Formulation business strategy of Vietnam International Joint Stock Bank in the period 2011-2015

Global Advanced Master of Business Adnimistration strategies and detailed orientation to enhance their competitiveness in order to sustain and develop in the new period In this common tr

FORMULATION BUSSINES STRATEGY OF

VIETNAM INTERNATIONAL JOINT STOCK BANK

1 Nguyén Trong Hai (C)

2 Nguyén Manh Cuong

Global Advanced Master of Business Adiuiunistaton

TABLE OF CONTENT:

PT GUND sex oxconveacscnavasnnenesaxesancatmrnenatenesannsisincti ti thd thdnadansnoasannemvncoouereeys 6 LIST OF TABLES sasssssssssvsssveasaasivsasassasensnsosonsnsocengnensysennsevavanveenennnssmneenyesusennrazasavessvuawenvennes 7 LIST OF FIGURES, GIRRAPHS G1 HT ng ngu ey 8 INTRODUCTION 0y va a1 9

1 Reason for researChl S€Ï€€fÏOH 2G 512093 3 13 1 91 1 3 1 vn ng re 9

2 EEseiFchi HHÏEG [WEB kaayeaenseitnttantrrntrtrivtntrtiortrgorttittgttbittstiytottif000311018.2426s6esfcessesees 10

3 Research methO(OÌOg Vy 5 5< 1919913193131 103 01 g1 gu cưng 10

4 Research’s €onfriDUfÏODNS << ng TT TT nu ngờ 10

5, SUPUCtUPe OF TOSCATCH sisnssccacessvonscsaasncavcessass.sase cncicsnsensessncncsoreenooneveyoenevesesneernonyters 11

1 CHAPTER 1: GENERALLY LOGICAL ISSUES ON STRATEGY

MANAGEMENT scssasssscconssnernenasanssnsnevancscwsaassnusinsenssinsseicaassadhcksticbereneanduserqnin 12

1.1 Theoretical background of strategy ManageMENt ccccececcecesesssssscscsesssssssssscscsees 12

inne Definitions of strategy ManageMeNt .ccccccccccscecsesescscecseveescsecevsvsvsvevsvevsvevevanevees 12 1.1.2 Levels Of Strategy .cssssssssssscseesssescsssesecesscseseesstecssseesessseseseseeceessesessscscsssecsssssenesenes 14 1.1.2.1 COPPOPALE SUE BY ssexccvsssersecresexsteurexvescssssceceavens caxeceaveti tha stvtasiswe<achensoaSnooouseraneanacnoneeneees 14

125, FUPICHOMAL STALE RY sssnussrassnusscsosnnsananatnsnissssaandanecansehncnanncenenanenenenenennenconnrersoracanuasecensnnryes 14

1.2 The process of strategy formulation 55s 219191 1113 3 511 xnxx erree 16

1.2.1.1 Analysis of External EnVITOIINII 2:2 2t t1 321212 121 1E 31111 111121111 1g rrey lĩ 1.2.1.1.1 Analysis of General environment (PEST Model) ¿sec ccsscecccsesssxrrrrersre l6 1.2.1.1.2 Analysis of Industry Environment (Five forces model) csccccccccccccccrcrrce 17

1.2.1.1.3 | Matrix of External Factor Evaluation (EFE) ccccccccccccscccccscesecsecseeseesccseeecsevsceseeaees 17

1.2.1.1.4 | Analysis of Competitive Profile Matrix (CPM) cccccccsssssessssssecsescseecstecsesteeeresseseees 19

1.2.1.2 Analysis of Internal Factor EnVirOnIN€II c5 5c 22 2 2x vs re 20

I.2.1.2.1 Analysis Basic Value Chạn St nh 122121111111 1110101 101010101011 re 20

1.2.1.2.2 Internal Factor Evaluation Matrix (IEE) - c c1 11 vn SH rerresoco 22

1.2.2 Selection and construction of businesS S†FAf€ØV ác c 2n c SH TH ớ 23 12.2 Ì: Evaluation of the opportunities of strategy selection through SWOT matrix 24 1.2.2.2 Strategy selection based on the QSPM matrix .ccccccceeeesseeesesesseseseseeecscseseseseeeseeees 25 1.2.3 Strategy deployment and evaluation 2 cecccceesesscsecseseeseeseseesesecsecscsecssscecsseresestees 27 1.2.3.1 The determination of Operational structure suitable with stratèy 27

1.2.3.2 The construction and deployment of strategy implementation process and regulation28

1.2.3.3 The construction of strategy implementation control SVSt€I c2 2c: 28

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VIETNAM INTERNATIONAL BANK IN RECENT YEARS 29

2.1 Overview of Vietnam International Bank (VIB) v cccccececcccecsscescecceecceececsscsceseescacens 29

2.1.1 Overview Of banking industry ccc cccecceseeessescetsssesssesesesesessessessevevsvsvsvevsvevsvevevavevens 29 2.1.2 Overview of VIB and VIB’s business activities .0ccccccceccccescsescesescseseetevsnseseseeeees 29 2.1.2.1 69/2/1000/0000 000 ha 29 2.1.22: History on the establishment and developimehit - 25: 25s srrrrrxe 3] 2.1.2.3 Products and ServiCes: .ccceceeseceseteeceseeteeessesstessesesecscsessessststesetevtssreeee dD 2.1.2.4 Network development? .ccccccscesssessseseseseeteveessecsssessstsesssesevesaucescsescscsvsvsvanevseseteses 34 2.1.2.5 The current organizational structure of VI , -.-¿ : 5: : 252222221211 EEEerrree 35 2.1.3 The business performance of VĨHH c c2: 121211121212 H HH HH re 36 2%, The evaluation on the current business activities of VÍHH -s-c<ccscccsesesee 38 2.2.1 The current business orientation Of VĨ c1 12121211221 12H rà, 38

2212 Analysis of the current business activities of VIH cua 39

2.2.2.1 Analysis of External Environmein( + c cccccsct cv nh n HT HH HH HH ryg 40

2.2.2.1.1 Analysis of general environment (PEST +Mode]) - ¿5c c5c2ccccccrscsererrerree 40 2.2.2.1.2 Analysis of Industry Environment (The Five Forces of Competition Model) 45

