Luận văn thạc sĩ xây dựng chiến lược kinh doanh thẻ tại ngân hàng vietncombank

1 Basic issues about strategy and business strategy 102.3.2 Analysis of micro environment model of five competitive forces 20 2.6.2 Model of analysis and selection of strategic alternati

Luận văn thạc sĩ Xây dựng chiến lược kinh doanh Thẻ tại ngân hàng

Vietncombank

THESIS Topic:

“Build a card business strategy of Vietnam Joint Stock Commercial Bank for Foreign Trade of Vietnam (Vietcombank) in the period of 2011 – 2015”

ACKNOWLEDGEMENT

We would like to commit this is the research project of our group The published data of the organizations and individuals are referred and used under regulation The results in the topic are honest and have not been showed in any other projects yet

Our group would like to thank Griggs University, representative of the University

in Vietnam, ETC Center, teachers are considerate to teach us; thank people in the Center who have helped us during the studying process in the Center

Group would like also to thank Vietnam Commercial Joint Stock Company (VCB); Vietcombank card Center which have supported us in the process of working and provided the data creating conditions for us to complete the research

Hanoi, February 25 th 2011

WRITERS’ GROUP

1 Basic issues about strategy and business strategy 10

2.3.2 Analysis of micro environment (model of five competitive forces) 20

2.6.2 Model of analysis and selection of strategic alternatives according to

CHARTER II: THE REAL SITUATION OF CARD BUSINESS OF JOINT

STOCK COMMERCIAL BANK FOR FOREIGN TRADE OF VIETNAM

(VIETCOMBANK)

27

1.4 Organizational structure 281.5 Income Statement of Vietcombank in the period of 2008 – 2010 30

2 Business strategy of Vietcombank in the period of 2011 – 2015 32

2.5 Plan on implementation of main targets in the period of 2010-2015 34

3.2 Card business of Vietcombank in the period of 2006 – 2010 36

3.2.2.2 Revenue on international debit card usage that Vietcombank issued 41

3.2.4 Conclusion: Assess card business results by 2010 44

4 Card business strategy of Vietcombank period 2010 - 2015 52

4.2 Analysis of external factors affecting business operation of Vietcombank 524.2.1 Analysis of macro environment according PESTLE model 524.2.2 Analysis of micro environment (sector environment): 5-competitive

CHAPTER III: SOLUTIONS AND PROPOSALS FOR ESTABLISHING CARD

1 Some solutions to successfully implement selected strategy 75

LIST OF WORDS

2 VIETCOMBANK Vietnam Commercial Joint Stock Bank

3 Vietcombank Vietnfam Commercial Joint Stock Bank

4 BIDV Bank for investment and development of Vietnam

5 Techcombank Vietnam Technical Commercial Joint Stock Company

7 HSBC, ANZ 02 foreign Banks operating in Vietnam’s market

Automated Teller Machine or Automatic Teller Machine is a equipment of Bank for automatic transaction with the customers, implementing the identification of the customers through ATM card

10 POS (point of sale)

Is a high-level type of money counting machine used for payment in the shop and used to manage in the retail business and even in service business

LIST OF TABLES

Page

Table 1.3

Choose strategic alternatives according to weight method

25Table 2.1 Table of business results of Vietcombank in 2008 - 2010 30Table 2.2 Implementation plan of business targets in the period of 2010 – 2015 34Table 2.3 Activity of issuing international credit cards within years of Vietcombank 36Table 2.4

Table 2.4: MasterCard and Visa Debit issuance of Vietcombank in the period of 2006-2010

GDP growth rate of Vietnam for the period 2005 to 2010

54

Table 2.10 Position of Vietcombank in the market (until 31/12/2010) 68

LIST OF FIGURES

Page

Figure 2.1 Model of VIETCOMBANK and subsidiary

Figure 2.7 Chart on international card payment of VCB during

2006-2010

41

Figure 2.8 Chart on revenue on credit card usage of VCB 42

Figure 2.10 GDP growth and GDP per capita from 1998 to 2007

(1)

55

Figure 2.11 Exchange rate movement of USD / VND from 2006

Figure 2.13 Market share of international cards issued 60

Figure 2.16 Card sharemarket of Vietcombank in years 68

1 The urgency of this topic

Storing money at home has become dangerous and no longer preferred by people

as before, but instead people look to the banks The explosion of the banking system and the introduction of a range of utility services make the demand for using banking services increase Of which card service is an advanced way of payment and a particularly important product for banks and customers

For customers-users, cards provide the flexibility, safety, convenience, saving time This has helped to draw customers to use more cards and cards have become a vital part of life

For banks, card business plays a very important role in the payment system and brings about large profits in retail operation

Vietcombank is the bank which holds the forefront of cards in Vietnam, with a leading position in the cards market during years, Vietcombank has actively diversified products and credit cards services, invested in technology system, expanding network of using cards and implementing marketing programs, etc to enhance competitiveness and promote the development of card However, the boom of the banks makes the competitive pressure increase in the market, requiring VCB to have the right development strategy in order to mobilize resources for maintaining its leading position

With the desire to apply the knowledge learned into practice, the group 4 decided

to choose topic: “Card business strategy of Bank for Foreign Trade of Vietnam period

from 2011 to 2015” Through this subject, we want to systematize the theoretical issues

of making and selecting business strategy, analyze the current status of business activities and strategic orientation to develop the Vietcombank card, then choose business strategy and propose solutions and recommendations to improve the competitiveness of Vietcombank card in 2015

2 Reason for research

- Systematization of the theoretical issues of business strategy, selecting the effective analytical models for the establishment of business strategy

- Applying the system of practical and theoretical basis to analyze and assess the inside and outside environment, advantages and disadvantages, thereby building

business strategy for VCB card

- To propose solutions and recommendations for completing the business strategy of VCB card

3 Object and scope of study

- Study object is credit card business at VCB Bank

- Scope of the Study: Credit card service, status and analysis of the status and proposals

of strategy for VCB credit card development

4 Study method

Methods of secondary data collection, data were extracted and compiled from statistical yearbooks, reports from the Bank's Website and annual Report of the Bank In addition, this assignment uses some references, books, magazines and other specialized teaching materials

Comparative method, synthesis method, the methods involved

In the process of analysis, the authors have used the method of comparing and synthesizing the data from the VCB in the past and present, as well as compare indicators and data of business results between VCB and some other commercial banks, and also consulted experts on the evaluation of points when analyzing the matrix

5 Structure

Besides the introduction, conclusion, reference materials, the research consists of three chapters:

Chapter I: Theoretical base

Chapter II: Current situation of the card issued by Bank for Foreign Trade of Vietnam Chapter III: Solutions and recommendations for the development of Vietcombank card business strategy period 2011 – 2015

Hanoi, dated February 25 th 2011

WRITER’S GROUP

CHAPTETR I: THEORITICAL BASE

Building up the business strategy is a leading task of enterprises In a fluctuating and fiercely competitive business environment like nowadays, in order to exist and develop sustainably, each enterprise has to be very dynamic and creative to build up its suitable business strategies

There are many ways to approach and analyze to build up and choose business strategies accordance with each enterprise’s characteristics In the following part, we will introduce our methodology to build up and choose business strategy for one product (service), process to build up strategy and experience in building up and choosing strategy in some countries in the world

1 Basic issues about strategy and business strategy.

1.1 Some concepts about strategy

The term strategy is commonly used and considered to be the foundation of the

operation of business enterprises There are many strategy definitions such as Strategy is

model of targets, purpose and plans to achieve those targets (Kenneth, 1965) or Strategy is a key factor influencing all operations of the organization (Ansoff, 1965) Strategy is the plan of controlling and using resources of organizations like human, property and finance… in order to improve and ensure its own essential interests

Kenneth Andrews is the first man to give these outstanding ideas in the classic book

named The Concept of Corporate Strategy According to him, strategy is what the

organization has to do base on its strong points and weak points in the context of opportunities and challenges

Exchanges and fighting among the above approaching views gradually converge

to create concepts of strategy quite united No matter what ways we approach, through the above views and definitions, we recognize that the strategy of enterprise contains three most common characteristics:

- Define an general action program toward the future of enterprise’s long – term basic business goals;

- Important policies, methods of the enterprise are made decision by the enterprise owner;

- Establish the sequence of action, the manner of processing and disposing resources in order to perform targets of the enterprise.

1.2 Business strategy and strategic choices.

1.2.1 The definition of business strategy.

Business strategy which is orientation of business operation, have goal in a long time as well as policy system, methods and ways of distributing resources to perform the goals of enterprise in respectively time duration

The business strategy has no intention to work out in details how to achieve goals because it is the duty of supporting programs, different strategies The business strategy only creates frameworks to guideline the logic of way of business and to perform

According to the above views of business strategy, we can realize their common feature, that is the business strategy of enterprise must have objective orientation, long – term and strategic offensive nature, especially they have to be performed as systematically calculating process

1.2.2 Characteristics of business strategy

The overall nature: Business strategy is the general map of the development of

enterprise, it determine the relationship between enterprise and objective environment The overall nature of the business strategy inflects on 3 aspects: Suitable for the development trend of enterprise, suitable for developing trend of country on economic, technological in certain period; suitable for the world economic integration trend, social field

The overall nature of business strategy requires to examine all parts of enterprise, analyze the condition of the whole enterprise, national situation Without overall view, there could not be good business strategy and international

The vision: In the previous time, many enterprises did not work efficiently

because they did not have strategic project, solved the permanent issues, do as movement so although hard, it is not efficient One of reason is that enterprise did not grasp development trend of enterprise So enterprise want to build up business strategy, they have to perfect forecasting task of economic, technological, social development trend A successful strategy is often based on rightly forecasting basis

The competitive: Without competitiveness, there is no need to build up and

perform business strategy So the competitiveness is the most basic feature of business strategy Nowadays, every enterprise operates in competitive environment Hence, business strategy has to research how the enterprise has more competitive advantage and after that get success in competing

The risk: The business strategy is future development project but existence

environment is not certain and changeable The duration of strategy is longer, uncertain factors of objective situation is more, the level of uncertain is more, and the risk of strategy is great The risk of business strategy requires enterprise to stand high, to have far vision, observe carefully and objectively so that it can make the right strategy

The professional and creation: Enterprises can base on their own ability to

choose the business fields which are suitable for their own strong points, avoid fields which big enterprises are exclusive The majority enterprises do this, are successful, develop and gain prosperity However there is no limit to technological advance and market competition Thus, enterprises have to continuously import or develop advanced technology Specialization and suitable technology creation are important methods to ensure the existence and development of small and medium – sized enterprises

The relative stability: The business strategy of enterprise must have the relative

stability in the certain period of time Otherwise, it does not have the meanings of leading in practical operation of enterprise Objective environment and practical operation of enterprise is a continuously moving process The business strategy also has the ability of controlling to fit with objective situation The business strategy cannot have one – sided stability but cannot change quickly, is relatively stable

1.2.3 Types of business strategy.

There are many ways of classify business strategy which create diversity of the manner of implementing business strategy When classifying business strategy based on the strategic level, we have 3 types of strategy such as enterprise - level strategy (general strategy), business – level strategy (field) and function – level strategy French managers thought that business strategy contains trade strategy, technological and technical strategy, financial strategy and human strategy Classifying strategy based on the process

of strategy, we have orientation strategy and action strategy

Figure 1.1 The term “Strategy”

Source: Teaching document of strategy administration – Griggs.

1.3 The role of business strategy

In the business operation of enterprise, the existence and the success in business depends firstly on the correctness of the strategy which has been identified and good performance of those strategies

Firstly, having business strategy helps enterprise to recognize their goals and

orientations in the business operation Hence, enterprise can realize what way to organize its business system and how to do to get success in business and know when the enterprise achieves its goals

Secondly, the business environment varies quickly; it creates thousands of

chances to find interests and make profit, however there are also full of risky traps Some kinds of strategy will help enterprise to actively make good use of business opportunities and at the same time reduce risks in the market

Thirdly, thanks to applying business strategies, enterprises will attach given

decisions to the conditions of environment, helps to balance resource as well as goals of enterprise and market opportunities to complete the set goals;

Fourthly, in fiercely competitive environment, by analyzing the factors of macro

environment comprehensively, the operating environment helps enterprise to identify opponents Based on it, enterprise can find out the comprehensive solution to improve the competitive capability of enterprise in the market

Building up a strategy requires to have strategic logic and to find out the answer

of three questions “Where are we, in present? Where do we need to go?, How to get

there?”

1 Evaluating the present: missions, targets, strategies

2 Analyzing business environment, the structure of

environment, development situation, analyzing thee

competitiveness and define enterprise

3.Analyzing the macro environment: demographic

environment, economy, society, technology and politics

4 Analyzing the inner of enterprise: structure, resources,

process, human resources and enterprise culture

5.Analyzing the strengths, weaknesses, opportunities

and challenges.(SWOT)

6 Analyzing and choosing strategy : Common or based on field

7 Evaluating and perform: requirements of resources, risk and interests

“Where we are now?

Where do we need to go?

How to get there?”

We realize that the process of defining business strategy is related to adhesive of customer’s need (what satisfy), the group of customer ( who is satisfactory) and the separate chances or How the customer’s need satisfied Those three decisions are the focuses of selecting strategy of enterprise because they create the origin of competitive advantage and define the enterprise’s method of perform in business

The process of administration strategy includes: analyzing outside to define

opportunities and risk In addition to, analyzing the inner environment to find out strong points, and weak points According to mission, vision, strong points and weak points, chances and risk to draw up the strategy and choose the suitable strategy Start to perform and adjust strategy, monitor and evaluate the strategy implement After that making enterprise and organization The process of strategy administration is described

in the below map 1-1: suitable for strategy

Figure 1.2: The process of building up business strategy

Source: Teaching document of strategy administration – Griggs.

2.1 Mission and strategic vision

Mission is the concept used to define the most important purpose, meaning of establishment and existence of enterprise It is the declaration to express the usefulness

of enterprise to society The terminology: “mission” of enterprise can be similar to common terminologies such as “principle, purpose’ of enterprise Mission document of enterprise is value during the operation time of enterprise if no chances and adjustment

is made However, in each period, that strategy has to be made strategic goals in details which are suitable for each period

Vision is known as a report telling the position enterprise wants to get The vision declaration draws up the future of enterprise, its own goals and purposes Vision declaration can be different in length, can be a brief sentence, also a long paragraph but

it has to define the last target of enterprise Vision is a target which enterprise want to achieve and it need to have the factors such as (1) the time duration enterprise towards

OpportunitiesChallenges

Build up & choose the strategy (SWOT)

Strategy selection

Leading in expenditureSpecification productFocusing on

and complete (2) Determining the scale and the size of enterprise in enterprise community and society (3) Build up vision towards the quality of product and ensure the best quality with the cheapest price (4) Enterprise need to toward the customer’s interests

2.2 The strategic goal

The strategic goal is pillars, situation which enterprise want to achieve in strategic stage Defining strategic goals is very meaningful to enterprise, because:

- Strategic goal is a means for enterprise to complete its own mission;

- Strategic goal is foundation of establishing the bias order in disposing resources

- Strategic goal is the foundation of building up strategy, policy and business plans

- Strategic goal of enterprise is the basis to gather, quantify concerned object such as customers, shareholders, employees of enterprise

It can be seen that the business strategy of enterprise is formed by the balance among 3 factors including: Strategic goal (expressing the desires of enterprise), business environment (expressing outside ties of enterprise) and the competence of enterprise (the inner ties of enterprise)

Saying that does not mean that we can put the business strategy at any levels of importance when defining the strategic goal of enterprise We have to restrict it to situation, environment, and the general competence of enterprise The good goal is both offensive and feasible To ensure that requirement, defining the strategic goal has to base

on the following factors:

- The general business duty of enterprise and in specific strategic period - Business philosophy (expressed in mission declaration of enterprise)

- General evaluation of business environment and the competence of enterprise

2.3 Analyzing outside environment

The objective of analyzing outside environment is to define opportunities and challenges, find out the ways of implementing and grasp chances from outside environment,

to avoid essential challenges as well

Scale and content of analyzing environment contains: analyzing the macro environment( general environment) and analyzing the micro.

2.3.1 Macro analyzing

With a view to analyze, synthesize the outside existing factors of enterprise, which have decisively influenced the existence, development of enterprise, it have to realize opportunities and challenges given by objective environment Enterprise has to not only adapt but also stimulate the changes of business environment The factors of macro environment were expressed in the next model:

Figure 1.3: The outside environment

Source: Teaching document of strategy administration – Griggs

 Analyzing demographic environment

Population size: observing the change of demography in population aspect

outstands the importance of this section The expectation of population show global challenges of population issue in 21th century and chances for business people

The age structure show chances in the service of taking care the old, insurance

services But it also implicits a threat to enterprise in the human resources problem

Demography Sector environment

Threats from new enterprises Power of suppliers Power of buyers Threats from alternative products Competitive intensity

Competitive market

Geographic disposal: Be able to create advantages in telecommunication field

By computer, people can connect to others through telecommunication network when they are at home

 Analyzing the political and legal environment

The political environment: is political factors and situation whose operation

influences business operation of enterprise These factors includes: The political regime, political party regime, guidelines and policies of Party and State, political situation

Legal environment: is the legal system related to enterprise, including in the legal

norm of the State, legal awareness of organs of justice, executive bodies and enterprises The influence of political and legal environment on the business operation of enterprise

is very wide and deep, even sometimes it has decisive meanings In general, if one country has stable politics, transparent and consistent policies, good political atmosphere, strict law, enterprise can develop healthily and stably

 Analyzing the economic environment

The economic environment is social, economic situation and economic policy of one country The macroeconomic environment contains: the social economic structure, the standard of economic development, economic policies and macroeconomic policy

 Analyzing the environment of science, technology, and technique.

The environment of science, technology, and technique is factor of science, technology and gather social phenomena relating directly to science and technology in the enterprise’s area It contains 4 factors: the level of science and technology in the society; human resources in science and technology, state institutions of science and technology, scientific and technological policies, legal text of science and technology

 Analyzing the environment of culture and society.

Social environment: contains the foundation and changes of social classes,

population structure, the moving situation of residence, the social power structure, the manner of living and working

Cultural environment: contains philosophy factors, religious factors, language factor,

and literature and art factors These factors mainly influence the business of enterprise indirectly but we can not underestimate them

 Global environment

The global environment includes the relating global market, the present markets which have been changing, the important international events, basic institutional features and cultural features on the global market

Macro analysis allows enterprise to evaluate the macro economic factor which has big influence in the business operation of enterprise and basic changes in the competitive environment Macro analyzing can be illustrated in the following table:

Table 1.1 Analyzing the macro environment Demographic

segment

Population sizeAge structure Geographic distribution

The diversity of racesIncome distribution

Economic

segment

Inflation rateInterestTrade deficit or profitBudget deficit or profit

Personal saving rateBusiness saving rateGeneral national product

Political/ legal

segment

Tax law Level -arranged principles

Labour Training Law Policies and educational trends

Environmental worriesThe change in choosing career and service

The change in priority relating to the characteristics of product and service

Technological

segment

Innovating productApplying knowledge

The level of investment of expenditure for R& D of the government

The new technologies of communication

Global segment The important political events The new industrialized countries

The main global markets The difference among cultural and

institutional features

Source: The lecture of strategy management – The statistic publishing house 2007.

2.3.2 Analysis of micro environment (Model of competitive force)

In any sector, each enterprise must suffer from competitive pressure from 5 sources, namely, competitive pressure for an enterprise which has just participated in the sector, competitive pressure from other enterprises operating in the same sector, competitive pressure of alternative products and services, influence of suppliers, influence of consumers or customers

Analysis of 5-force model of Michel Porter helps strategy-makers to analyze above forces – competitiveness structure of the sector is as follow:

Figure 1.4: 5-force model of Michel Porter

Source: Lecture document for strategy management - Griggs

- Risk from potential opponents: An enterprise which has just participated in

the sector can be a newly established enterprise or an enterprise which in the past traded in other products Those enterprises bring to that sector with new manufacturing capability; at the same time require a specific market proportion Whether this competitive pressure is great or small will depend on how much that enterprise had to spend and reaction of other enterprises when that enterprise participates in the sector, or on whether the participation barrier is high or low

- Threats from alternative products: Alternative products are products that have

Threats from alternative products

Negotiation strength of suppliers

Negotiation strength of buyers

Threats from new penetration

Competitiveness intensity in the sector

similar uses If profit of the alternative products is high, the competitive pressure is great (in terms of prime cost and selling price), making the enterprise be passive If the manufacturer of alternative products quickly develops its production, then that sector will be strongly threatened If consumer accepts alternative products conveniently in terms of economy and psychology, then that threat become greater.

- Negotiation capability of buyers: Customers of enterprise can be direct

consumer, consumption goods, when consumers require goods’ price to be cheaper, better quality and better after sales service, those can become pressure for that sector But customers can be distributors or agents The problem is that who will be main customer having negotiation power for which enterprise must specially care for; typical goods serving for the whole society (set up wire system and transformer station, construction…), the pressure on enterprise is “orderers” – Investors, they give criteria in terms of pattern, quality, construction technique, completion time, “ceiling price”…requires enterprises to have capability to be ready to meet those requirements during competition for “procurement” and “tender selection”

- Competitive pressure from existing companies: Competitiveness among

enterprises operating in the same sector is shown through competitive form and properties Competitiveness relates to typical features of the sector, structure and scale of enterprise in the sector, quantity of enterprise in the sector and market structure in the sector

- Negotiation capability of suppliers: Suppliers of materials can increase price

or reduce product’s quality or increase price and reduce product’s quality at the same time Enterprises care about negotiation capability with suppliers to solve to reach main requirements: patterns, quality, supply in terms of quantity; price; ability for capital advancement and capital turnover

However, for goods of which price is controlled by the State, price change is really a problem which need to be negotiated with Investors during construction and final settlement of construction work

In conclusion, analysis of business environment is extremely important with

enterprise Business environment includes macro environment and micro environment or sector environment Objective of the analysis is to identify opportunities and threats in order to make suitable management decisions

The study of 5 competitive forces according to model of M.Porter helps enterprises

to be fully aware of operation sides, being aware of supply and demand is also the same with being ourselves and opponents so that enterprises will have base to make the most reasonable decision in their business activities

Some main conclusions:

(1) If an enterprise can meet demand of the environment, its strategies will be more

efficient

(2) Main reasons for recession are often outside factors but not internal factors (3) If an enterprise becomes more independent in outside environment, it needs to

focus more and more on analysis and judgment that environment

(4) A changing and unstable environment needs to be analyzed and judged more and

more

(5) An efficient strategy maker must fully know himself (internal analysis) and fully

know his opponents (analysis of environment)

2.4 Analysis of internal environment

To have and overview and comprehensive view, beside analysis of outside environment to help enterprise be aware of opportunities and threats from outside, strategy makers need to study internal environment to be fully aware of himself, which means that he will be aware of strengths and weaknesses in his organization This is significant as that enterprise will find out strengths and weaknesses of itself when making business strategies

2.5 General matrix SWOT

2.5.1 General theory about SWOT

While PEST is an analysis tool relating to outside factors, SWOT focuses on internal changes relating to outside factors

SWOT is an extremely useful tool helps us to study about problems or make

decision in organization, management as well as business In other words, SWOT is

theoretical frame based on which we can review strategies, define positions as well as orientation of a company, analyze business proposals or any ideas relating to rights of an

enterprise Analysis of SWOT is a key for strategic development, clarification of

internal strengths of organization, weaknesses, opportunities and risks from outside

- Opportunities with strength (OS);

- Opportunities with weaknesses (OW);

- Threat with strength (TS);

- Threat with weakness (TW)

A company does not necessarily pursue best opportunities; instead it can establish competitive advantage development by studying about parallelism between its strength and up coming opportunities In some cases, the company can overcome its weaknesses to get attractive opportunities

To develop strategy base on SWOT analysis table, companies need to design a matrix of factors which is called SWOT matrix (or TOWS matrix) as follows:

Table 1.2 SWOT matrix SWOT matrix Opportunity (O)

Strategy ST

Strategy using strengths of an enterprise to respond, avoid outside threats (challenges)

Strategy WT

weaknesses of an enterprise to reduce threat from outside environment (challenges)

In which:

 Strategy S-O to pursue opportunities which are suitable with strengths of company.

 Strategy W-O to overcome weaknesses to pursue and seize opportunities.

 Strategy S-T to define ways in which the company can use its strengths to reduce

risks of loss and outside threats

 Strategy W-T to establish a defensive plan to prevent its weaknesses from

making the company itself to be vulnerable due to outside threats

In the context of globalization, opening and economic – cultural exchange with other countries is unavoidable and risks for enterprises in the market are also great SWOT analysis will help enterprises to “weigh – measure – count” accurately before making decisions in penetrating to international market

2 6 Strategy selection.

2.6.1 Common competitive strategy.

Enterprises pursue strategies at company level to gain competitive advantage, to better operate than its opponents in order to gain higher revenue than average level Enterprises often choose 3 basic strategies: leading in expenses, difference in products and concentration strategy

2.6.1.1 Strategy as leading in expenses

Company’s goal of pursuing low expense strategy is to create competitive advantage by manufacturing products at the lowest expenses

2.6.1.2 Strategy as difference in products

Company’s goal of pursuing the strategy as difference in products is to gain competitive advantage through manufacturing unique products satisfying customers which are nearly impossible for opponents

Step 1: Choose some most important criteria which is most suitable with the enterprise

to evaluate competitive strategies such as corporate value, revenue, profit, risk, investment, competitive advantage…This is subjective step of the chooser

Step 2: Assign weight to criteria to define importance of criteria which has more influence on final decision

Step 3: Mark each strategy in accordance with each criteria

Step 4: Take total of product to identify which strategy has highest mark will be chosen.Table 1.3 will illustrate the weight method in choosing strategic alternatives given out

Table 1.3 Choose strategic alternatives according to weight method (QSPM

MATRIX) MAIN FACTORS Classify Replaceable strategies

Development strategy Focus strategy

Internal factors

1 Prestigious on the market

2 Modern technology basis

3 Effective distribution channel system

4 Rich products and services

5 Always take the lead on card share

6 Low Charter capital

7 Low marketing efficiency

8 Lack of human resources

9 Low quality of banking products and services

External factors

1 Political – social stability

2 Ceaseless growth and high speed of the economy

3 Globalization and international economic integration

4 Legal documents in the field of finance, banking are

more and more perfect

5 Population scale and structure is favorable for banking

services development

6 IT develop very fast

7 Perform international commitments in the field of

banking

8 Competition between banks and financial institutions

is more and more severe

9 Cash habit is still popular

Total attractive points

SUMMARY OF CHAPTER 1

In Chapter 1, Group No 4 has just given generalization about business strategy of enterprise, from basic concept to nature of construction and selection of business strategy, in which PEST model has been applied to analyze macro environment, 5-force model of Michael E Porter to analyze environment of the sector, model of value series

to analyze internal environment At the same time, this writing also introduces model of SWOT and GREAT matrix to apply into construction and selection of business strategy

In Chapter 1, our group has focused on analyzing outside and internal environment of the enterprise, order of construction and business strategy of enterprise, then to provide reasonable arguments for establishment of business strategy

In next part, our groups will analyze and assess current status of business operation, core issues, strengths, weaknesses, opportunities, challenges; then establish and choose card service business strategy of VIETCOMBANK period 2011 to 2015

CHARTER II: THE REAL SITUATION OF CARD BUSINESS OF JOINT STOCK COMMERCIAL BANK FOR FOREIGN TRADE OF VIETNAM

(VIETCOMBANK)

1.General introduction about Vietcombank

1.1 General information about Vietcombank

Vietnamese name NGÂN HÀNG THƯƠNG MẠI CỔ PHẦN NGOẠI THƯƠNG VIỆT NAM English name JOINT STOCK COMMERCIAL BANK FOR FOREIGN TRADE OF

VIETNAM Transaction name VIETCOMBANK

Abbreviated name VIETCOMBANK

Head office 198 Tran Quang Khai, Hoan Kiem District, Hanoi City

Website http:// www.Vietcombank.com.vn

Email webmaster@Vietcombank.com.vn

Charter capital 13.223.714.520.000 VND (Thirteen thousand, two hundred twenty-three billion,

seven hundred fourteen million, five hundred and twenty thousand VND)

 Capital mobilization:

 Credit operations:

 Payment and Budget services:

 Other operations:

1.3 History of establishment and development

VIETCOMBANK was officially established on 01 April 1963 under Decision

No 115/CP separated from the Foreign Exchange Management Department under the Central Bank by the Government’s Council

In 1990, Vietcombank officially transferred from a specialized, exclusive bank in the field of foreign economic relation to a state-owned commercial all-purpose bank under Decision No 403-CT dated 14 November of the Chairman of Ministers’ Council

On 21 September 1996, under the authorization of Prime Minister, the Governor

of the State Bank of Vietnam signed Decision No 286/QD-NH5 regarding VIETCOMBANK re-establishment under the model of 90, 91 Corporation regulated in Decision No 90/QD-TTg dated 07 March 1994 of Prime Minister with the transaction name of Bank for Foreign Trade of Viet Nam, Vietcombank for short

On 26 January 2007, Vietcombank is the first state-owned commercial bank initially issuing stocks to the public at the Stock Exchange of Ho Chi Minh City On 02 June 2008, Vietcombank officially changed into a commercial joint stock bank with the largest charter capital in Vietnam

Spending 46 years of establishment and development, Vietcombank has now developed in the whole country and owned a network including: 1 Head Office in Hanoi,

1 Transaction Center, over 300 branches and transaction offices across the country, 3 subsidiaries in Vietnam, 1 subsidiary in Hong Kong, 4 joint-venture companies, 3 associates, 1 representative office in Singapore Besides, VIETCOMBANK has developed an Autobank system with 11.183 ATMs and Point of Sale (POS) in the whole country Banking operations are supported by a network of 1.300 agent banks in 100 countries and territories

1.4 Organizational chart: (attached chart)

Figure 2.1: Vietcombank and subsidiaries sub-units model (Parent Company/ Subsidiaries)

State 65%-70%

Parent Company Vietcombank

Joint-Commercial Joint Stock banks VCB Group rules

Financial Company Consumer Credit

Financial Company Housing/

Mortgage credit

Securities Company VCBS

Fund Management Company VCBF

Infrastructure Investment &

Development Fund Management Company

Assets Management Company

Financial Rental Company VCBL

Hongkong Financial Company Vinafico HK

VCB Money Transfer

Card Company

VCB-52%

Bonday- Benthanh JV

VCB-Real Estate Investment

& Trading Company

No 5 Road Joint-venture Company

Infrastructure Investment & Construction Company

VCB Training Center

Research Institute Academy - VCB

Financial operations

Figure 2.2: Organization structure of VIETCOMBANK

1.5 Income Statement of Vietcombank in the period of 2008 – 2010:

Income Statement of VIETCOMBANK according to the following table:

Shareholders’

General Assembly

Board of Directors

Risk Committee

Risk Management

Committee

Credit Committee

Other Committee…

Controllers Committee

Internal Audit

CEO – Senior Management

Other Committee …

Retail Business Group

Risk Manageme

nt &

Impaired Assets/ Bad Debts

Group

Operation Group

Financial &

Accounting Group

Other supporting depts:

Functional departments system at the Head Office

and branch network

Internal Inspectorate

Table 2.1: Income Statement of Vietcombank 2008 - 2010

business operations and

operations (2,592,410) (3,493,917) (4,409,643) 135% 126%Net profit from business

operations before loan

loss provision 6,347,2 24 5,792,8 87 6,897,18 9 91% 119%Loan loss provision (2,757,299) (788,513) (1,471,372) 29% 187%Pre-tax profit

Capital Adequacy Ratio

Average

Source: Foreign Trade Bank of Vietnam

Total consolidated assets of Vietcombank till 31 December 2010 estimate

306.857 billion VND- up 20,10% compared to the end of 2009

Figure 2.2: Total assets of Vietcombank in the period of 2008 - 2010

Source: Foreign Trade Bank of Vietnam

Pre-tax profit of 2010 is 5.425,817 billion VND, increase approximately 10% compared to the same period of 2009; Post-tax profit is 4.181,49 billion VND;

Figure 2.3: Pre-tax profit of Vietcombank in the period of 2008 - 2010

Pre-tax profit

Pre-tax profit

Total assetsTotal assets

Source: Foreign Trade Bank of Vietnam

2 Vietcombank’s business strategy in the period of 2011 – 2015

2.1 Strategic vision

Based on assessment of environmental business and operational experience after

46 years, Vietcombank has confirmed its leading position in the market Since then, Vietcombank defined its vision and business strategy as follows

“Building VIETCOMBANK too become a financial group based on the application of best international practices – making Vietcombank financial and banking Group one of 70 leading financial institutions in Asia in 2015 with the international scope of activities”.

2.2 Objectives

VIETCOMBANK sets up for themselves the specific development goals based

on the operating method of multifunction financial bank investment Group (VIETCOMBANK Holdings) with the expectations of gaining positive contribution from new shareholders, especially the shareholder / dosmestic and abroad strategic partners:

 Banking and financial services – a “core” area of business of VIETCOMBANK:

 Commercial banking maintains the leading position in specialized and traditional business areas of Vietcombank (wholesale banking, venture capital (treasury), payment services, trade finance, financing / investment projects, etc.);

 Expanding and promoting activities to the fields of retail banking and small & medium enterprises, investment banking (consultancy, brokerage, securities trading, investment fund management, etc.), insurance service and international financial services

 Pushing the development of the Group through trading and merger of companies, investing in non-financial sectors which are highly profitable, investment / investment management, development of infrastructure projects

 Improving the financial capacityand competitiveness; considering economic effect asthe top priority and sustainable growth are the leading objectives

 Restructuring organizational model and business administration in line with the best international practices, especially in the fields of strategic studies, risk management, financial management, internal inspection / audit

 Ensuring administration and maintenance of financial ratios, the percentage

of safety in a transparent way, according to the best standards and international practices

 Researching the application of the most advanced technologies in business operations and developing products based on modern technology

 Protecting the shareholders’ interests, paying special attention to the interests

of minority shareholders

 Developing policies to attract talent people, using the system of encouragement/ evaluation of the employee performance reasonably, building staff with high competence and good professional ethics

