Build business strategy in the period of 2011-2015 for Military Commercial Joint Stock Bank- Dien Bien Phu Branch

1 GRIGGS UNIVERSITY GLOBAL ADVANCED MASTER OF BUSSINESS ADMINISTRATION PROGRAMS CAPSTONE PROJECT REPORT “Build business strategy in the period of 2011-2015 for Military Commercial Joi

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GRIGGS UNIVERSITY GLOBAL ADVANCED MASTER OF BUSSINESS ADMINISTRATION

PROGRAMS

CAPSTONE PROJECT REPORT

“Build business strategy in the period of 2011-2015 for Military Commercial Joint Stock Bank

- Dien Bien Phu Branch”

Group Number: 01

Nguyen Ngoc An

Do Thi Ha Hoang Thi Thu Hien Nguyen Minh Hung Pham Thi Huong

HA NOI 2011

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COMMITMENT

We here by commit: The capstone‟s content is our actual research, which has been implemented on the basis of theoretical research, real situation of the bank Data and figures of the capstone are true Given strategies and solutions start from our practice and experience

Once again, we confirm the truthfulness of the above commitment!

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ACKNOWLEDGEMENT

We faithfully thank all teachers of the program In order to complete this graduate program and capstone, we have received wholehearted and enthusiastic guidance, assistance and criticisms of all teachers

Thank the Management Bank of Military Commercial Joint Stock Bank, Dien Bien Phu Branch and colleagues who have wholeheartedly exchanged views, offered suggestions and provided data and figure

CHAPTER 1: GENERAL THEORETICAL FOUNDATIONS OF

BUILDING BUSINESS STRATEGY

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1.1 Theories of strategy and strategic management 4

1.1.3.2 Stage of implementing and inspecting strategy 10

1.2.2.3 Competitive pressures from potential competitors 18

1.2.2.4 Competitive pressures from substitute products 18

1.2.2.5 Competitive pressures in the internal 18

1.3 Establishment of SWOT matrix and selection of business strategy 20

CHAPTER 2: ANALYSIS OF ENVIRONMENT FACTOR AND

SELECTION OF BUSINESS STRATEGY FOR MB DIEN BIEN PHU

BRANCH

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2.1 Overview about MB and MB Dien Bien Phu Branch 24

2.2.1.1 Analysis of macro environment according to PEST

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other bank

2.3 Establishment of SWOT matrix and selection of business strategy 66

CHAPTER 3: SOLUTIONS FOR IMPLEMENTATION OF

BUSINESS STATEGY OF MB DIEN BIEN PHU BRANCH BY 2015

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3.1 Business goals of MB Dien Bien Phu by 2015 72

Appendix 86

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LIST OF TABLES, FIGURES

Figure 1.4 The model of the working steps in the strategic planning stage 10

Figure 1.5 The model of the working steps in the strategic implement

stage

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Table 2.2 The basic targets of MB Bank in the period (2008-2010) 26

Table 2.6 The socio-economic targets in the first 8 months of 2011

compared to the same period of 2010

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Table 2.8 The structure of mobilized capital of MB Dien Bien Phu 50

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Table 2.12 The table comparing MB Dien Bien Phu with some

competitors in the sector

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Table 2.13 The table comparing MB Dien Bien Phu with some

competitors in the sector ( no credit)

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Table 3.1 The growth objectives of MB Dien Bien Phu ( 2011 – 2015) 72

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LIST OF APPENDICES

02 The list of VIP customers of MB in general and

Dien Bien Phu Branch

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LIST OF ABBREVIATIONS

13 TECHCOMBANK Vietnam Technological and Commercial Joint- stock

Bank

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INTRODUCTION

a The reason for selecting the topic:

As a corporate owner and manager, we should have a strategy for success Business strategy focuses on the long-term vision of the company The corporate owners and managers are very easy to forget and ignore business strategy because they are too busy with their current works or due to other reasons In many cases, the corporate owners can‟t know how to determine their business and which position it‟s now If there is a good strategic skill, we will set actual objectives and thoroughly know how to achieve them in the future As a corporate owner, manager, we should have strategies, build business strategy in a certain period in accordance with the actual circumstances, in order to survive in the market and win competitors in the same sector

