BUILDING THE BUSINESS STRATEGY PHASE 2011 2015 AND ORIENTATION TO 2020 OF SONG DA FINANCIAL JOINT STOCK COMPANY

TABLE OF CONTENTCHAPTER 1: THEORY FRAMEWORK 1.3.2 Five Forces Model of Michael - Industrial analysis 16 1.4.2 Sustainable competitive advantages of enterprise 20 1.7 Analysis model selec

TABLE OF CONTENT

CHAPTER 1: THEORY FRAMEWORK

1.3.2 Five Forces Model of Michael - Industrial analysis 16

1.4.2 Sustainable competitive advantages of enterprise 20

1.7 Analysis model selecting strategy of weighting method 25CHAPTER 2: ANALYZING THE REAL SITUATION OF SONGDA

FINANCE JOINT STOCK COMPANY

2.1 Overview on SongDa Finance Joint Stock Company 27

2.1.2 Business lines of the Company 27

2.2.2 Analyzing micro environment of SDFC – Industrial environment 40

2.5 Vision, Mission and Strategic Objective of SDFC to 2020 63

2.6 Selecting business strategy for SDFC according to weighting

Boosting the establishment and development of human resource with

advanced management and high-qualified and professional human

3.1.2 Optimizing management process to reduce the cost of goods sold

of financial services, raise quality and pre-eminence of products 723.1.3 Investing in information technology and modern infrastructure 72

3.1.4

Ensuring the diversification of channels for mobilizing capital,

mobilize enough capital and optimally balance capital structure and

3.1.5 Concentrating resources to establish subsidiaries and joint-venture

companies in the strong fields of the company 73

3.2

Some recommendations, shortcomings and following orientation

DEFINITIONS

Within the scope of this report, the following abbreviated terms are construed as follows:

ACB : Asia Commercial Bank

ASEAN : Association of Southeast Asian Nations

ATM : Machine and withdraw cash payment automatically

BIDV : Bank for Investment and Development of Vietnam

BIM : Bao Minh Insurance

EVNFC : Electricity Viet Nam Financial Company

Eximbank : Export and Import Bank

GDP : Gross domestic product

M& A : Mergers & Acquisitions

MB : Maritime Bank

MIC : Military Insurance Company

PVFC : Petro Viet Nam Financial Company

PVI : Petro Vietnam Insurance

Sacombank : Sai Gon Commercial Bank

SBU : Sub Business Unit

SDFC : Song Da Financial Joint Stock Company

Vietcombank : Joint Stock Commercial Bank for Foreign Trade of Vietnam

WTO : World Trade Organization

Figure 1-1 : Model of strategic management process 12

Table 1- 1 : Selecting strategy option according to weight method 26

Table 2-4 : Data on the security rate and risks management 32

Table 2-7 : Labor structure as of December 31, 2009 54

Table 2-8 : Select an appropriate strategy by using the weighting method 68

1 Reason for choosing the subject:

Becoming the 150th member of the World Trade Organization (TWO) on January

11, 2007 affirms that Vietnam’s economy in general and Vietnamese enterprises inparticular have integrated into the world economy deeply and widely Vietnameseenterprises have been renewing their thought of business and reaped certain success

To develop and integrate into the world economy successfully, Vietnameseenterprises need to ceaselessly renovate and raise the adaptability to the market andclearly define the destination that the enterprises need to reach How to reach it and

by which mean? Therefore, they need to have business strategy Sound andreasonable business strategies will insure the sustainable development of enterprises

on the basis of effectively implement enterprises’ goals

2 Objective of the study.

- Studying and systemizing theories, selecting effective model of analysis to

building and implementing business strategy

- Applying the system of theoretical bases and models to analyze internal and

external environments and building business strategy of the Company

- Suggesting solutions and recommendations to the Company in implementing

business strategy to complete the selected business strategy;

3 Scope of the study:

Studying and analyzing business lines of SongDa Finance Joint StockCompany

4 Method of the study

The report mainly used quantitative analysis method Methods of collectingdata such as using questionnaires, interviewing experts were used Using national

statistical data, information and specific data; using secondary data about strategyand previous reports of the Company.

5 Structure of the Capstone Report

Chapter 1: Theory framework

Chapter 2: Analyzing real situation of SongDa Finance Joint Stock Company.Give an overview of SongDa Finance Joint Stock Company Businessstrategy to 2015 and vision to 2020 Apply models of analyzing externalenvironment affecting the enterprise – Five forces model Apply the model of valuechain and sustainable competitive advantage to analyze the internal of theCompany Apply SWOT analysis to have an overall evaluation to find out thestrengths, weaknesses, opportunities, and threats Analyzing and selecting businessstrategy for the Company according to weighting method

Chapter 3: Recommendations and conclusion

Some solutions to successfully implement the selected business strategy,some shortcomings and recommendations to solve these shortcomings andorientation for further studies in the future

The End is references

CHAPTER 1: THEORY FRAMEWORK

1.1 Theories on Business Strategy of Enterprise

1.1.1 Concept of Strategy and Strategic Management

 Concept of strategy

- Strategy is model of goals, objectives and plans to achieve those goals

(Kenneth, 1965);

- Strategy and formation of a unique and valuable position include the

differentiation, a bartering selection to mostly concentrate resources togenerate advantages for an enterprise (Michael Porter)

- According to group 7, “Strategy is a system of coherent and long-term

measures and methods that an enterprise tries to implement to gain the clearer and more outstanding differentiation compared to its rivals to achieve a set goal”.

