Formulating business strategy for a securities firm the case of Kim Long securities joint-stock company

Strategy defínitỉon and classiíícation ..... 2 4 CHAPTER 2: KIM LONG SECURITIES JOINT-STOCK COM PANY.. Kim Long Securities C orporation..... Find out opportunities and th rea ts.... THEO

_ Â = í ữ h ■0 ,

H a n o i - 2 0 1 0

T A B L E O F C O N T E N T S

ACKNONVLEDGEMENTS i

TABLE OF C O NTENTS V LIST OF A B B R E V IA T IO N S viii

LIST OF TABLE X LIST OF FIGURE X INTRODUCTION 1

NECESSARY OF T H E S IS 1

SCOPE OF W O R K S 3

METHODOLOGY 3

CONTRIBUTION OF T H E SIS 3

C H A PT E R 1: T H E O R Y ON FO R M U L A T IN G BUSINESS STRA TEG Y 5

1 Strategy defínitỉon and classiíícation 5

1.1 Deíĩnition o fs tr a te g y 5

1.2 The ĩeatures and roles o f str a te g ie s 6

1.3 Classiiìcation o f stra teg y 7

1.3.1 C o r p o ra te s tr a te g ie s 8

1 3 2 B u s in e s s s t r a t e g i e s 8

1 3 3 F u n c tio n a l s t r a t e g i e s 8

2 Formulatỉon strategy p r o c ess 9

2.1 W hat is mission o f the firm 9

2 1 1 M i s s i o n 9

2 1 2 O b j e c t i v e 9

2 2 E x t e r n a l í a c t o r s 10

2 2 1 M a c ro a n a l y s i s 10

2 2 2 In d u s try a n a l y s i s 13

2 2 3 F in d in g o f o p p o rtu n itie s a n d t h r e a t s 2 0 2.3 Internal en viron m en t 21

2 3 1 V a lu e C hain a n a ly s is 21

2 3 2 P ro c e s s to id e n tiíy s u s ta in a b le c o m p e titiv e a d v a n t a g e s 2 2 2.4 Formulatỉon and choice o f appropriate strategy 23

2.4.1 S W O T M o d e l 23

2 4 3 F o r m u la tin g s t r a t e g y 2 4 CHAPTER 2: KIM LONG SECURITIES JOINT-STOCK COM PANY .27 1 I n t r o d u c t i o n 27

1.1 Securities industry in V ietn am 27

1 1 1 S e c u r iti e s 2 7 1 1 2 S e c u ritie s C o m p a n ie s 2 7 1 1 3 S e c u ritie s m a r k e t d e v e lo p m e n t a n d th e ío u n d a tio n o f s e c u ritie s co m p an ies 28

1.2 Kim Long Securities C orporation 30

2 External analysis 31

2.1 M acro environm ent analysis: 31

2 1 1 S o c ia l f a c to r s 31

2 1 2 L e g a l í a c t o r s 31

2 1 3 E c o n o m ic s f a c t o r s 3 2 2 1 4 P o litic f a c t o r s 3 4 2 1 5 T e c h n o lo g y í a c t o r s 35

2 2 I n d u s t r y a n a l y s i s 35

2 2 1 In d u s try e n v ir o n m e n t 35

2 2 2 F iv e fo rc e s m o d e l 3 9 2.3 Find out opportunities and th rea ts 45

3 Internal analysis 46

3.1 Vision, M ission, motto and objectives o f K L S 46

3.2 Value Chain analysis of K L S 47

3 2 1 F in a n c e p e r s p e c tiv e 4 7 3 2 2 H u m a n r e s o u r c e p e r s p e c t i v e 55

3 2 3 P R a n d M a r k e t i n g 5 6 3 3 I d e n t i í y s u s t a i n a b l e c o m p e titiv e a d v a n t a g e s 57

CHAPTER 3: FORM ULATION OF BUSINESS ST R A T E G Y 60

1 F o r m u l a t i o n b u s in e s s s t r a t e g y 6 0 1.1 Vietnam Securities market outlook 2 0 1 2 60

1.2 SW OT analysis 61

2 R e c o m m e n d a t i o n s 65

2 1 M a r k e t i n g s t r a t e g y 65

2 2 I n v e s t in T e c h n o l o g y 6 9 2.3 D iíĩerentiation services and products 69

2 4 E n l a r g e a g e n t n e tv v o r k 71

C O N C L U S IO N 72

vii

INTRODUCTION

NECESSARY OF THESIS

T o 2 0 0 9 , V ie tn a m s e c u ritie s h a s o p e ra te d fo r n in e y e a rs D u rin g re c e n t tim e , fo re ig n

a n d lo c a l in v e s to rs e x p e r ie n c e a b o o m o f th e s to c k m a rk e t in V ie tn a m T h e m a rk e t

capitalized value, that is included th e value o f State b o n d s , represented over 5 0 % o f

th e c o u n try 's G D P 1 O v e r U S D 1 0 0 m illio n is th e n u m b e r o f d a ily tra n s a c tio n v a lu e

p o s itiv e s id e o f th e nevv íìn a n c ia l m a n a g e m e n t a n d c o n tro l th e o rie s a n d a p p ro a c h e s

T h e s itu a tio n a ls o c a u s e d th e m s k e p tic a l a b o u t th e g ro w th o f th e fín a n c ia l m a rk e ts ,

1

th e in te ra c tio n a m o n g d iíĩe r e n t m a rk e t s e g m e n ts , a n d th e in te rg ra tio n o f re g io n a l

a n d g lo b a l e c o n o m ie s a n d s to c k m a rk e ts

T h e y e a r 2 0 0 8 e n d e d le a v in g th e d e v e lo p m e n ts o f th e g lo b a l íin a n c ia l c ris is in th e

s ta g e s o -c a lle d “ th e e n d o f a s ta rt S to c k m a rk e ts w o r lđ w id e w e re all tu m b lin g ,

w h ic h c a u s e d h u n d r e d s o f p e o p le to lo se th e ir j o b s a n d b e d e s titu te

T h e U n ite d S ta te s a n d g lo b a l íìn a n c ia l c ris is a ls o a d v e rs e ly a ffe c te d th e e c o n o m y o f

V ie tn a m , a n d p a r tic u la r ly its s to c k m a rk e t T h e V n -In d e x s u íĩe r e d a d e e p

c o n s e c u tiv e íầ ll o f 6 5 % 4 in its v a lu e fro m th e b e g in n in g o f 2 0 0 8 A g re a t m a n y

d o m e s tic a n d fo re ig n in v e s to rs b a c k e d o u t fro m th e m a rk e t, a n d m a d e it a lm o s t illiq u id