2.2.2.1.3 | Matrix of External Factor Evaluation (EFE) ccccccccccccescssscesssvscsesseseeccescsvscevececneeees 50

2.2.2.1.4 Analysis of Competitive profile matrix (CPM) .c.ccccccscscsssssseseseseseeeesesesesessesesesneseees 5I 2:2.2.2 Analysis of Internal Factor EnVirOnIT€HI ¿5:22 22 5232232 2222SEcEcxrxerrsrsrrrrxrrvee 53 DMs TH TH HÌ PP TP munnnerasaasoaraertoeerdpEEoesdtitrritmunnswmnisrtnadRtsmiadoefOiEAdi0Af9090.099001uiossssrssilsaos 53 2.2.2.2.2 Distribution fAC{OF: tt tt 1 1 1211111111211 1 1110151 1011121210111 0 ngờ 55 2.2.2.2.3 Human resources management factor: .c.ccccccccceccsscsesessescsssesessscecsescstesescsvscassersesenee D7 2.2.2.2.4 Marketing&Branding ÍACfOr St St 121211 211011101 HH ro 60 Dbiesd Ds “T6CRNOLO BY ccsssssesesssasvevevevsevasacieves ctssiscctensscesteroncetenssrescvsezecnassecsessversacusousuanarnssnuessscesacees 62 2.2.2.2.6 Research & Development products and serVices FaCfOF 5 ccccccsc+essccsee2 62 2.2.2.2.7 — Service Quality ÍACẨOT ccc t t1 1211212 1111011 1n H1 HT HH HH HH tệ 68 2.2.2.2.8 RiSk MANAQVEMENE cece eeeeeseeeeseteeseseeeesecsessesesesecsesassecsecssseseeasssescsscasescstsusecatseesses 69 2.2.2.2.9 Analysis of Internal Factor Environment matrix (IEE) -¿5- 552552 ccccccsccscee 7] 2.3 Evaluation on the feasibility of business strategies of VIB in the period 2011-2015 72

3 CHAPTER 3: THE PROPOSAL OF STRATEGY AND SOLUTIONS TO STRATEGY

DEPLOYMENT FOR VIB IN THE PERIOD 201 1-2015 << 5< «<2 73 3.1 The proposal of VIBs business strategy in the period 2011-2015 << 73 3.1.1 The orientation of VIB’s business development strategy in the period 201 1-2015 73 3.1.2: Evaluation of the opportunities of strategy selection through SWOT matrix 75 3.1.3 Strategy selection based on the QSPM Matrix .ccccscccscsscssessessessessessesessesecsscsseeesees ai

3.1.4 Identify business strategy selection in the period 201 1-20 1Š cccccccs2 79

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3.2 VIBs business strategies in the period 201 Í-2( 1 Ã 5-5555 sczscscscscscee 80

Dall Corporate level Strategy: o.c.ccccccceccceecseessesetsesesssesevscsssssessvevavstsevevssateevivevsviseussesvavenees 80 3.2.2 Business level Strategy 0 cccccecceecccecccecsescsescesvetsssessvsvstvsvscsevsvevsevevavisaevevsvevivavieseveveves 80

$.2.3 ElWWIEEIUTT (BEWV II IÊN HỆ DỮP grusggonsgeorgztiotfTVESEDIBIG2ĐSEEENHPNIGGSSS140238090/900039014090MB1.glnffosesoetgoaskssrzrgizgix 80 3.3 Solutions to the effective implementation of VIB’s business strategies in the period

DUE D+ ZOGS tgsssnvvtyDTESEĐEEEEENSSES.G715950101961831810/0ĐÁ5304031613851165155 484 sànnggdnúhomeoeageoetvoekogorszerecos crve 81 3.3.1 Finance solutions

3.342 Branchs Transformation system follow new sales& service model -.ccsccccc¿ 83

3.3.3 Marketing& Branding SOlUtions ccccecececsesesecscscssssesessssescscsessvscstacsevsvsceveveveveeeaeey 84

3.3.4 R&D products & service SOLUtIONS: oo ceecccesescsesesccscsessescsesesecscsesenececsessisasesseeeeey 88 3.3.5 CHBEIIE] SONOS ssasensiaswanirssvinsasednondoonenenencneemcanenencnareoaneneanexeenuredmnmnoneaswennsvevusesaesenseset 90 3.3.6 Technology SỌULOTS 2t 1112121111 11111111 1810111 HH HH tre 91 3.3.7 Human resources SOIUtIONS .cececeesesesesenetetsesseesescscsessseseseseseseceeseecsesereseetieaeieeeaes 92 3.3.8 Risk management SỌỤOS S1 1222 1512121111211 110101 E1 HH HH ưu 94

3.4 The completion of operational structure to the strategy implementation 94

3.4.1 Operational structure re-adjustment in correspondence with business strategies 94 3.4.2 The construction of strategy implementation control SyStem -ccccsce¿ 95 3.5 Roadmap of the strategic solution implementation .ccccccssesessseseeseeeesseseseseeeers 96 3.6 Proposal & Recommen(afÏOI - 5< < HH0 0105081 01018101 01030 se 97

3.6.1 Proposals to The Vietnam International Bank( VIB) .c.ccccccccccesccerececccsecscecseeseeaes 97

3.6.2 Proposals to The State bank Of Vietnam .c.ccceccccsccesesecseseescsesesecsssssceseecsvscscsesssseees 98 3.6.3 Proposals to Government Of VÏ€fAIN 2ĩ 2c 2221211212 121 1 11T HH rưệc 98 CONCLUSION 10008104 008 00 000.0000000 TT TH 001000900 99 REFERENC Eoicssssosscsossnssssonenssevssssscsssescezasesssssessees ãBfSstkš%0451559456151485615 618 Ä8458E4243843s«sổ9.50 s46 94638 2x94 100

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Al nse Ầ

CS Global Advanced Master of Business Administration CC

VietnamInternational Commercial Joint stock Bank

No 198B, Thai Ha Street, Dong Da District Ha noi City

To:

