Improving the competitive abilities of the bank through implementing the new product - logistics financing - Techcombank case study" : Luận văn ThS. Kinh doanh và quản lý : 60 34 05"

Trinh Van Do IMPROVING THE COMPETITIVE ABILITIES OF THE BANK THROUGH IMPLEMENTING THE NEW PRODUCT - LOGISTICS FINANCING"TECHCOMBANK CASE STUDY" 2007 * master of business administration thesis * Trinh Van Do vietnam national university, HANOI school of business master of business administration thesis Hanoi - 2007 vietnam national university, HANOI school of business Trinh Van Do IMPROVING THE COMPETITIVE ABILITIES OF THE BANK THROUGH IMPLEMENTING THE NEW PRODUCT - LOGISTICS FINANCING"TECHCOMBANK CASE STUDY" Major: Business Administration Code: 60 34 05 Master of business administration thesis Supervisors: DR Ta ngoc Cau Hanoi - 2007 CONTENTS Acknowledgements i Abstract ii TÓM TẮT iii Key words iv Content vi List of Tables x List of Figures xi INTRODUCTION 1 Necessity of the thesis Objective of the thesis 3 Methodology Expert consulting 5 Descriptive survey 6 Contribution of the thesis Thesis structure CHAPTER 1: LITERATURE REVIEW 10 1.1 Competitiveness, competitive advantages and the importance of competitive advantages 10 1.1.1 Competitiveness and competitive advantages 10 1.1.1.1 Competitiveness 10 1.1.1.2 Competitive advantage 10 1.1.2 The importance of competitive advantage 11 1.1.3 Specific expression of competitive advantage 12 1.1.3.1 Outweigh affectivity 12 1.1.3.2 High quality 12 1.1.3.3 Continual improvement 13 1.1.3.4 The ability to meet the demand of customers timely and quickly 13 1.2 Nature and process to realize sustainable competitive advantage 14 1.2.1 Source and process to recognize sustainable competitive advantage 14 vi 1.2.2 Sources, capability, key ability, exceeded capability and sustainable competitive advantage 14 1.2.2.1 Sources 14 1.2.2.2 Ability 15 1.2.2.3 Key abilities 17 1.2.2.4 Outweighing abilities 18 1.2.2.5 Competitive advantage and sustainable competitive advantage 19 1.2.3 Criteria of sustainable competitive advantages 20 1.2.3.1 Preciousness 20 1.2.3.2 Scarcity 20 1.2.3.3 The difficulty of imitation 21 1.2.3.4 A reasonable distance 22 1.2.3.5 Coincidence with factors of success 22 1.3 Functional field- The foundation to create sustainable competitive advantages 23 1.3.1 Production and operation management 23 1.3.2 Marketing 25 1.3.3 Material management 27 1.3.4 Research and Development (R &D) 28 1.3.5 Finance 28 1.3.6 Human resource 30 1.3.6.1 The planning of the labor source 31 1.3.6.2 Laborers enrolling 31 1.3.6.3 Training and Education 31 1.3.6.4 Salary and good-treatment- policy 32 1.3.6.5 Working relations 32 1.3.7 Customer relations and customer services 32 1.3.8 Building trademark and culture of enterprises 33 1.3.8.1 Building trademark 33 1.3.8.2 Building culture of enterprises 34 1.4.1 New service and product implementing 1.4.1.1 The new service and product definition vii 35 35 1.4.1.2 Why the firms design and offer new service and product 35 1.4.1.3 The development process of new service and product 35 1.4.1.4 Mass customization 38 CHAPTER 2: ANALYZING THE REAL SITUATION OF TECHCOMBANK 39 2.1 Techcombank overview 39 2.1.1 Techcombank history 41 2.1.2 The Techcombank mission statement and vision 44 2.2 Techcombank internal analysis 50 2.3 Competitive environment analysis 52 2.3.1 Macro competitive environment 52 2.3.2 Industrial competitive environment 54 2.3.3 Identifying the competitive advantage of Techcombank through comparison with the same ones in banking field 56 2.3.4 SWOT analyzing 58 CHAPTER 3: PRODUCT DESCRIPTION 62 3.1 The features of Logistics Financing product 62 3.1.1 The conception of Logistics financing of Techcombank 62 3.1.2 The structure of Logistics financing of Techcombank 62 3.1.3 The value Logistics financing creating for its clients and Techcombank 63 3.1.3.1 The value Logistics financing creating for Techcombank 63 3.1.3.2 The value Logistics financing creating for its clients 66 3.1.3.3 Conditions to use the service 68 3.1.3.4 Procedure of purchasing the service 68 3.1.3.5 Logistics partners of Techcombank 69 CHAPTER 4: SOLUTIONS RECOMMENDATIONS AND CONCLUSION 70 4.1 The solutions 70 4.1.1 Providing unique products and its structures 70 4.1.1.1 How to be a unique product? 