Service recovery for viettinbank trade finance operationsituation and solution for improvement

VIETNAM NATIONAL UNIVERSITY, HANOI HANOI SCHOOL OF BUSINESS HOANG PHUONG NGA SERVICE RECOVERY FOR VIETINBANK TRADE FINANCE OPERATION: SITUATION AND SOLUTION FOR IMPROVEMENT Major: Business Administration Code: 60 34 05 MASTER OF BUSINESS ADMINISTRATION THESIS SUPERVISOR: DR NGUYEN THI PHI NGA HANOI - 2012 ACKNOWLEDGMENTS First and foremost, I would like to show my sincere gratitude to my supervisor, Dr Nguyen Thi Phi Nga, who has supported me with her supervision, motivation, and thorough knowledge All kinds of her supports have enabled me to finish this thesis successfully Also, I would like to give my great thanks to my family, my friends, and lecturers and staffs of Hanoi School of Business for their motivation and encouragement to me in order to complete my study and my MBA degree as now Thank you and wish you all happiness and success! i ABSTRACT SERVICE RECOVERY FOR VIETINBANK TRADE FINANCE OPERATION: SITUATION AND SOLUTION FOR IMPROVEMENT Hoang Phuong Nga MBA, 2007-2009 School of Business Vietnam National University, Hanoi Supervisor: Dr Nguyen Thi Phi Nga August 2012, 92 pages In the chapter one, this thesis provides fundamental concepts of service, customer service and service recovery The theory on service recovery strategies is also mentioned Up to now, there have been a lot of studies on service development but not many detailed and specific studies on service recovery Thus, the theory of service recovery is still under dicussion and controversy In addition, the author uses qualitative methodology through the case study of improving service recovery to VietinBank‟s trade finance operation Then, the study mentioned the overview of VietinBank in general and VietinBank‟s trade finance service in particular With the long history of development, VietinBank also has remarkable experiences on trade finance service After giving the overall picture, the author goes to in-dept analysis on current situation of VietinBank‟s trade finance operation as well as current status of strategies for VietinBank‟s trade finance service From the in-dept analysis, some strengths and weaknesses of service recovery activities in VietinBank are extracted The solution ii for improving service recovery oF VietinBank‟s trade finance operation shall be given based on this table of strengths and weaknesses Next, the thesis gives some recommendations to Service Recovery for trade finance operation in VietinBank First of all, the author mentioned overall strategies and solutions for the development of VietinBank, both quantitative and qualitative targets Then, linking the current overall strategies and solutions of VietinBank with the table of strengths and weaknesses of VietinBank‟s trade finance operation, the author suggests development strategies for trade finance operation They are: (1) strategies for product and service; (2) strategies for customers; (3) strategies for technology; (4) strategies for marketing and distribution channels; and (5) strategies for human resources management After having a relatively clear picture on strategies for the improvement of VietinBank‟s trade finance operation, the author gives some suggestions on detailed actions plan to perform five mentioned strategies Finally, the study gives some recommendations to State bank of Vietnam and VietinBank itself for the improvement of Service Recovery of VietinBank‟s trade finance operation iii TÓM TẮT THỰC TRẠNG VÀ GIẢI PHÁP CHO VIỆC CẢI THIỆN DỊCH VỤ TÀI TRỢ THƢƠNG MẠI CỦA NGÂN HÀNG THƢƠNG MẠI CỔ PHẦN CƠNG THƢƠNG VIỆT NAM Hồng Phƣơng Nga Thạc sĩ QTKD, 2007-2009 Khoa Quản trị kinh doanh Đại học Quốc gia Hà Nội Giảng viên hƣớng dẫn: Tiến sỹ Nguyễn Thị Phi Nga Tháng 08.2012, 92 trang Trong chương một, luận văn cung cấp khái niệm dịch vụ, dịch vụ khách hàng vấn đề khôi phục dịch vụ Đồng thời, luận văn đề cập đến lý thuyết chiến lược khôi phục dịch vụ Cho đến ngày nay, có nhiều nghiên cứu việc phát triển dịch vụ, nghiên cứu chi tiết cụ thể việc khôi phục dịch vụ Do vậy, lý thuyết vấn đề khôi phục dịch vụ, ngày hơm nay, cịn chưa thống cịn nhiều tranh cãi Bên cạnh đó, tác giả sử dụng phương pháp mơ tả định tính qua việc phân tích tình cụ thể cải thiện việc khơi phục dịch vụ cho nghiệp vụ Tài trợ thương mại Ngân hàng Thương mại Cổ phần Công thương Việt