R o u g h s ta tis tic s b y th e e n d o f 2 0 0 8 s h o w e d th a t m o s t o f lo c a l s e c u ritie s firm s w e re

in s e v e r e lo s se s T h o s e b u s in e s s e s fo rm e d in 2 0 0 6 a n d 2 0 0 7 w e re in s ta g n a n t

o p e ra tio n s d u e to th e g lo o m y d o m e s tic b o u rs e T h e ir k e y s e rv ic e s su c h a s s e c u ritie s

p ro p rie ta ry d e a lin g , a n d u n d e rw ritin g w e r e le s s p ro f ita b le d u e to th e la rg e d ro p in

th e p ric e o f th e m ạ ịo rity o f lis te d s h a r e s o v e r th e in itia l v a lu e o f th e in v e s tin g

SCOPE OF W ORKS

D e s p ite th e m a n y le s s o n s o n b u s in e s s p e r ío r m a n c e o f s e c u ritie s c o m p a n ie s d ra w n fro m th e 2 0 0 8 g lo b a l íin a n c ia l c ris is , m y re s e a r c h w o rk , d u e to c e rta in c o n s tra in ts and o b s ta c le s , c o n c e n tr a te s o n ly on K L S ’s b u s in e s s s tra te g ie s , vvhich a re in Central

in te re s t o f its B o a rd o f M a n a g e m e n t a n d o th e r s e c u ritie s firm s S u b s e q u e n tly , th e

th e s is c o n te n t is a d h e r e d to s tu d y in g th e fa c to rs th a t a íĩe c t K L S 's s u s ta in a b le g ro w th fro m s tra te g ic p o in ts o f v ie w

M ETHO DO LO GY

T h is re s e a rc h u s e d d e d u c tiv e m e th o d to g o th ro u g h fro m lite ra tu re to fa c t a n a ly s is

C a s e s tu d y is u s e d to illu s tra te th e o r y o n ío r m u la tin g b u s in e s s s tra te g y

In a n a ly z in g th e c o m p a n y 's íìn a n c ia l p e r ío r m a n c e , c ro s s -s e c tio n a l a n d tim e - s e r ie s

d o w n s iz e d a d m in is tr a tiv e s tru c tu re a n d s tr e a m lin e d in v e s tm e n t A ỉl o f th e s e e ffo rts

a re s te e r e d to w a r d s th e u ltim a te g o a l o f m itig a te d ris k s , in c re a s e d c o rp o ra te v a lu e

a n d s tr e n g th e n e d r e s o u r c e s fo r K L S in th e c o n te x t o f o n g o in g g lo b a l a d v e rs e

d e v e lo p m e n ts

3

B e y o n d th e s e th e p a p e r c a n b e u s e d a s a r e í e r e n c e f o r o th e r s tu d ie s o r r e s e a r c h vvork o n th e a d m in is tr a tio n o f m a r k e t b u ild e r s , a n d K L S 'S b u s in e s s e f f ìc ie n c y in th e

p a s t p e rio d M o r e o v e r , th e s tu d y is th e o r e tic a lly v a lu a b le a n d g iv e s in s ig h t o f th e

n e w b u s in e s s s tr a te g ie s a n d o p e r a tio n a l m a n a g e m e n t m o d a litie s o f s e c u r itie s

c o m p a n ie s , w h ic h a re in g re a t d if f e r e n c e fro m th e ir tr a d itio n a l s tr a te g ic a n a ly s is a n d

a p p ro a c h e s

CHAPTER 1 THEORY ON FORM ULATING BUSINESS STRATEGY

1 Strategy defínition and cIassification

F ro m th e p o in t o f v ie w o f M ic h a e l P o r te r 5, a s tra te g y c a n b e d e íìn e d a s “ th e s tu d y to

id e n tiíy th e m o s t s u ita b le c o m p e titiv e p o s itio n fo r a n in d u s try , a n d m a jo r s c o p e o f

a c tiv itie s w h e re c o m p e titio n is p r e s e n t” S tra te g y , a c c o r d in g to h im , e m p h a s iz e s o n

1.2 The ĩeatures and roles of strategies

It c a n b e s e e n th a t th e c o n c e p ts o f a s tra te g y a re v a rie d Y e t, a s tra te g y , fro m a n y

a n g le s a n d at a n y tim e , h a s s o m e m o s t ty p ic a l íe a tu re s th a t r e íle c t th e n a tu re o f th e

b u s in e s s s tra te g ie s o f a n e n te rp ris e s p e c iíĩe d b e lo w :

❖ A s tra te g y m u s t c le a rly d e f in e th e k e y g o a ls to b e a c h ie v e d in s p e c iíle d

p e rio d s a n d m u s t g ra s p a t a ll a s p e c ts a n d le v e ls o f th e p ro d u c tio n a n d

b u s in e s s a c tiv itie s o f an e n te rp ris e

❖ B u s in e s s s tr a te g ie s m u s t b e r e íle c te d in a c o n tin u e d p ro c e s s fro m

❖ A strategy d e íìn e s th e c le a r s c o p e o f c o m p e titio n o f a n e n te rp ris e

T h e e s s e n c e o f th is c h a r a c te ris tic is to id e n tiíy c le a r ly th e b u s in e s s s c o p e o f a n

e n te r p r is e T h is is a n im p o rta n t s te p o f a n e n te r p r is e in r e íle c tin g b u s in e s s

e n v ir o n m e n t, p o s itio n in g s tra te g ie s , a llo c a tin g r e s o u r c e s a n d a d m in is te rin g its

in v e s tm e n t p o r tío lio T w o b a s ic q u e s tio n s r a is e d a re :

W h o w e a re in c o m p a r is o n to o u r c o m p e tito r s ? H o w to g e t o u r o b je c tiv e s ?

T h is is a re la tiv e ly c o m p le x p ro b le m s in c e th e m a r k e t s e g m e n ta tio n h a s a g re a t

im p a c t o n id e n tiíic a tio n o f o rg a n iz a tio n a l s tr u c tu r e o f a c o m p a n y

❖ A s tra te g y r e íle c ts th e in te rs e c tio n b e tw e e n o p p o r tu n itie s a n d th r e a ts o f a

c o m p a n y , a n d b e tw e e n its s tr e n g th s a n d v v e a k n e sse s, fro m w h ic h its

c o m p e titiv e n e s s is b u ilt In o th e r w o rd s , it is s h o w h o w th e firm c a tc h e s its

o p p o r tu n itie s , a v o id th re a ts fro m e x te m a l e n v ir o n m e n t, ta k e its s tr e n g th s a n d

o v e rc o m e its w e a k n e s s e s

T h is fe a tu re re v e a ls a k e y a s p e c t o f s tra te g y - th e lo n g -te rm s u s ta in a b le c o m p e titiv e

a d v a n ta g e o f a fìrm o v e r its m a jo r c o m p e tito r s in th e in v o lv in g b u s in e s s s e c to r

