G1 00129 STRATEGIC MANAGEMENT IN SAI GON-HA NOI COMMERCIAL JOINT STOCK BANK REALITY AND SOLUTION QUẢN TRỊ CHIẾN LƯỢC TẠI NGÂN HÀNG TMCP SÀI GÒN - HÀ NỘI THỰC TẾ VÀ GIẢI PHÁP

Trang 1

PDF Co sor Free Version

CAPSTONE PROJECT REPORT

STRATEGIC MANAGEMENT IN SAI GON-HA NOI ;

COMMERCIAL JOINT STOCK BANK

REALITY AND SOLUTION

Group No.: 8

1 Pham Dang Mai

2 Nguyen Viet Quang Minh

3 Do Tuan Bich

4 Do Thanh Long

Class :GaMBA01.M04

HANOI, JAN 2010

Trang 2

The Study - Group No.8 Strategic Management

However, strategic management is a difficult, complicated task in which a small mistake can lead to bankruptcy no matter how internal strength of banks

Sai Gon — Ha Noi Bank (SHB) is a newly founded bank that has turned rural share into urban one and is in the way of building brand mark, finding strategy to dominate the market in term of modern banking Its basic conditions of capital, banking technology, manpower, management experience are still in low profile These conditions are posing difficulty for strategic management and requiring strategic measures for Sai Gon — Ha Noi bank

Basing on such reality, Group No.8 has decided to do research on:

“Strategic management in Sai Gon-Ha Noi Commercial Joint Stock Bank — Reality

and Solution”

1 Aims of the study

- Study theory of strategic management of commercial bank

- Analyze reality of strategic management in Sai Gon — Ha Noi commercial joint stock Bank

- Propose solutions and measures in order to improve strategic management in Sai Gon

— Ha Noi commercial joint stock bank

2 Objectives and scope of the study

- Objectives of the study: To study real issues in strategic management in Sai Gon —

Ha Noi commercial joint stock Bank

- Scope of the study:

+ Place: In Sai Gon — Ha Noi commercial joint stock Bank

+ Time: From 2006 to 2008 and in early months of 2009

3 Methods of the study

Methods of specific and real problem solution: Statitics method, Analysis, Comparision, systemation, combination of theory and practice

4 Structure of the study:

The study consists of 3 chapters:

Trang 3

PDF Compressor Free Version

MEMBERS OF GROUP 8 INCLUDE:

1-PHAM DANG MAI (LEADER)

2-NGUYEN VIET QUANG MINH

3-DO TUAN BICH

4-DO THANH LONG

Trang 4

CONTENT PDF Compressor Free Version

CHAPTER LGisii00/00628gc063668G6G3ã404653086650808004x3033356ss65uSỐSG quaaniabntnn cada bide booghvarennonsnennrs 9 BASIC ISSUES ON STRATEGIC MANAGEMENT OF COMMERCIAL BANK +5 9 1.1 Commercial bank and necesarity of stategic management in commercial bank g 1.1.1 Generalization of commercial baniK - - 5< 5 1v 99v x9 ng ng ri 9 1,1,1.l JgBniffon-ofciwnnioiil BNEHĂccssceeeeeeonuoandddieedandroaorinihigii000001i6600110668333068658) 9 1.1.1.2 Activities charatéristics of Commercial Dank ccissssisissccssssessnarseserevisoscvaisansivadsve reese 10 I.1.2 Necessity of strategic management of commercial bank «+ «s<ss++ 1] 1.1.2.1 Definition of commercial bank stategic managemerI «5 «<< ssss+: II I.2 Basic contents of strategic manag€Imei cv nh nh ng ng 15 1.2.1 Defining missions and strategic business obj€CfÏV€S - (c5 S2 << sex 15 L2.A:1.: DETMINE BUSINESS MISSIONS wacciiinusiacrmmimmeanini manana 15 1.2.1.2 Building business strategic Obj€CfIV€S - Gà SH ng ng nhờ 17 1:2.2 Ainlysis Of OUSIDE buSiH6sŠ €ếHVÌROHHfEHE¿secssicesciasidcosEiieivssi8u8663686005686946 406 0568 19 12.2 1: AnSlysis Of Marcro ENVIFOHITCGHĂGqudagaidaddcustGiiag9vAG0A0 ÃAA4GuA04xoss 19 nụ: GHHVSINSINÍ HHIGRW EHNYHDIINEHEGsesereneondddrdovortsrriooit0400000013104010016G0900000079072952701604 19 1.2.2.3 Determination of opportunity and Challenge ccsescisssssccussscissasicciececsesnsevsessnssvevecens 20 1.2.3 International environmental analySis «c1 ngư 20 12.3.1 PMAHCIAl TESOUNCE ANA SIS vis scssssccvucesnssnvsescaivonsseusanesnanminnenacvnn ceaterasvernaninennccereeae: 20 1.2.3.2 Marketing-PR capacity anal ysis ississccasesisssccsccsssisssvsasoseenrcdaniavecverseanaviscncinaieteins 21

DI NI HH 11 0 caeseaeearrnaeeaeerBseaeeraseaoessontnronrtrnaotoonouanoorrianapnvnr 21 125.5 Aiialdsinb ofidilzHHGii SKĐÌÌ:¿sssssdoassyesgg6054244464s06661 0644646049844 6426219600g6s3i 22 D01 l RE TT R20 tữg646eis6ssaiiesEeesssixdbsoi0iit6ssssetssankb8Z more 22 LO; DCR IN SIEHES:HHEVEHEHNHCGbieeeaeerdoanareaaorroioanouooiiongraG000002Y1tA00003ã09 8.6) 22 1.2.4, Establishitig: BUSINICSS State OY cua doi 16655600/0010360ã566600000205300)80316G0115084655040686)603ĩ8 23 1.2.4.1 Suggesting asSIgnm€T( - cọ TH TH go vn 23 L2 ĐHH(EEIGIEHNN IS: caaeooianaiodiiaddadotddiiiSdig00545101565150684406640054895605/45456ã65á60-66855985/634 24 Leos SOUS LIND: RENAL G OY sgitv dù G00 AG6se@088ã428616-l8AixiailGQisedeseidissliessEk 24 1.2.5 Implementing b0USiiEil SÙỀHEDV cuueseuaeeeionniniikatotissoSGGE11423104611836440500004430585/82000/00801660 25 1:2.5;1 Establishing atttival ĐI EDBE:csuuedcagagcoiobsxi6146144662186540064G1-0044641143664: 4006 25 1.2.5.2 Building POÌIC€S - «G5 101 9 nu nọ ng g0 9v 26 1.2.5.3 Consthiction Of Operation DBEOBHUẨfS sasssesssisiasccccssnsvensessasssssnencannsionsvercenascanensaness 27 1.2.5.4, Resource diSHTIPUHONácaubatoadoaoidsdddaieiadgGiiigcilkqixgtsiuebiqsusuise 27 122.3 DeBloymentof pưIÏCV 6exECcUDOfseeexeeeesnrennioiniotsiersassaysxass0460554005054019130 28 1.2.6 Examination and adjustment of businesS pỌICy c - ĂĂSĂĂ S11 se, 28 1.2.6.1 Purpose of policy examination amd evaÌuatiOI - « «+ «xxx ssxeszx+ 29

