Luận Văn Xây dựng chiến lược kinh doanh của ngân hàng nông nghiệp AGRIBANK chi nhánh yên bái giai đoạn 2015 2020

Before the fluctuations of the economy in the world and in the country as analyzedabove, the most important issue for the Branch of the Bank for Agricultural and RuralDevelopment of Yen

LUẬN VĂN THẠC SĨ Xây dựng chiến lược kinh doanh của ngân hàng Nông Nghiệp AGRIBANK chi

nhánh Yên Bái giai đoạn 2015-2020

THESIS MBA BUILD A BUSINESS STRATEGY FOR THE BRANCH OF THE BANK FOR AGRICULTURAL AND RURAL OF YEN BAI IN THE

PERIOD FROM 2015 TO 2020

1 The necessity of the research

Today, international economic integration is an indispensable trend of the countrieshaving developing economy that want to access to advanced economies For Vietnam,international integration is the right direction and is important as prerequisites for creatingthe position in the international arena, and offers many opportunities for rapid growth andsustainable economy of the country

However, international integration also sets for Vietnamese enterprises, especially tothe commercial banks - especial enterprises trading in the field of currency - the credit facing

to the great challenge To overcome these challenges and apply well the opportunities requireVietnamese commercial banks to analyze the strengths of the weaknesses to makeappropriate strategy for each period, each stage of suitable development with the trend on theprinciple of national interests and enterprises

In 2008 and the early months of 2009, World economy has strong fluctuations.Breakup of a series of big names of Wall Street financial sector gives the signal of the greatdeep and wide crisis around the world

Through this economic crisis, Vietnamese commercial banks have chance to lookback the internal strengths as well as weaknesses Currently, Vietnam's economy inparticular and the world economy in general tend to rehabilitate and develop, the importantissues are that each economic organizations have to find themselves a suitable direction tocreate conditions for sustainable development in the future

Vietnam is considered as the economy recovered rapidly through the solutions of theGovernment stimulating the economy to grow However, it is undeniable that theVietnamese economy is growing below the potential effects to main resources includinginefficient investment, poor infrastructure and the economy processing in low value Fromthird quarter in 2007, the domestic enterprises have to undergo a toughest screening ever

Through this selection, the existing and developed enterprises demonstrated their highadaptability, quick and flexible in their business activities.

For the developing countries, the banking sector is considered as lifeline of theeconomy, playing especially important role in economic and social development, especially

in the period of industrialization and modernization of the country

At present, Vietnam is actively implementing measures to reform the administrative,legal framework created equally, favorable investment environment to encourage and attractforeign financial institutions investing into Vietnam

Competition rule does not exclude any units, any economic sectors in society and thisrule existing in all areas Thus, the economic sectors in general and the banking sector inparticular must also find themselves one direction, develop strategies and specific strategies

in accordance to survive and grow

The branch of Agricultural and Rural Development Bank of Yen Bai under theAgricultural and Rural Development of Vietnam established and put into operation in July

1988, with the direct function is to trade in monetary, credit and banking services in the areaaccording to Decree No.53/HDBT of Council of Ministers in March 26th, 1988

Before the fluctuations of the economy in the world and in the country as analyzedabove, the most important issue for the Branch of the Bank for Agricultural and RuralDevelopment of Yen Bai today is to plan the overall business strategy for all businessactivities to compete and dominate the market-share with the commercial banks in the area

of Yen Bai province and neighboring provinces to achieve economic growth in all aspects inthe period from 2015 TO 2020, creating the prerequisites for sustainable development in thecoming years This is why the group of authors chooses this topic: "Build a BusinessStrategy for the branch of the Bank for Agricultural and Rural of Yen Bai in the period from

2015 TO 2020

2 Purpose and scope of the research

The research on the basis to build the strategies, processes of building strategies andthe method to select optimal strategies to help the branch of the Bank for Agricultural andRural Development of Yen Bai determining their business strategy to match the conditionsand the current context

Applying the theory of building business strategic, applying the model of building andanalyzing and choosing the business strategies in specific situations of the branch of theBank for Agricultural and Rural Development of Yen Bai.

From the research above, propose a number of additional proposals and solutions toimprove the process of building business strategy for the branch of the Bank for Agriculturaland Rural Development of Yen Bai in the current conditions At the same time, point outimplementing roadmap of selected strategy from 2015 TO 2020

Scope of research: Go deep into the analysis, construct and select the solutionsimplementing roadmap of business strategy for the branch of the Bank for Agricultural andRural Development of Yen Bai in the period from 2015 TO 2020

3 Research Methodology

The method of qualitative and quantitative: research the situations of the branch of theBank for Agricultural and Rural Development of Yen Bai

Specific research method: analyze, compare, synthetize the data

The data: primary and secondary

Method of data collection: Based on the published data on the mass media anddocuments introducing the capacity of the branch of the Bank for Agricultural and RuralDevelopment of Yen Bai

4 The structure of the research:

Beside the introduction, conclusion and appendix, the big exercise is structured intothree chapters Main contents of each chapter are as follows:

Chapter 1: Theoretical basis of constructing business strategy

Chapter 2: Analyze the foundation, base to construct business strategy for the Bankfor Agriculture and Rural Development - Yen Bai Branch in the period from 2015 TO 2020

Chapter 3: Select strategy, the content of the strategy, organize to implement thestrategy and the solutions to implement the strategy of the Bank for Agriculture and RuralDevelopment of Yen Bai Branch period from 2015 TO 2020

CHARPTER I THEORETICAL BASIS OF CONSTRUCTING THE BUSINESS STRATEGY

1.1 OVERVIEW OF STRATEGY, BUSINESS STRATEGY AND STRATEGIC MANAGEMENT

1.1.1 The concept of strategy, business strategy and strategic management

There is no general definition of strategies, depending on views and approaches of theresearchers that there are many different definitions of strategy

The concept of "strategy" comes from the Greek word - Strategos and from ancientGreece As Alexander the Great around 330 BC, refers to the strategic management skills toexploit these forces to crush the enemy and to develop a global system of domination.Comment basis points of the strategy is the enemy could crush competitors - even morepowerful competitors, outnumber - if they can lead the battle and put opponents on thebattlefield facilitate the development operationalized their abilities

Today, with the rapid growth of the economy in the world, dragging the growth anddevelopment in the fields of politics, culture, society, showing decisiveness and the effect

of economic sectors to social life, so the application of theory of "strategy" becomes popularand improved range over many different ways to define the view with a modern andconsistent with the function resources make a difference and external environment

Strategy is the direction and scope of an organization in the long term: to the strategywill bring advantages to the organizations through the optimum arrangement of resources in

a competitive environment to meet demand and expectation of the capital contribution or:

Strategy is the business-orientation, the methods choosing the capable solutionsolving the most effectively the business objectives that companies put out

+ Chandler (1962): "Strategy is the determination of the objectives, basic long-term goals;conduct to apply a series of actions and allocate necessary resources to carry out this goal"(Chandler , A (1962) Strategy and Structure)

