CAPSTONE PROJECT REPORT FORMULATING BUSINESS STRATEGY FOR MARITIME BANK FROM 2010-2015 BÁO CÁO DỰ ÁN CAPSTONE XÂY DỰNG CHIẾN LƯỢC KINH DOANH CHO NGÂN HÀNG HÀNG HẢI GIAI ĐOẠN 2010-2015

CAPSTONE PROJECT REPORT FORMULATING BUSINESS STRATEGY FOR MARITIME BANK FROM 2010-2015 BÁO CÁO DỰ ÁN CAPSTONE XÂY DỰNG CHIẾN LƯỢC KINH DOANH CHO NGÂN HÀNG HÀNG HẢI GIAI ĐOẠN 2010-2015

c

PDF ompressor Hise CEST NIVERSITY

GLOBAL ADVANCED MASTER OF BUSINESS ADMINISTRATION PROGRAM

CAPSTONE PROJECT REPORT

FORMULATING BUSINESS STRATEGY FOR

MARITIME BANK FROM 2010-2015

Group No: I Students:

Class: GAMBAOI.NO02

HANOI, 2009

|

PDF Compressor F Is KB Versi

BLE OF CONTENTS

0U lai 00 1 .4 4 8u 1 5

3 KHE eniennidibioeiioiniibiEDOGL000680010001400080.00/0G 0081 65546/08140g880810019/0106063161885/0109G/3839/5205i0/8 7

4 Reưg0 0N DIEE HD hoa ưaaggdatioiGgssgtbsgšGGISGSRSGWGWQRRSiGCQY G0448 q0x0ga §

` GRRSIDDETTRgIRELNHTTRIINNEbazasaaaaeasgeentrnroorrrhrnnoiogrttorotrtroorrogtiotrnttiptrontieeeootiss §

6 EXIGGfGƠ Ó UIT Š codbcccobivogiiccccbi6605101104001428900636163130033300059050640/523 0034044 G0A030140/8C68 9

1 Structure of the capstone pFOJ€C - c1 ST TH ng 9 RCE Tổ dc vyxy tai 2i0400200G40001360160808000635900993386600/363s5906036)400900146101601600W64440000000060886006085g00988 10

TH ĐEN tua nnnaannoionngtdobidsuttioii90108006.0066316312485905ngg6000/8ud8u00802101000000.60E8040001612055266805633.0ua0:0400995/805908060.50608 10 1.1 Definitions related concepts and steps to build strategic managemen: 1]

1.1 Definitions and the processes of strategic managemen + «s5 +<<<x <<: II

1.1.2 External Environment AnaÏVSIS - c1 S111 St vn SH ng ng vn xe 13

1,15, [terial efiVifOfiiiieifiKLRHBWKÍS¡oeeeoeeniiainiiiitidigaantatddakš446xu 2018x508 cl380144434588816W8.-36:16680 19

1.1.5 — ©Øäi8HðnBI stfUEtiW€:aridiEÐĐHWỌÌS.seesoseooeudondiaodaiidodiasoavdisoroedsediikeesisei 26 l.2 — Methodology Q1 222121 1n TT ng xa 27 CHHỮ EEF TT bnuqg ga att G00490/0130000GlQGSR0GAGIASQUGQ0B0889830188SGGSSBNGGHUAIOSGRDHGNGSAEISIAIAGISSS 29 OVERVIEW OF MARITIME BANK AND THEORICAL BACK GROUND 29 sài: - CNWETVIVW Of BÍIBRIHUWNG NGi senseoseesentonthanhdtiioiiovotictditOGGRotiiG0EA0UT0/8004%9000000300058EĐ/32'0084 29

PDF Compressor Free Version PRINTS, DNC ER uaseesoirooaaootkorebatstboitugr4t0Y18)00010016140910010009/0040XA0063103E0000000001400014-079032.8805Ắ% 39

Ty MISION MISSION COPE Và oaooaduiltooiliottliiGiSy0A61440009449020640640120444214000s4 30

2.1.3 Products and Services of Maritime Bank 11v re 3]

2:44: CS tuaccccuiaaniiicaikc00cLã64114(01G100ã0013536240000080603011ả/Gã0v6u06g844 G1gG100iG8Gi40600445ã600405460688 3]

2.1.5 Human Resources .ccccccecccceeesecesssseeeeseeeeeteeeesesueeeessnececeeeeeeaseestaeeeneeseeeeeeeenereeeeaes 32

2.1.6 jWiiftiS 4€ NEVGỔ cuácceesetiabiiedicGaa8i584ã40600008:5048410005604601.0016g066.6163008306o6903600858ả-045.00u036 35

2.1.7 Committed action of Maritime Bank - G1132 113 xe nrưhg 35

2.1.8 | Development orientation of Maritime Bank from 2010 to 2015 « 36

2.2 Analyze the general environment in Vietnam ::::cceeeeeeeeeeeneeneeeeeeeeseeeeeeeeeeeeees 38

a a Demo prap hie environment sis ccciscscasssasccananacsmencounanaaniexsuentsrasssarmeonarnecacaunenemeensess 38

ca TL 0060101I06E0RYIOHHNTsdaosebteeoaviigmioissuiEeoluedldfSpllessbdosoiáedksiisonts 39 2u LEWRIĐOHIIGHIEHVNTEONHMETDĂEeseeanoasarabedoddroodithnoiientrittiigoraodiioivittavrtNfrelisiVeiSfeh 4I 3.4 S0610-cuHuFálenvifORHIEHLcossssaaooooioiddgddciilvddlikdkdoglikoddolobsasgisssia 43