Nam (VietinBank) Trong phần tiếp theo, nghiên cứu đề cập đến tranh tổng quan VietinBank nói chung nghiệp vụ tốn quốc tế VietinBank nói riêng Với bề dày phát triển lâu đời, VietinBank có kinh nghiệm định dịch vụ Tài trợ thương mại Sau có tranh tổng thể, tác giả luận văn sâu vào phân tích thực trạng nghiệp vụ Tài trợ thương mại VietinBank chiến iv lược VietinBank cho phát triển dịch vụ Tài trợ thương mại Từ phân tích sâu nêu chương hai, vài điểm mạnh điểm yếu hoạt động khôi phục dịch vụ Tài trợ thương mại VietinBank tác giả rút Từ điểm mạnh điểm yếu này, tác giả đồng thời đưa vài gợi ý giải pháp đẩy mạnh việc khôi phục dịch vụ cho nghiệp vụ Tài trợ thương mại Tiếp theo, luận văn đưa khuyến nghị gợi ý cho vấn đề khôi phục dịch vụ cho nghiệp vụ Tài trợ thương mại VietinBank Trước tiên, tác giả đề cập đến chiến lược giải pháp phát triển tổng thể cho VietinBank, mục tiêu mang tính định lượng định tính Sau đó, luận văn kết nối chiến lược giải pháp tổng thể với bảng tóm tắt điểm mạnh điểm yếu nghiệp vụ Tài trợ thương mại VietinBank để đưa chiến lược cho vấn đề khôi phục dịch vụ nghiệp vụ Tài trợ thương mại Những chiến lược là: (1) chiến lược sản phẩm dịch vụ; (2) chiến lược khách hàng; (3) chiến lược công nghệ; (4) chiến lược marketing kênh phân phối; (5) chiến lược quản trị nguồn nhân lực Từ chiến lược cho việc khôi phục dịch vụ này, tác giả gợi ý kế hoạch hành động cụ thể, chi tiết cho chiến lược năm chiến lược nêu Cuối cùng, luận văn đưa vài khuyến nghị với Ngân hàng Nhà nước nói chung VietinBank nói riêng cho mục đích cải thiện việc khơi phục dịch vụ nghiệp vụ Tài trợ thương mại VietinBank v TABLE OF CONTENTS ACKNOWLEDGMENTS i ABSTRACT ii TÓM TẮT iv TÓM TẮT iv TABLE OF CONTENTS vi LIST OF FIGURES ix LIST OF TABLE x INTRODUCTION .1 Necessity of the thesis .1 Literature review .2 Objectives of the research .4 Research Methodology 5 Contribution of the thesis Structure of the research CHAPTER 1: THEORETICAL FOUNDATIONS 1.1 The concepts of service, customer service and service recovery .9 1.1.1 Service and customer service 1.1.2 Service recovery 10 1.2 Types of customer‟s response to the service failures 12 1.2.1 Types of customer actions .13 1.2.2 Types of complainers 13 vi 1.3 The reasons customers complain .14 1.4 The expectation of customers 15 1.4.1 Customers expectation of fair treatment 15 1.4.2 Companies‟ behavior 16 1.5 Service Recovery Strategies .17 1.5.1 Fail-safe your service – Do it right at the first time 18 1.5.2 Welcome and Encourage complaints 19 1.5.3 Act quickly 19 1.5.4 Treat customer fairly .21 1.5.5 Learn from recovery experiences 21 1.5.6 Learn from lost customers .21 1.5.7 Return to “Doing it right” .22 1.6 Service Guarantees .22 1.6.1 Benefits of Service Guarantees .23 1.6.2 Types of Service Guarantees 24 1.6.3 When to Use (or Not Use) a Guarantee 25 CHAPTER 2: SERVICE RECOVERY FOR TRADE FINANCE OPERATION IN VIETINBANK 26 2.1 Overview of VietinBank and trade finance operation .26 2.1.1 History of VietinBank .26 2.1.2 Corporate Vision, Mission, Values and Ambitions 28 2.1.3 Trade finance operation of VietinBank 29 2.1.4 VietinBank‟s Trade Finance resources 36 vii 2.2 Analysis of VietinBank‟s current situation of Service Recovery 39 2.2.1 How customers respond to service failures in VietinBank: 40 2.2.2 VietinBank‟s Service Recovery Strategies for Trade finance operation 44 2.2.3 VietinBank‟s Service Guarantees 49 2.3 Summary of strengths and weaknesses of service recovery activities in VietinBank 50 CHAPTER 3: RECOMMENDATIONS TO SERVICE RECOVERY FOR TRADE FINANCE OPERATION IN VIETINBANK 53 3.1 Strategies and solutions for the development of Trade finance operation in VietinBank 53 3.1.1 Quantitative targets: 53 3.1.2 Qualitative targets: 53 3.2 Strategies and actions plan for improvement of Service Recovery for trade finance operation in VietinBank .54 3.2.1 Strategy for improvement of Service Recovery for trade finance operation in VietinBank in the period of 2012-2017 54 3.2.2 Actions plan for improvement of Service Recovery for trade finance operation in VietinBank in the period of 2012-2017 60 3.1.3 Recommendations for the improvement of Service Recovery in VietinBank 72 REFERENCES 73 ANNEX LIST 75 viii LIST OF FIGURES Figure 1.1: Unhappy customers‟ repurchase intentions 11 Figure 1.2: Customer response following service failure 12 Figure 1.3: Types of failure respondents 14 