Center for Educational Technology and Career

Hanoi National University

Global Advanced Master of business Administration Program

Griggs University

AGREEMENT

Company has create favorable conditions to collect and complete this capstone, but ask to keep confidential all information disclosed to concerning Company business and will not make public of such information

We will consider such solutions and proposal would useful in actual business

strategies for upcoming years

5 |

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They have imparted us useful knowledge and valuable lessons which help us enrich

a new understanding of the combination between theory and reality This plays an important role in our completion of this report and our daily dealing with business issues

The Board of Managers of Vietnam International Bank has supported and consulted

us to complete this report

All members of Team 9, Class GAMBA.X0410

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Table 1.5 SWOT Matrix 48688886568 N3SÿáZ05956x«sssso.sss9ssgx 94 Z9 45991988915 59949994593945190982550382840158607351380V% 25

Tuble 1.6 Quantitative Strategic Planning Matrix (OSPM) susssssssssecssssssssscsescsesssssenssssssessrssssacssesees 26 Table 2.1 Network of branches/ transaction OffiCeS sscscsssssscssssersesessssssscsssassecsssscssssesscecsscsesesecscsecsess 34 Table 2.2 Macroeconomic criteria in the period 2000 -201 1 (part 1) sccscsssssssssssecsssssssssecsessssszscassens 39 Table 2.3 Macroeconomic criteria in the period 2000 -201 1 (part 2) s sec<csscscssEesscscstsesessrssa 39 Table 2.4: Some criteria of credit organization system in Vietnam (on 31⁄/12/20110) ee<< 49 Table 2.5 External Factor Evaluation matrix (EF E) ssssssscssssssscsssscsssscscssssssssssssssacsesssssseseasessasscscaees 50

Table 2.6 Comparing financial criteria in the top 10 Vietnamese Danks ccscccccsscsssssscsssscecsescessecsecesee 51

Table 2.7 Competitive Profile Matrix (CPM) wu 110001002 7a ca nan 52 Table 2.8 Summary result business VIB GMONg fiVE VOAPS sessscsssssssssssssssssscscssssscssssssccssacscsssesesesesesece 53 Table 2.9 Internal Factor Environment matrix (IFE) 9993499965696555595515684461514983583)5566858365845585666886 7I

Table 3.1 SWOT matrix wu saascansasess sưa8i601s6 eer eee " .75 Table 3.2 QSPM matri sE943555995944999090/408 S34053556589554860888 33E§Š79vS4560585.016w655868196635555858 lẽtkfSXE64065skdas64 77

Table 3.2 VIB roadmap to implement strategy sus esesoseeensvenounossssnsesensonsssunssesnseusevestesevsuserexeys 9695 Table 3.3 \IqFkelting HHỈN ÍOF SCĐHICHÍQÏQH c e <5 << se S3 SA 939 E8 SE SESEESEESEESEeEsEteesetsersers - 9887 Table 3.4 Bundle products for eạch segieHIdtÏOH .«« Gà 199505956.01958g663388340551854158918485458556158 8988

Table 3.5 Branchs & Alternative Channel SOLUIION sesssesecerssererereeressssssssvssssssssssssssscssscssssscssscsesees 9190 Table 3.6 Compensation policy srereereseeresees Setdasenesesvaesevess 44833436435865555.05568558 4šÿ9355566560595515u588 senses 9493 Table 3.7 VIB roadmap to implement Strategy sssesereresessersrersersees LH 09 6 ve (1110/1010 001.2.125 9695

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LIST OF FIGURES, GRAPHS

Figure 1.1: Strategic management Process MOL sessecssecsecseersenss dọn ng TH E0 K1 vn I Fipgur© | 2- PESTT MÍO(GÏ eeecseee<ssse<s «<< se 43995E565883/493589339515564220950E6 4683686555655 sssssnmsksssssesssssesese lÍ TP Figure 1.3: The Five Forces of Competition Model wrcscccccccssccsssccsseccessesssscssecesssesssccesssceccseese 155855505 1 /

à

Figure 3.5 Summary life-stage ANd QDĐECQC SIF(ÍCE ceecseeseeseeseesessesseesee ae s6bsisssrsorssssass ĐOS

Figure 3.6 VIB Organization PO-SIUCIUTCssssersscssesssssscsesnsnecessnsssssecsssesesssssssssssssessscssscssassssceseacees 9594

Figure 3.0 [HG PRIORI ADLEMERE GHIỄN kaggggagngaahinaBidtoiltioiritotd0xinattlsassayiarepdsosaaasiadasasasssas SG

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INTRODUCTION

The cooperation and integration is the inevitable trend of the global economy

and lay a foundation for each national economy to take part in the common tendency of the world economy by taking advantage of the enormous transnational capital flowing through the banking system The growth in the banking integration and the construction of a transparent banking system to become the pillar in capital circulation for the capital-demanding economy like Vietnam are significant strategies to gradually move capital structure based on the orientation of the industrialization and modernization

According to this tendency, since becoming one of WTO’s official members on 11/01/2007, Vietnam is facing with many new challenges and opportunities The

banking industry has witnessed a lot of basic changes when many foreign

financial organizations can hold shares of Vietnam commercial banks Especially, the emergence of banks with 100% foreign capital in Vietnam will promisingly cause changes in the percentage of market share

The period 2007-2011 provides the most obvious picture of opportunities and

challenges with Vietnam banking system The capital rapidly heated growth and dramatic decline, high inflation, the fluctuation in exchange rate, unemployment

and business inequality, the competition among domestic nag foreign banks,

the increasing trend of dissolution and mergence, a lack of efficiency in the operation of small banks, large banks under the pressure of the growth in capital, human and infrastructure to ensure their competitiveness in comparison with foreign banks All these factors are putting a great pressure on the local banking system, forcing domestic banks to quickly conduct plans in order to increase their competitiveness to deal with challenges

Betore these difficulties and challenges, Vietnamese commercial banks, especially joint stock banks, including Vietnam International Bank, need to have

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strategies and detailed orientation to enhance their competitiveness in order to sustain and develop in the new period

In this common trend, the Vietnam International Bank is step-by-step making elforts to affirm its position in the top Vietnamese commercial banks and strengthen its competitiveness in the financial and banking market

