Xây dựng chiến lược kinh doanh cho công ty cổ phần chứng khoán Ngân hàng Đầu tư và phát triển Việt Nam giai đoạn 2012-2015

NGUYEN XUAN HAI BUILDING BUSINESS STRATEGY FOR BANK FOR INVESTMENT AND DEVELOPMENT OF VIET NAM SECURITIES JOINT STOCK COMPANY IN PERIOD OF 2012-2015 Major: Business Administration Code

NGUYEN XUAN HAI

BUILDING BUSINESS STRATEGY FOR BANK FOR INVESTMENT AND DEVELOPMENT OF VIET NAM SECURITIES JOINT STOCK COMPANY IN PERIOD OF 2012-2015

Major: Business Administration

Code: 60 34 05

MASTER OF BUSINESS ADMNISTRATION THESIS

Supervisor: Dr Tran Doan Kim

Ha Noi, 2012

ABSTRACT

BUILDING BUSINESS STRATEGY FOR BANK FOR INVESTMENT AND DEVELOPMENT OF VIET NAM SECURITIES JOINT STOCK COMPANY IN PERIOD OF 2012-2015

Nguyen Xuan Hai MBA Candidate, 2008-2010 Hanoi School of Business, Vietnam National University

Supervisor: Dr Tran Doan Kim

December 2012, 91 pages

The world economy has been in more stable phase after economic crisis and is having significant development Together with general development trend of the world economy, Vietnam is gradually marking position in global economy With the open economy, demand on capital in regard to enterprises increases and become diversified Securities market, by means of a part of market It is useful took to solve demand on capital

After 11 years of foundation and development, securities market in Vietnam has gained significant achievements and steps At present, there are more than 100 securities companies and each of them self-drives to survive and develop after ups and downs in market The ups and downs of market in 2010 and first half of 2012 have made some securities companies recognize efficiency and adjust their trading activities BIDV Securities Joint Stock Company (BSC) is one of the first securities companies adjusting their development strategy to be able to have improvement in securities market

With open tendency of economy, BSC has to face up with more and more rivals not only domestic ones but also foreign one with strong finance capacity The increase

of rivals reduces market share of BSC Although BSC has many competitive

advantages namely strong finance capacity and trademark and over the past years, BSC always improves to increase prestige and product quality provided customers; BSC must have development strategy in the future against fiercely competitive pressure as present If applicable, the company can control risks, solid steps and mark position in Vietnam Securities market

In the condition of the difficulties of the economy, the securities industry has faced

up to huge challenges Developing strengths, eliminating weaknesses, promoting the absolute advantage and competitive advantage will help the businesses in the field of securities find the way to survive and develop in the current period Which direction should be selected? what strategy should be chosen? The limitation of resources and the current period is extremely difficult for securities companies Thanks to discussions with experts in the field of securities as well as colleagues, leaders in the BSC and the knowledge achieved from the course, the author has contributed a little to find out strategy and direction for the BSC in the future With all the general information about the stock market, the author would like to bring to the reader an overview of the stock market in Vietnam, point out the strengths and the weaknesses of the BSC as a basis for selection of strategic development in the future All the solutions are orientedly given, accompanied with the instability of the stock market; the author hope to contribute a lot of useful ideas for development

of the BSC in the future

TABLE OF CONTENT

ACKNOWLEDGMENTS i

ABSTRACT ii

TÓM TẮT iv

TABLE OF CONTENT vi

LIST OF TABLE viii

LIST OF FIGURE ix

LIST OF CHART x

LIST OF SYMBOLS AND ABBREVIATIONS xi

INTRODUCTION 1

CHAPTER 1: THEORETICAL FOUNDATION OF BUILDING BUSINESS STRATEGY OF ENTERPRISE 3

1.1 Overview about business strategy of enterprise 3

1.1.1 Concepts 3

1.1.2 Typical features of business strategy 5

1.1.3 The role of business strategy in enterprise 5

1.2 Process of building business strategy of enterprise 6

1.2.1 Define Vision, Mission, Target, Policy and Core thinking 6

1.2.2 Analyzing external environment 7

1.2.3 Analyzing internal environment 10

1.2.4 Building business strategy 11

1.2.5 Distinguishing three strategic types: 12

1.3 Tools used to analyze strategies 16

1.3.1 SWOT matrix 16

1.3.2 Quantitative Strategic Planning Matrix (QSPM) 17

CHAPTER 2: ANALYSIS OF STRATEGY CONSTRUCTION BASIS OF BIDV SECURITIES JOINT STOCK COMPANY (BSC) 19

2.1 Overview of BSC 19

2.1.2 Business lines 20

2.1.3 Organizational structure 22

2.1.4 Line of vision, mission 22

2.1.5 Philosophy, viewpoint of business 24

2.2 Outside market analysis of BSC 26

2.2.1 Macro market analysis 26

2.2.2 Analysis of securities business sector environment 37

2.2.3 Judgment of opportunity and challenge 45

2.3 Analysis of internal environment 48

2.3.1 Business activity 48

2.3.2 Business support activity 60

2.3.3 Identifying strength, weakness and building the evaluation matrix of internal environment factor (IFE matrix) of BSC: 68

