Phân tích và đề xuất điều chỉnh chiến lược của công ty cổ phần chứng khoán VNDIRECT trong giai đoạn 2011 2016

VIETNAM NATIONAL UNIVERSITY, HANOI SCHOOL OF BUSINESS NGUYEN THI PHUONG THAO ANALYSIS AND RECOMMENDATIONS IN STRATEGIC ADJUSTMENT FOR VNDIRECT SECURITIES JOINT STOCK COMPANY (2011 – 2016) MASTER OF BUSINESS ADMINISTRATION THESIS Hanoi - December 2010 2010 * Ma st er o f Bu si n ess Ad mi n i st r a t i o n Th esi s * Nguyen Thi Phuong Thao VIETNAM NATIONAL UNIVERSITY, HANOI SCHOOL OF BUSINESS NGUYEN THI PHUONG THAO ANALYSIS AND RECOMMENDATIONS IN STRATEGIC ADJUSTMENT FOR VNDIRECT SECURITIES JOINT STOCK COMPANY (2011 – 2016) Major: Business Administration Code: 60 34 05 MASTER OF BUSINESS ADMINISTRATION OF THESIS Supervisor: Dr Nguyen Viet Anh Hanoi - December 2010 TABLE OF CONTENT ACKNOWLEDGEMENTS i ABSTRACT ii TÓM TẮT v TABLE OF CONTENT viii LIST OF TABLES xi LIST OF FIGURES xii LIST OF ABBREVIATIONS xiii INTRODUCTION 1 Necessity of the thesis Objective of the thesis 3 Research questions Scope of work Methodology Contributions of the thesis Expected results Further research directions Limitation of the thesis 10 Thesis structure CHAPTER 1: LITERATURE REVIEW 1.1 Strategy and role of strategy 1.1.1 Definition of strategy 1.1.2 Role of strategy 1.2 Strategic management process 1.3 Strategic vision and business mission 12 1.4 Setting objectives 12 viii 1.5 External environment analysis 13 1.5.1 Macro environment analysis 14 1.5.2 Industry and competition environment analysis 17 1.6 Company situation analysis 26 1.6.1 Analysis of how well the current strategy works 26 1.6.2 Analysis of company’s roots of competitive advantage 27 1.6.3 Analysis of company‘s cost structure 30 1.6.4 Evaluate the company‘s competitive position 33 1.7 SWOT analysis 35 1.7.1 What is SWOT? 35 1.7.2 SWOT matrix 36 1.8 Formulating a strategy 36 1.8.1 Levels of strategy - The Strategy making pyramid 36 1.8.2 Specific strategy at different levels 37 CHAPTER 2: CASE STUDY OF VNDIRECT 45 2.1 Over all about VNDIRECT 45 2.1.1 General information about VNDIRECT 45 2.1.2 The establishment and development of the company 46 2.1.3 The company organizational structure 47 2.2 Analysis of strategic vision and business mission 48 2.2.1 Analysis of current strategic vision of VNDIRECT 48 2.2.2 Analysis of current business mission of VNDIRECT 49 2.3 Objectives of VNDIRECT 50 2.4 External environment analysis 50 2.4.1 Macro environment analysis 50 2.4.2 Industry and competition environment analysis 58 2.5 Situation analysis of VNDIRECT 80 2.5.1 Analysis of how well the corporate strategy works 80 2.5.2 Analysis of how well the business strategy works 82 ix 2.5.3 Analysis of how well the functional strategy works 89 2.5.4 Analysis of business result of the company 106 2.5.5 Analysis of company’s resources and capabilities 108 2.5.6 The value chain and the company ‘s cost structure 111 2.5.7 Evaluate the company ‘s competitive position 113 CHAPTER 3: SUMMARY AND RECOMMENDATIONS 116 3.1 Summary and recommendations for theory development 116 3.2 Summary and recommendations for Government bodies 117 3.3 Findings for VNDIRECT 119 3.3.1 SWOT matrix analysis of VNDIRECT 119 3.3.2 Distinct competencies of VNDIRECT 122 3.4 Recommendations for VNDIRECT company from 2011 – 2016 122 3.4.1 Recommendations in strategic vision and business mission adjustment 122 3.4.2 Recommendations for corporate strategy adjustments 123 3.4.3 Recommendations for business strategy adjustments 125 3.4.4 Recommendations for functional strategy adjustments 129 3.4.5 Summary of strategic development direction of VNDIRECT 133 CONCLUSION 135 REFERENCES 137 APPENDICES 140 x LIST OF TABLES TABLE 1-1: A MODEL OF WEIGHTED COMPETITIVE STRENGTH ASSESSMENT 34 TABLE 1-2: MODEL OF SWOT MATRIX 36 TABLE 2-1: GENERAL INFORMATION ABOUT VNDIRECT 45 TABLE 2-2: PREDICTION OF GDP OF VIETNAM IN 2010 51 TABLE 2-3: THE DEVELOPMENT OF SECURITIES INDUSTRY VIA SOME CATEGORIES 58 TABLE 2-4: MINIMUM REQUIRED CAPITAL FOR SECURITIES OPERATIONS 61 TABLE 2-5: AVERAGE PROFITABILITY INDEX OF SOME MAJOR INDUSTRIES IN 2009 63 TABLE 2-6: DOMINANT ECONOMIC FEATURES OF THE SECURITIES INDUSTRY 63 TABLE 2-7: TOP 20 COMPANIES IN TERM OF CHARTER CAPITAL 69 TABLE 2-8: TOP 10 LEADING COMPANIES IN REVENUES IN EACH ACTIVITY IN 2009 70 TABLE 2-9: REVENUE