Ly uác PUOPEOIHG (OỀ ĐGIIGV GNaIHDHHEHOD-eeeeooesidonniaakbionidaksasaitaKeli1469960099614968/6460146353/86109 30 1.3 Experience in policy management in some domestic and international trading banks 31 1.3.1 Experience in policy management in some domestic and international trading banks 1.3.1.1 Experience in policy management in some domesticl trading banks 37 1.3.1.2 Experience in strategic administration in foreign bank ««-«««<<«+ 40 1.3.2 Experience lesson ‘about strategy administration ccicccsossvecssrececcarssereccnavenrcesssoneensconnss 42

CHAPTEI 2 (G30 Họ Họ Họ ii 43 CURRENT SISTUATION OF STRATEGIC MANAGEMENT 43

AT SAIGON —- HANOI COMMERCIAL JOINT STOCK BANK 43 2.1 Overview about Saigon — Hanoi Commercial Joint Stock Bank 43

2.1.1 Establishment and Dévelooment Of the Batik ‹‹‹:‹¡¡‹¿¿:ix:scc660c 66625 20 (2265921042 43

Trang 5

2.1.2 Organizational structure of Saigon-Hanoi Commercial Joint Stock Bank 44

2.1.3 Main activities of Saigon-Hanoi Commercial Joint Stock Bank 45

Pbl°d otiÿftlbi"f£Manese'sf0ẫu DEE RUA EEORN ERIE CARRERA ROMANCES 45 2: Lid 2 RAS AAR OOMENUACHVINGS ccc cccsnecsweownsavevesvenss pees wweneeneNESHeNS 45 2.1.3.3 Capital Mobilization aCfIVILI€S «cv sec 45 2.1.3.4 CredIf aCfIVIÏ€S HH no TH TT c0 1c nk 47 fee ace rua aT ÖÔH su ï.«ăẽđẴseằẰeẰẳẰŸẽsoaeaeesesasessesnneaeeneeeeaenaeee 48 2153.6; OUNCE (VI buyecsbebistayoitiebgiGiA0804SGa084GiAggiNssslgisssiSgvlas3s;3ggsa4v31303ã36ãx60868Ẻ 49 2.1.4 Financial situation of Saigon — Hanoi Commercial Joint Stock Banks during 2006-2008 49

n4 :4,:L, CHHHEDSP GRDILÁÌsaesauesosbinnacbideoiiddstiadLisiNgSäA20106565605601ã806/6866616105900866468444.044580964005968) 49 2.1.4.2 Business reSuÏ{S -c n HH SH HH ng nh nh nha 50 2.2 Current situation of Strategic Management at Saigon — Hanoi Commercial Joint Stock Bank 50 2:2:1 Define the business mission and strategies sisi sssisissiascices < aisndtss ccxnasdvaadeaeenasss 50 cel Bn ROTI EEE OES REE OIE ENS ueaeeerdveenusuoekntoatrueeltstriorvkKetgireekesaasvs 50 2.2.1.2 Evaluation on bussiness mission and strategies Of SHB cccccssessecsessesssesneeneesneeseees 51 2.2.2 Evaluation on the environment analysis at SHB . - 53

2;:i0.u:1s: BI VHDIHTETIL ÄW(W|VGÍNGuecsecneas sen te kieeca 6668600605365 61615346355 S681063686 03Q8.5805i948 16846 3i6/ i4 53 2.2.2.2 Evaluation on environment analysis Of SHB - 7]

2.2.3 Evaluating existing status of strategic plan in SHB 72

2.2.4 Evaluation on the strategy deployment at SHB 72

Du :1, EvyanlUglion:0ni e4 ig BHSITENS DOHUEESeeveeneeeseveviexeicesesakretreioivkaeseeeyollocs 72 2.2.1.2 Evalustton ơn sẽtti0B dniiuol.bOBIEGVCS:.occcccscccccccc660640363366966061423498 96655 73 2.2.4.3 Evaluations on action pÏans - - «cv 74 2.2.4.4 Evaluation on resources allocation during implementation 74

2.2.5 Evaluation on the checking and adjustment of strategy at SHB 75

2.2.5.1 Content and criteria for strategy evaluation at SHB 75

2.2.5.2 Evaluation on the checking and adJustment of strategy at SHB 76

2.3 Evaluation on the current situation of strategic management at SHB 77

2uÊ:.1 AIGHIGVGDHEN LG oeeecseieanaeiibikidigi0dt0n06100005610i91966014020600i56566600409148008002/8084466198v5000581005381000264664 77 Zio GHỦfIØOiiiiigŠ Bì P050 code taudauaoiGg054438603444434640AG1%440342330040A.061086038082x4S: 77 2.3.2.1 ShOrtCOImiTIỹS - - cọ Họ nọ Họ Họ 77 255.2.062 EE,BHVONS: FOF SHOWLGOIHUTDS cácusekuicinndiit00G22100000155ã866015180593/583660566863365523481014400000485A 79 CHAPTER ga GaGuaGittgttGiisqiciistolitcgtxseosidlsaiidbit,gsdggiowsasse 82 THE SOLUTION FOR IMPROVING STRATEGIC MANAGEMENT IN THE SAI GON - HANOL JOINT STOCK COMMERCIAL BANK bobciccca ai G2 62 0665ã4ggg áiaa6 82 3.1 The strategic management direction in Sai Gon — Hanoi Joint Stock Commercial Bank in the PEON ALIONT BEA wcsscainassansnssnccnsnnssccsnswninesviccwaninenssusnssnesdasncsenasceabesaKansiniuneanssbinndebsus cinenassnssessdssisatiescesiwens 82 3.1.1 The strategic management direction in banking indUSfTV - - 5-55 5s se exsxesex 82 3.1.2 The developing strategic direction of SHB in the next time «- << 5 «<< «2 83 3.2 The solution in improving the strategic management in SHH <-« «5< << sex 85 3.2.1.Preparing the prerequisite conditions in performing sucessful strategic management 85

32.2 PHEMNBTY: SOLON BIOUD socccssinesconnccasixancsnenanconaxentsnncommiencnneaaenmnnees rensasesiannnaniaenenesesunaneed 86 322.1; Solutions for Strategie BÏRHHÍHĐsoisieeaouiedoaoebiootobbiobisteisaaoilussssavessi 86 3.2.2.2 Solutions for strategy implementation ccccseceseessteeeneeeeeeeeeneeeneeeeeneaseeneeenes 94 3.2.2.3 Overall solution for the checking work and strategic adjustment - 97 3.2.7 SOUEION SUPHOSEING SEOUP: 0dcssiassnnssidesncnnnssedsvancsAdiarelensdeiibengstvasibdenecsiachatavanissinenasaeanes 100 3.2.4.1 deriprove the financial Strength, sesisiisessnnssecsmusenenvescssnasannceanvacinwanonancincnennacnsnmescens 100 3.7.3.2 Iiprovine huiriafi ?ESGUIGSS” QUAI EV:áciceceiai2626666006554216629/661056162444 100 3.2.3.3 Innovating technology and improve the quality of information and communication Sÿ5IöfiY T0 ĐI xoang gui ng Giác00015og6380610)60351006030361G831|S0200244880831008464016300030461980403160ke00100406x% 104

Trang 6

CHCONGUGSIỐN ssicccccciác g0 622 G2105 400441865ds358/306ã56u28i561033036560d3ùđ005406486658046c5E/6Sà S001154ã.4sg0à: 109

REFERENCE LES Â-xu suskcazs,kbi4tiic655520851/16640003621560861400i)á.086302/8480040:u3498/20061a/61944070ã00/4i0530080846) 110

