G1 00280 VÌ XÂY DỰNG VÀ LỰA CHỌN CHIẾN LƯỢC KINH DOANH AGRIBANK HÙNG VƯƠNG GIAI ĐOẠN 2012-2014 FOR BUILDING AND SELECTING BUSINESS STRATEGIES AGRIBANK HUNG VUONG IN THE PERIOD OF 2012-2014

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CAPSTONE PROJECT REPORT

BUILDING AND SELECTING BUSINESS STRATEGIES

FOR AGRIBANK HUNG VUONG

IN THE PERIOD OF 2012 - 2014

CLASS: GAMBA.M0110

GROUP 08

Hoang Cam Chi Nguyen Thi Hai Linh

Le Anh Tuan

HANOI - 2012

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Thanks to your valuable information and documents provided by management board and the enthusiastic guidance of staff in Agribank Hung Vuong, that help us easily collect data, gather the research information and concentrate on fulfilling our assignment in the earliest time

We would like to commit that this achievement reflects our best efforts in the process of studying, selecting and analyzing the research subject of each member and based on some references during the time of doing this research

We also commit that, this assignment is our product and we have not proposed this research to any other research program or education course

Hanoi, May 3, 2012 Members of Group

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SOCIALIST REPUBLIC OF VIETNAM PDF Comprebaneteperdensen- Freedom- Happiness

Ila noi, dated May 2012

CERTIFICATES

Vietnam bank for agriculture and rural development Hung Vuong Branch ( Agribank Hung Vuong) certification:

Agreed to provide information related to graduation assignments for group

8, GAMBA.M0O110 Master Business Administration from Central ETC —

Hano National University Griggs U.S institutions, with the topic

“BUILDING AND SELECTION BUSINESS STRATEGY FOR

AGRIBANK HUNG VUONG BRANCH FROM 2012 TO 2014”

AGRIBANK HUNG VUONG

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OPERATION OF AGRIBANK HUNG VUONG IN THE PERIOD OF 2008 -

2011

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2.2.1 Analysis of external environment factors

2.3 Analysis of internal environment factors

2.4 Operation network

2.4.1 Branch

2.4.2 Third-degree Branch, Transaction office

2.4.3 Comments, evaluations

2.5 Status of business operation in the period of 2008 to 31/12/2011

2.5.1 General activities of the branch

2.5.2 Operation of dependent transaction offices

2.5.3 Comments and evaluation on business operation of Agribank Hung Vuong Summary of chapter 2

CHAPTER 3.: OBJECTIVES, MEASURES TO BUILD AND SELECT BUSINESS STRATEGIES FOR AGRIBANK HUNG VUONG IN THE PERIOD COP 20 12 Ôi TÃ cuc saneasiiosetsiii11100100856g1605501HG00g061264333g1aGi58cug0g4c80ugg60i806i0606458581538410005ã 3.] Objectives of business operation of Agribank Hung Vuong in the period of 2012-2014

3.2 Building matrices and selecting business strate@ies: ccascescesseroenceceeceesveaccenneneses 3.2.1 Analysis of SWOT Matrix

3.2.2 Analysis of SPACE Matrix

3.2.3 Analysis of Strategy Matrix

3.2.4 Identifying replacable business strategies

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UNIVERSITY Global Advanced Master of Business Administration

PDF Compressor Free Version

3.3.3.Measure of technology

3.3.4.Measure of restructuring the organization apparatus

3.3.5.Cost estimation for implementing business strategies of Agribank Hung Vuong

CONCLUSION

RECOMMENDATION

BPP ERENCES nuunontirtvisiikli0E1030118901630000061091013805000103500531103/8009406.74003n0/00101079.094/0003091in8u84-0700/800284 APPENDIX

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3.3.4.Measure of restructuring the organization apparatus

3.3.5.Cost estimation for implementing business strategies of Agribank Hung Vuong

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1/ Reason for choosing this subject

It is not an overstatement to say that an enterprise will fall or succeed in the market depending entirely on strength of its business strategy and there is no risk for a well-prepared plan for prospective business activities Therefore, the enterprise must develop a short term plan for the immediate objectives and a long term plan for the business activities in the future at the same time As for the business fields that have severe competition and require huge initial investment, development strategy building plays an important part for the development of the enterprise

The banking sector is a specific business one, it plays an important role in the development of the national economy but also very sensitive to the fluctuations of the domestic and international economic - political - social environment Therefore, the activities of commercial banks are always strictly controlled In addition, competitive pressures in the banking sector become more severe together with the

deeper integration of the domestic economy Thus, the requirements set forth for

each bank are to build their own strategies to stabilize and develop the business operation on the basis of taking advantage of opportunities and minimizing the risks

on the integration process

For all these reasons, the strategic orientation of business must be consistent

with the specific characteristics of each bank in order to stabilize, develop and

improve competitiveness capacity of banks It is the most urgent need for each bank

in general and the Vietnam Bank for Agriculture and Rural Development and Agribank Hung Vuong in particular

From the above mentioned realities, Group 8 decided to choose the subject:

“Building and selectin business strategies for Agribank Hung Vuong in the Period of 2012-2014”

2/ Purpose of this research

This research focuses on the following matters:

- Basic theories on strategy and strategy management

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- Useful analysis models serving for the process of developing and choosing the business strategies of Agribank Hung Vuong

- Status of the strategy implementation of Agribank Hung Vuong

- Analyzing the internal and external environment factors that affect the implementation process of Agribank Hung Vuong’s strategy

- Proposing the appropriate measures to build business strategies for Agribank Hung Vuong in the period of 2012-2014

3/ Object, scope and research methodology

Object and scope: this research focuses on studying the current strategy management in the period 2012 - 2014 and proposes the measures for the coming

period

Research methodology: two main types of information shall be taken into account

in this research which are primary information and secondary information The secondary information is collected from many different sources, especially from the reports on business operation of Agribank Hung Vuong Additionally, we also take the advantage of collecting information from the open sources, namely, internet, books, especially from Philip Kotler’s Marketing Management coursebook regarding the typical strategy management theories

4/ Structure of the research

Chapter I: General theoretical bases on making business strategy

Chapter II: Current situation on organization and operation of Agribank Hung Vuong in the period of 2008 — 2011

Chapter III: Objectives, measures to build and select business strategies of

Agribank Hung Vuong in the period of 2012 — 2014

CONCLUSION

REFERENCES

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management theory, as follows:

- According to Alfred Chander (1962), strategy is “determination of the basic long- term goals and objectives of an enterprise, and the adoption of courses of action ard the allocation of resources necessary for carrying out these goals”

~ Ansoff H.I (1965) explained the concept of strategy as “the common thread

among the organizations, activities and product markets, it includes 4 aspects: merket — products, growth vector (the changes to be carried out by the enterprises

to conform with the market — products), competitive advantage and the resonance”

- According to Harvard Business School (1965): “Strategy is a system of goals and objectives which are defined under the business field/ operation that the company waits to participate in, the scale and position that the company wants to achieve and the basic policy, plans to implement that goals”

- Jemes B Quinn (1980) defines strategy as: “the pattern or plan that integrates an organization ’s major goals, policies and action sequences into a cohesive whole”

- William Glueck (1980) defines the term strategy as “the unified, comprehensive anc integrated plan that relates the strategic advantage of the firm to the challenges ojf te environment and is designed to ensure that basic objectives of the enterprise are achieved through implementation process”

- According to Fred R David: “Strategies are the means to achieve long-term goals Bus'ness strategy may include: the development in term of geographical aspect, the diversification of activities, ownership, product development, market penetration,

,

CiariaLlment ofexpenditure, liquidation, join† ventures `

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- In accordance with Michael Porter: “The strategy is the creation of a unique and valuable position, including differentiation, the decisive choices to mobilize the resources, from which to create advantages for the organization ”

- John I Thompson’s point of view is: “Strategy is the combination of resources, environment and expected values”

From the above viewpoints, we can see that strategies related to the basic objectives

in a long term of an enterprise However, the strategy formulation and decision- oriented goals are not enough, the strategy should be determined in accordance with the vision and mission of organization It is also the ways and means to achieve those objectives in the best way, so as to promote the strengths, overcome weaknesses of the organization, to receive the opportunities and avoid or minimize the risk of damage from the external environment

Thus, we can define the general strategy, as follows:

“Strategy is a direction and scope of an organization over a long-term which achieves advantage for the organization through its configuration of the resources to fulfil stakeholder expectations.”

1.1.2 Concept of business strategy

As mentioned above, the strategy relates to the objectives of an enterprise, strategies are built to help enterprises achieve the given objectives However, it is likely that business strategy is more related to how an enterprise can compete successfully in a specific market It involves in the strategic decisions about selection of products to meet customer’s needs and gain competitive advantages over competitors, exploiting or creating new opportunities etc

Fred R.David once said that “Business strategy plays as the means to achieve the long-term objectives.”

It can be said that business strategy is the mean that helps enterprise meet the long- term objectives Business strategy does not aim at mapping out the detailed actions,

it is a general plan, the most effective measures in mobilizing the enterprise’s resources to meet the expectation

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In an enterprise, the business strategy can be summarized as follows: “Business strategy is defined as the art of configuration of resources to meet the long-term objectives and it has the relationship with the changes of business and competition environment.”

1.1.2.1 Basic characteristics of business strategy:

- Business strategy is built from the basic objectives and business plan of an enterprise in each developing stage

- The orientation of strategy is to ensure the continual and stable development of an enterprise in the challenging environment

- Business strategy is to ensure best utilization and optimal combination of resources at present and in the future, to promote the advantages and seize the opportunities to gain advantages in competition

- Business strategy is reflected in a continual process

- Well-prepared strategy shall help the enterprise develop its business operation and gain success in the business world

- Business strategy is applied in a long term (3 year strategy, 5 year strategy, 10

year strategy)

1.1.2.2 Roles of business strategy:

- Business strategy helps enterprise recognize its goals, directions to make them

bases, guidelines to all production, business activities

- Business strategy helps the enterprise to capture and take advantage of business Opportutinities and concurrently, prepare active measures to overcome risks and threats in the competitive market

