G1_00287 XÂY DỰNG CHIẾN LƯỢC KINH DOANH CHO CÔNG TY CỔ PHẦN CHỨNG KHOÁN BẢO VIỆT GIAI ĐOẠN 2013 - 2017 BUILDING BUSINESS STRATEGY FOR BAOVIET SECURITIES JOINT STOCK COMPANY IN THE PERIO OF 2013 - 2017

G1_00287 XÂY DỰNG CHIẾN LƯỢC KINH DOANH CHO CÔNG TY CỔ PHẦN CHỨNG KHOÁN BẢO VIỆT GIAI ĐOẠN 2013 - 2017 BUILDING BUSINESS STRATEGY FOR BAOVIET SECURITIES JOINT STOCK COMPANY IN THE PERIO OF 2013 - 2017

GRIGGS UNIVERSITY GLOBAL ADVANCED MASTER OF BUSINESS ADMINISTRATION

PROGRAM

CAPSTONE PROJECT REPORT

BUILDING BUSINESS STRATEGY FOR

BAOVIET SECURITIES JOINT STOCK COMPANY

IN THE PERIO OF 2013 — 2017

Group Number: 02 Student's name:

Ly Thanh Loan

Do Van Tuan Duong Thi Thanh Hoang Dat Giang

HANOI 2013

CAPSTONE PROJECT REPOR FE - STRATEGIC MANAGEMENT

3 RESEGHYGH NIEHHHHGNGÙV kgaaauarkaoataesreseesosoensvosoveteveveesstrettorTpstetv590780970/8006191857000000003/089/0X5 6

4, TH StPUCHITE Of SUDjOCL cn cumnnenunenncnene EE 7

POET LE BR, corceueennncnvatnnseauapnesncesta itsiencbiten=menenesumnenmrnnstanorier waren sion inane enesioniinanoigrmene 8 GENERAL THEORETICAL BASIS FOR BUILDING BUSINESS STRATEGIES 8 1.1, Concept atid classification of BUSINESS SWALERY c.rercernenernoerseereruenenannceuneyeny 8

Lad nee CIBSSITIOATION OF DUSINGSS SITAICEY cenccenceumacnemmemne mean 8 l2 EEUS WGSS SIYRIEBDY TRHEHNHBBITIEIHEudddiaaiiinngdtiagtbibtoiiagi040erssvEsesnesoskeorisdinsxteidipskosgregha 9

1.3 SNIEETL Bi6bibEtilehDif DNGGENS eesseeseaenrnnsedrriarrtrdirtnotesgevigdetsfasbtiatGhS0ENGI0GIGGEBSSTGGSỂE 10

1.3.1 Establishing the functions, tasks and objectives of business strategy 10

1.3.2 Making evaluation, analysis of factors affecting the enterprise 11 1.3.3 Setting enterprise's woals and StraleBic OPTIONS sisssscsscnessiascernisnnssarcenscammnacocanss 18 CHẾT P 4E TS lÌ changgtdgilg8805iãu858GSbeseeslildnoSliknmrSnggiettrsntonSt0ot2GOIPSIDISRGHEDGS000)NGHGG000.GHĐMSIGSEGNGSSEE 22 MAKING ANALYSIS ON THE BUSINESS SITUATION OF BAO VIET SECURITIES JOINT STOCK COMPANY UF RECENT VY EARS cnncncmumcnnmonnnvonnsonsennn 22 2.1 Overview of Bao Viet Securities Joint Stock Company - 5-5-5 <<s<c<x Ze 2A.A» EDR THNOQUHENOEeeeennendrogntregtiniEBIDVTGGGEDEUNGENEXGHHGNGGEPOIIGSEIIGIEIEP0 G04 22 2.1.2) Establishment afd development WIStOLy ccrncncnoreemennnannmnammememue 23

Backs Sv CUPRA SS CTE xeeseeensrreerennneienotanbrrsstinginl1gS0100T900902/0900100/1000/0011-00018% Sở 2.2„ ZX8]YSI§ g' Die business situation Of BV SC wcccscscancunsncmmnnnmnmnasmammannems Zi 2.2.12 Major products atid SErVICES GT The COMPANY werenicecscosmrncrvecemmcrsmeaeneemnnraenen af

“6 0x.PRUETIðSE JXEBUI(S OVEF TNE PASE TOW VOATS nom ccnmnsnanorseniarsonrnomoenccamemneveewanninamnmens ao

2.3 Analysis of factors affecting the Company's business aCtiVities -.- -5 a2 Jdile Asal ysis Of External BUSINESS ENVITONINEM erccensescerresmmerencemmeecorsncsnenmuenasnes 32 sua EUIHIYSIS GỈ TH@ƒHHI 6ïIVHWGRIHEGEeseeeessdrdteeoneseotsigi0010944090000001G/200010001010000014 47

CAPSTONE PROJECT REPORE STRATEGIC MANAGEMENT

9.7 /18-7.2701000 ưyựyựýag 1 ERE EURO NEE ERINIERIEN 56 SOLUTIONS OF BUILDING OF BUSINESS STRATEGY OF BAO VIET SECURITIES

JO VO 201 7 cnanggregoasttoatnoitVANGVIAGGEGRINSHGIGGD.GIRNHSERABIGINGBIRRGIASEĐEGISBSGSGPHGGSRGBMSN001020-G9/0008800 56

