G1 00122 BUILDING THE BUSINESS DEVELOPMENT STRATEGY OF PETROLIMEX JOINT STOCK INSURANCE COMPANY (PJICO) FROM 2010 ΤΟ 2015 XÂY DỰNG CHIẾN LƯỢC PHÁT TRIỂN KINH DOANH CỦA CÔNG TY CỔ PHẦN BẢO HIỂM PETROLIMEX (PJICO) TỪ NĂM 2010 ĐẾN NĂM 2015

G1 00122 BUILDING THE BUSINESS DEVELOPMENT STRATEGY OF PETROLIMEX JOINT STOCK INSURANCE COMPANY (PJICO) FROM 2010 ΤΟ 2015 XÂY DỰNG CHIẾN LƯỢC PHÁT TRIỂN KINH DOANH CỦA CÔNG TY CỔ PHẦN BẢO HIỂM PETROLIMEX (PJICO) TỪ NĂM 2010 ĐẾN NĂM 2015

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CAPSTONE PROJECT REPORT

STRATEGY OF PETROLIMEX JOINT STOCK |

Tran Hong Thai Nguyen Thanh Binh

PETROLIMEX JOINT STOCK SOCIALIST REPUBLIC OF VIETNAM

Hanoi , date of birth an" January, 2010

To: GRIGGS UNIVERSITY,

GLOBAL ADVANCED MASTER OF BUSINESS ADMINISTRATION PROGRAM

Petrolimex Joint Stock Insurance Company (PJICO) would like to send

to Griggs University, The International Master of Business Administration

Training Program, our comment about the theme “Building the business development strategy of Petrolimex joint stock insurance company (PJICO)

from 2010-2015” implemented by the group of authors as follows:

The theme has worked out a general picture about the development strategy of the unit during the period of transition, competition and development

in order to meet the training demand of our company in particular and of the

society in general

The theme is highly practical which is applicable to the reality of the company during the competition and development period of the unit We would like to thank the group of author during the implementation period of the theme; they have had very useful exchange of ideas for the operations of the unit

We highly appreciate the training quality of GRIGGS UNIVERSITY, GLOBAL

ADVANCED MASTER OF BUSINESS ADMINISTRATION PROGRAM, which have been

under deployment in Vietnam

Yours faithfully,

- Archive in clerical fi Ặ Xà ` d3 4 ( 2

TONG GIAM DOC

Table 10: Original insurance revenue in 2008

Table 11: Original insurance revenue in the first 6 months of 2009

Table 12: SWOT matrix

Figure |

LIST OF FIGURES, GRAPHS

: Process of making strategy Figure 2: Business operation result of the company (2007 — 2009)

Figure 3: Market share in 2007

Figure 4: Market share in 2008

Figure 5: Market share of 6 months in 2009

Figure 6: Current organizational outline of the company

Figure 7: Operation market of service marketing

Figure 8: Current organizational outline of the company

Figure 9: Organizational model outline according to development strategy

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INTRODUCTION

1 The urgency of the theme

In the market economy towards integration, business production of product, service is not completely decided by the company but the market In which international market, regional market controls local market which has to rely on the international market — That is the world market unifies but it often changes due to changes of factor groups

environment

For that reason, if the company does not accurately forecast changes of factors in regional, international environment affecting market scale, it will meet risk in business production, as goods production is not conformable to market demands in terms of quality, appearance, price, taste, etc, thus, it cannot compete in the market

To avoid risk in business production, the Company is compulsory to build strategy Only with strategy, it can avoid risk in business in an integrated world In a world with global economy, competition is becoming more and more severe, thus, strategy becomes more valuable to the company

Insurance is a very important field to nations in general including Vietnam Insurance is not only a risk removing method but also an effective capital-mobilizing channel for the economy Practical insurance business activity in the last time shows continual

growth of insurance sector

Insurance market in Vietnam in recent time is very active, various and is becoming more and more professional Number of insurance dealing companies becomes

increasing Diversified possession forms in both life and non-life insurance and three fields of human, asset and civil responsibility insurance Companies operating in

insurance sector have gradually satisfied demands of customers

Of all many insurance companies, PJICO is evaluated as one of the companies with fastest development speed in the market and at present PJICO is one of the four

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environment for staff to uphold their competence and creativity; effectively

cooperating with partners to contribute and develop the community; Sustainably developing to increase value for shareholders through diversification of insurance activity and financial investment

