked 3 points ViettinBank and AgriBank gets average attention and marked 2 points
(8) Investment for human resource: VietcomBank, Vietinbank and BIDV are banks which usually organize professional training course, customer service style, and attention to human resource is more than average, marked 3 points Most of
employee of AgriBank are old this banks has not paid attention to use young staffs
to change service style and marked 2 points
(9) Service diversification: VietcomBank is the first Commercial bank to issue and pay by International card Visa, MasterCard and the biggest card payment agents in Vietnam: Visa, American Express, MasterCard, JCB At this moment,
this bank is a sole agent issuing American Express card in Vietnam, is the biggest Money Gram in Vietnam VietcomBank is evaluated to have good reaction and
marked 4 points
Up to now, BIDV already issued 27 new service products with a lot of
suitable diversification benefit such as: Automatic message sending/receiving service BSMS, future contract service of products, receipt payment BIDV also
speeds up automatic salary payment service, connect card payment with Banknetvn, implement modern banking service such as: Internet banking, P homebanking, Homebanking, co-operate with Western Union to transfer the money to oversee A part from above service, in the coming time, BIDV will implement 2 modern
distribution channels including click - call (based on internet background and
distribution channel through), co-operate to sell banking service product with other services in accordance with model "one stop service" BIDV gets goods reaction and marked 4 points
From 2008-2011 is the year in which all Agribank system has a lot of effort in implementation of developing new product and VAT service such as: Send and withdraw money in many places, mobilize saving to guarantee the value according to value of gold: set up connection program of Agribank with Securities Companies
Besides Agribank also develop Mobile Banking products: BSMS_ banking,
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Vntopup transfer through BSMS (A Transfer service) AgriBank with above average reaction and marked 3 points
Service products of VietinBank have been starting diversified and evaluated VietinBank to have good reaction and marked 4 points
(10)Foreign affair business:
VietcomBank is the bank with the best foreign affair business among banking system in Vietnam and marked 4 points
Agribank is one of the banks with good relationship with the greatest banks agents in Vietnam with more than 1,065 agent bank in 97 countries and area up to end of 2011 Agribank gets the good reaction with this criteria and marked 3 points
VietinBank have agent relationship with 850 banks and great financial organization of more than 60 countries in the world VietinBank gets good reaction with this criteria and marked 3 points
Up to 2011, BIDV has had agent relationship with more than 1,551 banks and
banking branches BIDV gets above average reaction and marked 3 points
Through competitive picture matrix of 4 banks, it shown that Vietcombank is
graded to be first with 3.5 points, the following is BIDV 3.45 points, after that it is
Agribank with 3.35 points and finally is VietinBank 3.2 points Deference mark among the bank is not much
e Threat of new entrants
The increase of domestic banks: The establishment of commercial banks in Vietnam is not met many obstacles That is the reason why the number of commercial banks has increased rapidly in recent times Despite having been just founded for ten years in area of credit operation, commercial banks providing credit Operations are up to more than hundred Nevertheless, to entry sector and become a reputable unit to customers, new banks will face many obstacles and they will not cause much difficulty for the expansion of market share of BIDV
Entry threat of foreign banks: The threat from the new bank will depend on the "high" of barriers to entry Under the WTO commitments, the banking sector is gradually opening up in the routine for seven years The banking sector has made fundamental changes when foreign financial institutions may hold shares in the
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banks of Vietnam and the emergence of 100% foreign capital banks Since 2006, Vietnam has gradually removed restrictions on share rates in the banking sector s of the foreign financial institution as committed in the Trade Agreement with the United States According to the commitments under the ASEAN Framework Agreement on Services (AFAS) of ASEAN Association, Vietnam had to completely remove the provisions on controlling the rate of contribution of capital, services value of the transaction from foreign banks since 2008
There were 05 (five) 100% foreign banks licensed establishment in Vietnam Nevertheless, when looking at the number of foreign banks having representative offices in Vietnam and foreign banks having equity in the domestic commercial banks, banks with 100% foreign capital will certainly be increased in the future The foreign banks are such way; barriers to the penetration of banks with domestic sources are being raised after the government suspended licenses to establish new
banks from August 2008 Apart from the provisions of charter capital, the time to
constantly be profitable, the State Bank is monitoring the newly established banks