Figure 1.4 Fairness and satisfaction 17 Figure 1.5 Service Recovery strategies 18 Figure 1.6: Causes behind service switching 22 Figure 2.1: VietinBank‟s Key Financial Index 29 Figure 2.2 Commercial banks in operation in Vietnam‟s market by 31st Dec 2011 31 Figure 2.3: Vietnam Trade finance market shares 2010 32 Figure 2.4: Banks in Vietnam, with whom trade finance customers are transacting34 Figure 2.5: Number of VietinBank‟s trade finance customers over 2008-2011 .34 Figure 2.6: Duration (years) that customers transacting with VietinBank .36 Figure 2.7: The reasons customers not complain 41 Figure 2.8: The reasons customers complain 42 Figure 2.9: The expectation of customers when complaining 42 Figure 2.10: Customer‟s identification of other complaining ways to a bank 45 Figure 2.11: Does VietinBank offer you service guarantees for trade finance? .50 ix 5) Your main business areas: (all results shown) - Import of steel - Export of agricultural products - Import of equipments - Import of communication facilities - Import of machinery - Import of consumer goods - Export of agricultural products - Import of pharmaceutical equipments - Import of machinery - Import of oil and gas - Export of agricultural products - Import of equipment spare parts - Import of office furniture - Import of raw materials - Import of pharmaceutical equipments - Import of chemical - Import of canned foods from Europe - Import of soybean meal 79 - Import of machinery - Import of steel - Import of consumer goods - Import of oil and gas - Import of consumer goods - Import of agricultural products - Import of consumer goods - export of agricultural products - Import of machinery - Vietnam - Vietnam, China, Spain - Vietnam and some foreign countries - garment - vietnam - vietnam - seafood - Vietnam - Food - machinery - furniture - agricultural products export 80 - Import of consumer goods - sporting goods - import of motorbike - insurance - Import of machinery - Import of consumer goods - Export of wooden furniture - Import of machinery - Import of agricultural products 6) The propotion of trade finance payment made by credit granted from VietinBank: Chart Wizard Percentage Responses < 10% 16.7 10 – 50% 22.9 11 50- 100% 60.4 29 Total responses: 81 48 7) How long have you been transacting with VietinBank? Chart Wizard Percentage Responses Below year 12.5 From - years 20.8 10 Over - years 37.5 18 Over years 29.2 14 Total responses: 8) Which of the following banks are you also transacting with? 48 Chart Wizard Percentage Responses Bank for foreign trade of Vietnam (Vietcombank) Bank for Industry and Development of Vietnam (BIDV) Bank for Agriculture and Rural of Vietnam (Agribank) Asia Commercial Bank (ACB) Vietnam Technological and Commercial Joint stock bank (Techcombank) Vietnam Export and Import Bank (Eximbank) 82 25.8 40 12.9 20 15.5 24 12.3 19 7.1 11 7.7 12 9) Military Bank (MB) 7.1 11 HSBC 7.7 12 Citibank 1.3 Sumitomo Mitsui Banking Corporation 0.0 Other 2.6 Which of the following trade finance services of VietinBank has your company been utilizing currently? Chart Wizard Percentage Responses Import LC 26.7 39 Import Collection 18.5 27 Export LC 6.8 10 Export Collection 7.5 11 Inward remittances 12.3 18 Outward remittances 17.1 25 Bank Guarantees 11.0 16 0.0 GSM-102 Program 83 10) Which of the following trade finance services of VietinBank you think would come into prominence? Chart Wizard Percentage Responses Import LC 34.4 31 Import Collection 15.6 14 Export LC 12.2 11 Export Collection 10.0 Inward remittances 10.0 Outward remittances 11.1 10 Bank Guarantees 6.7 GSM-102 Program 0.0 11) What you think about trade finance services quality of VietinBank? Chart Wizard Percentage Responses Great (move to question no.23) 2.1 Good (move to question no.23) 33.3 16 Not so good (move to question no.12) 64.6 31 Bad (move to question no.12) 0.0 Total responses: 84 48 12) Which of the following is the reason for your dissatisfaction? Chart Wizard Percentage Responses Unprofessional staffs and services 29.0 Long time processing 58.1 18 High rate of fees, charges 12.9 Total responses: 13) Have you ever faced a service failure at VietinBank? 