70 4.1.1.2 Solutions to structure of the bank 71 4.1.1.3 Solutions to system development 72 4.1.1.4 Solutions to structure of procedures 73 viii 4.1.1.5 Solutions to targeted customers and marketing 73 4.1.1.6 Solutions on human resources 74 4.1.1.7 Solutions to technology 75 4.1.1.8 Solutions to finance 76 4.1.1.9 Solutions to risk management 76 a Credit risks management 77 b Market risks management 78 c Exploiting risks management 78 4.2 Recommendations 79 4.2.1 Recommendations for Techcombank 79 4.2.2 Recommendations for the Government 81 4.2.3 Conclusions 83 ix Key Words APPENDIX2 -LOGISTICS FINANCING BUZZ-WORDS- 1- In- transit stocks 2- In- transit assembly 3- Inventory control 4- Inventory management 5- Invoicing 6- Issuing delivery invoice 7- Just in time inventory 8- Link customer information system systems for electronic management of supply chain process 9- Logistics management services 10- Localizations of products 11- Market research 12- Materials management 13- Merchandising 14- Modal analysis 15- Multi- modal management systems 16- Multi- package shipment processing 17- Online telecommunications 18- Order fulfillment 19- Order processing and control 20- Parts sequencing 21- Post production services 22- Pricing 23- Project cargo 24- Reduce inland transportation cost iv 25- Receiving report 26- Quality control 27- Quality assurance 28- Relocations 29- Remote spare parts distribution 30- Sailing advice 31- Sea/air 32- Shipment status report 33- Secure storage 34- Value added services 35- Warehouse and inventory 36- Warehouse localization 37- Vendor compliance v List of Tables Tables 2-1: Visible sources……………………………………………….15 Table 2-2: Invisible sources………………………………………………16 Table 2-3 : Criteria to define sustainable competitive advantages 21 Table 2-4: The combination among sustainable criteria………………….22 Table 2-5: The structure of culture of enterprises…………………………34 List of Figures Figure 2-1: New service or product developnt proces……………………37 x REFERENCES Reference Books Articles Interviews Internet sites APPENDIX APPENDIX 1.-THE LOGISTICS FINANCING SERVICES QUESTIONNAIRE APPENDIX2 -LOGISTICS FINANCING BUZZ-WORDS- APPENDIX -SUM OF THE QUESTIONNAIRE APPENDIX 4- THE STRUCTURE OF TECHCOMBANK xi Potential risks That is because logistics financing is a combination among a string of various products and services The Management Board of Techcombank defines the key policies and limits main risks under the proposals of the Operating Board and ALCO committee The risks management solutions are given out under the principles to minimize and control risks instead of eliminating them As a result, in order to maintain a sustainable and safe development, Techcombank out-lines synchronous solutions to risks management including credit risks, market risks and operating risks as well a Credit risks management To limit potential risks sprouting up during credit granting process, Techcombank should apply the following measures: Firstly, the procedure to value and accept the loan when a customer uses a product or logistics financing must experience through levels (bottom up) respectively in a flexible manner namely loan valuing; re-valuing and loan accepting It ensures the closeness of the procedure, of which lower levels provide the conditions supporting the higher ones and higher levels take charge of verifying results of their lower ones By doing so, each level must claim their responsibility in their professional activities The purpose of this procedure is to maintain accuracy and limit invisible risks Secondly, in case there is something wrong with loans the Department of credit management at the Headquarter and Groups of Re-valuing at branches at various levels take charge of re-valuing and inspecting them The General Directors Board and Directors at branches verify individually to the loans with medium and small value The Credit Council at the Headquarter Credit Council at branches verify in team to the loans with high value The Boards of Loan Addressing under the Headquarter take charge of addressing long standing loans (over 120 days) and deposited assets 77 b Market risks management Principles and market risk limits are built under the direction of the General Director and proved by the Management Board and ALCO committee The basic principles to prevent and control interest rate risks are to make GAP reports and the real payment deadline between capital sources and the use of sources with various terms The foreign exchange balance status limits