+ Quinn (1980): "Strategy is a pattern or plan integrating the major objectives, policies and aseries of action into a closely cohesive whole" (Quinn, (J, B 1980 Strategiesfor Change:Logical Incrementalism)

+ Johnson and Scholes: "Strategy is the direction and scope of an organization to gain longterm competitive advantage for the organization through the format of its resources in thechanging environment, to meet market demand and expectations of stakeholders ((JohnsonG., Scholes K (1999) Exploring Corporate Strategy 5th Edition)

Michael L Porter, famous professor of Business Strategy at the University of Harvard, in

1996 in the article: "What is Strategy?" He said:

• Firstly, the strategy is the creation of value and unique position, including differentactivities

• Secondly, the strategy is the choice, exchange in the competition

• Thirdly, strategy is the creation of conformity between all the activities of thecompany

So first of all, the strategy relates to the objectives of the enterprise Secondly,strategy is the way to implement the actions and decisions closely related to each other, andselect the method to coordinate those actions and decisions The strategy of the enterprisehas to exploit the fundamental strengths (resources and capabilities) and to consider theopportunities and challenges of the external environment

Managing strategy is a set of management decisions and actions determining the term performance of a business Managing strategy includes ongoing actions: Review theenvironment (internal and external), build strategy, implement strategy, evaluate and controlthe strategy Researching the strategy emphasizes on monitoring and evaluating the externalopportunities and challenges in the context of the internal strengths and weaknesses

long-1.1.2 Basic characteristics of the business strategy

We know that although there are many different views on business strategy, the basiccharacteristics of the business strategy are concept relatively uniform Those basiccharacteristics are:

- Business strategy defines clearly the fundamental goals, business directions need to reach

in each period

- The orientation of strategy ensures the enterprise to develop continuously and sustainably

in business environment constantly fluctuating

- Business strategy just outlines the directions of the activities of the enterprise in long-term,framework of the business in the future.

- Business strategy is built on the basis of competitive advantage of the enterprise to ensuremaximum mobilization and good combination with the exploitation and use of resources,core competence of enterprises at present and in the future to promote the advantages, seizeopportunities to gain advantages in competition

- Business strategy is reflected in the completely continuous process from building toorganizing to the implement, evaluate, check and adjust the strategies

- Business strategy always takes the thought of attacking to win the competition

- Business strategy is often built in the long period (3 5 and 10 years)

1.1.3 Role and importance of strategy and strategy management

In the market mechanism, building and implementing the business strategiesincreasingly plays an important role on the existence and development of enterprises Someorganizations do not have a strategy like the ship without rudder, most failures in thebusiness are due to the lack of a proper strategy or lack of implementation strategies in theright direction The role of business strategy for enterprises is shown on the aspects:

- Business strategy helps the enterprises identify the goals in each period and find clearly thedirection to their future as guiding to all activities of the enterprises

- Business strategy helps the enterprises capture and take advantage of businessopportunities, and proactive measures to deal with and prevent the risks and threats in thecompetitive market

- Help the enterprises exploit and use up their resources, promote the inherent strengths andovercome weaknesses surviving in the enterprises

- Business strategy contributes to distribute resources logically in each period, strengtheningthe position of the enterprise to ensure the enterprises to develop continuously, stably andsustainably

- Business strategy creates a solid basis for the enterprises to make the decisions inaccordance with the fluctuation of the market It is solid foundation for researching,implementation, investment and development of human resources, technological innovation,

expansion and market development, product development as well as increased laborproductivity, increase management efficiency of the business.

- Beside, business strategy helps the enterprises increase cohesion and consensus of staff andleadership in implementing the common objectives of the enterprises

Therefore, the strategy is the tool expressing specifically the long-term goals of theorganizations or enterprises Thus, the strategy will help the enterprises quickly achieve thegoals The core cause of success or failure of an enterprise depends on one important factorthat is an enterprise has a business strategy like what That helps enterprises quickly achievethe goals

1.1.4 The system of business strategy in the enterprise

Business strategy can be divided into many different strategies depending on theclassification base

However, within this article, we refer to all levels of business strategy, competitivestrategies based on competitive advantage and competitive strategies according to theposition of market-share in the market

1.1.4.1 Classify the strategies according to the levels of building strategies

1.1.4.1.1 Strategies for the enterprises

Strategies for the enterprises are always the general strategies and towards coordinatingbusiness strategy in relation to the expectations of the owner

The strategies for the enterprises can also be approached in the following ways:

- Growth Strategy: The strategies aim at achieving "goals of growth of the enterpriseincluding: focused growth strategy, growth strategy by way of integration (linking), growthstrategy by diversification

- Withdrawal strategy: This strategy is appropriate when the enterprises need to restructure toincrease efficiency after a period of rapid growth, the industry is no longer an opportunity togrow and break even

- Strategy of innovation: strategy of innovation may be considered as a strategy having astrong external impact, innovation can restore growth of the enterprises

1.1.4.1.2 The strategies for business units

The strategies for business units are the strategies applied specifically to each businessarea of the enterprise and strategic business unit (SBU) These are the specific competitivestrategies and associated with combinations of products and markets identified Strategies forbusiness unit can be approached in the direction such as: strategies based on competitiveadvantage; strategies to compete according to market share position in the market

1.1.4.1.3 Strategies of functions

The strategies of functions are strategies directing to improve the performance of parts

of the functions in the enterprise like manufacturing, marketing, material managing,researching, developing human resources These strategies may focus on a defined function.However, it needs a close coordination between the functions together to deliver efficient,quality, innovation and customer satisfaction at the highest levels across the enterprise

1.1.4.2 Classify the strategy based on competitive advantage

1.1.4.2.1 Strategy of leading costs

Strategy of leading costs is total of actions to provide the products or services withfeatures accepted by customers at the lowest cost in relation to all competitors

This strategy is appropriate for the business units on a large scale having ability toreduce costs in the process of activities, thereby increasing the competitiveness because oflower cost than that of competitors However, strategies of leading cost have the risk ofcompetitiveness by the process to produce and distribute goods and services may becomeobsolete because: The renewal of competitors; competitors can mimic the strategy of thecompany leading market on cost; Focus on cost reduction may exchange customers’awareness in creating the difference

1.1.4.2.2 The strategies of difference

The objective of the strategy of difference is to achieve the competitive advantage ofcompanies by creating products (goods or services) that customers realize that some uniquecharacteristics are important Companies making a difference try to satisfy customer’s needs

in ways that competitors cannot do with the intention would require a price increase (a pricesignificantly above industry average)

To pursue strategies of competition by differences, the enterprises often use thestrategic solutions as follows:

- The differentiated product company selects high differentiation to make competitiveadvantage Differentiation can achieve three main ways: quality, innovation and adapt tocustomers.