 Concept of strategic management

- According to Alfred Chandler, strategic management is the process of identifying

basic and long-term goals of an enterprise, selecting mode or orientation of actionand distribution of vital resources to implement those goals

- According to John Pearce and Richard B.Robinson, strategic management is a system

of decisions and actions to form and implement plans to attain goals of an enterprise

- According to group 7, “Strategic management is a systematic process from

building strategy, developing strategy, controlling and evaluating strategy to achieve the targets set by an enterprise.

1.1.2 Essence of Business Strategy

Business strategy is a business model of enterprise, in terms of business strategy, isthe platform of business activity; method of using resources; basis for handling allmatters of the business

Business strategy is the creation in management, which means that business, based

on certain objectives to form a new effective and competitive management system.Therefore, business strategy is preceded from the actual situation of theenterprise Two businesses in the same area, same product, same size, but thebusiness strategy can not completely be the same because of their different subjectivecondition At the same time the creative management must combine closely withorganizational creativity, technical innovation can promote the work of businessstrategy

Business strategy is to show the competitive position of enterprises, while buildingtheir business strategy, enterprises need an objective analysis of their situation,explore opportunities and challenges that affect the objective circumstances tobusiness Study of subjective conditions of the business to know the strengths andweaknesses and base on these actual situations to achieve the objective of theenterprise

1.1.3 Characteristics of Business Strategy

The conformity of business strategy is reflected on three aspects: It needs to

be consistent with the dominant trend of development and the motto directing theactivities of the enterprise and needs to be in line with the development trend of thecountry in economic, technical and social aspects in a certain period of time; andneeds to be conformable with the trend of world economic integration

 Predictiveness

In the past, due to having no strategy planning, doing activities spontaneouslyand following movement, many enterprises worked hard but ineffectively One of thecauses of that situation is the lack of understanding about the development trend ofthe enterprises Therefore, to build business strategy, there must be good forecast on

 Competitiveness

If there is not competition, it is not necessary to have business strategy; thus,when building business strategy, we need to know how to get businesses acompetitive edge over rivals and therefore win the competition

Business strategy is the planning the enterprise’s development in the future Thelonger-term the strategy is, the riskier the strategy is, requiring entrepreneurs to have aprudent and objective vision and observation to have a sound strategy Businessstrategy should not be too long-term and needs to insure the flexibility and practicality

 Professionalism and Creativeness

Enterprises can base on their internal power to select a suitable field of operationand avoid the industry in which big enterprise has dominant position However, thetechnological advancement and competition in the market is unlimited; therefore,enterprises need to ceaselessly specialize and invent suitable technology andimportant measures to insure their existence and development

 Relative Stability

Business strategy of enterprises needs to have a relative stability in a certain periodOtherwise, it will not have any steering implication to the real operation of theenterprise Business strategy also needs to be adjustable to suit the objectivesituation

1.2. Process of Building Strategy.

Figure 1-1: Model of strategic management process

(Source: Strategy Management – Statistical Publishing House 2009)

Selecting and building strategies Functional strategy Mission & Objective

Adjust strategy, structure and supervise

 Mandate of the enterprise

Determining current missions, goals and strategies of the enterprise is the startingpoint of strategic management When having developed in a business environment thatcontains full of fluctuations, managers need to redefine the initial goals

 Goals and mission of the enterprise

Insuring the agreement on the internal goals of the Company, establishing acommon voice or corporate environment; facilitating the introduction of goals andwork structure relate to the allocations of missions

1.3 Model of External Environment Analysis:

1.3.1 Macro Analysis

Figure 1-2 : External environments

(Source: Lecture on strategic management – Gamba)

Economi c

Cultural

- Social

Global

Technological Political/Legal

Environment

 Analyzing Economic Environment

Status of the macroeconomic environment determine the health, economicprosperity, it always affects businesses and industries Therefore, enterprises muststudy the economic environment to identify changes, trends, implications of itsstrategy There are four important factors in the macroeconomic environment that isgrowth of the economy, interest rates, exchange rates and inflation rates

 Economic Growth: leading to the explosion of spending by customers,

so it may tend to bring more relaxed about competition in the industryand tends to reverse when the economy declined

 Interest rates: It may affect the demand for products and services of the

business Interest rates are important factors when consumers to borrow

to finance their purchase operations for goods and services

 Exchange rate: Determining the value of national currencies with one

another Movement of exchange rates has a direct impact on thecompetitiveness of enterprises on the global market

 Inflation: Can reduce the stability of the economy, making the economy

grow more slowly, higher interest rates, exchange rate shifts are notstable If inflation increases, investment planning becomes risky Badinvestments held out of business, in case of inflation, will reduce theeconomic activity, eventually pushing the economy to stagnateplace Thus, high inflation is a threat to the company

 Analyzing Demographic Environment

 Population scale: Observing the demographic changes in terms of

population to highlight the importance of this segment The projection

on population shows the global challenges related to population of the21st century and opportunities for businessmen

 Age structure: showing the opportunities of services, but it also

contains new threats related to human resource for enterprises

 Geographical distribution: This may create advantages for technology.

With computers, people can stay at home and exchange with other people via the telecommunication network

 Analyzing Political and Legal Environment

 Political Environment: consists of political factors and contexts whose

operation has influence on the business of the enterprise These factorsinclude political regime, political party, political union, policies of theParty and State, political atmosphere of the society

 Legal Environment: This is the legal system related to the enterprise,

including normative law, legal sense of the judicial agencies, executiveagencies and the enterprise Influence of political and legal environment

to the enterprise is very deep and even has dominant implication

 Analyzing Scientific and Technology Environment

Many new techniques invented and applied quickly has been knowledged andrevolutionized the entire economies of developed countries That will change thescientific, technical and technological environment of the society, promotingtechnological innovation, technology of the society as well as boosting the currenttechnology transfer and industry restructure Enterprises should identify changes,implement and apply technical advancement and upgrading the technology

 Socio-Cultural Environment

 Social environment: It includes the formation, changes of social classes,population structure, migration, etc All the status and variation of the factorscan have influence on the operation of enterprises

 Cultural environment: include factors related to philosophy, religion,language, literature and art These factors have indirect influence on theoperation of enterprises and should not be underestimated

1.3.2 Five Forces Model – Industrial Analysis

Five forces model by Michel Porter is summarized in following 1- 3 figure:

Figure 1-3 Diagram of industrial competition

(Source: Strategy Management – Statistical Publishing House 2009)

 Threats of new entrants

New entrants may be newly-established enterprises joining the market orenterprises that previously traded other types of products, now trade many types ofproducts These enterprises bring about new production capacity to the industry, butalso require a certain market share Whether this competitive pressure is great orinsignificant depends on the expenses of an enterprise when participating in the

Threats of new entrants

Bargaining power

of suppliers Competitive rivalry

within an industry

Bargaining power of buyers

Threats of substitute products

market and the level of reaction of other enterprises when that enterpriseparticipates in the market and depends on the industry entry barriers.

 Threats of substitute products

Substitute product is a product of similar use If the profitability of thesubstitute product is high, the competitive pressure will be great and make theenterprise passive If the manufacturer of the substitute product rapidly developsproduction, the industry will be under a strong threat If consumers accept thesubstitute product smoothly both in terms of economics or psychology, thatthreat will be greater

 Bargaining power of buyers

Enterprises’ customers can request that the prices of goods or services to

be cheaper along with higher satisfaction on service quality The problem is whoare the main customers having the power to negotiate and need the attention ofthe enterprise Those users give criteria of price, quality, technology, date ofcompletion, etc It requires enterprises to have capacity to be willing to meetrequirements during the competition process

 Competitive rivalry within the industry

The competition among enterprises in the same industry is expressed via thepatterns, characteristics of competition, relating to the following factors:

- The business may base on the assignment of the industry, position and role of

the industry in the process of social production, resources used by the industry,the prospect of the economy, consumers’ habits, etc Via those analyses tounderstand the characteristics of the industry and have appropriate policies

- Structure and scale of enterprises in an industry usually come in two forms

Firstly, the structure and scale of big enterprises will be very big and those ofsmall enterprises will be very small In this case, the competition is not verytough because big enterprises have gained absolute dominant positions.Secondly, big enterprises are not too big; the small enterprises are not too

small In this case, the competition will be fierce because the internal powers

of enterprises in the industry do not vary much

- In general, the structure of number of enterprises in the industry is large, it will prove

that the market size is significant and the market entry barriers are relatively small

- Market structure in the industry, the supply and demand in the market,

over-supply, supply and demand is balance or over-demand If demand exceedssupply, there must be investigation of form of market entry with certainadvantages If the supply-demand is balance, enterprises should reinforcetheir strengths If supply is greater than demand, enterprises should considerthe creation of competitive advantage or withdrawal from the industry

 Bargaining power of suppliers

Suppliers in the banking sector is quite diverse, they can be the bank'sshareholders, or partners, enterprises having ample financial resources and often supplycapital to banks or customers have the ability to negotiate on prices Credit institutionsare interested in the bargaining power to suppliers to address the requirements ofquality, product prices and the capacity of capital advancement and turnover

1.4 Analysis Model of the Internal Of the Enterprise:

1.4.1 Value chain

The value generated of an enterprise is measured by the amount that buyerswho are willing to pay for products or services The division of activities in thevalue chain creates favorable conditions for investing costs and result of eachactivity, finding the way to improve each activity, combining them according to thestrategy to generate value of each specific product as well as of the enterprise

Activities supporting for key activities are specified as follows:

 Developing technology: developing products and manufacturing technology.