Trang 7

CHAPTER 1 BASIC [SMURSON STRATEGIC MANAGEMENT OF COMMERCIAL BANK 1.1 Commercial bank and neccessarity of strategic management in commercial

bank

1.1.1 Generalization of commercial bank

1.1.1.1 Definition of commercial bank

There are many definitions about bank One of these is the definition in Commercial Bank management by Peter S Rose:

Bank is one type of financial organization providing lists of various financial service — particularly credit, saving and payment sevice — and implementing much more financial functions in comparision with other business organizations in economy

In Vietnam, definition of bank is specified in Law of Credit banker in 1997 which was supplemented and admended in 2004 as follows:

“Bank is one type of credit organizations that performs banking functions and other relevant business activities According to characteristics, aims of activities, banks include: Commercial bank, development bank, Investment bank, Co-operation bank, and other types of bank”

In these above types of banks, Commercial bank are overwhelming in fields of capital scale, market share, and quantity

Pursuant to Decree No.49/2000/ ND-CP on 12th September 2000 issued by

Government about organization and activity of commercial bank, Commercial bank is

type of bank that perform all banking and other business activities, Commercial bank is

bank that performs banking functioons and other business activities for sake of benefit,

in order to implement State’s economic targets In which, banking activities are: money

business activities and banking sevices with regular content of recieving money and using that amount of money for loan and payment services

Activities of commercial bank include 3 aspects: debt operation (capital mobolization), loan operation (loaning, investment, business services) and agent operation (payment, agent, consultant, information, document and precious objects

Trang 8

development in order to create reputation for a bank

PDF CbhhhpréssoitiPy ebayeesionics of commercial bank

Being a financial agent, commercial bank is an enterprise because it has its own capital, trading activities, expenditure and activities for benifitcal purpose Commercial bank, however, is an enterprises with its own natures as follows:

Fisrt, activities of commercial bank are activities in doing business in money, bullion, securities, etc and supplying banking services according to laws

e Business activities of commercial bank are based on the basis of “borrowing” for

“lending” through its own credit operations or in other word, the nature of commercial bank activities is to purchase “right of monay use” for selling “right of money use” to others

e Commercial bank does not doing business in money by its own capital , but by money of depositors through its role as a credit agent for investors and hoarders

e In order to buy “right of money use” in specific period, commercial bank must pay specific amount of money for the capital owner (interest rate of fund rasing) and when

it sells right of money use, it also receives an amount of money which is called

(interest rate of loan) Therefore, in activities of a commercial bank, interest rate is the

price of loan use right Similar to other kinds of business, capital mobilization and loan

have an important role, deciding success or failure of banks in particular and of an economy in general

Second, products of commercial bank are immaterial and invisible Service supply

is relatively dependent on customers Products of commercial bank will be generated when customers diliver following documents to bank: Letter of account opening, thier authorization from trading and credit contract in or der to fullfil any financial duty Thus passive and independent characters of bank are significant

Third, relations between bank and customers (depositors and loaners) is in the

basis of mutual trust and benefit “To do business in banking is to do business of happiness ” In the relations between bank and customers, borrowing and lending activities are the transference of “rights of money use” in which bank just purchases or sells “using value of money”, so when commitment of usage ends in terms of time, money will return without changing in value and difference (if available) according to commitment is interest rate Moreover, price of purchasing or selling — interest rate of

Trang 9

deposit and loan- of money use right is very little in comparision with value of loan, so that compensation for risk if happens is little, too Therefore, confidence in banking

DF Compressor, Free Versio 5

actertios iS significant and in the first prioirty Regarding confidence, we refer to faithfulness and honesty that mean determination of loand paying of borrower as well

as capacity of them in thier carrier activities

Fourth, activities of commercial bank is risky ans sensitive to market, therefore,

commercial bank is subject to strict supervision and management of State through State banking system at provincal level Commercial banks need to perform measures to ensure operating activities such as: to maintain specific capital for paying, to have

capacity in order to cope with market changes, to choose trustful customers, to balance

capital, to supervise operation, to diversify property for minimize risks; to use time economical market or market of debt instrument selecting and cross-exhange of interest rate in order to minimize risks of interest rate and exchange rate, etc

1.1.2 Necessity of strategic management of commercial bank

1.1.2.1 Definition of commercial bank stategic management

a Definition of commercial bank strategy

There are many different definitions of business strategy in gernaral and bank business strategy in particular In general, bank business strategy can be difined as follows:

“Business strategy of a bank is a comprehensive and long-term activities program so

as to create long lap of a bank, a committment to implement basic and comprehensive targets of a bank and the allocation of important resources so as to achieve these larget in activities environment in the future.”

* Term “‘Stategy”’ contains the following content:

First, strategy is a kind of long-term directive plan in different levels or in general

or in grass root level or in functional activity level

Second, strategy is not an unchanged long-term plan but a flexible and adjustable one depending on conditions of business environment Thus, analysis and forcast of the business environment is an important basis to plan strategy Furthermore, resources factors should also be paid carefully attention to give out goo strategies that are

Trang 10

Third, business strategies are not amorphous direction but they are aimed at

specific targets which reflect general results of business progress that a bank may

act REGAINS Free Version

* Role of business strategy in activities of commercial bank

First: Defining long-term direction of activities for bank

Second: Providing manager of banks a framework for intellectual guidance and activities in short term and long term (prequisite for implementation of basic functions

in each level of management)

Third: Providing solid foundation for making decisions and plans in business

b Definition of commercial bank strategic management

Ensuring the directive position of strategy for business activities of a bank effectively and flexibly is an important task pf bank managers Tasks of bank managers include organization and supervision of strategy management

It can be said that contents of strategic management has clarified relations between bank and business environment It is the process of finding answers for such questions: Where is the bank in the market? Where should the bank be in the future? What are targets, images of the bank in the future? How will bank managers allocate resources to achieve these targets? How to recognize and ensure rgar bank should achieve desired position and image in the future?

In general, definition of strategic management can be specified as follows:

“Business strategic management is the process of analyzing present environment, predicting business future environment, defining missions, targets and strategic program; implementing, supervising, evaluating strategic programs and target in reality” Strategic management is not only a science but also an art of organizing, implementing and evaluating decisions relevant to function activities of bank on the basis of combination of these activities (marketing, manpower, supply of banking

service, finance, budget, development research, etc.) so as to allow banks to effectively

fullfil their business targets

c Model of strategic management

Trang 11

Diagram 1.1: Model of strategic management procedures

Developi Streng

domestic weakn

1.1.2.2 Necessity of strategic management

What are the role of strategy and strategic management to success of a bank? It

is the question for all banks In order to understand role of strategic management, it is necessary to understand strengths and weaknesses of strategic management in implementation process

a Strengths

First, to assist executive managers and employee in banks to recognize aims and direction of their business activities Therefore, strategic management will encourage both managers and employees to achieve better achievements to improve benefits of banks

Second, strategic management is the basis to define future image of bank It means that the forcast of bank position in comparision with other competitive banks | Third, strategic management helps banks actively find out and obtain potential opportunities as well as avoid risks to enhance benefit chances and minimize risks in changing business environment

Fourth, process of strategic management motivates innovation: if strategic managers want to achieve high efficency in management, they must adjust or change old methods of management by the more suitable ones

b Weaknesses

In addition, strategic management also has some weaknesses

Trang 12

First, in the process of forming model of strategic management, it is necessary to invest effort and time This view is absolutely true for newly applied banks that are lack 3 0 ener ry Know esse: sen and experiences, recruitment, training for model operation, conversion of intellectual and style of management