From this reality, our team has researched and finally decided the project * The construction of business strategies of Vietnam International Bank in the period 2011-2015” with hope of contributing to the evaluation of the current business strategy deployment in recent years and the construction of the business strategies of Vietnam International Bank in the period 2011-2015

Systemize the generally logical issues on strategy management

Analyze and evaluate the situation of strategy implementation at Vietnam International Bank in the period 2008-2011 through achievements and obstacles Propose solutions to construct and complete strategies of Vietnam International Bank in the period 2011 — 2015

The project uses quantitative and qualitative methods and comparison and statistical methodology combined with diagrams and tables to present the

theoretical and factual contents Then, we draw a conclusion and select business

strategies at Vietnam International Bank (VIB)

Analyze and evaluate the current business strategy deployment of Vietnam

International Bank

Propose solutions and business strategies for Board of Managers of Vietnam International Bank (VIB) to have an overview of the current business in order to make more efficient policies in the period 2011-2015

CS Global Advanced Maste: of Business Adiimi5tểrtion

CHAPTER 1: GENERALLY LOGICAL ISSUES ON STRATEGY MANAGEMENT CHAPTER 2: THE CURRENT SITUATION OF BUSINESS STRATEGIES OF VIETNAM INTERNATIONAL BANK IN RECENT YEARS

CHAPTER 3: THE PROPOSAL OF STRATEGY AND SOLUTIONS TO

STRATEGY DEPLOYMENT FOR VIB IN THE PERIOD 2011-2015

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Pheoretical background of strategy m:

Definitions of strategy management

The terminology “Strategy” originates from military art in the past which is con

Strategy is the determination of roads and vehicles to reach target goals through

policies (General Aileret)

Strategy is the art of action combination and control in order to achieve long- term objectives (G.Hirsch)

In another approach, Strategy is one way by which enterprises can answer the

question: Where do we want to go? How do we do to get there? Which recourses

do we have to go and what are obstacles that we need to overcome in the road?

In short, business strategy is the art of the optimal combination of resources, proposals and suitable decisions implementation with the fluctuations in environment to gain victory in the competition in order to reach long-term objectives in business

Roles of business strategy:

Business strategy helps corporate acknowledge obviously the purpose and

direction which are considered as a basic compass for all their manufacturing and business activities

Business strategy helps enterprises catch up and seize business opportunities, and at the same time, have active solutions to get over threats and hazards in the competitive market

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e Business strategy contributes to the efficiency enhancement of resource uses and strengthens corporate’ competitive position in order to ensure their sustainable development

e Business strategy creates a basic foundation for policies and decisions of suitable business and manufacturing with fluctuations in the market

The process of strategy management includes three main phases:

e The phase of building up and selecting suitable strategies with organizations (strategy formulation)consists of:

- Determining the vision, mission and core values of organizations Setting up objectives and making suitable policies

- Analyzing external and internal environment based on the following models: PEST+, Porter’s five forces SWOT, QSPM to set up strategies for enterprises

e The phase of strategy implementation includes the determination of operational structure suitable with strategies and making plans and management process of budget, technology, human

e The phase of evaluation and control (Strategy evaluation) consists of building up the control and evaluation system of strategy implementation and providing necessary changes

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be beds bi,

Corporate strategy is the strategy at the corporate level aiming to the objectives aid overall range of a corporate to meet the expectation of shareholders It contains specific activities that a company implements to gain the competitive advantages by selecting and managing a group of different business activities and competing in some certain industries and markets For example: Strategies of differentiation, Focused growth strategy, Integration development strategy, Decline strategy

the implementation of business and corporate strategies For instance, strategy of

product research and development, marketing strategy and human resource strategy,

etc

lable 1.1 Overview of general business-level strategies

i te Condition to appl

Corporate strategy Detail Corporate Content and solation ondition pply

group Strategies strategies

Usually unsaturated

I Enter market : Foster marketing demand, cost savings (Available products — ° ~ increases advantages

strategy (relationship aVailable market)

available market)

1 Integrate above (Enterprise - Supplier)

2 Integrate below

(Enterprise —

Distributor)

3 Horizontally integrate (Enterprise

— Competitor)

1 Concentric Diversification

(New products with

available technology)

2 Horizontal diversification (new

products different

from current products)

3 Mixed diversification (New products, new fields)

‹

Enhance available

products and services

to be suitable with interest

Merge or add more benefits for material suppliers

Merge or add more

benefits for distribution and marketing intermediary

Cooperate and compromise with competitors

Invest and develop new products on the basis of current products

Research and develop

new technology in the

current fields

Orient towards business and new customers

business and unique

requirements of raw materials supply

Inadequate distribution channels, competition

is often fierce,

dominant intermediate

and high profitability

Stable demand, not serious competition, enterprise with financial strength

Current products start

with advanced

technology, suitable marketing and distribution system This market is

saturated and many

changes to innovate emerge

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1.2 The process of strategy formulation

The process of strategy analysis is a chain of logic activities based on methodology

in order to determine business objectives, find out advantages and disadvantages, accurately evaluate the internal capability and give ways to deploy and control stated objectives

1.2.1 Strategy analysis

Strategy analysis is the process of analyzing influential factors from external environment, evaluating the organizational internal capability to seek new business opportunities, control risks in current business activities

1.2.1.1 Analysis of External Environment

Analysis of External environment is the process of analyzing impacts from macro environment through Pest plus Model, then analyzing opportunities and challenges from industry environment through The Five Forces of Competition Model and determining primary competitors of the organizations through CPM matrix, and finally providing comments on opportunities and challenges from external factors through EFE Matrix (External factor Evaluation matrix)

1.2.1.1.1 Analysis of General environment (PEST Model)

Macro economy including many factors, institutions outside the enterprise has a great impact on the organizational operation They are politics, legal system, social, economic, social/culture, Technology, Demographic, global:

+ Age structure * Income distribution + Geographic distribution

Economic Segment + Inflation rates + Personal savings rate

+ Interest rates * Business savings rates + Trade deficits or surpluses + Gross domestic product + Budget deficits or surpluses

