Building business strategy for Prosperity Joint Stock Commercial Bank

HA NOI NATIONAL UNIVERSITY

UNIVERSITY OF ECONOMICS

——————–

NGUYEN THI CAM TU

BUILDING BUSINESS STRATEGY FOR PROSPERITY VIETNAM COMMERCIAL BANK HA TINH BRANCH

Specialization: Economic Management

Code: 60 34 04 10

Master’s Thesis ECONOMIC MANAGEMENT

PRACTICE ORIGINAL PROGRAMS

SCIENTIFIC GUEST: Dr. QUOC MANH HAO

CONFIRMATION OF OFFICER INSTRUCTIONS

CONFIRMATION OF THE PRESIDENT OF THE THESIS CONFERENCE

Hanoi – 2014

TABLE OF CONTENTS

List of abbreviations …………………………………………………………………………… …………i

List of tables and charts ………………………………………………………………………. …………ii

INTRODUCTION ……………………………………………………………………………………. …………………………… .. first

CHAPTER 1: THEORETICAL BASIS ON BUSINESS STRATEGY FOR COMMERCIAL BANKING …………………………………….. ………………………. 7

1.1 Theory of business strategy …………………………………………………………….. ………. 7

1.1 Concept of business strategy ……………………………………………………………….. ………… 7

1.1.2 Characteristics of a business strategy …………………………………………………………………………. …… 8

1.1.3 The role of business strategy ……………………………………………………………….. ……….. 8

1.2 Commercial Bank overview ……………………………………………………………………… ………… 9

1.2.1 The concept of a commercial bank …………………………………………………………… ……… 9

1.2 Functions of a commercial bank ……………………………………………………………….. .. ten

1.2.3 Service system of commercial banks………………………………………………………. 12

1.3 Business strategy development process for commercial banks …. 16

1.3.1 Defining the mission …………………………………………………………….. …………. 16

1.3.2 Analysis of the external environment …………………………………………………………….. ……….. 17

1.3.3 Analysis of the internal environment …………………………………………………………….. ………… 22

1.3.4 Analysis and selection of strategies …………………………………………………………… ……… 23

SUMMARY OF CHAPTER 1……………………………………………………………………… …………30

CHAPTER 2: ANALYSIS OF BUSINESS STRATEGY FOR VPBANK HA TINH BRANCH …………………………………………………… ………………………………………. thirty first

2.1 Overview of VPBank, VPBank Ha Tinh …………………………………………… 31

2.1.1 Overview of VPBank …………………………………………………………….. ……… thirty first

2.1.2 Overview of VPBank Ha Tinh Bank ………………………………………………. 35

2.2 Developing business strategies for VPBank Ha Tinh Branch until 2020. …………………………… …………….. 39

2.2.1 Defining mission and goals ………………………………………………………… ………… 39

2.2 Analysis of the external environment …………………………………………………………….. ……….. 39

2.2.3 Analysis of the internal environment …………………………………………………………….. ………… 45

2.2.4 Analysis and selection of business strategies ………………………. 48

2.3 Assessing the feasibility of the strategy …………………………………………………. ………. sixty one

2.3.1 Financial feasibility assessment …………………………………………………… …………….. sixty one

2.3.2 Feasibility assessment of human resources …………………………………………………… ……………… sixty one

2.3.3 Other factors …………………………………………………………….. …………. 62

SUMMARY OF CHAPTER 2……………………………………………………………………… ……………………………. 66

CHAPTER 3: SOLUTIONS AND RECOMMENDATIONS FOR IMPLEMENTATION OF BUSINESS STRATEGY FOR Ha Tinh Branch Office.. 67

3.1 Solutions to the implementation of the strategy …………………………………………………………………………. …………. sixty seven

3.1.1 Solutions related to governance and organizational structure …. 67

3.1.2 Solutions related to financial capacity ………………………………………………. 68

3.1.3 Technological solutions …………………………………………………………….. …………….. 69

3.1.4 Solutions on Marketing ……………………………………………………………………………………….. ………….70

3.2. Some recommendations………………………………………. ………………………………. seventy three

3.2.1 Recommendations to State management agencies and the State Bank of Vietnam………………………………………………………. …………………………… …………….. seventy three