- Business strategy contributes to improve the efficiency of resources usage, strengthen competitive positions and ensure the sustainable development of the enterprise

- Business strategy creates the stable bases for proposing the policies and decisions

on business, production that conform to the changes of market

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1.2 Strategic management procedure

Strategic management process is a sequence of activities, including commitments, decisions and actions of an enterprise to be executed to achieve strategic competitive advantages; sustainable competitive advantages with above average profits

Strategic management procedure consists of 3 stages: strategy planning, strategy implementation and strategy evaluation

Comprehensive strategic management model

external shing lishin

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(Source: Fred R.David, Concepts of strategic management, page 27 )

Step 1: Strategy planning

This is the first stage, laying the foundation and a very important role in the entire strategic management process During this period, enterprises identify strategic

objectives on the basis of building mission, vision, core ideals; through the analysis

of factors of internal and external environment, exactly determining opportunities, threats, strengths, weaknesses, thereby combining and selecting appropriate Strategies

Step 2: Strategy implementation

This is the stage that turns strategies into actions to achieve the given objectives In the strategic management process, this stage is also important because a strategy that is very planned scientifically will become meaningless if it is not done well Three basic activities in the implementation stage are to build annual strategic business plans, to establish annual objectives, to make policies and distribute resources,

Step 3: Strategy evaluation

This is the final stage of the strategic management process In this step, it needs performing tasks such as: reviewing factors that are the bases for the current strategies, measuring performances and implementing adjustments

1.3 Mission, vision, objectives, policies and core ideals

1.3.1 Vision

Strategic vision represents the highest, the most general desire and ambition that organizations want to achieve Vision can be also considered as a road map which shows the destination in the future and the way that enterprises will go to reach that

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destination In other words, strategic vision is to draw the picture of the destination and reasons, the ways to go there

Identifying and stating the vision play an especially important role, because it focuses the enterprise’s people's expectations and encourage all efforts of the enterprise to achieve objectives, career and lofty ideals

1.3.2 Mission

The mission is a long-term valuable statement on objectives, it helps distinguish this enterprise with other enterprises Such statements are also called business phylosophies, business principles and the company's beliefs

The mission states “the reasons for the company’s existence” According to Drucker, the company’s mission statement answers the question: "What is our business?", "What do we need to do and how to achieve the vision statement?” 1.3.3 Objectives

Objectives can be defined as the given achievements that an organization seeks to achieve by pursuing her main tasks /missions Determining the right objectives is very important for the success of the enterprise, and objectives point out the direction of development, assess achieved results, show the objectives of resources distribution, development and cooperation, provide the basis to plan effectively, as a basis for the organization, and evaluation of the effects Objectives should be challenging, measurable, appropriate, logical and clear In an enterprise with many departments, the objectives should be established for the whole company and for each department

1.3.4 Policies

According to Fred R.David: “Policies are instruments to implement strategies, are the measure to achieve objectives Policies include established guidelines, principles and procedures in order to support efforts to achieve given objectives Policies are guidelines to make decisions and express the situations that are often repeated or cycled”

1.3.5 Core ideals

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Core ideals determine long term characteristics of an organization, it's a consistent determination that is beyond the life cycle of the product or market, the technological breakthroughs, the management styles and leading individuals In fact, the core ideals create the most important and sustainable contributions to successes in a visionary company

Core values are basic and sustainable principles of an organization Core values do not need external defences, they are valuable and important to the organization itself A company should determine by themselves the core values, that are independent from the current environment, competition requirements and methods

of management To identify the core values, it needs selecting the authenticity, thereby determining which values are the core

The external environment includes factors, forces, institutions occurring outside

enterprises, enterprises do not control but that affect performance and operation of enterprises

Identifying and evaluating opportunities and threats from the external environment enable enterprises to precisely, clearly their mission, tasks, to build strategies and to achieve long-term objectives and to make policies to achieve the annual objectives External environment includes:

- The macro environment or also called the general environment

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-Jhe industry environment or also called micro environment or competitive environment

1.4.1.1 Analysis of macro environment

The macro environment is the environment that covers activities and affect directly

or indirectly to the operation of all enterprises

The main goal of macro-environmental analysis is to identify changes in expected

trends of factors of the external environment With the focus on the future,

analyzing the external environment enables enterprises to identify and evaluate: Opportunities (O - Opportunities) of the environment in which enterprises can take advantages of and threats (T - Threats) that enterprises can face Since then, it enables enterprises to build clear business tasks, to identify feasible and long-term objectives and design strategies consistent with business objectives

We can use PEST model to analyze the macro environment This model consists of: -Political

** Political environment

Polical and legal factors also have great impacts on the level of the

Opportunities and threats from the environment The main thing in this environment

is the way that enterprises can influence on the government and the way that the government affects them

Enterprises must carefully analyze the philosophies, new policies related to state management Antimonopoly laws, tax laws, industries selected to be adjusted