Competition is a phenomenon closely attached with the market economy, it only occurs within the framework of the market economy Business in the field of monetary is a very sensitive one, affected by many economic, political, social, psychological, traditional and cultural factors, etc… Business activities of commercial banks are related to all economic, political-social organizations, each individual through mobilizing savings, loans At present, there are 5 State-owned banks; 1 policy bank; 1 Central People's Credit Fund; 39 joint stock banks; 13 wholly 100% foreign capital banks; 6 joint venture banks running and providing services in relation to credit and payment in Vietnam In the context of economic integration, implementing international commitments, Vietnam has gradually opened banking services, in order to direct to build a banking system with fair competition on international scale under consistent and appropriate legal framework One of important commitments of Vietnam when joining WTO is that the banking system of Vietnam will have to open door wider under given roadmap Apart from possible opportunities, the banking system also confronts with great

as Military Commercial Joint Stock Bank (MB) and MB- Dien Bien Phu Branch in

particular From that reality, Group 01 decided to select the topic: “Build business strategy in the period of 2011-2015 of Military Commercial Joint Stock Bank, Dien Bien Phu Branch”

b Purposes of research:

Based on the theoretical and practical foundations of strategic management and analysis and evaluation on the real situation of MB Dien Bien Phu, we have overall and exact evaluation on achievements and weaknesses in building strategies and solutions for repairing shortcoming at MB Dien Bien Phu

Then select business strategy and suggest solutions for implementing

business strategy in the period of (2011 – 2015), in order that MB Dien Bien Phu is

always a leading strong branch in MB‟s system and its field of action

c Objects and scope of research:

Research objects build and select business strategy, put forth solutions for

MB Dien Bien Phu to repair weaknesses and promote strengths, bring MB Dien Bien Phu a leading strong branch in MB‟s system

Scope of research is MB Dien Bien Phu, to study competition in the field of banking, banking system in Vietnam Strategic management is an extremely large and complex topic in relation to human in different fields Solutions to be taken are only right with specific circumstances and environments in a certain period of time Therefore, viewpoints and solutions which we have given are based on the reality of business environment and capacity of MB Dien Bien Phu

d Research methodology

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The theoretical foundation of this research is the theories of subjects: Strategic Management, Operations Management, Human Resource Management, Marketing Management, etc…

The research methodology mainly uses statistical analysis, synthesis, comparation, etc… with the system approach by data and figures colleted at MB Then, take solutions to help MB Dien Bien Phu have better and more positive direction in building business strategy

e Expected results

It‟s expected to achieve the following results:

- Specify the special characteristics of building business strategy in the field

of banking business

- Build business strategy for MB Dien Bien Phu and put forth solutions to be taken, specific plan in the period of 2011-2015

f Structure of the capstone

Apart from introduction, conclusion, references, annex, the capstone‟s structure consists of 3 chapters:

Chương 1: General theoretical foundations of building business strategy Chapter 2: Analysis of environment factor and selection of business strategy for MB Dien Bien Phu Branch

Chapter 3: Solutions for implementation of business strategy of MB Dien Bien Phu Branch by 2015

The origin of concept of strategy:

Concept of strategy began with ancient Greek This term has a deep root from the military, comes from “strategos” which means the role of the general in the military Later, it evolved into “Art of the generals” – means behaving skills and psychology of the generals By 330 BC, Alexander the Great used management skills to exploit all forces to crush the enemy and create a global system of domination

Figure 1.1: Simulation of military strategy

The competitive strategy of an organization is similar to military strategy, both tend to achieve the compatibility between abilities in order to create a difference and external environment which the organization participates in competition However, compared to military strategy, business strategy is more complex Unlike military conflicts, competition in business hasn‟t always caused the outcome including winners and losers The competition in the same sector sometimes gives them an opportunity to improve their strengths and skills like competitive seeds

Internal

Special abilities

External Battlefield conditions Compatibility

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Figure 1.2: Simulation of business strategy