- Company pursues strategies of differentiating in products trying to differentiate goods asmany as possible

- The differentiated product company divides the market into many sections The companysupplies the products designed specifically for each segment and becomes more extensive.The company can only choose to serve only selected market segments where there arespecial advantages of differentiation

- The company must control all of the costs to detect factors that are not really affecting totheir advantages of differentiation, just so can make the price of the product does not exceedthan what the customers willing to pay

Business strategy based on differentiation provides a competitive advantage for theenterprises, helping protect businesses against competitors thanks to the loyalty of customerswith brand name of the enterprises; differentiation and loyalty with the brand create a barrier

to the other companies trying to penetrate the sectors, reducing the threat from substituteproducts and reducing the power of the suppliers and the buyers’ However, strategy ofproduct differentiation is at risk of competition due to: the difference in price between theproducts of the company having different product and company leading the cost maybe toolarge; to any time differentiated products will not create value that customers are willing topay; when having more experience, the customers will have different perceptions of thevalue of different features; having trouble Title copied, counterfeit goods

1.1.4.2.3 The strategy of centralization

The strategy of centralization will direct at slots of specific markets that can determine

in the terms of geography, type of customers, or by segments of the products

Once selecting a market segment, the company pursues a strategy centralization usingapproaching ways of differentiation, or low costs Basically, a centralized company is aperson creates a difference by specialization or a leader of costs

1.1.4.2.4 Combining low-cost strategy and strategy of differentiation

Recently, due to the change of production technology, especially the development offlexible production technology, made the selection of low-cost strategy or strategicdifferences not clear anymore Because the development of technology businesses that caneasily benefit from both strategies The flexible technology allows companies to pursuedifferent strategies with low cost.

1.1.4.3 Classify the strategies according to competitive position

1.1.4.3.1 Strategies of the leading enterprises

The enterprises are recognized as the leader who will be more dominant in terms ofthe same force in the industry, creating many advantages and a strong competitive position inthe market To protect the market, the leaders of enterprises use the following strategies:

- Strategy of innovation: always try to lead the industry in areas such as developingnew products, services and channels, new distribution methods

- Strategy of consolidation: the focused thing is to keep prices at a reasonable level and offerproducts with new scale, form and models

- Strategy of leading: usually include the quick and direct reflects to the competitors: theform of this strategy maybe the "war" on price and promotions

- Strategy of harassment

1.1.4.3.2 Strategy of the enterprises at the challenging position

This could be big enterprises but not the number one in the market, the objectives ofgrowth at the enterprise level and centralized growth strategy is very suitable forimplementing growth target to gain more market share

Depending on the win market share from competitors, but how business challengescan use one of the following ways: attacking the opponent leads the market directly and area;snatching market share from competitors other than their small and weak world; seek toavoid direct confrontation

The challenging enterprises can focus on the most important five strategies: Keep theprice at a lower level than competitors; renovate (or improve) new products or stimulate newdemands; Improve delivery service faster until the customer does have the highest demandfor services; layout sales force better and broader or building distribution system better, andenhance improved work advertising promotions

1.1.4.3.3 The strategy of the late enterprises

These enterprises often have smaller market shares than the market-leading businessesand not challenges to the business leader in the market For this business objective is toprotect their existing market share

1.2 THE PROCESS OF PLANNING BUSINESS STRATEGY

Typically, strategy is understood as the result of a process of planning reasonablyarranged carefully Until now, the administrative scientists, strategy scientists andadministrators have proposed many models of strategy planning In each model is aframework for the entire process of strategic management based on a concept that wementioned above However, the review process of planning as the starting point is useful forour journey into the world strategy

The process of strategy planning in the enterprises can be divided into six steps,including:

- Step 1: Choose the mission and main objectives of the company;

- Step 2: Analyze the external environment to identify opportunities and threats;

- Step 3: Analyze the internal environment in order to identify the strengths and weaknesses

of the enterprises;

- Step 4: Select the strategies based on the search for resources, capabilities and corecapabilities and develop it to neutralize the risk, take advantage of opportunities from theexternal environment;

- Step 5: Implement the strategy will include designing organizational structure andcontrolling system suitably for inclusion in the strategy implementation

- Step 6: Evaluate the results of the strategy implementation

Map 1.1: MODEL OF STRATEGY MANAGEMENT

(Source: Associate Professor, Dr Le The Gioi; Dr Nguyen Thanh Liem, MA TranHuu Hai (2007), Strategic Management, Statistical Publishing House)

The strategic plan is created by this process usually covers the period of 3 years, 5years or 10 years and is updated annually Thus, strategic planning is oriented allocation ofresources in the organization Detail the steps in the constructing business strategy asfollows:

1.2.1 Define mission, business objectives

- The first step of the strategic planning process is to identify mission and main objectives ofthe organization and the opening phase is very important in the entire process of strategicplanning The mission presents the reason existing of the organization, and what it will do

Mission and objectives

Analyzing internal (Find capable resources and core capacity)

Business strategyGobal strategyStrategy for company

Change the strategy

Matching strategy, structure and control

Matching strategy, structure and control

Strategy of functions

The main objectives determine what the organization hopes to meet within the medium andlong term.

- The first elements of the manifesto of the business mission is to define clearly the tasks ofthe business Determine the duties of the enterprises to ensure some following requirements:Clearly defined tasks must notify all businesses and the public outside of that; mission must

be clearly defined right and reasonable; Tasks must reflect the vision of the enterprise visionand ensure the broad sustainable development of enterprises; Identify tasks of the business isnot too broad and general

- Vision and strategic objectives expressed in the mission declaration is the clear speech ofambition the enterprises pursuing and is expected destination of the business The strategicobjectives are influenced by many factors, such as the external environment; The resourceswithin the enterprise; the value and purpose of the leader; strategies that companies pursuepast and its development trend

- The identification of targets should ensure the following requirements: The target must beclear; the goal must ensure the link and reciprocally; must determine the priority

1.2.2 Analyze the external environment to identify opportunities and threats

The external environment is the main factors could affect the implementation of theobjectives the enterprises want to achieve The objectives of the external analysis are toaware opportunities and threats from the external environment of the company Analyzingexternal environment includes: analyzing the macro-environmental and environmentalsectors Analyzing these factors helps the enterprises to identify the location andcharacteristics of their environment, but their times exist, the effects of the externalenvironment to the enterprise's business objectives, and since then have decided the strategicbusiness plan to make the most of opportunities and minimize challenges, and there aremanagement decisions accordingly

1.2.2.1 Macro Environment

Macro-environmental is aspect of huge society affecting to an industry and companies

in the industry, it is economy; Politics and legality; Culture and society; Technology; naturalfactors

Map 1.2: The factors of macro environment

(Source: Associate Professor, Dr Le The Gioi; Dr Nguyen Thanh Liem, MA TranHuu Hai (2007), Strategic Management, Statistical Publishing House)