3.1 Development orientation of Bao Viet Securities JSC c.ccccssenssvenssnesesesorvenerenseonmexenves 56 3.1.1 Development orientation of the Vietnam securities market to 2020 56 3.1.2 Development orientation of securities company to 20177 - -«‹-«+++ 59 3.1.3 Development orientation of Bao Viet Securities Joint Stock Company 61 các bi, KH ỗogngonnauygigiititGtEA0TSESG0IB201000 SSSEGNHIOXSNRG.SIECGRHGGEEEHN-HSEENGGSEISSGI.HBGD48S018001 00304881 61

eet PINBIESIS GÌ JST NlnnggaauoiaadtrogsrDGIENIDNGUSICVRIGIASSHEWGSGOIRSEIGIGSSIEGDGIENHGGI1100280018 65

Sa cc3, BOHERONS DWŸ NHHYHH TESOUEUE snnseeeroaesrrentnsttiiirtgrrodigieitlg0G0TSTIGGSEGGANDDHMESLE8425 68

3.2%, Soluhons OF InfOrAliOr TRCRNGIGEY ecco a eon emeeron 69

3.2.9, SOMUONS GT COMOTES GUÌ HH c«eeesenreessnnniosatornYegrPiVsetP0fcr1499101987400/ 0101010804 71

CAPSTONE PROJECT REPORT STRATEGIC MANAGEMENT

ACKNOWLEDGEMENTS

On behalf of all students of Group, I would like to sincerely express our deep gratitude to our teachers Thanks to the thoughtful enthusiasm, guidance of our teachers, group 2 have together studied the lectures, school materials and various practical materials to complete our assignment I would like to thank the leadership and staff of Bao Viet Securities Joint Stock Company (BVSC) who are enthusiastic

to provide data and documentation for our Group 2 to complete this assignment

We commit that this is the assignment written and firstly published by our own Group

Yours respectfully!

Implementation Team

CAPSTONE PROJECT REPORT STRATEGIC MANAGEMENT

INTRODUCTION

1 The necessity of issues needed to be studied

Vietnam stock market has gone through 12 years of operation; 12 years that

is not a long time compared to hundred-of-years history of the world stock market, but 12 years compared to the period of existence of one person 's life is not short It

is a period of time that is enough for a child delivered to be able to walk, run and

stride firm foot steps in the way forward

Officially coming into operation since 2000, the size of stock market has

grown strongly in a solid way, gradually contributing its role as an important medium and long-term capital channel that makes positive contribution to the industrialization and modernization of the country The total level of capital raising

in the stock market in 2012 was estimated to reach 152,600 billion dongs,

increasing 54% compared to the same period in 2011

The number of investors participating in the stock market is increasingly

crowded Currently, account number of investors reaches 1.2 million accounts

From 7 securities companies when the market began to come into operation, until now, the entire market has 105 securities companies with a total of 117

branches, 54 transaction offices, reduces 25 branches and 23 transaction offices

compared to 2011

2012 marked the big turning point in the completion of legal framework in

the Vietnamese stock market Although the stock market still has difficulties, the

impact of these documents is not apparent, it also creates a fair, transparent place for members of the stock market to develop

BVSC is one of the first securities companies established in Vietnam with its member code 001 Along with the stock market experiencing 12 years of ups and downs, BVSC always has a mission that is giving "firm belief" for investors and enterprises with a "lasting commitment" To maintain its position as a leading securities, providing its customers with the best services and the most satisfaction for its shareholders, BVSC always pays attention to the risk management, not

CAPSTONE PROJECT REPORT STRATEGIC MANAGEMENT

the the target set by the General Meeting of Shareholders BVSC is still of the top of

10 securities companies with the largest equity in 2012 During two consecutive years 2011 & 2012, BVSC is honored to be the "typical M & A advisor" at the annual M & A Forum

2013 is considered as the year in which the policies are opening up great ypportunities for the stock market, specially cash flow in the market will gradually shift to organizationnal investors This is the basis so that the market can has more

stable liquidity and indicator

In order to maintain its position in the stock market, BVSC needs to have

z0od orientations, policies and decisions in the future

From the fact above, the topic "Building the business strategy for Bao Viet Securities JSC in the period of 2013 - 2017" is selected as the research subject by Group 2

2 The purposes of research

Group 2 makes research and analysis of the business situation at BVSC to

propose business development strategy of BVSC in the period of 2013-2017

3 Research Methodology

- Data collection method

Data of the assignment is extracted and synthesized from the reported data rovided by the unit, the auditting report of 2010, 2011, the fourth quarter financial report of BVSC Besides, the assignment also uses some references, books, nagazines and specialized teaching materials

CAPSTONE PROJECT REPORT STRATEGIC MANAGEMENT

- Methods of comparison, synthesis, expert method

In the analysis process, the group uses the methods of comparison, synthesis

of BVSC’s previous and current data, as well as makes comparison of criteria, the

data on production and operation results of BVSC and some other enterprises of the same industry and field in Vietnam and neighboring provinces; and consults experts

of Bao Viet Securities Joint Stock Company and financial experts in making evaluation on the scores in the analysis process of matrices

4 The structure of subject

In addition to the introduction, conclusion, appendices and a list of references, our assignment includes the following chapters:

+ Chapter 1: Methodology

+ Chapter 2: Analysis of BVSC’s business environment

+ Chapter 3: Building the business strategy of BVSC in the period of 2013-2017

CAPSTONE PROJECT REPORT — STRATEGIC MANAGEMENT

CHAPTER I GENERAL THEORETICAL BASIS FOR BUILDING BUSINESS

STRATEGIES 1.1 Concept and classification of business strategy

1.1.1 Concept of business strategy

The researcher Chandler 1962! said that "Strategy includes the defining of the enterprise’s basic long-term goals, at the same time, selects the way or course of action, allocates essential resources and makes implementation of these goals”

However, previously, this concept was often related to military or army When the exchange of goods develops in the society, the strategies are applied in the field of business, the main argument of strategy is that a party can win over its competitors or even stronger people if possibly cause fighting lead the competitors

to a favorable situation for promoting strategic capabilities

In the current context, the term of strategy in military strategy used in management refers to the busines strategy

1.1.2 Classification of business strategy

Enterprise strategy

Enterprise strategy refers to the specific actions of a company in order to gain a competitive advantage through selecting and managing a group of different business activities and competition in certain industries and market segmentations for certain products Enterprise strategy focuses on the objectives and scope of the

organization

Business Strategy

Each business unit within a large company selects its own strategy at the level of its department and considers it as a tool to compete in a certain market This

is the commitment and action that helps the company achieve competitive

advantage through the exploitation of core competencies in the specific market

CAPSTONE PROJECT REPORT —- STRATEGIC MANAGEMENT

Functional Strategy

Functional strategy can help implement strategy effectively for the departments and company thanks to the support of resources, processes, human resources and important skills

Global Strategy

There are many ways to enter a foreign market to gain a competitive advantage and maximize core competencies of a company

A clear concept of business strategy mentioned in the textbook of the Master

of Business Administration program of Griggs University is: "A series of commitments and actions that a company uses to gain a competitive advantage by exploiting core competencies in a certain market."

1.2 Business strategy management

Strategic management can be defined as an art and science setting,

implementing and evaluating decisions related to many functions by which an

organization can achieve its given goals In this definition, strategic management

focuses on integrating management, marketing, accounting and finance, manufacturing, research and development, information systems and business areas

to achieve the organization’s success

CAPSTONE PROJECT REPORT STRATEGIC MANAGEMENT

i EN a a ee NG

1.3 Strategic management process

Establishing the enterprise’s current vision,

mission, tasks & strategy

|

' : \

Macro-environmental Industry environment Micro-environmental

analysis analysis analysis

Allocating Estimating Making Structuring

resources budget policy organization

1.3.1 Establishing the functions, tasks and objectives of business strategy

The first step is establishing the enterprise’s function, in fact, defining the

enterprise’s mission, vision and strategic objectives

- Mission: Indicating the reason for the existence of a company and showing what the company needs to do

- Vision: This is a message assigning a task for an overall goal, creating

confidence in the future of the company

- Strategic Objective: Identifying tasks of a company, which a company hopes to achieve in the medium and long term

1.3.2 Making evaluation, analysis of factors affecting the enterprise

On the basis of clearly defining tasks of an enterprise, we will have an overview of problems related to the enterprise and classify the groups of problems

We can divide the problems affecting the enterprise into two groups: Problems coming from the company's internal environment and problems coming from

external environment

Enterprise and impact factors

1.3.2.1 Analysis of impacts of external environment to enterprise

External environment includes all factors outside enterprise that managers

can not control, but have major impact on the outcome of objectives, growth and

profit of the enterprise

Analysis of external environment includes the macro-environmental analysis and industry environment analysis The analysis of these factors will help the enterprise determine the position and specific environment of the enterprise,

CAPSTONE PROJECT REPORT STRATEGIC MANAGEMENT

survival time and understand the impact of the external environment to the enterprise before making an appropriate decision on strategic planning

a Macro- environmental analysis

Macro-environment affects all fields, sectors of production and business The changes in the macro environment can directly affect to any force in the industry and change the relative power of the forces as well as the attractiveness of an industry

Macro-environment includes: (1) Economic Environment, (2) The political

and legal environment, (3) The socio-cultural environment, (4) The natural environment, (5) Technological environment, (6) Globa! Environment

Economic environment: As the economic situation and future trend that has

a major impact on the success and strategy of a company Economic environment determines the nature and orientation of an economy in which the company is Operating The impact of an economy to a company can change the company's capacity of value and create income Important factors of the macro-economy

include economic growth, monetary policy, such as basic interest rates, lending interest rates, exchange rates and inflation rate

Political & legal environment: Political and legal factors making impact on the enterprise in different ways It can provide opportunities as well as obstacles or even risk to the company Political & legal environment often includes:

- Government is the largest consumer in an economy

- Political stability and consistent policy always attract investors A complete

legal system is the basis for the enterprise’s stability

- Decisions on taxes and costs can bring opportunities but can also hinder the

development and business development

- The Labor Code, the regulations on recruitment, pension, unemployment benefit are factors that the enterprise needs to consider

Socio-cultural environment: Natural life rapidly changes by loanlifestyle loans that is an opportunity for many manufacturers Enterprises must consider the attitude of consumers, change in the age structure, the proportion of getting married

CAPSTONE PROJECT REPORT STRATEGIC MANAGEMENT

and delivering children, the women’ position in their work and family The appearance of a consumers’ association is an obstacle to which the company needs

to pay attention, especially the quality of product, to ensure the interests and rights

of consumers Raising awareness of people and the diverse needs that will be a challenge for manufacturers