STRUCTURE IN 2009 OF MAJOR COMPANIES IN GROUP 74 TABLE 2-10: A SUMMARY OF MAIN RIVALS ‘S CHARACTERISTICS AND MOVES 76 TABLE 2-11: TOTAL SALARY AND BENEFIT FOR BOARD OF MANAGEMENT OF VNDIRECT IN 2009 102 TABLE 2-12: EMPLOYEES ‘S QUALIFICATION OF VNDIRECT 103 TABLE 2-13: CAPITAL INCREASING PROCESS OF VNDIRECT 104 TABLE 2-14: SEVERAL CATEGORIES OF BUSINESS RESULT OF VNDIRECT (20072009) 107 TABLE 2-15: BUSINESS UNIT COST STRUCTURE ANALYSIS AMONG VNDIRECT AND RIVALS IN 2009 112 TABLE 2-16: A MODEL OF WEIGHTED COMPETITIVE STRENGTH ASSESSMENT OF VNDIRECT, SSI AND TLS 114 TABLE 3-1: SWOT MATRIX ANALYSIS OF VNDIRECT 119 TABLE 3-2: RECOMMENDED DEVELOPMENT ROAD MAP OF VNDIRECT FROM 20112016: 133 xi LIST OF FIGURES FIGURE 1-1: STRATEGIC MANAGEMENT MODEL FIGURE 1-2: EXTERNAL ENVIRONMENT 13 FIGURE 1-3: FORCES COMPETITION MODEL 18 FIGURE 1-4: THE GENERIC BUILDING BLOCKS OF COMPETITIVE ADVANTAGE 27 FIGURE 1-5: A REPRESENTATIVE VALUE CHAIN MODEL 31 FIGURE 1-6:THE STRATEGIC MAKING PYRAMID MODEL IN A DIVERSIFIED COMPANY 37 FIGURE 1-7: MODEL OF BUSINESS STRATEGIES 40 FIGURE 2-1: ORGANIZATIONAL STRUCTURE OF VNDIRECT 47 FIGURE 2-2: INTERNET USERS GROWTH 2000-2009 IN SELECTED ASIAN COUNTRIES 57 FIGURE 2-3: INTERNET USERS IN VIETNAM 2005-2009 57 FIGURE 2-4: THE VALUE CHAIN OF VNDIRECT 111 xii LIST OF ABBREVIATIONS GDP : Growth Domestics Product VNDIRECT : VNDIRECT Securities Joint Stock Company HSX : Ho Chi Minh City Securities Exchange HNX : Hanoi Securities Exchange IPO : Initial Product Offering ROA : Return on Asset ROE : Return on Equity KSF : Key Success Factor OTC : Over the counter SSC : State Securities Commission VNNIC : Vietnamese Internet Center ABS : An Binh Securities joint stock company ACBS : ACB securities company Ltd AGRISECO : Agribank securities joint-stock corporation BSC : BIDV securities company Ltd BVSC : Baoviet securities joint stock company DAS : Dong A securities company Ltd FPTS : FPT securities joint stock company HBBS : Habubank securities company Ltd HBS : Hoa Binh securities joint stock company HSC : Hochiminh city securities corporation KLS : Kim Long securities corporation SBS : Sacombank securities joint stock company SHS : Saigon Hanoi securities joint stock company SSI : Saigon securities incorporation TLS : Thang Long securities joint stock company VCBS : Vietcombank securities company Ltd xiii VIETINBANKSC : Vietnam Bank for Industry and Trade securities Joint stock company xiv Dealing strategy: The previous dealing strategy of VNDIRECT is to focus only to real estate stocks which is considered as the highest profit industry at present However, as analyzed in the previous chapter, this is a too risky strategy, especially when the economy is in recession period Therefore, VNDIRECT should develop a more cautious and balanced dealing strategy with a portfolio covering stocks in almost basic industries like food, construction materials, pharmaceutical, The company should set up certain principles to screen stocks in the portfolio and the expected profit When the market went down, it should be active in cutting loss timely, avoid becoming inability of payment In the long run, VNDIRECT should consider to separate the dealing business units from others That is the way many foreign securities companies did, and SSI at present also follows this strategy The purpose of this strategy is to avoid the conflict of interest between customers and the company itself As VNDIRECT already have a portfolio management fund, VNDIRECT can empower all of its dealing and investment activity to this fund to ensure the basic principle in the industry Underwriting and consulting strategy In the time to come, the company ‘s direction will focus more to the investment bank business like underwriting and consulting, which brings opportunities to access institutional customers To this, the company needs to: - Begin by targeting small and medium sized companies whose demand is not high and who need cheaper fees This strategy is suitable in the beginning time, when the staff is still not quite experienced and the capital is limited This is exactly what VNDIRECT did in brokerage strategy before and was successful in 1st year (targeting small customers first and when strong enough, move to the bigger segment) 127 - Recruit more experts and high-level human