Second, strategic targets may become unchangable when they are in written form The overbelief in selected targets and strategies and not paying attention to changes in environment as well as not updated information may lead to failure in strategy

Third, mistakes in forcast of environement especially in long term is significant Changes may happen in any cases deleting changes or turn them into challenges therefore strategy will be out of direction

Fourth, great efforts in planning strategy without paying much attention to direction of implementation leads to bad results in achieving targets This makes strategic manager unconfidient in helpfulness of strategic management However, it is mistake of managers, not mistake of the management manager

Such weaknesses lead to doubts in value and helpfulness of strategic management

in banks However, these weaknesses can be overcome and achievements from

strategic management are clear

Therefore, study and implementation of strategic management in banks are very necessary and suitable with trend of development of modern management theory

1.2 Basic contents of strategic management

1.2.1 Defining missions and strategic business objectives

Analysis of present strategy and defining long term mission, objectives of banks are the initial point in model of strategic management

1.2.1.1 Defining business missions

Business missions of a bank are its purposes in doing business, are reasons for its foundation, existence and development Business missions answer the questions: What are purposes of a bank?

A sound business mission is firstly the direction of customer because customers are determining factor for the existence of banks Customers pays for services supplie by

banks

Trang 13

In practical view, business mission are in written form When making business mission of a bank, the following factors should be paid attention and approciately

seitl)h,Compressor Free Version

Customer: Who are customers of a bank? Which group of customers will bank

select?

Service: What are services will bank offer? Will the bank offer oner service or a

group of services? What are main service of the bank?

Market: Where will the bank do business? What is scale of business of a bank: local or national or regional or global? In which, business mission must define details

of main market This depend much on scale of the bank

Technology: Is technology the interest of a bank? Is technology weakness or strength of the bank?

Attention to development and profit opportunities: Is the bank involving in development objectives and profitability with shareholder? This is confirmed in property growth, its own capital, ROE indicator to prove growth in scale and benefit of

shareholders and increase in value of the bank

Position in business industry: What is position of the bank in the market and its image in the future? In general, only well-known banks specifies this point in business mission

Competitive advantages: Each bank has its own competitive advantages in the market For example, competitive advanteges are history of the bank, quality of

service, staff, diversity of services, fees, delivery system, etc However, the business

mission only specifies outstanding strength of the bank in comparision with other bank

Care for employee: What are attitude and attention of the bank to its employee? Viewpoint of recruitment, development, encouragement and attraction of skilled employees, working conditions, salary, benefit, appointment opportunities, working atmosphere, co-operation and respect to each other

Human philosophy: What are belief, care for human being, sharing spirit of interest, development of human

Trang 14

Attention to community image: Does the bank pay attention to community? Is the bank a good example in business region? Does the bank contribute to improving living PDF Compressor Free Version, be ti §

sinilitf & people and economic growth in the area that it is doing business?

The business mission document can be made in various level: Department level to reflect general aims; branch level to show in detail about theose aims in relationship with community; in owned company level (selling and purchasing, sercurity, insurance companies) the business mission is characterized in service and market

1.2.1.2 Building business strategic objectives

Strategic objective is defined as achievement that the bank tries to obtain in process

of pursuring its business missions in long period

The first requirement in defining strategic objective is to ensure character of exactness It is necessary to define list of important and significant objectives and arrange them basing on priority order instead of making an out-of-order list of objectives

Requirements of exactness of objectives

Reality as well as theory have shown that the exact objectives are ones that meét as much as these following requirements about:

e Detail

An exact objective is the detailed one It will clarify content, time and place scope

of the objective The more detailed the objective is, the easier finding out direction and strategic solution is In general, objectives at department level are general meanwhile those at lower level are more detailed

e Measurability

A detailed ojective is measurable Thus objectives should be in form of relative or absolute statistics Measurability is attached to standards for checking and evaluating achievement

e Consistency

In defining strategic objectives, it is necessary to pay attention to consistency because the consistency of objectives is poor and the objectives themselves have contrasting relations such as short-term profit is contrary to long-term growth, loosing

of credit may increase credit risk, etc

e Feasibility

Trang 15

The objectives should be feasible for implementation This point means that the objective must reflect desire and comply with ability of the bank

° TH kibi0DPYssor Eree Version

The objectives should be flexible and adjustable to be suitable with opportunitie and challenges in real business market

Theoretically, objectives are classified in to 2 groups: Qualitative objectives are the ones that reflect quality and characters (quality of resources, specialization level); Quantitive objectives are the one that reflect results that are measurable according to specific unit (scale of property, market share, profit, etc.) after each period of doing

business

List of objectives in a popular business strategy of a bank includes:

e Objectives about financial profits presenting in objectives of: revenue on asset (ROA), revenue on equity capital (ROE), Profitable asset on total asset, etc

se Objectives about sales, scale of activities, presenting in objectives of: Mobilizing and lending sales, new branches number, number of auto telling machine (ATM);

number of newly recruiting staff; number of increasing customer, etc

e Objectives about market domination presenting in objectives of: Share of the bank

in the market; Type of customers; Scope and place of business activities, etc

e Objectives about quality of business activities such as: Quality of banking service; quality of managers; quality of banking technology; quality of communication, etc

Trang 16

1.2.2 Analysis of outside business environment

Strategic management ee on good understanding of conditions in outside PDF Compressor Free Version

environment that the bank is doing business at present and in the future Business environment of a bank is scene in which the bank exists and performs activities and is affected by it Bank’s business environment can be described by factors that are considered as driving force on all business activities of banks The outside business

environment is divided in to 2 levels: micro and marcro environment

1.2.2.1, Analysis of marcro environment

Macro environment includes general factors such as economy, politics, law, culture, poplulation, nature and international environment that has effect on all industries of

business and financial institution However, the effect is not necessarily similar in

methodology, direction and level

In banking activities, factors such as economy, law and policy always have strong and direct effect However, it does not mean that we can ignore other factors in the environment Here below is analysis of each factor in macro environemnt:

a Economic environment

Economic factors must be paid particular attention in banking business because they have direct and strong effect on activities of the bank, for example, economic

cycle, inflation rate, unemployment rate, GDP growth rate, prospect of economic

industries that use capital of bank, shifting structure among economic sectors, stablity

of price, interest, integrating opportunities into international market, for example, increase or decrease in market interest rate in disadvantegous way that can lead to serious decrease in net profit revenue and own capital of banks

b.Environment of politics-law and Government policies

These factors in banking business should be well analyzed because in nature, banks are finacial agent and their activities has an important effect on national finacial system Therefore, in comparision with other business industries, State strictly supervises in terms of law and policy in many fields such as competition, bankruptcy, combination, bank organization structure Regulations of lending, deposit insurance, provision of credit risk, capital scale, etc are specified in Banking Law and guidance

about law implementation

Trang 17

Stability level of political environment, internal and external affairs of the State Economic, financial and money policies or Govenment policies of foreign exchange, tat, Hebe gement để: SESE SIOT aad other relevant bodies such as Central Bank,

Ministry of Finance, ect should be also paid atttention in environmental analysis

c Environment of culture-society-population-nature

Social culture that includes many long-lasting and slowly changing issues play important role in strategic analysis such as consuming culture, habit of using banking

service in daily life, economical custom, investment and behaviour in communicative

and business relations, desires in life, etc Business strategy is a failure if it is not in comformity with conditions of social culture, population, nature

