Developing business strategies for Bao Viet Insurance Corporation - Quang Binh branch in the period of 2012-2016

Developing business strategies in accordance with the characteristics of each insurance company has become an urgent need for every company in order to rapidly dominate the market, incre

BRANCH IN THE PERIOD OF 2012 - 2016

Group No.8

Student’s name:

1.Pham Quang Hai 2.Hoang Minh Canh 3.Tran Quoc Huy 4.Le Quang Minh

3AOVIET - CỘNG HÒA XÃ HỘI CHỦ NGHĨA VIỆT NAM

TONG CONG TY BAO HIEM BAO VIET

CONG TY BAO VIET QUẢNG BÌNH

Quang Binh, ngay tháng nam 2012

GIAY XAC NHAN

Kính gứi: - Trường Đại học Quốc gia Hà Nội

- Trung tâm công nghệ Đào tạo và Hệ thông việc làm ETC

Công ty Bảo Việt Quảng Bình xác nhận

Thời gian vừa qua, Nhóm 8 lớp V0210 Thạc sỹ Quản trị kinh doanh quốc tế rường Đại học Griggs liên kết với Trung tâm Công nghệ đào tạo và hệ thong VIỆC

ml ETC đào tạo gôm những thành viên:

.Ông: Phạm Quang Hải - Nhóm trưởng

Ông: Hoàng Minh Cành - Thành viên

.Ông: Trần Quốc Huy - Thành viên

Ông: Lê Quang Minh - Thành viên

Đã đến Công ty Bảo Việt Quảng Bình nghiên cứu và lấy số liệu để làm đẻ tài

¡t nghiệp thạc sỹ quản trị kinh doanh do Trung tâm Công nghệ đào tạo và hệ thống

Gaigsd UINIVERSIT™ GaMBA V0210 Group 8 Strategic Management

ACKNOWLEDGEMENT

In the process of transforming the economy to market mechanism, in addition

9 the States macro efforts in establising and completing the regulations and system

if the: legal documents, there should be a powerful transformation in perceptions

nd actions of all the people directly implementing those regulations and legal

ocuments

Being the managers of Government organizations and enterprises, the rvembeers of Group 8 have been aware of the importance of applying the knowledge

if advance management science at work and chosen the Global Advanced Master of

susiniess Administration Program offered by the Center of Educational Technology

nd C.areer Development — Vietnam National University, Hanoi (ETC) and Griggs

Iniversity (US) After almost 2 years participating in this training program, the roup members have learned many skills and expanded the relationships supporting

ur work in the future But the biggest thing we have achived is the advanced

1anagement knowledge of developed economies

We sincerely thank ETC, Vietnam National University Hanoi, Griggs Jniverrsity for providing us with this opportunity We would like to express our eep gratitude to our professors and lecturers for giving us valuable lectures with all

1eir meart Special thanks should go to Prof Anthony Robert Sanichara and Ass rof IDr Ngo Kim Thanh for imparting us the knowledge of Strategic Management

the core course of the training curriculum and instructing us to complete the

apstoone project in order to achieve high academic results

We also sincerely thank the businesses for supporting us in collecting data to

ompkete the capstone project; sincere thank should also go to our companies and

rganiizations fr creating favorable conditions for us to participate in the program

The groip members will try to apply all of the knowledge acquired through

ie course to tie specific conditions of their work in order not to disappoint our

rofesssors, lectures, companies and organizations

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STRATEGY SELECTION AND IMPLEMENTATION SOLUTIONS 53

3.1 Long-term development orientation of Bao Viet Insurance Corporation -

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Table 22 Annual GDP growth fate of Quetie IW daeaesesdaeiddddidlidissaasaioddssasse 29