resource and qualified professionals, and continually organize training course for the current staff in order to enhance the consulting and underwriting advisory capability Invite or recruit foreign training experts if needed - Investment bank services offered includes but not limit to: o Capital market services: Consulting in privatization, IPO, underwriting, stock issuance, stock listed o Debt instrument market: Bonds issuance, bonds listed o Company evaluation o Restructuring and M&A - Recruit more sales staff who are in charge of big customers ‘ relations - Look for a strategic partner (the best is a foreign bank) to increase the underwriting capability, the financial capability as well as consulting capability and institutional relationship Portfolio management strategy The operation of portfolio management company will be separated from VNDIRECT, and when the company is mature, all of dealing activity should be authorized to this company In the long time, VNDIRECT could consider to establish separated funds like mutual fund, balanced fund, venture capital fund, real estate fund,… Strategy of analysis and forecasting business unit As VNDIRECT applied service packages for different investor segments, the analysis and forecasting business unit should become a cost centre (which 128 brings revenue from charging analysis reports and extra fee for individual consulting) This is an important step to enhance the capability of analysis and forecasting and to create a motivation for the development of this unit Besides term reports, this division can supply analysis report in specific industries and as deeper reports required by customers 3.4.4 Recommendations for functional strategy adjustments Over all recommendations In order to ensure the smoothly co-operation among different groups and departments, VNDIRECT should carry out a total quality management system (like ISO) This also help to increase the prestige of the company in the eyes of investors and stakeholders Information technology system strategy Technology is a competency of VNDIRECT, and although it might not be a distinct competency in the future, it is very important competency of VNDIRECT The IT technology strategy, therefore, should be continually maintain and improve the system to better satisfy customers ‘ needs and demands Suggested adjustments are: - Build up a private account for institutional customers with different customized front face - Research to apply the most update technology (which is online social network and web 2.0) Create a social network for investors and business - Build up an artificial stock trading floor for students and stock trading beginners, who might be potential customers in the future Products/service strategy: 129 All ideas of customers should be analyzed carefully in order to give out new products/services Even a survey for new customer segments demands is needed to be conducted Following are some suggestions of new products/services: - Step by step offer various service packages for enterprises, including investment and underwriting - Automatic remind system for customers via email (dividend, stock price) and home money transfer (with a great value) - Online money transfer from securities account to saving account at shortterm base with higher interest rate without the intermediate individual account - More detailed reports with industry and company analysis should also be added - The information in the website should be more accuracy and updated with customized languages (firstly in English) for different target customer groups - VNDIRECT should research in advance the modern tools like derivatives and short-sell and be well-prepared for providing these services to customers when they are allowed Marketing and sales strategy: As marketing and sales is a weakness of VNDIRECT, the company should implement a more aggressive marketing and sales strategy: - Work out an over-all marketing campaign which target the right customers segment Establish a separate marketing division Actively advertise and 130 PR campaign on public medias: TV, newspaper and magazines (investment) and other prints, radios, out-doors, internet,… - Establish branches and agents in other provinces, especially in southern areas Organize seminars for investors in these provinces