Bn PER are rsarconoemencenenncenmcnrneeuee peter: 45 2:6 - 'GlbRleHiVHGHHiEN:acocueiiaciisgaoiioidiiiiiadeiiiisoiliiiitiaagilGkdidSáiotliGlásaidil660556806404 47 2.3 Analysis economic, financial, and banking environment in Vietnam - 48

2.4 _ Analysis of the internal environment of Maritime Bank ssààssccẶs<<<< <2 Só

2:5; The'present business strategy of Maritime Bank cisicsivisisssssssscsassacsvercansseecnevissisancaascs 67 l.iu(2đaiiiiiidaââaâầaẳâ 69 Formulating business strategy for Maritime Bank from 2010-2015 .« -«- 69 3.] _ Objective and development orientation of Maritime Bank from 2010-2015 78 3,2 Build the business strategv for Marittme Bank from 2010-20]§ ««- << 8]

a Personal CUSLOMET? .0.ccccccccecesseesseeeseeeeesueeeeaeeeesaeeceeaeeenaueeceaeeeteeectuaeeneteeeeeeseees 85

b SIM: EUSEGHTEEoesukibuioidoasibitoigtiitiki10SEHE.G0557/004803)33488554N/4G0M41802013885/01364610/240GGIEA 86

3.3 Recommendations to implementing action plans .ccceeeeceeeeeeeeeeeeeceeeeeaeneeeeeeeeaees 89

CUNG, 1.175 HT coicco15300062ASGSSSRGIGOQGEBGBIRSDASSTGGIGGĂAG08868Ax00X430 Romana Sasua 97

Consumer Behavior anda Insights Chief Executive Officer

Foreign Directed Investment Gross Domestic Products Human development index Hong Kong and Shanghai Bank Corporation Joint Stock Company

Key performance indicators Qualitative Comparative Analysis Return on Asset

State bank of Vietnam Small and medium sized enterprises customer World Trade Organization

Vietnam dong

Vietnam Posts & Telecommunications

PDF Compressor Free Version OF TABLE

[able I.1.S: Comparison between owners and manaØ€FS cv vn van 27 [able 2.4.1c: EEFEE matFrIN - c0 11111 TT TT net 56 [able 7.11Ỡ: _TFE HH wiiscsocce cera 60060200 GIGSOGI|GGGSQGSQGINGIUOGSOQRSQUIERSGEGESuiESS 62 Table 2.4.2a: operate criteria of Š commercial stock banks .-¿. -c<<<5<<- 65 ERHHØ.ä 1Z Mlaritte DariNšS GIIEEGHVWEN eaauseueeaiitidtiatiogsodidiissnliikekggiNtS6A4AIV0340Á430153600016805a5 79 [able 3.2.a: Service products offered to personal €uS†OI€FS - 55532 83 lable 3.2.b: Service products offered to economIc Organ1zatIOnS -c sec: 85

PDF Compressor Free Versiqno r; FIGURE

Figure 1.1.7: Siratesic ristissenienl sccm 13 Figure? 1.1.2.1 en vironittientatial st scsssscccwessssssccosmaacsmecrenmrenrwncnmmasimansnsaceamenmeanieas 15 El0ufe.2.3:ar: Trend OT DTDOLIÍNS caceeeeonendedokieiAELAABAGIAAEESESDDHSSETEESAISNGG0Đ350/0955600840/0/80026 ence Figure 2.3.b: Forecast of niarkel S€QMECHb co ccesnececmmonncenare neanenovennsnenentanceneneorennvancenneneseneee DE Figure 2.3.c Current satisfaction level across competitive dimenslons - 53 Figure 2.3.d Number of SME and Large corporate throughout Vietnam 55 Eipbfe 2.3:e TötA|.a4sset(S4 GETGD SBS issiiscccsscssssescassvsssusnccnssasesseunsnnconnvanscsanauanasenssasmevasvonsuves 57 EIER(Esâu 1: KHRNHE DMHANSOI WHHulCLExzessnnoasasdionisrsiebtioanAS00000A1909196501010X03006G-0%56160/460029980.04500000094 57 Figu:e 2.3.g Customer deposits of top JSBs Quy 58 ElsÙf£ 23:4, Current business THö d6 ago dqaGditG0161606126010610004AG63834808802186 59 FlØUe 3;4.2: Fo†ecøst Ìriererrieiiiii THOTEHSE ;socvecccoiiicitiiiiiobigiiA00â 36G Giâc 2â in ầsiê0êg4443448 636 63 Figure 2.4.1.5 Comparison in sale products scscccsesvevacrenessensrcerecannencrnaneanarservennvansnnsnanune 66 Figure 2.4.1.c Comparison in qualItV Of S€TVIC€S SH re 67