Natural environment: The smart strategy planners often pay attention to the climate and ecosystem Seasonal service manufacturers sometimes have to consider the risks from unpredictable climate change The phenomenon ELINO causes an increase in temperature of the earth In the North, the cold weather during a long time has been very rare for the recent winters that is a threat to the manufacturers and suppliers of winter clothes But it offers a great opportunity for manufacturers and suppliers of spring and autumn clothes

Science and technology Environment: Technological changes certainly

affect the life cycle of a product or a service, as well as affect the production methods, materials as well as the attitudes and behaviors of employees This

requires strategic planners to constantly pay attention to the changes and investment

in technical progress

A global environment: Regionalization and globalization is an inevitable trend that all companies, all industries and governments must consider and review Vietnam officially joining the international organizations such as ASEAN, WTO has brought opportunities for the companies in Vietnam such as market, investment

but this is also the challenges that Vietnamese enterprises have to face

b Analysis of industry environment:

Mission of the strategists is to analyze and forecast the competitive forces in

an industry environment to identify opportunities and challenges for their enterprises

The enterprises of the same industry are affected by factors of that industry, including: (1) Current competitors, (2) Potential competitors, (3) suppliers, (4) Customers; (5) Substitute products

CAPSTONE PROJECT REPORT) STRATEGIC MANAGEMENT

The current competitors: The first force of the competitive five-force model

of M.Porter is competition between companies of the same industry If the competitors are weaker, the company will have the opportunity to raise its pricesand earn more profit On the other hand, when the current competitors are very strong, there will have significant competition in price All price competition will lead to damage Competition between companies of the same industry often includes the following main issues: Competitive structure of the industry, the actual situations of the industry’s needs and barriers to exit

- Competitive structure of the industry is based on the data and ability to distribute products of a company Different competitive structures have different

implications in the competition

- Demand situation of an industry is a determinant of the severity of the internal competition Commonly, the increase in demand often brings more

opportunities for the enterprise to expand its production and business activities On the other hand, the decrease in demand leads to fierce competition as enterprises

need to keep their achieved market share Losing market share is inevitable for non- competitive companies

- Barriers to escape serious threat to competition when demand of an industry decreases significantly Barriers to exit are economy, strategy and relationships to keep the company in the industry If there is a high barrier to exit, the companies may be tightly hold in an industry that they do not like

The potential competitors: As the current companiws which do not compete

in the industry, but can compete if they choose and decide to join the industry This

is a challenge to the current companies Currently, the companies are trying its best

to prevent potential competitors entering the industry because once there are more companies entering the industry, the level of competition is more fierce, the market and profitswill be shared and the company's position will change

Suppliers: The suppliers can become a challenge when they begin to increase the price of input raw materials or reduce the quality of the products or

CAPSTONE PROJECT REPORT STRATEGIC MANAGEMENT

Substitute goods: As other products which can meet the needs of customers Substitute goods usually has typical features For example: An increase in the number of fresh water can be a real threat to traditional beverages such as coffee or tea This risk requires the company to perform the analysis and ensure regular monitoring of technical and scientific progress because it is directly related to the

innovation of technology and products Moreover, changes in market demand are

also important factors causing such challenges

In summary, analysis of the external environment plays a very important role for an enterprise Business environment includes the macro environment and industry environment The goal of analysis is predicting an environment to identify opportunities and challenges on the basis of which we will make appropriate management decisions

c External environment factors evaluation matrix (EFE):

Strategic planners usually use the external environment factors evaluation matrix to summarize and evaluate factors of the business environment affecting the enterprise The process of EFE matrix development consists of five steps as follows:

Step 1: Making a list of factors critical to the enterprise’s success

Step 2: Making classification of importance from 0.0 (not important) — 1 (very important) for each factor Total classification level assigned to these factors must be equal to 1.0

Step 3: Making classification from 1 to 4 for each determinant of success to show how the current strategies of the enterprise response to each factor In which:

CAPSTONE PROJECT REPORT STRATEGIC MANAGEMENT

1.3.2.2 Analysis of internal enterprise

Objective of analyzing the internal environment of an enterprise is to properly assess the weaknesses, strengths of an enterprise and competitive advantages to develop appropriate strategies for the enterprise

a Making evaluation of human resources

Human resources play a very important role for the success of an enterprise People provide the input data to develop goals, make environmental analysis, select, implement and test a company's business strategies Although viewpoints of the planning system are appropriate and right, it will not be effective if people do not work effectively Analysis of human resources of a company should focus on the following contents:

- Occupation, qualifications, experience, ethics of staff;

- The value of labor relations compared with the industry and other

competitors;

- Policy of a company’s human resources;

- Using effectively measures of encouraging and motivating employees to complete their tasks;

CAPSTONE PROJECT REPORT | SURATEGIC MANAGEMENT

ee Se PU i A ce a eaten oma Ne idan Nee ee VV%

- The ability to balance the use of employees (using the minimum and

maximum);

- The general control system of organization;

- Environment and organization;

- Capacity, level, attention of the top managers;

- Strategic planning system

b Evaluating the financial capacity of enterprise

Functions of a finance department include: Analysis and plan making, testing and implementing the financial plan and the financial situation of a company Making accounting and financial analysis should focus on the following issues: Ability to mobilize short-term, long-term capital and debt ratio of equity, cost capital of the company compared to the entire industry and competitors, tax issues