Developing technology can lower production cost, creating more attractiveproducts and sell at higher prices

 Human Resource Management: Human resource is the most precious asset of

the enterprise High-quality human resource and an effective apparatus areimportant factor for the success of the enterprise

 Company Infrastructure: Infrastructure includes organizational structure,

executive systems and culture of the enterprise Via the management power,senior managers can actively shape the infrastructure of the enterprise andthrough which all activities to create other value is done

Figure 1 – 4 Value chain diagram

(Source: Lecture on strategic management – Gamba)

In ter est

Inte res t

Pur ch a sin g

Hu ma

n res ou rce ma na ge me nt

Tec hn olo

gy dev elo pm

en t

Marketing & Sales Logistics outside Production

Logistics inside

1.4.2 Sustainable Competitive Advantages of the Enterprise

 Competitive advantages of the enterprise is constituted from 4 factors:

The first is the knowledge and technological capacity of the staff including

knowledge and skills of each employee; and qualities and knowledge structure ofthe whole staff

The second is the technical system of the enterprise or the crucial system of

techniques to implement the business strategy of the enterprise

The third is the management system of the enterprise, the enterprise’s

strengths formed through regimes, regulations, organizational structure,organization plan, and leadership, encouragement of the enterprise and the leader’sart of leading

The fourth is the concept of value and the enterprise’s culture system, the

important constituent of the enterprise

 The analysis of competitive advantages of the enterprise - needs to solve 3

problems:

- What are the competitive advantages of the enterprise? How is their status?

To solve this problem, we need to analyze in-depth resources, technicalsystem, management and corporate culture of the enterprise

- What is the effect of competitive advantage on the competitive strengths of

the enterprise? Generally, the unique the competitive advantage of theenterprise is, the longer the time for maintaining the strength is and thefirmer the competitive strength is

- How to develop and foster the enterprise’s competitive advantage? The

development and fostering the enterprise’s competitive advantage ofteninclude the investment and revive the human resource of the enterprise,ceaselessly raise the technical quality of the staff, timely renovate

management structure to be able to make it operate smoothly andharmoniously with the objective environment.

1.5 SWOT Analysis

SWOT analysis is used to analyze strengths, weaknesses, opportunities andthreats of an enterprise to determine a suitable business strategy, promote strengths

of the enterprise and overcome weaknesses in making full use of business strategy

as well as challenges from the external environment

SWOT analysis is the key to develop strategy and clarify the internal power of the enterprise; strengths, weakness, opportunities and threats from the outside

 Strengths

What are the strengths of the enterprise? What is the best task done by theenterprise? What are the advantages that people see from the enterprise? The issuesmust be considered by the enterprise and other people Strengths are formed whencomparing with competitors

 Weaknesses

Which weaknesses can be improved? Which tasks are best done? What needs to beavoided? The above issue needs to be considered both internally and externally.Other people can see weaknesses that the enterprise does not recognize Why docompetitors can do better? This matter should be viewed practically

 Opportunities

Where the good opportunities are? What is the existing trend that should be paidattention? Opportunities may come from the changes of technologies, policies of theState, social pattern, population structure, etc The most effective method to find is

to check the enterprise’s strengths and pose the question “whether those strengthscan lead to any new opportunities? The enterprise can do reversely – check itsweaknesses and pose the question “whether there is any opportunity to removethem?”

 Threats

What are the current obstacles? What competitors are doing? Whether there is anychange in the work, products or services? Is there any problem related to overduedebts or the cash flow? Which weaknesses are threatening the Company? Theseanalyses often help to find what need to be done and turn weaknesses intoprospects.

1.6 General Competitive Strategies

1.6.1 Cost-Leadership Strategy

This strategy has two basic advantages Firstly, with lower price, the cost leader

can set the lower price compared to its rival while still gain equal profit to the rivals

Secondly, is the competition in the industry increases and enterprises compete in price,

the cost leader will likely to stand firmly in competition rather than other enterprisebecause of its lower cost

 Strategic Solutions

Product differentiation is often costly Therefore, the cost for this is not toodifferent compared to rivals using product differentiation strategy; to make thedifferentiation has a low cost, the cost leader often skips different market segmentsand pays attention to the market in a large scale In fact, enterprises often set lowerprice compared to their rivals to attract customers to their products

 Advantages

In the most general way, measures to have enterprises gain cost-relatedadvantages vary by each industry and structure of industry Some advantages maycome from the production scale, technological monopoly, preferential on materials,components of products, the service quality, technical process, etc The advantage

of each basic strategy is best demonstrated by Porter’s Five Forces Model The leadership strategy is protected from competitors in the sector by its own cost; thelow cost also means that it will be less impacted by the competitors in the case ofincreasing input cost and the discount of products when buyers have betterbargaining power; cost-leadership often strongly requires the enhancement of direct

cost-bargaining power with suppliers; of substitute products join the market, with lowcost, cost leader can reduce price to compete and sustain its market share;