to introduce about investment opportunities Expand the areas to Laos and Cambodia - Change the commission structure base for sales staff toward creating more motivations for them (direct commission) - Look for international partners via Internet and foreign financial communities Attend several foreign countries tours to discover the market and the demand of foreign investors In the long run, open representative offices in some major countries - Actively apply internet marketing on the website of VNDIRECT and other reputable financial websites (cafef.vn, vietstock.vn, laisuat.vn, ) an on electronics newspapers (Vnexpress.net) - Establish a department for investors relations and business relations For special segments, establish a separate division to take care of them - Actively sponsor and joint community activities for the public ‘s interests: Scholarships for excellent students at university, organize competition “Talent investors” for students, sponsor for activities of business community - Actively cooperate with VCCI and other organizations who might have best access to enterprises community Human resource strategy: 131 As analyzed in previous chapter, human resources is not a strength of VNDIRECT The company still have many things to to develop it human resources: - Expand the channel of recruitment to others such as headhunting services - Improve the compensation and salary base to keep and recruit successfully talents The salary should be competitive in the market - Organize usual training course for all staff, especially management courses for top and middle managers - Recruit foreign experts to create a multi-cultural work environment and to have easier access to foreign community - Build up an equal appraising system - Build up a KPI (key performance index) system to apply in the whole company Financial strategy The company must increase charter capital from 1000 billions dong to 3-4,000 billions dong in order to strengthen the financial position of VNDIRECT and facilitating the underwriting activities, increase the budget for dealing, and providing more financial services for customers The increase of capital might be implemented via issuing stocks to public or strategic partners, issue bonds or convertible bonds, and take loans from investors In the long-time, the company should also consider the direction of being listed in an international stock market to be easier to access international investors The company should consider to increase the dividend paid (at least 15% or 20%) to attract more attention of investors 132 3.4.5 Summary of strategic development direction of VNDIRECT Over-all objectives: Develop the company to become a reputable and reliable financial organization who supplies the best financial solutions to investors and stake-holders both internationally and locally VNDIRECT should aim at of leading securities companies in Vietnam and within the Indochina region, by supplying full services of brokerage, portfolio management and investment bank activities services Road map: Table 3-2: Recommended development road map of VNDIRECT from 20112016: Period Road-map - Continue maintain and improve the modern IT system to 2011-2013 provide more services and to serve the demand of OTC stocks - Continue maintain and develop the brokerage market share to 5% in HSX and 10% in HNX - Integrate in to southern market, and foreign market Look for an international strategic partner - Set up principle for dealing activity to ensure the risks are minimized - Looking for opportunities to buy in other smaller securities company - Strengthen and recruit the human resources, enhance the management skills of middle managers and the analysis and forecasting of professionals 133 - Separate the dealing activity to an independent fund - Increase capital step by step to prepare for investment bank activities (to 3000-4000 billions dong) - Build up first steps in investment bank and portfolio management: Targeting small and medium sized companies 2014 – 2015 - Focus to the expansion of consulting and underwriting - Switch the focus of investment bank activity to bigger companies and corperations - Expand the market coverage into Indochina countries - Establishment or strategic alliance with a bank - Open representative offices in several