However, that will not prevent enterprises having enough conditions from participating in banking sector once Government allowed re-establishment of bank
Entrance barriers are also reflected through market segmentation and target market that existing banks are targeting, brand value as well as customer base, customer’s loyalty that banks have built These are particularly important because they will determine the viability of a bank looking forward to entering Vietnam market
Look at Vietnam's banking sector in the context of Vietnam and the world; it is covering by economic crisis The strict entrance barriers make the threat from new
banks in the future quite low Once the world economy has recovery with open of
banking sector under WTO commitment and other organizations, the existence of new banks is almost certain
© Threat of substitute products
For corporate customers, the risk from being replaced is not high since this customer kind needs clarity as well as vouchers, bills in the package of banking services If trouble occurs during use of products and services, customers often
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For consuming customers, on the other hand, the habit of using money makes Vietnamese consumers keep money at home or if they have an account, once they have money on account, they will withdraw all for use Government agencies and enterprises pay salary through bank accounts in order to promote the non-cash
payment, contribute to financial transparency for every citizen However, the
locations to accept card payments are most of the restaurants, luxury-shopping areas where people are not always to purchase
Even in the supermarket, consumers have to wait for employees to get the card reader or go to another bar when trying to use the card for payment The main inconvenience adding psychology favor money makes consumers want to keep and use money rather than via banks
In addition to the form of saving in bank, Vietnamese consumers have many
other options such as holding foreign currencies, investing in securities, mode of
insurance, investing in precious metals (gold, diamonds, etc.) or investing in real estate Interest rate from bank does not always attract consumers At this time for
instance, gold price is on hot, sudden increase or decrease during the day, while the
U.S dollar in the free market also changes, the interest rates of most banks is only at 14% a year
Thus, with the subject as corporate customer, the risk of replacing the retail banking products is not high; however, concerning products for individual customers, BIDV faces up more threats from substitute products The substitutes for
individual credit operations will be on growth when financial market lacks of stability and psychology to use money of people is at high level
e Bargaining power of customers
There are three main kinds of customers in BIDV-Thang Long State enterprise, private enterprise individual customers, in the past, the main volume of credit is State enterprise together with the development of private economic sector the credit amount of this sector is increasing year by year
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Table 2.2: Credit mechanism according to customer
No Type of customer 2008 2009 2010
| State Enterprises (bill D) 632 458 448
2 Private Enterprises (bill D) 865 1.113 1,533
3 Individual customers (bill D) 142 192 261
Total account outstanding 1,639 1,763 2,242
(Source: Report on appraising activities of BIDV —Thang Long branch from 2008-2010) Besides the development of total credit amount in BIDV — Thang Long, the structure of customers also changed This change can be indicated via figure 2.2 below: 2010 — id State enterprise 2009 id Private enterprise ud Individual 2008 0% 20% 40% 60% 80% 100%
(Source: Report on appraising activities oƒ BIDV -Thang Long branch from 2008-2010) Figure 2.3: Credit mechanism chart according customer type
Data in above table could show that strong movement in customer mechanism according to development orientation to enlarge private and retailed consumption
market Lending rate for state owned enterprises decreases from nearly 40% in 2008 to be 20% at the end of 2010 and lowest during 5 years from 2005-2010 Meanwhile,
account outstanding density of private enterprises is developing strongly and continuously through assessment periods (Up to 31/12/2010 it was 1,533 billion Dong which hold density 68%/total account outstanding, increase 668 billion Dong in comparison with 2008) Retail account outstanding increases 84% in comparison with 2008 (hold 12% in comparison with total account outstanding)
We could see that there are a lot of changes in mechanism according to customer type, private account outstanding density increased from 53% in 2008 to
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63% in 2009 and 68% up to end of 2010, it guarantee that the branch always
complete the assigned task by BIDV in years The increase concentrates on private customer, small and medium term enterprises operating in commercial production, small business or consumption to buy house, motor or borrow salary etc These customers guarantee to bring the benefit for the branch