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INTRODUCTION

¢ General context and the neccesity of the research

In the context of deeper international integration, Vietnam's economy has grown rapidly, strongly and comprehensively in all sectors The market mechanism has brought about a diverse environment of business forms, promoted high

economic growth, improving the spiritual and material living standards of the

people At the same time it also poses more risks in the society; the natural fluctuations lead to unexpected environmental disaster risks Those are important factors significantly affecting the formation and increase of insurance demands The insurance market, therefore, is increasingly expansive The number of insurance

service providers has grown constantly There are not just domestic companies but also foreign companies Insurance companies are facing with increasingly fierce

competiton, they should make great efforts to survive and grow Developing

business strategies in accordance with the characteristics of each insurance

company has become an urgent need for every company in order to rapidly

dominate the market, increase market shares, enhance their competitiveness, expand

and promote the insurance products and services

Quang Binh is a fast-growing province in the economic and social fields, the

insurance market has developed from only one company — Bao Viet Insurance

Corporation — Quang Binh Province which has been operating since the early years

of re-establishment of the province (1989) The number of insurance service providers has increasingly increased; by now there have been two companies and

two branches located in the area This, on one hand, provides more choices of

insurance service proviers for organizations and individual in the province; on the

other hand, reduces the market share of local businesses Competition in the

insurance industry is,thus, becomes increasingly fierce

In an attempt to continue maintaining and strengthening the position and

competitiveness in the insureance market of Quang Binh; in order to improve the business performance and effectively implement the assigned plans as well as

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In this research, the group will conduct research on the business operations

of a number of insurance service providers in Quang Binh, as well as analyze and

assess the local business environment Afterwards, business of Bao Viet Quang

Binh will be carefully examined in comparison with others' As a result, a business

strategy will be formulated

¢ Research purpose

Develop business strategy and propose feasible strategy implementation solutions in order to sustainably maintain the leading position of Bao Viet Quang

Binh in the local market in the period of 2012-2016 and subsequent years; become

the first class business, take a position in the Top 10 companies of Bao Viet Insurance Corporation

¢ Scope of the reseach

The scope of this research is: reseaching the business operations of insurance service providers in the province of Quang Binh, in the period of 5 years A

business strategy for Bao Viet Quang Binh in the period of 2012-2016 will also be

developed

¢ Reseach methodology

Research methodology: using scientific research of strategic management and other management science subjects, using statistical, synthesis, comparison and projection methods, combined with the matrix tools and methods of qualitative and quantitative analysis in order to develop a business strategy for Bao Viet Quang

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Binh's managers Secondary data are taken from reports of the Bao Viet Quang

Binh, Bao Viet Insurance Corporation, Vietnam Insurance Association, Ministry of

Finance, the Ministry of Planning and Investment, the Statistics Office of Quang Binh and other information from books, newspapers, internet

Analytical techniques to be used: SWOT matrix, IE Matrix, QSPM Matrix

and Michael Porter’s 5 Forces Model

The steps are as follows:

Step 1: Research the applied theories and supporting tools for developing the

business strategy for Bao Viet Quang Binh

Step 2: Analyze and assess the external environment affecting the company's

business activities, including macro environment and industry environment, thereby

identify the opportunities and threats that company is facing

Step 3: Analyze, evaluate the company's internal environment, including its resources, competitive advantages and core competencies, thereby identify the company’s strengths and weaknesses

Step 4: Summarize and find out the company’s strengths, weaknesses, as well as the external opportunities and threats From which, propose a long-term development orientation for the company in accordance with the actual conditions

Step 5: Conduct quantitative analysis of the internal and external factors that

have impacts on the business operations of the company, based on this develop the company’s alternative strategies

Step 6: Select strategic alternatives

Step 7: Propose strategy implementation solutions, action plans and budget, based on the actual situation of the company

¢ Structure of the project

In addition to the introduction and conclusions, the project includes three

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Chapter I THEORETICAL BACKGROUND ON BUSINESS STRATEGY

DEVELOPMENT

1.1 Concepts and Roles of Business Strategy

1.1.1 Business Strategy Concepts

Strategy can be considered as a generai action plan, a pathway and means to achieve specific goals which have been identified

According to Alfred D Chandler: “Strategy involves determining basic and

long-term objectives of a business, along with selecting the manner of action

courses and allocating necessary resources to implement those objectives"

Wiliam.J.Gluech states that: “Strategy is a consistent, comprehensive and

coordinative plan designed to ensure the accomplishment of the company’s basic objectives.”

According to Fred R David in his book “Concept of strategic management”, strategy is the means to achieve long term objectives Business strategies can

include the development in terms of geography, activity diversification, possession,

and product development, market penetration, spending cuts, liquidation and joint

ventures.”