Upcoming time is seen as the difficult period of the economy In the insurance market, there appears more competition from newly established insurance companies as well as market newly joining foreign ones Thus, to promote the leading position in Vietnam’s electric cable market as well as ensure sustainable development in next time, the Company needs to build competition strategy in current environment as well as development orientation in upcoming time

2 Research aims

Based on researching general reasoning on business strategy and overview of the insurance market in Vietnam; The theme goes deeply to analyze the business environment, real state of insurance business operation and development tendency

of this market, from that to build a sustainable development strategy at Petrolimex Insurance Joint Stock Company

3 Research object and scale

The object is Petrolimex Joint Stock Insurance Company, hereinafter called PJICO

COMPANY

Research scale: The theme focuses on studying, analyzing the real state of the company, competitive factors inside the company Analyzing the state of competition environment to the development of the market, domestic and foreign insurance businesspersons (competitors) hereinafter called COMPETITORS From that propose investment strategy to develop the company and competition strategies

to ensure sustainable development of the company

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Systematize reasoning on building business strategy of a medium and small enterprise A common form of enterprise of Vietnamese economy, especially joint stock company — a form showing important role in the integration process of the country to the world and region economy Analyzing business environment in

insurance sector, risking business sector, sharing loss with customers, insurance

products are services with unique, abstract but more extremely specific, practical features than all other products in the market once provisions in the insurance contract are implemented timely, effectively

From that draw strong and weak points of the Company in this sector to build competition strategy in the increasingly severe competition environment That is likely to a model for medium and small companies in different sectors of the economy which are based on medium and small enterprises of the country

5 Research methods

Main research methods used in the process of making this dissertation are analysis, reasoning, comparison, generalization, forecast, etc based on practical data, situation of the Company and market investigative documents of prestigious competence evaluating organizations to find out specific solutions for the company

- Part III: Choosing and organizing the implementation of development strategy

of Petrolimex Joint Stock Insurance Company

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OAR PE THEORY BASIS OF STRATEGIC

CONSTRUCTION FOR ENTERPRISE

I./ STRATEGIC ADMINISTRATION

1 Definition on strategic administration

Strategic administration is an issue paid attention to by many economists as well as administrators Because the content of strategic administration is very wide on research range and rich in actual application; at each sight angle, people present different point of view and definition on strategic administration Although each point of view is not completely adequate and comprehensive, on overall these points

of view have had big contribution to cognizing and carryng out the administrative

administration

- Strategic administration is the collection of administrative decisions and actions deciding the long success of the enterprise

- Strategic administration is the collection of decisions and action measures leading

to the planning and implementation of strategies in order to reach the target of the organization

- Strategic administration is process of researching current environments as well as

future environments, forming targets of the organization; formulate to implement

and check the decision implementation aiming at reach the target in current environments as well as future environments

Finally we would like to introduce a definition on strategic administration widely used in intensive training courses on business administration in England, United States and accepted by many economists

- Strategic administration is the art and science of the construction, implementation and evaluation on synthetic decision, helping each organization can reach its target According to this definition way, strategic administration pays attention to

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order to reach the success for the enterprise

2 The meaning of strategic administration

In fluctuation condition of business environment now, above all others, only one

thing that enterprises know surely is the change Strategic administration process is

a trend to help these organizations overcome troubles in business world by their own capacity and effort This is the scientific research result basing on the trading realtity of many companies It is really a product of managerial science because if oganizations establish good administration process, they will have a good support to

go on ahead However, the level of success depends on the implementation capacity mentioned in part of strategic application, showing the arts in administration

Strategic administration process basing on the attitude which the company continuosly investigates events happening inside and outside the company as well

as trends impacting strongly on the company has rapidly increased in these days In

order to exist, all organizations force to have changeable and adaptable ability to the

fluctuations Strategic administration process is stablished to help the company concentrate on the best adaptation to changes in long term

Strategic administration helps the organization to be more active instead of passive

in planning clearly their future; it allows the organization to pioneer and make the influence on its activity environment (instead of reacting weakly) Therefore, applying out of its ability to control and manage the enterprise; from chairman of board of directors, general managers to board of manager of many trading

administration On history, basic meaning of strategic administration is helping organizations make the better strategies via handling more suitably and methodly to strategic choices However, recent researches show that the contribution of strategic administration to implementation process is much more important than the

contribution to making sinle decisions or documents

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Benefits from the strategic administration that we can see here an be divided into two types: benefit can be counted to money and benefit can’t be couinted to money Benefit can be counted to money

