RESEARCH DISSERTATION “CONSUMER BANKING BUSINESS STRATERGY OF ABBANK PERIOD 2010 - 2015”

RESEARCH DISSERTATION “CONSUMER BANKING BUSINESS STRATERGY OF ABBANK PERIOD 2010 - 2015”

RESEARCH DISSERTATION

“CONSUMER BANKINGBUSINESS STRATERGY OF

CHAPTER 1: THEORETICAL BACKGROUND ON BUSINESS STRATEGIC MANAGEMENT.

CHAPTER 2: SITUATION OF BUSINESS STRATEGY OF ABBANK

2.3 Analysis of industry environment factors28

3.2.2 Objectives of the card business strategy of ABBANK42

3.4 Plan of R&D team set up: Supervision and evaluation of the business strategy

3.4.1 Supervision of business strategy implementation513.4.2 Adjusting the business strategy and the action plan52CONCLUSION

LIST OF ABBREVIATIONS

ANZ Australia and New Zealand Bank ODA Official Development Assistance

ATM Automatic Transfer machine SIBOR Singapore Interbank offered rate

HSBC Hong Kong Shanghai Bank Corporate T.Os Transaction Offices

ISO International Standard Organization USD United State Dollar

LIBOR London Interbank Offered rateNPL Non Performance Loan

POS Point of sale

LIST OF TABLESTable 2.1 Current organization of ABBANK

Table 2.2 Growth of fund mobilization and credit of ABBANK

Table 2.3 The business result of ABBANK

Table 2.4 Outlook of Vietnam economic period 2010 – 2013

Table 2.5 Market Opportunities

Table 2.6 Population growth rate

Table 2.7 Phân tích tổng hợp cơ hội & thách thức từ các tác động của môi trường vĩ mô

Table 2.8 Phân tích tổng hợp cơ hội & thách thức của các tác động đến từ môi trường ngành

Table 2.9 Comparison the performance of ABBANK and Competitors

Table 2.10 Comparison of core competencies among ABBANK and its competitors

Table 2.11 Evaluation and comparison of core competencies among ABBANK and competitors

Table 2.12 Evaluation on the overwhelming competencies of ABBANK and competitors

Table 3.1 S.W.O.T Analysis of ABBANK

Table 3.2 Bảng tổng hợp phân tích mô hình G.R.E.A.T

Table 3.3 Phân tích mô hình BCG tiềm năng thị trường thẻ

Table 3.4 Phân tích phân khúc khách hàng mục tiêu sử dụng dịch vụ thẻ

Table 3.5 Phân tích cơ cấu khách hàng và kế hoạch phát triển trong 5 năm

Table 3.6 Bảng xây dựng kế hoạch triển khai nhân sự R&D cho khối bán lẻ

Table 3.7 Bảng xây dựng kế hoạch tổ chức công việc của R&D

Table 3.8 Kế hoạch phát triển sản phẩm, dịch vụ thẻ 2010 – 2015

The financial market of Vietnam is now more and more developed in terms of scale,formulation, quality and the market participation structure According to the WTO road map andVietnam American commercial agreement, Vietnam commits to treat fairly among the domesticand foreign banks on banking services, eliminating all limitations of access to the domesticbanking market However, in comparison with the foreign banks, the Vietnam banking system isstill weak in many aspects such as capital, management experience, business, technology, qualityand variety of services and risk management as well This requires each commercial bank tohave suitable solution for development and competitiveness enhancement, mastering thedomestic market and reaching to the international financial market Among which, the formationof big banks with multi-functions and diversified business, which can adapt well to quickchanges in the modern world is now becoming a rational demand and an indispensible tendency On the other hand, the competition among the domestic commercial banks as well as the rivalrybetween domestic banks and financial institutions are aggressive now On the banking andfinance market, more and more investment funds, insurance companies, urban banks are foundedand the Vietnam stock market is exciting All those phenomenon result in many financialinvestment channels which are of choice to the enterprises and individuals Financial institutionis fighting directly with banks on fund mobilization and investment and the competition in thebanking sectors is tougher and tougher In the light of the above practice, for sustainable survivaland development, Vietnamese banks need to build up a suitable development strategy which ismatching well with the practical features in every development stages

Besides, the world financial crisis and the global economic downturn since end of 2007 hasgiven considerable impacts on Vietnam’s banking sector This crisis is also a chance for us tohave a broader and more practical view on all the threats, opportunities, strengths andweaknesses of the commercial banking sectors, which posed a critical need of commercial banksfor reviewing and planning their own development strategy.

With the topic of “Strategic Management”, I conducted this study on a bank, where I am nowworking for, in an aim to apply knowledge obtained during the training program in analyzingand suggesting solutions on business strategic management With the above reasons, I decided toselect the title: “Improving the business strategy, duration 2010-2015 of the An Binh Joint StockCommercial Bank” in a wish to contribute to the sustainable development of the An Binh JointStock Commercial Bank in such a trend of regional and global integration

Creating a strategy is a core management function It must be said that having a good strategyand executing the strategy well, does not guarantee success Organizations can face unforeseencircumstances and adverse conditions through no fault of their own.