2.4 SWOT matrix of BSC 70

CHAPTER 3 74

3.1 Orientation for business strategy of BSC in period of 2012 - 2015 74

3.1.1 Strategic targets of BSC 74

3.1.2 Building partial strategies 78

3.2 Selecting business strategy for BSC in period of 2012 - 2015 83

3.3 Solutions for implementing business strategy of BSC 84

3.3.1 Solutions on human resource 84

3.3.2 Solutions on Marketing 88

3.3.3 Solutions on capital 89

CONCLUSION 90

REFERENCES 91

LIST OF TABLE

Table 1.1: SWOT analysis 17

Table 2.1 Important milestones 20

Table 2.2 Comparison of some criteria in business activity of BSC with competitors 44

Table 2.3 External factor matrix affecting BSC (EFE) 46

Table 2.4 - Main financial targets of BSC in 2009 – 2011 57

Table 2.5 - Matrix of internal factors of BSC (IFE) 70

Table 2.6 SWOT matrix of BSC 71

Table 3.1: QSPM matrix of BSC 75

LIST OF FIGURE

Figure 1.1: PEST model in macro-environment analysis 9 Figure 1.2: Michael E Porter’s five force model 10

LIST OF CHART

Chart 2.1 GDP growth rate of Vietnam in period 2000 - 2010 29 Figure 2.2 Inflation of Vietnam in period 2000-2010 30

LIST OF SYMBOLS AND ABBREVIATIONS

2 FPTS FPT Securities Joint Stock Company

3 HNX Hanoi Securities Trading Department

4 HSC Ho Chi Minh City Securities Joint Stock Company

5 HSX/HOSE Ho Chi Minh City Securities Trading Department

6 QSPM Quantitative Strategic Planning Matrix

7 MBHS MBH Securities Joint Stock Company

8 CSC Capital Securities Joint Stock Company

INTRODUCTION

I The imperativeness of topic

The world economy has been in more stable phase after economic crisis and is having significant development Together with general development trend of the world economy, Vietnam is gradually marking position in global economy With the open economy, demand on capital in regard to enterprises increases and become diversified Securities market, by means of a part of market It is useful took to solve demand on capital

After 11 years of foundation and development, securities market in Vietnam has gained significant achievements and steps At present, there are more than 100 securities companies and each of them self-drives to survive and develop after ups and downs in market The ups and downs of market in 2010 and first half of 2012 have made some securities companies recognize efficiency and adjust their trading activities BIDV Securities Joint Stock Company (BSC) is one of the first securities companies adjusting their development strategy to be able to have improvement in securities market

With open tendency of economy, BSC has to face up with more and more rivals not only domestic ones but also foreign one with strong finance capacity The increase

of rivals reduces market share of BSC Although BSC has many competitive advantages namely strong finance capacity and trademark and over the past years, BSC always improves to increase prestige and product quality provided customers; BSC must have development strategy in the future against fiercely competitive pressure as present If applicable, the company can control risks, solid steps and mark position in Vietnam Securities market

Coming from above problems, I realized the particularly important role of building strategy for existence and development of a securities company Therefore, I

decided to select topic in line with the theme “Building business strategy for

BIDV Securities Joint Stock Company in period of 2012-2015"

 To systematize basic knowledge and theory of strategic management and strategy building

 To initially approach to actual operations of securities company in particular and Vietnam securities market in general

 To apply gained knowledge building strategy for BIDV Securities Joint Stock Company

III Researching scope

Researching scope: Trading activities of BIDV Securities Joint Stock Company, Vietnam securities market and some factors in currency market

IV Researching methods

 Analysis of data from books, newspaper and internet;

 Observation from reality of the company;

 Summary of appraisal about the company;

CHAPTER 1: THEORETICAL FOUNDATION OF BUILDING

BUSINESS STRATEGY OF ENTERPRISE

1.1 Overview about business strategy of enterprise

1.1.1 Concepts

1.1.1.1 Concepts about strategy

From the past up to now, there have been many definitions about strategy according to different viewpoint We would like to introduce and analyze some traditional and modern notions to have relatively entire and extensive view about strategy conception:

 According to Alfred Chander (1962): “Business strategy covers definition of

long term basic target of enterprise, selection of method or action program

 According to Ansoff H.I (1965): “We can consider strategy as “joint

connection” among activities of enterprise and market consuming products,

it contains four parts: market scope – product, growth rate (changes conducted by enterprise to match to market scope – definite products),

 According to school of Harvard Business University (1965): “Strategy is

system of goals, targets stated under the form of sectors/business activities that the company wants to, entry, size, position that the company wants to achieve and basic policies as well as plans to implement predetermined targets”3

 According to William Glueck (1980): “Business strategy is a united,

comprehensive and cooperative one designed to ensure the enforcement of basic targets in enterprise” or “Strategy is a united and general one drafted

 According Michael Porter: 5“Strategy is the creation of unique and valuable position including differentiation, exchanged selection to focus on resources; from that it brings advantages for organization”

From above definition, we can see that strategy relates to long term and basic goals of an enterprise Nevertheless, building and selecting the strategy oriented goals are not enough; strategy must be defined as matching to vision, mission of organization and methods as well as means to reach those goals the most effectively If applicable, it promotes strengths, overcomes weaknesses, makes use of opportunities and mitigates threats from external environment

Thus, we can define strategy in general as following: “Strategy is a series of

complex activities to mobilize resources of organization and gain certain objective.”