Strategy is also understood to be a set of goals and policies as well as primary plans to achieve those goals It shows what business activities that the company is doing and will do, and which business field it will belong to

Besides, business strategy or competitive strategy can also be defined according to the following 6 factors:

- Product market: A company’s business opportunities depend on its products,

the markets that it serves, the competitors that it can confront or avoid and its

integration level

- Functional strategy: Competition methods can involve one or more following functions: product strategy, positioning strategy, pricing strategy, distribution strategy, production strategy, information and technology strategy, segmentation strategy, globalization strategy

- Strategic assets and capabilities: Strategic capabilities are the outstanding aspects of a company Strategic assets are the resource strength of a company compared to other comptetitors When fomulating strategies, the company should

pay attention to costs as well as the ability to build/ maintain assets and capabilities,

creating the sustainable competitive advantage of the business

- Resource allocation: Financial and non-financial resources such as

workshops, equipment, and human resources all have to be allocated Allocation

decision is critical to the strategy

- Business synergy effect: Only companies that achieve the synergy effect can

outperform the companies that ignore or do not exploit this effect

Overall, strategy is a set of actions and decisions that are closely related to each other in order to help organizations achieve their objectives It needs to be formulated in the way that can make use of basic strengths, including resources and

capabilities of the organization, as well as consider the opportunities and threats from

the environment

1.1.2 Roles of Business strategy

As the market economy always changes, companies have to adapt to those changes in order to survive and develop Business strategy is considered as a principle in business Therefore, if companies want to succeed in their business,

they must have an appropriate business strategy and a good implementation of it

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- Planning role: Business strategy helps companies find their purposes and directions It helps the managers consider and determine which direction the company should follow and when the desired results are realized

- Forecasting role: In a changing environment, opportunities and threats

always occur Strategy planning process helps managers analyze the environment to make forecasts and find out right directions Based on this, they can better grasp the opportunities, take advantages of them and reduce the threats associated with the

environment

- Controlling role: Business strategy helps managers to use and allocate resources optimally as well as coordinate effectively functions in the organization to

reach the common goals

1.1.3 Business Strategy Classification

1.1.3.1 Business Strategy Classification by Strategy Levels

When classifying business strategy according to strategy levels, we normally

have:

- Corporate level strategy (or general strategy): created for the whole

corporation in all business fields that the corporation is currently participating in

The objective of this strategy is identifying the destination that the corporation

wants to reach as a whole , as well as the directions and measures to achieve that

target

- Business Unit level strategy (field): created for narrow and specialized business field In the case that the company is only operating in one field, the business level strategy is also the corporate level one

- Functional level strategy: created for individual functions within the

company such as: finance, marketing, human resources functional level

strategies can be considered to support the success of the business level strategy and

the corporate level strategy

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1.1.3.2 Business Strategy Classification by Strategic Contents

Based on the strategic contents, French managers suggest that business strategies include the following:

- Commercial strategy

- Financial strategy

- Personnel strategy

- Technology strategy

1.1.3.3 Business Strategy Classification by Strategic Process

According to this method of classification, there are 2 strategy types as

follows:

- Orientation strategy: refers to the main orientations of business goals,

directions of a company, and measures to achieve those goals It is formulated based

on the analysis of external and internal environment of the company

- Action strategy: the action plans of a company in each specific situation with expected strategy adjustments Action strategy can be selected from the

strategies developed during the formulation of orientation strategy or from strategies emerging during the implementation of orientation strategy

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1.2 Business Strategy Development Process

Figure 1.1 F David’s Comprehensive Model of Strategic Management Process

External Factor: Setting up

Opportunitiez: &Threatz Goal ì Goal '

Internal Factor2 S electin : : ' Depart t ' '

Evaluating to find out Strate & : ae ' Strength: & Weaknezzez E ' - '

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1.2.1 Developing Mission Statements and Strategic Vission

Mission is a long-term statement about an organization’s purpose which can also be considered as a company’s statement of business philosophy, business rules All of those identify the business areas of the company, specifically the core

products and services, the target customers, market demands, technology fields or

the combination of these fields Mission statements generally include a company’s

desired achievements which are publicly-stated, an image that the company wants

to reach, differentiating a company from another A company’s mission are deployed and outlined into clear goals which are the state, specific results that the organization wants to achieve over a period of time

1.2.2 External Environment Analysis

1.2.2.1 Macro Environment Analysis (PEST++ Model)

Analyzing the macro environment is to answer the question: what the company is coping with? Four main factors of macro — environment which affect

the organization independently and combinedly, the company has to deal with:

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- Polictical and Legal Factors:

The influence of political and legal factors is increasing on the operations of businesses Companies are protected by laws; on the other hand, companies must comply with the regulations on institutions, policies, laws, remuneration, procedures

important influences on almost every decision on products, services, markets and

consumers

- Technological Factors:

Technology and technical factors have great influences on businesses Once

there are new and advanced technology, the opportunities as well as threats are

created to every industry and business The developments of new technology can create a new market, resulting in the proliferation of new products, which alters the

competitive relationships in the industry and makes the current products become out-of-date

In addition to the above 4 main factors, there are other factors such as natural conditions and global factors These are the external factors to the company and industry; their effects on the company and industry are objective

1.2.2.2 Industry Environment Analysis (M Porter’s 5 Forces Model)

In addition to the macro environmental factors, businesses are directly influenced by the industrial environment in which they are operating

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POTENTIAL ENTRANTS

Figure 1.2: Michael Porter’s Five Forces Model

Five main elements of the industry environment — 5 forces are:

- Suppliers:

Suppliers can claim their power and threaten producers by increasing prices,

reducing the quantity and quality of products or services Companies should take

into account all the negative impacts caused by their suppliers However, suppliers

can only put the pressure on companies in some particular situations: there are few

suppliers in the industry, lack of substitute products and services, suppliers have the advantage of product or service specialization, threat of forward integration of suppliers to complete the product value chain

- Buyers:

Buyers are people or organizations purchasing the business’s products or

services Buyers can be divided into five groups: end consumers; intermediate

distributors; wholesalers; retailers, industrial customers Buyers are the main objects involving in the consumption of products Identifying customers and therr

influences is necessary to create a basis for determining the market for products and services as well as investment structure Customer demand is the most basic

element that manufacturers consider when making decisions regarding whether or

not to maintain long-term competitive advantages for a particular product The

numerous choices, buyers have the ability to integrate backward into the industry in

order to control a part of or the whole production process When buyers have

advantages over producers, it is obvious that the producers have to reduce the price

and increase the quality of products and services, leading to a decrease in gained

profits

- Substitutes:

Substitutes seem not to compete fiercely with the products or services of companies However, they can affect the profitability and become a threat to companies Substitutes that can be innovated and changed by technological

advancements should be taken into consideration Most of new substitutes are the

result of the technological revolution To be successful in business, companies

should spend sufficient resources on strategic technology development

- Existing competitors:

Competitive rivalry of existing competitors within an industry is reflected in

the industrial intensity, barriers to exit, fixed costs, added values, industrial

situations and structure, over capacity situation, differentiation betweens products, switching costs, brand identity, competitor diversification, and elimination situation

within the industry Competitors may have their strengths and weaknesses which

can affect their competitiveness

- Potential entrants:

Potential competitors are businesses that have not appeared in the industry

but may affect it in the future The threat of potential competitors depends on many

factors such as: absolute cost advantages, the Government’s policies, the economies

of scale, capital requirements, brand identity, switching costs, access to industry

distribution channels, the likelihood of retaliation from existing industry players,

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1.2.3 Internal Environment Analysis

The internal environment of a business consists of all the things belong to the business itself, directly related to the production and business cpcrations of the company to order to identify strengths and weaknesses of the company, forming the basis for strategic planning and implementation of business strategy Subjects to

be considered are major factors occurring within the business, and under control of the business Those key factors are: human resources, financial capability,

marketing, information systems, and organization activities

1.2.4 Developing Strategic Alternatives

1.2.4.1 External Factors Evaluation Model (EFE)

Table 1.1: EFE Matrix

External business

environment factors

List all the factors | Assign a weight for | 1= The business’s (4) = (2) x (3)

of the external} each factor; the | response is poor

business value of each weight | 2= The business’s

environment should be between 0 | response is average

and 1 The higher | 3= The business’s the weight of a|response is above

factor , the more | average

important the factor | 4= The business’s

is response is superior

score =A

EFE matrix helps managers summarize and evaluate economic, social,

cultural, demographic, geographic, political, legal, technological and competitive

factors by assigning a weight with the value from 0.1 to 1.0 and a rating for each

factor Based on this, strategic planners can identify external opportunities and

threats affecting the business

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1.2.4.2 Internal Factors Evaluation (IFE)

Table 1.2; IFE Matrix

important the factor

List all the factors | Assign a weight for | 1= Major weakness (4) = (2) x (3)

of the internal each factor; the 2= Weakness

business value of each weight | 3= Strength

environment shouid be between 0 | 4= Major strength

The process of developing EFE and IFE matrices includes 5 steps: creating a

list of internal or external factors; assigning a weight for each factor; assigning a rating for each factor; calculating the weighted score for each factor; calculating the

total weighted score for all the factors

FÄ advantage of opportunities | by taking advantage of

8

5

10

SWOT matrix is a tool for auditing a business and its environment in terms

of strengths, weaknesses, opportunities and threats Combining those factors,

companies can identify their appropriate strategies:

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- S/T combination: businesses use their strengths to avoid threats or reduce

the impact of threats

- W/O combination: businesses take advantage of opportunities to overcome weaknesses

- W/T: businesses overcome or minimize weaknesses to avoid threats

1.2.4.4 IE Matrix

IE Matrix is used as an analyzing tool applied simultaneously with the

SWOT matrix and can be used to collate with the SWOT matrix This is a more

quantitative analyzing technique which is widely used by many businesses

nowadays The IE matrix which is a combination of the external factor evaluation

(EFE) matrix and internal factor evaluation (IFE) matrix, is based on an analysis of

internal and external business environment

Figure 1.3 Internal - External Matrix (IE)

IFE - Internal environmental factors

Strong Average Weak

Combining the EFE matrix with the IFE matrix, we have the IE matrix which

is used to identify and evaluate the strategic position of a business Appropriate

strategic orientations will be defined in correspondence with this strategic position

If the strategic position of a business is located in the 3 green boxes, the business is

in a rapid growth area If a business’s position is located in the 3 yellow boxes, the

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business should select concentrated development strategy or stable strategy If a business’s position is located in the 3 red boxes, the business should curtail, liquidate or even quit its business to preserve the resources

- FS: Financial Strength

- CA: Competitive Advantage

- ES: Environmental Stability

- IS: Industry Strength

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In principle, a QSPM can include any group of strategies in an alternative set

of strategies which include any strategy; but only strategies in the same group can

be evaluated and compared These groups of strategies are different and a QSPM can only evaluate strategies in the same group

It should be noted that QSPM shows the comparative attractiveness of the alternative strategies; and more importantly it provides subjective bases to consider and determine the most appropriate product strategy However, QSPM also has

some limitations and it must have certain conditions to be used in practice One of

the biggest drawbacks is that in the process of developing the matrix, intuitive judgement is required to give the factors the attractiveness score - although based on the environmental analysis information conducted before Therefore, in order to

effectively use QSPM, strategists are required to discuss thoroughly and reach a

consensus on each number in the matrix by adding scoring bases in the

attractiveness score column

Strategy selection is the final determinant step of the strategy development and also the first step in the strategy implementation process Developing and selecting strategies can identify steps required to have a feasible business strategy However, to be successful in the marketplace, selecting the appropriate strategy is essential and crucial And with the selected strategy, the company must implement

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it effectively This is a critical stage to translate the company’s strategic expectations into reality

1.2.5 Analyzing Strategic Options

According to Michael Porter, the advantages of any business always come from one of the two aspects: cost advantage and product differentiation By

applying these advantages, businesses pursue 3 generic strategies: Cost -Leadership Strategy; Product Differentiation Strategy; Focus Strategy

1.2.5.1 Cost — Leadership Strategy

This strategy aims at becoming the lowest cost producer in the industry with acceptable quality standards By which, the company either sells products at the average price of the industry in order to gain higher profits than competitors or sells

products at a lower price than the average price of the industry in order to gain

market shares This cost leadership strategy is often applied for large markets Businesses that are successful in applying this cost leadership strategy usually have the following characteristics:

- Ability to access to capital sources in order to invest in manufacturing facilities and equipment This can be considered as a barrier to entry that many other companies cannot overcome

- Capability to design products appropriately in order to increase

productivity For example, install a particular small part to reduce time spent on assembling

- High manufacturing level

- Effective distribution channels

Any generic strategy can contain potential risks and the cost leadership

strategy is not an exception With the support from modern technology, competitors

may have unexpected breakthrough in production, removing the competitive advantages of the cost-leading business In addition, some companies pursue a strategy focusing on niche markets where it is not difficult to achieve even lower costs compared with their traditional markets As a consequence, together they form