F a c in g w ith c o m p e titiv e n e s s , th e s u c c e s s íìil c o rp o ra te s tra te g is t is th e p e rs o n w h o

c a n fin d o u t e x a c tly í i m v s p o s itio n o n th e m a r k e t w h e re th e ílrm c a n w e ll p e r ío r m its c a p a b ilitie s a n d d e fe n d a g a in s t o th e r c o m p e tito r s , b o th e x is tin g c o m p e tito r s a n d

p o te n tia l c o m p e tito rs

S tra te g y p la y s v e ry im p o rta n t ro le s In th e c o r p o r a te le v e l, it p ro v id e s th e d ire c tio n

to e n s u r e th e firm g o e s o n th e rig h t w a y to a c h ie v e its o b je c tiv e s L o o k in g dovvn to

in d iv id u a l b u s in e s s o f th e firm , s tra te g y p e r ío r m s th e ro le s th a t a re m o re detail It

Figure 1-1: Hierarchy o f Strategy

S o u rc e : S tra te g ic M a n a g e m e n t, L L B y a rs

1 3 1 C o r p o ra te s tra te g ie s

V is io n a n d m is s io n a re íìin d a m e n ta l d ire c tio n s th a t th e firm m u s t c o n c e m w h e n

s e ttin g its e lf lo n g -ru n o b je c tiv e s , o rg a n iz a tio n a l c u ltu re , p o lic ie s , s h o rt-ru n

o b je c tiv e s

C o rp o ra te s tr a te g ie s a d d re s s w h ic h b u s in e s s e s th e fírm w ill ju m p in a n d h o w its

re s o u rc e s vvill b e a llo c a te d a m o n g th e s e b u s in e s s e s

D e te r m in in g c o r p o r a te s tra te g ie s a re o n e -s te p to m a k e th e Vision an d m is s io n o f th e firm is c le a r e r a n d s h o w th e w a y to a c h ie v e its o b je c tiv e s

1 3 2 B u s in e s s s tra te g ie s

B u s in e s s s tra te g y o fte n c o m e s a lo n g w ith a b u s in e s s u n it N o rm a lly , í ĩ m r s

a c tiv itie s c a n b e s e g m e n te d in to b u s in e s s u n its A b u s in e s s u n it is a s m a ll o p e ra tin g

u n it o f th e fĩrm vvhere it p ro v id e s a s e t o f s p e c iíìe d p ro d u c t, it h a s its e lf c u s to m e r

s e g m e n t, a n d it c a n d e te r m in e its o w n c o m p e tito rs

T h e re fo re , b u s in e s s s tr a te g y íb c u s e s o n h o w to c o m p e te in a g iv e n b u s in e s s

1 3 3 F u n c tio n a l s ư a te g ie s

F u n c tio n a l s tra te g ie s a re to o ls to re a liz e c o r p o r a te s tra te g y a n d b u s in e s s s tra te g y

P u n c tio n a l s tr a te g ie s đ e a l w ith th e a c tiv itie s o f th e íu n c tio n a l a re a s o f a b u s in e s s

s u c h a s m a rk e tin g , p ro d u c tio n , R & D , íĩn a n c e , p e r s o n n e l, e t c

2 Strategy íbrm ulation process

2.1 M ỉssion and objectives

2 1 1 M is s io n

M is s io n o f a n o rg a n iz a tio n is an o v e ra ll g o a l o f th e o rg a n iz a tio n W ith o u t a c le a r

m is s io n a n o rg a n iz a tio n c a n m is s le a d in g a n d c a n n o t d e v e lo p its o b je c tiv e s a n d

s tra te g ie s O r g a n iz a tio n a l m is s io n s h o u ld d e íĩn e w h ic h b u s in e s s it w ill p u rs u e , w h a t kind o f P roducts and Service will be provideđ to the m arket A ll o f these m ust be

id e n tiíle d v e ry c le a r in th e o rg a n iz a tio n a l m is s io n A n e ff e c tiv e m is s io n s h o u ld b e

th e p la n n e d b u s in e s s o u tc o m e is c o n s is te n t w ith its r e q u ire m e n ts lik e v v h eth er th e

d e liv e r y o f th e c o m m o d ity c a n b e c o n tr a c te d w ith in tw o vveeks T h is a llo w s th e firm

to ta k e r a tio n a l a c tio n s to g e t th e d e s ire d o u tc o m e s u c h a s im p ro v e d p ro d u c tio n a n d

s to r a g e a n d r e d u c e d o rd e r a n d d e liv e r y tim e , a n d ra is e d s e n s e re s p o n s ib ilitie s at vvork

T a r g e t h a s a ls o Central ro le th a i is th e re s u lt o f c o m p a ris o n F o r e a c h e n te rp ris e ,

ta r g e t c a n b e lo n g - te r m , m e d iu m o r s h o rt-te rm E c o n o m is ts a s s u m e d th a t an

e n te r p r is e íĩx e s its ta r g e ts in e ig h t m a in s e c to r s a s fo llo w s :

9

M arket position; Renovatỉon; Capacity; F inancial a n d logistics source; Profìts;

P ersonneỉ developm ent a n d efficiencies; E m pỉoyee attitudes a n d effìcìencies; Social responsibilities;

e n v ir o n m e n t a n d in d u s try e n v iro n m e n t T h e a n a ly s is o f s u c h ía c to rs s h a ll h e lp a n

e n te r p r is e id e n tiíy its p o s itio n a n d e n v ir o n m e n ta l p ro p e rtie s , th e e x is te n c e a g e ,

d e te r m in e in ílu e n c e s o f th e e x te m a l e n v ir o n m e n t a n d its ta rg e ts , th e n b e a b le to

m a k e d e c is io n s in p la n n in g o f s tra te g y

2 2 1 M a c ro a n a ly s is

M a c ro e n v ir o n m e n t in c lu d e s v a rio u s fa c to rs th a t h a v e in d ire c t im p a c ts o n a c tiv itie s

o f a n e n te rp ris e th ro u g h its in ílu e n c e s o n fa c to rs o f th e s e c to r e n v iro n m e n t, o f

w h ic h th e r e a re 5 fa c to rs c o n s id e re d b y a d m in is tr a te r s a s th o s e th a t in ílu e n c e m o s t

s tro n g ly , th a t is: e c o n o m ic , p o litic , le g a l, te c h n o lo g y , s o c ia l fa c to rs

Figure 1-2: SLEPT Model

ỉconoinic j 'MÊÌ,

P o litic a l Ị

w

Macro Factors

in v e s tm e n t in p ro d u c tio n e x p a n s io n

I n íla tio n ra te : a ffe c ts p re d ic tio n p o s s ib ilitie s o f in v e s to rs , h ig h in íla tio n ra te

s h a ll m a k e p re d ic tio n m o r e d iffic u lt, in v e s tm e n t m o re ris k y , b rin g in g a b o u t

re d u c e d in v e s tm e n t, p ro d u c tio n a n d h a v in g im p a c ts o n s e c to r c o m p e titio n