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UNIVERSITY Global Advanced Master of Kusiness \deninistration

or prioritized , the labor law are the areas in which the state management policies can impact on the operations and profitability of the industry or of enterprises

Stability: We will consider the stability of the elements such as political, diplomatic conflicts of the law institution Institutions with a high stability can create good conditions for business activities and vice versa unstable institutions with conflicts will negatively impact on business activities on its territory

On a global scale, enterprises also face with a range of concerned issues of politics and laws

The strict regulations of countries in order to protect consumer rights, security are also the significant impacts on business activities of the industries and enterprises

“+ Economic environment

The state of macro-economic environment determines the health, prosperity

of the economy, it always causes the impacts on enterprises and industries

Economic environment shows the nature and orientations of the economy in which enterprises operate Impacts of the economy on a company may alter the

ability to create values and its income Four important factors in the macro economy

is the growth rate of the economy, interest rate, exchange rate and inflation rate

- Economic growth rate: helps companies have opportunities to expand and earn high profits In contrast, the economic downturn will cause the price war in saturated industries

- The interest rate: can impact on the demand for the enterprises’ products

- The exchange rate: determines the value of a country’s currency as compared

to the currency of other countries The shift of exchange rate will directly impact on

the competitiveness of enterprises in the global market

- Inflation: may reduce the stability of the economy, make the economy grow more slowly, higher interest rates, the unstability of exchange rate shifting If the inflation increases, the investment plan making will become risky The key feature

of inflation is that it causes difficulties for the future expectations High inflation is

a threat to enterprises

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Global Advanced Master of Business Administration

** Socio-cultural environment

e Socio-cultural environment relates to the social attitudes and cultural values Because cultural values and social attitudes create the social background, it often leads to changes and technological, political - legal, economic and demographic conditions Like technological changes, social changes also create opportunities and threats

e Cultural factor: Each country or territory has the specific cultural values and social factors and these factors are features of customers in those areas

These cultural values are the values that make up a society, can contribute to that society's existence and development Therefore, the common cultural factors, especially the spiritual cultures are protected very strictly and scaled Yet we can not deny the acculturation of different cultures in the countries This interference will change consumption psychology, lifestyle, and create development prospects for the industries

e Social features also make enterprises concern when doing market researches,

the social factors will divide the community into customer groups, each group has the different characteristics, psychology, income,

- Total population, total number of people in working age

- Average life expectancy, health status, diet, eating regime

- Average income, income allocation

- Lifestyle, education, aesthetic attitudes, living psychology

- Living conditions

s* Technological environment

Technological environment includes institutions, activities related to the creation of new knowledge and transferring of that knowledge to the outputs,

products, processes and new materials The technological changes include both

creation and destruction, both opportunities and threats One of the most important impacts of technological changes is that it can affect the height of barriers to enter

and reshape the industry’s structure radically

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GRIGGS

University Global Advanced Master of Business Administration

In terms of integration and globalization, no country or no enterprise does not have any directly or indirectly relationship with the world economy, these relationships are daily, hourly developing very strongly, diversely, complexly and impacting on enterprises

Besides basic factors of PEST model, nowadays, when doing market

researches, depending on the sector that enterprises do business, they also analyze the natural environment and global environment

“+ Natural environment

Natural environment includes geography, climate, natural landscape, land,

rivers and seas, mineral resources under the ground, the sea and forest resources, the

purity of the water environment and atmosphere to ensure the necessary inputs and operating environment of enterprises These factors that should be studied in this environment are:

- Geographical locations, natural and climate conditions

- Types of resources, minerals and reserves

- Exploitation and use of natural resources

** Global environment

Global environment includes related global markets, the current markets in changing, important international political events, the characteristics of cultural

institutions and basic cultures in global markets The globalization of business

markets creates both opportunities and threats

- Threats: The globalization creates competitive pressures, the competitors coming from all regions The integration process will cause the enterprises to adjust

in accordance with comparative advantages, allocation of labor in the region and the

world

- Opportunities: It is important that when integrating, trade barriers will

gradually be removed, enterprises have the opportunities to trade with partners in

distant geographic areas, enterprises’ customers now are at not only the domestic market where enterprises are doing business but also the customers coming from all

Over areas

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1.4.1.2 Analysis of the industry environment

In order to plan strategies, in addition to analyzing the macro environment, studying the industry environment is a very important part The industry environment is the environment that relates directly to each enterprise, the major part of enterprises’ activities and competition occurs directly in this environment Michael E Porter, a famous professor of the business strategy in Havard University brings out the five competitive force model that help strategic administrators analyze the competitive environment, identify opportunities, threats from this environment thence build adaptive strategies According to him, five competitive forces are:

- Competitive pressure from implicit competitors

- Competitive pressure from substitutes

- Competitive pressure of customers

- Competitive pressure of suppliers

- Competitive pressure in the internal industry

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“+ Competitive pressure from implicit competitors :

According to M-Porter, implicit competitors are those enterprises which are

not currently available in the industry but may affect the industry in the future more

or less implicit competitors, their strong or weak pressure on the industry will depend on the following factors:

- The industry’s attractiveness: This factor is shown via some criteria such as

profitability rate, the number of customers and the number of enterprises in that

industry

- The industry entry barriers: factors make the entry to an industry more difficult and costly (advantages of scale, product differences; capital requirements; changing costs, access to distribution channels, disadvantages of costs not related to the scale; the government’s policies; retaliation of the existing industry enterprises)

“* Competitive pressure from substitutes :

Substitutes are the products of the industries that serve the same customer demand as products in the industry The emergence of substitutive products can lead

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to the risk of selling price decrease or profit drop of the enterprises Therefore, enterprises must forecast and analyze the development trends of substitutive products causing to enterprises

Substitutive products and services are those that can satisfy demands the same as products and services in the industry

The threat of substitutes increases when:

- The costs of switching the products of buyers are low

- Prices of substitutes are lower

- Quality and effectiveness of substitutes are better than currently used products Special products which are highly appreciated by customers will be less impacted

by this threat

** Competitive pressure from customers:

Customers are served objects of enterprises and the factor that creates the

market Pressure from customers is primarily in two forms: claim a discount or bargain for the better quality of products / services and it is them who control the

industry’s competition via the purchase decisions These makes the existing

competitors rival against each other and drop the industry profits

The bargaining power of customers will increase when:

- Few buyers and they are big customers

- Buyers consume the major part of products of an industry

- Buyers account for a big ratio in the annual revenues of sellers

- Costs of switching other products are low

- Products are undifferentiated and are standardized products

- Enterprises’ products do not play the important, decisive part on the product quality of buyers

- Buyers have sufficient information such as demand, prices in the market, even

prices of suppliers

Buyers maybe integrate backward to the industry of sellers

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** Competitive pressure from suppliers :

Suppliers are individuals or organizations that supply the necessary resources for the operation of the enterprises Suppliers can create opportunities for the enterprises when they reduce selling prices, increase product quality, increase the quality of services attached Conversely, they can also cause threats for the enterprises when increasing selling prices, reducing the product quality, services and not assuring the number and duration of supplied products and services

Advantages of suppliers can cause pressures on enterprises via many factors:

- The number of suppliers: The number of suppliers will decide competitive pressure, their bargaining power to the industry and enterprises If the market only has a few dominant suppliers, the suppliers create pressures on prices, quality and method of payment If the market has only few dominant vendors, they will create the competitive pressure, which affects entire business, production activities of the industry

- Scale of suppliers: the dominant suppliers will have more strengths to

- When the supplier's products are important inputs for the operation of

enterprises or when the suppliers' products are differentiated and highly appreciated

by customers of enterprises In this case the pressure of suppliers will increase

- Costs of changing suppliers: suppliers will have higher pressure if enterprises have to pay a higher fee due to arising costs of design changes, employee retraining, ordering fees, inventories when changing suppliers

- When suppliers threaten to integrate forward into the industry it means that they will also control their outputs via investment in buyer expansion or definitive purchase In this case, it is causing more and more difficult to enterprises to improve terms of supply contracts

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JNIVERSITY Global Advanced Master of Business Administration

** Competitive pressure within the industry :

Competitors are those who trade the same products or services with enterprises Competitors share the market shares with enterprises and can rise if they are in aigher competitive position The competitive nature of the industry increases or decreases depending on the market scale, the development of the industry and the investment rate of competitors The nature and intensity of competitions among cxisting enterprises in the industry depend on many factors:

Crowded competitors or nearly equally sized competitors

The growth rate of the industry

- High fixed costs and warehousing fees

- The shortage of product differentiation and switching costs

- The industry has excess capacity

- Diversification of the industry

- The stake on the industry is high

- Exit barriers

In order to compare enterprises with competitors mainly based on factors affecting the competitiveness of enterprises in the industry, our group use competitive image matrix

Competitive image matrix help strategic administrators recognize the competitiors mainly with the major strengths and weaknesses of their own, while also clearly see its advantages and weaknesses to be overcome With this matrix, we

can put into the key factors of the internal environment which have decisive effects

on the development of enterprises such as financial stability, the effectiveness of marketing activities

Classification level shows measures that enterprises’ strategies respond to each

factor of competitors: the importance level is as follow: 4 is the best, 3 is above

average, 2 is average and | is weak

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1.4.1.3 External Factor Evaluation Matrix - EFE

EFE matrix synthetizes, summarizes and evaluates major opportunities and threats of the external environment affecting enterprises It helps strategic administrators evaluate the response level of enterprises to opportunities and threats, make some comments on the external environment to facilitate or make it difficult for enterprises

There are five steps to build EFE matrix:

- Step 1: Listing key opportunities and threates that have great impacts on the success or failures and business industry of enterprises

- Step 2: Classifying the importance from 0.0 (not important) to 1.0 (very important) for each factor The importance of each factor depends on the impact of such factor

on the success or failure of the enterprise in its business industry Typically, Opportunities have higher importance classification levels than threats; however, some threats also can get higher classification level if they especially seriously affect enterprises The classification level is determined on the basis of comparison

with the competitors or by methods of experts, group discussions; and results

achieved on the basis of the group’s consensus The total number of classification

levels assigned to all factors must be equal to 1.0

- Step 3: Determining classification coefficient from 1 to 4 for each factor, the

coefficient of each factor depending on the enterprises’ response level to factors,

including: 4 - good response, 3 - above average response, 2 - average response, | - weak response These coefficients are determined by the expert method, based on performance (the efficiency of current strategy) of the enterprises