Political/Legal Segment + Antitrust laws * Labor training laws

+ Taxation laws + Educational philosophies and policies + Deregulation philosophies

+ Workforce diversity * Shifts in work and career preferences + Attitudes about the quality + Shifts in preferences regarding

of work life product and service characteristics Technological Segment + Product innovations + Focus of private and government-

+ Applications of knowledge supported R&D expenditures

+ New communication technologies Global Segment * Important political events + Newly industrialized countries

* Critical global markets + Different cultural and institutional

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|; ( f /J7(11AIT\ Environs ii (Ƒ Ve JOrces mode [)

Research on macro economy is a very important and indispensable in the process of Strategy management Macro environment which is also called competitive environment/industry environment, is the environment directly related to each enterprise Most of operation and competition of the enterprise occur in this environment

Michael E.Porter, a famous professor of business strategy of Harvard Business School, provided the model of 5 Competitive Forces in order to help strategy managers analyze microenvironment and identify opportunities and threats from this environment According to Porter, 5 competitive forces are:

Threat of Substitutes

* Protection against imports of substitutes

Existing Competitors

* Foreign providers of know * Weak consumer protection laws

how and licenses have * Monopoly licenses and concessions * Fragmentedésmall local buyers

pover * Distortions of competition due to

* Protection of local suppliers regulation

limits competition * Protection against imports

* Cartels

* High barriers to ertry

* Protection limits foreign erfry

> 7 792

= II) Vlatrix oO; EX 1Í hút for “val ((I1O11 (E] fk)

The matrix of EFE is used to synthesize summarize and evaluate main

opportunities and threats from external environment (such as economy, culture,

society, demography politics, law, technology and industry competition) that have

an

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impact on the operation of enterprise It helps Board of Directors evaluate the adjustment of the enterprise to opportunities and threats and at the same time

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acknowledge beneiicial factors and difficulties of the enterprise in business

eny ronment

Building up the matrix of EFE requires 5 steps:

Step 1:Make a list of main opportunities and threats that have great influence on

the success and business field of the enterprise

Step 2: Sort the significance level from 0.0 (not important) to 1.0 (very important) for each factor The significance of each factor depends on its influence on the success of the enterprise in its business field Normally, the significance of opportunities is often higher than that of threats However, some threats are considered to have high significance if they can put serious impacts

on the enterprise Sorting level is determined on the basis of making comparison with competitors or group discussions; the result is based on the agreement

among team members The total sorted level fixed for factors is equivalent to 1.0

Step 3: Determine the sorting coefficient from 1 to 4 for each factor; coefficient

of each factor depends on the response of the enterprise to that factor, in which:

4 — good response, 3 — over average response, 2 — average response, | — weak

response These coefficients are determined by the expert method on the basis of outcome (the efficiency of current strategies) of the enterprise Therefore, sorting the significance at Step 2 is based on the industry while the sorting coefficients at Step 3 is based on the current situation of the enterprise’s

response

Step 4: Multiply the significance of each factor to its coefficient in order to determine the enterprise’s score of significance

Step 5: Sum all scores of significance of all factors to determine the total score

of significance for the enterprise Whatever the sum of main opportunities and

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threats determined is, the maximum total score that an enterprise can gain is only 4.0 and the minimum is 1.0 The average total score of significance is 2.5

1.2.1 1.4 Analysis of Competitive Profile Matrix (CPM)

Among influential factors from industry environment, competition is considered as

the most important Competitive Profile Matrix helps identify main competitors of a

company, both advantages and disadvantages of competitors and its competitive

advantages and shortcomings Competitive Profile Matrix is different from External Factor Evaluation Matrix in analyzing and comparing the significance of internal factor of each enterprise such as financial capability, stability, trademark, customers’ loyalty, etc, direct competitors in the same reference system with

different proportions

There are 5 steps to make the Competitive Profile Matrix:

e Step 1: Make the list of factors impacting significantly the competitiveness of the enterprise within the industry

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e Step 2: Sort the significance level from 0.0 (not important) to 1.0 (very important) lor each factor The significance of each factor depends on its miluence on the competitiveness of the enterprise within the industry The total sorted level fixed for factors is equivalent to 1.0

e Step 3: Sort from | to 4 for each factor; type of each factor depends on the response of the enterprise to that factor, in which: 4 — good response, 3 — over

average response, 2 — average response, | — weak response

e Step 4: Multiply the significance of each factor to its type in order to determine the score of significance

e Step 5: Sum all scores of significance of all factors to determine the total score

of Competitive Profile Matrix for each compared enterprise

Competitive Competitors

Rating Score Rating Score Rating Score

‹+@

Grices)

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f ; Internal environment analysis requires collecting and processing of invisible and Visible values in terms of operation and analyzing of value chains (infrastructure, human resources, technology, finance research and development, marketing and business situation of enterprises) The process of analyzing internal environment of enterprises is described as the following diagram:

Primary Activities

21, Page

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Internal environment analysis also requires the participation of leaders, manager's staff and customers through collecting secondary and primary information processing and analyzing in order to identify basic advantages and disadvantages of

enterprises

The outcome of internal environment analysis is the determination of resources and core capability, then building up competitive advantages and strategic competitive strategies of enterprises

[IFE summarizes briefs and evaluates basic strengths and weaknesses of the enterprise The matrix show strengths that the enterprise should foster and weaknesses that should be improved in order to enhance its position and

achievement

IFE matrix is an important tool to build up strategies for the enterprise and requires

5 steps to take shape:

- Step 1: Make a list from 10-20 factor, including basic strengths and weaknesses

which have a great impact on the development of the enterprise

- Step 2: Sort the significance from 0,9 ( not important) to 1,0 ( very important)

for each factor The significance of each factor depends on the level of its

influence on the success or failure of the enterprise in its business field

Whatever they are strengths and weaknesses, the factor which has the greatest influence on the operation of the enterprise will be sorted to be of the highest

level of significance The sum of all level of significance fixed for all factors must be 1,0

- Step 3: Identify sorting coefficient from 1 to 4 for each factor, the coefficient for each factor depends on the level of strength and weakness of the enterprise, in which: 4 — very strong; 3 — fairly strong; 2- fairly weak; 1 — very weak These coefficients are determined by the expert methods, based on the evaluation of internal environment of the enterprise