1.1.1.2 Concepts about business strategy of enterprise

As mentioned above, strategy related to goals of an enterprise and set forth strategies must help enterprise gain predetermined goals Nevertheless, business strategy has connection to the methods for enterprise to be able to successfully compete in specific market It relates to strategic decisions about product selection, meeting requirements from customers, holding competitive advantages in comparison with rivals, exploiting and creating new opportunities

According to Fred R.David “Business strategy contains means reach to

long-term goals” 6

It can say that, business strategy is means helping enterprises reach long term goals Business strategy is not to outline specific actions; it is compressive program, the most effective mobilization solutions for resources with the aim at conducting predetermined goals

Business strategy in an enterprise can be defined in following general way:

“Business strategy is an art of designing and organizing means to reach long term goals of enterprise; it has connection to changes of business environment

(5) : Strategy Management - Strategy Management Curriculum

and competition”

1.1.2 Typical features of business strategy

From viewpoints about strategy mentioned above, strategy still has the most typical features in any period of time It reflects the nature of business strategy in enterprise with the most basic ones such as:

 Business strategy defines basic goals and business orientation of enterprise in each phase

 The orientation of strategy is to ensure the continuous and stable development in fluctuated business environment for enterprise

 Business strategy ensures the maximum mobilization and optimal combination in exploiting and using resources of enterprise at present and in the future It also upholds advantages, catches opportunities to hold competitive initiative in market

 Business strategy of enterprise is shown in continuous process from forming

to conducting, assessing and adjusting the enforcement of predetermined targets

 Business strategy always has idea to fight against and win in business market

 Business strategy is always built in long term (it may be 3 years, 5 years or

10 years)

1.1.3 The role of business strategy in enterprise

The role of business strategy in enterprise is demonstrated through following issues:

 Business strategy helps enterprise define their orientation in each specific period of time It is guideline for all production and trading activities of enterprise

 Business strategy helps enterprise catch and make use of opportunities, promote strengths and have initiatives to overcome weaknesses, avoid or respond to mitigate damages from external threats in competitive market

 Business strategy has significant contribution to the effect of using resources, promotes position of enterprise and ensures the continuous as well as sustainable development

 Business strategy creates solid foundation for enterprise to make decisions in accordance with displacement of market It also creates solid foundation for research and deployment, development investment, human resource training, market expansion and product development

1.2 Process of building business strategy of enterprise

1.2.1 Define Vision, Mission, Target, Policy and Core thinking

1.2.1.1 Vision

Strategic vision demonstrates the highest and the most general desires and wishes that organization wants to achieve We also consider vision as routine of enterprise in which it shows the destination in the future and the way enterprise will follow to reach that destination Or in other words, strategic vision is to draw a picture of destination together with reasons and means to do

Defining and stating vision have particularly important role since it gathers expectations of all members in enterprise and encourages them making efforts to gain goals, career and noble ideas

1.2.1.2 Mission

Mission or function is a statement having long term value in objective and distinguishes this company to others Such statements are also called as business philosophy, business principles and belief of the company

The mission states the existence reason of enterprise According to Drucker, the business mission statement gives answer to the question “What is our business operation?” “What would we do and how would we do to reach the vision statement?”

1.2.1.3 Target

We can understand target as established achievements which enterprise finds out

all ways to gain while pursuing their mission The right definition of targets has

remarkably important role to the success of organization since targets map out development orientation and evaluation for gained results They also provide the view about priority in allocating development resources, foundation to have effective plan as well as solid basis for assessing result

Target is considered as a factor if it contains enough measure factors and reality with obvious apportionment It also reflects concentration, threats and feasibility

in term

1.2.1.4 Policy

Fred R.David said that: “Policy is tool to implement strategy as well as the

mean to gain target Policies include guidelines, principles, regulations and procedures established to support efforts to gain predetermined targets Policies are instruction to make decisions and show repeated situations or recycle situations” 7

1.2.2 Analyzing external environment

External environment includes factors, forces and regulations happening out of enterprise Enterprise cannot control them but they have significant influences to efficiency and operation of enterprise

Recognizing and assessing opportunities and threats from external environment led enterprise define their mission and functions correctly and obviously Furthermore, enterprise can build strategies and reach long term target as well as policies to reach annual targets

External environment contains:

 Macro-environment or known as general environment;