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a group controlling larger market share

1.2.5.2 Product Differentiation Strategy

This is a strategy to develop differentiated products and services so that those products and services have special and unique features, being valued and higher appreciated by customers compared to those of competitors Added values coming from the product’s uniqueness allow companies to desensitize prices which are still accepted by customers It is hoped that higher prices will cover the additional costs

in the process of providing products Moreover, due to the different characteristics

of products, if suppliers increase their prices, companies can transfer this difference

to customers, because customers can not easily find similar substitute products

Businesses which are successful in applying this product differentiation strategy

usually have the following strengths:

- Research capability and access to leading scientific advancements

- Skillful and creative research and development (R&D) team

- Proactive and professional sales force with the ability to communicate the strengths and uniqueness of the products to customers successfully

- The company’s brand and reputation for quality and innovation

There are some potential risks associated with the product differentiation

strategy such as: the possibility that the company’s products are imitated by

competitors, changes in customer predilection In addition, some companies that

pursue the focus strategy may reach the higher level of product differentiation in

their niche markets

1.2.5.3 Focus Strategy

To implement this strategy, companies focus efforts and resources on a market segment by innovating products without changing other factors Companies try to take advantage of any opportunity of existing products, services or market

By summarizing and synthetizing some basic theories, the contents of

Chapter 1 can be considered as a basis for developing and analyzing the conents of

Chapter 2 and Chapter 3 of the Capstone Project

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Chapter 2 ANALYSIS OF THE BUSINESS ENVIRONMENT AND SITUATION OF BAO VIET INSURANCE CORPORATION - QUANG BINH BRANCH

2.1 Introduction about Bao Viet Quang Binh Company

2.1.1 Establishment and development process

Baoviet Insurance Corporation — Quang Binh Branch, which was esiabvlished

on August 1, 1989 based on the Decision 130/QD-BTC on Juiy 18, 1989 of

Minister of Finance, is organized and operated complying with the Charters,

decentralization, authorization, regulations and directions of the Corporation

Business name and headquarter of the company:

- Full name in Vietnamese: Bao Viet Quang Binh Company

- International trade name:

BAOVIET INSURANCE CORPORATION

Quang Binh Branch

Headquarters: Thong Nhat Street, Dong Hoi City, Quang Binh Province Telephone number: (052) 3821 430 / 3828 899 Fax: (052) 3823 186

Logo of the company: Bao Viet Insurance

Accounting form: Bao Viet Insurance Corporation — Quang Binh Branch

(hereunder named the Company or Bao Viet Quang Binh) is a dependent

accounting unit of the Corporation, operated based on decentralization,

authorization of the Corporation as well as annual distribution plan of the

Corporation The Company has its own seal, accounts in Vietnam’s currency as well as foreign currency opened at domestic banks

2.1.2 Functions and tasks

Some of the main fields that have been provided with commercial insurance in Quang Binh province are: Cargo insurance, maritime insurance, river

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boat insurance, fishing vessel insurance, property insurance, motor vehicle insurance, life insurance, and professional liability insurance It is the task of Bao Viet Quang Binh to establish an insurance reserve fund from contributions and

insurance purchases of producers, businesses, individuals and agencies both inside and outside the province to share risks as well as timely compensate for damages

caused by natural disasters, unexpected risks of businesses, social and civil agencies

in order to avoid business interruption, contributing to the socio-economic stability

and development

Objectives of Bao Viet Quang Binh include running a profitable business,

preserving and raising the capital of the Corporation; maximizing productivity of the Company as well as the Corporation; cooperating with other members of the

Corporation and other members of Bao Viet Group to achieve the shared targets

Comprehensive — Legal Dept |* >| Accounting — Finance Dept

Professional Operations Professional Operations

Figure 2.1 Organizational structure of Bao Viet Quang Binh Company

- Management Board of the Company includes 01 director and 01 deputy

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- Professional departments are Comprehensive - Legal Department, Accounting — Finance Department, Professional Operations Department I,

Professional Operations Department II

- There are five regional insurance offices located in 4 districts and | city in the province, namely, Quang Trach Insurance Office, Bo Trach Insurance Office, Quang Ninh Insurance Office, Le Thuy Insurance Office, Tuyen - Minh Hoa Insurance Office

