Building Seabank's development strategy to 2015 - 1

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MINISTRY OF EDUCATION AND TRAINING

SCHOOL …………..

Thesis

Building SeABank's development strategy to 2015

SUMMARY

In the business and development activities of a bank, a specific business strategy is needed. Therefore, a bank that wants to survive and develop sustainably requires first of all clear mechanisms and policies on strategy.

Southeast Asia Commercial Joint Stock Bank (SeABank) is one of the earliest established joint stock commercial banks and is in the Top 10 largest joint stock commercial banks in Vietnam with total assets of VND 30,597 billion. Currently, SeABank has a charter capital of VND 5,068 billion, one of the 7 joint stock commercial banks with the largest charter capital in Vietnam.

Based on research on strategic theory, Delta model, Michael Porter's five competitive forces model and strategy map model, we will apply them to analyze and evaluate SeABank's strategies until 2015.

Based on the theoretical overview and research method, we analyze SeABank's current strategy such as: Products, customers, system structure, from which we analyze the SWOT matrix to see the advantages, weaknesses, opportunities and challenges as well as analyze the current state of the internal and external environment to orient the goals and missions of SeABank until 2015.

From there, the author has suggestions to improve the strategic model such as optimal products - services, network, comprehensive customers, perfecting the structural system... to make it better, suitable for market developments and current capabilities of the organization, then the implementation of the new strategy will be highly effective and sustainable.

The Project was completed in a short time, so it is inevitable that there will be shortcomings and mistakes. We sincerely hope that teachers and professors will review and give comments to make the Project more complete.

Student performed by Nguyen An Giang

Student: Nguyen An Giang – MBA course 3 – Master of Business Administration program

CHAPTER I INTRODUCTION

1. REASONS FOR CHOOSING THE TOPIC: In a market economy following the integration trend, the production and business of products and services is not entirely decided by enterprises, but by the market. In which the international market and regional market dominate the domestic market. However, the world market is constantly changing due to changes in groups of factors such as: economic environment, finance - currency, politics, society, culture. Therefore, if enterprises do not accurately forecast the developments of international and regional environmental factors, the consequence is business risks. To avoid risks, enterprises are forced to develop strategies.

Strategic management has become essential for organizations, only strategy can avoid business risks in economic globalization. Therefore, I chose the topic "Building a development strategy for SeABank to 2015" as my MBA thesis to analyze, evaluate and adjust the current strategy to improve and perfect to help SeABank overcome challenges, and at the same time be able to survive and develop sustainably in the current fiercely competitive environment.

2. OBJECTIVES AND SCOPE OF THE RESEARCH: Based on the theoretical basis of strategic management, the theory of Delta Triangle model, Strategy Map and Value Chain to comprehensively assess the current state of SeABank's operations. Find out the strengths, weaknesses, opportunities and challenges for the development of SeABank in the past time; from there build a development strategy and implementation solutions for SeABank until 2015.

Research and evaluate collected data and information. From there, build a development strategy for SeABank until 2015.

3. EXPECTED RESULTS:

Through the research, it is expected to achieve the following specific results:

- Applying strategic theories to banking practice.

- Analyze and evaluate the current strategic status of SeABank.

- Propose and provide strategic solutions for SeABank's development until 2015

4. PROJECT STRUCTURE:

Chapter 1: Introduction

Chapter 2: Theoretical overview. Chapter 3: Research methods.

Chapter 4: Analysis of the current status of SeABank's strategic operations.

Chapter 5: Overview of the environment affecting SeABank's business operations.

Chapter 6: Proposed strategies and solutions of SeABank until 2015 Chapter 7: General conclusion.

CHAPTER II

THEORETICAL OVERVIEW

1. CONCEPT OF STRATEGY AND STRATEGIC MANAGEMENT:

1.1. Strategy: Strategy is a map showing the way to go, to achieve in production and business development and providing scientific arguments to get there. In other words, strategy is a general action program towards realizing long-term goals.

- According to American Professor Chandler: "Strategy includes determining the basic, long-term goals of an enterprise, at the same time choosing the method of action and distributing essential resources to achieve those goals".

- Dr. Nguyen Thi Lien Diep: "A business strategy is a program of action.

general action towards achieving the goals of the enterprise”.

Nowadays, along with the growth rate of the economy, the concept of "Business Strategy" has become popular and is a top concern for any business that wants to achieve success.

1.2. Strategic management: Strategic management is the process of studying current and future environments, formulating organizational goals, implementing and controlling decisions to achieve those goals in the current and future environments.

1.3. The role of strategic management

Nowadays, in the context of the changing world economy with a high level of integration and rapid technological development, most enterprises must pay attention to establishing strategies. The reason why enterprises are interested in strategic management is because:

- Help your business see clearly the future direction so that managers can consider and decide which direction the organization should go and when to reach certain specific goals.

- Helps managers clearly see the opportunities and risks that occur in business in an integrated economy. At the same time, it helps analyze, evaluate and forecast future environmental conditions, take advantage of opportunities, reduce risks, and help businesses overcome competition and win.

- Help managers make decisions to deal with each business environment, improve production and business efficiency, and move the business forward.

However, strategic management also has some disadvantages such as: Enterprises spend a lot of time and money on strategy building. Not only that, the error limit in long-term environmental forecasting can sometimes be very large. If the error is not overcome, there will be risks.

(Source: Associate Professor, Dr. Dao Duy Huan, STRATEGIC MANAGEMENT, Statistical Publishing House, 2007, pages 13, 14)

2. STRATEGIC MODELS:

2.1.Delta model (Arnoldo C. Hax & Dean L)

The delta model consists of three basic core components: the optimal system, the optimal customer, and the best product.

Optimal system

Customer Optimization Best Products

(See Appendix 2.1: Delta Model (Arnoldo C.Hax & Dean L, page 37)

The delta strategic management model shows that, towards Customers, this is the focus of the strategy and it helps the enterprise determine how much success it has achieved in production and business, including:

2.1.1. Structural system: With the current situation, the structural system must invest in additional technology, machinery, people, other resources, supporting companies with what type and quantity, what architecture... to provide products and services according to customer requirements.

2.1.2. Best products:

- Low cost strategy: is to carry out value chain activities with high efficiency and low cost or modify the value chain to reduce costs and add value to customers.

- Product differentiation strategy: Combining distinctive features that make buyers prefer the company's products or services over competitors' brands; Finding ways to differentiate products so that they can create value for buyers that cannot be easily and inexpensively copied by competitors; Not spending more on product differentiation than the price that can be charged to customers.

- Scale: Depending on the strategy, we offer different types of products with different qualities suitable for the applied strategy, in addition to researching to determine market share.

- Link: With the customer strategy given, it is necessary to determine which products and provide the first products to the market with outstanding designs for testing, exploring customer reactions to the products, from which to receive opinions, learn from experience to find solutions to overcome to suit the requirements of target customers.

2.1.3. Customer solutions:

- Scope: Depending on the product and divided into many groups, classify which customers use which type of product and whether the current capacity of the enterprise can meet the needs or not. If not, develop joint ventures with partners or use external resources to meet the needs of customers.

- Scale : conduct customer analysis, provide structure and customer ratio using different types of products to plan product portfolio and customer strategy, and identify target customers.

- Linking: In the customer strategy, it is necessary to create links and continuity to develop more and more: During the implementation process, we need to monitor, evaluate and draw lessons from experience to provide and create banking products and services suitable for each target. Specifically, linking through the following steps:

o Regular contact with customers

o Find ways to retain customers

o Provide products and services according to customer needs

(Source: HELP University, Malaysia, STRATEGIC MANAGEMENT - document for MBA, in Vietnam, 2010)

2.2. Strategy Map Model (Robert S Kaplan and David P Norton): A strategy map describes how an organization creates value by linking strategic objectives together in clear cause-and-effect relationships. The objectives mentioned are financial, customer, process, experience and expansion. (See Appendix 2.2: Strategy Map Model, page 38) 2.2.1. Why use a strategy map: Because:

- The strategy map will be more concrete and help the communication process between executives with each other and with employees. In this way, the connection can be created around the strategy, which makes the implementation of the strategy easier. It is undeniable that implementing a well-built strategy is a real challenge.

- The strategy map connects elements such as shareholder value creation, customer relationship management, operations, quality management, core competencies, innovation, human resources, science and technology, and organizational structure on one chart. (Source: HELP University, Malaysia, STRATEGIC MANAGEMENT - material for MBA, in Vietnam, 2010)

2.2.2. Description of the Strategy Map : The objectives mentioned in the Strategy Map are: Financial, Process, Experience and Expansion.

a-All information will be summarized on one page, this makes communication easier.

b- Four directions: Finance, Customer, Internal, Lessons and development

c- The financial sector will aim to create long-term shareholder value, and build cost structures and asset utilization based on a productivity strategy; and a growth strategy that expands opportunities and enhances customer value.

d- The final four elements of Strategic Innovation are supported by Price, Availability, Selection, Performance, Service, Partners, and Brand.

e- From the company's internal perspective, the process of operating and managing customer relationships will contribute to adjusting and improving the image of products and services.

f- All these processes will be reflected through human resource management, information management and corporate capital. Corporate capital is understood as corporate culture, leadership, connection and teamwork.

g- Cause-effect relationships are described and shown in arrows. ( Source: HELP University, Malaysia, STRATEGIC MANAGEMENT - document for MBA, in Vietnam, 2010)

2.2.3. Main principles of the Strategy Map: includes 5 principles as follows:

a. Strategy to balance conflicting sources

b. Customer-oriented strategy with different values

c. Values ​​created by the internal strength of the enterprise

d. The strategy includes complementary and simultaneous themes.

e. Strategic alignment determines the value of intangible assets

2.2.4. There are three different ways to make a difference:

a. Flagship Product: Seek to develop products that are unknown, untried, and always welcome. This strategy will require a

Pioneering innovation helps create new products, maximize functionality and get known in the market fastest. For example: Sony Corporation and Intel are two examples of this strategy.

b. Customer intimacy : Is to build a bond with its customers so that the company knows who its customers are and what products and services they need. This strategy requires an optimal customer network management method. The driving force of the improvement method is to focus on the needs of target customers, focus on developing new products and enhancing services to serve customers in the best way. For example : CompanyThe Home domestic transport association has been very successful in applying this strategy.

c. Optimal operation : Is to provide optimal products and services; quality, price and convenience that no other company can compare. This strategy emphasizes cost, quality, fast service, good relations with suppliers, fast and efficient supply and distribution. Typical examples are McDonald's Corporation, AirlinesSouthwest, Dell Computer Corporation (Source: HELP University, Malaysia, STRATEGIC MANAGEMENT - document for MBA, in Vietnam, 2010)

2.3. Value chain and M.Poter's 5 competitive forces model

2.3.1. Value chain : Is a set of closely linked elements. These elements are the activities, functions and business processes that the company performs in the process of designing, producing, marketing, delivering and supporting products/services and thereby creating value for customers at the lowest cost, bringing the highest value and efficiency.

(See Appendix 2.3: Corporate value chain, page 39)

2.3.2. M.Poter's 5 competitive forces model: 5 Competitive Forces model: Includes

- Analyze the competitive forces of companies in the same industry

- Analyze the bargaining power of people

- Supplier competitive force analysis

- Analyze potential competitors

- Analyze the competitive force of alternative products

(See Appendix 2.4: M.Poter's 5 competitive forces model, page 39)

Chapter II Conclusion:

With the theories of strategy, the role of strategic management becomes a vital issue for each organization, a compass for the set goals. From there, managers plan goals to suit the current situation of that organization.

The three models ( Delta Model, Strategy Map and Value Chain) are a theoretical development in strategic management, because the above three theories do not contradict each other, they only complement each other, creating a theoretical framework for project implementation.

- In the Delta Model, there are many research and analysis contents, however, due to the limitation of the topic, we only analyze 3 basic issues in the business strategy of the enterprise:

+ Key products and services

+ Comprehensive customer

+ Fixed system

To accomplish the above 3 issues, we must apply the Strategy Map to evaluate each stage in the enterprise's operations, and at the same time use Michael Porter's value chain to evaluate and analyze cost reduction and efficiency increase based on the causal relationship "optimal value leads to optimal profit".

RESEARCH METHODOLOGY

During the process of doing the course project, I used the following research methods:

1. OBSERVATION METHOD:

Observation of human behavior, involving systematic observation, recording, description, analysis and explanation. We can collect by observing the characters and the corresponding scenes to see how they evaluate the products and services of SeABank that have satisfied them, including: 20 deposit customers; 20 loan customers

Observe the working attitude and behavior of employees, especially customer relations staff, to see if they treat and communicate with customers well and make customers satisfied. This result is very valuable for suggesting improvements in Customer Marketing.

2. COMPARISON METHOD: Used to analyze competitors. Use Delta criteria to compare strategies up to 2015, from there evaluate the strategy and propose solutions for better strategy implementation.

3. INTERVIEW METHOD (must have accompanying questions):

Interview is a very important method to collect data on the requirements of the information system in the project. The subjects invited to interview for information collection include: SeABank leaders; State Bank leaders; Leaders of other banks such as

:Techcombank, Eximbank, Asia Commercial Bank, Vietcombank, Sacombank……

The interview method used in this project is structured interview (pre-prepared questions) with 2 basic interview types: Closed questions and open questions.

These are the data and information collected by SeABank itself, so this assessment is honest. On the other hand, we need to consider these documents as relative, cannot be applied in a stereotyped way but must know how to apply the increasingly changing Political - Economic - Social policies to suit the laws of Globalization.