Strategy can be simply defined as a plan aiming at achieving competitive advantage that cannotbe replicated by competitors A good strategy with effective implementation can help managersand staffs of all levels well define the objective, recognize the action orientation and contributeto the success of the organization On contras, an organization without a clear strategy anddirection will be a boat without the monitor In order to better understand definitions of strategy,we can go through some view points of famous economists:

View point 1: Strategy is a special plan

- G Arlleret - “Strategy is the definition of roads and means to reach to an established

objectives through policies”

- Gluecl - “Strategy is a type of comprehensive and general plan which is designed to ensure

the achievements of organization’s objectives”

View point 2: Strategy is an art

- Alain Threlart said “Strategy is an art which the enterprise use to fight against competition

and win”

- M.Porter said “Strategy is the art of building sustainable competitive advantage to self

So, these authors consider strategy as an art of competition and business development

Viewpoint 3: Strategy is both a plan and an art

- “Business strategy is an art of coordinating all the activities and controlling them in orderto achieve the long term objectives of the enterprise”.

- “Business strategy is an art of designing and organizing means in order to reach to longterm objectives of the enterprises, ensuring the adaptation to the change of businessenvironment”

Via above viewpoints, we can realize that the strategy relates to objectives of an organization,strategies must be of helpful to the organization in obtaining established objectives However,the formulation and decision of strategy according to the objectives are not enough; the strategyshould put the concrete action into the right time with certain resources in order to realize theobjectives The strategy of the organization includes not only what the organization wants toperform, but also the approaches to complete the task A separate action is simply not a strategy.All strategies should heading for the objectives of the organization and are established on thebasis of internal resources (strengths, weaknesses), external factors (opportunities, threats) So, in conclusion, we can define generally the strategy as followed:

“Strategy is a wide range of complex actions in order to mobilize all the resources of the organization to achieve a certain goal”

1.1.1.2.What is business strategy?

Business Strategy is a term used in business planning that implies a careful selection andapplication of resources to obtain a competitive advantage in anticipation of future events ortrends.

Business Strategy is concerned more with how a business competes successfully in a particularmarket It concerns strategic decisions about choice of products, meeting needs of customers,gaining advantage over competitors, exploiting or creating new opportunities etc.

According to Fred R.David “Business strategy is a mean to achieve long term objectives”

We can say that the business strategy is actually means which enable the enterprise to achievelong term goals Business strategy does not aim at mapping out detailed action plan, but they aregeneral program, solutions on efficient mobilization of all resources in order to realized definedgoals

In general, business strategy can be defined as followed:

Business strategy is a range of commitments and actions that a company uses to achieve acompetitive advantage by exploiting core competencies on a certain market

1.1.1.3.Fundamental issues of business strategy:

Business strategy needs to define 3 critical issues which are:- Who to serve

- Which demand to satisfy

- How to satisfy the above demand

1.1.1.4.Role of business strategy:

- Business strategy help the enterprise to realize clearly their goals, objectives, direction whichwill serve as the premises and lodestar for all the business and production activities of theenterprise

- Business strategy enables the enterprise to realize and capture all the business opportunities,at and at the same time proactively overcome all the threats on the competitive market;

working out policies and determinations on business and production activities which aregoing along with the market movements

- The business strategy should contribute to the enhancement of efficiency in using resources;strengthen the competitive position of the enterprise for the long term sustainabledevelopment of the enterprise

1.1.2 Strategic Management Process:

Strategic management process is a chain of activities, including commitments, determinationsand actions of an enterprise in order to obtain the strategic competitive advantage; sustainablecompetitive advantage with the above average profit

Strategic management process can be divided into 4 stages:

- Stage 1: Defining the objectives of an enterprise on the basic of building Mission, Vision,and Core Value by reviewing and analyzing environment factors to identify threats,opportunities, weaknesses, strengths, core competencies and competitive advantage

- Stage 2: Building and Selecting suitable strategy for the enterprise - Stage 3: Implementing the strategy

- Stage 4: Reviewing and evaluating the strategic management

1.2.Vision; Mission; Core Values1.2.1 Vision:

Vision is a mental image of the possible and desirable future state of the organization Thisimage, which we call a vision, may be as vague as a dream or as precise as a goal or a missionstatement Vision which elevates the energy, enthusiasm and self-esteem of everyone in thecompany while ensuring that everybody sees a benefit in following the vision

So what is a vision? : Corporate vision is a short, succinct, and inspiring statement of what theorganization intends to become and to achieve at some point in the future, often stated incompetitive terms Vision refers to the category of intentions that are broad, all-inclusive andforward-thinking It is the image that a business must have of its goals before it sets out to reachthem It describes aspirations for the future, without specifying the means that will be used toachieve those desired ends.”

1.2.2 Mission:

A mission statement is an organization's vision translated into written form It makes concretethe leader's view of the direction and purpose of the organization For many corporate leaders itis a vital element in any attempt to motivate employees and to give them a sense of priorities.A mission statement should be a short and concise statement of goals and priorities In turn,goals are specific objectives that relate to specific time periods and are stated in terms of facts.The primary goal of any business is to increase stakeholder value The most importantstakeholders are shareholders who own the business, employees who work for the business andclients or customers who purchase products and/or services from the business.