and risk value limits are proved by ALCO and the use of derivative products is the basic measure to control risks sprouting out during the commercial transaction of foreign exchange Making the plan of payment and spared capital yearly (proved by ALCO) limits of MCO as well as other payment limits is also the basic principles in preventing and controlling payment risks The Treasury department claims responsibility for regulating daily toward payment risks, interest rate and foreign exchange basing on the limits verified by ALCO The risk management Board ( under the General Planning Department) takes charge of analysing and valuing the status, controlling the limits as well as measuring risk levels to trading productivity of the bank c Exploiting risk management Risk management Board has responsibility for giving out measures and controlling limits to any types of exploiting risks especially relating to Techcombank‟s database , IT and fund activities Concerned departments and units in all system directly manage and control exploiting risks every day Modernizing IT system, building a prepared back-up system and data protecting system are being taken priority in solutions to manage operating risks Above are some solutions to operating risks management during the time Techcombank implements logistics financing 78 4.2 Recommendations 4.2.1 Recommendations for Techcombank To make logistics financing a strategic strategy and different from other services by other banks, Techcombank should some following methods: Strengthen the service Logistics financing is a new product so that it is impossible to avoid gaps and shortcomings in its theory and practice The combination between the bank and logistics companies includes numerous chains with their own benefit Each side of the combination links together by rights and responsibilities The matter is that Techcombank should clarify the rights and responsibilities of each side in each chain Techcombank should invest to build its own system of warehouse because of the following reasons Firstly, at the time being, Techcombank is spending much money on hiring warehouses for deposited goods Additionally, it is not easy to hire ones with good quality and suitable for the goods Secondly, the bank can not ensure the quality and quantity of the stocks while sending goods to stocks Thirdly, under logistics financing terms and conditions, Techcombank must take charge of keeping goods until it is sent to the end buyers, which sometimes takes lots of time The system of warehouse must be next to the main ports and in the targeted markets of the bank Additionally, if possible, the system of warehouse should link to processing units to raise the quality and value of the products Techcombank should pay attention to staff training New staff should be provided with basic knowledge of logistics financing by the persons in logistics financing units in each branch Besides, Techcombank should invite experts from logistics companies and some partner associations to deliver practical lessons on logistics financing Further more, the training of IT and banking profession must be given care to help them keep up with the requirements of the bank in the new era If possible, Techcombank should invite experts from international banks to give lectures to enrich their profession In addition to the theory training, the bank should 79 generalize practical lessons from logistics financing affairs to make its staff experienced Besides general training, the bank pays attention to select the capable personnel basing on their success in carrying out the service To make the logistics financing known to the customers, Techcombank should launch the marketing campaigns widely via mass media The bank should runs marketing campaigns on financial newspapers or magazines, economic reviews ,etc The reason is that logistics financing is a completely new service to most Vietnamese enterprises The first purpose is to make them well understand the features and function of the service as well as the great benefit they can gain from using the product As a result, the marketing campaign should be as clear as possible and introduced directly into the potential markets and customers of Techcombank such as Associations of Coffee, Wood, Iron and Steal ,etc Besides the general marketing campaign, Techcombank should grant first customers with discounts or special offers To implement the services smoothly, it is necessary to have a strong commitment among the leading officials It is great unity and harmony among its leaders that leads to the success of the service It is too early to tell the future of a new service like logistics financing because of the fact that any services include both chances and possible risks The matter is that the shareholders, The Management Board and Leading Board of Techcombank should clearly understand and commit to face up with any conditions No success without loss and failures The unity and commitment to share responsibilities and risks are the bases to mobilise all members of the bank in the process to implement the new service The commitment must be turned into action and specific policies to ensure the success of logistics financing service for further development of the bank Additionally, shareholders and the Management Board must be a firm leaning post with a flexible operating mechanism for the Operating Board and the Staff of Monitoring at different levels to run the bank flexibly, react timely and the most effectively 80 4.2.2 Recommendations for the Government As mentioned previously, logistics financing not only brings about added value for the customers and the banks but also the benefit for the Government Where‟s the benefit from? The answer can be found in the fact that the logistics financing partly contributes to the development of enterprises by raising the quality of their products and improving their competitive advantages Once the enterprises become stronger, they will contribute more to the national budget in line with the direction given out by the ruling Communist party “ wealthy people mighty nation” To that fact, the Government should create favourable conditions for the development of enterprises directly and logistics financing in directly via some listed policies The Government should provide a reasonable import-export policy which can encourage import-export activities The policy should focus on simplifying the administrative procedures of the export-import process, granting special offers to enterprises specializing in competitive products such as forestry, fishery agricultural as well as handmade and fine arts ones, etc The Government should also play the role of macro regulator by assisting concerned enterprises with legal practice; market information and price as well A suitable taxation policy is also a good solution to the development of both enterprises and the bank as well The Government should also provide different tax levels of which the most favourable are given to the enterprises specializing in competitive products such as forestry, fishery agricultural as well as handmade and fine arts ones, etc The procedures to make up for the added value tax must be as simple as possible to have such enterprises can re-invest into another trade affairs At the macro level, the Government can have negotiations with foreign partners so that they grant us with the most favoured nation status or at least the favourable taxes on some key Vietnamese products This is an effective measure to speed up foreign commerce and to raise trade volume Consequently, the development of foreign commerce means the blossom of logistics financing product 81 One important factor for the development of foreign trade is the infrastructure status Thanks to the care from the Government, the condition of infrastructure of Vietnam has been improved considerably To back up for the development of enterprises, foreign commerce as well as logistics financing the Government keeps on carrying out an overall plan of mending, upgrading and building infrastructure including roads, ports, warehouses, processing units, means of transporting, shipping, means of up-loading, technology ,etc Roads linking industrial zones, key economic regions together and to the ports must be in good condition to ensure time and the quality of the goods The system of warehouses and processing units must be built in line with the proved standards and meets the demand for hygiene, safe and convenience The means of transportation and shipping should be professional and modern to ensure time and quality of goods Ports should be equipped with hightechnique mechanism to help with professional activities in an accurate, professional, safe, modern, convenient and economical way The matter is that all factors must be go well with together to become a complete chain The Government should honour and fully carry out its commitment on international Laws and commerce This is a precondition to make Vietnam a market economy in which all economic sectors are competing freely under the regulations of Vietnamese Laws Under the commitment, the Government creates all favourable conditions for enterprises both locally and internationally to business in Vietnam without any privilege or discrimination This makes foreign enterprises feel safe when carrying transactions with Vietnam Besides, the Government should raise the voice if a nation violates its commitment on international Laws and commerce and such violence does Vietnamese enterprises harm By the method, the Government will attract many foreign enterprises as well as promote foreign trade Logistics financing finds it suitable to develop Last but not least, the Government should expand the commercial cooperation bilaterally and multilaterally By joining the regional and global economic organisations, Vietnamese‟s enterprises have many chances to penetrate into plenty 82 of potential market Foreign products are also imported into Vietnam via Vietnamese importers The import-export activities have become busier more than ever before However, the Government also pays attention to developing commercial cooperation in both scope and scale That means we are targeting at potential commercial relations with big value contracts It is not exaggeration to tell that the larger commercial cooperation, the busier the foreign trade will be And the busier the foreign trade is, the more developed logistics financing will be Here are some basic recommendations for the Government to develop foreign trade in general and logistics financing in particular It is not complete to give out just a few solutions, however, they are expected to strongly support for the development of logistics financing service by Techcombank in the foreseen future 4.2.3 Conclusions Base on the analyses above, this section can reach the following conclusions Logistics financing is really a strategic solution which meets the demand for an overall service backing up import-export activities of many Vietnamese enterprises Further more, it is impossible to deny the fact that logistics financing brings about much benefit for the State, added value for the products and improves reputation of enterprises For Techcombank, logistics financing is also a strong tool in winning market That is because this is the unique service which is introduced in Vietnam for the first time The appearance of the service is not by accident but the result of serious market studies and experience of the bank‟s staff and leaders under the guideline “serve customers the best” In the current context of competitive environment among commercial banks, market for the logistics financing service is still opened As a pioneer in the implementation of the new service, Techcombank has many good conditions to raise its competitiveness and gain success For the whole society, logistics financing partly contributes to change the old method of import-export which is far from in line with the common practice of the 83 activity Since logistics financing shows its advantages in supporting foreign trade, it soon becomes a common method import-export for undeniable benefit it can bring about to all concerned parties However, to make logistics financing a perfect solution , it is necessary to strengthen its strong points and minimize its weakness, give out detail and clear terms and conditions for each part in particular section of the whole string of logistics financing, launch marketing campaigns and personnel training, be active in finance, technology and management policies ,etc By doing so logistics financing is being given conditions for further development 84 REFERENCES Reference Books Andersson D, (1997), Third Party Logistics- Outsourcing Logistics in Partnership, Department of Management and Economics, Linkoping University, Linkoping Berglund M, (1997), Third-Party Logistics Providers- Towards a Conceptual Strategic Model, Department of Management and Economics, Linkoping University, Linkoping Berglund M, (2000), Strategic Positioning of the emerging third party logistics provider, Department of Management and Economics, Linkoping University, Linkoping Wilson Logistics, (2000), Proß ß Delivery, Spreadsheet Interviews Mr Duong Duc Tang, the Director of Vinafco Logistic Professor Vu Dinh QuangMr Tran Nam Tien – Director of Vinalink Mr Nguyen ngoc Lam – Vice Director of Gemadept Internet sites ASG, Transport, Logistics, ( 2000-09), http://www.asg.se/ ABX Logistics, (2000-10), http://www.abxusa.com/home/Serinfo.asp/ EMERY WORLWIDE, (2000-10), http://www.emeryworrld.com/eww/emeryweb Wilson Intranet( 2000-10-12), /corporate facts/Global/About Wilson /Our offices, 85 APPENDIX APPENDIX - THE LOGISTICS FINANCING SERVICES The Logistics financing services questionnaire: Please answer the questions below, save and send back to: trinhvando2001@yahoo.com Company name: Your name: Job Title: Inbound logistics services Please, mark the row representing your status, with the figure “1” Supplier interface management Supplier hubs Demand-pull Inspection service Consolidation and customer loading 86 Vendor managed inventory systems Outbound logistics services 1- Distribution facility possibilities 2- Out bound merge in transit 3- Remote spare parts distribution 4- Repairs and returns 5- Reverse logistics Warehousing services 1- Inspection services 2- Stock taking and managing 3- Pick and pack services 4- Assembly 5- Consolidation 6- Labeling 7- Bar coding 8- On demand printing 9- Different types of storage facilities 10- Direct and consolidated consignments 11- Component testing and recapping 12- Packing 13- Cross docking 14- Physical security 87 15- Quality control APPENDIX – THE DIAGRAM OF CARRYING OUT THE SERVICE Lưu đồ TRÁCH NHIỆM TIẾN TRÌNH THỰC HIỆN THAM CHIẾU CVKH Tiếp nhận yêu cầu khách hàng Xem điểm 7.1 CVKH Giới thiệu sản phẩm cho khách hàng Xem điểm 7.2 CVKH Thông tin khách hàng Xem điểm 7.3 Tư vấn Xem điểm 7.4 CVKH Y Xem điểm 7.5 CVKH Hướng dẫn lập hồ sơ yêu cầu CVKH Lập báo cáo Xem điểm 7.6 Giám đốc, P.GĐ chi nhánh Khả đáp ứng Xem điểm 7.7 N Y CVKH Thông báo cho công ty Logistics Xem điểm 7.8 Đàm phán hợp đồng Xem điểm 7.9 Thông báo thực hợp đồng Xem điểm 7.10 Theo dõi, kiểm soát Xem điểm 7.11 N CVKH Cán định Giám đốc, P.GĐ chi nhánh Thông báo cho khách hàng Giám đốc, P.GĐ chi nhánh Giải chấp lô hàng Kết thúc 88 Xem điểm 7.12 Các công ty Logistics 3-Công ty Gemadept      Loại hình doanh nghiệp :Cơng ty Cổ phần Trụ sở :Tịa nhà Harboar View, 35 Nguyễn Huệ, Quận TP HCM Ngày thành lập : 1990, Cổ phần 1993 Lĩnh vực hoạt động: Dịch vụ Logistics- Dịch vụ vận tải đa phương thức Người liên hệ: Ông Nguyễn Ngọc Lâm Tel: 08-89140141- H/P 0913.923933 Hệ thống kho Vinalink STT ĐỊA ĐIỂM TÊN DIỆN TÍCH I- KHO CỦA VINALINK Hệ thống kho - bãi 145-147 Nguyễn Tất Thành, Quận - HCMC - Kho kín (kho thông thường) 1.000 m2 - Kho ngoại quan Kho Sóng Thần 10.000 m2 Bình Dương - Kho kín (kho thông thường) 1.000 m2 II- CÁC KHO LIÊN KẾT CỦA VINALINK 3.000 m2 có sức chứa 2,000 Ton GW (1,000 Ton NW) Kho lạnh KONOIKE VINA 18A Lưu Trọng Lư, Quận 7, TPHCM Kho ngoại quan KONOIKE VINA 15 Đại lộ Hữu Nghị Khu Công Nghiệp Việt Nam - Singapore (VSIP) 5.800 m2 Kho Phú Mỹ Quận 7.000 m2 Kho Vietrans 142 Lê Lai, Hải Phòng Kho Phú Hải Hải Phòng 89 * 63.000m2 - mái che * 63.000m2- trời 2.700 m2 Hệ thống kho Gemadept STT ĐỊA ĐIỂM TÊN DIỆN TÍCH CÁC KHO SỞ HỮU CỦA GEMADEPT : Kho CFS Bình Dương Di An, Bình Dương 800 m2 Kho Sóng thần KCN Sóng Thần, Bình Dương -Kho ngoại quan 40.000 m2 -Kho thường 71.000 m2 Thuận An – Bình Dương Kho ngoại quan Bình Dương 45.000 m2 Kho đường bao Trần Hưng Đạo -Kho ngoại quan Km9, Đường bao Trần Hưng Đạo, Hải Phịng -Kho ngồi trời -Kho CFS 1.328 m2 5.000 m2 1.100 m2 Kho CFS, cảng cạn Phước Long Quận Thủ Đức - HCMC 1,200 m2 Hệ thống kho Vinafco STT ĐỊA ĐIỂM TÊN DIỆN TÍCH I- KHO CỦA VINAFCO Kho Tiên Sơn Kho kín (kho thơng thường) 21,000 m2 (bao gồm Kho ngoại quan) KCN, Tiên Sơn, Bắc Ninh 10.000 m2 Diện tích mở rộng Kho Bạch Đằng 10.000 m2 916 Bạch Đằng, Hai Bà Trưng, Hà Nội 3,500 m2/ 6,000 m2 - Kho kín II- CÁC KHO LIÊN KẾT CỦA VINAFCO Kho Hải Phòng 226 Lê Lai 142 Lê Lai 10,000 m2 90 Năng lực Vinafco  Hệ thống đại lý, giao nhận quốc tế: 16 nước giới ba miền Việt Nam  Năng lực vận chuyển lực chất xếp: Vinafco mạnh giao nhận vận chuyển khu vực nội địa phía Bắc Gemadept  Hệ thống đại lý toàn quốc nước khu vực Đông Nam Á  Năng lực vận chuyển lực chất xếp: Gemadept mạnh kinh nghiệp cung cấp dịch vụ giai nhận vận chuyển quốc tế Vinalink  Hệ thống đại lý giao nhận chủ yếu Việt Nam  Năng lực vận chuyển lực chất xếp với ưu điểm khu vực phía Nam 91