6

PDF Compressor Free Version

INTRODUCTION

1 Subject:

Formulating business strategy for Maritime Bank from 2010 — 2015

2 Company overview:

Vietnam Maritime commercial joint-stock Company

Head office: 521 — VIT tower — Ba Dinh district - Hanoi City

Main business sectors: Banking

The products are mainly distributed in all over country

of integration It shows that economic development orientation in general and banking system in particular are right and suitable with development rules of market economy Maritime Bank also follows this rule At the end of 2008, total asset scale increased 87%, market capital call increased 88%, credit investment increased 72%, bad debt reduced 0.5%, financial investment increased 96%, operation profit

increased OUP hese or ree Net SION eased 82% in comparison to the beginning of this year The number of branches increased from 16 (in 2005) up to 100 (in the middle of 2009) and is expected to reach number 130 at the end of this year (according to the annual report of Maritime Bank in 2008)

However, the rapid development also has the potential risks which need to be prevented by banking system Therefore, Maritime Bank needs to build a business strategy in 5 years, from 2010 to 2015 with the clear and detail orientation so that they can achieve the objective to become one of the 5 biggest banks in Vietnam Regarding this objective, the capstone project authors choose the topic

“Formulating the business strategy for Maritime Bank from 2010 to 2015”

4 Research Objectives

Find out a suitable business strategy for Maritime Bank in the next period

together with solutions for the feasible and efficient implementation of this business

strategy by follow activities:

- Applying the theories of business strategy analysis and its application, we will analyze environmental factors and their effect on the business of Maritime Bank in order to know the business opportunities and threat analysis

weaknesses, mission, vision, objectives to find out and suggest a business strategy for Maritime Bank in the next period together with solutions for the feasible and efficient implementation of this business

Strategy

5 Capstone project limitations

We have only some weeks to finish this capstone project, it means that we have all this time to analyze 5 years before and the forecast of next 5 years so it is

absdlutely Mat Seon Ace tên hức or not the detailed yearly action plans of the company

The contents divided into three main parts as followings:

Chapter 1: Theory

Chapter 2: Maritime Bank’s strategy over the last 18 years

Chapter 3: Formulating the business strategy for Maritime Bank from 2010

to 2015

PDF Compressor Free Version

Chapter I:

THEORY

Vietnamese banks have the rapid development speed and is often swept to the circle of daily raising works - works related to customers seeking, credit debt balance growth, capital call risk management and so on Most of these works are dealt according to the raising requirement; it means that whenever having problems rising, they are dealt with immediately without planning methodically, managing systematically or evaluating scientifically Management the daily matters takes all times of managers at all level but they are still in messy and passive situation Chief Executive Officer (CEO, especially the management director, is leaded by the daily matters so much that he may lose his way at any time His situation is just like a man in a thick forest without any clear direction and he goes in any ways he can

find, therefore the more he goes, the more he loses

Understanding deeply this theory, banks have been building the strategy for their own and they understand that organizing the strategic management will help organizations in general and banks in particular indentify objectives, orientations clearly and pave the appropriate ways and allocate resources effectively to ensure the achievement of established targets in the reasonable time

However, organization’s objectives must be identified base on the scientifically and careful analysis about market situation, customers, consumption trend, competitors, technology change, legal environment, eco-social situation, SWOT and so on As the results, the objectives will be the challenging but practical targets and meet the expectation of stockholders, managers at all level and employees Organization’s goals are also rooted from their missions, visions, ambitions and core values The match between “desirable” and “practical” things through scientific analysis will help organization give up their illusions or prevent

PDF Compressor Free Version ;

them from miSsing development opportunity caused by setting up low target of growth from the beginning

As the result strategic building and management play an important role in sustainable development but we must base on the theories and the detail and particular methods to practice it From this foundation, all theories in this chapter are divided into two main parts:

- Part 1: Definitions, related concepts and steps to build strategic

management:

+ Definition of strategy and strategic management

+ Some factors need to be noticed when analyzing external environment: general environment, industrial environment, competitive environment

+ Some factors need to be noticed when analyzing internal environment: resource, competence, core competence, etc, chain value analysis, SWOT analysis

+ Corporate level strategy: definition, price strategy, differentiation strategy, focus strategy, combination between price strategy and differentiation strategy, merges and_ restructuring _ strategy, international strategy

DF Co essor Free Versio :

long" térm and short-term plans based on its available resources that will enable an organization to achieve its long-term objectives

Therefore firstly we must identify the definition of strategy in order to define strategic management In reality there are many different definitions of strategy, for example:

a Strategy is the process of identifying corporation’s main long-term objectives, choosing methods or action orientations and allocating essential resources to pursuit these objectives (Alfred Charder)

b Strategy is a form or a plan combined with the main goals, policies, and

action schedules to become the consistent block (James B Quinn)

c Strategy is a consistent comprehensive and coordinating plan which is designed to ensure that organization’s basic goals will be done (William J Glueck)

There are so many different definitions, but in general strategy is the organization’s orientation and action scale in long term to get economic advantages through indentifying the available resources which can be used in

a particular business environment to satisfy market demand and to ensure benefits for all stakeholders In particular, strategy is to:

a To get corporation’s long-term objectives (business and social responsibility)

PDHComnressor Free Versio i a §

e Tre external potential “risks affecting to strategic implementation:

environment, competition politics natural resource, and risk preventing plan

Strategic management process

In term of process, strategic management is seen as management process of establishing strategic view, specifying the organization's objectives, drafting a strategy and implementing this strategy, and adjusting it to suit with each particular circumstance and time It can be generalized as followings:

Vision an Strategic | Level Budget 7| andrevision

f target Strategy (if it is

orcast Supports systems neccessary)

to strategy

1.1.2 External Environment Analysis

PDE Com ressor Free Version : : `

xternat vironment analysis is an argumentative issue in specifying corporation's future and indentifying which is the best strategic orientation to apply