 Disadvantages

The main threats of cost-leadership strategy lies in the ability of competitors

in finding the way to produce with lower cost and attack the cost leader by its own

“forte” The possibility that competitors will imitate the methods of the cost leader

is a threat to the cost-leadership strategy; there is a threat that the cost-leader onlythinks about cost and unlikely to be able to follow the changes in the taste ofcustomers It may make decision to reduce cost, but the decision will have visible tothe demand for the product

1.6.2 Product Differentiation Strategy

The purpose of product differentiation strategy is to gain competitiveadvantages by creating products, goods or services are recognized as unique incustomers’ reviews It is likely that an enterprise differentiates its product to meetconsumers’ demand in a way that competitors cannot The possibility to increaserevenue by achieving a high price allows the strategy users to have betterperformance than their competitors and gain higher profits

 Strategic Solutions

Product differentiation can be attained in three main ways, namely quality,innovation and adaptation to customers The renovation is very important forcomplicated technological products The attraction of the products satisfies theexpectation about the origin of the differentiation A strange psychology ofcustomers can become the source of product differentiation The attraction may bethe factors associated with status or pride of the age groups or socioeconomicgroups In fact, the basis of product differentiation is infinite

The product differentiation is the basis for innovation, technologicalcapability and depends on the function of research and development

 Advantages and Disadvantages

Difference from competitors, product differentiation brings about the loyalty

of customers with the brand, a very valuable asset New enterprises are forced tocreate their own capacity to be able to compete with existing brands and this task isvery costly

Product differentiation does not allow enterprises underestimate the matter ofcost; the cost difference needs to be greater than the supplemented cost to generatedifferentiation to reach an equivalent cost or nearly equivalent cost to competitors.Therefore, there must be a cost reduction in the parts that do not influence theproduct’s differentiation

A company can also reduce production costs and marketing expenses if itlimits the number of models in the product line by selling a package of "options" ofproducts rather than letting the consumers to decide which options they want Atimely storage system can also help reduce costs, improve quality and reliability ofthe enterprise’s products

1.6.3 Concentrated Growth Strategy

Concentrated growth strategy is different from the two above strategies because

it orients to serve the demand of a limited group of customers or market segment.Enterprises following concentrated growth strategy will focus on serving a specificmarket segment which can be defined according to geography, type of customer or abranch of the product line In nature, an enterprise following concentrated growthstrategy is a product-differentiation enterprise or a cost leader

Another characteristic is that enterprises following concentrated growth strategycompete with the ones following product differentiation in only one or a few marketsegments in which the product differentiation is successful because they only haveknowledge about a small group of customers or about the region Moreover, theconcentration on a small chain of products sometimes allows people to makeinnovation quicker than a big differentiation

 Strategic Solutions

Concentrated-growth enterprises select a market segment to compete inrather than the whole market as the cost leaders or satisfy a large number of marketsegments like followers of product differentiation strategy in general; enterprisesfollowing concentrated growth strategy can have many methods to develop theircompetitive advantages and this explains why there are too many small enterprisescompared to big ones A concentrated-growth enterprise has many opportunities todevelop specific activities and compete with low-cost enterprises and product-differentiation enterprises which are increasing.

 Advantages and Disadvantages

The competition of concentrated-growth enterprises comes from the origin ofits own capacities – efficiency quality, renovation or adaptability to customers It isprotected from competitors at a certain level in which it can supply products andservices that competitors cannot However, to suppliers having bargaining power,concentrated-growth enterprises are disadvantageous because they purchasematerials with a small volume; therefore, bargaining power belongs to suppliers.However, as long as they can turn the increase in price to its loyal customers, thisdisadvantage is insignificant and the generation of loyalty to customers also reducesthreats of substitute products Another advantage of concentrated growth strategy isthat it allows enterprises to come closer to customers and timely response to theirchanging demand

Because enterprises following concentrated growth strategy produce a smallvolume of product, so their production cost will be higher compared to cost-leadership followers; the higher costs may lower the profit if followers of thisstrategy are forced to invest more in developing a specific capacity; the marketsegment of these enterprises can suddenly disappear due to the changes intechnology or customers’ taste The disappearance of market segment is also acause for the failure of small enterprises There is a threat that enterprises followingproduct differentiation strategy will compete to gain the market share ofconcentrated-growth enterprises

1.7 Model of Analyzing and Selecting Strategy According to Weighting Method

Weighting method selects a strategy in a series of options given on the basis

of assessing criteria for selection such as value of the enterprise, revenue, profit, thesuitability with corporate culture, etc to find out the best strategy This methodconsists of 4 steps:

* Step 1: Selecting the most important and suitable criterion with the

characteristic of the enterprise to evaluate competitive strategy as well as the value

of the enterprise, revenue, profit, competitive advantages, etc This is a subjectivestep of the chooser

* Step 2: Imposing weight to criteria to determine the important of criteria

having influence on the final decision

* Step 3: Marking each option of strategy according to each criterion.