B a la n c e o f p a y m e n t, e x c h a n g e ra te : a ffe c t th e m a rk e t a n d e x te m a l e c o n o m ic

11

relatio n s o f an e n te rp rise ; s o m e tim e s re s u lt in th e c h a n g e in e c o n o m ic State

d y n a m ic s o c ie ty c a n s ig n iíĩc a tio n im p a c t o n th e d e m a n d o f o r g a n iz a tio n , s P r o d u c ts

o r s e rv ic e s a n d c a n a lte r its s tr a te g ic d e c is io n B e h a v io r p a tte m s o f in d iv id u a ls a n d

g ro u p s r e íle c t th e ir a ttitu d e s , b e lie f s a n d v a lu e s T h e s o c ia l e n v ir o n m e n t in c lu d e s

th e a ttitu d e s a n d v a lu e s o f s o c ie ty a s w e ll a s th e b e h a v io r T h o s e a re íiin d e r m e n ta l

íầ c to r s th a t c re a te c o n s u m p tio n ’s tr e n d s A n d o b v io u s ly th a t w ill s ig n if ic a n tly

in ílu e n c e o r g a n iz a tio n ’s o p e ra tio n

• L e g a l fa c to r

T h e la s t fa c to r is le g a l B u t th is is th e m o s t im p o rta n t fa c to r w h ic h w ill e ffe c t o n

e v e r a c tiv itie s o f th e o rg a n iz a tio n

L a w s in ílu e n c e th e h ir in g a n f firin g o f e m p lo y e e s , c o m p e n s a tio n , w o rk in g h o u rs

a n d w o r k in g c o n d itio n s L a w s a ls o in ílu e n c e a d v e r tis in g e x p e n s e s , th e p ric in g o f

p ro d u c ts a n d c o r p o r a te g ro w th b y m e rg e s a n d a c q u is itio n s G o v e rn m e n t ta x p o lic ie s

a lso a ff e c t th e íĩn a n c ia l s tru c tu re a n d in v e s tm e n t d e c is io n

2 2 2 In d u s try a n a ly s is

In d u s try e n v ir o n m e n t c lo s e ly a tta c h e s a c tiv itie s o f a n e n te rp ris e , fa c to rs o f th e

o p e ra tio n e n v ir o n m e n t sh a ll d e c id e th e in v e s tm e n t e n v iro n m e n t, c o m p e titio n

s tre n g th a n d p r o íits in th e se c to r A c c o r d in g to p ro f e s s o r M ic h a e l P o rte r, th e c o n te x t

o f th e o p e ra tio n e n v iro n m e n t is s u b je c t to in ílu n e n c e s o f fiv e c o m p e titiv e fo rc e s:

th re a ts o f e n try , c o m p e titiv e riv a lry w ith in th e in s d u s try , b a r g a in in g p o w e r o f

Threats of substitutes

mBÊm

S o u rc e : S tra te g ic M a n a g e m e n t, L L B y a rs

13

Threat of Entry by potential competitors:

P o te n tia l c o m p e tito r s a re c o m p a n ie s th a t a re c u r re n tly n o t p a rtic ip a tin g in

c o m p e titiv e riv a lry w ith in b u t a re lik e ly to p e n e tra te in to th e in d u s try T h e ir

a p p e a r a n c e s h a ll in c re a s e c o m p e titiv e in te n s ity , d e c re a s e p r o íĩts w ith in th e in d u s try

T h e p e n e tra tio n c a p a c ity o f p o te n tia l e n tra n ts w ill d e p e n d o n th e e x te n t to w h ic h

th e re a re b a r r ie r s to e n try T h e h ig h e r p e n e tr a tio n b a rrie rs a re , th e m o re d iffic u lt it is

fo r o th e r c o m p a n ie s to e n te r th is in d u s try a n d v ic e v e rs a

T h e re a re s e v e ra l v a r ia b le s c a n r e d u c e e n tr y in to th e in d u s try T h e y m a y in c lu d e econoinies o f scale, product differentiation, Capital requirem ent, access to

d is trib u tio n c h a n n e ls , a n d re g u la to r y ío r c e s E n try b a rrie rs a lso in c lu d e th e

re p u ta tio n a n d g o o d v v ill o f e x is tin g c o m p a n ie s F in a lly , s w itc h in g c o s ts c a n a ls o

d e te r c o m p e tiíio n

E n try b a r r ie r s a ls o a ff e c t th e e x is tin g c o m p a n ie s ’ r e s p o n s e to e n try F o r in s ta n t, a n

in d u s try w h e r e th e e c o n o m ie s o f s c a le p la y s a n im p o rta n t ro le , a n e x is tin g c o m p a n y

m a y re d u c e its p ric e s ig n iíĩc a n tly to p re v e n t a n e w c o m e r ’s e n try

Rivalry among existing fírms:

R iv a lrie s a re r e g u la r p re s s u re a n d d ir e c t th r e a t to c o m p a n ie s T h e m o re a g g re s s iv e

th e c o m p e titio n o f e x is tin g p la y e r s w ith in th e in d u s try is th e m o re p ro f it- m a k in g

c a p a c ity T h e ir e x is te n c e a n d d e v e lo p m e n t a re th re a te n e d It is s u c h la te n t

c o m p e titio n th a t e x is tin g c o m p a n ie s w ith in th e in d u s try k e e p e n h a n c in g in v e s tm e n t

c o s ts w ith a n a im to d iff e r e n tia tin g th e ir m a rk e t- a c c e s s P ro d u c ts , s e rv ic e s o r

re d u c in g th e ir p ric e s T h e c o m p e titio n in te n s ity w ith in th e in d u s try o fte n d e p e n d s

o n th e f o llo w in g fa c to rs :

s The n um ber a n d capability o f com panies w ithin the industry:

T h e n u m b e r a n d c a p a b ility o f c o m p a n ie s w ith in th e in d u s try d e c id e s c o m p e titio n

n a tu re a n d in te n s ity w ith in th e in d u s try In th e in d u s try w ith b ig c o m p a n ie s o f

e q u iv a le n t c a p a b ilitie s , th e c o m p e titio n te n d s to b e íĩe r c e a n d m u c h m o re in c lin e s to

a p r ic e w a r to s u rv iv e In th e e v e n t o f o n ly a fe w in ílu e n c e d c o m p a n ie s p re v a il; th e y

te n d to h a v e c o n n e c tio n s w ith e a c h o th e r to c o n tro l th e m a rk e t, w h ic h m a k e s le ss

in ílu e n c e d o n e s r e lu c ta n tly fo llo w p la y in g r u le s s e t o u t b y th e p re v a ilin g