Population character includes size of population, population structure according to age, sex, income, popuplation growth rate, potential of population shift among

economic sectors, between urban and rural area, etc

Natural character consists of natural resources, goods production capacity in different natural conditions such as lack of energy or watse of natural resources, etc may lead to considerations in investment, lending or funding for projects avoiding demage and waste of natural resources |

Technology should be focused because in banking industry, service products are easy to imitate, change quickly with need of customer Furthermore, technology is also

a requiring condition in creating differences in competition Therefore, it is necessary

to obtain new trend in technology so as not to be left behind and be disadvantegous in competition

1.2.2.2 Analysis of micro environment:

a Analysis of present competitor

Present competitors are banking organizations that have been able to directly

Trang 18

competing, invading each other’s market or new market segment and so on Especially, the trend of loosening eee created more and more severve competition among bake aS Well as othe PES A GEP OD eatin such as insurance companies, finance

companies, finance leasing companies, pension fund ect Wherefore, information and

competition analysis need to pay attention to competitor’s several important aspects such as what they want to achieve, what they have been able to do, how their impact on the market and what their strengthness and weakness are

b Analysis of potential competitos

Operation boundary among banks, finance institutions and non-financial institutions will be able to be cleared and appear mutual penetration in services provided to customers in the future As a result, besides present competitors, it is necessary to pay attention to potential ones in the future such as insurance companies, construciton associations, goods distributing wholesalers and retailes, huge corporations intended taking part in banking industry like foundation of bank, finance companies, finance leasing companies and so on dirrectly under mother company |

of the bank, knowledge of finance, investment ability, scale and stability in income and

business, sensitiveness to service quality or interest rate and so on

d Subsitution in finance markets

In business banking, substitution rarely appears However, in some cases, it still exists and

has trend that customers invest in stock market, real estate ect instead of using traditional

banking services such as depositing, borrowing and opening saving accounts

In conclusion, factors in external micro and macro environment are usually complicated, various and multidirectional To analyse well them, it is necessary to own effective information collection and analysis system updated and supplemented frequently into database for assessing again seriously and carefully on term

Trang 19

In technological aspect, it should be established a summary of environmental factors according to each group of micro-impact, macro-impact and detailed impact in

PDF Compressor Eree Version ;

structure on the basis of importance level of line of business with studied bank and characteristics of each impact according to the level from very good to very bad is simultaneously mentioned

1.2.2.3 Determination of opportunity and challenge

“Opportunity” mentions influence of economy, society, politics, technology, competition trend and events that can bring huge benefit to the bank

An opportunity can be simply understood as a situation in which goal implementation and bank’s operation are conveniently influenced by some environmental factors for example: Stable economic growth in the bank’s market segments or the state’s tax reduction to banking industy

A chalenge involved in impacts of economic, social, politic and technological issues but it can bring about disadvantages and difficulties and threatens business of the bank

Chalenge can be also simply understood as a situation in which goal implementation and bank’s operation are not conveniently influenced or are restrained

or disadvantaged by environmental factors such as riskes of being pushed out of target market by competitors, decreasing quality of passenger service due to underdeveloped technology, losing capital due to out of risk control and so on

The important thing is that it shoudn’t consider all advantages and disadvantages as opportunities and challenges altogether It is necessary to apply appropriate method to restrict and arrange in which paying attention to the best opportunities and the worst risk to find out the balance between strengthness and weakness and resources to get the best result

Table 1.1: Major opportunities and challenges

with banking business operation

- Tax allowance - Appearance of substitution products

- Opportunites in jointing venture and| - Economy in downturn

Trang 20

- Opportunites of expanding market to} flutuation of exchange rate

other nations in the region and all over|- Explosion of new technology and

í Ƒ ressure of technology innovation

FP Compressor Free Versio F if Zy

- Opportunites in technology transfer - Taxation increase

- Increasing saving trend - Customer’s change

- Appearance of new market segments - Changes in law and the government’s

- Opportunities of trade relationship in| new policies

international integration or priorites| - Other challenges

thank to bilateral relationship

1.2.3 International environmental analysis

Internal analysis or resource condition analysis is defined as the analysis of internal factors in bank that can be changed or mobilized or controlled to give into business operation The resource definition includes many factors like: resources,

materials, organizational struction, service policy, finance, marketing and so on

1.2.3.1 Financial resource analysis

Financial resources are shown in the following criteria: banking ownership scale; the abiligy in capital mobilization compare with competitors; capital and asset structure; growth rate indicators (profit growth rate, account outsourcing growth, mobilization growth rate); Profit and profit distribution policy; the balance between capital resources and capital resource using; capital expense compared to overall industry and competitprs; liquidation ability; the ability in control expenses and reduce the capital expense; financial scale; profit percentage like gross profit total over total

asset ROA or ROE; the relationship with the owners, shareholders and investor:

payment; liquidity and provison for financial loss and so on

1.2.3.2 Marketing-PR capacity analysis

The marketing and public relation capacity analyisis includes the following contents: the ability in researching market, customers and the marketing information

Trang 21

system; competitive position in the market; the ability to define clearer the targeted customer, the diversification level on service item and the development in new service; PDF Compressor Free Vers

banking servi Guality: KSspDinn network and service distribution; marketing and communication system; interest and other expenses and so on

knowledge, responsibilitu, eagerness, professional ethnic; internal environment;

personnel policies about recruitment, training, remaining and developing human resources, personnel experience, the ways in encouraging personnel; the density in transfer personnel or quiting jo, the number of personnel relative to the scale and working efficiencies

1.2.3.4 Analaysing organization skill

Analysing organization skill in bank includes the following contents: the current organizational structure; prestige and position of bank; organizing the internal communication systeml system for control, investigating, the environment and organizaion order; the strategic planning system, capacity; caring levels of superior leaders; the abilities in using methods and technique in drafting decisions and so on

1.2.3.5 Materials

Analysing material factors including the following contents: the transaction headquarter and transaction places; instruments serving customers, internal machine; payment system, computer system, banking technology knowledge

After analyising the human resources factor, the next important step is to establish the data table and what is more important, gathering human resources factor

in group so that it is necessary to evaluate the major strengths and primary

weaknesses

Trang 22

1.2.3.6 Defining strenths and weaknesses

PDE tSgl0p-asbelrpd general table for resource factors due to their importance

allow the bank to discover the strengths, weakness which will become the basis for

analysing strategic matrix Bank’s strengths and weaknesses can be:

Table 1.2: Commercial bank’s strengths and weakness

Strengths:

Bank’s products are lower in price

compared with the competitor’s

The products are differentiated,

unique and famous

Service organization is efficient

Wide branch network

Bank can approach low cost capital

resources

Good relationship with customers

High technology

Eager and high skilled staff

The information system supporting

for the efficient banking activities

Market research and = customer’s

demand analysis is taken care of in the right way;

Not yet establishing — the relationship with customer

Other weaknesses

Strategic anaylsis is the way to choose the right strategy, catch up with strategies in order to take advange of strengths and make goods for weaknesses

1.2.4 Establishing business strategy

The primary task in establishing the strategy: suggesting the potential business plan, analysing and choosing plan to find out the optimal business strategy; giving out the business strategic decision

1.2.4.1 Suggesting assignment

The suggestion for strategic plan always ask the reconsideration whether it is suitable

or right for the chosen target and then give out the plans to implement Both target and vision