In order to practice banks as well as other corporations need to analyze according

to the following techniques:

Step 2: Follow

e Realize important trends arising form the signals from checking environment

e Need to realize the meaning of the events as well as the different changing trends

e In order to follow effectively, banks must recognize which is the most important concerned party Especially in banking industry where some factors such as technology, product, resource, etc are always changed so quickly

In fact that checking and following well will be the effective tools helping Maritime Bank recognize new important things which are happening in the market and methods to commercialize technology developed by company

Step 3: Predict

e Predict the potential events, way and speed of their appearance such as the logical results of changes and trends which are discovered by checking and following

Step 4: Evaluate

PDF Ca essor Free Version —

ˆ pecily deadline and importance of effect which environmental trend change may affect to Maritime Bank’s strategic management

e Evaluate implications from corporation’s point of view

If there is not any evaluation corporations may have many useful data but they

do not understand any things related to competition Therefore, it is necessary to evaluate the following factors respectively:

e Economic growth rate

e Present basic interests rate regulated by the State Bank and expectation in the future

e Foreign exchange rate

e Inflation rate

KC ressor Free Version

+ Buy from external

+ Create new technology by themselves

In banking-finance environment, technology plays an important role in risk

management, economical efficiency, and convenient values for employees as well Consequently, one of the most popular trends in Vietnam is domestic banks

often seek a strategic partner who is an advanced foreign bank to take a short-cut by

receiving high technological guide or transfer from the strategic partner

Socio-culture environment

Related to social attitudes and cultural values:

+ Social attitudes and cultural values which create the foundation for

PDE Com res or Free Version

New policies related to state management

Anti-monopoly law and tax law

Policies to domestic and foreign credit organizations

Selective industries to be adjusted or place the top priority

Related global markets

Changing global markets

Important international political events

PDE C ressor Free Versi eden, §

+ Main institutional and cultural characteristics in global markets

Corporations must be aware of the different social cultural and institutional

characteristics of global market

1.1.3.2 Analyses industry’s real situation

Industrial analysis is a summary of all notions and technology to make clear the key issues about:

e Suppliers

e Human and material resource

e Growth scale and speed

e Industrial structure

e Distribution channel

e Cost

e Trend

e Main factors to succeed

After making clear all factors mentioned above, corporations will have a comprehensive outlook about industry’s real situation to evaluate potential and main factors to succeed Then corporations need to continue indentifying and understanding their competitors

1.1.3.3 Competitors

Through understanding their competitors, corporations will understand their strengths, weaknesses and strategies in order to build the most suitable strategy for their own and market

Understanding competitors is not only collecting financial information about other companies in industry but also introducing methods and specific steps as follows:

e Identify competitor

PDE Com ressor Free Version

e Scale, growth speed profit

e Objective and ownership ratio

Culture

Cost and income structure

Barriers when moving from industry (transfer)

To complete understanding about macroeconomics and industry's real situation, identify and understand competitors as wel! help corporations generalize their opportunities, threats at the present and coming stage Base on it, corporation can introduce the draft orientation for their strategies which match to their internal values Thus, internal environment analysis is also very important to guarantee

strategy’s success or failure

1.1.3 Internal environment analysis

Internal environment analysis is corporation’s resources, skill analysis Corporation’s resources include main factors as followings:

1.1.3.1 Resource, competence, core competence

a Marketing

e Products/ Services; product quantity

e Focus level of selling some product ranges or to target customer groups

e Market share or market segment

e Products/services need to be repaired or have a chance to widen

e Selling model's efficiency, target customer's level

e Creativeness and efficiency of advertisement and promotion

e After sale service

e Customer’s truth and confidence

b Accounting finance

VD son dail bite

Long-term capital call ability

Ability to develop different kinds of business

Corporation's capital cost in comparison to their competitors Relationship with owners and investors

Efficiency of financial lever

Product/ Operation/ Technology

Input cost, relationship between units and related units

Management system of product’s efficiency

Scale of field of business

Technology’s effect in using and maximizing resources Exploitation level and effectiveness of secure contracts Research and development, technology, renovation

Human resources

Management skills

Employees’ skills and their moral

Labor relationship in comparison to industry and competitors Effectiveness of motivation

Ratio of quitting job and being absent without any reasons

PDS ompre sor Eree Version

Making pian and controlling plan ability

1.1.3.2 Value chain analysis

Value chain or value chain analysis is a business administration concept which was first mentioned in 1985 by Michael Porter

Michael Porter said that value chain is a chain of activities Product passed all activities and chain in order and gets some values at each activity Chain of activities provides product for more value than total added values provided by other

activities The most important thing is that the concepts of value chain cannot be

mixed with cost for all activities

There are many different way of value chain analysis, however, in general, this activity need to measure and evaluate some following features:

Research and development

Design of products, services, processes or

1.1.4 Corporate level strategy

1.1.4.1 Definition

Corporate level strategy is the strategy divided into many particular levels, in other words, it is divided to apply for each vertical industry, each department of corporation depending on the real situation of each corporation

To clarify strengths/weaknesses and get enough information of company before making decision, we need to analyze company capital by SWOT tool

PDF Compr r Fr rsion ‘ ; :