So what is the mission? : The mission defines the fundamental purpose of an organization or anenterprise, basically describing why it exists and what it does to achieve its Vision A corporateMission can last for many years, or for the life of the organization It is not an objective with atimeline, but rather the overall goal that is accomplished over the years as objectives areachieved that are aligned with the corporate mission”

Mission can be different about the length, business values and business objectives The missionis the reason for the existence of the company on the market, who you are and which product orservice you will bring to the customer and public All the decision during the process of strategicplanning and the management of company should be always aligned with the mission statement”The mission statement can be the motivation for the employees when the objectives and corevalues of the company are communicated with the customer and public

1.2.3 Core Value:

Core values are all for which the company can not pay with money or change All core valueswill create a premise to formulate the regulations of the company The core values can bedefined as followed:

- A system of beliefs influencing the behaviors among people and groups of people - Core values are the soul of the organization;

- Efficient values which has been attached deeply within the organization.- Core values are necessary and long term regulations:

 Working out decision and action of an organization; Not a cultural or detailed action;

 Do not serve the financial objectives and short term advantages;

 The organization will want to keep the core values even when the mission has beenchanged

Core values don’t care the population; they got the true value and huge importance for theinsiders of the organization

1.3.Strategic Analysis.

All the activities of the organization are influenced by factors of macro environment (generalenvironment) and micro environment (industry environment and internal environment), so inorder to plan a strategy for the organization, we will need to analyze all the environmentalfactors and their impact on the activities of the organization

1.3.1 Macro environment analysis.

Macro environment analysis will help the organization to realize and evaluate: Opportunities (O)of the environment which the organization can exploit and the Threats (T) which theorganization can overcome Then, it enables the organization to build a clear business mission,identify the long-term feasible objectives and design a suitable strategy with the businessobjectives

We can use the PEST model to analyze the macro environment This model use factors such asPolitical, Economics, Socio cultural & Technological

They are four factors which affect directly economic sectors, these are external elements of theenterprise and the industry, and the industry must be affected as a natural element Enterpriseswhich are based on the impacts will give out suitable policies and business activities

1.3.1.1 Political and legal factors:

These are factors which can affect all the business sectors in a region, political and legal factorscan create danger for the survival and development of any industry When doing business on anadministrative unit, enterprises will be forced to follow all the political and legal factors at thatregion

- Stability (politics, foreign affair): The regime with high stability will create good favor forthe business activities and on the other hand, it will give bad affect on the businessperformance on its region

- Tax policies (Import-export tariff, consumption tax, income tax…): will affect the revenueand profit of the enterprise.

- Laws (Law of investment, Trade law, Labor law, Anti-monopoly law, anti-dumping law…):which can have big affect on the enterprise?

- The government’s policy can have influence on the enterprise in a way that it can createadvantages or challenges for the enterprise For example: trade policies, industrydevelopment policies, economic development policies, tax policies, competitionmanagement policies, consumer protection policies…

1.3.1.2 Economic factors:

Enterprise needs to pay attention to the economic factors in both long-term and short term andthe government’s intervention in the economy Normally, enterprise will base on the economicfactors to decide investments on industries and regions

- State of the economy: Every economy has its own circle, in certain stage of the economiccircle; the enterprise will have their own suitable decisions.

- Factors influencing the economy: interest, inflation…

- Government economic policies: law of basic salary, government economic developmentpolicies, and preferential policies for industries: tax reduces assistance…

- Economic future prospects: GDP, GDP growth, GDP growth on investment…

1.3.1.3 Cultural and social factors:

Each nation or territory has its own cultural and social factors which are the features of theconsumers in that region,

Cultural factors are value which formulates the society, which can facilitate the survival anddevelopment of the society However, we can not deny the cultural exchanges of differentcultures and nations, which can change the consumption psychology, lifestyle and create thedevelopment prospective for the industries.

Beside culture, social factors also draw interest of enterprise in market research, social factorswill divide the public in to different groups of customers, each group have its own feature,psychology, income… such as:

- Average age, health state, nutrition condition, hygiene- Average income, income allocation, living conditions

- Lifestyle, education, viewpoints on beauty, living psychology

1.3.1.4 Technological factors:

Relating to the degree and direction of the technological progress or innovation which happen inthe society, including products, technological process, new materials, general degree of thescientific activities, basic scientific innovations

Beside fundamental factors according to the above PEST model, nowadays, when doing themarket research, people normally bring about the global factors (integration factors) whichbecome the micro economic factor influencing on the industry

- What important is that integration process will facilitate the elimination of trade barriers.Enterprise will have opportunities to engage in business with partners who are far away interm of geography; customers of the enterprise are not only domestic market where theenterprise is operating, but also customers from all around the world

1.3.2 Industry environment analysis.

There are many models for industry environment analysis, among which the five competitiveforces model of M Porter is the most popular

This model analyzes the industry environment via the evaluation of 5 forces which influence theactivities of organization, including:

1.3.2.1 The Bargaining Power of Suppliers:

The bargaining power of suppliers is also described as the market of inputs Suppliers of rawmaterials, components, labor, and services (such as expertise) to the firm can be a source ofpower over the firm Suppliers may refuse to work with the firm, or, e.g., charge excessivelyhigh prices for unique resources.