Thang ong branch could achieve the strong movement in restructuring the customers because not only they follow development orientation of the system but also it reflects the activeness and accuracy in business decision of Leadership and employees of the branch Change in operation model according te TA2 model and compietion of all credit products during from 2008-2009 had also contributed greatly to increase competence of the branch, especially enlarge the lending for highly
efficient small and big enterprises
Together with development of bank systems and competition between banks the power of customers has become bigger and bigger, especially for private sector
To ensure the efficiency of credit operation, BIDV — Thang Long needs to have new
strategy for investment project appraisal activities It will be the basic to develop
credit operation in future
e Bargaining power of suppliers
The concept of supplier in banking sector is quite diversified They may be shareholders provide capital to banks’ operations, or companies who are responsible
for maintaining the system or ATM machines, companies providing banking
software, human resource provision system At present, BIDV is investing equipment
and selecting suppliers depend on their conditions This contributes to reduction of
Supplier's power when they cannot provide a large market but must compete with other ones
One of suppliers having the great power with banking development strategy is shareholders They have great influence on the development strategy of the bank in general and BIDV is not an exception In recent years, the stock market has been
frozen due to the financial crisis However, the existing shareholder system of BIDV
is quite strong It is a source of capital, management consulting for efficiency of BIDV in expanding network of clients The shareholders may aid for development of
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retail banking products including VMS (20% stake), Mobifone (development cooperation in mobile banking), PV Gas (Development of credit operations to the oil companies)
One of the sources having a large impact on the quality of retail banking operations is labor force Along with the explosion of the commercial banking system, banks are looking for qualified labor force in area of retail banking The scarcity of senior labor in banking industry is becoming more serious when banks are expanding its network to dominate market For human resource issues, BIDV focuses on attracting talent and train the best personnel from developing available human
resources
2.2.2.3 External factors evaluation matrix
To use quantification method of outside environmental factors to approve
important marking as mentioned in chapter I, we will see the reaction capacity of
BIDV — Thang Long branch for environmental change through EFE matrix as followed: Table 2.3: EFE matrix () (2) @— | @®=@⁄G) (1) Investment activities 0.05 4 0.20
(2) Stable political environment 0.05 l 0.05
(3) Development of science and technology 0.20 3 0.60 4 eee financial market to speed up bank to self- oo 0.05 3 0.15
(5) GDP growth speed 0.20 4 0.80
(6) Market Penetration of foreign banks 0.05 3 0.15 (7) Informatics technological development 0.05 3 0.15
(8) Competition of bank system 0.10 3 0.30
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|) Investment activities: Increase investment, create favorable condition for investment affecting to domestic investment stimulation When investment demand increases which leads to demand in capital for project investment increase However, there are many customers borrowing money for investment, affecting level is just about 5% and this is factor that Thang Long branch reacts a little Therefore classification matrix: column (2): 0.05; column (3): 4
(2) Political environment is stable which has much affect to operation of the
field However, in Vietnam, politics is stable and could not be changed, therefore,
evaluation on this effect of these criteria is only 5%, which leads to success of investment project assessment, and this is the factor that Thang Long Branch reacts a little Therefore, classification matrix is followed: column (2): 0.05; column (3): 1
(3) Scientific and technological development: This criterion greatly affects to success of the industry, the author estimates about 20% Thang Long branch reacts this one factor well Therefore, classification matrix: column (2): 0.2; column (3): 3
(4) Open financial market to make bank self-innovate: This criterion certainly affects to bank operation with 5% of rate and this is the factor that Thang Long
branch react more than averagely Therefore, classification matrix as followed:
column (2): 0.05; column (3): 3
(5) GDP growth speed: This outside affect greatly affects to success of the bank, affecting rate is 20% This is the factor that Thang Long branch pays a lot of attention with high reaction Therefore, classification matrix: column (2): 0.20; column (3): 4
(6) Market penetration of foreign banks: Many people worry about foreign
banks However, according to the author, the presentation of this bank is not so
worried; affecting rate is only 5% Thang Long branch reacts with this affect above averagely Therefore, classification matrix: column (2): 0.05; column (3): 3
(7) Informatics technological development: develop automatic updated software system to assess effectiveness of the project to help assessment staffs to
assess and evaluate the project more accurate This affect could affect 5%, and
Thang Long branch reacts more than averagely Therefore, classification matrix: column (2): 0.05; column (3): 3