Thus, the classification of importance in Step 2 is based on the industry, and the classification coefficient in step 3 is based on the status of enterprises’ response level

- Step 4: Multiplying the important level of each factor with its coefficient to determine total score of importance of enterprises

- Step 5: Adding total score of the importance of all factors to define the toal score

of the importance of enterprises

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Whatever the total score of major opportunities and threats is, the highest total score that an enterprise can achieve is 4.0 and the lowest is 1.0 The average total score of the importance is 2.5

1.4.2 Analysis of the internal environment

The internal environment of an enterprise includes its internal factors and systems To survive and develop, all enterprises must do following activities:

administration, finance, accounting, production / business / operation, research and

development, marketing, and requires an information system, management system, functional departments

Analysis of the internal environment aims at determing strengths (S) as well as weaknesses of enterprises (W)

e Strengths are what enterprises are doing very well or features that enable enterprises’ comptetiveness, they may consists of:

- Secrets, skills, experiencs or special know how

- Strengths in material facilities such as: profuse capital source, large distribution

system

- Strong human resources:

- Strength in organization and management

- There are invisible valuable assets such as: images, reputed brands, high loyalty of

customers

- They have advandtageous position in the market: lower costs, better products

- Strength in relationships

- Dominant key competence

- Important competitiveness competence

e Weaknesses are that enterprises are missing, weak or factors that will drive

enterprises into a disadvantageous situation, specifically includes:

- In shortage of important competition experiences

- Insufficience in resources: human resources and financial resources

- Weakness in organization and management

- No stable input supply

Za

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SEES

(GRIGGS

- Weak marketing activity

- No valuable invisible assets

The results of the internal environmental analysis are to determine the resources, capabilities and core competencies from which to build competitive advantages and strategic competitive advantages of enterprises The competitive advantage of enterprises is that enterprises are able to offer the market a special value that no competitors can offer

1.4.2.1 Internal Factor Evaluation Matrix (IFE matrix)

IFE matrix synthetizes, summarizes and evaluates basic strenghts and weaknesses of enterprises The matrix shows strengths that enterprises need to promote and weaknesses that enterprises must improve in order to enhance their achievements and competitive advandtages This is a very important instrument in planning strategies for enterprises

There are five steps to build IFE matrix:

- Step J: Listing factors including major strengths and weaknesses that greatly impact on the enterprises’ development

- Step 2: Classifying the importance from 0.0 (not important) to 1.0 (very important) for each factor The importance of each factor depends on the impact of such factor

on the success or failure of the enterprise in its business industry Regardless of the strengths or weaknesses, factors to be considered with the greatest impact level on enterprises’ operations will be classified the importance at the highest level The total number of classification levels assigned to all factors must be equal to 1.0

- Step 3: Determining the classification coefficient for each factor, the coefficient of each factor depends on the strength/ weakness of enterprises in which: 4 —very

strong, 3- considerably strong, 2 — quite weak, | - very weak These coefficients are

determined by the expert method based on the results of the internal environment evaluation for enterprises

- Step 4: Multiplying the importance level of each factor with its coefficient to determine total score of importance of enterprises

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- Step 5: Adding total score of the importance of all factors to define the toal score

of the importance of enterprises

Whatever the total score of major strengths and weaknessess is, the highest total score that an enterprise can achieve is 4.0 and the lowest is 1.0 The average total score of the importance is 2.5

1.5 Instruments to build and select strategies

1.5.1 Strengths —weaknesses — opportunities — threats matrix (SWOT matrix)

SWOT is a collection of the initial letters of English words: Strengths, Weakness, Opportunities and Threats This is an extremely useful instrument to help us understand the problem or make decision in organization, management and

business as well In florid words, SWOT is a theoretical framework upon which we

can review the strategies, identifying positions and directions of an organization or a company, analyze business proposals or any ideals relating to the interests of enterprises And in fact, the application of SWOT in business planning, strategic planning, competitor evaluation, market surveys, product development and in the research reports, are selected by more and more enterprises

Results of SWOT analysis are used to implement following steps of the administrative procedure by enterprises: strategy formulation and specific strategic control mechanism Enterprises’ strategies must assure to take full advantages of external opportunities, promote strengths, counteract external threats and limit — Overcome weaknesses of enterprises SWOT analysis result table (SWOT matrix) is

shown as follow:

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C SS

Table 1.1: SWOT Matrix

_— Using strengths to limit Listing strengths advantages of

Step 2: Fixing values from | (the worst) to 6 (the best) for FS and IS, from -1 (the best) to -6 (the worst) to ES and CA

Step 3: Calculating the average score for FS, IS, ES & CA

Step 4: Marking the average score for each side

Step 5: Adding two points on the horizontal axis and marking the result, adding two points on the vertical axis and marking the result Marking the co-ordinate of this new point