Concepts of strategy in the field of business:

Because the society has developed a great idea and the strategic thinking is

no longer exclusively designed for the military field Therefore, the similarity of business activities are also used with strategic and leadership factors However, in the business world, it‟s not simple like that In order to analyze strategies, we should define what strategy is There are a lot of good definitions of strategy; the difference among these definitions is often caused by the viewpoints of each author

In 1962, Chandler is the person who initiated and developed the theory of strategic management: strategy is the determination of long-term purposes and objectives of enterprise and the acceptance of chains of actions as well as distribution of necessary resources for implementing these objectives

In 1980, Quinn defined: strategy is an integrated pattern or plan of basic objectives, policies and chains of actions of organization into a coherent population

Lately, Johnson and Schole defined: Strategy is the orientation and scope of

an organization in the long term, in order to gain advantage for the organization through its structure of resources in the context of a changeable environment, in order to satisfy the needs of the market and satisfy the expectation of stakeholders

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Concept of strategic management:

People often regard strategy as a product of reasonable planning process led

by senior executives, but it‟s not all In many cases, valuable strategies may arise from the internal organization without a prior planning

Strategic management is a set of strategic decisions and determination of long-term performance of a company Strategic management consists of continuous actions: review the environment (both internal and external); build strategy, evaluate and control strategy Thus, strategy research emphasizes on supervising and evaluating external opportunities and threats in the contex of internal strengths and weaknesses

Strategic management origins from business policies, strategic management combines long-term planning topics with strategy However, contrary to strategic management, business policy has a general management orientation, mainly focusing on the internal, paying attention to the integration of the organization‟s functions Meanwhile, strategic management not only pays attention the integration

of the internal functions like business policy but also emphasizes more on the environment and strategy Therefore, people use the term strategy in stead of business policy

1.1.2 Bases of strategy

Strategy is the direction and scope of action of an organization in the long term in order to gain business advantage through determining existing resources which can be used in a certain business environment to meet the market‟s needs and ensure benefits for all involved agents More specifically, strategy aims at:

- Sustainably achieving long-term objectives of enterprise (business & social responsibility)

- Market or market segments which the company will trade in, business tactics will be apply

- Values that the enterprise brings to the Owner and Society in which it‟s a Member

In terms of process, strategic management is regarded as management process including: form a strategic vision, set objectives, draft a strategy, implement the strategy, and adjust the strategy in accordance with the specific circumstances over time

1.1.3 Basic steps of strategic management

According to the diagram (Figure 1.3), the basic contents of strategic management are divided into 3 main stages: plan strategy, implement strategy and evaluate strategy However, the actual operation of companies show that the level of emphasis on each stage of strategic management is different, and there is a relative difference among companies in the same sector, companies running in various fields, and there is another difference among different companies of different countries

“strategy planning” The difference between strategic management and strategy planning is that strategic management consists of strategy implementation and strategy evaluation

Research activities include collecting information on the current field and environment of the company This process is also called “Environmental control” For enterprises, researches are organized to indicate main strengths and weaknesses

in the fields of the company There are many ways to determine the internal factors

of the enterprise like targets evaluating the internal average Many forms of survey have been developed and applied to evaluate internal factors such as: working

Plan strategy

Organize research

Combine intuition with analysis

Make a decision

Implement

strategy

Set annual objectives

Policy for each section

Distribute resources

Evaluate

strategy

Review internal &

external factors

Evaluate and implement

Make adjustments

A fact is that all enterprises have a restriction; i.e., resource restriction Strategists have to select which strategy brings the biggest benefit to the enterprise Decisions in the stage of planning strategy put forth a concentration on specific products to the enterprise Markets, resources and technology during a period of time must be specified Strategies indicate long-term competitive advantages It also contains long-term objectives having good effects on the company Strategists have

a thorough grasp of the future prospects of the company, so they may understand analytic decisions during the process of planning and they are authorized to transfer necessary resources during the process of implementation

During the process of planning strategy, determination of tasks of the enterprise is paid attention by not only senior planners but also executives A clear objective is very useful for setting objectives as well as planning strategy The stage

of planning strategy is performed through the following steps:

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PROCESS STEPS CONTENTS FOR IMPLEMENTATION

Figure 1.4: Model of steps in the stage of planning strategy

1.1.3.2 Stage of implementing and inspecting strategy

Stage of implementing strategy: Implement strategy is commonly called

action stage of strategic management Implementation means encouraging employees and Board of Directors, in order to make successfully planned strategies become specific actions Three main works of implementing strategy include establishing annual objectives, policies, policies for sections and distributing resources This stage is the most difficult stage during the process of strategic management, because it requires not only sensitiveness, determination but also devotion of administrators The key of successfully implementing a strategy is the ability to encourage employees, this is not merely science, but it puts emphasis on art Art inspires and motivates people‟s heart If a strategy is planned without being implemented, no matter how good it is, it still has no value

Implement strategy has a deep and broad influence on the whole enterprise, it affects all departments and functions For implementing strategy, skills of each individual are extremely essential Implement strategy include strategy

Planning

strategy

1 Functions, tasks

2 Evaluate external environment

3 Evaluate internal environment

4 Analyze and select strategy

Specify the role, nature and basic contents of the enterprise

Specify the role, nature of external environment evaluation, contents and contents for evaluation

Nature of internal evaluation, evaluation on main operations of the company

Use models, combine qualitative evaluation with quantitative one, select a suitable strategic model for the company

Figure 1.5: Model of steps in the stage of implementing strategy

Inspect and evaluate: The final stage of strategic management is strategy

evaluation Because the factors of internal and external environment are always variable, all strategies may be changed in the future There are three main operations in evaluating strateggy: (1) review internal and external factors which are used as a basis for planning the current strategy, (2) evaluate the level of implementation (3) carry out necessary amendments

1 Make management decisions

Set annual objectives, policies, distribute resources, adjust structure, build corporate culture

2 Implement strategy for marketing, finance

& accounting, R &

D works

Implement regulations under accounting standards Apply marketing strategy in relation to 4p

or 7p

Implement

strategy

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Figure 1.6: Model of steps in the stage of evaluating strategy

1.2 Analysis of environmental factors

1.2.1 Analysis of macro environment – PEST Model

While M-Porter‟s Five Forces Model goes into analyzing the internal factors

in business environment, PEST studies the impacts of the interanl factors in macro environment Factors include:

Political

Economics

Sociocultrural Technological

They are four factors directly affecting economic sectors, these factors are the external ones of the enterprise and sector, and the sector must suffer their impacts as an objective factor Enterprises depend on impacts and then put forth suitable policies and business activities

Review strategy Review foundations used for

building strategy

Re-evaluate strategy Evaluate the level of

implementation of the organization

Make necessary adjustments

* Politics and Government:

- Regulations on consumer loans

- Anti-trust regulations

- Environment Protection Acts

- Tax regulations

- Special stimulation

- International services regulations

- Hiring and promotion regulations

- The Government‟s stability

an administrative unit, enterprises must comply with political factors in that region

- Stability: We will review the stability of political and diplomatic conflicts Politics with high stability may create a good condition for business activities

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and vice versa unstable politics with conflict occurrence will have a bad effect

on business activities in its territory

- Tax policies: Policies on import and export tax, consumer tax, income tax, etc… will affect revenue and profit of the enterprise

- Related laws: Investment Law, Business Law, Labour Law, Anti-trust Law and Anti-dumping Law, etc

- Policies: The State‟s policies will affect enterprises; it may produce profits or challenges to enterprises such as: commercial policies, internal development policies, policies on economic development, tax, competition regulation, consumer protection, etc…

1.2.1.2 Economics

Enterprises always pay attention to economic factors both in the short-term and in the long-term and intervention of the Government in the economy Commonly, enterprises will depend on economic factors to decide investment in sectors and areas

- Status of the economy: Any economy also has cycle, in each certain stage of economic cycle, enterprise will make its own suitable decisions

