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 Trinh Van Do IMPROVING THE COMPETITIVE ABILITIES OF THE BANK THROUGH IMPLEMENTING THE NEW PRODUCT - LOGISTICS FINANCING-"TECHCOMBANK CASE STUDY" 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 Abstract TÓM TẮT Key words Content List of Tables List of Figures INTRODUCTION Necessity of the thesis Objective of the thesis Methodology Expert consulting Descriptive survey Contribution of the thesis Thesis structure CHAPTER 1: LITERATURE REVIEW 1.1 Competitiveness, competitive advantages and the importance of competitive advantages 1.1.1 Competitiveness and competitive advantages 1.1.1.1 Competitiveness 1.1.1.2 Competitive advantage 1.1.2 The importance of competitive advantage 1.1.3 Specific expression of competitive advantage 1.1.3.1 Outweigh affectivity 1.1.3.2 High quality 1.1.3.3 Continual improvement 1.1.3.4 The ability to meet the demand of customers timely and quickly 1.2 Nature and process to realize sustainable competitive advantage 1.2.1 Source and process to recognize sustainable competitive advantage vi 1.2.2 Sources, capability, key ability, exceeded capability and sustainable competitive advantage 1.2.2.1 Sources 1.2.2.2 Ability 1.2.2.3 Key abilities 1.2.2.4 Outweighing abilities 1.2.2.5 Competitive advantage and sustainable competitive advantage 1.2.3 Criteria of sustainable competitive advantages 1.2.3.1 Preciousness 1.2.3.2 Scarcity 1.2.3.3 The difficulty of imitation 1.2.3.4 A reasonable distance 1.2.3.5 Coincidence with factors of success 1.3 Functional field- The foundation to create sustainable competitive advantages 1.3.1 Production and operation management 1.3.2 Marketing 1.3.3 Material management 1.3.4 Research and Development (R &D) 1.3.5 Finance 1.3.6 Human resource 1.3.6.1 The planning of the labor source 1.3.6.2 Laborers enrolling 1.3.6.3 Training and Education 1.3.6.4 Salary and good-treatment- policy 1.3.6.5 Working relations 1.3.7 Customer relations and customer services 1.3.8 Building trademark and culture of enterprises 1.3.8.1 Building trademark 1.3.8.2 Building culture of enterprises 1.4.1 New service and product implementing 1.4.1.1 The new service and product definition vii 1.4.1.2 Why the firms design and offer new service and product 1.4.1.3 The development process of new service and product 1.4.1.4 Mass customization CHAPTER 2: ANALYZING THE REAL SITUATION OF TECHCOMBANK 2.1 Techcombank overview 2.1.1 Techcombank history 2.1.2 The Techcombank mission statement and vision 2.2 Techcombank internal analysis 2.3 Competitive environment analysis 2.3.1 Macro competitive environment 2.3.2 Industrial competitive environment 2.3.3 Identifying the competitive advantage of Techcombank through comparison with the same ones in banking field 2.3.4 SWOT analyzing CHAPTER 3: PRODUCT DESCRIPTION 3.1 The features of Logistics Financing product 3.1.1 The conception of Logistics financing of Techcombank 3.1.2 The structure of Logistics financing of Techcombank 3.1.3 The value Logistics financing creating for its clients and Techcombank 3.1.3.1 The value Logistics financing creating for Techcombank 3.1.3.2 The value Logistics financing creating for its clients 3.1.3.3 Conditions to use the service 3.1.3.4 Procedure of purchasing the service 3.1.3.5 Logistics partners of Techcombank CHAPTER 4: SOLUTIONS RECOMMENDATIONS AND CONCLUSION 4.1 The solutions 4.1.1 Providing unique products and its structures 4.1.1.1 How to be a unique product? 4.1.1.2 Solutions to structure of the bank 4.1.1.3 Solutions to system development 4.1.1.4 Solutions to structure of procedures viii 4.1.1.5 Solutions to targeted customers and marketing 4.1.1.6 Solutions on human resources 4.1.1.7 Solutions to technology 4.1.1.8 Solutions to finance 4.1.1.9 Solutions to risk management a Credit risks management b Market risks management c Exploiting risks management 4.2 Recommendations 4.2.1 Recommendations for Techcombank 4.2.2 Recommendations for the Government 4.2.3 Conclusions ix Key Words APPENDIX2 -LOGISTICS FINANCING BUZZ-WORDS1- 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-WORDSAPPENDIX -SUM OF THE QUESTIONNAIRE APPENDIX 4- THE STRUCTURE OF TECHCOMBANK xi 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 TRÁCH NHIỆM 88 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 I- KHO CỦA VINALINK Hệ thống kho - bãi - Kho kín (kho thơng thường) - Kho ngoại quan Kho Sóng Thần - Kho kín (kho thơng thường) II- CÁC KHO LIÊN KẾT CỦA VINALINK Kho lạnh KONOIKE VINA Kho ngoại quan KONOIKE VINA Kho Phú Mỹ Kho Vietrans Kho Phú Hải 89 Hệ thống kho Gemadept STT TÊN CÁC KHO SỞ HỮU CỦA GEMADEPT : Kho CFS Bình Dương Kho Sóng thần -Kho ngoại quan -Kho thường Kho ngoại quan Bình Dương Kho đường bao Trần Hưng Đạo -Kho ngoại quan -Kho trời -Kho CFS Kho CFS, cảng cạn Phước Long Hệ thống kho Vinafco STT Kho Tiên Sơn Kho kín (kho thơng thường) Diện tích mở rộng Kho Bạch Đằng - Kho kín Kho Hải Phịng 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 ... 3.1 The features of Logistics Financing product 3.1.1 The conception of Logistics financing of Techcombank 3.1.2 The structure of Logistics financing of Techcombank 3.1.3 The value Logistics financing. .. 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... instead of that of Vietnamese ones) Objective of the thesis In the first part I have mentioned the necessity of the thesis This section will clarify the objective or the meaning of the thesis The