* Step 4: Calculating the sum of products to find out the option with the highest

mark This will be the selected option

Table 1- 1: Selecting strategy option according to weight method

Strategy A Strategy B Strategy C

Mark Product Mark Product Mark Product

CHAPTER 2: ANALYZING THE REAL SITUATION OF SONGDA

FINANCE JOINT STOCK COMPANY

2.1 Overview of SongDa Finance Joint Stock Company

2.1.1 The Establishment and Development Process

SongDa Finance Joint Stock Company (SDFC) is a non-banking creditorganization established and took effect from 7/2008 according to license number 137/GP-NHNN issued by Governor of Vietnam State Bank on 23/5/2008 After three years

of operation, the company has gradually marked their position and prestige in market

as one of the most efficient businesses in financial block At present, the company hascharter capital of 686 billion VND, has the cooperative relationship with more than 200national and international credit organizations, financial organizations regarding as:BIDV, Vietcombank, ANZ, HSBC,…as well as partner, supplier of prestigious financeproducts for more than 300 enterprises including big groups and corporations as: PetroVietnam, Song Da group, Vietnam Steel Corporation, so on

According to the Trading Registration license number 0103024916 with thefirst registration on 26/05/2008, the third change on 10/1/2011 as TradingRegistration license No.0102759935, business sectors of the company as follow:

The company mobilizes capital

Lending in short term, middle term and long term according to the rules of state bank;

Trusting loan of national and foreign governments, organizations and individualsaccording to the rules of law and credit organizations as well as trusting contract;

Consuming loan by paying in installment

Discounting, rediscounting, pledging commercial paper and other value papers

Guarantee: the company guarantees by prestige and financial capacity with respect tothe guaranteed ones Furthermore, the company also guarantees: loan guarantee,payment guarantee, bidding guarantee, contract implementation guarantee, remainingpayment guarantee, etc according to the rules of state bank

Opening account and budget service

Contributing capital, purchase stock of other businesses and credit organizations;

Investing for projects according to contract;

Participating in currency market;

Overseas national currency exchanges service and trade gold;

Issuing share, stock and other papers for businesses;

Having the right to be trusted, agency in sectors relating to finance, banking,insurance and investment even asset management, investment capital oforganizations and individuals according to agreement;

Foreign exchange activities according to current rules about foreign exchangemanagement

2.1.3 Apparatus of the Company

Along with the more and more diverse development of operations as wellrequirements on management, administration and risk management according to theregulation of the State Bank

Figure 2 – 1 Management model of the Company

(Source: SDFC structure according to decision 172 dated 26/02/2011 of SDFC)

2.1.4 Infrastructure and technologies of the Company:

 Infrastructure

The headquarter of the Company is located at No.121, Chua Lang Street,Dong Da District, Hanoi The building consists of 01 ground floor and 7 high floorswith the area of over 1,000m2 The Company has a system of elevators, standbyelectricity system, fire preventing and fighting system, air-conditioner system andthief alerting system The headquarter is organized as an open space according toeach area

Internal control Executive Board

Shareholders’ General Assembly

Risk management Dept

Financial- Accounting Dept

Office Management block

Investment and consulting Dept

 Technology

The technological equipment of the Company is quite suitable with its scale.Most personal computers in trading rooms are under Lenovo brand name andinstalled with the authorized Window operating system At present, the Company isusing Bank 2000 system in banking management

2.1.5 Some Notes about the Development History of SDFC:

- On January 31, 2008, the State Bank of Vietnam issued Document No 1091/

NHNN-CNH accepting the regulation on establishing SongDa Finance JointStock Company

- On April 07, 2008, the General Shareholders’ Assembly happened at Song

Da Corporation to establish SongDa Finance Joint Stock Company

- On May 23, 2008, SongDa Finance Joint Stock Company was issued license

for establishment and operation No 137/GP – NHNN by the State Bank ofVietnam;

- The Company officially commenced and came to operation from July 23,

2008

- On November 10, 2008, the Company became the 50th member of Vietnam

Banks Association

- In 2009, the Company became one of leading units in emulative movement

and presented commemorative flag by the State Bank of Vietnam

Table 2-1 Capital mobilization by year

Currency unit: VND billion

Deposits and loans from credit

Financial derivatives and other

-Funds received from financing,

trust investment, risky credit for

credit institutions

(Source: Financial Statement in 2008, 2009 and 2010 of SDFC)

 Credit products

Table 2-2 Balance of debit by year

Currency unit: VND billion

(Source: Financial Statement in 2008, 2009 and 2010 of SDFC))

Table 2-3 Classification of lending forms

Currency units: VND billion

Total balance of

(Source: Financial Statement in 2008, 2009 and 2010 of SDFC)

Credit products such as lending working capital, financing and co-financingfor investment projects applied to enterprise customers, lending for living, repairinghouses, purchasing houses, etc to individual customers are products trusted andregularly used by customers

Table 2-4 Data on the security rate and risks management Criteria Unit Dec 31, 2008 Dec 31, 2009 Dec 31, 2010