countries in order to integrate deeper into international financial community - Top in consulting and underwriting 2016 - Develop full investment bank servcices and portfolio management - Being well-prepared for being listed in international stock market 134 CONCLUSION Although being a very young company with only years old and being established with a very small initial investment capital, VNDIRECT securities joint stock company has also passed nearly all periods (developing and recession) of the market and now has become one of the top 10 biggest securities companies within the industry Based on the core competency of technology and the excellent capability of board of directors, VNDIRECT had started up with strategies as follows: – In brokerage business unit: It applied a differentiate strategy focusing retails and online customers (most are individuals) based on technology development – In dealing, it applied a high risky strategy of investing in real estate stocks – In other activities, VNDIRECT had not a clear strategy These above strategies helped VNDIRECT to be successful in the first year, but after that due to results of the recession and the pressure of severe competition, technology will no longer the sole competency of VNDIRECT, these strategies appeared weakness and the company made a loss in 2008 Therefore, the board of directors decided to change the direction of VNDIRECT to focus more in investment banks beside the maintenance of current brokerage market share, and these changes had some major positive influences to the business result of VNDIRECT However, as the change is quick, there was still no clear strategy in the time to come, as well as the road map is not clear and too hasty Under this circumstance, VNDIRECT needs to revise its overall strategy and make some adjustments: – Move the brokerage strategy to be the best cost provider and to access more market segments: southern provinces, institutions and foreigners 2- Have more aggressive marketing and sales strategy – Look for international strategic partner (especially a bank) and opportunities to buy in other securities companies – Strengthen the human resource, rebuild the compensation structure to be more competitive and to keep talents – Reallocate the dealing portfolios, reduce the rate of real estate stocks and increase the rate in 135 other industries 6- Prepare for the capital increase 7- Recruit more professionals in investment to be well prepared for the development more these activities in the future 8- Targeting the investment bank unit firstly to small and medium sized companies 136 REFERENCES English: Arthur Thompson and Strickland (University of Alabama), Strategic Management: Concepts and Cases, 10th edition, McGraw Hill Companies Charles W.L Hill (University of Washington) and Gareth R Jones (Texas A&M University), Strategic management – An integrated approach, 4th edition, Houghton Mifflin Company, New York John A Pearce II and Richard B Robison, (University of Phonenix), Strategic management – Formulation, Implementation and Control, 7th edition, McGraw Hill Companies Porter, M E 1996, What is a strategy? Harvard Business Review (November-December) Porter, M E (Jan 2008), The Five Competitive Forces that Shape Strategy, Harvard Business Review Ayako Takai, Graduate School of Economics, The University of Tokyo, (September 2004), Success factors and their formation processes in early stage competition in the Japanese online securities industry, Japan Vietnam NetCitizens Report (March 2010), Internet usage and development in Vietnam, Cimigo Company, Vietnam Vietnam Salary Survey 2009, Navigos Group Vietnamese: Luật chứng khoán, Việt Nam Law on Securities, Vietnam 10 Nghị định số 14/2007/NĐ-CP Chính phủ Quy định chi tiết thi hành số điều Luật Chứng khoán 137 Decree No.14/2007/NĐ-CP regulating details of implementation several articles of the Law on Securities 11 Quyết định số 27/2007/QĐ-BTC Bộ Tài việc ban hành Quy chế tổ chức hoạt động công ty chứng khoán Decision No 27/2007/QĐ-BTC on the promulgation of the regulation on the organization and operation of securities companies, Ministry of Finance 12 Quyết định số Decision No 128/2007/QĐ-TTg phê duyệt Đề án phát triển thị trường vốn Vietnam đến năm 2010 tầm nhìn đến năm 2020 Decision No 128/2007/QĐ-TTg