- Economic Environment: economic factors have a strong influence on the enterprises, this isalso the most often mobilizing factor, the most difficult to predict of the macro factors Itsmovement always contains both opportunities and challenges for the enterprises in whichprominent is the movement trend of : The trend of total domestic product and total nationalproduct; interest rates; inflation; balance of payments, exchange rate; the economic policiesthe realization of the government in the development sector

- Environment of politics - law: The elements of political and legal work to a large extent theopportunities and threats from the environment, so influential to the operation of enterprises,

it includes: political stability, the system point of government policy, the current legalsystem, the trend of government diplomacy, the political evolutions in the country, regionand the world

- Environment of culture - society: the cultural and social environment includes the normsand values accepted and respected by a specific society or culture Cultural – socialenvironment is strongly influenced to the enterprises, usually the following elements: The

Economy

Internal Environmen

t

Techno

logy

Politics and Legality

Natural

Factors

Society and Culture

change of the age tower, the rate of marriage and childbirth, the attitudes of consumers, thenotion of aesthetics, ethics, lifestyle, occupation; the customs, habits, traditions; concernspriorities of society; level of awareness and general education of society,

- Natural environment: Natural conditions include: geographical location, climate, naturallandscapes, land, river and sea mineral resources in the earth, the sea, the forest resources, inthe clean water, air

Their impact to the policies for the business has been recognized by the enterprises for

a long time In many cases, the natural conditions become a very important factor to form thecompetitive advantage of products and services The problem of environmental pollution,poor quality products, waste resources with growing demand for limited resources makes thebusiness decisions to change and measures related activities

- Technological environment: Technological environment includes institutions, activitiesrelated to create new knowledge, shift that knowledge to the outputs, products, processes andnew materials This is one of the dynamic factors containing many opportunities and threatsfor the enterprises Therefore, the enterprises must alert for new technology because it canmake products obsolete directly or indirectly, in addition to the benefits of technologicaldevelopments bring

1.2.2.2 Industry environment

They are a series of factors that influence directly to a company and competitiveactions and competitive reactions of that company The major technique used to analyze thecompetitive environment in the industry is the model of five competitive forces of theprofessor Michael Porter He pointed out a model of five competitive forces within theindustry, they are: (1) The threats of potential competitors, (2) The levels of competitionamong available companies in the industry; (3) negotiation power of buyers, (4) negotiationpower of sellers; (5) Threats of substitute products

Map 1.3: Model of five competitive forces by M Porter

(Source: Michael Porter, "Competitive Strategy: Techniques Analyzing Industries and

Competitors)

- Potential competitors: is the enterprises are not competing in the same industry, buttheir competitiveness if they join the industry Ability to penetrate the opponents of thispotential depends on the barrier penetration industry If the enterprises have a strategy toenhance the barrier penetration sector will limit the risk of penetration of potential rivals

- Suppliers: These suppliers may increase pressure on threatened when they are able

to increase or decrease in price in the quality of products and services they provide Thereby,reduce the ability to find profit of the enterprises On a certain aspect, that threat creates less

or more dependence for many enterprises

- The substitute products: substitute products are the other products can meet theneeds of consumers Its basic characteristics have more advantages than those of the normalproducts in the individual characteristics This threat requires the enterprises to have the

The threats of potential competitors

Negotiation

power of

sellers

Threats of substitute products

Negotiation power of buyers

The levels of competition among available companies in the

industry

analysis, frequent monitoring of scientific technology, which directly related to technologicalinnovation and product innovation.

- Analyze customers: Customers are individuals or organizations that demand forproducts or services of the enterprises Customers can be viewed as a threat of competitionwhen they are in the position of requirement for a lower price or when they request betterservice Customers can pressure for suppliers in the following circumstances: The buyer is asmall number of large-scale and while there are many suppliers of small and medium scale;Customers buy a large quantity; providers depend on customers with large rate % of totalorders; Customers have full information

- The competition among competitors in the industry: The business enterprises in anindustry often differ in the market, distribution channels, product quality, technology, priceand advertisement However, in the same sector, there are some enterprises together pursueand implement a strategy or similar strategies forming strategic groups in the industry.Number and capacity of companies in the industry determine the nature and intensity ofcompetition in the industry

Thus, by studying the external environment, companies can decide what they can do.For successful companies, either their strategies must be consistent with their operatingenvironments, or the companies can shape the environment to the advantage of it throughselecting the strategy

1.2.3 Analyze the internal environment in order to identify the strengths and weaknesses of the enterprises

The ability of the enterprise is a key factor to decide whether the companies can do,the business strategy of the business has successfully implemented or not To ensure theviability of the strategy, when developing the strategies we have to evaluate the situation,identify strengths, weaknesses, thereby determining the real ability of the enterprises Thepurpose of the analysis within the business is to identify potential and existing sourcescreating sustainable competitive advantage for the enterprises, also identifying obstacles inmaintaining a sustainable competitive advantage The contents of internal analysis includeanalysis of sustainable competitive advantages, analysis of strategies and analysis offinancial performance

1.2.3.1 Analysis of sustainable competitive advantages

There are two ways to analyze the sustainable competitive those are resourcesanalysis and value chain analysis Analyzing resources helps identify core capabilities inrange of the company, while analyzing the value chain helps companies understand the costadvantages or the differences in the business units

Analyze the resources

Analyzing the resource shows the reserves of resources, capabilities and availableassets to business units or entire company

- Resources: The resources, in term of broad definition, include a series of elements ofthe organizations, technique, material and human resources, finance of the company Theresources can be divided into two categories: tangible resources and intangible resources.The tangible resources can be seen like the financial resources, organizations, physical andtechnological facilities Intangible resources include human resources, improving ability andreputation

- The potential capability: the potential capability is the ability of the company to usethe integrated resources with an aim to achieve the state of desired goal More general,potential capability of a company is the product of organizational structure and controlsystem

- The core capability: is the resources and capabilities of the company to use assources to create competitive advantages Create a competitive distinction of a company andreflects the character of the company that, through activities that a company conductsurpasses the competition and activities thereby creating unique value for the type ofproducts and services through its long time

Analyze the value chain

The value chain analysis allows companies to understand the link to create value fortheir products and link does not create value The term "value chain" refers to the idea as acompany is a series of activities in the metabolism of the added output value to customers.That process includes the activities and support activities, each activity increases the value toproducts Complementary activities occur inside each type of activity

- The main activities: The activities associate with products and services of theenterprises Those are activities in purchasing and managing inputs, marketing activities andservices activities of customer care after that These activities save, enhance quality andsatisfy the needs of the customers, the value chain of the company is increasinglyappreciated and the company has advantages in competition.