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- Step 4: Multiply the significance of each factor with its coefficients to determine the score of significance

Step 5: Sum all scores of significance of all factors to determine the total significance score of the enterprise

The highest total score that an enterprise gains can be only 4,0 and 1.0 for the lowest The average score of significance is 2,5 The total score of significance

of the enterprise staying at 4,0 shows that the enterprise obtains good internal environment, this means current strategies of the enterprise has fostered its strengths and improve current weaknesses By contrary, the total score being | shows that the enterprise is weak at strengths and cannot improve weaknesses from internal environment

ID Key internal factors Weight Rating Weighted score Strengths

of enterprises

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1.2.2.1

SWOT analysis will create the most effective matrix to serve leaders to make decisions quickly and efficiently This is the technique of analyzing organizational internal strengths and weaknesses to find out opportunities and threats in business environment In addition, SWOT analysis helps companies evaluate their main

competitors to build up suitable strategies to ensure their effective competitiveness

in the market

Effective methods to conduct SWOT analysis include:

Strengths:

e What are the advantages of your company?

e What can you do better than others?

e What are special things you have or do you have the cheapest resources?

e What are your strengths in the market?

e Considering this issue needs to base on an internal aspect, and views of customers and others in the market

e Should imagine and compare relatively with competitors

Weaknesses:

e What do you have to improve?

e What do you have to avoid?

e What are things that people often consider as Weaknesses?

e Do others see your Weaknesses but you don’t?

e Are competitors doing better than you?

Opportunities:

e What are the best opportunities?

e What is the most beneficial trend that you are expecting?

e Look at strengths to find out opportunities

Threats:

* What are your obstacles?

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What are your competitors doing?

Are there any changes in your career or services and products?

« De technological changes impact your position?

Are there any weaknesses of the company that influence seriously business activities?

external threats

ST strategy: use a firm’s

impact of external threats

need to have the synthetic matrix to summarize, evaluate and sort feasible strategies

and compare their ability to replace through the quantitative strategic planning matrix QSPM

This technique objectively shows that all strategies can be replaceable because they use input data from analyzing the matrices such as EFE, IFE, CPM and SWOT There are 6 steps to form the QSPM Matrix

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Step 1: List external opportunities and threats, internal strengths and weaknesses from EFE and IFF matrix

Step 2: Sort external! and internal factors contributing to success

Step3: Study the matrices including SWOT to provide a list of replaceable strategies

Step 4: Identify the score of attraction which illustrates the relativity of each strategy

Step 5: Calculate the total score of attraction

Step 6: Calculate the sum of scores of attraction, then find out which strategy

has higher score of attraction which has higher attraction

The list of corporate strategies in a descending order as follows:

Function strategy: Strategy of product research and development, marketing

strategy, human resource strategy

SELECTIVE STRATEGIES

Key factors Weight Strategy 1 Strategy 2 = Strategy 3

AS Total AS Total AS Total

AS AS AS Internal factors

Relationships, procedure, control system, authority and decision-making processes of enterprises

To-do work and how to do when enterprises build up strategy or strategies Effective organizational structure can create stability in daily process and work management Moreover, it also provides opportunities to develop competitiveness and flexibility in the resource allocation for activities to foster necessary competitive advantages

The bigger the organizational scale becomes, the more complex relationships

are It requires enterprises to have different organizational models to guarantee

the efficiency of strategies There are 3 organizational structure models as follows:

Simple structure: In this structure, the entrepreneur being direct manager takes responsibility for making all important decisions and supervising all activities while staff supports the manager to carry out his supervision This structure is suitable with focusing strategy and business strategy

Functional strategy: The function of Chief Executive Officer (CEO) and Heads

of functional departments in this structure This structure is suitable with both corporate strategy and business strategy

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* Multi-department structure: In this structure, the executive leaders of the enterprise appoint responsibility hierarchy for Heads of departments in daily work and even in business strategy Functional departments operate as Centers

of profit/cost This structure is suitable when the enterprise grows through diversity strategy

* It is necessary to make a roadmap of the deployment of each task in the strategy

to ensure the feasibility of strategy deployment

* It requires the combination process between functional departments to conduct strategies

+ The criteria system for each period of strategy implementation is very important

* Regulation of assigning responsibilities to each division and functional

department to oblige strategy orientation and process

1.2.3.3

* An enterprise needs to have control system to instruct strategy implementation, compare factual outcome with expected results and at the same time suggest some solution to overcome when the enterprise cannot accept factual outcome different from its expected result

* Incommon, there are two ways to control an enterprise:

° Strategy control: relates to the examination of suitability between what the enterprise should do (opportunities from external environment) and what the enterprise can do (competitive advantages of the enterprise) Strategy control will evaluate to what extent the enterprise focuses on procedure to implement

strategy

* Financial control: is conducted through the measurement of financial criteria such as: Return on Equity, Return on Assets, etc If these criteria are better than they are expected and tend to grow, the enterprise is implementing strategy well o

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|

2 CHAPPER 2: THE CURRENT SEFUATION OF BUSINES:

2.1.1

The banking industry is a special industry which is conducted based on a certain

“goods” called “money” in order to ensure flows of valuable activities in the economy through a complex structure including State banks, commercial banks, financial firms, insurance companies, etc, with individuals and other organizations

in the economy

Commercial bank is one kind of financial firms providing a list of the most diversified financial services, especially credit, savings and payment, and doing the most financial functions in comparison with any organization in the economy Commercial banks play a key role in generating capital for business and manufacturing activities, contributing to the economic growth and solving social

issues Commercial banks are tools that Government uses to regulate macro and microeconomic activities From the macro aspect, this movement will create a

balance between criteria such as economic ones — growth — inflation — employment From the micro view, the process of movement will generate income for owners (entrepreneurs and individuals) in the form of profit and fee

TỦ sấu

The Vietnam International Joint Stock Bank (called shortly Vietnam International Bank — VIB Bank) was founded according to the Decision 22 on the 25/01/1996 of

the Vietnam State Bank Governor

Full name in Vietnamese : The Vietnam International Joint Stock Bank

Short name in English : VIB Bank

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Equity (at the end of 2010) : 4.250 billion VND