Ratio of bad debt over total

(Source: Financial Statement in 2008, 2009 and 2010 of SDFC)

 Investment Activities

After five months of operation, at the end of 2008, the Company disbursedVND 34.65 billion and income from investment reached VND 1.13 billion In 2009,the Company continued to invest in bonds with VND 279 billion and gained anincome of VND 26.8 billion In 2010, the Company disbursed in investment and thebalance from stock investment as of December 31, 2010 was VND 103 billion andthe balance from bond investment was VND 438 billion

 Financial Services

The implemented activities have brought about high effectiveness to theCompany such as giving consultancy on issuing bonds, stocks, managingEnterprise, appraising and determining investment capital Income from services in

2009 reached VND 13 billion In 2010, income from services was VND 22.7billion, up 175% compared to 2009

 Foreign Currency Trading

The Company was allowed to supply foreign currencies in domestic marketpursuant to Document No.1477/NHNN-CNH dated March 4, 2009 of the StateBank of Vietnam The Company has purchased foreign currencies to serve thedemand for importing equipments, materials and paying debts to foreign countries,etc of customers in SongDa Corporation Income from foreign currency tradingwas VND 4.68 billion in 2009 and VND 23.1 billion in 2010

Assessing Business Activities over the Past Three Years

The Company came into operation in the context that the world and as well

as domestic economies encountered numerous difficulties, but with the efforts ofthe Company’s staff, after two years of operation, the Company has reaped certainresults and surpassed the set targets:

Table 2-5 Business result in last 3 years

Currency unit: VND billion

Criteria Unit

Last 5 months of

Closing balance of mobilized

Closing balance of debit balance VND billion 681,2 1.560 2.472

(Source: Financial statement in 2008, 2009 and 2010 of SDFC)

Table 2-6 Criteria of efficiency

Criteria months of Last 5

2008

(Source: Audited financial statement of SDFC)

To achieve above rosy results, apart from the support and facilitation ofshareholders, the Company has actively and proactively approached customers,especial the market in Song Da Corporation and step-by-step expanded businessrelations outside the Company

2.2 Analyzing External Environment of SDFC

2.2.1 Analyzing Macro Environment

* Economic growth: During the period 2006 - 2010, average GDP growth

of Vietnam reached 7% Despite of the financial crisis and global economicdownturn in 2008 affected most of the world economy, Vietnam has achievedgrowth rates relatively high compared with many countries in the region and theworld GDP in 2010 calculated at current prices reached 101.6 billion dollars, 3.26times bigger than 2000, GDP per capital reached $ 1,168 However, economicgrowth in Vietnam has a considerable number of foreign matters such as: growth inwidth mainly based on increased investment, resource exploitation, and othermacro-economic balance and potentially unstable rumblings

Planned economic development Vietnam 2011 - 2015 are outlined in thedocument national party congress XI: Striving to achieve GDP growth of 7.0 to7.5% per year of high technology products and production application of hightechnology products reached 35% of the GDP ratio of trained labor to 55% Theexport turnover increased up to 12% per year, reducing the trade deficit, in 2020strives to balance imports and exports Social capital investment on average 5 years

to reach 40% of GDP Mobilization rates in the state budget reached 23-24% ofGDP budget deficit reduced to 4.5% of GDP in 2015 This is a good signal formany economic sectors, many businesses in the medium to long term

* Interest rates: In late 2010 and early 2011, the Vietnam enterprises as

well as all the economies are faced with the reality of credit interest rates rise Manybusinesses have to produce moderation, or to reduce the access to investment capitaldue to credit is difficult, the actual lending rate is now delivered in about 17-19%per year, with the interest rate is enterprises can hardly profitable business Besides,even if capital mobilization is very difficult, high cost of capital This fact is notquickly resolved, will have more enterprises have to cease production, stop theprojects and there will be many individual investors or businessbankruptcy Therefore, this leads to dangerous situations as the economy stalled,and will take time to overcome

* Exchange rate: In 2010, up to 18.8.2010, the State Bank of Vietnam has

adjusted to three times the interbank rate, up 11.17% to a total of 18.932 VND /USD Dated 11/02/2011, after a long time holding back, the State Bank of Vietnam

to increase inter-bank rate rose to 9.3% With the above adjustments, the priceceiling of U.S $ sales schedule posted on 11/2/2011 by the commercial banks is thebase price is 20,900 VND and 20,486 VND

The adjustment of exchange rates on 11.02.2011 by the State Bank is an actproper and accountable to the context of economic difficulties Rate rise will curbimports and stimulate exports The export business is the direct source of foreignexchange earnings and the combined use of domestic raw materials will benefitfrom the adjustment of exchange rates However, the adjustment of exchange ratesalso bring negative impacts, first of all increased costs for manufacturers Prices ofbasic commodities such as petroleum, fertilizers, pharmaceuticals has increaseddramatically as most of the goods to consumers have increased The consumer priceindex will be affected in the coming months To continue to control inflation,interest rates will continue to remain high in coming time This could cause theeconomy to fall into the vicious cycle