T h e c o m p e titio n in te n s ity a ls o m u c h d e p e n d s o n th e a llo c a tio n o f c o m p e tito r s in

g e o g ra p h y

■S S iz e o f c o m p a n ie s in th e in d u s try :

C o m p e titio n is lik e ly to in c re a s e w h e n c o m p a n ie s a re s im ila r to e a c h o th e r in siz e

In th is s itu a tio n , th e r e is n o in d u s try le a d e r a n d c o m p a n ie s w ill c o m p e te to

d is tin g u is h th e m s e lv e s fro m th e ir riv a ls

s D iv e rs ity o f c o m p e tito rs in te n s ifie s c o m p e titio n

In th e in d u s trie s , i f th e c o m p a n ie s o rig in fro m d if f e r e n t n a tio n s , c u ltu re , a n d g o a ls ,

th e c o m p e titio n vvill b e h ig h

s In d u s try g r o w th ’s ra te is s lo w

In th is s itu a tio n , c o m p a n ie s m u s t w o rk h a rd to m a in ta in th e ir m a rk e t s h a re

s H ig h íĩx e d c o s ts w ill p re s s u r e c o m p a n ie s to p ro d u c e n e a r its c a p a c ity In

tu m , th is m a y le a d to a g g re s s iv e m a r k e tin g a n d p ric e -c u ttin g

Bargaining power o f buyers

Bargaỉning pow er o f suppliers

S u p p lie rs c a n e x e r t c o n s id e ra b le in ílu e n c e o n c o m p a n ie s in a n in d u s try w h e n :

s T h e re a re v e ry fe w s u p p lie r

s T h e re a re v e ry fe w s u b s titu te P ro d u c ts

15

s T h e P ro d u c ts a re d iíT e re n tia te d a n d h a v e b u ilt-in s ig n iíic a n t s w itc h in g c o s ts

s S u p p lie rs c a n in te g ra te fo rw a rd

Threat o f substitutes

S u b s titu te s a re Products th a t a c c o m p lis h th e s a m e p u rp o s e o r s e r v e th e s a m e n e e d s

A p a rt fro m th e ío r e g o in g ía c to rs , th e c o m p e titio n in te n s ity a ls o d e p e n d s o n o th e rs

s u c h a s th e d iffe re n tia tio n o f P ro d u c ts , s e rv ic e s a m o n g c o m p a n ie s w ith in th e

in d u s try , th e g ro w th ra te o f th e in d u s try , e n try b e ttin g , a n d íìx e d c o s ts , e tc

U n d e r s ta n d in g th e d y n a m ic s o f c o m p e titio n is a c ru c ia l s te p in a n a ly z in g th e

in d u s try

2 2 2 2 In d u s try life c y c le

In d u s trie s c h a n g e o v e rtim e M a n a g e r s n e e d to u n d e rs ta n d th e c h a n g e s th a t o c c u r in

th e in d u s try vvhere th e y a re v v o rk in g in T h e s e c h a n g e s a ff e c t th e in te n s ity a n d b a s e s

o f c o m p e titio n T h e c o n c e p t o f th e in d u s try life c y c le is a u s e íu l to o l to c o n d u c t th is

a n a ly s is A n in d u s tr y ’s p ro g re s s o fte n e x p e r ie n c e s 4 p h a s e s : e m e rg e n c e , g ro w th ,

m a tu r ity a n d d e c lin e T h e s e p h a s e s a re s im ila r to p ro d u c t life c y c le D e p e n d in g o n

th e c h a r a c te r is tic s o f th e in d u s try life c y c le , th e f ư m c a n đ e te r m in e th e

c o r r e s p o n d in g s tr a te g ie s , w h ic h c a n le a d to í ĩ r n ^ s s u c c e s s in th e fu tu re

E m e r g i n g s ta g e : a t th is s ta g e , industry b o u n d a r ie s a re v a g u e A t th is s ta r tin g p o in t,

th e r u le o f th e g a m e is u n d e íĩn e d ; P ro d u c ts a re n o t s ta n d a r d iz e d ; th e e n tr y b a r r ie r o r

w ith d r a w in g fro m th e m a rk e t is a ls o e a s y o r v e ry lo w T h is s ta g e a ls o im p lic its a

h ig h p o íe n tia l c o m p e titio n In th e e a r lie r p e rio d o f e m e rg in g s ta g e , th e

c o m p e titiv e n e s s in te n s ity is Io w b u t th e p ro f ita b ility o f in d u s try is h ig h It id e n tiíĩe s

th a t th e m o r e th e firm ju m p s in th e m a r k e t in th is p h a s e , th e m o r e b e n e íĩt th e firm

c a n e a m A b o v e a ll, in th is s itu a tio n , th e fírm c a n s u s ta in a s tro n g p o s itio n w ith in

th e in d u s try O f c o u rs e , b e lo n g in g vvith th e s u c c e s s , th e ía ilu r e o r ris k y o f n e w

in d u s tr ie s is a ls o v e ry h ig h

Figure 1-4: The industrv life cycle

S o u rc e : S tra te g ic M a n a g e m e n t, L L B y a rs

G r o w t h s ta g e : T h is m a y b e th e m o s t e x c itin g p h a s e o f th e in d u s try life c y c le

C o m p a n ie s th a t s u r v iv e th e e m e r g in g p h a s e lo o k fo rw a rd to b u ild in g th e ir b ra n d

n a m e , re c o g n itio n , a c q u ir in g m a rk e t s h a re a n d a c h ie v in g p ro íìta b ility C o m p a n ie s

a c h ie v e th e s e g o a ls a s in d u s try s a le s e x p a n d , th u s a llo w in g th e m to b e n e íìt fro m

p ro d u c t d if f e r e n tia tio n a n d a g g re s s iv e m a r k e tin g c a m p a ig n W ith th e te c h n o lo g y

in th e in d u s try In a d d itio n , it o fte n le a d s to a s h a k e o u t th a t c a u s e s m a n y c o m p a n ie s

A - L o / ìo '