 Sector environment or known as micro-environment or competitive environment

1.2.2.1 Analyzing macro-environment

Macro-environment is the environment covering activities and having direct or indirect influences to all activities of enterprise

The main objective of analyzing macro-environment is to acknowledge changes

of anticipated tendencies from factors of external environment With the concentration on future, analyzing external environment allows enterprise to

recognize and assess: Opportunities (O) of environment that enterprise can make use of and Threats (T) facing up enterprise From that, enterprise builds clear

business functions, defines feasible long term target and designs strategy matching to business goals

We can use PEST model to analyze macro-environment The model includes:

 Political

 Economics

 Socioculture

 Technological

Figure 1.1: PEST model in macro-environment analysis

1.2.2.2 Analyzing micro-environment

In order to plan strategy, apart from analyzing macro-environment, researching micro-environment (sector environment) is particularly important Sector environment has close connection to enterprise and most of activities and competitiveness of enterprise directly happen in this kind of environment

Five force model

In order to clarify competitiveness within industry, Michael E.Porter – professor

of Harvard Business Administration University pointed a frame that helps administrators realize opportunities and threats facing up enterprises or industry The frame of Porter is called as five force model According to Porter, there are five force orienting competitiveness within industry regarding as:

Figure 1.2: Michael E Porter’s five force model

1.2.3 Analyzing internal environment

Internal environment of an enterprise includes its internal factors and system To survive and develop, every enterprise has to implement management operation for finance, human resource, trading and production, research and development

as well as marketing Additionally, they must have information system, management system, and functional departments in each sector Each of them has strengths, weaknesses and defining these factors will help enterprise to build and select suitable business strategy

Analyzing internal environment is to define strengths (S) as well as weaknesses (W) of enterprise

 Strength (S) is the things that business is doing well or feature to help

businesses improve their competitiveness Strengths can exist in the following formats:

- An important skill or experience - the secret to manufacture with low cost, technological secret, producing without defective products, experience in providing good customer service, product innovation skill,

commercial skills for product in large scale and unique advertising promotions;

- Advantages in material facilities as rich capital, large distribution system;

- Strong human resource;

- Advantage in organization and management;

- The valuable physical property - modern buildings, attractive location, natural resources stocks;

- Keep interest position in market: lower cost and better products;

- Strengths in relationship;

- Predominant core capacity;

- Important competitive capacity

 Weaknesses (W) is something that businesses are missing, poor or a

condition pushing enterprises in disadvantage The internal weakness of the business may present:

- Lack of the significant skills and experience in competition;

- Lack of resource: human resource, finance;

- Weak in management and organization ability;

- Do not have stable input material supplying source;

1.2.4 Building business strategy

In order to exist and develop in fiercely competitive environment, enterprise must create competitive advantages The competitive advantage is shown under

the two basic forms: the lowest cost or product differentiation Combining the two basic forms of competitive advantage with operation scale of enterprise, we will have three general competitive strategies such as:

 Cost leadership strategy;

 Differentiation strategy;

 Focus strategy: this strategy has the two specific forms as cost focus or differentiation focus

1.2.5 Distinguishing three strategic types:

1.2.5.1 Cost leadership strategy:

Cost leadership strategy (the lowest cost strategy) was popularly applied in the 1970s of the 20th century in the developed capital countries and now still applied

by many enterprises of developing countries The lowest cost strategy with its nature is how to reach total lowest costs (production, management) in the branch, on the basis of implementing policies: focus on investment in material facilities, equipments, mass production to utilize large scale goodwill, follow the purpose of cost reduction from experiences, cost control and close expenditure, reduce costs for research and development, marketing fields,, advertising services …

The objectives pursued by the company for this strategy are to create products, services with the lowest costs to overcome competitors to exist and develop Companies choosing the lowest cost strategy have low differentiation levels of products, low market segment, have strength of focusing on production administration and material supply section With low product prices, the company has capacities to consume block volume of products, create conditions

to strength production, to lower more product prices

 Strength

- Thanks to low costs, the company may sell products with lower price than competitors but still maintain estimated profit level In the case

competitors sell products at the same price, then the company with the lowest cost shall reach higher profit level

- When the business line is in growth period, if there is a price war and companies compete mainly in price aspect, the company with lower cost shall reach winning part thanks to better competition capacity

- The company is easy to suffer when having price increase pressure from suppliers

- To meet large production scale, the company always has demands on materials with large quantity, as a result, position of the company in negotiation with suppliers is improved

- If happening alternative products, the company may reduce product price

to compete and remain market share

- Advantages on costs are barriers to prevent other companies to penetrate the market Thus, as long as maintaining advantages in costs, the company’s pursuing this strategy is still safe

 Threatening

- The most serious danger for the company pursuing the lowest cost strategy is continuously finding production method with lower cost than competitors If not, the company shall lose its position; the company must often re-invest in modern equipments, reject timeless assets …

- Changes in technology make investment costs or whatever is learned null and void

- Capacities of easy imitation by competitors for production methods of the company or learning experiences of investment in more advance production methods to have lower costs of as same as the company