COUHF°Hdde CN EESION og are often established in comparison to competitors

e Weaknesses: What things should be improved? Which is the worst work

of corporation? What should be avoided? External people can see the weaknesses which corporation does not see by itself Why do competitors can do better than corporation? It is necessary to judge practical!y and face with the truth

e Opportunities: Where are opportunities? Which is the considerable trend which corporation needs to know? Opportunities may be rooted from technological change, markets (both international market and small scale market), government’s policies’ change related to industry in which cooperate operate, social structural change, demographic structure, or fashion structure, etc happening in area The most effective seeking method is checking corporation’s advantage and address question whether these advantages can open up any opportunity In contrast, corporation can check their own weaknesses and address question whether any opportunity might appear if they can get rid of these weaknesses

e Threats: What are obstacles which firm is facing with? What are competitors doing? Whether the typical requirements of works, products, services have any change or not? Whether technological change may cause any potential risk to company or not? Are there any problems with bad debt

or cash flow? Are there any weaknesses threatening company? This analysis often helps corporation find the necessary things need to be done and transfer weaknesses to become potential

After got all information by SWOT analysis, according to Porter, it can be divided into some main strategy group and the contents of each group are as followings:

1.1.4.3 Low cost strategy

rsi Reda ucI trọnpEf9ser FREES sion of the most important solutions which all

~~

corporations ant to do, followings are some solutions to perform this strategy:

e Study: including labor effectiveness and specialization

e Improve technology in business

e Re-design product

e Seek supply with low price or substitute materials with cheap price

e Seek the support from related units

e Scale and effectiveness of corporation’s scale: Analyze, re-evaluate effectiveness of present model, consider of re-organize (if necessary)

1.1.4.4 Differentiation strategy

Another way to compete in markets is differentiation strategy in comparison

to competitors This strategy is often embodied in 3 main goal groups:

e Create added values for customers:

+ Study new ideas to provide new values which customer realize or

observe easily

+ Service quality

e Make different in price

e Make different in product: hard to copy, pioneer, product’s quality and so on 1.1.4.5 Focus strategy

With this strategy, corporation will focus on some particular customer groups (biase on corporation’s objectives) such as:

Conssqagnthy TT tt NI or services, even business operation models

of corporation are designed to bring the highest convenience and competition for

these customer groups

1.1.4.6.The combination between low cost strategy and differentiation strategy

In fact, there are few corporations applying only one strategy, there are always

the cross and combination between different levels to get corporation’s

development objectives

The nature of this strategy is summery of low cost strategy and differentiation

Strategy

1.1.4.7 Merge and restructuring strategy

Merge and restructuring strategy is often used as an effective tools to buy other companies, restructure the organization to develop corporation to become the strong potential company in finance and market share

a Merge: Followings are some effective merge strategies:

e Supplement asset/ resource: Buy other companies with assets meet corporation’s present demand to build competitiveness

e Friendly merge: Friendly agreements will make it easy for merge

e Carefully choosing process: Being careful in negotiation and evaluating all possibilities will make resonant building unity easy

e Maintain financial inertia: Provide enough supplemental finance so that profitable project will not be missed

b Restructuring: restructuring is strategy through which corporations change unit groups or their financial structure, there are some kinds of restructuring Strategy as followings:

e Downsize the personnel

e Narrow scale

e Sell business units

1 OM Litera ationalization Strategy

Internationalization strategy is the strategy which focuses on developing foreign markets (open representative office buy capital, contribute money with foreign companies) to advertise corporation’s brand name, and seek new market Followings are some reasons for this strategy:

® International market brings new opportunities

e Broadening new market helps to lengthen product's life circle

e Necessary resources may be guaranteed

e Potential product demand is bigger

e Use comparative advantage effectively

1.1.5 Organizational structure and controls

Organizational structure and controls is:

e Relationship between concerned parties that are used to identify and control strategic orientation and operation results of corporation

e Related to identify guarantee methods of strategic decisions which are made effectively

e Used in companies to establish rules between owners and senior managers whose interests may be conflicted

In fact that owners and managers in most corporations are separated each other, while both of them have the different objectives and considerations

Difficult to control the huge corporations | Make decisions leading to pursuit

objectives which are conflict with

Cannot predict who are the managers | Managers’ opportunities

Table 1.1.5: Comparison between owners and managers Thus, it is necessary to establish manage and control mechanism to avoid opportunity phenomenon of managers

1.2 Methodology

Base on the theories mentioned above, Maritime Bank has applied each step

which was mentioned in Part 1 of this Chapter to build strategy for stage from 2010-

2010 as follow:

» Analyze external Environment: Analysis economic, financial, and banking environment in Vietnam

>» Analyze internal Environment: Maritime Bank SWOT analysis and some

information related to competitors

>» Corporate level strategy: Base on the results of the analysis of two above steps, we chose hereafter strategies

e Differentiation: Create different products, services and added values for

target customers

e Focus: We divided products and services into two groups then in each of them, we focus on some particular customers:

o Retail banking: attach special to mass affluent customer

© Corporate banking: attach special to some kind of customers which are manufacturers, trading manufacturers, _ retail manufacturers

At tie same time Bank uses methodology of collecting, analyzing and processing data as followings:

Collecting secondary data is one of the most important things in studying to

build stritegy The main purpose of collecting data (from the previous scientific

stu VINE tr SAS aa on and carrying out experiment) is to build the scientific theoretic foundation’ basic to prove assumptions or find the studying issues There are 3 main methods of collecting data: a) Collect data from reference materials b) Collect data by experimental ways (carry out experiments) c) Collect data by field trip (questionnaires — in appendix 4)

To ensure suitability and correctness with the real situation of industry, Maritime Bank has used 2 out of 3 mentioned methods at the same time

a Collecting data from reference materials:

e Statistics, evaluation and prediction about Vietnam economy

e Domestic and foreign statistics and evaluation data about Vietnam banking finance market

e Statistics data of the State Bank of Vietnam

e Banks’ annual reports

e Maritime Bank’s data

b Collecting data by field trip

Maritime Bank has applied:

e Interview: individuals, groups, focus

e Questionnaires — written answers

The collected data will be screened to ensure that the right groups which need to

be analysis are focused and correct data are collected Then, the data will be analysis to build strategy

Carrying out this method is the most effective solution at present to have a general outlook about economy, industrial market, competitors, customers and Maritime Bank’s values as well This is proved by the contents of Chapter II and

Chapter III

PDF Compressor Free Version

stock bank was still had not been settled and Maritime Bank was one of the first

Commercial Join Stock bank established in Vietnam It was the result of collaboration strength and innovative thinking of founding shareholders: Vietnam Maritime Administration (Vinalines), Vietnam Post and Communication Group (VNPT), The Civil Aviation Administration of Vietnam With the experience of

18 years operating in banking and finance field, and with the support from strategic shareholders mentioned above, Maritime Bank has the considerable potential to

develop in the integration era

Maritime Bank is chosen as one of six Vietnam commercial banks to take part in project of modernization banks and payment system at the first stage Recently, Maritime Bank has passed other competitors to become the only one Vietnam commercial bank sponsored by World Bank for the second step of this project At the end of this stage, Maritime Bank will build completely electronic bank system (e-bank) up to the international standard to diversify and increase service quality, meeting maximum demand of all customers

PDK (r8g|P SSO TE Bane BM had 24 shareholders, registered capital of 40 billion VND and several branches in big cities such as Haiphong, Hanoi, Quang Ninh, and Ho Chi Minh City Until now, Maritime Bank has grown strongly, sustainably and created customer's faith The current registered capital (October 2009) is 2.240 billion VND (according to the business operation report on Oct 31°, 2009) Since Dec 31“, 2008 Maritime Bank ranked at the 9" in term of total assets

the 10" in term of gross loan volume the 10" in term of customer deposits of corporation and individual customers in commercial stock bank (follows some big

banks such as Asia Commercial Bank (ACB)) (compare data of banks based on auditing results in 2008) Follow the development route, the registered capital will increase to 3.000 billion VND and total asset will reach 60.000 billion VND in

2009 Human resources increase annually from 30% to 60%, from 483 staffs in

2005 to 2.000 staffs in 2009 Number of branches increase rapidly from 16 branches

in 2005 to 100 branches in mid of 2009 and is scheduled to reach 130 branches at the end of 2009 It is expected that Maritime Bank’s branches network will reach

432 business units in 2025 (interview Mr Nguyen Duc Thuan, Financial Director)

2n siêo Vision, mission, core value (according to http://www.msb.com.vn/a- gioi-thieu/bsu-menh-tam-nhin-gia-tri-cot-loi )

VISION:

Maritime Bank strives to be the leading commercial stock bank in providing

professional multi - financial services that meet the international standards With the

commitment for sustainable development, Maritime Bank strives to become the leading national commercial stock bank in modernizing, creation and faithfulness in every business operations

MISSION:

* Create effective relationship with financial group in main industries such as

maritime telecommunication aviation, investment, insurance

* Sustainable development, trustworthy for small and medium business customers

30

PDE Compressor Free Version

: PribHde ni ualily banking services for all customers

* Build effective partnership with international and domestic financial institutions

CORE VALUE:

* Focus on satisfying customer by quality service

* All business operations have effective result

* | earning and creating to reach perfectness

* Cooperation and truth is the motivation to succeed

2.1.3 Products and Services of Maritime Bank

Maritime Bank provides diversified products for all customers Maritime Bank provides saving deposit, lending product, package payment deposit, international

payment, banking guarantee, domestic letter of credit, using cash authority, salary payment, collecting cash authority, etc for corporate customers Maritime Bank provides other products for personal customers such as payment deposit, saving deposit, card products, foreign and domestic remittance service, express money transfer service (Money Gram), foreign exchange service, traveler’s cheque service Added to the list, Maritime Bank also provide electronic banking service named Mobile Banking and Internet Banking to serve all customer groups

2.1.4 Customers

To corporate customers: The traditional customers of Maritime Bank are mainly

in maritime industry and telecommunication of its strategic partner Up to now, Maritime Bank has widened its customers including customer in many fields such

as service, trade, production, real estate, construction, aquatic, economic

corporation, state-owned corporations and their branches Maritime Bank’s customer database show that Maritime Bank has more than 10.000 corporate customers which are small and medium sized enterprises (with the total capital is approximately 10 trillion VND, and average growth rate is 21% from 2000 to 2008) and 5.000 corporate customers who are huge and medium sized enterprises (with

the {oR GeHaPre sor Hires YOu VND and average growth rate is 19% from

2000 to 2008) Customers are often from Hanoi and Ho Chi Minh City in which there are many companies and industrial parks In general, Maritime Bank has taken advantage of strategic shareholders to develop number of corporate customers