Suppliers, if powerful, can exert an influence on the producing industry, such as selling rawmaterials at a high price to capture some of the industry’s profit Their influence depends on theproducts and services provided by them The degree of influence depends very much onfollowing factors:

- Supplier switching costs relative to firm switching costs - Degree of differentiation of inputs

- Presence of substitute inputs

- Supplier concentration to firm concentration ratio - Employee solidarity (e.g., labor unions)

1.3.2.2 Bargaining power of customers:

The bargaining power of customers is also described as the market of outputs: the ability ofcustomers to put the firm under pressure, which also affects the customer's sensitivity to pricechanges.

The power of buyers is the impacts the buyer has on a producing industry In general, when thebuyer is strong, the buyer sets the price

- Buyer concentration to firm concentration ratio

Degree of dependency upon existing channels of distribution

New Entrants

(Internal competition)

The Threat of New Entrants into the Industry

Threat of Substitute Products or Services

Bargaining PowerBargaining

Power

- Bargaining leverage, particularly in industries with high fixed costs - Buyer volume

- Buyer switching costs relative to firm switching costs - Buyer information availability

- Ability to backward integrate

- Availability of existing substitute products - Buyer price sensitivity

- Differential advantage (uniqueness) of industry products - RFM Analysis

1.3.2.3 The Threat of New Entrants to the Industry:

A new entrant to the industry is a brand new competitor or maybe a new brand from on oldcompetitor A new competitor to your industry may erode some of your customer base, yourchallenge is to determine if it is likely that a new competitor will come along and try to stealyour customers away

New competitors are restricted by up front capital costs, access to technology or requirements toobtain licenses then your market position is likely to be protected However, if there are nobarriers to entry your position could be weakened

Profitable markets that yield high returns will draw firms This results in many new entrants,which will effectively decrease profitability Unless the entry of new firms can be blocked byincumbents, the profit rate will fall towards a competitive level.

Entry barriers are:

- The existence of barriers to entry (patents, rights, etc.) - Economies of product differences

- Learning curve advantages

- Expected retaliation by incumbents - Government policies

1.3.2.4 The threat of substitute products:

The existence of products outside of the realm of the common product boundaries increases thepropensity of customers to switch to alternatives:

- Buyer propensity to substitute

- Relative price performance of substitutes - Buyer switching costs

- Perceived level of product differentiation

In pursuing a competitive advantage over their rivals, a firm can choose from several followingcompetitive moves:

- Changing the price – raising or lowering the price to gain a temporary advantage

- Improving product differentiation – improving feature, implementing innovations in the manufacturing process an in the product itself.

- Creatively using the distribution channels – using a distribution channel that is novel in the industry

- Exploiting the relationship with suppliers.

The intensity of rivalry is influenced by following industrial characteristics: a large number offirms, slow market growth, high fixed cost, high storage cost or high perishable products, lowswitching costs, low level of product differentiation, high strategic stakes, high exist barriers, adiversity of rivals, industry shakeout

1.3.3 Internal Environment Analysis.

The Internal Analysis of strengths and weaknesses focuses on internal factors that give anorganization certain advantages and disadvantages in meeting the needs of its target market.Strengths refer to core competencies that give the firm an advantage in meeting the needs of itstarget markets Any analysis of company strengths should be market oriented/customer focusedbecause strengths are only meaningful when they assist the firm in meeting customer needs.Weaknesses refer to any limitations a company faces in developing or implementing a strategy(?) Weaknesses should also be examined from a customer perspective because customers oftenperceive weaknesses that a company cannot see Being market focused when analyzing strengthsand weaknesses does not mean that non-market oriented strengths and weaknesses should beforgotten Rather, it suggests that all firms should tie their strengths and weaknesses to customerrequirements Only those strengths that relate to satisfying a customer need should be consideredtrue core competencies

The internal analysis is a comprehensive evaluation of the internal environment's potentialstrengths and weaknesses Factors should be evaluated across the organization in areas such as: - Valuable ability and trade secret

- Valuable tangible assets - Valuable human assets - Valuable intangible assets

- Alliance or partnership with the partners - Key competitive capacity

Results from internal environment analysis are the definition of resources and core competenciesfrom which the enterprise can build the competitive advantage and strategic advantage for theenterprise

1.3.4 SWOT matrix:

1.3.4.1 SWOT matrix and selection of an optimum strategy

SWOT matrix is a strategic planning method used to evaluate the Strengths, Weaknesses,Opportunities, and Threats The SWOT analysis provides information that is helpful in matchingthe firm's resources and capabilities to the competitive environment in which it operates Assuch, it is instrumental in strategy formulation and selection

If the analysis target of SWOT is a business strategy, the research objective is improving theenterprise performance; SWOT can be understood as followed:

- Strengths: Maintain, develop, use as leverage

- Weaknesses: Improve attributes of the person or company that are harmful to achieving theobjective.