- Factors affecting the economy: Interest, inflation

- Economic policies of the Government: Law on Basic Salary, the Government‟s strategies on economic development, incentives for sectors: Tax reduction, financing, etc…

- Economic prospect in the futre: Growth speed, GDP growth, GDP ratio per invested capital, etc…

1.2.1.3 Socio-culture

Each country and each territory have its typical cultural values and social factors which are characteristics of consumers in that region Cultural values are the

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values which make a society and can foster the development and existence of that society Therefore, the cultural values are usually protected very closely and largely, especially the spiritual cultures However, we can not deny the cultural intersection among different cultures This intersection will change consumer psychology and lifestyle, and create the development prospects for sectors

Besides the culture, businesses are also interested in the social characteristics when researching the market The social characteristics will divide the community into groups of customers, and each of the groups has different characteristics, psychology and revenue such as life expectancy, health status, diet; average income, income distribution; lifestyle, education, aesthetic conceptions, living psychology and living conditions

1.2.1.4 Technology

The world is still in the technological revolution A series of new technologies are born and integrated into products and services In the field of information technology, modern communication technology has helped the geographical distance, means of transmission

Information technology and internet have influence on business activities In addition to the above basic factors, when researching the market today, businesses must take the globalization factor into a macro factor affecting the sector

Figure 1.7: Model of five competitive forces

POTENTIAL COMPETITORS

(BARRIERS TO ENTRY)

- Absolute cost advantages

- Experience curve

- Exclusiveness of input factors

- The government policies

- Fixed costs/ Value-added

- Growth of the sector

- The scale and strength of competitors

- The difference of products

- The difference of efficiency

- Prices of substitute products

CUSTOMERS (POWER IN NEGOTIATION)

- The promotion of customers

- The customer replacement

- The impacts of input factors on

prices and ability of differentiation

- Supplier switching costs

- The appearance of the substitute

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1.2.2.1 Competitive pressures from the suppliers

The number and the scale of suppliers: the number of suppliers will decide

the competitive pressures and the power in negotiation for the sector and businesses Only having a few suppliers with the large scale on the market will create competitive pressures which affect the whole business and production activities of the factor

The availability of suppliers: In this issue, we study the possibility of

replacing the input materials by the suppliers and the supplier switching costs

Supplier information: In this era, information is always the factor promoting

the commercial development, supplier information have a large impact on the selection of input suppliers for businesses

1.2.2.2 Competitive pressures from customers

Customers are a competitive pressure which can directly affect the whole business and production activities of the factor Customers are divided into 2 groups:

- Retail customers

- Distribution customers

Both of them put pressures on businesses on the price, the product quality, and accompanying services And they control the competition in the sector through the purchase decisions

Competitive pressures from customers on the sector:

- Scale

- Importance

- Customers switching costs

- Customer information

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1.2.2.3 Competitive pressures from potential competitors

According to M-Porter, potential competitors are the businesses which are not available in the sector, but they can have influence on the sector in the future The number of potential competitors and the intensity of their pressures on the sector will depend on the following factors:

- The attraction of the sector: this factor is reflected by targets such as the rate of profit, number of customers and number of businesses in the sector

- The barriers to entry: are factors which make the participation in the sector become more difficult and costly

1.2.2.4 Competitive pressures from substitute products

Substitute products and services are the products and services which can satisfy the demands equivalent of the products and services in the sector The main competitive pressures of substitute products are the ability to meet demands compared with products in the sector In addition, the factors of price and quality, other factors of the environment such as culture, politics and technology will also affect the threats of substitute products

1.2.2.5 Competitive pressures in the internal

The businesses in the same sector will directly compete with each other to create backpressures to the sector, which creates an intensity of competition In one sector, the following sectors will increase competitive pressures on competitors

- The sector situation: demand, growth rate, number of competitors, etc

- The sector structure: concentration sector or dispersion sector

- The barriers to exit: like the barriers to entry, barriers to exit are factors which make businesses‟ withdrawal from the sector become difficult

1.2.3 Analysis of the internal environment

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To survive and develop, all the organizations have to conduct the activities: administration, finance, accounting, manufacturing, business, operation, research and development, marketing, etc and must have the information system In each of the activities, each organization has its own strengths and weaknesses