- Due to low cost objective, the company doesn’t invest appropriately in R&D, marketing operations, thus, necessary changes in products or marketing are not seen, changes in customers’ taste are not satisfied and gradually the company loss its competitive advantages

1.2.5.2 Differentiation strategy:

Nature of the Product Differentiation Strategy is to create thing recognized by the whole industry as “unique" Differentiation may be expressed in many forms: product design, quality, mark, trade name, manufacturing technology, customer service …

Objectives of the Product Differentiation Strategy is to obtain competitive advantages through creating products considered as unique for customers, satisfactory with customers’ demands by way impossible to implement by competitors Just this capacity permits the company to price “dominant” to product, increase revenue and reach profit rate over average This “dominant” price is always higher than product price of the company pursuing the low cost strategy and accepted by customers because they believe that products have high quality As a result, products are priced on the basis of market, at acceptable level by the market

Differentiation strategy, the company is interested in which price level products shall be more accepted by customers than production cost issue

- With the Differentiation strategy, the company may support increase in material price better than the company pursuing the low cost strategy Because customers shall be end sufferers, once only the company is a supplier of product, and customers have loyalty with loved brand, then they shall accept with dominant price level

- The differentiation and loyalty with brand is barrier for other companies

to penetrate to the market New companies want to competition, the must create strengths, special differences for them and this is costly

 Challenges

- Building and developing differentiation capacity to create different products/services request high costs and make product price high, even very high Once, difference from price between competitors selling products with low prices and the company creates significant difference, then differentiation may not keep loyalty with the brand Customers shall sacrifice some certain features, services or images of differentiated products to buy other products and save significant amounts

- Advantage of the differentiation strategy is the unique of product That factor permits the product to be priced dominantly However, how to maintain this advantage and mention to price level acceptable by the market Correct pricing plays very important role, has capacity to determine survival, sustainable development of the company

1.2.5.3 Focus strategy:

Different from two lowest cost strategy and Differentiation strategy of products, the nature of focus strategy is to meet requirements for some certain market segments determined through geographical factors, customer objects or product nature … As well as the Product Differentiation Strategy, the centralization strategy may implement under many ways: centralization on the basis of the

lowest cost or on product differentiation or both of them, namely the company implements the low cost strategy or differentiation only in market segment chosen to reach competitive advantage

 Advantages

- Competitive advantage of companies pursuing centralization strategy originated from their competitive capacities - unique, special product or service supply capacities which are unable to implement This also permit the company have advantages in relation with customers because the company is sole person to supply products, services; customers are unable to find at other competitors

1.3 Tools used to analyze strategies

1.3.1 SWOT matrix

SWOT analysis model is the useful tool for catching up with and making decision in every case with respect to any business SWOT is the abbreviation of four letters Strengths, Weaknesses, Opportunities and Threats In a visual way, SWOt is theory frame and basing on that, we can consider strategies, define position as well as direction of an organization, a company Furthermore, we can analyze business proposes or any ideas relating to interest of enterprise In fact, application of SWOT in business plan, strategy planning, rival assessment, market research, product development and research report is selected by many enterprises

SWOT analysis makes enterprise have through understand about:

 Strengths

Table 1.1: SWOT analysis

WT strategies

Overcome weaknesses to avoid threats

1.3.2 Quantitative Strategic Planning Matrix (QSPM)

QSPM is tool used to decide the best selection for enterprise QSPM matrix uses input factors from analyzing EFE, IFE matrix and combination result of analysis

in SWOT matrix to have objective decisions in the best alternative strategies In order to develop a QSPM matrix, we have to implement following six steps:

 Step1: List important external opportunities/threats and internal

weaknesses/strengths

 Step 2: Classify internal and external important factors

 Step 3: Determine alternative strategies that the company should consider for

implementation Collect them into specific groups if possible

 Step 4: Define attractive score of each strategy The attractive score

demonstrates the relativeness of each strategy in comparison with other We only make comparison for strategies in the same group The attractive score

is classified as follow: 1= not attractive, 2= lightly attractive, 3= quite attractive, 4= significantly attractive If successful factors do not affect to strategy selection, we will not mark attractive score for these strategies

 Step 5: Calculate total attractive score It is the result of multiply classified

score (step 2) with attractive score (step 4) in each line

attractive score in each strategic line The higher and higher score is, the strategy is more and more attractive

CHAPTER 2: ANALYSIS OF STRATEGY CONSTRUCTION BASIS OF BIDV SECURITIES JOINT STOCK COMPANY (BSC)

2.1 Overview of BSC

Being issued license to incorporate on 26/11/1999, with transaction name: BIDV Securities Joint Stock Company (BSC), the Company had the honor of becoming the first securities company in the banking sector to participate in the business in securities field and it is also one of the first two securities companies in Vietnam Inheriting and bringing into play the highly valuable experience over the past 50 years of the system of Bank for Investment and Development Bank of Vietnam (BIDV) - the State-owned commercial bank was appointed by State Securities Commission of Vietnam to be the payment bank for the securities market - the opening and putting into operation as a financial intermediary operation with multi-purposes of BSC also marked the start for securities section in general and career of brokerage, investment and securities investment brokerage in Vietnam in particular

At the end of 2010, with the development orientation of BIDV, at the same time, to meet the demand and requirement of the market, BSC carried out the capitalization and auction successfully 10,195,570 shares On 01/01/2011, the Company officially changed name into BIDV Securities Joint Stock Company with the charter capital

of 865 billion VND At present, BSC has a head office in Hanoi, a branch in Ho Chi Minh city, transaction network all over the country with over 200 employees working in both support block and operations block

Over the past 10 years, with the comprehensive, strong and effective support of BIDV, by effort of personnel, BSC is incessantly better itself with the objective of becoming one of the leading securities companies in Vietnam

Company’s name : BIDV Securities Joint Stock Company

2.1.1 History of formation and development

Table 2.1 Important milestones

1 In 2009 BSC was respected by Hanoi Stock Exchange (HNX) to be

one of 15 typical securities companies among nearly 100 members in HNX according five criteria determined by HNX

2010

BSC received the Certificate of Merit of Ministry of Finance

“Have achievement in constructing and developing securities market - Period 2006 - 2010”

3 September 2010 BSC respectfully received Gold Cup of typical enterprises of

1000 years of Thang Long awarded by Vietnam Union of Science and Technology Association

4 In 2010 BSC received the prize “Prestigious securities trade name” -

in 2010 for typical enterprises in Vietnam securities market

5 May 2011 BSC was awarded the prize “The best securities consultancy

Company” selected by The Best Vietnam 2010 program

6 June 2011 BSC was awarded the Third Labor Medal by the State

2.1.2 Business lines

2.1.2.1 Securities service

BSC always supplies the diversification of financial consultancy service products to all objects of organization customer and individual customer inside and outside the country Basic service products include opening securities transaction account, securities transaction consultancy brokerage, implementation

of securities transaction, money payment, securities deposit, consultancy brokerage and support of listed securities transfer

2.1.2.2 Investment banking service

BSC provides diversified financial consultancy products including:

- Enterprise finance consultancy, enterprise assessment, enterprise finance restructure, purchase, sale and merger of enterprises…

- Capital mobilization consultancy inside and outside the country including securities market and debt market, split consultancy, issuance consultancy and guarantee (issuance for the first time to the public, separate issuance) of stocks, issuance consultancy and guarantee of enterprise bonds

2.1.2.3 Investment analysis and consultancy services

Analysis products include:

- Company analysis report, initial analysis report and periodical diary report or according to each event

- Market analysis report: focusing on analysis, updating the happening of macroeconomics, securities market according to day/week/month

- Expert reports to update the changes of monetary policies of the State Bank of Vietnam as well as the Ministry of Finance

MANAGEMENT BOARD

BOARD OF GENERAL DIRECTORS

BRANCH LEVEL

TRADING OFFICE LEVEL

INVESTMENT BANK BLOCK OPERATIONS BLOCK SUPPORT BLOCK

SECURITIES SERVICE DEPARTMENT

INTERNAL CHECKING DEPARTMENT

ADMINISTRATIVE ORGANIZATION DEPARTMENT

RESEARCH ANALYSIS DEPARTMENT

INFORMATION TECHNOLOGY DEPARTMENT

GENERAL PLANNING DEPARTMENT

ACCOUNTING FINANCE DEPARTMENT

FINANCIAL

CONSULTANCY

DEPARTMENT

INVESTMENT CONSULTANCY DEPARTMENT

SECURITIES SERVICE DEPARTMENT

GENERAL DEPARTMENT

SECURITIES SERVICE DEPARTMENT

ACCOUNTING DEPARTMENT

BOARD OF DIRECTORS OF BRANCH

HEAD OF TRANSACTION DEPARTMENT

Core value

- Product, service: Value of BSC is located in the long-term development value

of the customer brought by the product and service

- Experienced and creative staff: Traveling with and attaching to the development process of the company is always considered as the most highly valuable thing with BSC

- Advanced infrastructure: modern infrastructure is always focused the investment and exploitation effectively to create the important driving force for the product development process and use efficiency of investment capital of BSC

Competitive advantage

Being the member of Bank for Investment and Development of Vietnam, one of the four biggest State-owned commercial banks at present, BSC always receives the comprehensive support of BIDV in all operation aspects

The most valuable assets creating the prestige and image of BSC is the human resource With the personnel who is young, self-motivated and keen on business, trained in famous universities inside and outside the country, through the regular organization of new knowledge training and cultivating programs, by experience accumulated from implementation of the contracts, big projects, BSC always brings to the customers the belief by series of methodical, creative and professional consultancy services

On the basis of wide branch network of BIDV, BSC developed quickly the transaction point systems all over the country to timely service the demand of all customers