Maturity phase: In th is p h a s e , competition in c r e a s e s , b u y e rs b e c o m e m o re

s o p h is tic a te d C o m p a n ie s e m p h a s iz e d if f e r e n tia tio n , u s in g a g g re s s iv e m a r k e tin g a n d

a d v e r tis in g c a m p a ig n C o n v e r s e ly , in d u s tr y g ro w th is s lo w e r a n d o fte n le a d s to

re d u c e in d u s try p ro f íta b ility A f le r s h a k e o u t p e r io d , n e w p ro d u c t a n d a p p lic a tio n s

a re h a rd e r to c o m e b y vvhile in te m a tio n a l c o m p e titio n in c re a s e s F a c in g to th is

s F a llin g R & D a n d a d v e rtis in g e x p e n d itu r e s

H o v v ev er, it is s till u s e fu l fo r m a n a g e rs to k n o w s o m e m a in c h a r a c te r is tic s o f th e

in d u s try life c y c le :

s S ta g e s o f th e in d u s try life c y c le v a ry in d u ra tio n ;

s D iíT e re n t stages o f the cycle require d iíĩe r e n t skills and c a p a b ilitie s ;

s T h e in d u s tr y life c y c le is n o t alvvays lin e a r

ư n d e r s ta n d in g th e d y n a m ic s o f c o m p e titio n is a c ru c ia l s te p in a n a ly z in g th e

in d u s try It h e lp s m a n a g e rs to d e te r m in e th e fa c to rs th a t a ff e c t riv a lry in th e ir

in d u s try , to id e n tiíy p o te n tia l riv a ls , to r e c o g n iz e c u r r e n t a n d e m e rg in g s u b s titu te s

a n d to u n d e r s ta n d h o w d iíĩe r e n t riv a ls c o m p e te D a ta o n in d u s try s tru c tu re a n d

d y n a m ic s o f c o m p e titio n c an b e u s e íìil in d e lin e a tin g k e y s u c c e s s ía c to rs

Key success ĩactors (KFS)

K e y s u c c e s s f a c to r s d e te rm in e th e r e q u ir e m e n ts fo r s u c c e s s ũ il p a r tic ip a tio n in a n

in d u s try K e y s u c c e s s ía c to rs v a ry fro m o n e in d u s try to a n o th e r T o d e te r m in e

19

K S F s, it r e q u ire s tw o in te r r e la te d a c tiv itie s : c u s to m e r a n a ly s is a n d a n a ly s is o f th e

c o m p e titio n T o g e th e r ío r e c a s tin g d e m a n d o f th e firm , w e c a n d e te r m in e a n d ra n k

th e o p p o rtu n itie s a n d th r e a ts in o r d e r o f its im p o r ta n c e

N o O p p o r tu n itie s ( R a n k e d ) T h r e a ts ( r a n k e d )

1

2

N - PRIMARY ACTIVmES - /

T h e p rin c ip le id e a o f v a lu e C hain is to id e n tiíy th e r e le v a n t a c tiv itie s in b u s in e s s ’s

p e r lo r m a n c e T h e p u r p o s e is to a n a ly s is e a c h a c tiv ity to fín d o u t th e r o le o f e a c h

a c tiv itie s a n d its c o n trib u tio n in íin a l P ro d u c ts o f th e b u s in e s s V a lu e C hain is

d e ĩin e d as a c h a in o f a c tiv itie s T h e fin a l P ro d u c ts p a s s th ro u g h a ll a c tiv itie s in th e

v a lu e C hain A n d a t e a c h a c tiv ity , th e P ro d u c ts g a in s o m e a d d e d v a lu e T h e v a lu a b le

m e a n in g in th is c o n c e p t is that th e Chain o f activities contributes to íìn a l Products

m o re a d d e d v a lu e th a n s u m m in g u p in d iv id u a lly a d d e d v a lu e o f e a c h a c tiv itie s

T h e v a lu e c h a in d iv id e s all a c tiv itie s o f a n o rg a n iz a tio n in to 2 c a te g o riz e s : p rim a ry

a c tiv itie s a n d s u p p o r t a c tiv itie s

T h e p r im a r y a c tiv itie s in c lu d e in b o u n d lo g is tic , o p e ra tio n s , o u tb o u n d lo g is tic ,

m a r k e tin g a n d s a le s , a n d Service.

T h e s u p p o r t a c tiv itie s in c lu d e a d m in is tr a tiv e in ír a s tr u c tu r e m a n a g e m e n t, h u m a n

r e s o u r c e m a n a g e m e n t, in fo rm a tio n te c h n o lo g y , a n d p ro c u re m e n t

21

In a n a ly z in g e a c h a c tiv ity o f th e v a lu e C hain, m a n a g e rs c an d e te rm in e th e

o r g a n iz a ti o n 's s tr e n g th a n d v v e ak n e ss in e a c h a c tiv ity in r e la tio n s h ip vvith

o r g a n iz a ti o n , s o b je c tiv e a n d s tra te g y It a ls o h e lp s to c o m p a re th o s e a c tiv itie s to

o th e r o rg a n iz a tio n s to a ss e s s th e e ff e c tiv e n e s s in e a c h a c tiv ity

2 3 2 P ro c e s s to id e n tiíy s u s ta in a b le c o m p e titiv e a đ v a n ta g e s

F ig u r e 1-6: P ro c e s s to id e n tifv s u s ta in a b le c o m p e titiv e a d v a n ta R e s

SUSTAINABLE COMPETITIVE ADVANTAGES

In ta n g ib le re s o u r c e s : s u c h a s b ra n d n a m e , k n o w -h o w , R & D , in ío r m a tio n , e tc

> C a p a b ilitie s a re re s o u rc e s w h e n th e y a re used fo r business activity purposes

> C o r e c o m p e te n c ie s ío u n d a m o n g th e c a p a b ilitie s o f th e o rg a n iz a tio n T h e s e

a re c ritic a l k e y fa c to r leading to s u c c e s s b u s in e s s

> D is tin c tiv e c o m p e te n c ie s : a d is tin c tiv e com petency o c c u rs w h e n an

o r g a n iz a tio n a l s tre n g th c a n n o t b e e a s ily m a tc h e d o r im ita te b y a c o m p e tito r

D is tin c tiv e c o m p e te n c y b rin g s th e o rg a n iz a tio n m o v in g o v e r th e c o m p e tito rs

a n d s h o w in g th e b e tte r p e r ío r m a n c e

> S u s ta in a b le c o m p e titiv e a d v a n ta g e : is th e a b ility to d o s o m e th in g th a t

c o m p e tito r s c a n n o t d o o r at le a s t c a n n o t d o n e a r ly a s w e ll

D is tin c tiv e c o m p e te n c ie s in lo n g ru n b e c o m e s u s ta in a b le c o m p e titiv e a d v a n ta g e s