Marketing: is the process of defining, forecasting, setting and meeting the

desired needs of the customers to products- services of the business

Mastering the functions including customer analysis, purchase, sale, planning for products- services, assessment, distribution, market research, opportunity analysis, responsibility for society helps strategists define and evaluate the strengths and weaknesses of marketing activities

Manufacturing: is the activity of businesses associated with the creation of

products This is one of the main fields of businesses and has strong influence on the ability to achieve success of businesses in general and other fields

Manufacturing the high quality products with low cost will help the marketing department have more advantages because the good quality products with relatively cheap price is often easy to sell; the finance department is also less difficult because the effective means of production create favourable conditions to save financial resource Manufacturing also has influence on the functional department of human resources

Finance and accounting: the financial conditions are often considered as

the best assessment method of competitive position of businesses and are the most attractive condition for investors To build strategies, businesses need to build their own financial strengths and weaknesses Solvency, debts, mobilizing capital, profits, capital use, amount of cash, and common shares of the company can make some strategies become more feasible Financial factors often change the current strategies and the implementation of plans

Administration: includes the functions of planning, organizing, controlling,

checking; administration includes all administrative activities related to preparation

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for the future such as forecasting, setting goal, proposing the development strategies and policies, establishing operational plans

Information systems: businesses enhance the quality of adminisrtative

decisions in order to improve activities in a business An effective information system will collect, encode, store, synthesize and provide information to answer the questions about the important strategies and organizations Center of information system is a database containing the profiles and data which are important to managers

1.3 Establishment of SWOT matrix and selection of business strategy

The model of SWOT analysis is very useful for grasping and making decision in any situation for any business organization SWOT is an acronym of 4 words including Strengths, Weaknesses, Opportunities and Threats SWOT provides a tool for strategic analysis, the position check and evaluation, and the orientation of a company or a business plan SWOT is suitable for teamwork, and is used in setting up business plans, building strategies, assessing the competitors, marketing, developing products and services

Figure 1.8: Diagram of SWOT matrix Strengths:

- Be assessed to have good reputation by customers,

-Low-cost advantage due to its own production secret,

- Easily access to the advanced natural resources,

- Easily access to the distribution networks

- Be thought to have bad reputation by customers,

- Composition of operation requires high cost,

- Less able to access to natural resources,

- Less able to access to the main distribution channels

In somes cases, the weakness can be the strength if it is considered from another angle We can see this clearly when trying on learning about a production unit with the large operation capacity Although large capacity can be considered as

a strength which competitors of this company do not have, it can also be considered

as a weakness if the concentration of large investment in capacity makes the company difficult to quickly adjust to suit the change of environment

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Opportunities:

The external environmental analysis may reveal new opportunies to generate profits and growth, such as:

- Customers‟ demand has not been fully met,

- The appearance of new technologies,

- The loose regulations,

- The elimination of barriers to international trade

Threats:

The changes of the circumstances and the external environment may create threats to businesses, such as:

- Customer tastes transfer from the company‟s products to other products,

- The appearance of substitute products,

- The new law regulations,

- Barriers to international trade more closely

Instead of pursueing the best opportunities, a company can create the ability

to develop competitive advantages by learning about the relevance between its strengths and upcoming opportunities In some cases, companies can overcome their weaknesses to win attractive opportunities

To develop strategies based on SWOT analysis, companies need to dasign a matrix of factors called SWOT matrix (also known as TOWS matrix) as shown below

WO strategies

Take advantages of external opportunities to improve internal weaknesses These weaknesses prevent businesses from exploiting opportunities,

so businesses need to overcome their weakesses as soon as possible

T: Threat

List the threats

ST strategies

Use internal strengths to avoid

or reduce the threats from the external environment

WT strategies

These are the defence strategies

to reduce the internal weaknesses and avoid the external threats A business which faces the external threats combined with its internal weaknesses will face huge risks and can have to associate, merge or even be bankcrupted