Due to opening since the securities market of Vietnam was put into operation,

up to now, BSC has constructed and developed a big customer basis belonging

to various sectors, lines and fields

All activities of BSC are constructed and operated on the basis of a modern information technology foundation; they are designed as an open system;

therefore, they not only meet the demand on transaction, information query, consultancy for the investors, internal management of the company in the current stage but can also be developed, completed and integrated with other systems as having the change, upgrade in the transaction system and information announcement of the Stock Exchange in the future

BSC is also one of the first securities Companies which were issued the certificate of reaching the quality management standard under standard ISO 9001:2000 by BVQI international measurement organization

With strong financial potential, with prestige created and affirmed in the market, apart from establishing the relationship with domestic partners to implement big projects, BSC can establish the relationships with international financial organizations (WB, IFC, MPDF ) to support comprehensively for customers

2.1.5 Philosophy, viewpoint of business

Upgrading the information technology infrastructure, developing and putting into operation the advanced application software such as securities assessment, determination of enterprise value, basis analysis, technical analysis and online order to support timely, effectively the process of making decision of the investors

Further improving the information announcement system to provide the information fully, timely, accurately, reliably and having use value for the investors

Improving the service quality through focusing on resource investment into the services which allow approaching directly to objective customer groups

Strengthening the sponsoring for projects for supporting the investment knowledge increase for the community through coordination with Universities, Academies, Research Institutes to hold regularly the programs on scientific seminar, direct consultancy at enterprises, test on securities study, tests on enterprise director, financial director, virtual securities… to increase the prestige and image of BSC

Quality management policy

Being aware that product quality, service provided to customer is the factor having survival significance for the development and development of each enterprise, from the beginning, BSC directed all efforts on improving and increasing the service quantity, quality to maximize the interest of customers

To facilitate maintaining the continuity and utility of the quality management system; at the same time, to standardize and control the risk in all main activities, BSC promulgated the quality management manual under standard ISO 9001: 2000 This is the material stating clearly the guideline, policy, general principle and content on quality management which BSC commits to implement

in order to improve the quality of product, service, serve the customers better and better

On the basis of forming the quality management objective, forming the quality management system, BSC constructs and implements the human resource management policy; forms and checks the process of creating service products under PDCA model, manages all documents, procedures in the quality management system, periodically organizes the idea collection of customers, partners to measure, analyze, improve and overcome the shortcomings in order

to complete the products and services

2.2 Outside market analysis of BSC

2.2.1 Macro market analysis

Business operation situation of a company is the basic and relatively popular foundation for decision of the investor Considering the fluctuation of business situation of the Company is to estimate directly the securities price of the Company The investors can judge the business situation through economic factors such as: economic growth rate, interest rate, inflation, exchange rate… The systematic risk factors have great impact to the companies in the financial field, especially the securities companies, securities investment fund…

2.2.1.1 Political, legal factors

At present, the operation of enterprise in Vietnam in general and companies operating in the financial field in particular such as securities companies may bear risk from changes on law, policy because the legal system and policy of Vietnam are not completed, synchronous and always have change, in which there are regulations relating to securities investment, securities market, corporate income tax, personal income tax in the securities investment activity Furthermore, the explanation, application and execution of legal regulations in Vietnam always have certain lag compared with the promulgation, amendment, supplementation of new regulations and have inconsistency at different points of time, between the transactions etc… Therefore, they create many shortcomings and many have great impact to investment, business activity of enterprises

In recent years, although the legal system of Vietnam has been prepared meticulously, more transparently so that investors are easy to access, the uncertainty and the legal issues that arise in the legal documents such as the Civil Code, Commercial Law, Securities Law, Law on Enterprises, Law on Corporate Income Tax, Law on Value Added Tax, Law on Personal Income Tax, Construction Law, Real Estate Business Law, Housing Law, Law on Environmental Protection, etc affect to the documents guiding the execution and affect to the business activities of the enterprises

When Vietnamese legal system develops, it is expected that the inconsistency and uncertainty of the legal regulations will be settled in accordance with new legal regulations, explained and clarified more clearly and the old laws will be replaced or modified However, it is difficult to predict when Vietnamese legal system will achieve the stability and predictability as the legal system of the other developed economies On the other hand, the recognition and enforcement

of decisions of the court, arbitration and Vietnamese administrative agencies in the event of occurring dispute remain uncertain

Prior to the integration movement, Vietnamese enterprises have had many opportunities to develop but has faced many difficulties An enterprise wants to stand stably in the international market must face with numerous factors beyond its control In those factors, politics and law are two issues to be concerned The success or failure of enterprise in the international business depends largely on whether the enterprise understands the policies and laws of the host country or not Wherever the enterprise is located, it is affected by the legal system and policies of that country’s government Therefore, let’s consider the impact of politics and law to operation of BSC

Legal environment affects to BSC:

 Creating equal environment for the companies to operate, protecting as the companies comply with the law, maybe having priorities for the companies

 Putting forth the regulations allowing or not allowing, binding, requiring the company to comply, like this, the company must comply well the regulations of the law and the company will develop in right direction