3.2.2 Recommendations to VPBank Head Office …………………………………………………… ………… 74

SUMMARY OF CHAPTER 3……………………………………………………………………… ………………………………… 77

CONCLUDE………………………………………… …………………………… … 78

REFERENCES………………………………………. …………….. 79

LIST OF ABBREVIATIONS

Number	symbol	Originallymeaning
1	AGRIBANK	Bank for Agriculture and Rural Development
2	ATM	Automated Teller Machines
3	BIDV	Investment Commercial Joint Stock Bank & development
4	GDP	Gross Domestic Product
5	SBV	State Bank
6	NH	Commercial Bank
7	TMCP	Share trading
8	TECHCOMBANK	Vietnam Technological and Commercial Joint Stock Commercial Bank
9	USD	US Dollar
10	VIETCOMBANK	Joint Stock Commercial Bank for Foreign Trade
11	VPBank	Vietnam Joint Stock Commercial Bank Nam Thinh Vuong
12	VPBank HA TINH	Vietnam Prosperity Joint Stock Commercial Bank Ha Tinh branch
13	WTO	World Trade Organization

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LIST OF TABLES AND CHARGERS

TABLES

Number	Table	Content	Page
1	Board 2.1	Economic indicators of VPBank Ha Tinh from December 31, 2010 – December 31, 2013	37
2	Board 2.2	SWOT analysis	49
3	Board 2.3	EFE Matrix Analysis	51
4	Board 2.4	Analysis of the IFE Internal Factor Evaluation Matrix	52
5	Board 2.5	QSPM Matrix Analysis – S/O Group	54
6	Board 2.6	QSPM Matrix – S/T Group	56

CHART, CHART RED

Number	symbol	Name of table, diagram, chart	Page
1	Sister 2.1 . chart	Organizational chart of VPBank Ha Tinh	36
2	Expression 2.1 . chart	Percentage of mobilized capital and outstanding debt in Ha Tinh province in 2013	38

Preamble

1. The need to choose research topics

In the context of globalization, businesses in general and the commercial banking system in recent years have made strong developments, especially after Vietnam’s accession to the WTO. In the current context, besides many opportunities, a series of difficulties from the business environment, fierce competition not only within the industry has forced banks to make decisions to make changes. comprehensive at the strategic level.

However, Vietnam’s financial and banking market is in the early stages of development, the products and services that financial institutions provide are relatively primitive, mainly traditional banking products and services. Modern and specialized banking and financial products and services are lacking and weak.

These are opportunities for financial institutions with the potential to seize and exploit and are conditions for banks to survive and compete in the increasingly fiercely competitive market. Each bank must develop a business strategy suitable to its specific characteristics in each historical period so that it can quickly dominate the market, improve its competitiveness, expand and promote its products. banking and financial products and services, and at the same time must make a remarkable difference, bring many conveniences and added values to customers.

Surviving, developing and winning the competition is becoming an urgent need for every bank. In that general context, Joint Stock Commercial Bank of Vietnam Prosperity Ha Tinh Branch (VPBank Ha Tinh Branch) under the Joint Stock Commercial Bank of Vietnam Prosperity Vietnam (VPBank) is also gradually making efforts to in order to affirm its position, and at the same time improve its competitiveness in the very vibrant financial and banking market of Ha Tinh province.

Stemming from that fact, I chose the topic: “Building a business strategy for Vietnam Prosperity Commercial Joint Stock Bank – Ha Tinh Branch” with the desire to contribute to further improve business efficiency and bring the business to the market. VPBank Ha Tinh Branch rose to a new position in the VPBank system in particular and the Vietnamese banking system in general, contributing to bringing VPBank into the top 5 leading joint stock commercial banks in Vietnam and one of the three leading retail commercial banks in Vietnam. Vietnam by 2020.

During nearly two years of training at the Economic Management class 5 – University of Economics – Hanoi National University, under the dedicated guidance of teachers and learning from other students, I have gained a lot of experience. Loaded with a lot of in-depth economic knowledge, useful for working in the banking sector.