A combination of internal factors and external factors is the most difficult task for the development of SWOT matrix, which requires a good judgement and will not be a best combination Normally, companies will pursue strategies WO,

WT or ST to help them apply the SO strategy

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CHAPTER 2: ANALYSIS OF ENVIRONMENT FACTOR AND SELECTION OF BUSINESS STRATEGY FOR MB DIEN BIEN PHU BRANCH

2.1 Overview about MB and MB Dien Bien Phu Branch

2.1.1 Overview about MB

Establishment history: MB has been established and come into official

operation in accordance with Business Registration Certificate No 0100283873 dated 30th September 1994 issued by Hanoi city‟s Department of Planning and Investment and License No 0054/NH-GP dated 14th September 1994 of State Bank

of Vietnam

Through more than 16 years of operation, MB has been more and more developed with the orientation to become a group with MB Parent Bank (one of leading commercial joint stock banks in Vietnam) and 5 subsidiaries operating effectively, step by step confirm its prestigious trademark in financial services (banking, insurance, securities) and real estate in Vietnam With diversified services and products, MB has strongly developed and rapidly expanded to new market segments apart from its traditional market Over the past 5 years, MB has continuously categorized at level A by SBV – highest standard promulgated by SBV

Its charter capital at establishment period was only 20 billion dong which is mainly contribution from shareholders and 25 officers; so far the charter capital has increased 265 times, up to 5,300 billion dong with tens thousand of shareholders and nearly 3,000 staffs and officers working in MB Now MB has strong financial and competitive capability, ensuring minimum capital safety ratio regulated by SBV, at the same time incessantly meet demand for expansion of the bank in the future Total assets of MB incessantly increase, reaching 96.256 billion VND till 30/6/2010 At present, in respect of total assets and charter capital, MB is one of State‟s commercial joint stock banks of great scale

BOARD OF MANAGEMENT

EXECUTIVE BOARD

SUPERVI SORY BOARD

RESEARCH AND DEVELOPMENT AGENCY

INTERNAL CONTROLLING

1 GENERAL PLANNING DIVISION

8 OFFICE FOR THE SOUTH REGION

1 BUSINESS SUPPORT BLOC

2 ADMINISTRATIVE BLOC AND QUALITY MANAGEMENT

3 NETWORK AND DISTRIBUTION CHANNEL MANAGEMENT

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- Total assets 44,346,106 69,008,288 96,256,893

2 Business operation results

- Immediate liquidity (within 7 days) 118.00% 185.00% 154.9%

- Common liquidity (within 1 month) 110.00% 135.00% 48.8%

(Source: Source: Financial Statements 2008; 2009 and 2010 of Dien Bien Phu

branch )

The immediate and general payment capacities of MB have unhomogeneous changes Specifically, in 2010, the quick payment capacity within 7 days of MB was quite high 154.9 % meanwhile the general liquidity is only 48% Because of the specific characteristics of the banking fiels, the money liquidity in the system is under the seasonality Normally, the short term liquidity, the due debts at a time of about 1 week can not arise so much, therefore the immediate payment capacity of

MB is high The general payment capacity within 1 month in 2010 was low, only 48.8% Because at the time of calculating, the total figures of due debts of MB are relatively high meanwhile the total basic payment assets do not increase very much The reason can be the fact that the balance between lending resources and mobilizing resources does not match to each other, 2010 is a difficult year to the mobilizing part

2.1.2 Overview about MB Dien Bien Phu branch

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Military Commercial Joint Stock Bank, international transaction name: Military Commercial Joint Stock Bank (abbreviation name: MB) was established in

4th November 1994 It has head office at 28A Dien Bien Phu and its charter capital

at establishment period was 20 billion dong Main orientation of the Bank in the first was financial intermediary for military enterprises participating in economy development and implementation of national defense tasks

In the face of growing demand for development of the economy and subjects

in the economy, Banks have incessantly expanded business operation both in terms

of scope and financial capability MB has also incessantly expanded its operation network through the establishment of branches and transaction offices in order meet demand for capital of the economy In 2005, MB moved its head office to Building