T y p ic a lly th e d e v e lo p in g a s u s ta in a b le c o m p e titiv e a d v a n ta g e re s u lts fro m ta k in g

a d v a n ta g e o f One o r m o re d is tin c tiv e c o m p e te n c ie s a n d b u ild in g s o m e ty p e o f

s E x a c tly fit to k e y s u c c e s s ía c to r s o f th e in d u s tr y

2.4 Form ulatíon and choice o f appropriate strategy

> A c c e s s th e a ttr a c tiv e n e s s o f o r g a n iz a tio n ’s situation a n d d ra w c o n c lu s io n s

r e g a r d in g th e n e e d for s tra te g ic a c tio n

2 4 2 F o r m u la tin g s tra te g y

F ig u re : 1- 8: P r o c e s s to íb r m u la te s tr a te e v

Vision/ objectives

Functional Strategy Competitive Strategy Corporate Strategy Global Strategy

Matching organization structure to chosen

1r

Monitoring and Evaluation Implementation and

2 4 2 1 F u n c tio n a l le v e l - s tra te g ie s

F u n c tio n a l s tr a te g ie s a re c o n c e m e d vvith th e a c tiv itie s o f th e d iffe re n t fu n c tio n a l

a re a s , s u c h a s p ro d u c tio n , íìn a n c e , m a r k e tin g a n d p e r s o n n e l ư s u a lly , fu n c tio n a l

s tr a te g ie s a re fo r a re la tiv e s h o rt tim e - n o r m a lly o n e y e a r o r le s s F u n c tio n a l

B u s in e s s s tr a te g ie s s h o w h o w to c o m p e te in a g iv e n b u s in e s s T h e s c o p e o f

b u s in e s s s tra te g y is n arro v v e r th a n a c o r p o r a te s tra te g y T h e re a re th r e e m a in

ty p e s o f b u s in e s s s tra te g y a s:

> O v e ra ll c o s t le a d e rs h ip

> D ifferentiation o f the product/ Service

> Focus o f the product/ Service

2 4 2 3 C o r p o ra te le v e l - s tr a te g ie s

C o r p o ra te s tra te g ie s a re e s ta b lis h e d a t th e h ig h e s t le v e ls o f th e o rg a n iz a tio n a n d

in v o lv e a lo n g -ra n g e tim e h o r iz o n C o r p o ra te s tra te g y is c o n c e m e d w ith w h ic h

b u s in e s s e s a n o r g a n iz a tio n w ill b e in a n d h o \v its r e s o u r c e s w ill b e a llo c a te d a m o n g

CHAPTER 2 KIM LONG SECURITIES JOINT - STOCK COMPANY

s e c u r itie s c o m p a n y a s d e íĩn e d in th e la w s is a lim ite d lia b ility jo in t s to c k c o m p a n y

e s ta b lis h e d in a c c o r d a n c e w ith th e la w s a n d r e g u la tio n s o f V ie tn a m to c o n d u c t

b u s in e s s o p e r a tio n s d e s c rib e d in th e b u s in e s s lic e n s e is s u e d b y th e S ta te S e c u ritie s

C o m m is s io n 8

The roles o f securities com panies

• T o d e v e lo p re g u la tio n s fo r m o b iliz a tio n o f fiin d fo r is s u e rs

• T o e n h a n c e e ffic ie n c y o f in v e s tm e n ts a n d c o n tr ib u te to re d u c e d tim e

c o n s u m p tio n a n d m itig a te d ris k s v ia th c ir c o n s u lta n c y s e rv ic e s

• T o c o n tr ib u te to íb rm u la tio n o f s to c k m a rk e ts a n d r e g u la riz a tio n o f p ric e s

• T o c o n tr ib u te to in c re a s e d liq u id ity o f fin a n c ia l P ro d u c ts

• T o p r o v id e in íò r m a tio n to a d m in is tr a tiv e a u th o r itie s fo r th e ir c o n tro l o f th e

s to c k m a r k e t

O peration in S ecurities Com pany

• S e c u r itie s b ro k e ra g e

27

S e c u ritie s b ro k e r a g e is th e Service in w h ic h a s e c u ritie s c o m p a n y a c ts as an

in te rm e d ia ry to c a r r y o u t s e c u ritie s b u y in g o r s e llin g o rd e rs o n b e h a lf o f its

c u s to m e rs

• S e c u ritie s d e p o s ito r y

S e c u ritie s d e p o s ito r y is th e r e c e ip ts o f s e c u ritie s d e p o s ite d b y c u s to m e rs ,

s a fe k e e p in g o f c u s to m e r s ’ s e c u ritie s , a n d d e liv e ry o f s e c u ritie s to c u s to m e r s a n d

g iv in g a s s is ta n c e to c u s to m e rs to e x e r c is e th e rig h ts r e la te d to th e ir o w n e r s h ip o f

s e c u ritie s

• U n d e rv v ritin g

U n d e n v r itin g is th e Service in w h ic h th e u n d e r w r ite r c o m m its to th e is s u e r to

c o m p le tin g th e p ro c e d u r e s p rio r to a s e c u r itie s o ffe rin g , to b u y in g a p a rt o r a ll th e

s e c u ritie s o f th e is s u e r fo r re s a le o r to b u y in g th e r e m a in in g u n d is trib u te d p o rtio n o f

s e c u ritie s íío m th e is s u e r; o r to a s s is tin g th e is s u e r in d is tr ib u tio n o f s e c u ritie s to th e

p u b lic s

• S e c u ritie s in v e s tm e n t a d v is o ry

S e c u ritie s investm ent advisory is the Service in vvhich securities com panies provide

in v e s to rs w ith in íb r m a tio n su c h a s s e c u ritie s a n a ly s is re s u lts , p u b lic a tio n o f a n a ly s is

re p o rts a n d s e c u r itie s - r e la te d re c o m m e n d a tio n s

• S e c u ritie s p ro p rie ta ry

S e c u ritie s p ro p r ie ta r y is a c tiv ity th a t s e c u ritie s firm s d o b u y in g a n d s e llin g o f

s e c u ritie s its e lf T o s u c c e s s in th is a c tiv ity , s e c u ritie s firm m u s t e x p e rie n c e m a n y

in c re a s e fro m 3 c o m p a n ie s to 14 c o m p a n ie s ( a p p r o x im a te ly 5 tim e s ) W h ile th e

n u m b e r o f a c c o u n t in c re a s e d a b o u t 10 tim e s T h is s ta tis tic re v e a ỉs th a t th is s e c to r is

is e q u iv a le n t to a b o u t 10 tim e s in c o m p a r e to 2 0 0 5 O n e p ro p o rtio n th a t th e m a rk e t

m u s t b e re a c h e d in 5 y e a r s , th e n it j u s t r e a liz e d o n ly in 2 y e a rs

R e g a rd in g th e n u m b e r o f s e c u r itie s c o m p a n y , th e in c re m e n t p ro p o rtio n is at 5,5 tim e s c o m p a re to 2 0 0 5

T h e c o m p e titiv e n e s s in th e s e 2 y e a rs w a s re a lly to u g h B u t b e c a u s e o f its

p ro íìta b ility th e re a re s till m a n y o rg a n iz a tio n s th a t w a n t to p e n e tr a te th is m a rk e t

T o 2 0 0 8 , th e n u m b e r o f s e c u ritie s c o m p a n ie s re a c h e d 102 c o m p a n ie s ( in c re a s in g o f