 BSC can compete healthily with other companies

 The company can take full advantage and mitigate the risks, grasp the viewpoints, regulations, priorities, even carry out the corridor movement as necessary to create the favorable environment for its operation

However, the law had the change and such supplementation may influence on the company The new laws often bring out obstacles and challenges The company must always be ready to deal with new challenges, new opportunities when the new law is issued along with the frequent and rapid changes in the socio-economic standards, and legal standards A market which has been closed can suddenly be open etc due to the change of the law

Impact of political environment:

Stable politics is a condition for developed economy and vice versa, developed economy is an important factor contributing to stable politics On the other hand, the institution and political guidelines decide the way of economic policies Politics affects to the enterprises primarily through the economy Vietnam is a country which is considered to be political stability and “Vietnam wants to be friends of all countries” is the condition for the company developing a maximum

As the politics is stable, the company will attract more investors It can be said that political stability is one of the most concerned issues of the investors With stable politics, no worry about the instability, the company only focus on development

2.2.1.2 Economic factors

 Economic growth rate:

In the period from 2006 to early 2008, Vietnam was one of the countries with relatively high and stable growth rate: the average GDP growth rate was 7.8%/year However, since 2008 up to now, along with the deterioration of the world economy, Vietnam’s economic growth slowed considerably, in

2009 it was only 5.32%, in 2010, it was 6.58%, in 2011 it continued to experience difficulties and it is predicted that 2012 will be further reduced

Chart 2.1 GDP growth rate of Vietnam in period 2000 - 2010

The development of the securities market bear great influence from the growth and development of the economy Strong and grown economy opens opportunity of high and stable growth for the enterprise, helps making healthy the shares on the securities market and promote the investors to actively participate in the market At the same time, economic growth is the driving force to motivate the enterprise to expand production and business activities, enhance the mobilization of financial resources in the securities market, make the securities market more vibrant In contrast, when the economy is unstable or slowly developed, “health” of the enterprise and optimism of investors will be reduced, and the securities market in general and the business activities of the BSC in particular will indirectly adversely affected

Despite the fact that global economic crisis has no small influence on the growth of developing countries like Vietnam, according to the evaluation of Japanese Bank for International Cooperation (JBIC), Vietnam still ranks the third in prospects for development of business activities in the medium term stage (behind China and India and above Russia, Thailand, Brazil) with the reasons: good location for diversifying the investment, cheap manpower source, having good capability of domestic market development, good quality human resources, having good supply source for assembly industry

Thus, in the medium term, the securities market of Vietnam will have favorable growth prospects

However, the growth rate of gross domestic product (GDP) which is rather good together with the inflation rate which rises dizzily are no small concerns to the business activity of enterprises, especially for securities companies

 Inflation: this was the biggest risk in 2011 and it has been overcome gradually

in 2012

Vietnam’s CPI index in recent times fluctuates rather unusually, it is mainly due to food and foodstuff factors (accounting for 39.93% of the CPI goods) The main factors continuing to put pressure on CPI in the coming year include escalation of commodity price (along with the pressure on increasing the world commodity price), unstable weather affecting to food supply, routes of increasing coal and electricity prices which were implemented and finally, an important influence factor on inflation being the import demand for production and consumption continues to increase, while maintaining a stable exchange rate and regain confidence in the VND as well as a challenge to the management authorities

Chart 2.2 Inflation of Vietnam in period 2000-2010

Source: General Statistics Office of Vietnam

On fiscal policy, the Government had clear orientation to tighten, specifically to reduce unnecessary investment projects, increase collection, reduce budget expenditure, take the budget deficit to below 5% With public investment being

an important driving force of the growth, it is possible to see that tightening the fiscal policy, a relatively important step in controlling inflation, will cause no small effect to general growth of the economy The policy of tightening the money and fiscal year will cause many challenges for growth of the economy Connecting the difficulties of 2010, with inflation pressure is further maintained

in 2011, to 2012, the tightening of monetary policies, fiscal policies has been causing many challenges for growth plan of the economy in the next time

With inflation pressure being imminent challenge, monetary policy and fiscal policy are going according to the direction of ensuring the macro stability and initially promoting the impact of dominating the inflation but reducing the growth rate of the economy When the interest rate level is still at high one, the enterprise will be very difficult to approach the capital to produce and invest, or have to bear a very high capital cost besides the input commodity price increases The growth problem will not be given priority as in the past and not let high inflation extend or happen again in the next years

Although the interest rate level was lowered, for the current situation of the enterprises, it is still at high level, it will be maintained in further period and then it may be reduced; however, which level it will reduced to, it depends on measures of the State Bank, general situation of the banking system and ability

of the Government in implementing the plan on cutting down the proposed budget expenditure

Exchange rate: On 11/02/2011, the State Bank carried out the increase of

interbank exchange rate VND/USD from 18,932 VND to 20,693 VND, with narrow transaction margin from +/-3% to +/- 1% Big adjustment level (over 9%) is considered as brave step of the State Bank aimed at taking official exchange rate near the exchange rate of free market which was tensioned over