Especially, the subject of Strategic Management has allowed me to see many issues on the theoretical basis for my master’s thesis. In my opinion, the topic “Building a business strategy for business for Vietnam Prosperity Commercial Joint Stock Bank – Ha Tinh Branch” is a highly applicable topic and suitable for the major of Economic Management.

For the thesis topic “Building a business strategy for business for Vietnam Prosperity Commercial Joint Stock Bank – Ha Tinh Branch” the question I posed is: What is a business strategy? Business strategy analysis for VPBank Ha Tinh branch?

2. Research situation

In the process of researching and improving my knowledge at the Economic Management class 5 – University of Economics – Hanoi National University, I have been studying, cultivating and learning from teachers and friends to serve my students. service for their own work. Although the time for researching the topic is still short, the learning process has not gained much in-depth knowledge, I myself also work in the HR department of VPBank Ha Tinh branch, so understanding banking knowledge also has many limitations compared to other peers.

However, during my studies, I have researched a number of domestic documents related to the thesis topic such as: Hoang Van Hai, “Strategic Management” Hanoi National University Publishing House, 2010; Nguyen Thanh Hoi, Phan Thang (2001), Management Studies, Statistical Publishing House, Hanoi; Tran Anh Tai (2007), Administration, Hanoi National University Publishing House; Phan Phuc Hieu (2007) “Analysis of modern strategies and applications” Transport Publishing House, Hanoi; Nguyen Thi Lien Diep, Pham Van Nam (2006), Business Strategy and Policy, Labor and Social Publishing House, HCMC; Ngo Dinh Giao Editor (1997), Business Administration Technology & Business Administration Services of Enterprises, Education Publishing House, Hanoi; Dr. Duong Huu Hanh (2004), Corporate Governance, Statistical Publishing House, Ho Chi Minh City. Assoc. Prof. Dr. Le Van Tam (2000), Textbook of Strategic Management, Statistical Publishing House, Hanoi. Assoc.

In addition, I also researched a number of master’s theses on building business strategy of such as: “Improving business strategy of Hoang Ha Joint Stock Company”, Open University by author Nguyen Xuan Dung; “Building a strategy to develop INDOVINA bank” Da Nang University of Economics by author Le Van Minh… In addition, I also read some references translated from foreign authors such as Philippe Lasserre, Joseph Putti, Business and Management Strategy, Volume I, National Political Publishing House, Hanoi, 1996 Arthur A. Thompson; W. Chan Kim, Renee Mauborgne (Translated by Phuong Thuy), Blue Ocean Strategy, Knowledge Publishing House, Hanoi, 2007. Michael Hammer, James Champy (Translated by Vu Tien Phuc), Re-establishing the company, Ho Chi Minh City Publishing House. Ho Chi Minh, 1999 etc…

Although the research period is still short, I myself work in the Administration – Human Resources department, so my knowledge and experience on the subject of research still have many limitations, but I found that most of the The above documents have mentioned quite clearly and in detail the theoretical basis points of business strategy. However, in order to clearly define business strategic goals and specific solutions at VPBank Ha Tinh branch, there is no document to mention this issue. Therefore, just based on the actual needs of the unit where I work, plus my passion for research, I researched the issue of “Building a business strategy for Vietnam Prosperity Commercial Joint Stock Bank – Branch Ha Tinh”

3. Research purpose

The purpose of the thesis is to answer the questions What is business strategy? Business strategy analysis for VPBank Ha Tinh branch? thereby proposing some solutions to implement business strategies, in order to contribute to making Vietnam Prosperity Joint Stock Commercial Bank – Ha Tinh Branch become one of the strong banking branches of VPBank system and in the province. Ha Tinh.

Research mission:

– An overview of the basic theory of business strategy, the process of strategy formulation.

– Analyze external and internal factors to find strengths and weaknesses of VPBank Ha Tinh Branch.

– Define business goals, based on strengths

– weakness, opportunity

– risk of challenge.

– Propose a number of business strategy options and solutions to implement that strategy.

4. Object and scope of research

The object of the study is the business strategy of VPBank Ha Tinh Branch. The scope of the study is limited to strategic issues and strategic management in the banking industry.