- The supporting activities: Help the main activities of the enterprises done better,more effectively Activities we are talking to is the activities of personnel management,technology development, and procurement

Map 1.4: Model of the company value chain by Michael E Porter

(Source: Michael Porter, "Competitive Strategy: Techniques Analyzing Industries and

Competitors)Therefore, analyzing the sustainable competitive advantage is the result of theresources and unique ability to use creative activities according to the ways that competitorscannot imitate or imitated by other partners The factors creating sustainable competitiveadvantages are efficiency, quality improvement and meet the demands of the customers

Map 1.5: The basic blocks to create competitive advantage

(Source: Associate Professor, Dr Le The Gioi; Dr Nguyen Thanh Liem, MA Tran Huu Hai

(2007), Strategic Management, Statistical Publishing House)

1.2.3.2 Analyze the strategies

All enterprises have strategies and tasks of the analyst are to describe the currentstrategy of the enterprises The description of strategy is focused towards product strategy -customers, competition points and logical strategy The content of analysis will focus onanalyzing strategies of the company; strategies of products - customers; point of competitivestrategies; function strategies and consistent of available strategies of the enterprises

1.2.3.3 Analyze financial performance

Dominated quality

Dominated

efficiency

Dominated improvement

Meet the dominated demands of the customers

Competitive advantages and different low cost

The purpose of the analysis of financial performance is to evaluate financialperformance of the enterprises through analysis of financial parameters, the current standardsand over time: the profitability, liquidity, effective leverage, through the operation data.Simultaneously, analyze the economic value increasing or its fluctuation, measuring thedirect value to the shareholders

Conclusion: By studying the internal environment, the enterprises will determine whatthey are able to do

1.2.4 Select the strategy

Selecting the strategy is the forth step in the process of planning strategy in enterprise.This is an important factor in all processes of planning business strategy

1.2.4.1 The basis to select the strategy

When selecting strategies, the enterprises should consider a number of factorsaffecting to the selection of strategy The factors such as: strengths of industry andenterprises; The strategic objectives of the enterprise; attitude of the Chief Executive;financial resources; capability and qualification of administrators; The reflection of theconcerned objects and the issue of time

1.2.4.2 The requirements when selecting the strategy

To ensure the selection strategy to be right, in accordance with the market, the process

of selecting business strategy needs to grasp thoroughly the following requirements:

- Strategy selection has to ensure to compliance with environmental conditions

- Strategy must be consistent with foreign policies, views and managementmethodology of the manager board

- Strategy must be consistent with the financial capacity, material and personnel of theenterprise

1.2.4.3 Some models of analyzing and selecting the strategy

SWOT Analysis Technique:

After analyzing the factors of macro environment, business industry environment, theenterprises often determine clearly the opportunities and threats from external environment,

strengths and weaknesses from the internal environment to make basis considering andbuilding orientation and strategic project The techniques are widely used are analysistechnique of the strengths - weaknesses, opportunities and threats (SWOT).

SWOT matrix is used to form the strategic plans as the following steps:

- Step 1: Synthesize the analyzed result of the business environment - opportunitiesand threats

- Step 2: Synthesize the analyzed results of internal business environment - strengthsand weaknesses

Groups of strategic project formed:

- S - O Strategy: To use strengths of the enterprises to take advantage of externalopportunities;

- W - O strategy: To overcome weaknesses to take advantage of externalopportunities;

- S - T Strategy: To use strengths of the enterprises to deal with the external threats;

- W - T strategy: To overcome weaknesses in order to reduce the external threats;

Map 1.6: SWOT MatrixInternal environment

of the enterprise

Weaknesses (W )

List the most importantweaknesses from the table ofgeneral internal environment

of the enterprise

Opportunities (O)

List the most important

opportunitíes from the table

Threats (T)

List the most important

threats from the table of

ST Strategy

Take advantage of strengths inthe enterprise to reduce theimpact of external threats

WT Strategy

Strategies are combinednature defensive effort toovercome weaknesses and

environment of the

enterprise

reduce the threats of externalimpact

(Source: Associate Professor, Dr Le The Gioi; Dr Nguyen Thanh Liem, MA Tran Huu Hai

(2007), Strategic Management, Statistical Publishing House)

Use the GREAT model to calculate the points for the strategy and select the optimal strategy

- Based on the principles and standards set out, we conduct to compare the foundstrategies, then find the best strategy to implement

- Can apply the GREAT model to select the optional business strategy from theanalyzed and selected basic strategies

(Source: Strategy Management by A Chardler 2004.2006)

- GREAT model is a model used in the analysis of strategy management, strategy ofcompetition GREAT means as follows:

G: Gain

R: Rick

E: Expense

A: Achievability

T: Time – Allowed time to carry out the goals set out

Apply the method of weight - consider the importance to the company

Step 1: Select the criteria to evaluate the strategy add glue weight to the criteria:Based on the nature of the business operations of the company, the criteria defined theappropriate score, total points of the criteria is 01 point

Figure 1.7: Weight point according to the criteria of GREAT model

Scoring the criteria with a scale from 1 to 10, each point shows the level of meetingstandards setting out the principle of the higher point, the higher level applied (the more Gain

- the higher point; the less Risk – the higher point; the less Expense- the higher point;the higher Achievability - the higher point; the shorter Time - the higher point)

Figure 1.8 GREAT model to calculate the points for the strategy and select the optimal

strategy Crit

int

Pro duc t

Po int

Pro duc t

Po int

Pro duc t

Po int

Pro duc t

Po int

Pro duc t

Po int

Pro duct ố

Po int

Pro duc t G

Step 3: Determine the total points of the strategies

- The product = weight * point

- Plus the points in the column of product, we get points for each strategy

Step 4: Select the optimal strategy:

Choose the strategy having the highest point, the second highest, and the thirdhighest as the optimal strategy

1.2.5 Organize to implement the strategies

Organize the implementation of strategy is fifth step in strategic planning process.This is an important stage means to ensure the success of the entire strategic planningprocess

1.2.5.1 The requirement of organizing the strategy implementation

To organize the successful implementation of strategies, the enterprises need to ensurethe following requirements:

The strategic objectives and implementation plan must be fully consistent andcommon to all the staff involved

- Implementation plan must be clearly defined.

- Must attract the full participation of the crowded enthusiastic staff, employeesthroughout the enterprise

- Ensure adequate necessary resources for implementation of the strategy

- Develop information systems management within enterprise and control systemuseful in monitoring closely the process of implementation strategies

1.2.5.1 The contents of strategy implementation

There are many different views about the process of implementing the strategy.Lawrence proposed process implementation strategy includes five steps needed to ensurecompliance strategy will be implemented successfully, those are: Setting goals and businessplans more concise; change and adjust the organizational structure according to the currentstrategic objectives, identify responsibilities of each division and coordination mechanismsbetween departments; distribution of resources; planning and implementation of policiesbusiness adapted the process of working through the establishment of information systems,

to promote the cultural folds support strategies, management change, adaptation betweenproduction and administration

Set shorter-term plans

To turn strategic goals into reality the enterprises need to establish shorter-term plans.Shorter-term plans referring to the objectives and very specific solutions in the distributionand using of all resources during strategy These plans are the main tool to control theprocess of implementing strategies in each short period This is the indispensable conditionsfor enterprises to actively carry out the necessary adjustments and the basis of determiningthe order of priority in the implementation strategy

Adjust the organizational structure to implement the strategy

When implementing strategies, the enterprises often have to review the organizationalstructure and can refine suitably Strategy is successfully implemented or not depends on theactivities of the organization is divided, organize and coordinate how There are twodirections to change the organizational structure mainly, those are: Develop organizationalstructure, conduct to build a new organizational structure appropriately or keep the old-styleorganizational structure, change only organization in accordance with the strategy selected

Distribute the resources

Distribution of resources is one of the important contents of the process ofimplementing the strategies The rational distribution of resources is one of the conditions forthe implementation of strategic objectives most effectively Basis to distribute the resourcesare:

The strategic objectives and producing programs or the shorter-term plans, the basiccontents of the distribution of resources, which are: evaluate the resources; Adjust theresources, ensure the distribution of resources

Build the business policies:

- Marketing Policies: including six policies: product policy; price policy; promotionpolicy (advertising, sales promotion); distribution policy; payment policy; customer servicepolicy;

- HR Policy: including the following contents: Recruitment policy, selection anddevelopment orientation; policy of training and skills development; policy of fosteringtreatment; policy of assessment and measures of controlling the discipline;

- Financial policy: associated with financial activities to support and promote theimplementation of the objectives defined Financial policy must ensure sufficient amount ofnecessary capital to prepare a good financial budget, evaluate correctly the value of theenterprises

- Policy of research and development: associate with the development of newproducts under the strategic direction of the market; converse technology; change theproducts to meet the special interest of customers;

- Policy of production and cooperation: associate with producing the products andprocesses of service to support and promote the implementation of the identified objectives

1.2.6 Check and evaluate the results of the strategy implementation

1.2.6.1 The purposes

Checking, evaluating and adjusting the strategies have common purpose is to identifythe distortions of objectives, measures, and results on how to implement the content strategy

of the business compared to the initially expected set the current status, identify the causesand plan the measures to adjust strategies.

1.2.6.2 The main contents of checking, evaluating and adjusting the business strategy

Determine the content of checking and evaluating the business strategy

The content of checking the business strategy and checking, valuating the plandeploying business strategies, including the following basic contents:

- Checking and evaluating the business environment (external environment andinternal environment) change or not;

- Check the system of strategic goals of business including system of goals andoverall objectives and the system of strategic business of division

Build the standard of checking and evaluating

- Standard of qualitative: the standard of qualitative is the standard not expressed inthe form of physical measurements or currency Building standards of qualitative mustensure the consistency, appropriateness, feasibility

- Standard of quantity: The factors of objective and target evaluated can be thecategories reflecting quantity or quality When determining and evaluating the factors,objectives, and criteria need to determine the limit distortions allow each factor, target

1.3 Conclusion

Chapter I is the overview concepts on strategy and strategy management, is the basis

to build, select and implement the strategies This is the necessary theoretical basis to studythe status of the Branch of the Bank for Agricultural and Rural Development of Yen Bai thatwill be analyzed in chapter II At the same time, propose the solutions to implement businessstrategy for the Branch of the Bank for Agricultural and Rural Development of Yen Bai inthe period from 2015 TO 2020 in Chapter III

CHAPTER 2 ANALYZE THE FOUNDATION, BASE TO CONSTRUCT BUSINESS STRATEGY FOR THE BANK FOR AGRICULTURE AND RURAL

DEVELOPMENT – YEN BAI BRANCH IN THE PERIOD FROM 2015 TO

2020.

2.1 General introduction of AgriBank Yen Bai

2.1.1 Process of establishment and development of Agribank Yen Bai

Agribank Branch in Yen Bai province is a unit directly attached to Agribank Vietnam.History of establishment and development of the branch is associated with the history ofestablishment and development of Agribank Vietnam

In 1988, Agricultural Development Bank of Vietnam was established by Decision no.53/HDBT of the Minister on March 26, 1988 (now the Government) on the establishment ofspecialized business banks

On November 14, 1990, president of the Council of Ministers (now the Prime Minister)signed Decision No 400/CT establishing Agricultural Bank of Vietnam as an alternative ofAgricultural Development Bank of Vietnam

On March 1, 1991 the State Bank Governor issued Decision No 18/NHQDestablishing Agribank representative offices in Ho Chi Minh City on June 24, 1994

On July 30, 1994 in Decision No 160/QD-NHN9, Governor of the State Bankapproved model of innovation management system of the Agricultural Bank of Vietnam

On 07/3/1994 according to Decision No 90/TTg of the Prime Minister, Agribankoperates under the model of State corporation with the organizational structure including theBoard, Chief Executive Officer, assisting apparatus, including internal controls apparatus,dependent accounting plan units, independent accounting plan units, business units, todistinguish clearly the management and administration, Board Chairman is not CEO

On November 15, 1996, authorized by the Prime Minister, Governor of State Bank ofVietnam signed Decision No 280/QD-NHNN renamed Agribank Vietnam Agribank VN

operates under the corporations model 90, a State enterprise at special level, operating underthe Law on Credit Institutions and are under direct control of the State Bank of Vietnam.

2.1.2 Organizational structure, management apparatus of Agribank Yen Bai branch

- Name: Bank for Agricultural and Rural Development of Yen Bai

- Business name: AGRIBANK YEN BAI BRANCH

- Main office address: Number 41 - Đinh Tiên Hoàng - Yên Bái city - Yên Báiprovince

+ Member units includes: 10 Province, city and town branches

Figure 2.1 Organizational structure of the Agribank Yen Bai Branch

Direct or

Vice directors

Credit

Departmen

t

Planning - capital resource Departmen t

Accountin

g - Funds Departmen t

Marketing Department

Internal control and investigati

on Departmen t

Administra tion - human resource Departmen t

Computing Department

province, city and town branches

2.1.3 Activities, products and business tasks of the Branch Agribank Yen Bai

- Business activities: Currency trading, carry out a commercial bank 's professional.

- Main products:

+ Credit products: Base on loan purposes, the current credit products of Agribankinclude: Consumption Loan (buy car, buy a home paid in wages, in income, householdappliance procurement ); Loan on real estate business; Loan on securities business; Loans

on abroad studying; Loan for additional working production business capital; Loans on ;Loans on import and export financing; Loans on purchase of fixed assets, projectsinvestment Sản phẩm tín dụng: Căn cứ theo mục đích sử dụng vốn vay thì hiện tại sản phẩmtín dụng của Agribank gồm có: Cho vay tiêu dùng (mua xe, mua nhà trả bằng lương, bằngthu nhập, mua sắm vật dụng gia đình ); Cho vay kinh doanh bất động sản; Cho vay kinhdoanh chứng khóan; Cho vay du học; Cho vay đi lao động nước ngòai; Cho vay bổ sung vốnlưu động sản xuất kinh doanh; Cho vay lưu vụ; Cho vay tài trợ xuất nhập khẩu; Cho vay muasắm tài sản cố định, Đầu tư dự án

+ Capital mobilizing products include: Non-term Deposits; Payment Deposit; SavingsDeposit (Savings deposits guaranteed by gold, stairs saving) Certificate of deposit term;Account term deposits; Deposits of other banks

+ Domestic guarantee products include: Guarantee of bids; Guarantee of contractperformance; Guarantee of payment, Guarantee of payment recovery, Guarantee warrantyworks and equipment; Guarantee loan; and others

+ International payment products: Mở L/C; Authorization to pay; Authorization tocollect; Money transferring; Discount on documents Chiết khấu bộ chứng từ

+ Servicing products: Remittance service; Western Union payment service; card service;services of collecting and paying; payroll card; domestic money transferring service, checksservice; budget service; account service; multilateral payment services; foreign currencytrading services

+ E-banking service products include: SMS banking, Atransfer; Vntopup

- Tasks

+ Business tasks

+ Political tasks

+ Society tasks

2.1.4 Mission, vision, business culture and business objectives of the Agribank Yen Bai Branch

Mission, vision and business culture

- With the motto for the prosperity and sustainable development of customer andbank, AGRIBANK goal is to continue to maintain the position of the leading commercialbank in Vietnam, advanced in the region and the high prestige over the world

- Implementing the AGRIBANK business culture content that executive leaders ofAGRIBANK had summarized in 5 words "Honesty, discipline, creativity, quality,efficiency ”

2.2.1 Macro environmental analysis

2.2.1.1 Economic environment

International economic environment

- International economic growth rate: This is the indirect factor but increasingly

having strong influence to the situation of economic development of Vietnam in general andbanking industry in particular In the coming years, the most important thing for AgriBankYen Bai is to identify and predict the fluctuations of the situation of the global economic -financial crisis which is happening How will this crisis continue, when will the economicleaders of the world (USA, Europe, Japan, China ) completely escape from the crisis andthe immediate impact, as well as its long-term impact to the economy of the world.Currently, the economic situation is rather positive, but some macroeconomic indicators such

as GDP growth, unemployment rate, indicators of stock market still have many bad factors.Therefore, none of the countries claims to have overcome this crisis.

How it affect to Agribank Yen Bai?

- Forecasting shows that the growth of the world economy after the crisis having thesign of slowing down, this will affect the export activities of the enterprises, the demand forgoods to the exports of Vietnam reduces, leading to the enterprises have to narrow, evenclose because of losses If this situation lasts, it will make the bad debts of the banksincrease This will affects seriously to the operations of banks, because the bank is the directinvestors to these enterprises

Figure 2.2 Forecast growth rate of GDP of some areas and countries in 2009 and 2010

compared with growth level in recent years:

- Situation of financial - bank markets of the developed countries:

The breakup of a series of big names of the world's financial sectors has affectedindirectly to the activities of Commercial Banks in Vietnam At the same time, it directlyreflects the health of the world economy as well as confidence of the investors into thismarket In the recent times, the operations of the banks have recovered better than thebeginning of 2009, but its fluctuation in 2010 depends entirely on the recovery of the worldeconomy

How it affects to the Agribank Yen Bai?

- The liquidity declines strongly: the evidence for this is that mobilized interest rateincreases rapidly (in 2008 and the early months of 2009 sometimes mobilized interest ratewas pushed up nearly 20% per year)

- The indirect capital resource of the world credit organizations investing for theAgribank Yen Bai through the profession of delegating investment diminishes strongly

- The bad debt of Agribank Yen Bai tends to increase

Vietnam economic environment

- The economic factors generally have direct and largest impact on stock market andalso affect the strategies and business plans which securities companies had determined

Figure 2.3 GDP growth rate of Vietnam in recent years

How it affects to Agribank Yen Bai?

- GDP increases leading to capital requirements of economic sectors increases→loandemand increases → competitive pressure among banks reduces → opportunities forAgribank Yen Bai expands activities and gain profit highly

- GDP reduces is in contrast

* Policies of the Government to banking industry:

Vietnam economy is just in the early stage of the market economy, under powerfulcontrol of the Government through the policies Therefore, the economic policies, especiallymonetary policy of the Government have strong and immediate influence to the economy ingeneral and the activities of commercial banks in particular Now we would like to analyzesome policies affecting directly to the operation of Agribank Yen Bai:

- The monetary - credit policy of the Government:

The credit policy of the Government directly affects the lending operations of thecommercial banks in general and Agribank Yen Bai in particular The rate of credit growthallowing in this year is 30%, mostly was used up by Agribank Yen Bai in the first 9 months

of 2009 Therefore, from now to the rest of the year and the early months of 2010, theGovernment tends to use the policy of "tighten credit" This policy directly affects the capitalrequirements of the economy in general and loan customers at Agribank Yen Bai inparticular This impact is negative to the Agribank Yen Bai

- Basic interest of the State Bank:

The State Bank uses the basic tool of interest rate to regulate "prices" on the monetarymarket The premises and the oscillation of mobilization interest and lending on the marketwill turn around this rate In recent times, due to tight credit policy, mobilization interest ratetends to increase, while the lending interest rates are controlled by the commercial banks(maximum lending interest rate equal to 150% basic interest rate) This makes a directimpact on the business performance of commercial banks in general and Agribank Yen Bai

in particular due to the difference between interest of input and output is too low

- Exchange rate:

The exchange rate has a strong impact on the foreign exchange business of commercialbanks in general and Agribank Yen Bai in particular A stable exchange rate will reduce thelevel of risk for the branch in business as well as other related activities Conversely, whenthe exchange rate has the negative fluctuations, it will bring risk to the business plans of thebranch itself In the coming times, the pressure of reducing domestic currency value isincreasing

* The markets closely related to the capital mobilization activities of the branch :

Mobilize the capital of banks, Real Estates, Stocks, gold and foreign currency on theprinciple of "communicating vessels" Thus, when the real estate, securities, gold and foreignmarket have sign of "heat", the currency is likely to be withdrawn from the market of capitalmobilization of banks and vice versa In fact, at Agribank Yen Bai, in the warming phase ofthe price of gold and dollars, customers massively withdraw previous deposits to go to buygold and dollars This reduces the mobilized capital of the banks, causing difficulties in theliquidity of the Agribank Yen Bai

* Inflation rate:

The rate of inflation creates will pressure to increase interest rate, and businessoperations of enterprises will face many difficulties and potential risks This risk willincrease bad debts of the Agribank Yen Bai

2.2.1.2 Political and Law environment

- The Political: The stability of politics of a nation has a direct and quite strong

impact on the operation of commercial banks In the world, financial - monetary marketsreacts immediately when there are impacts related to politics such as the new governmentchange, protesters, One of the outstanding strengths in comparison to the other countries inregion is that Vietnam has a stable politics, security and defense environment contributing toattract investment, develop the economy On this aspect, affect positively to Agribank YenBai

- The Law: Legal system of Vietnam for the banking industry is still at a simple level.