- Opportunities: Good anticipation of external conditions that is helpful to achieving theobjective.

- Threats: external conditions which could do damage to the objective.

SWOT is a very powerful tool enabling the enterprise to find out the problem or make decision,reviewing the decision in business organization and management On the fact, the SWOTapplication in building business plan, strategic planning, competition evaluation, market survey,product development and also in the study reports…which are selected by many enterprises SWOT analysis can build a better understanding for the enterprise on its: resource strengths,resource weaknesses, best opportunities and basic threats.

Via SWOT analysis, enterprise can draw out a conclusion on the approach to mobilize resourcein a certain internal and external situation of the enterprise.

Table 1.3.4 SWOT Analysis Synthesis:

- Buying the competitors - Alliance or join-venture to

enlarge the coverage - Expanding to exploit new

substitute products- Slow market growth- Conflict in movements

of foreign exchange rateand commercial policies

regulations

- Vulnerability in front ofbusiness

- Customer or buyer havemore advantages

customers’ demand - Demographic changes

S: Strengths

- Strong strategy - Strong finance- Good reputation - Market leading- Core competencies- Price advantage - Strong advertisement

- Production innovation skills - Good customer relationship - Good product quality - Alliance or joint venture

- Narrow product lines - Poor marketing skills

Corporate strategy refers to the overarching strategy with regard to long-term aims andobjectives of a company and ways of achieving them by allocation of resources in order to meetthe expectation of shareholders.

Corporate strategy includes detailed actions which a company carries out to gain the competitiveadvantage via selecting and managing a group of different business activities and competition incertain industries and product market

1.4.1.2.Focus growth strategy:

They are key strategies aiming at improving popular products or markets without change of theinput elements.

Three strategies to select focus growth include: market penetration strategy, market developmentstrategy, product focus strategy

1.4.1.3.Integration development strategy:

This strategy is suitable for organization within strong production industry, with a fear that focusgrowth can not be realized due to the market saturation.

Two corporate strategies heading for integration growth include: Forward integration strategyand backward integration strategy.

1.4.1.4.Decrease strategy :

This strategy is suitable when the enterprise need to concentrate to enhance the productivity aftera period of fast development, when the longer term development opportunities are no longeravailable in the period; other more attractive opportunities are following

There are 4 types of this strategy: Simple justification strategy, capital withdrawing strategy,harvesting and payment.

1.4.2 Business strategy:

Business strategy refers to the aggregated strategies of analysis single enterprise in order toachieve a sustainable competitive advantage and long-term success in its chosen arenas orindustries.

1.4.2.1.Cost Leadership Strategy:

This generic strategy calls for being the low cost producer in an industry for a given level ofquality The firm sells its products either at average industry prices to earn a profit higher thanthat of rivals, or below the average industry prices to gain market share In the event of a pricewar, the firm can maintain some profitability while the competition suffers losses Even withouta price war, as the industry matures and prices decline, the firms that can produce more cheaply

will remain profitable for a longer period of time The cost leadership strategy usually targets abroad market.

Some of the ways that firms acquire cost advantages are by improving process efficiencies,gaining unique access to a large source of lower cost materials, making optimal outsourcing andvertical integration decisions, or avoiding some costs altogether If competing firms are unableto lower their costs by a similar amount, the firm may be able to sustain a competitive advantagebased on cost leadership.

Firms that succeed in cost leadership often have the following internal strengths:

- Access to the capital required making a significant investment in production assets; thisinvestment represents a barrier to entry that many firms may not overcome.

- Skill in designing products for efficient manufacturing, for example, having a smallcomponent count to shorten the assembly process.

- High level of expertise in manufacturing process engineering.- Efficient distribution channels.

Firms that succeed in cost leadership often have the following internal strengths:

Each generic strategy has its risks, including the low-cost strategy For example, other firms maybe able to lower their costs as well As technology improves, the competition may be able toleapfrog the production capabilities, thus eliminating the competitive advantage Additionally,several firms following a focus strategy and targeting various narrow markets may be able toachieve an even lower cost within their segments and as a group gain significant market share

1.4.2.2.Differentiation strategy:

A differentiation strategy calls for the development of a product or service that offers uniqueattributes that are valued by customers and that customers perceive to be better than or differentfrom the products of the competition The value added by the uniqueness of the product mayallow the firm to charge a premium price for it The firm hopes that the higher price will morethan cover the extra costs incurred in offering the unique product Because of the product'sunique attributes, if suppliers increase their prices the firm may be able to pass along the costs toits customers who cannot find substitute products easily

Firms that succeed in a differentiation strategy often have the following internal strengths:- Access to leading scientific research.

- Highly skilled and creative product development team.

- Strong sales team with the ability to successfully communicate the perceived strengths ofthe product.

- Corporate reputation for quality and innovation.

The risks associated with a differentiation strategy include imitation by competitors and changesin customer tastes Additionally, various firms pursuing focus strategies may be able to achieveeven greater differentiation in their market segments

1.4.2.3.Focus strategy:

The focus strategy concentrates on a narrow segment and within that segment attempts toachieve either a cost advantage or differentiation The premise is that the needs of the group canbe better serviced by focusing entirely on it A firm using a focus strategy often enjoys a highdegree of customer loyalty, and this entrenched loyalty discourages other firms from competingdirectly

Because of their narrow market focus, firms pursuing a focus strategy have lower volumes andtherefore less bargaining power with their suppliers However, firms pursuing a differentiation-focused strategy may be able to pass higher costs on to customers since close substitute productsdo not exist

Firms that succeed in a focus strategy are able to tailor a broad range of product developmentstrengths to a relatively narrow market segment that they know very well

Some risks of focus strategies include imitation and changes in the target segments.Furthermore, it may be fairly easy for a broad-market cost leader to adapt its product in order tocompete directly Finally, other focusers may be able to carve out sub-segments that they canserve even better

1.5.Implementation and Evaluation:1.5.1 Organizational structure:

All organizations need an organizational structure to carry out and manage its strategies Thestructure of an initial organization is shaped according to the strategic options of the organizationand when it’s established, the structure will give impacts on current strategic performance aswell as future strategic selection The organizational structure will figure out:

- Relationship, procedures, control system, responsibility and decision making process whichfeature the organizational structure.

- The job need to be done and how to do it when the organization built up strategy orstrategies

- The organization want to realize its mission, vision need to build up an efficientorganizational structure, which will bring about:

- Stability: The ability which is necessary for managing daily fixed process as well as theforecasted process.

- Flexibility: Bring about the ability to develop competitiveness, at the same time beingflexible in allocating resources for activities to achieve necessary competitive advantage.Organization usually changes their structure when its size and complication are increasing.There are 3 fundamental types of structure:

- Simple structure: In this structure, the enterprise owner who is also the direct managers ofall the important decision, and the supervisor of performance of all staffs This structure issuitable for the focus strategy and business strategy

- Functional structure: The role of Chief Executive Officer (CEO) and functional managerswill appear in this model This structure will be suitable with both corporate strategy andbusiness strategy.

- Multi-sections structure: in this structure, the managers of all levels in the organization willdivide the responsibility of all functional managers in daily activities and business strategy.Functional departments will operate like centers of profit/ cost This structure will beworking well in an organization via diversifying

1.5.2 Controlling system:

An organization needs controlling activities in order to guide the strategic implementation,enabling a good comparison between the practical results with the expectation At the same time,suggest solutions to improve and prevent when the organization achieve the results which do notmeet the expectation

Normally, there are two ways to control the organization:

- Strategic control: Referring to the matching between what the organization should do(Opportunities from external environment) and what the organization can do (competitiveadvantage of the organization) The strategic control will evaluate the focus of organizationon procedure to implement the strategies

- Financial control: Via measurement of financial ratios such as: ROI, ROA… These ratiosare better than expectation and on growth trends; the organization can implement thestrategy successful.

Depending on the strategic option, organization can have different controlling methods,example: big multi-businesses corporation using cost leadership strategy to focus on financecontrol, while the company and business units use the differentiation strategy to focus onstrategic control.

1.5.3 Building action plan:

In order to implement the strategy, organization need to work out the detailed action plan foreach stage.

Action plan building will help the organization to control the progress and results of eachstrategic stage, then make necessary adjustments to keep track with the strategic objectives Theaction plan will help the organization to prepare and allocate resources investment proactivelyand efficiently

Website: www.abbank.vn & www.youcard.vn

Charter Capital : 2.850 billions dongs

Head quarter : No 170 Hai Ba Trung, District 1 , HCMC

ABBank’s current network includes 82 branches and transaction offices (01 transaction center, 11 branches,and 70 branches and sub-branches) cover almost all the big cities and provinces of Vietnam

Strategic partners of ABBank are big corporations and banks which are operating in Vietnam and abroadsuch as: the biggest bank of Malaysia – May bank, EVN, Gleximco…

ABBANK strives to build a strong brand with internal strengths, transparent performance, and socialassociations in business activities With the objectives of becoming one among the five leading joint stockcommercial banks in Vietnam and striving for the 1st position in terms of modernization, professionalismand prestige after 5 years ABBANK has put the whole system online through modernization with the corebanking software, which is in partnership with Temenos in 2008.

Step by step, ABBANK has built and improved the regulations on professional performance and procedure.It also pays special attention to risk management as well as modernization of domestic internationalpayments procedure

2.1.2 Organizational structure of ABBANK

The current organizational chart of ABBANK is multifunctional form The detailed functions ofdepartments are following:

Table 2.1: Current organization of ABBANK

BOARD OF CONTROLLERSHAREHOLDERS’MEETING

EXECUTIVE SECRETARYBOARD OF MANAGEMENTBOARD OF DIRECTOR

Hanoi Branch A&F DepartmentIT centerDa Nang BranchRetail BankingCard Center

Can Tho BranchCorporate Banking International payment center

Vung Tau BranchLaw & ComplianceAccounting Dept Binh Duong BranchExternal affairsOperation DivisionBac Lieu BranchInternal controlRisk ManagementGia Lai BranchFinancial Investment

Sơn La Branch Board of strategic client development

Hai Phong BranchAdmin Dept.Quang Ninh Branch

year when the fiscal years is finished or unexpected meeting according to the regulation.

the combination of the collective management with the management and direction of the Chairmanof Management Board and strengthens the responsibility of each management board member

representative of ABBANK.

Board of Management includes the General Director, Deputy General Directors, Chief accountantand the supporting system includes operation director, departments, and boards, headquarter andcenters

Professional divisions include 9 fundamental divisions: Corporate banking, retail banking, riskmanagement, Capital source and investment, Core banking system, IT center, Card center, HR…Leading each division is a division manager elected by the general director The general directorwill assign the deputy general directors to take over the functions of division managers

2.1.3 Products and Services of ABBANK:

Products, services of ABBANK are established and divided into groups according to the classification ofcustomers The corporate banking, individual banking, investor banking

services such as loans, factoring, guarantee services, import/export financing, account services, trade

- Individual banking: ABBANK provides individuals with fast and complete credit products as well

as flexible savings products such as installment loan for house/land purchase or house renovation;installment loan for house/land purchase with tenor up to 30 years and life insurance for consumer;installment loan for car purchase; unsecured loan for consumption; installment loan formanufacturing; working capital financing; flexible secured loan for consumption; YOU savingproducts: interest rate based on actual deposit days, escalating savings,… and payment services,internal and external remittance…

as well as investment consultancy ABBANK particularly provides corporate investors with servicessuch as financial consulting, consulting and guarantee on bond issuance, acting as agent of bondissue ABBANK’s competitive features are recognized by the provision of flexible, effective andsafe financial solutions with friendly service; focus on customers’ needs and satisfaction in thedevelopment of any business models and organizational structure; ensuring of excellent andconsistent service delivery based on standard technology and process as well as skilled staffs

2.1.4 The business situation and result in 2008 and first 6 months of 2009:

Up to 30/06/2009, the performance of ABBANK is following:-Total Asset: 13.747 billions dongs-Fund mobilization : 7.245 billions dongs-Total credit: 6.538 billions dongs-Rate of profit/ charter capital : 273.10/ 2.705 (10,60%)

2.1.4.1 Fund mobilization and credit:

Table 2.2: Growth of fund mobilization and credit of ABBANK (Unit: billions dongs)

Growth on

31/12/2008% ofplan 31/12/0830/6/0930/6/09Absolute%

7.245,3561.304,112 5.578,702 362,253

3.827,644 1.027,

578 2.582,214 803,592 2.336,6062.076,489

2Credit activities

By Terms

- Short-term- Medium-term- Long-term

By customer

- Corporate - Individual

-15%47%

NoRatioUp to Up toPlan of Growth on31/12/2008% ofplan 31/12/0830/6/0930/6/09Absolute%

- Short term credit(%)

- Risk provision deduction 81.22952% 4.74055% 4.03445% (73.845)3% 123%39% 104%117%

On fund mobilization:

-Total mobilized fund up to 30/6/2009 reached 8.618,731 billions dongs, 2.901,575 billions dongsmore than plan (The plan up to 30/6/09 is expected 7.780,354 billions dongs), went up 111% thewhole year plan (The plan until the end of the year for mobilized fund is 11.073.000 billions dongs).In the total outstanding mobilized fund, the exceeding amount is mainly coming from the corporatefund mobilization (increase by 2.100,919 billions dongs) The mobilized fund structure includemainly the term of less 12 months, amounted to 6.882 billions dongs/ 7.245 billions dongs(accounting for 95%).

On Credit:

-Outstanding credit up to 30/6/2009 is 8.618,731 billions dongs, exceeding 838,377 billions dongsover the plan (The expected figure to 30/6 is 7.780,354 billions dongs) and reach 111% the wholeyear plan (Total outstanding credit according to the whole year plan is 10.460.000 billions dongs).The total exceeding outstanding credit come mainly from corporate clients ( amounted to 2,100.919billions dongs).

-In the credit structure, the proportion of long term credit accounts for 48%.

2.1.4.2 Payment activities:

-ABBANK built and completed the domestic payment system in the whole system via channels suchas CITAD, AGRIBANK For international payment, transactions are totally handled at the paymentcenter, which marks ABBank among the first commercial banks in Vietnam conducting centralinternational payment activities, handling transactions at the center Thanks to that, the risk isminimized, the payment service quality is increased, and the prestige of ABBANK is thereforestrengthened on the international market

1,494.81945.785 6.5485.69556.09834.862 7.463

- Operational spending (Besides staff spending)- Spending for staffs

- Spending for other activities

61.1996.0004.024 4.5568.0255.3330.19318.95423.0916.919

(Source: Report on business result 6 months of 2009 of ABBANK)

Up to 30/6/2009, the profit gained is 175 billions dongs/ 215 billions dongs as planned, reached 82%,mainly focus on the deposit interest, credit interest and profit from investment and bond trading

2.2 Analysis the influence of the macro environment factors:2.2.1 Political, legal, policy factors:

-Vietnam is always ranked at the high level in terms of political stability in comparison with someother countries in the region and all over the world Besides, over the last few years, the legal systemis continuously improved, which lay a good premise for FDI attraction and bring about goodopportunity for credit organization to expand customer network.

-Due to international integration requirements, over the last few year, policies on tax, financialmanagement, State Bank, Government is more and more improved and gradually adapt to theinternational public, which create favorable conditions for credit organizations to enjoy a more andmore transparent legal system, and at the same time they can prepare necessary conditions tocompete with the strong foreign competitors.

-On the other hand, policies which adjust the financial market of Vietnam are still not completedand changing This can be considered a disadvantage of the banking operation

2.2.2 Economic factors:

-In the end of 2006, when Vietnam officially became WTO member, the economy sawtremendous growth However, on the verge of 2008, the macro economy experienced instability Theunexpected price increase and fluctuation of steel, petrol, cement, fertilizers, processing materials….caused many difficulties for the economy Besides that, the monetary tightening policy by thegovernment has limited the credit source provided to the economy, the banking system faceddifficulty in terms of liquidity, mobilized fund and credit as well The credit growth rate in 2008 islowest in the last 5 years, increased only 14.32% compared to 2007 Regarding the credit quality, the

over due debts amounted to 2.497 billions dongs up to 12/2008, accounting for 9.06%, among whichthe bad debts is 886 billions dongs, accounting for 3.14%, the loss debts is 231 billions dongs,

accounting for 0.85% (Source : ABBANK’s study)

-2007-2009 is a difficult period of the economy when it has to cope with the financial crisis andeconomic downturn originating from financial crisis in US in 5/20007 The monetary policies areloosening with caution of the State Bank of Vietnam and the 4% interest similus package since early2009 by the government has come in to effect So far, the world as a whole and Vietnam inparticular has overcome the bottom of the crisis

-GDP of Vietnam showed some growth signals and will probably achieve impressive recovery.(according to the forecast of The State bank of Vietnam for 2009, economic growth might reach 5%,and the figure could be 6% - 6,5% for 2010)

-Following some experts, after the similus package by the government, the recovered economyshows strong growth, which might lead to high inflation rate (According to the forecast of the StateBank of Vietnam, the inflation rate is about 6%-8% in 2009 and less than 10% for 2010), if thegovernment don’t work out the solutions to constraint the inflation efficiently, there might be athreat of turmoil in the monetary market

Charter 2.4: Outlook of Vietnam economic period 2010 - 2013:

Current account balance (% of GDP)-11.1-9.7-6.7-4.9

Exchange rate D:US$ (av)18,20018,24118,27718,343

Charter 2.5: Market Opportunities

GDP (US$ bn at market exchange rate)97.3103.4119.9132.5GDP per head (US$ bn at market exchange rate)1,1091,1661,3401,466Personal disposable income (US$ bn)40.846.351.857.4

Household consumption per head (US$ bn)710800890990

2.2.3 Social and cultural factors:

-Vietnamese society is more and more developed, the living standard of the people is better,which heighten the consumption demand for a better lives of themselves and their family Someparts of the population with stable income, mainly young families, are now familiar with theconsumption credit card.

-In another aspect, the habit of using cash still exists in large part of the Vietnamese consumerswhich lead to limitation in applying new individual financial services This can be considering adifficulty for the strategy of increasing proportion of retail banking in the bank’s performance

2.2.4 Demographic factors and labor source:

-Vietnamese population probably increase at the average rate of 1%/year during 2010-2013,which make the total population of 90,4 millions people over 86.1 millions people in 2008

-The huge labor force and the young population structure is a precious asset of Vietnam, whichwill together with the improved economy and more employment opportunities become themomentum of consumption development

-Besides, the urban population is increasing at higher rate that geographic expansion in big cities,plus the population immigration from rural areas to towns to seek employment will contribute to theexpansion of individual consumption market

Charter 2.6: Population growth rate (Million)

2.2.5 Technological factors:

-Banking technology has gain tremendous achievements over the last few year Thanks to thisnew technology, banking transaction become more convenient, faster and safer Vietnamese banksare on the race for application of advanced international technology (application of information

technology in almost all activities, replacing the magnetic stripe card with the smart card which is

safer, implementing the application of core banking system, internet banking services, SMSbanking…)

2.2.6 Integration factors:

-The banking and finance are among the sectors which are strongly open during the internationaleconomic integration of Vietnam Foreign banks are, therefore, will have various activities inVietnam and are treated fairly according to the international standards of WTO

-Banks also have to face the pressure of technological innovation, enhancement of managementcapacity in order to adapt to the new competitor However, integration also opens new opportunitiesfor domestic banks to approach the foreign capital, technology, management experience and market -Integration also made Vietnamese financial market more dependent on the changes of the world

economy This is a challenge and also an opportunity for domestic banks

Charter 2.7: Analysis of opportunities and challenges from macro environment effections