Trang 23

established before need to be changed, supplemented if the changes are needed via the environement and resource analysis Primary strategy groups are as following:

a Rising strategic group

al Inward rising strategy

* Centralized rising strategy

This strategy focus on innovation and opening much more services or current market without changing any factors Some plans can be implemented

Firstly, penetratin market: finding market share to increase services or current market via better marketing encouragement in order to increase the lending revenue; increasing the account number, increasing the customers in transactions and increasing

times in transaction and so on

Secondly, developing market: bring current traditional service into new market

or new customer group

Thirdly, developing market: launching new services into current market by innovationg or upgrading the previous with high quality service or sell more or cross products

* Open rising strategy

This is strategy focusing on giving more financial services basing on new market or penetrate in non-financial sector This strategy asks to open resource scale, knowledge in various industries There are two primary forms:

Firstly, the focused diversification strategy

Giving more new services in order to create new market mentioning about financial demand like services relating to new sectors like securities, arising financial

service and so on

Secondly, the block diversification strategy: developing into other industry not relating to the financial demands like tourism, communication service and so on However, the bank finds difficulties in developing in this direction because of the banking regulations

Trang 24

Instead of growing by the internal strengths, the bank can catch up with the strategy by the outward direction, there are three primary strategy:

Firstly, merging strategy: merging with another bank to create a stronger bank

in capital, managing experiences, market share, changes in organizational structure and other changes

Secondly, repurchasing strategy: a bank repurchases another bank by buying shares and holding the control rights but still keep name, organizational structure or repurchase financial company, security company to supplement new service item

Thirdly, joint-venture strategy: joint ventures happen when two or more banks combine to implement a problem that an individual bank cannot do completely and has

no effect on the property rights of two parties

b Narrowed operation strategy group

This strategy is suitable when the bank needs to rearrange to increase the operation efficiencies in the unstable and recession economu, some businesses having loss or realizing the other attractive oppotunities This strategic group includes following detailed strategy:

b1 Cut-cost strategy

This is a temporary strategy to rearrange the more efficient business operation when having any industry in low productivity while the expenses are too high, or having temporary difficulties relating the business environment condition

b2 Strategy in cut out some business lines

This strategy happens in the ways to transfer, sell or close some business places directly under the bank with the aim to withdraw investment capital from business lines that cannot bring profit or collect capital into some activities or sectors which are having high profit and potential development

53 Harvest strategy

Havesting is to fine the way to maximize the monetary for the foreseen purposes in regardless of the consequences in the long term, this strategys is applied to the bank or member banks who are in the side of bankruptcy by concentrating on

Trang 25

withdrawing the debts, stopping mobilize capital and lending, selling assets of bank

1.2.4.2 Strategic analysis

The choices in strategic ways are often affected seriously by the objective factors Although we can deny the experienced roles of the strategy maker, it requires the analysing process to reduce objective factors basing on the information source and applying the right analysing analysing and scientific technique

This step is very complexed and requires high professional characteristics The theoretical basis for implementing this strategy is the theory on investment portfolio and applying it into the strategic matric analysing technique There are some popular matrix in strategic analysis as following: BOSTON’ consulting group matrix; G.E strategic network strategy of General Electric Company; matrix for internal and

external factors (I.E); Grand strategy Matrix; SWOT and so on

In the topic scope, the thesis will concentrate on researching simple matrix but having many values and efficiencies in analysing strategy is SWOT mathix

The use of this matrix in strategic analysis is carried out as following:

List of main oppotunities from business environment

List of main threats from business environment

List of primary strengths from banking sources

List of primary weaknesses from banking sources

Trang 26

Combining couple in matrix in order to create 4 strategic group: SO, WO, ST,

WR Besides, it is possible to combine in more complicated way to choose the mix PDE Compressor Free Version

stracteg

advantages of oppotunitiesC or avoid

The consideration in order to ensure optimum requires to consider before making any decisions, basing on:

Bank’s competitive advantage compared with competitors

Bank’s tasks and targets

Management board’s view

Political environment in bank

Administration board’s roles

1.2.5 Implementing business strategy

1.2.5.1 Establishing annual target

* Definition: Annual targets are the result that the bank tries to achive in each year and achive the long term targets

Trang 27

* Characteristics

Firstly: annual targets are measured, directed and challenging, suitabl reali

and high feasibility,

Secondly: annual targets are divided in section target, and then take it as the basis for members to carry out

Thirdly: annual tartgets are defined by the criteria that can bring profit, the growth rate createria and market share for each business sector in geographical region and customer group

* Meaning: Is the basis to distribute the resource in the process of strategy

implementation; is the basis to evaluate the level in completing administrator’s jobs; is

the important technique to control the strategic implementation in order to achive the long term target; is the preferential basis for organizations and departments

* Purposes: Defining annual targets in order to: instructing and directing member’s operations; defining standards in order to evaluate the performance efficiencies; supply basis for implementation

1.2.5.2 Building polices

* Definition: Policy is the regulating regulation, procedure methos, regulations, forms and administrative works that are established to support and encourage the work due to the positioned targets

* Roles: Is the equipment to implement the strategy; is the basis for control strategic

management

Building and completing policies in order to supply the general regulation in instruction the ways in thinking and acting for the administration level in the process

of implementing the assignments in each level, each unit or operation aspects

Policies also contribute important role in making target more specific and understandable The dominant policies in the bank in order to support the strategic implementation including: marketing policy, credit policy, investment policy, capital mobilization policy, human resources policy, financial policy, technology policy and

SƠ Øn

Trang 28

1.2.5.3 Construction of operation programs

PBECEBIRGE By & SolNplex, of targets, policies, procedures, principles and asigned tasks, steps of operation, necessary resources and other elements to successfully execute tasks and gain proposed targets

It is easy to understand that operation program is concretization of specific contents, concrete used resources measures and order of operation steps It answers the question: What is necessary to do? Operation period includes: Starting and finishing time of work, people to execute and to be responsible for work execution, resoureces

mobilized to execute work, result of work

In many banks, programs are devided into main following types: General programs; main programs, subprograms

1.2.5.4 Resource distribution

Important resources of a bank include: Financial resource, material, human and

technological resources Each resource has its own limit thus resource distribution must obey principle of priority order according to annual targets and built policies and operation programs

Content of resource distribution includes: Resource evaluation and adjustment, ensuring and distribution

1.2.5.5 Deployment of policy execution

Execution organization of long-term targets is based on achievement of annual targets via execution of business policies, built operation programs and reasonable

resource distribution

1.2.6 Examination and adjustment of business policy

The last step of policy management process is policy examination or naturally process of operation result evaluation process of bank in execution of proposed policy

1.2.6.1 Purpose of policy examination amd evaluation

First, enhancing execution of targets, clearly orienting performance prospect of each member of operation machine, directing personnel in struggling and striving to achieve high result with purpose of deserving rewarding

Trang 29

Second, defining errors in target, measurement and method and execution result of policy content in comparison with primary expectation to define present status

Third, Defining direction and level of errors

Fourth, definig reasons of these errors

Fifth, providing measurements to adjust operation or policy,

1.2.6.2 Procedure of policy examination

a Defining detail and standard of examination

examination details are all works relating to stages of previous policy management,

including: Tasks, target, business environmental analysis, proposal, selection and

execution of policy

Examination standards are also clearly defined Without examination standards, examintion will be meaningless Standards to examine are targets, lines and previously selected policies

b Achieved result measurement

Measurement of real achievement of bank via execution of specific policy is a complicated work although framework and evaluation technique are also included in policy content previously defined

c Conparison between achieved result and proposed standard

Difficulty in comparison is difference of used measurement methods, inconsistency

in system of measurement standard and evaluation, and exsisting of elements not be

able to be directly mesured by normal methods There are two basic methods:

First, qualitative comparison: For qualitative target, achieved result is evaluated by comparison between real result and proposed target

Second, quantitative measurement: Targets of common policy are clearly determined , thus examination of execution achievement of these targets is also based

on concrete measurement mostly according to percentage of plan execution of each

term (month, quarter, year 5 years)

d Defining of error reason

In examination, it is very important to clearly define error reasons both in objective and subjective faces Error may start from policy due to inaccuracy in forcasting of

Trang 30

environmental status, errors in policy building method, unappropriate execution process and be considered as base to adjust policy

1.2.6.3 Procedure of policy adjustment

This is the diagram showing procedure of policy adjustment

Diagram 1.2: procedure of policy adjustment

necessity of obstacle of Executing Reevaluati

policy policy | _ policy | _,| ng policy adjustment adjusment adjusment adjustment

1.3.1 Experience in strategic management in some domestic and

international trading banks

1.3.1.1 Experience in strategic management in some domestic and trading

banks

The thesis statement has chosen two domestic trading banks to reasearch experiences in policy management One is a long-standing bank with depth of construction and development history- Vietnam commercial bank; and the another is a newly-built bank with quite sufficient and methodical system of policy management — Lien Viet Trading Joint-Stock Bank

Trang 31

a Experiences in strategic management in Vietnam Commercial Bank

The Bank always considered as leading one in banking industry in Vietnam is vidrllh com cesspu tine CVER) With depth of cosntruction and developmement history, VCB pursues development policy of mixed growth, including: Concentric growth and diversification, buyback and joint-venture policy

Pursueing development policy of mixed growth with advantage of operation and scale, force of personnel having high knowledge and awareness of business operation, VCB always assesses information technology at its true worth and considers modernization of technology as one of basic conditions to direct to international standard of a modern bank VCB, on the base of modern technology, has brought out

to the market new products such as card service and online banking service highly evaluated by customers, opponents and management authorities Investment in banking technological developement is a true and timely policy of VCB; constructing marketing policy not noisy but having deep strength, close finacial and credit policies but not losing flexibility in changing context of business environment With human resource policy absorbing talents for many important roles, operation organization

modal of VCB shows closeness, tidiness and effectiveness in operation of a versatile and modern bank

In order to enhance credit quality and management of credit risk, VCB has a credit marking and grading system managing system information Basing on this system, the bank will consider and evaluate customer then built credit limits for each customer, to both ensure safety and most effectively protect interest of customer

Beside automatic marking and grading system, VCB also has management system

of relationship and interest evaluation for customer Basing on that, the bank has been using it to analyse market, segment customer and construct reasonable policies for each its target market and potential group of customers Policy system of VCB is quite sufficient and flexible

Thus, VCB has a quite close and flexible system of policy management basing on modern information technologicl foundation, reasonably balancing resources to become a leading bank providing many new service products for the market, maintaining number-one role in banking industry in Vietnam

b Lien Viet Joint Stock Company

Trang 32

Upon mentioning Lien Viet Joint Stock Company (LienViet Bank), few people are not surprised about strong growth in its profit

PDK CORR ess or, FES EN toe, LienViet Bank organized Logo design and selected its message as effective measure of advertisement

With newcomers entering the market, capital, technology and experience of managers are essential weapons to win in competition LienViet Bank was established

with charter bank of 3,300 billion VND in 28 March 2008 At that time, this capital

was regarded as the biggest among joint-stock banks, which is favorable condition for LienViet Bank to impletion further business strategy

Unlike other young banks (including SHB) those select inexpensive, low-quality Core Banking system, Lien Viet Bank developed a systematic technological investment strategy aiming at the objective of becoming the No 1 bank in Vietnam in term of modernization LienViet Bank bought Core Banking Flexcube from the world’s top financial service IT solution supplier — I-Flex Solutions

If anyone read LienViet Bank General Culture, he shall learn vision, determination

and confidence of the bank leaders In spite of shortness, it fully indicates mission, key values, prospect, objective and behavior principle of LienViet Bank’s members

Although Lien Viet Bank is newly established, it has developed a relatively adequate and flexible policy system including credit policy, financial polity, human power policy, Marketing, research and development policy With each policy, the bank specify clear reward and fine system to ensure discipline and motives for all employees

With such development rate, LienViet Bank is expected to achieve considerable progresses compared with medium-grade joint stock company and rise with seiner banks in joint stock bank sector including ACB, Sai Gon — Thuong Tin Bank in the near feature

Extract from mission, vision announcement of some joint-stock bank: a-Maritime Joint-stock Bank (MSB):

Strategic Vision:

Maritime Bank strives to be the leading commercial stock bank in providing professional multi - financial services that meet the international standards

Trang 33

The Study - Group No.8 Strategic Management With the commitment for sustainable development, Maritime Bank strives to

become the leading national commercial stock bank in modernizing, creation and

faithfulness HIẾU GÀ Business Opeeations

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

* Provide high quality 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

* Learning and creating to reach perfectness

* Cooperation and truth is the motivation to succeed

b-VIB BANK

-Vision and mission of VIB

To customer: Outstanding in supply of creative solution to make maximum

fulfillment of customers’ demand

To employee: Establish effective culture, business spirit and efficient working

environment

To shareholder: Bring out attractive and sustainable values for shareholders

To the community: Make active contribution to community development

c-Techcombank

Mission

Techcombank is a multi-functional Joint Stock bank of Vietnam, providing individuals and companies with high competitive, various and uniformed financing services and products in order to meet all demands of customers, creating rising for shareholders, developing interests for Techcombank staffs and contributing to the development of community

Vision 2010

Trang 34

Techcombank is making endless efforts to be ranked as the top bank of Viet Nam in trust, quality and effectiveness

d- Sai Gon — Hanoi Joint Stock Bank (SHB)

With existing foundation and strength, SHB identifies its strategy to strive to the top, modern retail bank in Vietnam and a strong financial corporation by 2015

Target customers

e Small and medium enterprises: 10,000 customers by 2010

e Consumption customers and households: 1,500,000 customers by 2010

e Local and international big customers: 100 customers by 2010

Target market

e Big cities: Hanoi, HCM, Da Nang, Can Tho and Hai Phong

e Provinces, cities with high growth rate including: Quang Ninh, Vinh, Hue, Nha

Trang, Vung Tau, Lang Son, Lao Cai

e Industrial parks in big cities including Vinh Phuc, Hung Yen, Bac Ninh, Chu Lai, Binh Duong, Quy Nhon, Dong Nai

1.3.1.2 Experience in strategic administration in foreign bank

Due to limit in time, the thesis only presents administration experience in a foreign bank as HSBC

Trang 35

HSBC is one of financial service organization and the world’s biggest bank with branches in Europe, Pacific Asia, America, Middle East and Africa HSBC positions its trationiark CARBRERS OF knee, Veesiony bank understands locality” HSBC achieves various defeats in Vietnam and on 01 January 2009, HSBC becomes the first foreign bank to officially operate subordinate bank in Vietnam

Global development is one of the key business strategies of HSBC Sustainable development with HSBC includes responsibility, sensitivity in long-term business management method in which benefits in human beings, education, society,

With the message “global bank, local understanding”, how has HSBC operated quality administration operation?

In term of strategy and quality administration of HSBC, HSBC develops business strategies those are renewed, adjusted timely in the event of changes in economy The latest adjustment strategy is announced in 23 November 2007 through presentation of HSBC leaders in front of the public, employees and analysis experts from financial organizations, banks, big corporation of the world in the form of open workshop, in which questions and answers are raised to highlight as well as protect feasibility of their business strategy Information in strategies, policies, action plans, service

products, price, fees, business results, advertisement information cover all varied, open, updated, accessible operation of the bank in order to serve various subjects

including clients, investors, shareholders, employees of the bank This proves respect

to above-mentioned partners and confirms style of strategic administration based on effective information foundation of HSBC

As a global bank, HSBC is characterized by multi-colored culture, because each

country, territory in which HSBC operates contains specific culture and specially respected by the bank All the statement, film clips, advertisement images of HSBC show human respect, especially respect of customers, people in the world and highly appreciate success in the world

Research in strategies and strategy administration of HSBC does not aim at learning their strategies because with Vietnamese Commercial Bank, it is a big expect as well as takes 10 years or more to achieve global success like HSBC because we do not have adequate material and human condition However, we can learn experience in strategy

Trang 36

administration that is the optimum information transparency and openness, respect in human beings, community, society, environments rarely achieved by any banks in PDE ressor.Free.Version _

the Mme Sirdtesic information openness is capable of expressing status in the market and absolute trust for concerned subjects

1.3.2 Experience lesson about strategy administration

By study of strategy management experience of domestic and foreign banks, it is possible

to dray in some experience in commercial bank strategy management as follows:

Firstly: The bank management board is required to be aware of significance of strategy administration and pay proper attention to this process It is recommended to invest in organization, development of administration of strategy in systematic manner right from the earl days of establishment or mode transfer Since the first right steps are basic premises for further progress in sustainable development of the bank (clear example in LienVietBank.)

Secondly: To successfully pursue strategy, the bank must develop modern technology and effective communication system, since they are important factors supporting strategy administration in all steps of this process from environmental information analysis, market segment, and selection of target customers, dissemination, and strategy announcement to customers, employees and concerned agencies Especially, if it is possible to develop customer feedback system, strategy administration must be supported from the bank and provided with feedback, support

of customer, functional authorities to make proper adjustment to ensure successful strategies

Thirdly: A successful business strategy is that with information transparency, openness in term of strategies, respect of people, community, culture, society, environment (Lesson learnt from HSBC)

Fourthly: Promote strength; make use of opportunities when obtaining necessary resources to become the leader in business activity in a sector with various risks as currency business that requires investment in time, material and human power However, advantage of a pioneer in new product and service supply in the market shall result in big success for the bank (Lessons learnt from VCB)

Fifthly: Strategies aims at diversifying product, service categories, reducing income density from risky traditional products such as credit, which is a wise strategy

Trang 37

Conclusion of Chapter 1:

Above is all general explanation and lessons learnt about strategy administration in commerce bajks li Ree ES OR ton Jor Vietnamese commercial banks in general and SHB in particular to make flexible application in strategy administration depending on their actual condition To make good application of above issues for strategy administration, this thesis shall study operation status in SHB, good points and weakness as well as reasons in following chapter

Trang 38

CHAPTER 2 PDFG@URRENSD SISAUVAKIQON OF STRATEGIC MANAGEMENT

AT SAIGON — HANOI COMMERCIAL JOINT STOCK BANK

2.1 Overview about Saigon — Hanoi Commercial Joint Stock Bank 2.1.1 Establishment and Development of the bank

13/11/1993: The Rural Commercial Joint Stock Bank Nhon Ai (precursor of Saigon

— Hanoi Commercial Joint Stock Bank - SHB) was established under license of

0041/NH/GP on November 13, 1993 issued by the Governor of State Bank of Vietnam

and officially went into operation on December 12, 1993 with the initial registered charter capital of 400 million

20/01/2006: Governor of State Bank of Vietnam signed Decision No VN 93/QD- NHNN of consent for conversion SHB model from rural commercial banks into urban commercial bank, thereby creating favorable conditions for SHB to improve its financial capacity, expand scope of business, to become more competitive developing, marking a new stage of development of the SHB The bank aims to become one of the leading retail commercial banks in Vietnam, providing diversified products and

services to the market, which is sustainable and safe to meet the requirements of

international economic integration

After 15 years of operation, the current charter capital of SHB reaches 2,000 billion VND (as of September 30, 2009), business networks are present in most major cities across the country with many new products and services utilities SHB's customers are diversified and from different economic sectors and different business lines Business activities of SHB in the past years stay safe in terms of capital ratio, high prudent credit policies, and reasonable procedures

It is expected that by the end of 2009, SHB will increase its charter capital to VND 3,500 billion and continues to increase its charter capital in the coming years to meet the increasingly high business needs for expansion and development

Specific business development plans in accordance with action plan, the roadmap

of integration of Vietnamese bank with potential financial strength of potential shareholders, the determination of the leaders and all to bank staff will be the positive factors in the development stage and will help SHB develop in a sustainable way during its integration process

Trang 39

2.1.2 Organizational structure of Saigon-Hanoi Commercial Joint Stock Bank

The organizational structure of Saigon-Hanoi Commercial Joint Stock Bank is

depicted in the following diagram:

Diagram 2.1: Organizational structure of SHB

&Training |_| | Credit control accounting Law internal control

development {| enterprise |— Payment centre |_ a eministration I

Department Department P

2.1.3 Main activities of Saigon-Hanoi Commercial Joint Stock Bank

2.1.3.1 Operation and Management

In terms of operation and management, with the greater autonomy - in management operations and management of the bank, Board of Directors actively arrange for appropriate personnel and make timely decision related to debt recovery and business development, as well as actively in the development and implementation

of mechanisms to encourage employees Thus, business activities of SHB have achieved encouraging results which are presented below

2.1.3.2 Risk management activities

With the motto to control and prevent risks to actively prevent rather than solving the risks, SHB has a strict and scientific system of risk management from higher levels

to individual staff Risk management structure includes Control Board, ALCO

Council, the Council on Credit, Credit Management Office, Internal control

Department, Risk management Department In addition, the risk management activities also get the assistance from relevant departments such as Planning

38

Trang 40

The Study - Group No.8

dong) dong) dong)

Source: Capital source and foreign currency business Department — SHB

By the end of 2008, Mobilization from the market I of SHB reached 9508 billion,

an increase of 19% compared to the end of 2007, increasing over 15,000 times compared to the end of 2006 Balance of Mobilization from the market II by the end of

2008 is VND 2,235 billion a decrease of 68.48% compared to 2007 However, the total

mobilized capital is sufficient to meet growth and demand for capital liquidity, lending and investment Capital structure also changes the direction of increasing the proportion of non-term deposits, so the cost of interest reduced significantly, thereby to get profit from the difference in average mobilized interest rates and average credit

interest and investment rate

Table 2.1: Structure of mobilized capital from market I of SHB

llalll 2UVO Ua OLID

Source: Capital source and foreign currency business Department — SHB ,

39

Tiêu đề	Strategic management in Sai Gon-Ha Noi Commercial Joint Stock Bank reality and solution
Tác giả	Pham Dang Mai, Nguyen Viet Quang Minh, Do Tuan Bich, Do Thanh Long
Chuyên ngành	Strategic Management
Thể loại	Capstone project report
Năm xuất bản	2010
Thành phố	Hanoi

Định dạng
Số trang	98
Dung lượng	17,08 MB