for the approval of the Proposal to develop Vietnamese capital market and the vision until 2020 13 Trung Hưng, Phát triển nhà đầu tư tổ chức: Cần loại bỏ nhiều rào cản, báo Hà Nội điện tử, ngày 24/1/2010 Trung Hung, Develop institutional investors: Needed to remove many barriers, Hanoimoi electronics newspaper, 24 January 2010 14 Ngọc Thủy, Cơng ty chứng khốn thành Ngân hàng đầu tư: Bình mới, rượu chưa kịp mới, Tạp chí Nhịp cầu đầu tư, ngày 14/9/2009 Ngoc Thuy, Securities company become Investment bank: New vase, unnew wine, Investment bridge, 14 September 2009 15 Mai Phương, Mua bán hàng loạt công ty chứng khoán, báo Thanh niên điện tử, ngày 13/12/2010 Mai Phuong, Acquiring a series of securities companies, Thanh Nien electronics newspaper, 13 December 2010 16 Cáo bạch công bố thông tin (nếu có) cơng ty: VNDIRECT, SSI, TLS, ACBS, FPTS, HBBS, VCBS, BSC, BVSC, ABS, HSC, số Cơng ty chứng khốn khác Prospectus (if any) of securities companies: VNDIRECT, SSI, TLS, ACBS, FPTS, HBBS, VCBS, BSC, BVSC, ABS, HSC, and several other securities companies 138 17 Báo cáo tài năm từ 2007 đến 2009 (nếu có) Cơng ty chứng khốn: VNDIRECT, SSI, TLS, ACBS, FPTS, HBBS, VCBS, BSC, BVSC, ABS, HSC, số Cơng ty chứng khốn khác Financial reports (from 2007 to 2009) (if any) of securities companies: VNDIRECT, SSI, TLS, ACBS, FPTS, HBBS, VCBS, BSC, BVSC, ABS, HSC, and several other securities companies 18 Một số định nghị Hội đồng Quản trị Ban Giám đốc Cơng ty chứng khốn VNDIRECT Several resolutions and decisions of Board of Directors and Board of Management of VNDIRECT Websites: 19 http://vndirect.com.vn 20 http://www.hsx.vn/ 21 http://www.hnx.vn/ 22 http://www.ssc.gov.vn/ 23 http://www.gso.gov.vn 24 http://www.morganstanleyindividual.com 25 http://www.cafef.vn 26 http://bolender.com Interviewees: Ms To Thuy Linh, strategic analysis expert of VNDIRECT (now investment analysis deputy manager of SSI) and her husband, IT manager of VNDIRECT Mr Nguyen Dinh Phong, investment director of VNDIRECT Mr Stephen Gilbert Halzeton, senior strategic partner of Stafford Investment Group, USA (previously enterpreneur in residence of IDG Ventures Vietnam) 139 Ms Pham Phuong Linh, securities expert of Thanh Cong securities company Mr Phan Anh Tuan, Vice CEO of Vincom securities company APPENDICES A Interview content (for VNDIRECT managers): Interviewee ‘s information: Title: Number of experience years at VNDIRECT: Number of experience years within the industry: Key success factors of the industry What are major strategic groups within the industry? Which strategic group does VNDIRECT belong to? Which securities represents for each strategic group? Who are major rivals of VNDIRECT in the same strategic group? The value chain of VNDIRECT? Strategy of VNDIRECT:  Corporate strategy:  Business strategy  Each functional strategy: Human resource, marketing, IT, finance … Evaluation of the past and current strategy How did it work? Major resources and capabilities of VNDIRECT Major opportunities and threats of VNDIRECT 10 Major strengths and weaknesses of VNDIRECT 11 Major ‘s achievement of VNDIRECT during the last years:  Revenue:  Market share: In HNX, HSX  Characters of customers: Individual vs Institutions, Local customers vs Foreign customers 140 12 Future strategy of VNDIRECT until 2016 13 Evaluate KSFs of VNDIRECT vs other rivals? 14 Recommendations for State bodies? B Interview content (for securities experts): Interviewee ‘s information: Title: Current working company: Number of experience years within the industry: What are the drivers of changes in the industry and what impact will they have? What are the KSFs in the industry? Evaluate KSFs among VNDIRECT vs different securities companies (SSI, TLS) Recommendations for State bodies? 141 ... Findings for VNDIRECT 119 3.3.1 SWOT matrix analysis of VNDIRECT 119 3.3.2 Distinct competencies of VNDIRECT 122 3.4 Recommendations for VNDIRECT company from 2011 – 2016 122... STRENGTH ASSESSMENT OF VNDIRECT, SSI AND TLS 114 TABLE 3-1: SWOT MATRIX ANALYSIS OF VNDIRECT 119 TABLE 3-2: RECOMMENDED DEVELOPMENT ROAD MAP OF VNDIRECT FROM 20112 016: ... NATIONAL UNIVERSITY, HANOI SCHOOL OF BUSINESS NGUYEN THI PHUONG THAO ANALYSIS AND RECOMMENDATIONS IN STRATEGIC ADJUSTMENT FOR VNDIRECT SECURITIES JOINT STOCK COMPANY (2011 – 2016) Major: Business