Headquarter : 198B, Tay Son Street, Dong Da District,

Hanoi city

By 20th October 2011, after 15 years of operation, VIB has become one of the leading commercial joint stock banks in Vietnam, with total assets of more than VND 100,000 billion The bank’s charter capital is now VND 4,250 billion while its shareholders’ equity is more than VND 8,200 billion Currently, the bank has 4,300

people working at 150 branches and transaction offices in 27 key provinces/ cities

across the country During its operation, VIB has won a range of titles and awards from prestigious organizations nationally and internationally, including "Strong Brand of Vietnam", "Bank with The Most Satisfying Retailing Services" and "Bank with Excellent International Payment", and ranked the 3rd among 500 biggest

private enterprises in Vietnam in terms of revenue as voted by VietnamNet

2010 marked a significant development milestone of VIB by a strategic partnership with the Commonwealth Bank of Australia (CBA) - the Number One retail bank in

Australia and the world’s leading bank with over 100 years of experience CBA has

officially become a strategic shareholder of VIB with an initial stake proportion of 15% After one year of being an official strategic shareholder, on 20th October 2011 CBA made an additional investment of 1,150 billion dong in VIB, increasing its stake to 20% from 15% in order to further strengthen the capital base and capital adequacy ratio (CAR), and expand business opportunities and operation scale for

VIB This strategic partnership facilitates VIB’s improvement in capital,

technology, and risk management in order to successfully implement the long- term plans in the bank’s business strategy and especially to improve the customer service quality in line with international standards

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Being one of the pioneers in reforming business activities VIB always takes its customers as the focus and its service quality and innovative solutions as the business motto, with the determination to "become the most innovative and customer-centric bank in Vietnam" Since its foundation, one of the missions defined by the bank's leaders is to be “excellent in providing innovative solutions to satisfy customers” maximum needs” Therefore, VIB has been enhancing its efficiency in the use of capital and management capacity and continuing to focus on the development of retail banking networks and new products through diversifying distribution channels in order to provide financial solution packages to focused customer groups, and simultaneously improving the service quality to increasingly better serve customers

The founders and shareholders of Vietnam International Bank include individuals and businessmen achieving a lot of success in Vietnam and in the world,

VietcomBank and Agribank Until 20/10/2011, the strategic shareholder, Commonwealth Bank Australia (CBA), in the top 10 global banks, has owned 20%

of the VIB total shares

On 18/9/1996:

International Joint Stock Commercial Bank of Vietnam, abbreviated as Vietnam International Bank (VIB) started its operation with initial capital of VND 50 billion and 23 staff The first head office was based at No 5 Le Thanh Tong, Hanoi

In 2006:

* Successfully implemented the Banking Technology Modernization Project

¢ The charter capital was increased to more than VND 1,000 billion

* Became an official member of the International Organization for Visa and

MasterCard cards

* Established VIB Card Centre, and independently issue the local debit card, VIB Values

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° The charter capital was increased to VND 2,000 billion

* Signed Cooperation Agreements with leading Groups and Corporations such as Petro Vietnam, Insurance Joint Stock Corporation, Petro Vietnam Finance Corporation, ete

* The number of agents reached 82

* Ranked 3 out of 500 leading private enterprises in Vietnam

* Opened the new head office at Viet Tower, 198B Tay Son, Hanoi

* Launched the online banking services VIB 4U

* Issued VIB Chip MasterCard

* Established the Banking Technology Division with enormous efforts to turn VIB into the bank with the most modern technology in the market

In 2009

Signed the Cooperation Agreement with Commonwealth Bank of Australia

(CBA)

Officially launched the new brand re-positioning project

Increased the charter capital to VND 3,000 billion

Implemented the business strategy (2009 - 2013), with an aim to become the most customer-centric bank in Vietnam

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‡ Paes

* Implemented various projects for the new business strategy: Retail Banking Space, Human Resource Management System and Performance, Technology Strategy Project, Branch System [Transformation Proyran

In 2010

Commonwealth Bank of Australia (CBA) - Australia's leading bank has officially become a strategic shareholder of VIB with an initial share proportion

of 15%,

Its charter capital was increased to VND 4,000 billion

Continued implementing projects to serve VIB’s critical business strategy (2009

Vietnam International Bank provides services and products aiming at institutions,

companies and individuals, as follows:

Institutions: contain financial institutions, state-owned commercial banks, joint stock commercial banks and foreign banks with many services such as deposits and loans the Interbank, foreign currency business, investments and security business, agent services, trade finance, co-funded-trust, deposits, asset management, lending and treasury

Corporate: VIB offers corporate services including: credit, export-import

financing, guarantee services, domestic and international payment foreign currency trading, etc

Individuals: VIB offers services for individuals including: — savings, consumption credit, payment, financial proof confirmation, card, foreign currency trading, and remittance

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Until 11/2011, in addition to Headquarter in Hanoi, VIB has over 150 business units

at 27 provinces aid cities in the whole country such as Hanoi, Ho Chi Minh City, Hai Phong Quang Ninh, Hai Duong, Vinh Phuc, Phu Tho, Thai Nguyen Thai Binh,

Ha Tay, Thanh Hoa, Nghe An, Hue, Da Nang, Quang Ngai, Binh Dinh, Khanh Hoa, Dac Lac, Dong nai, Binh Duong, Vung Tau, Can Tho, An Giang, Kien Giang, Tay Ninh

Network of branches/ transaction offices

1 Head Office (HO)

1 Main Transaction Office

150 branches, transaction offices and savings funds

In 27 provinces/ cities nationwide

In the North:

Hanoi: Ho, Main transaction office, and 33 branches and transaction offices

Hai phong: 2 branches and 4 transaction offices

Hai Duong: | branch, 1 transaction office and 1 savings fund

Thai Binh: 1 transaction office

Quang ninh: 2 branches and 6 transaction offices

Thai nguyen: | branch and | transaction office

Vinh phuc: | branch and | savings fund

Phu tho: | transaction office

Thanh Hoa: | branch and 2 transaction offices

In the Central:

10 Nghe An: 1 branch, 2 transaction offices and | savings fund

11 Hue: | branch and 2 transaction offices

12 Da Nang: 2 branches

13 Quang ngai: | branch and | transaction office

14 Binh Dinh: | branch

15 Daklak: 1 branch and | transaction office

16 Khanh Hoa: 1 branch and 1 transaction office

17 Lam Dong: | transaction office

18 Dong Nai: | branch and 4 transaction offices

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0 Binh Duong: | branch and | transaction office

1 Tayninh: | transaction office

Ca Mau: | transaction office

tO =1

The current organizational structure of VIB obliges Law of Credit Organizations, Enterprise Law and Organizational and Operational Vietnam International Bank According to the factual situation, Vietnam International Bank established its organizational structure based on the matrix model of business divisions, business

units and departments, as follows:

Division, Individuals Customer Division, Treasury Division, Credit Management Division, Support Division, Financial committee, Human Resources Department, Marketing and Communication Department

° Business points: Head quarter, Main branches, Local branches and Transaction Offices

= T rece] (ee | ome | [ree] [Scar me) Le tion | 4 — a | a ity F | lại | | Sse Mu [Say ee | ————— assessment | | 5 | | pas |

|_| teformation | {market Risk | |! Prose _ | Product | | Product] || [Foren Foreign | 2uaranleed | | Mmienal ; and |

Figure 2.1: Current Organization chart

2.1.3 The business performance of VIB

Performance in 2010 demonstrates positive and impressive results — with basic

Director Total assets stand at approximately VND94,000 billion, an increase of 65.9% compared to 2009; outstanding loans stood at above VND43,000_ billion, up57.6% against 2009; mobilized funds topped VND 61,000 billion, a 78.3% increase in comparison to 2009 Pretax profit for the year was VND1,051 billion,

up 72% over 2009 and 11.2% higher than the target set by the Board of Director

In 2010 also marked substantial progress in implementing Business Strategies — that lay the foundation for VIB’s accelerated growth phase in 2011-2013 This is

transformation; branch — transformation roll-out) (BTR); and — performance

36 | ›

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management.Notably, the BTR project has been successfully implemented in three areas — north Hanoi, South Hanoi and east Ho Chi Minh City Such rave factors

as new sales and service models, refurbished offices, better products and services, well-outlined procedures, improved interaction with customers, performance- oriented and customer-centric culture have generated substantial changes in VIB’s services and business activities With rapid acceptance by the public and customers, and strong, positive feedback, VIB’s image and reputation in the market has been markedly elevated All these elements contribute to setting up VIB — as an innovative and customer-centric brandheading towards international standards, and

as a bank of public choice

2010 also witnessed a momentous event for VIB On01/09/2010, Commonwealth Bank of — Australia (CBA) officiallybecame VIB’s foreign strategic shareholder with an

Initial stake of 15% this strategic shareholding partnership enhances VIB’s ability

to raise capital, acquire and apply technology, manage risk, implement —long-

improvements in customer service quality towards reaching international standards

Key operational directions in 2011

In 2011, the Vietnamese economy is expected to confront different challenges and difficulties While further engagement with the global economy by the banking sector In particular and the financial service sector in general generates

increasingly fierce competition, a bank with consistent strategies, best services

and a customer- centric approach will outperform the competition

VIB has set a challenging goal in 2011 of earning pre-tax profits of VND 2,024 billion (up 91.5% against 2010) We are certain this can be attained with sound

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leadership from the Board of Director, effortsfrom all VIB > members and consensus among customers, partners and shareholders Key orientations for 2011 iowards achieving the targeted goals and affirming VIB‘sstatus ia the current competitive market have been identified as follows

l Continued focus on enhancing customer service quality

bo Enhanced safety in the bank’s operations

Reinforced business performance

fw Becoming an “employer of choice”

2.2.1

Vision: VIB becomes one of the leading joint stock banks in the market, providing multi-financial services for target customers at the main economic areas of Vietnam”

Mission:

Sustainably develop with emerging small and medium enterprises

Being creative and diversifying products and services for individuals with stable

income and flexible and safe business

Comprehensive banking financial services

Cooperating and becoming strategic partners with financial institutions

Core values (5 values)

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Year 2006 8.23% 974,266 425,373 83 7.5% 16.901 25.44% 36.539%

Year 2008 6.31% — 1,485,038 490,458 85 23.0% 16,980 25.43% 22.87% 2.17% Year 2009 5.23% 1,658,389 516,566 86 6.9% 17,941 37.73% 28.70% 2.20% Year 2010 6.78% 1,980,914 551,609 9.2% 18,932 29.81% 27.20% 2.50% Mar - 2011 441,707 109,313 20,703

Jun - 2011 1,069,930 258,618 20,618

Sep - 2011 5.76% — 1,710,214 406,308 18.2% 20,628 8.16% 9.82% 3.10% EsisiE 5.80% 90 19.0% 21,006 12.00% 13.50% 3.50%

Table 2.3Macroeconomic criteria in the period 2000 -201 1 (part 2)

Criteria Export Import i rade deficit increase from Tax& Papers’ Budget

leficit /Export payment in of government deficit

Mar - 2011

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Vietnam is one of countries having stable political conditions, encouraging and

enabling enterprises in general and banking industry in particular to develop

Legal system is being completed to meet the requirement of the banking industry

Difficult conditions to take part in the banking industry such as the requirement of the minimum equity of 500 billion, profitable business activities in the continuously 3 years, the limitation of the ownership

percentage of individuals and enterprises, etc make conditions for current banks to seize chances to foster business and keep market share

‘eals:

In the process of WTO participation, the Government should remove old

mechanism to allow world financial corporations to participate and put more

pressure on domestic banks in the financial market

Uncompleted legal system with overlapping regulations causes obstacles to business activities of banks In addition, the implementation of law and regulations has not been taken into account yet

Subsidization policy still back up and protect domestic banks

Macroeconomic policies are always adjusted suddenly, creating difficulties to banks in the construction and implementation of long-term strategies and plans

specifically

Social and economic conditions

Opportunities: