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 BANKING BUSINESS STRATERGY OF ABBANK PERIOD 2010 - 2015” Author: Program: 14th Intake: Tutor: Adviser: Hanoi: Ms Phan Thu Hien MBA 2005 – 2007 Mr Vu Tri Dung Mr Pham Anh Dung December 2009 STABLE OF CONTENT COVER TABLE OF CONTENT LIST OF ABBREVIATIONS LIST OF TABLES PREFACE CHAPTER 1: THEORETICAL BACKGROUND ON BUSINESS STRATEGIC MANAGEMENT 1.1 1.1.1 1.1.2 1.2 1.2.1 1.2.2 1.2.3 1.3 1.3.1 1.3.2 1.3.3 1.3.4 1.4 1.4.1 1.4.2 1.5 1.5.1 1.5.2 1.5.3 Overview of strategic management Definition Strategic Management Process Mission, Vision, Core Values Vision Mission Core Values Strategic Analysis Macro Environment Analysis Industry Environment Analysis Internal Environment Analysis SWOT Matrix Strategic Selection Corporate Strategy Business Strategy Implementation and Evaluation Organizational structure Controlling System Building Action Plan 6 8 8 9 11 14 15 16 16 17 19 19 20 20 CHAPTER 2: SITUATION OF BUSINESS STRATEGY OF ABBANK 2.1 2.1.1 2.1.2 2.1.3 2.1.4 2.2 2.2.1 2.2.2 2.2.3 2.2.4 2.2.5 2.2.6 2.3 2.3.1 Business Overview General Information Organization structure Product & services Business situtation of year 2008 Influence of macro envirnment factors Political, legal, policy factors Economic factors Social and cultural factors Population & labour force Technological factors Integration factors Analysis of industry environment factors Threats from new banks 21 21 21 22 23 25 25 25 26 27 27 27 28 28 2.3.2 2.3.3 2.3.4 2.3.5 2.4 Threats of substitute Threats of customers Threats of suppliers Industry rivalry Comparison of ABBANK’s internal environment with two competitors 28 29 29 29 30 CHAPTER 3: IMPROVE THE BUSINESS STRATEGY OF ABBANK, PERIOD 2010-2015 1.1 Building and selecting the business strategy: 40 3.1.1 S.W.O.T Analysis 40 3.1.2 G.R.E.A.T Analysis 41 3.2 Implementation orientation and scope of the business strategy for card products and services of ABBANK 3.2.1 Orientation of long term priority strategy 3.2.2 Objectives of the card business strategy of ABBANK 3.2.3 Implementation scope of the strategy 3.3 Detailed action plan 3.3.1 Plan of HR strategy 3.3.2 Plan for R&D team set up 3.3.3 Plan for cards product & services 3.4 Plan of R&D team set up: Supervision and evaluation of the business strategy implementation 3.4.1 Supervision of business strategy implementation 3.4.2 Adjusting the business strategy and the action plan CONCLUSION REFERENCES 42 42 42 42 48 49 49 50 51 51 52 LIST OF ABBREVIATIONS ACB ADB AFTA ANZ ATM CD GDP HSBC IMF ISO IT LIBOR L/C POS Asia Commercial Bank POS Asia Development Bank QD-NHNN Asian Free trade Area SBV Australia and New Zealand Bank ODA Automatic Transfer machine SIBOR Certification of Deposit SMS Gross Domestic Product SOCs Hong Kong Shanghai Bank Corporate T.Os International Monetary Fund WTO International Standard Organization USD Information Technology VND London Interbank Offered rate NPL Letter of Credit ATM Point of sale LIST OF TABLES Point of Service Decision of VN State Bank State Bank of Vietnam Official Development Assistance Singapore Interbank offered rate Short Massage Service State owner Companies Transaction Offices World Trade Organization United State Dollar Vietnam dong Non Performance Loan Automaticed teller machine Table 2.1 Table 2.2 Table 2.3 Table 2.4 Current organization of ABBANK Table 2.5 Market Opportunities Table 2.6 Population growth rate Table 2.7 Phân tích tổng hợp hội & thách thức từ tác động môi trường vĩ mơ Table 2.8 Phân tích tổng hợp hội & thách thức tác động đến từ môi trường ngành Table 2.9 Table 2.10 Comparison the performance of ABBANK and 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 mơ hình G.R.E.A.T Table 3.3 Phân tích mơ hình BCG tiềm thị trường thẻ Table 3.4 Phân tích phân khúc khách hàng mục tiêu sử dụng dịch vụ thẻ Table 3.5 Phân tích cấu khách hàng kế hoạch phát triển năm Table 3.6 Bảng xây dựng kế hoạch triển khai nhân R&D cho khối bán lẻ Table 3.7 Bảng xây dựng kế hoạch tổ chức công việc R&D Table 3.8 Kế hoạch phát triển sản phẩm, dịch vụ thẻ 2010 – 2015 Growth of fund mobilization and credit of ABBANK The business result of ABBANK Outlook of Vietnam economic period 2010 – 2013 Comparison of core competencies among ABBANK and its competitors PREFACE 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 and Vietnam American commercial agreement, Vietnam commits to treat fairly among the domestic and foreign banks on banking services, eliminating all limitations of access to the domestic banking market However, in comparison with the foreign banks, the Vietnam banking system is still weak in many aspects such as capital, management experience, business, technology, quality and variety of services and risk management as well This requires each commercial bank to have suitable solution for development and competitiveness enhancement, mastering the domestic market and reaching to the international financial market Among which, the formation of big banks with multi-functions and diversified business, which can adapt well to quick changes 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 rivalry between domestic banks and financial institutions are aggressive now On the banking and finance market, more and more investment funds, insurance companies, urban banks are founded and the Vietnam stock market is exciting All those phenomenon result in many financial investment channels which are of choice to the enterprises and individuals Financial institution is fighting directly with banks on fund mobilization and investment and the competition in the banking sectors is tougher and tougher In the light of the above practice, for sustainable survival and development, Vietnamese banks need to build up a suitable development strategy which is matching well with the practical features in every development stages Besides, the world financial crisis and the global economic downturn since end of 2007 has given considerable impacts on Vietnam’s banking sector This crisis is also a chance for us to have a broader and more practical view on all the threats, opportunities, strengths and weaknesses of the commercial banking sectors, which posed a critical need of commercial banks for reviewing and planning their own development strategy With the topic of “Strategic Management”, I conducted this study on a bank, where I am now working for, in an aim to apply knowledge obtained during the training program in analyzing and suggesting solutions on business strategic management With the above reasons, I decided to select the title: “Improving the business strategy, duration 2010-2015 of the An Binh Joint Stock Commercial Bank” in a wish to contribute to the sustainable development of the An Binh Joint Stock Commercial Bank in such a trend of regional and global integration CHAPTER I THEORETICAL BACKGROUND ON STRATEGIC MANAGEMENT ACTIVITIES OF AN ORGANIZATION 1.1 Overview of strategy and business strategy 1.1.1 Definition 1.1.1.1 What is a strategy? The definition of strategy is a long term plan of action designed to achieve a particular goal or set of goals or objectives Strategy is management's game plan for strengthening the performance of the enterprise It states how business should be conduct to achieve the desired goals Without a strategy management has no roadmap to guide them Creating a strategy is a core management function It must be said that having a good strategy and executing the strategy well, does not guarantee success Organizations can face unforeseen circumstances and adverse conditions through no fault of their own Strategy can be simply defined as a plan aiming at achieving competitive advantage that cannot be replicated by competitors A good strategy with effective implementation can help managers and staffs of all levels well define the objective, recognize the action orientation and contribute to the success of the organization On contras, an organization without a clear strategy and direction 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 defense” 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 order to achieve the long term objectives of the enterprise” - “Business strategy is an art of designing and organizing means in order to reach to long term objectives of the enterprises, ensuring the adaptation to the change of business environment” 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 strategy should put the concrete action into the right time with certain resources in order to realize the objectives The strategy of the organization includes not only what the organization wants to perform, 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 the basis 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 and application of resources to obtain a competitive advantage in anticipation of future events or trends Business Strategy is concerned more with how a business competes successfully in a particular market 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 achieve long term goals Business strategy does not aim at mapping out detailed action plan, but they are general program, solutions on efficient mobilization of all resources in order to realized defined goals In general, business strategy can be defined as followed: Business strategy is a range of commitments and actions that a company uses to achieve a competitive advantage by exploiting core competencies on a certain market 1.1.1.3 Fundamental issues of business strategy: Business strategy needs to define 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 which will serve as the premises and lodestar for all the business and production activities of the enterprise - 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 are going 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 sustainable development of the enterprise 1.1.2 Strategic Management Process: Strategic management process is a chain of activities, including commitments, determinations and actions of an enterprise in order to obtain the strategic competitive advantage; sustainable competitive advantage with the above average profit Strategic management process can be divided into 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 Values 1.2.1 Vision: Vision is a mental image of the possible and desirable future state of the organization This image, which we call a vision, may be as vague as a dream or as precise as a goal or a mission statement Vision which elevates the energy, enthusiasm and self-esteem of everyone in the company 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 the organization intends to become and to achieve at some point in the future, often stated in competitive terms Vision refers to the category of intentions that are broad, all-inclusive and forward-thinking It is the image that a business must have of its goals before it sets out to reach them It describes aspirations for the future, without specifying the means that will be used to achieve those desired ends.” 1.2.2 Mission: A mission statement is an organization's vision translated into written form It makes concrete the leader's view of the direction and purpose of the organization For many corporate leaders it is 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 important stakeholders are shareholders who own the business, employees who work for the business and clients 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 an enterprise, basically describing why it exists and what it does to achieve its Vision A corporate Mission can last for many years, or for the life of the organization It is not an objective with a timeline, but rather the overall goal that is accomplished over the years as objectives are achieved that are aligned with the corporate mission” Mission can be different about the length, business values and business objectives The mission is the reason for the existence of the company on the market, who you are and which product or service you will bring to the customer and public All the decision during the process of strategic planning 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 core values 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 values will create a premise to formulate the regulations of the company The core values can be defined 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 been changed Core values don’t care the population; they got the true value and huge importance for the insiders of the organization 1.3 Strategic Analysis All the activities of the organization are influenced by factors of macro environment (general environment) and micro environment (industry environment and internal environment), so in order to plan a strategy for the organization, we will need to analyze all the environmental factors 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 the organization 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 business objectives We can use the PEST model to analyze the macro environment This model use factors such as Political, Economics, Socio cultural & Technological They are four factors which affect directly economic sectors, these are external elements of the enterprise and the industry, and the industry must be affected as a natural element Enterprises which 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 factors can create danger for the survival and development of any industry When doing business on an administrative unit, enterprises will be forced to follow all the political and legal factors at that region - Stability (politics, foreign affair): The regime with high stability will create good favor for the business activities and on the other hand, it will give bad affect on the business performance on its region - Tax policies (Import-export tariff, consumption tax, income tax…): will affect the revenue and 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 create advantages or challenges for the enterprise For example: trade policies, industry development policies, economic development policies, tax policies, competition management 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 and the government’s intervention in the economy Normally, enterprise will base on the economic factors to decide investments on industries and regions - State of the economy: Every economy has its own circle, in certain stage of the economic circle; the enterprise will have their own suitable decisions - Factors influencing the economy: interest, inflation… - Government economic policies: law of basic salary, government economic development policies, 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 the consumers in that region, Cultural factors are value which formulates the society, which can facilitate the survival and development of the society However, we can not deny the cultural exchanges of different cultures and nations, which can change the consumption psychology, lifestyle and create the development prospective for the industries 10 CHAPTER III BUSINESS STRATEGY FOR ABBANK TO BECOME ONE AMONG TOP 05 JOINT STOCK BANK OF VIETNAM DURING 2010-2015 2.1 Building and selecting the business strategy: 2.1 S.W.O.T Analysis: After external and internal analysis, I continue to develop SWOT matrix to find out strengths and weaknesses in the relation with opportunities and challenges of the external environment: Table 3.1: S.W.O.T Analysis Opportunities (O) - - S W O T - Strengths (S) - - - Strategic partners of ABBANK are big corporations, whose potential might be fully exploited Leaders with long experience in various domains; Commitment to modern technology investment and application; Young and highly adaptive HR HR with good sales skills while the products and services are still weak and poor Weaknesses (W) Brand is not strong while the - Threats (T) Stable economy and politics which overcome the crisis and achieve good growth Market potential is still big with 22 millions of people in 500 big and small cities Average income per capital in cities is ~ millions/month and keep raising Fast development of modern technology Development of a various retail system Combination (S-O) - - Competitive pressure from domestic and foreign competitors Habit of using cash in consumption is still popular in majority of population The threat of inflation from the economic crisis in 2007 is still high, which create constraints for the consumption demand The state banks have traditional and long time relations with big corporation and enterprises Combination (S-T) Exploit efficiently the available technology background to create and develop differentiated products and services which are better suitable with the consumption trends Exploit the customer database of EVN to expand the market share Develop cooperation with retailing system to have the fully packaged after sales services Combination (W-O) Exchange training Combination (W-T) Pushing for promotion of - 40 - - promotion activities are still limited Can not exploit efficiently the big potential customers and strategic partners Can not exploit efficiently the invested technology system The management mechanism is still weak an incomplete R&D activities are not well organized, lack of a long term product development strategy Weak customer service, lack of customer segmentation and systematic customer care services in the whole system Products and services are not diversified, no differentiated; the target customers are not well defined 2.2 managing staffs and expert with Many Bank in Malaysia activities to ABBANK brand develop G.R.E.A.T Analysis: Based on the S.W.O.T analysis, we could identify and analyze internal strengths and weaknesses of ABBANK and from external opportunities and threats, we can define some basic strategies which might be interesting to the organization However, in short-term, it’s necessary to select an optimum strategy by qualitative evaluation on different aspects of strategies from S.W.O.T model: Profitability, risk management, implementation expense, feasibility and the implementation time of strategies when they come in to effect Table 3.2: G.R.E.A.T Analysis (Grading scale of 1-5, is the highest) Selected strategies Development of special products and services Connecting to the EVN’s customers database Training exchange, appointing Maybank’s R&D manager Connection to the retailing system Brand promotion Profitability 5 5 Risk Management 3 Expenses 4 Feasibility 5 Timing 5 5 Ratios 41 Total 25 23 21 20 19 So, according to the G.R.E.A.T model, current priority strategies are: - Development of differentiated products and services Connecting to the EVN’s customer database Training exchange, appointing R&D manager from Maybank Above priority strategies are not solutions for all business activities of the bank, I therefore selected a specific product line – Card products and services – to build the business strategy, from which we can build a concrete business strategy which can be applied on other financial products and services of ABBANK on the basis of customer databases, products and services features as well as other long term competitive factors of ABBANK over its competitors 3.2 Implementation orientation and scope of the business strategy for card products and services of ABBANK 3.2.1 Orientation of long term priority strategy: - Customer strategy: Exploit the potential corporate customer database to develop the salary payments via account and card services, using the powerful relation of ABBANK with strategic partners in electricity industry - Differentiated Product and service strategy: :Leading in features of card products and services and customer care policies which are differentiated thanks to the advantage on modern technology and long term private strengths of ABBANK such as domestic and abroad strategic partnership and alliance with partners such as Maybank and EVN - HR Strategy: Building research team to develop card products and services, they should be capable to make analysis and synthesis of the market information, both domestic and abroad, propose initiatives for development of product portfolio, various card services to response to the development orientation of retailing market, regarding card payment 3.2.2 Objectives of the card business strategy of ABBANK: - Becoming one among top commercial joint stock retailing banks in Vietnam in 2015 - Accounting for 30% of the Vietnam’s card market with millions issued cards units in 2015 - Building stable profit sources in the banks, including the profit from retailing banking which account for 15% of the total profit 3.2.3 Implementation scope of the strategy: 3.2.3.1 Strategy for selecting the target market and customer segmentation: a Evaluation the market potential of Card business in Vietnam: 42 43 High Question Cash Cows Dogs High Industry growth rate Star Low Table 3.3 BCG analysis of potential card market Low Market share Conclusion: Card market is a star market: - High industry growth rate: 300%/ year in recent years - Market potential is huge with total population in big cities is 22 millions people Up to 30/06/2009, total number of cards issued by the whole system includes domestic and foreign banks (mainly focus on the big cities) are around millions cards By which, the rate of active cards is averagely 45%, equal to 7,6 millions of cards So the market potential is 14,3 millions of cards Suggestion: ABBANK should consider card as key products in their retailing system b Evaluation of customer segmentation feature by the income level and working title High Winner Winner Question (II) (III) Average business Loser (V) (VI) Profit producer Loser Loser (VII) (VIII) (IX) High Average Low Medium (I) Winner (IV) Low INCOME OF POTENTIAL CUSTOMER Table 3.4:Analysis of the segmentation features of card user POTENTIAL DEMAND ON THE CARD PRODUCT OF ABBANK Conclusion: ABBANK need to focus its development, provision, marketing on customer groups (I), (II), (III), (IV), (V), (VII) Among which, groups (I), (II), (III) and (IV) account for 20% in the customer structure, but bring about 80% of profit for the bank 44 c Characteristics of potential customer group: Group (I), (II), (III) account for 5% in the total customer structure of ABBANK – VIP Customers - People with high position and big influence in the society: Politic and social actors - Successful businessmen: top leader or managing people of enterprises and organization such as board of management, board of directors, directors, deputy directors, chief accountant… - High earning (≥ 50 millions dongs per month) and living standard are very high The good they use can reflect their image and value, the high demand for quality and customer care services of differentiation and advanced level - They represent their organization, enterprises to use ABBANK’s services and sometime the bank is successful in providing the trust investment services in trading gold, stock and foreign currency for this group - They have short time to receive the information, so the message should be short, coherent and persuasive In many cases, we need to turn to influence of others whose close relationship with them to approach and conquer this customer group Corporate relationships can affect this target Group (IV), (V) account for 25% in the total customer structure of ABBANK – Middle class customers - People holding position of manager or deputy manager and above in organizations and enterprises - Have good and average income and above (≥ 15 millions dongs/month) with good living standard, they have demand for life convenience by individual loans - They care quality of goods and services, at the same time concern about price and always expect that the goods and services are worth for the money paid These services can be charged given that the quality requirements are met - Concern for the efficiency and solutions of products and services Convince this group of customer is not much different from proving the product utility Besides, another important factor is regulations of the organization can influence this group Group (VII) accounting for 70% in total customer structure of ABBANK – Popular customers: - They have an average income at enterprises, companies… … There income is just enough for family consumption, simple and popular entertainment and leisure They are staffs in enterprises using financial services of ABBANK - They are cautious in selecting the goods and price is well considered as decisive factors in purchasing This group of customer care about saving the money and spending just enough for family and themselves - They are influenced easily by their boss’ decision, so the sales via leadership and management level are the best efficient approach d Market and customer development strategy of ABBANK: - The organization’s decision might affect the purchasing decision of the customer for the card products, especially the payroll payment via account transfer, potential of this group account for 80% of the total customer structure - Focusing on development of customers who receive salary on their account This is a source of highly loyal customers with the potential of cross selling other financial products and services of ABBANK: 45 Table 3.5: Analysis of customer structure and development plan in years Group Structure Customer growth plan (Unit : Thousand of people) 2010 2011 2012 2013 2014 2015 Enterprises with financial relation with ABBANK 40% 80 120 200 360 600 800 EVN Corporation and its member companies 15% 30 45 75 135 225 300 Shareholders are individuals and institution of ABBANK 5% 10 15 25 45 75 100 Cooperation with retail chains on the connecting card products 15% 30 45 75 135 225 300 Individual uses the financial services of ABBANK 20% 40 60 100 180 300 400 Current customers 5% 10 15 25 45 75 100% 200 300 500 900 1,500 TOTAL 100 2,000 From above customer analysis, ABBANK can define which card products and services can meet well the customers’ demand, selling methods and marketing approach as well as how to use influence of others in the purchasing decisions of each customer group 3.2.3.2 Strategy of differentiated product and service development: The leading strategy about differentiation of products and services, plus the optimum customer services based on the competitive advantage on modern technology and strengths which can not be imitated by its competitors in long-terms such as strategic cooperation, domestic and abroad alliance strategy with partners are Maybank, EVN, and Prudential … a Provide the products and services that the potential customer need: Base on the analysis of customers and their characteristics, we suggest ABBANK to conduct the R&D activities for smart card product and service packages which can satisfy customers as followed: Group (I), (II), (III) – VIP customers: - Top concern of customers for card products and services is international card services (credit card, debit card) with brand of AMERICAN EXPRESS/ VISA/MASTERCARD/JCB/DINER CLUBS - With the international credit card, there should be policies of granting the credit card with highest line in comparison with its competitors for this group of customers - Types of Card for this group include TITANIUM/PREMIUM/DIMOND/GOLD - The prestigious payment system which accept and apply good card holders care policies such as Hilton, Metropole, Melia, Sofitel Various luxurious resorts such as Furama, Vinpearl land… chains of jewelry shops, fashion shops, perfume shops… 46 - The top service package with priority on the luxurious tour registration, VIP flight booking for traveling, studying abroad and domestic and international business strip ABBANK implemented strategic alliance with big tourist companies in Vietnam and airlines such as Vietnam airlines, Pacific airlines, Air Asia – Strategic partners of Maybank, and they are quite familiar with VIP customers care program - There should be good care and access such as private 24/24h phone line, the special reception corner with good consultancy at the customer care center of the bank in regions: Northern region, Central region, Southern region - Benefit the customer care policies with valuable and surprising gifts on special occasions and anniversary dates such as birth day of spouse, children … - The service package is designed well, with various caring channels and combination of many programs of partners, the entrance and maintenance fee can bring about good revenue for ABBANK Group (IV), (V) – Middle class customers: - The top concern of this group is utilities, various payment features based on the high technology - The set of domestic and international credit cards with link to the deposit account to supply the domestic demand for cash or spending without cash as well as the demand of spending without cash internationally - Supply insurance services to protect the consumers in case the card and PIN code are badly used, which can cause loss of money in the account - The international card payment services to develop internet based payment – Ecommere when this group of customers is familiar with information technology and they can self protect for safe use - This service package is simple, convenient at reasonable charge Group (VII) – popular customers: - Meet the simple demand such as receive payroll via account and card withdrawal at any places and any time over all Vietnam - This service package is simple and user friendly with a fundamental charge plus many fee discounting programs to appeal and maintain the customer loyalty with ABBANK’s products and services e Providing products and services to develop the branch and potential market in the future: Product of card alliance with the retailing chains: - The development potential of retailing system in Vietnam: on the basis international retailers such as Wal - mark, 7-Eleven, Big C, Metro …is the opportunity for all banks in general and ABBANK in particular to develop the card products which are based on the alliance of different brands for the same target customers in order to improve customer care and increase their loyalty - Besides retailing system, there are also airlines, famous fashion brands, luxurious perfume…to be considered for product alliance, especially with prestigious brands with high purchasing frequency because the consumers are caring for the quality, service and prestige of suppliers - This market is quite popular abroad with co brand card products such as Singapore Airlines, Cathay Pacific connected to American Express, 7-Eleven connected to CHASE and VISA … - Only few banks participate in this potential market such as Vietcombank with Vietnam airlines, ACB with SaiGontourist and Techcombank with Vietnam Airlines 47 Alliance card products for students to transfer or receive money for living expenses and tuition fee - Students who stay far away from home account for 75% of total number of students in a university, therefore this group have the demand of transferring and receiving money from and to their family - The traditional methods which is based on the postal system is no longer used, it’s now the trend that the students open a bank account to receive money from their parents - With this group of students, they care about efficient transferring with competitive charge and convenience - This group of students will become future potential customers of the bank when they finish study This group should receive good attention of the bank for product line, the bank’s card services - Currently, strong players in providing these services are SEA bank, VIBBank, BIDV and Agribank - The market is still open because the implementation approach of banks is not well structured, what could be seen is only the number of cards issued The alliance card products for the people who work abroad.: - Number Vietnamese coming to Malaysia, Singapore, Thailand, Philippine to work is very popular - This group of customer has a high demand of transferring money to their family The total amount of money that is transferred to Vietnam from group of abroad Vietnamese is very big and increasing - Main methods: via big remittance firms such as Western Union, Money Telegram … or informal and black market - This is a potential service market, the source of foreign currency for banks, especially ABBANK with the competitive advantage of Malaysian Bank which is the biggest bank of Vietnam with presence on more than 20 nations all over the world 3.2.3.3 HR strategy: Develop a R&D team on retailing products and services in general and card products and services in particular Sumsung statement: “Our biggest asset is the talent staffs which are able to develop market leading products and bring about new values for the consumers 36000 people, accounting for 26 % of our workforce, contribute to the creation and development of future products They are now working in 42 research institute all over the world, with continuous training and updating for managing position in the future Research institutes are closely coordinated to develop strategic technology for the future as well as unique technology to form new market trends.” R&D human resource at SAMSUNG Electronics increase by 20% every year and will come over 50.000, more than 30% of the total staffs, in 2010 This resource will decide our ability in the digital technology revolution, in the context of continuously changing information technology market” (Theo www.samsung.com) US president Barack Obama said in a speech at the annual meeting of the National Academy of Sciences: " US spend 3% of its GDP( 420 USD dollars) on scientific research and development He also emphasized that US is now lagging behind some other nations in scientific research, that’s why he want to invest more in scientific research and development to keep US science always leading, not lagging as it was in recent decades.” 48 (According to: ICTNews - TechNewsWorld) Those statements by an international prestigious firm in high tech electronics and the US president Barack Obama reaffirm the importance of HR policies dedicated for R&D team of an organization ABBANK is not exceptional Therefore, with the R&D HR development strategy, ABBANK should be awarded of the following requirements: - Establishing the R&D center which help to research retailing products and services for the enterprises - Mission: marketing research, market trends, competitors, products, which are highly adaptive to the current domestic and international context, launching the new products and services with enclosed programs - The current force of people is too small, which is a shortage for developing the market, customers using cards of ABBANK It’s required to increase the number of people over years, which goes along with the strategy of retail banking development of ABBANK - Participating in the training course which was co-organized with May bank, which relate to the function and responsibility of the center - The HR policies, salary and bonus should be considered core values of retail banking and corporate banking and become the true core of banking retail bank – business strategy of ABBANK in next years - The success of business strategy of ABBANK’ retail banking depends very much on the solutions proposed by this team 3.3 Detailed action plan: I apply the S.T.A.R.S model to build the detailed action plan: S Steps: Steps and tasks to be done - T.Timining: Progress plan - A Aesstence: Assistant - R Responsibility: Key responsible person - S Success contenis: criteria for success evaluation 49 3.3.1 Plan of HR strategy: Table 3.6: Plan of HR implementation for retailing banking domain STEPS TIMINING Building the HR strategy with May Bank Building remuneration scheme Recruiting R&D manager from Maybank Quarter I/ 2010 Quarter I/ 2010 Quarter II/ 2010 Quarter II/ 2010 Recruiting R&D experts Assignment Quarter II/ 2010 Quarter II/ 2010 Plan of R&D team set up: HR training 3.3.2 ASESSTENCE RESPONSIBILITY SUCCESS CEO, Maybank HR Building years strategy CEO HE Consensus on the deal Maybank HR Managing staff from May Bank Retail banking HR Forming of R&D team HR Maybank R&D theoretical level CEO with full power in the team Domestic and abroad R&D Management training Table 3.7: Action plan of R&D activities STEPS Building the product development strategy for next years HR is specialized by products or programs Implementing the task according to project models Checking the progress and quality of project Coordinating with different sectors and department to launch the services Actualizing the committed scheme Checking the working quality TIMINING ASESSTENCE RESPONSIBILITY SUCCESS Quarter IV/ 2009 R&D management R&D team Building the years strategy Quarterly R&D team R&D management Reasonable and efficient work assignment table Daily R&D management R&D team Working progress Weekly R&D team Daily R&D management R&D management Implementation progress R&D team Ensure time to market of products Quarterly R&D management Satisfaction and loyalty of staffs Daily R&D management Fulfill the plan 50 3.3.3 Plan for cards product & services: Table 3.8: Development plan for card products and services during 2010 - 2015 No 2011 2012 2013 2014 2015 X X X X X X International debit card/ VISA debit X X X X X X Connect card X X X X X X Internacional credit card/ VISA credit X X X X X X International credit card/ Mastercard credit X X X X X Smart card issuance and payment II 2010 Domestic debit card/ YOUcard debit I Portfolio of products and services X X X X X X X X X X X X X X X X X X X Card product Member of international card organization Accept payment with VISA/Master X Accept payment with JCB/ Diners Accept payment with American Express II Development of ATM & POS services Nationwide electricity bill payment X X X X X X Developing the payment services of deferred payment for telecom industry X X X X X X Insurance fee payment services X X X X X X Other payment services X X X X X X X X X X X X X X X X Transfer services on mobile phone X X X X X Bill collection on mobile phone services X X X X X ATM based deposit services IV Mobile services Prepayment for mobile phone fee V X Internet services E-commerce payment connection X X X X X X Online purchase with cards X X X X X X X X X X X Bill collection connection 51 Online bill payment services VI X X X X X Alliance for preferential expansion, card acceptance Insurance X X X X X Airlines X X X X X X Chain of hypermarkets, supermarkets, wholesale X X X X X X Chain of fashion shops X X X X X X Chain of restaurants X X X X X X Via VNPOST X X X X X X Via member companies of EVN X X X X X X Via chain of retailers X X X X X X Via universities X X X X X X Via labor exporting centers X X X X X X Via tourist centers VII X X X X X X X Sales channel development 3.4 Supervision and evaluation of the business strategy implementation 3.4.1 Supervision of business strategy implementation: - Supervision: it’s a process of checking information on inputs, outputs and information treatment - Evaluation: it’s the task of evaluating the results concerning different factors: efficient and maximized resources, technological adaptation, saving progress, budget under control, product launch, distribution channels, marketing channels, customers’ perception and satisfaction - Evaluation methods:  Self compare with previous time (Before – After) Before the strategy and after the strategy, how is the situation changed?  Compare with competitors in the same market, the same product (in the same business environment)  Compare with the average figures of 10 leading companies in the same industry, at the same products (might not be the same business environment) Comparison and evaluation of the strategy should be conducted according two all above three approaches, normally focus on the before-after approach 3.4.2 - Adjusting the business strategy and the action plan: Evaluation of business strategy implementation can be adjusted based on the information of input and out puts and the information treatment 52 - The adjustment will be done when the evaluation result take into account the evaluation time of following factors: efficient and maximized resources, technological adaptation, saving progress, budget under control, product launch, distribution channels, marketing channels, customers’ perception and satisfaction - Adjustment methods  Adjustment to increase the ratios  Adjustment to decrease the ratios  Cancel the project 53 CONCLUSION There is a famous quote concerning strategic planning: “There’s a strategic objective for a group, but there is no generic strategy for the group” I decided to propose and analyze one particular product line, the card products, because with a concrete problem, I would like to contribute my understanding to the top leaders and middle managers of ABBANK in solving a general exercise in order to obtain the strategic objective of retail bank – Working out the business strategy of ABBANK during 2010 – 2015 Card products and services are core products of ABBANK’s competitors Therefore, ABBANK should consider them as core values of its smart and satellite financial services offered to customers The solutions suggested in this thesis can be considered as a perfect “chopstick” which can satisfy its users Regarding to this “chopstick”, if the same theoretical background is applied for other chopsticks, we will finally get a package of qualified chopsticks Similarly, with the strategic objective of becoming one among top retail commercial joint stock bank of Vietnam, ABBANK need to understand clearly and thoroughly the above approach of chopstick production and apply flexibly it on different products, and services ABBANK will surely succeed in the end With my full efforts, knowledge and experience at the current position, I hope that this small thesis might be a reference source for ABBANK’s sustainable development Firstly, I myself can be a small chopstick which always self improve in my job create positive influence on my colleges We all together commit to make ABBANK become the friendly retail bank of all people 54 ... term - Non term - Term of less 12 months - Term of over 12 months By client - Corporate - Individual Credit activities By Terms - Short-term - Medium-term - Long-term By customer - Corporate - Individual... values of retail banking and corporate banking and become the true core of banking retail bank – business strategy of ABBANK in next years - The success of business strategy of ABBANK? ?? retail banking. .. vụ thẻ 2010 – 2015 Growth of fund mobilization and credit of ABBANK The business result of ABBANK Outlook of Vietnam economic period 2010 – 2013 Comparison of core competencies among ABBANK and