31 Chart Wizard Percentag Response Yes e s 93.5 29 6.5 No (move to questio n no.23) Total responses: 85 31 14) Did you respond to VietinBank when a failure occurred? Chart Wizard Percentage Responses Yes (move to 83.3 25 16.7 question no.16) No Total responses: 15) Why didn’t you respond when a failure occurred? (After this question, please move to question no.20) 30 Chart Wizard Percentage Responses It wastes my time and effort since nothing good may occur I don’t know how to complain It’s not important, I don’t want to complain 56.0 14 12.0 32.0 Total responses: 86 25 16) Why did you decide to respond to a VietinBank’s staff when a failure occurred? Chart Wizard Percentage Responses To help me and others avoid silimar 18.5 I want to get compensation from VietinBank 51.9 14 I want fair treatment 18.5 I like to complain about everything 11.1 situations next time Total responses: 17) What was the behavior of VietinBank’s staff against your complaint? 27 Chart Wizard Percentage Responses Welcome and encourage complaint, apologize immediately and promise to 11.1 40.7 11 33.3 14.8 recover the service in the shortest time Transfer to another person who will be in charge Do not apologize, only take note the complaint and call back at another time Question me in an impolite way about the fault and promise to call back Total responses: 87 27 18) How long did VietinBank’s staff keep you waiting to recover the service? Chart Wizard Percentage Responses He/she handled everything immediately 44.4 12 Several hours 33.3 One day 18.5 Two days 3.7 Never call back 0.0 Total responses: 19) Are you satisfied with his/her way of recovering the service? 27 Chart Wizard Percentage Responses Yes 48.1 13 No 51.9 14 27 Total responses: 88 20) Do you know any other way of complaining to VietinBank (via internet, email, hotline…)? Chart Wizard Percentage Responses Yes (please move to 20.0 80.0 24 question no.21) No (please move to question no.22) Total responses: 21) Did you find it it easy to access processing to complain? 30 Chart Wizard Percentage Responses Yes 33.3 No 66.7 14 Total responses: 89 21 22) Did you respond about service failures to your friends, family or any other 3rd party? Chart Wizard Percentage Responses Yes 83.3 25 No 16.7 Total responses: 23) Does VietinBank offer you a Service guarantee for trade finance services? 30 Chart Wizard Percentage Responses Yes 27.7 13 No 72.3 34 Total responses: 24) Have you ever faced a service failure at a bank? 47 Chart Wizard Yes (please move to 90 Percentag Response e s 87.0 40 question no.25) No (The questionnair e will end 13.0 here Thank you!) Total responses: 25) What was the behavior of the staff in that bank against your complaint? 46 Chart Wizard Percentage Responses Welcome and encourage complaint, apologize immediately and promise to 28.6 12 50.0 21 19.0 2.4 recover the service in the shortest time Transfer to another person who will be in charge Do not apologize, only take note the complaint and call back at another time Question me in an impolite way about the fault and promise to call back Total responses: 91 42 26) How long did the staff keep you waiting to recover the service? Chart Wizard Percentage Responses He/she handled everything 64.3 27 23.8 10 One day 2.4 Two days 7.1 Never call back 2.4 immediately Several hours Total responses: 27) Are you satisfied with his/her way of recovering the service? 42 Chart Wizard Percentage Responses Yes 87.5 35 No 12.5 40 Total responses: 92 28) Do you know any other way of complaining to that bank (via internet, email, hotline…)? Chart Wizard Percentage Responses Yes (please move to question no.29) 42.5 17 No (please move to question no.30) 57.5 23 Total responses: 29) Did you find it easy to access processing to complain? 40 Chart Wizard Percentage Responses Yes 65.5 19 No 34.5 10 Total responses: 30) Does that bank offer you a Service guarantee for trade finance services? 29 Chart Wizard Percentage Responses Yes 68.3 28 No 31.7 13 Total responses: 93 41 ... Strategies and actions plan for improvement of Service Recovery for trade finance operation in VietinBank .54 3.2.1 Strategy for improvement of Service Recovery for trade finance operation... concepts of service, customer service and service recovery .9 1.1.1 Service and customer service 1.1.2 Service recovery 10 1.2 Types of customer‟s response to the service failures... Actions plan for improvement of Service Recovery for trade finance operation in VietinBank in the period of 2012-2017 60 3.1.3 Recommendations for the improvement of Service Recovery in