The analysis data is mainly from the reports of VPBank Ha Tinh Branch, of the State Bank of Ha Tinh. Therefore, the topic is only applicable at this bank branch.

5. Research Methods

– Approaches: The thesis uses a combination of approaches such as individual approach, historical approach, qualitative and quantitative approach.

– Methods of data processing and analysis: The topic uses descriptive, analytical, and synthetic statistical methods when evaluating business results of VPBank Ha Tinh Branch; Using the SWOT analysis matrix, using the evaluation matrix of external factors EFE, evaluation matrix of internal factors IFE, quantitative strategic planning matrix (Quantitative StrategicPlanning Matrix – QSPM to evaluate evaluate the strengths, weaknesses, opportunities and threats of the bank.

– Sources of information: The topic uses information from textbooks, research documents, and theses of some domestic and foreign authors as references for writing theses. In addition, the thesis also uses a number of books, Internet and reports of VPBank, VPBank Ha Tinh Branch, State Bank of Ha Tinh Province, etc.

6. New contributions of the thesis

– The thesis topic systematizes the theories of business strategy of commercial banks on the basis of the synthesis of theories of many schools, many strategists have far-reaching influence on the theory of business strategy. business ever since.

– Proposing business strategy for Joint Stock Commercial Bank of Vietnam Prosperity Ha Tinh Branch (VPBank Ha Tinh Branch) which was not available before with high applicability. In particular, the topic shows detailed strategic solutions for the development of the Bank.

7. Thesis structure

In addition to the introduction, conclusion, appendices and list of references, the essay consists of 3 chapters:

Chapter 1: Theoretical basis of business strategy for commercial banks

Chapter 2: Analysis of business strategy for VPBank Ha Tinh Branch

Chapter 3: Solutions and recommendations to implement the business strategy of VPBank Ha Tinh Branch

CHAPTER 1

THEORETICAL BASIS OF BUSINESS STRATEGY FOR COMMERCIAL BANKING

1.1 Theory of business strategy

1.1.1 Concept of business strategy

The term strategy was coined in the military field to refer to the skills and art of using military forces of commanders, planning decisions, large-scale operations, and pivotal impact. to turn the situation around, in favor of one warring party to win the final victory.

In war, strategy is more art than science, “strategy is the art of commanding the means to victory” or “strategy is the art of fighting from a position of superiority”.

Later, the term strategy was used in many fields including economics, initially to refer to the way of business cooperation, the way to fight in the marketplace, but it can be understood that strategy is a plan of action, a plan of action. An action plan is designed to achieve a specific goal, which is a combination of long-term goals and measures, ways, and ways to achieve those goals.

According to Chandler, “The business strategy of an enterprise is the determination of the basic long-term goals and objectives of the enterprise and the application of a series of actions and the allocation of resources necessary to carry out the purpose”.

According to Bruce Henderson, “Strategy is the deliberate search for a plan of action to develop and incorporate an organization’s competitive advantage. What differentiates you from your competitors is the basis for your advantage.”

Michael Porter agrees with Henderson’s statement, “Competitive strategy involves differentiation. It is the careful selection of a distinct set of activities to create a unique set of values.

In general, the concept of strategy includes the following contents: Determining exactly the goal to be achieved, determining the path or method to achieve the goal, and orienting the allocation of resources to achieve the selected goal. .

Thus, through the above points of view, we can understand “Strategy is a business orientation to achieve the set goals of the organization”.

1.1.2 Features of business strategy

– Business strategy is a subjective product of the cognitive process, so it is only directional. When implementing a strategy, it is necessary to combine strategy and tactics, strategic goals and situational goals.

– Continuity and inheritance strategy, ensuring high operational efficiency for the whole life cycle, and at the same time ensuring the organization’s combination of environmental factors with internal resources to make decisions strategic direction and plan that are both advanced and feasible.

– Strategies with forward thinking, gaining advantage in competition.

– Business strategy is usually formulated over a long period, usually for the long term and its length depends on the business cycle.

1.1.3 The role of business strategy

– Business strategy helps the organization to realize its purpose and direction in each period, as a guideline for all activities of the organization. It helps the organization to be more proactive instead of passively defining its future.