Financial analysis will be widely understood throughout the company

because all activities of a company is reflected through finance So finance has an

interactive relationship with other departments and factors in the entire company

c Evaluating the infrastructure of an enterprise

Although the raw materials of enterprise is very different, process of building business strategy based on resources is very important Analysis is made on the

basis of the current level of the company's technology and technique as well as the

ability to apply advanced technology This analysis also considers whether a company has developed a suitable scale of production or not, the current productivity of the company, whether the company is located in a convenient geographical location or not Geographical location can impact costs (land, house, labor), the technical level of employees, materials, provide convenience for customers and shipping costs, capacity/ ability to cooperate, joint venturs and economic connections

In short, the enterprise needs to combine three resources to create a comprehensive resource based on the current sources and supplements All these resources will determine the quality of plan and implement the company's strategy

CAPSTONE PROJECT REPORT STRATEGIC MANAGEMENT

d Internal environment factors evaluation matrix (IFE):

Strategic planners usually use the internal factors evaluation matrix to summarize the analysis, evaluation of the strengths and weaknesses of the enterprise’s internal factors

Internal environment factors evaluation matrix (IFE):

The environmental

factors of internal

point business

factors of internal | higher the score is, | important weakness

business the more important | 2 = Weakness (4)=(2)x(3)

factors are 3 = Strengths

1.3.3 Setting enterprise’s goals and strategic options

Tools for building strategy:

Analysis of SWOT matrix:

- This is a very useful tool that helps us understand or make decisions on management, organization and business SWOT is an acronym including the first letters of English words: Strengths; Weaknesses; Opportunities; Threats

CAPSTONE PROJECT REPORT — STRATEGIC MANAGEMENT

O- Opportunities T - Threats S-O: Promoting the strengths,S-T: Promoting the

S - Strengthsbeizing the opportunities tostrengths and limiting

Internal

weaknesses, taking advantage

of opportunities

Strategic Options

Analysis and intuition are as a basis for making the decision on building strategies Quantitative strategic planning matrix (QSPM) will show objectively the

best alternative strategies PEST analysis model, EFE matrix, IFE and SWOT will

provide us with the necessary information to build matrix QSPM Matrix QSPM is the tool that allows the strategic planners to make objective evaluation of alternative

strategy, first of all, based on the key factors for the success identified in the internal

and external environment

Matrix OSPM

SELECTED STRATEGIES Main factors Classification | Strategy | Strategy | Strategy

CAPSTONE PROJECT REPORT — STRATEGIC MANAGEMENT

| - Politics / law / government

_- Society, culture, population

Internal factor: | = Weakeness, 2 = Less weaknesses, 3 = Less strengths, 4 =

The best strength

External factors: 1 = the company's response remains weak and poor; 2 = the company's response is average, 3 = company's response is above average, 4 = the company’s response is good

After establishing matrix QSPM, we will select one or more strategies with the highest score for implementation

Organizing and implementing strategies

After building a business strategy, organizing and implementing is the

activities that managers must carry out to consider the strategic objectives and basis for strategy development, developing annual goals, system of policies and implementation plans, building appropriate programs and budgets as well as the procedures and the allocation of resources (human resources, finance, technique,

infrastructure), selecting, improving the organization to be suitable with the

strategy

Managers also have to set up the Board of Management to commit the

implementation of strategy through the deployment of strategic steps and finally is

the inspection, control and cooperation in the implementation process

Strategy evaluation

Strategy management process with the right decisions can bring long-term and meaningful results On the other hand, the wrong strategic decisions can lead to

CAPSTONE PROJECT REPORT — STRATEGIC MANAGEMENT

serious disadvantages and even difficulties or obstacles Therefore, most of the strategic planners agree that strategy evaluation is essential for the prosperity of an organization Timely evaluation will provide the warnings of difficulties and risks

of management or problems that may occur before the situation becomes worse Strategy evaluation process includes the following three main activities:

- Checking the relevance of business strategy before being officially implemented As we mentioned, business strategy determines the success of a company

- Evaluation the effectiveness of the company through the stages of business strategy development to figure out shortcomings of the strategy to timely adjust and

supplement

- The process of checking and evaluating the effectiveness of a strategy includes: determining the issues needed to check, evaluate, building standards and criteria of checking, evaluating, determining the number of results, comparing and evaluating the performance, determining the cause of problems and developing

solutions

CAPSTONE PROJECT REPORT —- STRATEGIC MANAGEMENT

CHAPTER II MAKING ANALYSIS ON THE BUSINESS SITUATION OF BAO VIET SECURITIES JOINT STOCK COMPANY OF RECENT YEARS

2.1 Overview of Bao Viet Securities Joint Stock Company

2.1.1 General introduction

Transaction name: Bao Viet Securities Joint Stock Company

= Headquarter : No §Le Thai To, Hoan Kiem district, Hanoi

Telephone : (84-4) 3928 8080

%4 Fax : (84-4) 3928 9888

*® Website : WwW.bvsc.com.vn

® Branch of Ho Chi Minh city: The eighth floor, Bao Viet Group

Building, 233 Dong Khoi, District 1, Ho Chỉ Minh city

%®_ Andtransaction offices

CHỨNG KHOÁN BẢO VIỆT

%_ Charter capital : 722.339.370.000 dongs

Vision:

Maintaining its position as the leading securities company, providing the best services for customers and the best satisfaction for shareholders;

Creating the most dynamic, effective and professional working environment

for the employees of the company;

Creating conditions for employees to actively maximize their capacity and creativity of work

CAPSTONE PROJECT REPORT — SERATEGIC MANAGEMENT

* Professional ethics is the most important quality of staff

* Compliance and risk control:

* Serving the best for customers to develop

2.1.2 Establishment and development history

Bao Viet Securities Company (BVSC) is the first securities company in Vietnam, with the founding shareholder being Vietnam Insurance Corporation (Bao Viet) which operates under supervision of the Ministry of Finance

BVSC officially started operation on 26 November !999 pursuant to Business License No 01/GPHDKD issued by the State Securities Commission of

Vietnam

On 28 November 2005, the Prime Minister signed Decision No

310/2005/QD-TTg approving the Equitization Plan of Vietnam Insurance Corporation and the pilot scheme to establish Bao Viet Finance-Insurance Group

On 15 October 2007, Bao Viet Finance-Insurance Group completed its equitization process and became a joint stock company Accordingly, BVSC becomes a member

of Bao Viet Group From a company with a chartered capital of VND 43 billion,

BVSC has continuously enhanced its financial competence and increased the

chartered capital By the end of 2009, the Company’s chartered capital reached VND 722 billion BVSC is one of the securities companies with high chartered capital, capable of meeting all the demand for securities services of both institutional and invidual investors

% November 26", 1999: BVSC was officially incorporated under the Business License No 01/GPHDKD issued by the State Securities Commission of Vietnam to founding shareholders of Baoviet Vietnam Corporation (currently as Baoviet Holdings), under the Ministry of Finance;

+ June 06", 2000: Established the Branch of BVSC in Ho Chi Minh City;

% December 18", 2006: BVSC was officially listed on Hanoi Stock Trading Center (currently as Hanoi Stock Exchange) with stock code of BVS;

CAPSTONE PROJECT REPORT — STRATEGIC MANAGEMENT

+ November 15', 2006: BVSC was approved by Hanoi Department of Planning and Investment to increase its chartered capital from VND 49.45 billion to VND 150 billion;

+ October 15", 2007: Baoviet Holdings completed its equitization process and became a joint stock company Under the new model, BVSC has become a member of Baoviet Holdings;

& April 16", 2008: BVSC successfully offered its shares to the public,

officially increasing its chartered capital from VND 150 billion to VND

450 billion under License No 122/UBCK-GPDCCTCK of the State

Securities Commission of Vietnam

February 22™, 2008: Set up BVSC’s Transaction office No 1 at No 94 Ba

Trieu, Hoan Kiem District, Hanoi;

January 11st, 2008: Opened its new Main Office and Trading Floor at

Baoviet Holdings Building - No 8, Le Thai To, Hoan Kiem District, Hanoi;

“4 December lữ”, 2009: BVSC was issued the Decision No 288/UBCK-GP

of the State Securities Commission of Vietnam on increasing its chartered

capital to VND 722,339,370,000;

% October 09", 2009: Set up Transaction Office at No 146 Nguyen Van Cu,

District 1, Ho Chi Minh City;

%& November 26", 2010: BVSC officially introduced its Online Transaction

System — BVS@Trade;

#- May 19", 2010: Changed the logo and new brand recognition system;

% June 09", 2011: BVSC was awarded as “The representative M&A

Advisory firm of the year 2010 — 2011” and “The Most Typical M&A Case

2010 - 2011” with KDC - NKD - KIDO case at M&A Vietnam Forum

2011;

% May 19", 2011: Opened My Dinh Transaction Office at No 8 Nguyen Co

Thach, Tu Liem, Hanoi

CAPSTONE PROJECT REPORT STRATEGIC MANAGEMENT

2.1.3 Organization Structure

The company was organized by Joint Stock Company model of the Enterprise

Law, including: General Shareholders, Board of Directors, Chairman of the Board, General Director, Deputy General Director, Board of Supervisors, functional

departments

General Shareholders is the Company’s highest authority, which has the annual meeting organized once a year to pass by the most important decisions of the company such as: Annual Audit Financial Report, Report of Board of Supervisors,

Report of Board of Directors, Profit Distribution Plan, Financial Plan, Annual Production, decided the list of members of Board of Directors and Board of

Supervisors

Board of Directors manages and directs the business and affairs of the Company, fulfil the rights on behalf of the company, except the competence of the General Shareholders as: monitoring General Director, Managers of the company, decide to develop business plans and annual budgets, identify operational objectives

on the basis of the strategic objectives approved by the General Shareholders, decide the organizational structure of the company

General Director was appointed and responsible by Board of Directors of the

Company, under the leadership of the Board of Directors General Director of the

Company shall have the following powers and duties: implement the resolutions of

the Board of Directors and the General Shareholders, business plans, investment plans approved by the Board of Directors and General Shareholders, on behalf of the company signcommercial and financial contracts, organize and handle the daily business operations of the Company

Organizational structure of the Company is shown in details as following figure:

CAPSTONE PROJECT REPORT —- STRATEGIC MANAGEMENT

2.2 Analysis of the business situation of BVSC

2.2.1 Major products and services of the company

Securities services

Brokerage

As the first security company in Vietnam stock market, in the 10 — year establishment and development, BVSC maintained its position as one of the leading securities companies in the market At present, BVSC is among top 10 biggest brokerage houses on Ho Chi Minh Stock Exchange

Individual client brokerage

With the commitment to provide best services to clients, over recent years, BVSC has placed clients and clients’ interest at the focal point of its development strategy Investment in the information system, introduction of value — added services, enhancement of the investment advisory service quality, organization of annual customer care workshop as well as promotion activities are examples of BVSC’s endless efforts to deliver high quality products and best customer services

to the market

CAPSTONE PROJECT REPORT STRATEGIC MANAGEMENT

Institutional client brokerage

With its solid track of experience and the prestige built in over many years, BVSC has been the first destination for large foreign and domestic investment organizations who wish to participate in Vietnam stock market

Custodian Services

BVSC provides securities custody services for investors, including securities deposit, right exercise, stock transfer, stock mortgage, inheritance, donation and odd-Iot shares transaction Custodian services are provided by BVSC in a timely, convenient and prudent manner in accordance with regulations of the State Securities Commission and Vietnam Securities Depository

Besides custodian services, BVSC also provides shareholder registry management service for unlisted enterprises BVSC has implemented shareholder registry management through website, creating conditions for exercising operations

in a timely and accurate manner, helping enterprises to quickly update and follow

changes about shareholders and capital ownership structure in enterprises

“ Company Advisory/ Investment banking services

Being considered as the most important business activity since the beginning

of the Company, advisory/ investment banking activities have received special management attention and resource allocation This business segment has been a success and contributed to building BVSC’s brandname in Vietnamese stock market Throughout 11 years of operation and development, with experienced, professional

and well — trained staffs having sound knowledge of the market and laws, BVSC

has provided a variety of services to enterprises, namely corporate conversion, corporate finance, issuing and listing, M&A, corporate management, underwriting and other services Our clients have been industry — leading companies with well —

known brandnames such as Kinh Do JSC, Vinpearland JSC, Constrexim JSC,

VinaCafe JSC, Binh Minh Plastic JSC, Hoa Phat Corporation, Electricity Vietnam

Corporation, Vietnam Dairy Products, etc

CAPSTONE PROJECT REPORT STRATEGIC MANAGEMENT

“* Investment analysis and Advisory services

With high qualified, experienced and sharp — minded analysts who follow market movements closely, BVSC’s investment analysis and advisory activities have been highly valued for its diversity and quality, meeting customers’ demand for accurate, objective and updated analyses Analysis reports provided by BVSC have actively supported clients in making necessary decisions in various market conditions Our typical clients are: State-owned Capital Investment Company (SCIC), Baoviet Fund, Viet Bridge Capital Fund Management Company, Prudential Vietnam Fund Management Company, Dragon capital Fund Management Company, SGAM investment Fund Company, etc

2.2.2 Business Results over the past few years

Summary of financial report of BVSC in the period of 2009 - 2012

Currency: VND

Revenue from brokerage services | 48.719 | 33.708 | 64.730 |

| Revenue from securities trading and 54.729 103.805 | 120.063 |

agent services

Revenue from securities custodian 3.279 2.578 2.798

G.amba - M0311 - / R CC Page 29

Net revenue from operating activities 208.822 195.798 239.381

(Sources: BVSC)

Revenue in 2012 reached 208.9 billion, equivalent to 135.7% of the plan and

profit after tax was 77.7 billion, 500% higher than the targets set by the General

Shareholders The array of the highest effective segments of the Company was from the fixed interest rate services, revenue on capital, brokerage, sales and consulting

Annual brokerage revenue was 48.7, equal to 144.5% over the same period

and revenue from financial services activities was 96.8 billion, equal to 204.61% in

2011 Financial factors of safety and the liquidity coefficient at 31/12/2012 BVSC were 450%, almost three times compared with the norm of liquidity in accordance

CAPSTONE PROJECT REPORE STRATEGIC MANAGEMENT

overall market share in threestock markets HSX, HNX and Upcom reached 3.22%,

mcreased 12% compared to the overall market in 2011 In the bond brokerage activities, BVSC continued to rank No 2 on HNX stock market with the market

A Business Consolidation of Vinpearl company into Vincom Joint Stock Company

into Vingroup under consulting of BVSC also given the award for "The most typical acquisition consolidation of Vietnam 2011-2012"

To get these results, BVSC made simultaneously business solutions in major segments With its own propriety investment activities, BVSC continuedto reduce

its capital and focus resources to provide financial services and fixed interest rate

investment to gain a large and stable source of income, contributing to 46% of total revenue in 2012 (96,8 billion) In addition to the array of key services such as transactions, consulting, the Company has continued to implementfinancial services

to customers in accordance with the regulations of Sate Securities Commission and was licensed the margin trading since March 2012 by State Securities Commission.Not just focusing on main activities, BVSC also conducted to provide

CAPSTONE PROJECT REPORT — STRATEGIC MANAGEMENT fn: AO ES SR REL A TEETER Tố ng AERA AARP

high - quality investment advisory products for investors by incorporating between brokerage analysis & advisory departmentsto contribute to orientation and market share information, supply analysis reports to customers from which they had investment decisions in the most proper way

2.3 Analysis of factors affecting the Company's business activities

2.3.1 Analysis of external business environment

2.3.1.1 Marcoeconomics

Growth:

The low point in the 2012 marcoeconomic picture was the reduction in growth,

as Vietnam’s GDP growth reached only 5.03%, the lowest in the last 12 years —

even lower than the 2009 GDP growth of 5.3% during the global financial crisis The Vietnam economy did not change much in the last years Agriculture, forestry and fisheries decreased slightly from 16.1% of 2011 GDP to 15.8% in 2012; industrial and construction output also declined from 41.7% to 41.5% Only the service sector had a positive change with GDP increasing from 42.2% in 2011 to

42.7% in 2012 Among total economic growth (5.03%); agriculture, forestry and

fisheries increased 2.72%, contributing 0.44 percentage point of total growth; the imdustrial and construction sector increased 4.52%, contributing 1.89 percentage points; and the service sector grew 6.42%, contributing 2.7 percentage points

Agricultural, forest and

fishery sector Industrial sector Service sector

CAPSTONE PROJECT REPORE STRATEGIC MANAGEMENT

% Growth forecast in 2013:

With the government’s stimulus plan will ease difficulties for enterprises and especially that the solution packages will boost the real estate market, 2013 growth

is expected to be more prosperous Industrial and construction firms are likely to

take leading roles in growing GDP In addition, if the SBV achieves its 12% credit growth and capital is efficiently pumped into real estate, Vietnam could experience higher development (approximately 5-7%) The recovery of domestic demand will still play an important role for Vietnam GDP’s growth while there is little stability

in global markets

Inflation

Inflation is one ofthe most important macroeconomic indicators and

frequently used in economic analysis Inflation affects awide range for many areas

and the stock market is not an exception

Firstly, inflation affects the stock market indirectly through its impact on production of goods and services of enterprises in general and the listed companies

in particular Inflation shows the increase and extension of the general price level in the economy; and one of the causes of inflation is due to rising costs (cost-push inflation) Therefore, inflation is often equivalent to input costs for production and business activities of the enterprise increases For example, inflation makes the cost

of borrowing more expensive because lending institutions such as commercial banks had to raise interest rates to ensure positive real interest rate to depositors.When production costincreases, price of the products and services of the business will have to increase in order to ensure production or profits However, the consumption of products and services of the business will decline due to higher selling prices, particularly in the shortterm and as consumers look for alternative

CAPSTONE PROJECT REPORT STRATEGIC MANAGEMENT

products This makes the profit targets of the business difficult to be sure and even declining, leading to the expected profit of the business in the future undervalued.As a result, share prices of listed companies on the market are affected

by the decline to various degrees If inflation increases sharply, the consequences will happen as fast as possible and the stock price is getting affected If inflation rises too high and 1s taken place in the environment of the tightening of fiscal and monetary policy, the consequences are even more severe because the market liquidity 1s significantly reduced due to the decreased capital flows

Secondly, inflation can directly impact on investors’ psychology and values

Of investments in the stock market Increased inflation is one of the manifestations

of economic instabilities In this environment, investors’ psychology in the stock market is also seriously affected and the stock market is no longer the attracting address of investment capital, will appear "Herd mentality" in the sell-off, as a result, theshares supply is many times greater than the demand and the market liquidity becomesseriously

% Forecast in 2013:

Low credit growth in 2012 (8.91%): Comparing YoY credit growth and inflation in Vietnam, we can see that the effect of credit growth on inflation is usually lagged from 6 months to | year With credit growing at its slowest rate in

2012, inflationary pressures from monetary policies in 2013 will not be too high

The growth of credit and inflation in Vietnam

CAPSTONE PROJECT REPORT — SEURATEGIC MANAGEMENT

Pressure on demand will not be high: Total retail sales and consumer service revenue in 2012 was estimated at VND 2,324 billion, up 16% compared with 2011 Discounting the price factor, this increase is only 6.2% much lower than the average

in recent years, furtherreflecting the slow recovery in the Vietnamese economy and weak demand that is not likely to create upward price pressure in 2013

Pressure on rising petrol prices will not be high: in 2012, the domestic petrol prices were adjusted upward 6 times (the total increase was VND 6,050/L) and downward 6 times 9the total decrease was VND 3,700/L) The current domestic petroi price is close to world prices without the government’s support In addition, according to a Bloomberg forecast, 2013 world crude oil prices are likely to remain stable or slightly increase (less than 5%) Thus, the inflation risks created by

increasing petrol prices will be limited

Monetary policy

Exchange Rate

The adjustment of the exchange rate will impact negatively on the business

of foreign debts when making provision for the year-end exchange rate risk, including the enterprises of public service sectors, cement,shipping, oil and gas However, for the oil industry and shipping enterprises, who have direct foreign currency revenue from product sales, provision of service outputs also benefit from the exchange rate changes

In addition to business loans in foreign currencies, enterprises have to import

most raw materials from foreign countries and mainly serves domestic demand is

also affected by exchange rate changes when input costsincrease.Enterprises of sectors such as basic materials (steel, plastic), consumer goods (milk, candy),

industry (chemical, petroleum transport business) and pharmaceuticals will have to

solve the problem of balancing the output price to fit input costs while ensuring retain market share and revenue

In the opposite side, the exporting businesses have foreign currency income directly and combine use of raw materials in the country will benefit from the adjustment of the exchange rate; including the fisheries sector, garment,rubber and