No 3, Lieu Giai street – Ba Dinh – Hanoi, and thus MB Dien Bien Phu branch separated to establish branch level I at 28A Dien Bien Phu In June 2005, the branch officially came into operation in accordance with Decision of Board of Management

of MB So far, the branch has been operated as an independent accounting unit and become one of most excellent units in Military Commercial Joint Stock Bank in general and in the whole system of commercial joint stock bank in particular

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Figure 2.3: Organizational structure of MB Dien Bien Phu

* Functions and tasks of each office and division:

By 31st December 2010, total personnel of the branch were 209 officers, with

6 offices and divisions and 8 decentralized branches Board of Directors has 1 Director and 2 Deputy Directors

- Director: is the Head who is responsible for managing and running all activities in the Branch; at the same time he is also person who signs, approves and makes important decisions

Individu

al Custome

r Division

Budget Accounting Division

International Payment Division

Enterpri

se Custome

r Division

Admin – Personn

el Division

Dong

Da Transaction Office

Thai Thinh Transaction Office

Dao Duy Anh Transaction Office

Giang

Vo Transaction Office

Thanh Cong Transaction Office

Board of Directors

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- Deputy Directors: 2 people, who authorized by the Director to directly manage specific activities In addition, they also represent for Director in managing and running all works in the Branch when the Director is absent

Subordinate to Director and 2 Deputy Directors are following offices and divisions:

- Credit Management Division: perform procedures to give customers short-, medium- and long-term loans

- Budget Accounting Division: account and make statistics of transactions in the Branch; at the same time synthesize statistic, process and store data and information relating to activities of the Branch

- International Payment Division: buy and sell foreign currencies; carry out international money transfer, collection payment, documentary credit (L/C), factoring, etc; consult customers to use commercial financing products

- Individual Customer Division: welcome customers, exchange contributing ideas and deal with requests of customers

- Enterprise Customer Division: welcome customers as enterprises, deal with many activities such as contract signing, lending and other related issues

- Admin-Personnel Division: supervise personnel, recruit, organize and train personnel; store legal documents, perform administrative works; organize, run and control internal operation in the Branch

Transaction Offices: Account reports and accounting books, each transaction office has its own seal and perform professions of a commercial joint stock bank in accordance with regulations of Law and of MB There are following transaction offices:

- Ly Nam De transaction office - No 14 Ly Nam De, Hanoi

- Nguyen Bieu transaction office - No 18 Nguyen Bieu, Hanoi

- Giang Vo transaction office - No 1 Giang Van Minh, Hanoi

- Thanh Cong transaction office - No 27 Huynh Thuc Khang, Hanoi

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- Thai Thinh transaction office - No 71 Thai Thinh, Hanoi

- Dong Da transaction office - No 391 Truong Chinh, Hanoi

- Dao Duy Anh transaction office - No 9 Dao Duy Anh, Hanoi

- Dang Van Ngu transaction office - No 45 Dang Van Ngu, Hanoi

Relationship among offices and divisions

Offices and divisions in Military Bank in general and in Dien Bien Phu branch in particular have close and mutual relationship with one another Board of Directors in the branch is responsible for leading, managing, supervising related activities and operations of the branch Offices and Divisions directly carry out activities such as business operation, mobilization and giving loan, foreign currency exchange, buying or selling, providing various banking services and products Although Offices and Divisions in the branch work independently, they always coordinate with one another in working to improve its efficiency Sub-divisions are specialized but still give support for one another Mutual attachment and support help Military Bank to well carry out its operation motto: “Steady and trustworthy”

Human resources

In 2010, MB Dien Bien Phu branch had one branch and 8 transaction offices with total 209 staffs, being categorized as follows:

In term of managing level:

- Managers: 20 people (Including: 1 Director, 2 Deputy Directors, 14 Division Managers and 3 Division Deputy Managers)

- Staffs: 189 people

In term of education level:

- Post-graduate: 12 people

- Graduate: 194 people

- College degree: 03 people

Managers and staffs in MB Dien Bien Phu branch are trained intensively in term of special profession which is suitable with functions in their work so as to