– The business strategy that is given will make every member of the organization understand what must be done and commit to it. That can create support and promote the available capacity of employees in the organization, clarify the responsibilities of each individual.

– Business strategy helps organizations exploit competitive advantages in the market to create competitive advantages, thereby helping members of the organization to have a positive attitude to changes from the external environment. outside.

– Business strategy helps the organization to effectively use intangible and tangible assets.

– Business strategy is the basis and basis for selecting business plans, investment plans, technological innovation, and market expansion.

1.2 Commercial Bank Overview

1.2.1 Concept of Commercial Bank

Up to the present time, there are many concepts of Commercial Bank. As in the US, a Commercial Bank is a currency trading company that specializes in the provision of financial services and operates in the financial services industry.

According to the French Banking Act (1941) also defined: “Commercial banks are enterprises or establishments whose regular occupation is to receive money from the public in the form of deposits, or in other forms. and use such resources for themselves in discounting, crediting and financing transactions”.

In Vietnam, the Law on Credit Institutions of Vietnam states as follows: “Commercial bank is a type of bank that is allowed to carry out all banking activities and other business activities in accordance with the provisions of law. This law is for profit.”

From the above observations, it can be seen that a commercial bank is one of the financial institutions that is characterized by providing a variety of financial services with the basic operations of taking deposits, lending and providing other financial services. payment service.

In addition, commercial banks also provide many other services to satisfy the maximum demand for products and services of the society.

Thus, “The business strategy of a commercial bank is a business orientation to achieve the objectives set by the commercial bank”.

1.2.2 Functions of commercial banks

1.2.2.1 Credit intermediary function

A bank is a credit intermediary whose main activity is to convert savings into investment, requiring contact with two types of individuals and organizations in the economy: Individuals and organizations that are temporarily in deficit. spending (i.e. spending on consumption and investment exceeds income and therefore they are the ones in need of additional capital).

Individuals and organizations have a temporary surplus in spending (i.e. their current income is greater than the expenditure on goods and services and thus they have money to save). The existence of these two types of individuals and organizations is completely independent of the Bank, and it is inevitable that money will move from the second group to the first group if both are mutually beneficial.

Then, a financial relationship will be formed, which can be a direct relationship in the form of credit or an allocation and capital partnership relationship and also an indirect relationship if there are many direct relationships. limited due to incompatibility in scale, time, space…

With indirect relationships that require the participation of financial intermediaries, with specialization they can reduce transaction costs, increase income for savers thereby encouraging savings, while reducing credit costs for investors and also encouraging investment. Credit intermediaries brought together savers and investors, thus resolving the contradiction of direct financial relations. With the function of credit intermediaries, commercial banks act as a “bridge” between those who have excess capital and those who lack capital and it has not only brought benefits to those who have excess capital and those who lack capital, but also benefited those who lack capital. economic benefits for itself and the economy.

For banks, they will find their own profit from the difference between lending rates and deposit rates or brokerage commissions. This is the most important function of the Commercial Bank, it determines the maintenance and development of the Bank and is the basis for performing other functions.

1.2.2.2 Payment intermediary function

Payment intermediary function means that the bank stands to pay for customers by transferring money from one account to another at their request.

Through this function, the Bank acts as the “treasurer” for businesses and individuals because the bank is the holder of the customer’s money, spending money on behalf of the customer. The more developed the market economy, the more this function of the bank is expanded.

Through the payment intermediary function, the commercial banking system contributes to the development of the economy. When customers make payments through banks, it will reduce risks, reduce payment costs for customers, and speed up business capital turnover faster, making customers’ capital efficiency increase. .

For commercial banks, this function contributes to increase the bank’s profits through the collection of payment fees. Moreover, it increases the bank’s loan capital as shown on the customer’s deposit account balance. This function is also the basis for forming the money creation function of commercial banks.

Money – Gold has an important function as a means of payment in the exchange of goods and services. On the face of it, gold faced many difficulties and the Bank created a means of payment when issuing promissory notes to customers, and with certain advantages, it became a widely accepted means of payment.

In addition, the promissory note is also replaced by metal money as a means of circulation and storage, it becomes paper money. Today, debt receipts have been developed in many different forms such as checks, promissory notes, etc., which have made the payment faster and more efficient.