To personal customer: Long time ago, personal customer development in term of capital cal) and personal credit of Maritime Bank was passive, spontaneous, unmanageable, and did not control its customers Customer care only focuses on corporate customer not personal customer Until Oct 2007, Maritime Bank performed vertical organization structure model and establish Personal Customer

Department and Corporate Customer Department (Decision on establishment of

Personal Customer Department at Headquarter Maritime Bank has _ been establishing Personal Customer Department and Corporate Customer Department at its branches of system (see Organization Structure) Since Oct 2007, Maritime Bank has focused on personal customer and reached the number 198,000 personal customer (included customer having current account and saving account) (customer

data until Oct 15", 2009) and credit loan surplus reached 2,400 trillion VND

(processed data) in which bad debt accounts for 2% and total capital reached 32,853 thousand trillion VND (processed date until Oct 31°, 2009) This number is increasing in comparison to the same time in 2008, according to Personal customer

data until Dec 31°, 2008)

215; Human Resources

Human recourses have an upward trend in recent years, from 483 employees

in 2005 to 2,000 employees in 2009 There are more female than male, particularly, female employees increased 100% from 2005 to 2007 but male employees only increased 51% (according to employee data of Maritime Bank in 2005, 2006 and 2007) It is a typical characteristic of banking industry Employees who have bachelor degree account for a lion share of the total and increased 90% from 2005

to 2007 Maritime Bank continued to recruit in 2008 and 2009 Maritime Bank’s

PDF Com ressor Free Version ¬ : ae

maragers are people who have high professional level experience of working for foreign banks such as HSBC, ANZ and bib non state-owned banks such as VCB, BIDV or get master degree from a foreign university It also contributes to

strengthen the vertical organization structure model and contributes considerably in

Maritime Bank's operation effectiveness It is expected that total employee number will reach 4,980 people (Interview Mr Nguyen Duc Thuan, Director of Financial and Planning Department)

Organizational — structure of Maritime Bank (according to

http://www.msb.com.vn/a-gioi-thieu/dso-1]110-to-chuc )

PDF Compressor Free Version

2 s 5 daeq Bulxuog eIoIodo2j

PPE Compress r Epes Version

wards achieve

(According to http://www.msb.com.vn/a-gioi-thiew/ithanh-tich-va- su-cong-nhan-cua-xa-hoi )

Some typical awards which Maritime Bank has achieved in recent years

Golden Global Award in 2007

The most Satisfied Corporation Award in 2008

Top Trade Service 2007 awarded by Ministry of Industry and Trade

International Payment awarded by representative of Hongkong and

Shanghai Bank Corporation (HSBC)

Certificate for “high performance in implementing solutions to prevent

inflation and meet the demand capital for business development” awarded

by the State Bank of Vietnam

Vietnam Brand names 2007, 2008 awarded by Vietnam Economics Times and Department of Promotion — Ministry of Trade

Competitive Flag awarded by the State Bank of Vietnam because of “having high performance in pioneer of competition trend of banking industry in

2008)

“Bank performs well international payment” title awarded by CitiBank

“Bank reaches standard payment telegraph in international payment”

awarded by Wachovina

The certificate awarded by Prime Minister for high performance from 2006

to 2008 and contribution in building socialism and national defense

Vietnam Golden Star in 2009 and TOP200 typical brand names of Vietnam

bói, Committed action of Maritime Bank

(According to lHID:/4www.11sÐ.com.vH/a-gioi-thie/cam-ket-thuong-

hieu )

35

PDF,Compressor.Kree Version pe T

Aims to become one of the fargest joint-stock banks in Vietnam, Maritime Bank

always follow the principles that the Bank has committed

To customers:

- Provide high quality service, flexible and fast

- Do not stop to diversify to make the best products for customers

- Ensuring absolute safety and security

To staff:

- Set up working environment based on trust and mutual respect

- Developing cultural performance with adequate benefits

- Create opportunities for the development of all members of Maritime Bank

To shareholders:

- Value of investment growth rapidly for shareholders

- Ensure the sustainable growth of the bank

To the entire society:

Maritime Bank is committed to contributing valuable cultural and economic for the communities and the development of whole society

2.1.8 Development orientation of Maritime Bank from 2010 to 2015 Maritime Bank sets up the objective to get TOPS leading banks in Vietnam in the next 5 years, particular goals are as follows:

To the development orientation, Board of Directors meeting’s report shows the consistent ideas among members; details are as (Annex 1)

s* More than 60% agrees that the main objective of Maritime bank is both growth and profit, however, it will focus more on growth

s* Four managers (account for 36% of total capital) agree that Maritime Bank should account for 3% market share in the next 5 years

s* 90% of managers agree that ROA’s goal will be from 2% to 2.5%

36

is the segment of small and medium sized enterprises, in addition another 33% still wants to focus on the segment of huge corporation

45% of managers think that capital call is the biggest opportunity in Vietnam market while 42% worry about the shortage of talent people wil! become the biggest challenge to Maritime Bank in the next 5 years

All ideas are suitable with the study of the author group of this capstone project base on the analysis the operation results of Maritime bank and the trends in some

countries in the world as well

To personal customer: Maritime Bank has the big steps in mobilizing capital from individuals However, the cross selling product as well as choosing many products at the same time are still limited There is a reduction of bad debt toward lending products of personal customer