Because the legal system is not complete, and the management system is not strict, so anumber of basic services and products on the market are not allowed to offer to investors Onthe other hand the laws: Civil Code, Law of Credit Organizations, Land Law, BusinessLaw are not full, incomplete and not united, there is still the state this law conflicts withothers This leads to disputes the interests between the banks with each other and withcustomers Legal system is not accurate, consistent and sufficient negatively affecting to thebusiness operations of Agribank Yen Bai

- Management of Government to Commercial Banks: Currency trading is a very

special commodity market, so it has the State's attention and has been managed quite closely

2.2.1.3 Technological Environment

- The importance of technology to banking industry: With characteristics of a

service in the field of finance - currency, technology is the second most important factor(after the factor of quality of human resources) for success and safety of investorsparticipating trading on financial - currency markets In terms of financial, investment intechnology is the largest (by the invested value) In terms of the cost of a company,depreciation expense for the cost of technology is always the second largest (after the cost oflabor) Agribank Vietnam in general and its branch of Agribank Yen Bai in particular have

been allowed by the State bank to modernize information technology in banking (AgribankVietnam to buy IPCAS software copyrights of Korea's Hyundai corporation as softwaredelivery online services for the whole system) Main activities of commercial banksprimarily are the implementation of financial transactions through the system of informationtechnology All transactions are directly related to the large amount of money and take placedaily The amount of money transferred to bank is extremely large Characteristics of theseactivities are: transaction occurs with the very quickly speed, requires high precision,security of transactions to be almost absolutely sure that no errors would occur and thereforethe information technology system should ensure the security of a system to manage andpreserve assets for clients Thus, a system of information technology must ensure the fivebasic elements: Fast, Accurate, Safe, Convenient and Secure With online transactionssystem on IPCAS, Agribank Yen Bai has met that demand.

2.2.1.4 Cultural - Social Environment

- The Social factors: Vietnam is currently ranked 13th in the world for population

size with a population of over 87 million people Over 30% of the population in Vietnamtoday are young (under 35 years) Along with the development of the economy in the last 20years, there was a significant number of people (especially in urban areas) have highaccumulation With such factors, a growing number of people are in need of investment forprofitability from their money Current channels to invest in real estate, stock, gold andcurrency contain too many risks, so investing in capital mobilization channel of the bank isthe safest

- Number of customers: Customers use the services of the banks have many

potential, especially in the rural regions

2.2.1.5 Natural Environment

As income is the primary attribute, and as the conditions of technology, currentcustomers mainly concentrated in big cities, where people have higher incomes, and havedirect access with the location of the transaction However Agribank Yen Bai branch have atransaction network throughout the cities, districts, wards and communes, remote areas and

extremely difficult areas This is a very strong advantage over competitors

However, the natural environment in Vietnam in general and natural environment inYen Bai province in particular is on a complicated development Because Yen Bai terrain ismountainous, population is not evenly distributed so the common pipe floods, flash floods,landslides create serious damage on human and properties The loan amount of the branch inthese places tends to be lost.

2.2.2 Analysis of banking industry environment

Figure 2.4: The model of five competitive forces by M.Porter

(Source: http://Saga.com)

2.2.2.1 Analysis of potential competitors

After the state had issued the Law on Credit Institutions and the decrees, circularsand related documents, a series of financial regulations was created Agribank Branch in YenBai province is directly compete with existing competitors and potential competitors.Potential competitors are the Corporation commercial banks preparing open branches in YenBai, the commercial banks branches in neighboring provinces, black credit This is thefuture rival that the branch has to face in the competition for market share on credit, capitalmobilization, services, card This is demonstrated in the following aspects:

Firstly, the commercial banks in Vietnam in general and Agribank Yen Bai inparticular are increasing pressure to maintain and expand its market share in the area.Currently, Agribank Yen Bai suffered competitive pressure not only by foreign commercialbanks but also suffer the competitive pressure with the financial institutions and otherintermediary financial institutions such as security market, finance leasing, insurance, etc

In addition, rejecting gradually the restrictions on foreign commercial banks means that

foreign commercial banks will gradually participate fully in all areas of banking operations

in Vietnam

Secondly, competition in the capital mobilization is increasingly fierce Performingthe integration requires us to make the roadmap removing the restrictions to the foreignbanks in mobilizing the capital On September 16th, 2004, State Bank of Vietnam (SBV) hasadjusted the rates of mobilizing the VND deposit to the foreign branches operating inVietnam from 25% to 50% Vietnam is committing to open the market of financial - bankingservices as the gradually relaxed roadmap and gradually remove the restrictions on bankingactivities Period from 2001 to 2010, the U.S Banks will be allow to establish the jointventure banks with a capital of 30% - 49%, to 2010 allowed to established banks with thecapital of 100% of America Banking integration requires commercial banks in Vietnam ingeneral and Agribank Yen Bai in particular quickly increases the scale, invests technology,improves the management level Modern technology and management level as well as theabundant financial potential of the foreign banks will be the basic advantages creating thecompetitive pressures in the banking industry and forcing the Vietnamese banks to increasecapital, invest the technology, improve the methods of management, modernize paymentsystems to improve operational efficiency and competitiveness

Thirdly, competition in providing the banking services is getting drastic Nowadays,

in addition to the traditional professions such as credit and investment, the banking serviceswill also create new nuances to the bank in the competitive strategy to create market sharefor themselves Thus, the Vietnamese Commercial Banks in general and Yen Bai Agribank

in particular must also suffer the pressure creating a style of culture to the bank, creating aspecific serving style showing specific features of their to create a firm standing on themarket

Fourthly, competition in the use of labor gets increasingly fierce All the success of anenterprise comes from human factors Currently, the regime of preferential treatment forworkers, especially workers with high qualifications of commercial banks in Vietnam ingeneral and Yen Bai Agribank in particular has not convinced enough to entice those highprofessional qualifications workers The brain draining is an irremediable illness not only forthe financial – banking industry, but to all economic sectors in Vietnam

2.2.2.2 Analyze the existing competitors in the industry

- The current competitors: BIDV Yen Bai, Vietinbank Yen Bai, Yen Bai People’sCredit Fund, Post Office Savings, Neighbor Branches of the Bank…All the competitors arevery strong on financial potential, human resources, information technology, with relativelylarge operating locality The presence of these competitors has taken away a large share ofthe branch To have a strategy as well as specific solutions to deal with competitors is onething not easy

Figure 2.5: The Market share of mobilizing capital of the Branch in the years

from 2004 to 2008

Unit: %Market share of mobilizing capital 2004 2005 2006 2007 2008

1 Bank for Investment and Development of

Yen Bai

2 Bank for Agriculture and Rural

Development of Yen Bai

5 The Branch of Vietinbank Yen Bai 0 0 0 0 2

(Source: Annual report of the State Bank in Yen Bai province)