Step 6: Drawing a vector with the direction from the center of the matrix to this point

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GRIGGS

Table 1.4: SPACE Matrix

-6 Competitive

Correlative to each vector angle, enterprises will identify the appropriate

Strategy

1.5.3 Grand strategy matrix

This matrix consists of: the horizontal axis representing the competitive position

of enterprises in the market (strong or weak) and the vertical axis representing the market growth (rapid or slow) Appropriate strategies are listed in each quadrant

Grand strategy matrix

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Liquidation

Weak Quadrant III Retrenchment Conglomerate diversification Horizontal diversifcation

Strong

Quadrant IV

Conglomerate diversification Horizontal diversifcation Related diversification

Joint ventures

Slow market growth 1.5.4 Decisive stage

QSPM matrix uses information taken from 3 matrices in stage 1 and 3 matrices

im stage 2 to objectively evaluate replacable business strategies Strategies selected

to put into QSPM are not all strategies found out in the stage 2

To build QSPM matrix, 6 following steps must be implemented:

Step 1: Listing S,W,O,T factors taken from EFE, IFE matrix

Step 2: Classifying each factor to be appropriate with EFE, IFE matrix Step 3: Studying matrice in the stage 2 and defining replacable strategies in

Step 4: Defining total attractiveness score (TAS) according to each factor:

Step 5: Calculating total attractiveness score for each row by multiplying

need of consideration

attractive and 4 is very attractive

the score ranges from | to 4, | is unattractive, 2 is less attractive, 3 is quite

the classification score in step 2 by the attractive score in Step 4

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CES

GRIGGS

- Step 6: Calculating total attractiveness score of each strategy

The attractive strategy is the strategy with the highest total score in Step 6

QSPM Matrix Replacable strategies

Classi | Strategy 1 Strategy 2

Internal factors

External factors

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2.1 Overview of Agribank Hung Vuong

2.1.1, General information of Agribank Hung Vuong

- Name of the branch: Hung Vuong Branch for Agriculture and Rural Development Bank ( Agribank Hung Vuong )

- Address: Building CC2A, North Linh Dam Urban Area, Dai Kim Ward, Hoang

Mai District, Hanoi City

- Tel.: 04.36414793 Fax: 04.36410910

- Hung Vuong Branch for Agriculture and Rural Development was established under Decision No 145/QD/HDQT-TCCB dated February 29, 2008 by the Chairman of the Board of Directors of Vietnam Bank for Agriculture and Rural Development ‘On adjusting Hung Vuong Branch for Agriculture and Rural Development under West Hanoi Branch for Agriculture and Rural Development to

become under Vietnam Bank of Agriculature and Rural Development’ which officially went into operation from April 1, 2008 to present

2.1.2 Functions, tasks of Agribank Hung Vuong

Doing business on multi-lines and multi-fields on finance, monetary, credits,

banking services and non-banks in accordance with the laws, constantly improving the profit of the bank, contributing to implementing the national monetary policy,

serving the economic development of the country

2.1.3 Business operation of Argibank Hung Vuong

2.1.3.1 Capital mobilization

- Getting currency deposits and demand deposits in Vietnamese and foreign currencies of economic organizations and residents

- Getting saving deposits with diversified and attractive forms: Non-term savings

and time savings in Vietnamese and foreign currencies, reward savings, accrual-

type savings, etc

- Issuing bills of exchange, bonds, etc

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- Short-term lending in Vietnamese and foreign currencies

- Mid and long-term lending in Vietnamese and foreign currencies

- Export-import financing; discouting the official documents on exports

- Co-financing and syndicated lending for large projects, long payoff

- Overdraft, customer loans

2.1.3.3 Mortage

Mortage, re-mortage (domestic and international): Bid mortage; Contract performance mortage; Payment mortage

2.1.3.4 Payment and trade finance

- Issuance, payment of import letter of credit; notices, certification, payment of

import letter of credit

- Import and export collection (Collection): Document against payment (D/P) and document acceptance (D/A)

- Domestic remittance

- Western Union Money Transfer

- Collection of payment, payment order, check

- Salaries expenses paid for enterprises through accounts, ATM

- Oversea remittance payment, etc

2.1.3.5 Funds

- Purchase and sales of foreign currencies (Spot, Forward, Swap, etc)

- Purchase and sales of valuable papers (government bonds, treasury bills, commercial papers, etc.)

- Collection and payment in Vietnamese cash and foreign currencies, etc

- Safe rental; storage and preservation for gold, silver, precious stones, valuable papers, invention patents

2.1.3.6 Cards and electronic banking

- [ssuance and payment of domestic credit cards, international credit cards (VISA, MASTER CARD, etc.)

- Services for ATM cards, Cash card

- Internet Banking, Phone Banking, SMS Banking

2.1.3.7 Other activities

- Exploitation of life insurance, non-life insurance

- Investment and financial advisory

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CG KS

To complete the related existing services to meet the customers’ increasing needs,

and create momentum for the development and integration into regional and international countries, Agribank Hung Vuong always has a strategic vision in investment and development, focusing on 3 fields:

- Human resource development

- Technology development

- Distribution channel development

2.1.4 Organizational structure of Agribank Hung Vuong

- Board of Directors: Includes 01 Director and 02 Vice Directors

- Number of the professional departments: Includes 04 professional departments (Administration - Human Resources Department, Accounting - Budget Department, Planning - Business Department and Internal Control Department)

- Number of type III branches: none

- Number of Transaction Offices: 04 offices

+ Phap Van transaction office: Headquartered at kiosk No.2, Ist floor,

Apartment No.7 — Phap Van Urban Area - Tu Hiep, Hoang Liet ward, Hoang Mai

district, Hanoi

+ South Linh Dam transaction office: Headquartered in COTANA GROUP

Building, Lot CC5A, Linh Dam Peninsula, Hoang Liet ward, Hoang Mai district,

2.2 Analysis of environmental factors

2.2.1 Analysis of external environment factors

Industry growth: In recent years, the banking industry has grown rapidly in both quantity and scale of operation The number of banks has increased from nine banks

in 1991 to 80 banks in 2007, and until December 31, 2010 the statistics is as follows:

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GC SES

Table 2.1: The growth in quantity in Banking industry

In addition, the scale of operation of Banking Industry is also growing and

developing The growth has focused on two traditionally-operating areas: lending

and capital mobilizing The average growth rate of credit activities and mobilizing

activities in the last 10 years is 32.12% and 30.11% respectively Despite the strict

control in recent years, the growth in the banking industry remains at a good level

Table 2.2: The growth of capital mobilization and credits

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= SEES

In the current period, the growth rate of credit actitities and capital mobilization

The operation network continues to be strengthened and expanded efficiently, facilitating enterprises and residents to access banking services

Period in the industry’s development circle: The banking system can be evaluated to still have a potential growth, but the growth rate in the coming years will reduce, and the banking system will have to focus more on increasing the financial capacity and improving the credit quality to ensure the safety of the system

2.2.1.1 Analysis of the macro environment based on PEST model

- Economic environment

Vietnam's economy through 2011 has many dark points In content of global economy on post-crisis, slow recovery, Vietnam's economy will also not avoid being affected The growth of Vietnam’s economy has achieved positive results; in the whole year 2010 its GDP reached 6.78% - exceeding the 6.5% target of the Government - remaining at relatively high growth in the region and world, of which all sectors and fields have achieved a higher growth rate than that in the previous year

Table 2.3: GDP growth rate of economic sectors in the period of 2000 - 2010

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years and have gradually increased over the past 10 years

Table 2.4: GDP per capita in the period 2000 - 2010

GDP per capita (USD)

Source: IMF Country Report No 06/52, February 2006; IMF Country Report No

10/281, September 2010; Report to the Prime Minister on the socio-economic situation in 2010 and missions in 2011

Besides achievements in growth, Vietnam's economy still faces challenges such

as high inflation with annual CPI increase up to 18.58%, the highest inflation rate

since 1992 if except for the sudden increase due to the global economic crisis in

2007 - 2008 Interest rates have soared, particularly sometimes with the interest rate

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CES

GRIGGS

of 18-21%/ year, loan interest rate is up to 22-25% /year The race of interest rates has caused obstacles for the production and business operation of enteprises

- Technological environment: Banks with better technologies will have competitive advantages in the market Vietnam has further developed, gradually catches up with developed countries in the world so the technical-technological systems of the banking industry will be further upgraded and modernly equipped to meet the customers’ increasing needs, thereby reducing costs, improving the

operational efficiency

With the tendency of global integration, to be capable of competing with foreign banks, which have inherently had more advantages in terms of technology, domestic banks must continuously improve their technology Also, the technology transferring and automation between banks have increased, leading to the joint venture and cooperation to complement new technologies to each other However, currently the technology investment of the banks is still independent, has no connection, resources and information sharing together, reducing the effectiveness

of inter-bank information systems as well as customers’ interests such as problems

on connecting information in the card and credit system among banks, etc

Another factor is that the IT and telecommunications infrastructure have still many problems The quality of the national data transmission network is not stable, slow at speed, high at costs, affecting much the IT network and quality of banking services Changing technology has continuouly been impacting the business operation of Banks strongly

- Global environment

Regionally and internationally economic integration is taking place strongly and worldwide, especially for developing countries International integration is a development opportunity for countries and creating many challenges that countries have to face for survival and development In our country today, international integration and economic liberalization has had the routes and been irreversible They includes a route for eliminating the protection regulations under Vietnam - U.S Bilateral Trade Agreement (BTA ), the process for joining AFTA, WTO and

Tiêu đề	Building and selecting business strategies for Agribank Hung Vuong in the period of 2012-2014
Tác giả	Hua Xuan Nam, Hoang Cam Chi, Nguyen Thi Hai Linh, Le Anh Tuan
Trường học	Griggs University
Chuyên ngành	Master of Business Administration
Thể loại	Capstone project report
Năm xuất bản	2012
Thành phố	Hanoi

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Số trang	101
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