To interbank transaction: It is the market segment which brings the strong growth for Maritime Bank in the last few years However, the experience from big finance markets such as the U.S, the UK, German, emerging economies, some countries having similar economics characteristics to Vietnam, and Maritime Bank’s analysis/study as well show that interbank market always has the high potential risk which can affect to Maritime Bank’s strategy

With the aim to become one of 5 leading banks in Vietnam and the agreement in identifying target customer, the chosen development orientation of Maritime Bank has some main points as follows:

PDE Goa SSS ChAT ES, VeRO enough credit mobilizing capital products,

fee collecting products and so on

* Focus on LC by providing factoring products and credit products

To personal customer:

# Focus on high income customers with capital mobilizing capital product and remittance product, appeal gradualiy this customer group to other products related to asset and investment

* Focus on middle income customers with capital mobilizing capital product an remittance product, but Maritime Bank will widen its branches through VNPT

2.2 Analyze the general environment in Vietnam

2.2.1 Demographic environment

The great population and housing census’s result in 2009 (until Oh Apr 1°, 2009), Vietnam population is approximately 86.2 million people, ranks the 12" in the world Average age is 72 years old (male is 70 years old and female is 73 years old), ranks the 4" in the South East Asia, the 20" in Asia and the 83" in the world Vietnam population is not distributed equally and there is difference in areas Red River`s Delta and Mekong Delta account for 43 % of population The northern midland and mountain provinces and Central Highland only account for 19% of population The most crowded area is Ho Chi Minh city with 7.12 million people,

followed by Hanoi with 6.44 million people, and Thanh Hoa ranks the third with

3.4 million people, and Nghe An ranks the 4" with 2.9 million people ( according to http://www.sggp.org.vn/xahoi/2009/8/199741/) The urban population § only accounts for 27.9% lower than the proportion 39% of South East Asia and ranks the 8"" in the area, lower than proportion 41% of Asia and ranks the 41“, lower than proportion 49% of the word and ranks the 177" in the world The proportion of

fermbtl? Hs SRIPRAESS Wah6619 4N PRches 49.1% (2008), and mainly at the old age but at the young age female proportion is much lower than male

GDP/capita in USD calculated by foreign exchange rate increases sharply (from 289 USD in 1995 to 402USD in 2000, 639 USD in 2005 and reached to 1.024 USD in 2008), however it is still low in comparison to the average of the world (about 7.500USD), the Asia (about 3,000USD), and South East Asia (approximately 2,000USD) Vietnam ranks the 7/11 Asian countries, the 39/48 Asia countries and territories, the 146/185 countries and territories in the world GDP/head — calculated

by equivalent purchasing power — is the lowest in 3 human development index (HDI) and it also lower than age, knowledge index (according to http://www.vneconomy.vn/20090402 10345706P5C1 1/dan-so-viet-nam-qua-cac-

thoi-ky.htm, updated at 10h20° on Dec 11", 2009)

It is expected that Vietnam population will reach 100 million people in 2024, old people will account for 13% of population if Vietnam keeps the present

population growth rate and the stable factors of economics and politics (According

to http://viet.vietnamembassy.us/tintuc/story.php?d=20010202121501)

22.2 Economics Environment

Vietnam economy faces with many difficulties in 2009 because of being suffered from the terrible depression of global economy Manufacture, export, foreign direct investment (FDI) and construction reduce sharply While stock market went down, real estate market was frozen, dropped the price, and was in passive and inertia situation As many trends in the world, Vietnamese government has been performing the serious controlling method to prevent from economics depression, stabilize macroeconomics, orient the sustainable development Two main solutions are: opening fiscal and monetary policies

+ Vietnamese government gives the packages to boost demand to prevent depression, the first package which has been performed to support for the interest is

abolt 17,06010NRšï? HET ee LEH OM age is to support the long and middle term interest and to boost investment with the total capital about 8 trillion USD

+ Government also implements a number of solutions which have never been appeared in recent years to loosen the monetary policy such as low interest, basis interest is 7%, reduce the legal reservation rate from to 10% to 5%, increase money

http://www.saga.vn/view.aspx?id= 16084)

In 2009, financial system has been stabilized because banking system is not suffered from global financial crisis Working capital of banks is abundant, credit activity happens as usual and has an upward trend at the end of the year after being quite tranquil at the beginning of the year All banks have reached the high objectives of increasing credit in 2009 and got high profit in the first 7 months (Until July 7", 2009, ACB’s profit was 1,200 trillion VND, Techcombank’s profit was 1,031 trillion WND, 9000 trillion VND for Sacombank and Eximbank is 813 trillion VND)

(According to http://dantri.com.vn/c76/s76-335795/giai-ma-loi-nhuan-cua-cac- ngan-hang.htm)

Stock market has the high growth rate (about 60% in comparison to 235 of the floor level) High liquidity creates capital liquidity, appeals foreign capital and

a part of investment capital from saving as well, recovers capital mobilizing capital activities gradually High gold price creates liquidity in gold market and the potential capital

e Real estate market: Real estate market is gradually stabilized after depression and freezing time

+ By far the most sparkling point in real estate market is construction activity and project performance After being frozen for a year because of increasing building material high cost of lending capital, frozen real estate, construction activities are boosted in both areas: big project and household construction Many

40