In short, changes in exchange rates can affect directly to the operation ofenterprises, especially the currency trading business, including SDFC

* Inflation: Vietnam, after 12 years to control inflation (1995-2007), from

December 2007, official inflation back at level 2 figure in 2008 In 2009, inflation at6.52%, and so far in 2010 the inflation rate continued double-digit re-established at11.75% Currently, Vietnam is facing a situation of double-digit inflation and tends

to rise again, inflation was at 1.74% in Jan, 2011 During early 2011, the economy

is constantly receiving the "shocks" about the price of petrol (gasoline A92 2900increase per liter, up to 19,300 dong per liter of diesel rose 3,550 per liter, up to18,300 VND per liters), the average electricity price increased 15.28% compared

with 2010, diseases of cattle and poultry more complicated and widespread naturaldisasters around the world pushing up demand for food , Vietnam's export rice priceincreases put pressure on food prices, increased domestic food, (food commoditygroups accounted for 42.85% of the "basket" of goods the CPI in Vietnam) Inaddition, the expectation of devaluation in the same time, gold prices rosecontinuously set new record levels, the instability of the global economy makes thehoarding mentality keeps gold and dollar to raise, causing further macroeconomicinstability.

In summary, if the inflation rate continues to rise, it will cause economicupheaval serious, such as distortions in the production structure of employment,income inequality, unemployment rose, Therefore, to economic stability at acertain level, inflation should be reduced to levels acceptable

(Source: The figures above referenced press release from the General Statistics Office in 2009, 2010 and information on the Economic Times, Electronic Newspaper Vietnamnet, vnexpress).

 Political And Legal Environment

Vietnam manages the market economy with the views as follows: Themarket economy has many components of which the state sector plays a leadingrole and cooperates with other economic components to develop gradually thefoundation of national economy; Common characteristics with other countries:Recognizing the independence of subjects of the market (individuals andenterprises); Build a competitive market system with prices regulated by the market;build an effective macroeconomic-regulating mechanism and implement theguidance; complete a system of law and economic law, ensuring a legal frameworkfor economic activities

Business Law in 2005, Investment Law in 2005 and Law on Credit Institutions in

2010 are considered as a breakthrough in the realization of equality and autonomy

in the trading of businesses The participation in many international conventionsand treaties on the protection of intellectual property rights as well as theenforcement of international standards show the determination of VietnamGovernment in the integration in laws in the coming time, including law relating tothe financial and banking sector

 Demographic Environment

In the report "Trends in Vietnam employment 2010" shows that there arechanges in structure of Vietnam labor market from the employment in the agriculturalsector with low labor productivity and labor-intensive use to industries and serviceswith higher added value and more investment in technology and finance

Vietnam also has relatively high employment rate per population, with nearly75% of the population aged 15 years old or older However, due to instability of theglobal financial crisis, the rate of labor force participation in Vietnam declinedduring the period 2007-2009 The rate of labor force participation increased for bothmen and women aged 15-19 years old (from 37.1% in 2007 to 43.8% in 2009)

In recent years and in the coming years, the trend in return of many overseasstudents with qualifications and knowledge trained abroad will contribute toimproving the quality of local human resources

 Social and Culture Environment

* Social Environment of the Enterprise

The trend in international economic integration in the 2011 -2015 periodcontinues to facilitate the trade of goods and services between Vietnam and othercountries to expand and develop, arising the demand for existing utilities provided bybanks in the rapidly growing trade High-tech banking service products will haveconditions to develop stronger which also creates favorable conditions for thedevelopment of financial services products in Song Da Finance Group

* Cultural Environment

Society is developing more and more modern civilization and boostinginternational integration The shift in social values is towards the direction that

people are more interested in the increasing demand for spiritual life Socialenvironment will have a lot of changes under the trend that the cultural exchangebetween Vietnam and other countries is increasingly open The tendency to increasespending and raise the cultural-artistic life and material life is higher and higher, sothe demand for electricity suddenly increased sharply in the peak hours, and powerindustry still faces a serious shortage of power to provide to the people.

 Scientific and Technological Environment

The government has identified that the goal of modern technology throughthe short-cut steps wait in front for the technology is considered as a foundation forpromoting economic growth From the practical technological development sinceVietnam opened, many predicted that by 2015, scientific and technologicalenvironment of Vietnam will develop and be able to meet the standards of theregion in some areas such as information technology, telecommunication, bankingtechnology, etc

 International Environment

The trend to coordinate the world economy with the development of trans-nationalcompanies, financial groups with global operation scale has an impact on economicpolicies, and policies on science and technology in the country; facilitate themobilization of investment capital, expand international cooperation links forbusiness However, these factors also put pressures on enterprises in building adevelopment strategy and increasing their own capacity

2.2.2 Analyzing Micro Environment of SDFC - Industrial Environment

 Profession Environment

* Development outlook of banking sector

The economic crisis in 2008 – 2010 period was a big event for the economy.Banking sector not only has to deal with difficulties caused by the economic