The application of strategic administration made companies more successful and

have futher vision in future, which is foreseeing the trends; it also helps these

companies implement tarets in short term better The achievement is figures about revenues on profit, market share and increase level on the stock value of the company on stock market

Benefit can’t be couinted to money

The figures, achievements gained from finance are not the all results from applying strategic administration effectively The benefits gained are invisible benefits, uncounted in money; but it is very important, having desisive characteristics for the company such as the sensitiveness to changes of environment, the more understanding on strategies of competitors, improving the capacity of labors, reducing the shyness to changes, understanding more about carrying out the treatment Strategic administration makes the ability to prevent risks of enterprises increase because it encourages the exchange among managers in every parts and functional levels The exchange helps people be aware of their right in developing

products and services, and acknowledge their contributios The awareness of labors

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Strategic administration makes the following benefits:

- Help identify and arrange the priority and make the best of opportunities

Bring out the facual outlook on difficulities of administrative mission

Bring out a draff for comprehensive development of actions and control

Minimize risks

Help key decisions serve the proposal of targets better

Help arrange better time and resources for defined chances better

Allow to reduce necessary time and resource in order to amend mistakes and temporary decisions

Make the frame for the relationship among individuals inside the company

Help coordinate single behaviors into a general effort

Provide the basis for making clear the responsibilities of each individual

Bring about the encouragement to advanced thoughts

Bring about the cooperative, close-knit and fervent form in dealing with problems

as well as chances

- Encourage the positive attitude to the change

- Bring amout the discipline level and the formality to administrative mission in the

company

3 Basically competitive strategies in each bisiness fields

Companies pursue the strategy at enterprise level in order to reach the competitive advantage, allowing them to operate better than competitors and reach the higher revenues than the average They can choose from three basic strategies: leading on expenditure, product differentiation and concentration

Above strategies are basic strategies of all enterprises or all sectors Each of three basically competitive strategies is the result of consistent choices of the company on

products, market and individual ability- these choices consolidated each other

Table 6.4 summerizes the suitable choice for each general strategy of the company

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3.1 Leading strategy on expenditure

University — Ass Prof Dr Ngo Kim Thanh

differentiation any _ aay a ge (price or unique)

Strategic administration textbook — National Economics

The purpose of the company in pursuing the leading on expenditure or low

expenditure strategy and better activity (having better advangtage) than competitors,

doing everything to manufacture commodity or services at lower expenditure than competitors This strategy has two basic advantages Firstly, due to low expenditure, the people leading on expenditure can put the lower price than their competitors; they still get the profit equal to the competitors If the companies reach the same value for their products, leader on expenditure can get the higher profit due to its

lower expenditure Secondly, if the competition in the same line of business

increases and companies start competing, leader on expenditure will have ability to

stand stably in competition better than other companies due to its lower expenditure

3.2 Differentiation strategy

The purpose of this differentiation strategy is reaching the competitive advantage by making the products — commodity or services- acknowledged the best by the consumers due to their remark The ability of differentiation strategy to satisfy the demand of customers according to the way that competitors can’t have, meaning that it can reach the higher price — significant higher price compared with the

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pay that price because they believe in the product quality of differentiation products

equal to that price difference

3.3 Centralization or concentration strategy

The third competitive strategy, concentration strategy, differs from two others mainly because it trends to serve the demand of limited customer group or segment market The company pursueing the centralization strategy pays attention to serving

a specific market segment, that segment can be defined according to geography, customer type, or a branch of product line

Once choosing a market segment, the company can pursue the concentration strategy or differentiation product or low expenditure On the nature, the concentrative company is a differentiation producer or attractor on specialization

expenditure Due to the small scale, some concentrative companies can pursue the

leading on expenditure and differentiation product If concentrative companies use the method of low expenditure, products have been in competition with leader on expenditure in market segments which not having the expenditure advantage If concentrator pursues differentiation product method, all differentiation product methods have been widely opened to concentrative companies

Once more characteristic of concentrative companies is that they compete with differentiation product people only in few market segments Companies pursueing

concentration strategy surely develop the quality of differentiation product

successfully because they have knowledge on a small customer group or the region Moreover, concentrating on small production chain allows concentrator to make the renovation quicker than big differentiation companies Concentrative companies pay attention to establishing the market share in a market stegment; and if it is successful, they can start serving many market stegments and making the lost in competitive advantage of differentiation people

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I1./ STRATEGIC CONSTRCTION PROCESS

Figure 1: The procedure of strategy planning

THE PROCEDURE OF STRATEGY PLANNING

Define the function, task of enterprise and strategic target

1 Trading field definition

Trading field definition must answer the question: what is our line of business? What would it be? What must it become?