4 3 % c o m p a re to 2 0 0 7 ) a n d th e v o lu m e o f in v e s to r s ’ a c c o u n t is 5 3 1 ,4 2 8 a c c o u n ts (in c re a s in g o f 7 0 % c o m p a r e to 2 0 0 7 )

T h e y e a r 2 0 0 8 h a d a lo t o f c h a n g in g in b o th th e vvorld e c o n o m y a n d V ie tn a m e s e

e c o n o m y V ie tn a m e s e s e c u r itie s m a rk e t a ls o c a n n o t a v o id th is c h a n g e V N - in d e x

in e a rly 2 0 0 8 w a s 9 2 1 0 7 p o in t a n d c lo s e d th e e n d y e a r tra n s a c tio n a t 3 1 5 6 2 p o in t

A s re s u lt, 9 0 % s e c u r itie s c o m p a n ie s g o t lo s s in 2 0 0 8 T h is is a ls o th e d iíĩĩc u lty th a t

e c o n o m y a n d V ie tn a m e s e e c o n o m y T h is is p o s itiv e s ig n a l to s e c u ritie s in d u s try

ỉ .2 Kim Long securities join t - stock com pany

A s e c u r itie s c o m p a n y is a íĩe c te d b y m a n y fa c to rs fro m e c o n o m y , p o litic , s o c ie ty ,

B e ío r e its a d m is s io n to W T O , th e le g is la tiv e s y s te m o f V ie tn a m b o re th e c o n s tra in ts

o f d u p lic a tio n a n d n o n a lig n m e n t T o m e e t th e re q u ir e m e n ts o f th e W T O

31

m e m b e rs h ip , th e c o u n tr y h a s m a d e e v e r y e ffo rt to im p r o v e its le g a l fra m e w o rk , a n d

su c h im p r o v e m e n ts h a v e b e e n r e c o g n iz e d b y th e in v o lv in g n e g o tia tin g p a rtie s

B y fa r, V ie tn a m h a s in tr o d u c e d a d e q u a te la w s a n d re g u la tio n s g o v e m in g th e

íb r e ig n - in v e s te d e n v ir o n m e n t, a s w e ll a s th e ir s u b s id ia ry d o c u m e n ts a n d

c o m m itm e n ts o n o p e n in g th e d o m e s tic m a rk e t, a n d a c c o m p a n ie d g u id e lin e s 9

In g o v e m in g th e s to c k m a rk e t, th e N a tio n a l A s s e m b ly p ro m u lg a te d th e 2 0 0 6

S e c u ritie s L a w a n d its s u b s id ia ry d o c u m e n ts o n s e c u r itie s a n d s to c k m a rk e t, w h ic h

c re a te s le g a l f r a m e w o r k fo r s u c h a c tiv itie s o f th e p a r tic ip a tin g o rg a n iz a tio n s a n d

in d iv id u a ls a t h o m e a n d a b ro a d G e n e r a lly , v iv id p ro g r e s s h a s b e e n m a d e to th e

le g a l e n v ir o n m e n t o f V ie tn a m T h is o ff e r s a n o p p o r tu n ity fo r th e in c re a s e o f íb r e ig n

Capital, and ío r m u la tio n o f new investment partnerships in various ĩields, including

the securities Service Y e t there is m uch room for im provem ent in the system to

m a k e it m o re s p e c iíic a n d le s s o b s tr u c tiv e to ío r e ig n o rg a n iz a tio n s th a t a re

in te r e s te d in th e d o m e s tic m a rk e t

2 1 3 E c o n o m ic fa c to rs

V ie tn a m e s e e c o n o m ie s h a s e x p e r ie n c e d o n e y e a r w ith a lo t o f o p p o s iíe e ffe c ts

F ro m th e to u g h ly in c r e a s in g o f in te re s t ra te to th e d e íla tio n o f th e e c o n o m ie s , fín a lly V ie tn a m e s e e c o n o m ie s a re a ls o im p a c te d b y th e w o r ld e c o n o m ic c ris is

E s p e c ia lly , w ith a lo t o f b a n k r u p tc y o f b a n k s , fm a n c ia l in s titu te s o n th e w o rld ,

V ie tn a m e s e b a n k in g a n d in te r m e d ia r y ĩin a n c ia l in s titu te s h a s b e e n in c u rre d r e la tiv e s

n e g a tiv e e ffe c t

A s th e ío r e c a s t o f IM F , in 2 0 0 9 V ie tn a m G D P gro vv th ra te w ill j u s t b e a b o u t 5 %

T h is ío r e c a s t m a y b e s till to o o p tim is tic vvhile W B a s s e s s e s th e g lo b a l tra d e a n d

e c o n o m ie s g ro w th ra te w ill b e n e g a tiv e

B e lo n g w ith th e g o in g d o w n tr e n d o f th e s e c u r itie s m a rk e t, a lm o s t o f firm s h a v e

n arro v v e d its b u s in e s s s iz e T h e in v e s to r s h a v e n o n e e d to b o r r o w fro m th e b a n k to

e x te n t o p e ra tin g b u s in e s s e s

85 b illio n U S D A s th e s ta tis tic o f th is a s s o c ia tio n , in 2 0 0 9 a b o u t 6 0 % , e q u iv a le n t to

2 0 0 0 0 0 e n te r p r is e s o f th e s e S M E s is fa c in g w ith m a n y d iíĩic u ltie s

F a c in g o b s ta c le s a s s u c h , it w a s e s s e n tia l th a t th e G o v e r n m e n t ta k e a s te e rin g ro le in

s tim u la tin g th e e c o n o m y In s titu tio n a lly , th e G o v e r n m e n t n e e d s to in tro d u c e

íù n d a m e n ta l a m e n d m e n ts in o r d e r to s h ift fro m th e a n ti- in íla tio n a r y e ff o r ts to

d o w n tu m - f r e e s tim u lu s T h is a p p ro a c h is c o n s id e r e d p ro p e r u n d e r n e w

c ir c u m s ta n c e s , a n d c o n tr ib u te s to th e r e c o v e ry o f th e n a tio n a l e c o n o m y a n d s to c k

m a rk e t I n p r a c tic e , h o w e v e r , th e r e re m a in n u m e r o u s c h a lle n g e s to th e lo c a l

e c o n o m y a n d th e e n tir e b u s in e s s c o m m u n ity , p a rtic u la rly th e liste d c o m p a n ie s d u e

to th e o b s ta c le s in th e is s u a n c e o f in c re a s e d Capital a n d s lo w e d -d o w n p riv a tiz a tio n

T h e s e c u r itie s in d ic e s o f d iíT e re n t c o u n trie s a ll d ro p b y 3 0 - 7 0 % in v a lu e a s in d ic a te đ

in th e ta b le b e lo w :

Table 2- 2: Securities ỉndices o f diíTerent countries in period 2007 - 200810

ỉHCị 31, 200$