1.2.2.3 The function “create money”

This is a consequence of the above two functions in banking: From some initial reserve through the process of lending and paying by bank transfer, new deposits are created and it is larger than with many times the initial reserve, called the money creation process of the banking system.

A bank, after receiving a deposit, will have a balance on the customer’s deposit account at the bank. With this money, after leaving a required reserve, the bank will invest it, lend it, from which it will transfer to the deposit capital of other banks.

With the rotation of capital through the credit and payment function of the bank. Commercial banks can perform the function of creating money.

1.2.3 Service system of commercial banks

There are large differences in the banking service portfolio across countries, regions and between banks. This difference comes from a number of reasons:

regulations of each country’s laws, capacity of each bank, business strategy of each bank, demand and consumer culture in each market area in which the bank operates. Distinctions aside, one can see a long list of services most commercial banks can provide:

– Carry out foreign currency exchange;

– Discount on commercial paper and trade finance loans;

– Receiving deposits: payment, savings, other terms;

– Preserving valuables: gold, precious metals, papers…;

– Financing government activities;

– Provide trading accounts;

– Entrustment service;

– Consumer loans;

– Finance support;

– Cash management;

– Equipment leasing service – financial leasing;

– Project finance loans;

– Sale of insurance services;

– Provide retirement plans;

– Providing securities brokerage services;

– Mutual fund services and grants;

– Real estate business;

– Contribute capital to buy shares;

– Wholesale banking and investment banking services;

– …

With a diversified financial services system that will continue to expand, banks have shattered the image of an institution that merely accepts deposits and makes loans. In fact, commercial banks have contributed to society many benefits: intermediary role; payment role; guarantor role; agent role; especially implementing economic and financial policies of the government and central banks.

Specific characteristics of commercial banking services:

When discussing the role and function of a commercial bank, we have considered the issue from the perspective of the bank itself, now there needs to be a change to suit the banking business that is customer-oriented. . We will have to study banking services from the perspective that commercial banks have to compete to provide banking services to customers in the most effective way, bringing high and sustainable profits. That is why it is important to clarify some basic characteristics of banking services that affect strategic decisions of banks. Those unique characteristics are:

– Invisibility:

This makes it impossible for customers to conduct a review of the bank’s services before purchasing. There are two problems that arise from invisibility: One, one cannot perceive with the senses. Second, banking services cannot be displayed, demonstrated and cannot be tried. This feature offers strategists the following suggestions: Associate services with tangible components. For example, the powerful branch system of BIDV, the No. 1 tower in Hanoi of Vietcombank, ATM system of Dong A bank… Colors of costumes, distinctive slogans…; The role of the Brand for banking services is more necessary than any other business sector or field.

– Inseparability:

The inseparability between supply and consumption. That is, there must be direct contact between banks and customers. Sales (transactions) play a decisive role. Dealer, service attitude, professional style…; Service time and transaction processing are important criteria; Transaction locations and transaction forms need to consider convenience and minimize transaction costs with customers; Technology and equipment demonstrate strength and belief for customers; Developing TeleBanking and AutoBanking systems is a trend and an unchangeable requirement.

– Heterogeneity:

Many banking services have distinct differences in standardization. There are many services that need to be highly standardized, but there are also services that are highly personalized. The heterogeneity increases the risk to customers and to the bank itself. This requires banks to have strategic solutions to enhance effective communication; Follow up, strictly control and give reasonable advice to ensure the effectiveness of the bank’s financial investments.

– Unable to store:

Zero-storage presents banks with several fundamental difficulties: Fluctuations in demand can make perfecting difficult; Risk of disappointment from customers when not responding promptly. Strategic solutions must focus on: Means, technology, and people only represent the service delivery capacity, not the service itself. It can be wasted when service demand is low. But customers can’t wait and be disappointed when demand exceeds capacity; Banks must perform well in demand forecasting; Create the right plan. In order to have a good forecast, good plan, the banking business must pay attention to the market, customer relations, PR, advertising, Logistics…. The bank must also be ready a strategy of “recovery recovery”. restore confidence” in case the forecast is wrong.