The answes are diverse and different Perhaps because enterprise only trades in one

field and they also participate in many fields Single line of business enterprise only operates in a major field, multi-sector enterprise trades in many fields at least two

business fields

2 Strategic target

According to the most general meaning, strategic target and vision shown in the

declaration of mission is the clear declaration on ambition that enterprises pursue

Therefore, strategic target is the destination which enterprises hope to reach It is the purpose concretization of enterprises on the direction, scale, structure and

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activities In contrast, when the economy is recession and decadence, it will lead to

the decline in consumption expenditure and simultaneously leads to the increase in competitive force Normally, the decadence in the economy causes the fight in price

in manufacture fields, especially in mature fields The interest rate level will decide

the demand for products of enterprises Currency policy and exchage rate may also

make some good chances for enterprise, but also be the risks for their development Inflation and inflation prevention issue are also an important factor which must be considered and analyzed In fact, if inflation rate is high, the control of price and salary can’t be made Inflation increases, investment project becomes risker, enterprises will decrease the enthusiasm in investing in manufacture development Therefore, high inflation is the risk to enterprises

3.2 Technological environment

This is the factor having big and direct influence on trading strategy of fields, sectors as well as many enterprises In fact, our world witnesses the technological changes making the stagger, even causing the lost in many fields; simultaneously also appear many new trading fields or more complete ones

The changes of technology of course impact on the lifecycle of a product or a service A theorical cycle includes phases: beginning, development, mature and fade-out The reality to some enterprises and some products is that they will have a

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new đềbctoMBXF3@Wdiretcr°fiM@efour period Moreover, technological changes

also influence on manufacture methods, materials as well as behavior attitude of

labors

From that requires strategists to pay attention to the change regularly and the investments in technological advancement

3.3 Social — cultural environment

Medium and long term strategic period, social — cultural environment can be the biggest change factor Lifestyles changing quickly themselves according to the trend of importing new lifestyles are always the chance for many manufacturers Enterprise also takes into account the consumption behavior, the change of age tower, birth and marriage rate, position and role of women at work and in the family The appearance of Association of consumers is the obstacle requiring the attention of enterprises; especially the product quality must ensure the benefit of consumers A challenge to manufacturers is that the intellectual standard of the

people is higher and higher, more and more diverse

3.4 Natural environment

Wise strategists often pay attention to the climate and ecological environment Sometimes, the risk of unpredicted changes on the climate is carefully considered

by enterprises having the manufacture and services relating to the crop

3.5 Politics, law and government environment

Factors of government, law and politics impact on enterprise according to different directions They can make the chance, obstacles even the real risk for the enterprise They often consist of:

- Government is the biggest consumer in the economy

- The stability on politics and the consistence on big policy viewpoint are always attractive investors Law system established and completed will be the basis to trade stably For example, enionmental protection law is the issue that enterprise must

take into account

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- Deeb? OW aS eH LEM ETS Be trading enterprises will be the risk, for example if they want to produce and supply high degree alcohol, tobacco

opportunities and threats in the international aspect for enterprises with more or less distinct, if only considering the outside environment within a Vietnam country Indeed, the international environment will be more complex, more competitive

according to the viewpoits from diffirent social, cultural, intitutional construction,

policy and economic

The Viet Nam’s official entrance into international organizations as ASEAN, WTO has been created many opportunities for Vietnamese enterprise to investment, market as well as there are many challeges that Vietnamese enterprises must confront Liberalization of regional trade, tariff barrier demlishment will be the big

threats for Vietnamese enterprises Furthermore, ASEAN also put its self in the

relationship of global competitive world, such as the EU, NAFTA, Japan, China Joining into World Trade Organization WTO, Vietnam will expand the export market to many contries in the world, be enjoyed most favoured nation statute, not

to be discriminated in international trade But on the contrary, the challeges in international competitiveness will be more dractic

3.7 Analysis of environmental sectors

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A raHbW 90Aat(tWed REE@}Sđặ!9P technical economic sector includes many

enterprises can offer the same or similar products and services can replace for each other Mission of strategists is to analyze and predict the competitive influences in the environmental sector to determine opportunities and threats for their enterprises

- Analysis of exsiting competitor: Competion beweent enterprises in a productive industry offten include the main contents as: competitive structure of industry, in

sector, actual demand of sector and exit barries

applucations for competition Competitive struction changes from the hoard productive sector to the concentrated productive sector

competitiveness of internal sector Usually, high demand creates big opportunity for enterprises to expand their activity, on the contrary, low demand leads to violent competitiveness to enterprises maintain their controlled markets Danger to lose the market is unvoidable for enterprises without competitive ability

Withdrawal barrier is a danger of serious competition when sectorỖs demand is

relationship beweent strong enterprises If an withdrawal barrier is high, enterprises can be locked tightly in the unfavorable industry

- Analysis of potential competition: The potential competitors are enterprises currently not competing in the same industry: but be able to compete if they choose and decide to join the industry This is a threat to existing enterprises Enterprise

currently trying to prevent potential competitors to join the industry because more and more business in a competitive industry is fiercer than the market and profits

will be shared, the location of the business will change

The level of advantages and disadvantages to enter the industry by potential competitors mostly depends on the barriers to joining an industry

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- Arla SiGe Piel THe App hEN en be considered a pressure of threat when they

are able to increase in price of input or decrease in the quality of products and services which they provide Thereby, the profit-making capacity of enterprise is decrease On a certain aspect, the threats that creates some dependence for enterprise

- Customer analysis: This is the force generated bargaining ability of the buyer The buyer can be considered as a competitive threat when forced enterprise to sell off or require high quality and better service Contrast, the weak buyers will bring

an opportunity for enterprise to increase prices to earn more profits Buyers include: the final consumer, distributors (wholesale and retail) and the industrial buyers

- Substitutes: Substitutes are another products can satisfy the needs of consumers Their basic characteristics have more advantages than normal products were replaced in the individual characteristics Threats require enterprise to have the analysis, monitor frequently the progress of technical - technology, which is directly

related to technological innovation, product innovation Moreover, the change of

market demand is also important factors creating these threats

4 Technical strategy SWOT analysis

The strategic administration uses many tools, technologies to analyze strategies Topics using the analysis technique of strengths - weaknesses - opportunities and threat (SWOT)

SWOT is the the collection of the first letter of the English words: Strengths - Weaknesses, Opportunity and Threats This is a very useful tool to help us understand the problem or make the decision in the organization and management

as well as in business Say in a illustration way, SWOT is theorical framework

based on the that we can review the strategic and determinate the position and

direction of a organization, a company, analyze the proposed business or any ideas regarding the interests of enterprise In fact, the application of SWOT build a business plan, strategic planning, competition evaluation, market surveys, product

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strengths and weaknesses from the internal enterprise to based considerations and

building orientations and alternative strategies Techniques are widely used technical analysis of strengths - weaknesses - opportunities and risks (matrix SOT) SWOT analysis provides useful information for connecting the resources and capabilities of the company with the competitive environment that the company is active This is a tool in the formation and strategic selection SWOT (also called SWOT matrix) is a method of analysis of strengths, weaknesses, opportunities and risks

SWOT provides a tool for strategic analysis, review and evaluate the position and orientation of a enterprise or a business project SWOT is suitable with work and

analysis according to groups, is used in making business plan, bulding strategy,

evaluating competitors, marketing, product development and services

SWOT analysis is the assessment of data held in a SWOT order in logic model, to

be understood, to be presented, discussed and to be applied it Four-dimensional evaluation of the SWOT is to extend the two-dimensional "strengths" and

"weaknesses" SWOT analysis can be used for any type of decision making and

pattern SWOT allow thinking positively, beyond the framework of habit and

instinct When the SWOT analysis, the first thing is to identify a subject to analysis clearly Only then can expect other persons to contribute into the analysis process, and those who see the results of the analysis can understand the purpose of analysis methods, evaluation and relationship between SWOT elements This method is

simple, easy to apply and can be used in many fields of business activities

5 Selecton of enterprise’ s business strategy :

The implementation of analysis, selection and decisions a business strategy is necessary to ensure a strategy has high feasible, which requires companies to build

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marty ProfeQE RES Hal kw Med $IQHdards to make the basis for the selection of an

optimal strategy If the choice is difficult, must be patient to find new opportunities, should not desperate Remember that political factors, culture of the organization also affect the strategy selection

Based on the principles and standards set out, the enterprise conduct to compare the strategic plans that planned with the aim to find an appropriate business strategy to implementation Strategy was selected must be the optimal strategy or at least be consistent with the conditions and circumstances of enterprise To choose the strategy is common to consider the following basis: The strength of industry and enterprise; Strategic objectives of the enterprise; attitude of the Chief Executive; Sources of financial ability and qualification of administrators; The reflection of the

concerned subjects and the time problem

Strategic decisions are put into practice must be the optimal strategy or at least It is the best of the strategic plan that built Want to select the best or most optimal business strategy among strategies, people often use the method of score according

to standard

When evaluating optional strategic, need to ensure some requirements as follows:

- Otional strategic must ensure compliance with environmental conditions

- Otional strategic must be in accordance with foreign policy, viewpoits and methods of the management board

personnel of the enterprise

Strategic selection is the final step of the strategic construction and also the initial step for the strategic organization implementation Construction and selection of business strategies have put forward the necessary steps to have the feasible business strategy But let enterprise success in the business market, the selection of

an appropriate strategy has meaningful decision With the selected strategy, enterprises must implement the strategy effectively This is an important period and

a metabolic step the desire business strategy into reality

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7 Check, evaluate the implementation result and adjust

Check and evaluate the strategy is the final section of strategic administrative

process

Check, evaluate and adjust having the purpose is defining the variation on target, measure, method and deployment result of strategic contents of enterprises compared with initial estimate in order to establish the current condition, define reasons and estimate measures to adjust the strategy

Check and evaluate the strategy covering all sections and activities of strategic administration, from planning the target, building the method to organizing to carry out the strategy

Requirements to the mission of checking and evaluating the strategy:

+ Carry out suitably to different periods of the strategy

+ Ensure flexibility

+ Ensure the provision

+ Concentrate on key and important points and contents

Check and evaluation standards:

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currency Qualitative standards must ensure the consistence, suitability and feasibility

+ Quantitative standards: are standards which can quantify, measure, compare and analyze

+ Other standards: politic trend and the pressure of parties make the difference on strategic result compared with the estimate

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PART fi? ANALYSING BRSIS FOR BUILDING STRATEGY

FOR PETROLIMEX JOINT STOCK INSURANCE COMPANY (PJICO)

1 Introducing Petrolimex Joint Stock Insurance Company (PJICO)

1.1 Company history

PETROLIMEX Joint Stock Insurance Company (PJICO) is the first insurance joint stock company being established in Vietnam by big economic groups such as Petrol

Vietnam, Vietcombank, Vietnam Steel Corporation, Vietnam National Re-insurance

Company, Synchronous Materials and Equipment Company, Hanoi Electronics Company, Vietnam Railway Union, AT Safety Company On June 21%, 1995, PJICO was officially established in the warm welcome of domestic and foreign customers With the function of dealing with non-life insurance products, initially, PJICO Company only had 35 officers, after 14 years of establishment and

development, at present, PJICO develops throughout the country with 51 branches,

1.250 young, active staff and 4.500 professional agents presenting in the whole provinces and cities of the country, and is one of the four leading non-life insurance companies in Vietnam non-life insurance market

However, standing in front of the world integration, product, service business is not completely decided by the company but sometimes by changes of the market Thus,

to avoid risk in business production, the Company is compulsory to build strategy to develop strongly in the common tendency, have an own development strategy in conformability to the socio-economic situation of Vietnam in particular and countries in the world in general

1.2 Business fields of the company

Right after being established, PJICO quickly got access to the market and implemented more than 80 insurance products and at present, is occupying the market in fields such as: Transportation, work construction and installation, petrol

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and Ol eS SUR Rife SMpOHESCBAESAAE mechanical vehicle insurance, etc In which,

we must cover some products which are strong points, standing at the leading TOP

in Vietnam’s insurance market such as:

e Maritime Insurance profession:

- Insurance for goods which are transported by sea, land, river, air

- Insurance for ship body

- Insurance for civil liability of the ship owner

- Insurance for ship building contractor

- Insurance for river, fish ship

- Insurance for mechanical vehicle

- Human combined insurance

- Insurance for teachers, students

- Insurance for labor compensation

- Insurance for tourists

- Insurance for passengers

- Insurance for every risk in construction, installation

- Insurance for fire and special risks

- Insurance for every industrial risk

calculating and allocating loss, agents appraising, dealing with compensation and

asking for the third person

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Source: Petrolimex insurance company (Pico)

BUSINESS RESULT IN 2007 OF PJICO

a/ General business result of the whole company

Figure 3: business production result of the company in 2007:

Target Impleme Plan | Implemen | Implement | Implement

ntation 2007 tation ation rate | ation rate

2006 (billion 2007 2007/TH | 2007/KH (billion d) d) (billion d) | 2006(%) | 2007 (%) 1.Total business income 831,37 950 1.040 125% 110%

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aa

- Data in 2006 are drawn the balance sheet and audited

- Data in 2007 are quickly collected on January 15", 2007

b/ Original insurance business of each unit

Result of revenue, plan completion rate, implementation rate compared with 2006 and specific compensation rate of each unit according to following table:

Table 4: Original insurance business result of each unit in 2007

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BUSINESS OPERATION RESULT IN 2008 OF PJICO

a/ General business result of the whole Company:

Table 5: business production result of the company in 2008:

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TotäÏ Đẳsá@40 Pdesa0E RliecX9WIĐ 1.3008 billion, growing 25% compared with

2007, reaching 106% compared with the plan, in which original insurance revenue

got VND 1.060 billion, growing 19% compared with 2007, obtaining 102%

compared with the plan assigned by Administrative Council Profit before tax was VND 60,5 billion, increasing 32% compared with 2007, obtaining 86% of the plan Average income per capita was VND 6 million, increasing 13% compared with

200 hs

b/ Original insurance business result of each unit

Revenue result, plan completion rate, implementation rate compared with 2006 and specific compensation rate of each unit according to following table:

Table 6: Original insurance business result of each unit in 2008

Plan Implementati | Compare | Compared | Compe

No Unit name (million on in 2008 d with with plan | nsation

dong) (million d) 2007 (%) in 2008 rate GROUP 1: over VND 30 billion

“sạc sac 45% 37%

GROUP 3 over VND 7 to 15 billion

103.76%

10978% |

41%

=; 68%

“z

41%

3% | 10127% - 37%

48% 39%

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BUSINESS OPERATION RESULT IN 2009 OF PJICO

a/ General business result of the whole company

Table 7: Business production result of the company in 2009:

Impleme | Impleme ntation ntation

Impleme Implementa | rate 2009 rate ntation | Plan 2009 | tion 2009 / rate 2009/

_1.Total business revenue 1.308 | 1.426.6 1.555| 119% | 109%

Including original insurance

of each family but they also pay attention to society, community For that reason, to

avoid, restrict unlucky risks in the process of living, producing and business and ensure firm financial source for each family, organization and enterprise, demand

for insurance for the whole community in the country and region is very urgent

For developed countries such as European countries, insurance demand is an indispensable demand and is considered as right of each person At present, insurance business firms are researching new products, alternative and more practical products to serve life of the community

With new insurance market like Vietnam at present, potentialities are still very big, according to statistics, number of mechanical vehicle alone, Vietnamese population

- In material insurance for new cars, there is 45% of the number of

registered, circulating cars joining insurance at insurance companies

to 2009, there is still 35% of vehicle joining insurance

only accounts for 12% of the whole population

In short, there are many professions which have been implemented but still have smail number of participants, proving that insurance potentialities are still big

Opportunities and challenges of the Company:

In the conditions of Vietnam’s economy with about 90% of the number of

enterprises are medium and small ones, originating from poor infrastructure,

management experiences and administration in the market economy is still low, staff need to be trained and re-trained, improved with strategic thinking competence, executive, management art to meet rapid changes of the current business environment In the process of regional and global economic integration,

having full and intelligent awareness of opportunities as well as challenges is the

first step for enterprises to be ready to cope with possible difficulties in the future

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Opportunities:

NetW@E Ofo hi pC@sir dovearddensiell provinces and cities, the company has also

established relationship to State management agencies, big economic groups, corporations, companies to create a development break-through of the company, covering and occupying the market rapidly, sustainably

The particular feature of the company in dealing with insurance products is collecting money in advance and providing service later has created conditions for the company to have a big capital source to have joint venture, combine investment

in projects, financial sector inside and outside the country Investing in information technology, modern technique, improving working productivity, enhancing the quality of products and service

Market opportunities: The Company can get access to bigger markets to expand business production Both in theory and practice, the role of market was asserted clearly in regulating every production, business clue, stimulating the strength of purchasing power, diversifying and differentiating demands for creating high attraction for the ability of supplying service of the company, life quality of people

is being clearly improved both in terms of quantity and quality, economies have evident consumption feature Globalization, free trade expansion can create market opportunities for every enterprise form