- Total number of the Company’s staff is 23 people and more than 130 insurance salesmen around the province

- Qualifications: 2 with master degrees, 18 with university degrees, 3 with intermediate diplomas

2.1.4 Vision

The company vission is to bring about fundamental foundation for sustainable development through business administration; information technology development; human resource investment; brand development; competitiveness and business performance improvement; maintaining the leading position and step by

step developing new products and services such as medical, educational, retirement

insurance; expanding the market into some neighbouring provinces

“customers are the center”; developing and growing sustainably

2.1.7 Main business fields

The task of the Company is to run business on non-life insurances and other

fields under decentralization of the Corporation and complying with Vietnam’s regualations Insurance products offered include: Insurance combined with human,

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physical accident 24/24, medical insurance, retirement insurance, student insurance, crew accident insurance, car and other vehicles insurance, construction insurance, marine hull insurance, fishing boats, rive boats, fire insurance and special risks, insurance for artchitects, doctors, lawyers, civil liability insurance for owners of of cars, motors, river boats or marine ships, etc

2.2 Analysis of the business environment of Bao Viet Quang Binh (External

environment)

2.2.1 Macro Environmental Analysis (PEST)

2.2.1.1 Economic Factors

- Vietnam’s economy is evaluated as stable and fast growing

Table 2.1 Economic growth index of Vietnam

Growth rate (%) Target 2006 7.8 2007 8.4 2008 6.2 2009 a2 2010 6.5 20s 7-8

Source: the Government's Report

- Avarage income of all classess has improved; average income per capita continuously rises each year

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- Quang Binh’s economy grows rapidly with the annual average growth rate

in the 6 year period (2006-2011) of 10.7%, which marks the fastest growing phase,

higher than that of the phase 2001-2005 by 2.14% Economic structure has got

appropriate and well-oriented transformation The rate of agriculture and forestry, fishery has decreased while the rate of construction and services has increased GDP

per capita has got a considerable increase and the gap between the province’s GDP

and that of the nation has been gradually narrowed In 201!, inspite of the shared

tough situation and various issuess such as inflation, the increase in price of

essential materials and goods, the increasing interest, extremely cold weather

condition, floods and epidemics, the socio-economic situation of the province has

got some encouraging and comprehensive achievements due to the efforts of all levels, agencies as well as the people of the province

Table 2.2 Annual GDP growth rate of Quang Binh

(Source: Quang Binh’s people’s committee)

2.2.1.2 Political and legal factors

Political and social situation of Vietnam in general and of Quang Binh

province in particular is stable, highly appreciated by many countries, which

produces the fundamental for present and future cooperation and investment enhancement, bringing about advantages for businesses As a result, the total community investment capital has dramatically increased All of these good conditions are advantages for businesses in general and insurance companies in particular

Law on Insurance has been amended and supplemented towards integration

and renewal to suit the general trend of the world Decree 103/2008/ND-CP and

Ministerial Joint Circular between Ministry of Public Security and Ministry of

Finance No 35/2009/TTL-BTC-BCA gave some instructions on implementing

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However, a problem raised in the text of global and national economic crisis

is the Decree 11/NQ-CP of the Government issued on January 14, 2011 on major solutions to control inflation, stabilize macro economy, guarantee social welfare

including a policy of tightening public spending, postpone or limit public

investments, purchases, leading to postpones, slowing progress of many projects; Many constructors and producers have come to stagnation, loss; many labour have lost their jobs or suffered from decreasing income

2.2.1.3 Social and cultural factors

The population of Quang Binh province is about 853.000 people (2011) Most of the local people are Kinh, ethnic minorities live mostly in the 2

mountainous districts Minh Hoa and Tuyen Hoa and some communes of West Bo Trach, Quang Ninh, Le Thuy districts However, the population is not evenly

distributed, 84.86% of people live in rural areas, and 15.14% of people live in urban

areas Population growth rate in cities is higher than that of rural areas due to emigration and urbanization Demographic structure largely affects sales potential

of insurance Quang Binh is still a poor province, its people; especially in rural

areas have not got the idea of purchasing insurance services As a result, along with

the increase in number of people living in cities, district centers or towns is the

increase in insurance demand, which is the opportunity for the Company- the best insurance network with regional branches situated in all district centers as well as their communes Nonetheless, due to the knowledge gap between the cities and the

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