Joining the process of economic integration, developing countries and insurance

companies have more conditions to get access to modern technologies, big

companies have developed so much saturated, we need to have more capital sources, resources which form Corporations, groups to have enough competition strength in the market, enough financial potential to access to big insurance services, potential market to invest

One of the premises for the development of globalization process is strong development of information technology — telecommunications revolution Result of the global information system is also condition to enhance people’s intellectual standards, expand communication between cultures, nations, creates favorable conditions for the accession to an open world — open market, enhancing management competence, exchanging knowledge, experiences which have been

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In short, with current integration, we have all the things which decades ago, European capitalists had to launch wars to seek market, create conditions for economic companies, groups in the world to continue developing market when domestic market was saturated

Challenges:

low, limiting accession to big projects, being difficult to compete to foreign insurance enterprises

+ Technology level is backward compared with developed countries in the world

With annual economic growth of 8%, Insurance sector must go a step ahead to meet development demands of the economy, thus, investing in building strategy in this period is extremely important and the company has to calculate to invest, recruit resources in this period to timely meet and serve demands of the society Inflation and factors above will affect demand, payment capacity of socio- economic elements when joining insurance, reducing revenue, affecting profits of the company The company needs to weigh when making calculation for their short-

term strategies to avoid shortcomings Compared with salary of labors in

developing countries, salary in our country and other undeveloped countries is quite low Common integration tendency of the world economy is that salary will increase, which is a disadvantage for business strategy as it leads to cost increase

To limit this risk, the Company needs to carefully calculate expenses, propose plans

to prevent risks effectively, cut non-profit making expenses, on the basis of cutting expense, limiting compensation to enhance competition capacity

- Social culture: Target of the company is tending to diversified insurance market segment, expanding insurance scale, meeting demands of every economic element

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In the immediate period, apart fron ensuring the development, the company needs

to continue spreading trade-mark policies as well as protect its prestige in the market In addition, the company <lso needs to make contribution to the propaganda

to enhance knowledge, understarding of customers about insurance, promoting service quality to quickly create reiability to customers

Other social moral matters are also factors affecting strategy of the company With social situation that has many negitive phenomenon, troubling customers, affecting prestige, and reliability of customers to insurance companies

2.3 Technological factors

PJICO believes that the applicatior of reliable high technological solution will bring the company a good competition advantage PJICO expects to have a flexible, rapid

customers’ service, allowing quicker, more rational and easier management of business activities of insurance enterprise The system can assist insurance business

activities that the enterprise requires, at the same time make contribution to

speeding up the growth of the company

With functions aiming to develop new products more quickly, helping the enterprise shorten time for market accession, supplying a web interface with remote accessing ability for company’s customers only and suppliers such as agents, breakers, helping them find information rapidly

3 Analyzing business environment

3.1 Analyzing external environment

PJICO is a joint stock company with founding shareholders are corporations, big economic groups, thus, it has strong financial source, has got access to many potential customers, together with integration into the world economy, with stable politics like in Vietnam, there have been a lot of companies investing in this market, creating conditions for enterprises to access, exploit With open economy, income

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3,9%

- In 2008, Vietnam did show weakness and limitations of a hot development

economy after successes in the past years, especially after accessing to the WTO in

2007 Recorded inflation in many recent years, consumption price index increases 22,97% compared with that of 2007 Foreign currency market changed, stock market fell deep and long (VNindex decreased by 70% compared with late 2007), banks faced with difficulties in mobilizing capital and lending, production enterprises could not arrange capital to expand production, etc are evidence showing that 2008 was a difficult year after nearly 15 years of stable development

Situation of non-life insurance market in 2008

- Revenue of non-life insurance cost in the whole market was estimated to reach over VND 10.600 billion, growing 27% compared with 2007, total compensation money was VND 4.050 billion, compensation rate was about 38% Bao Viet still took the lead the market with original insurance revenue of about VND 3.500 billion, increasing 27% compared with 2007, PVI reached VND 2.100 billion, increasing by 21% Bao Minh revenue was VND 1.700 billion, not increasing compared with that of 2007 (other insurance companies were posted according to arising revenue, PJICO in 2008 was still posted according to real revenue)

- In 2008, though non-life insurance revenue of the market increases highly but business effectiveness decreased compared with 2007 Main reason was loss due to increased natural disasters, compensation expenses, financial crisis leading financial

investment activity to face with many difficulties, severe competition between

insurance companies led to insurance cost decrease (according to evaluation of Insurance Cost Association, there were professions reducing by 50%)

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