 Try to maintain (and surpass) some fundamental indicators in 2015:

 Owner capital reaches 2,5 – 3 billion USD;

 Average asset total 18%-20%/year;

 In 2015, asset total 30 – 40 billion USD;

 The annual average rate ROAE is above 15%;

 The annual average rate ROA is 1,2%;

 Indicators CAR from 10% -12%

2.3 Business strategy

With vision and big goals, VIETCOMBANK choose to conduct three basic strategies: (i) wide development strategy based on modern technology and meet the needs of integration, (ii) strategy for sustainable growth, and (iii) the Strategy for powerful human resource development

2.4 Solutions for Implementing

 Restructuring the organization and operation model, management system; continuing to improve financial capacity; developing their own capital scale and capital safety rate; expanding operations to become finance and banking investment Group; building infrastructure equivalent to the status of Vietcombank

 Upgrading information technology systems to ensure smooth, efficiency and meet the demand of new management

 Actively making plan on protecting and developing Vietcombank brand in the market of brand development Vietcombank increasingly high value on the market

 Protect the rights of shareholders

2.5 Plan on Implementation of main targets period 2010-2015

Table 2.2: Business Plan period from 2010 to 2015

ROA (rate off profit/assets) 1.50% 1.50% 1.60% 1.60% 1.60%

ROE (rate of profit/owners

equity) 19.00% 19.00% 20.00% 20.00% 20.00%

NPL (bad debt rate) 3.00% 2.50% 2.50% 2.00% 2.00%

CAR (Capital safty rate) 11.00% 11.00% 12.00% 12.00% 12.00%

Source: Foreign Trade Bank of Vietnam

3 Card Business of Vietcombank

3.1 The formation and development of Vietcombank Card

Specific historical marks

• 1990: The Agent Bank of Visa card payment

• 1991: The Agent Bank of MasterCard payment cards

• 1996: Releasing Vietcombank MasterCard credit card

• 1997: Releasing Vietcombank Visa credit card

• 1998: The Agent Bank of JCB card payment

• 2001: The Agent Bank of DinersClub card payment

• 2002: Vietcombank Connect 24 card Issuance

• 2003: Exclusive distribution and Amex card payment in Vietnam

• 2005: Combined with Vietnam Airlines to issue the link card VietnamAirlines Vietcombank American Express (GLP) (Bong Sen Vang Award)

• 2006: Providing online card payment services according to international standards

• 2008: The Agent Bank of China Union Pay card payment (CUP)

• 2009: Launching Chip technology card with the brand Vietcombak Visa and Vietcombank Mastercard

The cards issued by Vietcombank:

 Domestic debit cards

 Vietcombank Connect24 Card

 Vietcombank SG24 Card

 International Debit Cards

 Vietcombank Mastercard Debit Card - Style

 Vietcombank Connect24 Visa Card

 International credit card

 Vietcombank Visa Card

 Vietcombank MasterCard

 Vietcombank American Express Card

 Vietcombank VietnamAirlines American Express Card (Bong Sen Vang Award)

3.2 Card business of Vietcombank in the period 2006 - 2010

3.2.1 Issuance

3.2.1.1 Issuance of international credit cards

The result of the credit card issued by VIETCOMBANK in recent years

Table 2.3: Activity of issuing international credit cards within years of

Tổng cộng 9,556 20,842 25,523 30,840 48,007 118.10 22.46 20.83 55.66

(Source: Report on cards business from 2006 to 2010 -Card Center VIETCOMBANK)

Figure 2.4: Diagram of credit cards issued by Vietcombank

(Source: Report on cards business from 2006 to 2010 -Card Center VIETCOMBANK)

Among the three brands issuing credit cards, Visa card is the most popular This can be illustrated that the number of Visa cards issued each year is always higher than the number of Master and Amex cards, as following:

- VISA card accounts for the largest share – nearly 50%

- Master Card No 2 - 31% %

- Amex card No 3 - 19%

Especially when the world financial crisis negatively affected the economy in

Diagram of credit cards issued by Vietcombank

Total

general and credit business operations in particular in 2008, Visa still maintained the development speed of card’s owners along with Amex Looking at quantity of issue, quantity of MasterCard owners was lagging behind Quantity of card issued in 2008 and

2009 of Master has a quite big distance from Visa and Amex

For Amex, VIETCOMBANK made uninterrupted effort in order to perform in accordance with commitment on quantity of issued card stated in the Exclusive Contract with TCTQT Amex Till the end of 2010, VIETCOMBANK still maintained the Exclusive Contract with TCTQT Amex

Although quantity of circulating card is the lowest, Amex is the credit card having the most impressive development speed In 2009, the upward speed of Amex was 72%, while Visa was 21%, Master was 14%

During 2010, VIETCOMBANK continued to be on top on the market regarding quantity of credit card with market share of above 30% However, compared to previous years, the growth speed of VIETCOMBANK credit card isn’t on top instead of ACB, SACOMBANK, TECHCOMBANK

3.2.1.2 Issue International Debit Card:

Based on domestic visa debit and visa credit, Vietcombank did research and officially released VIETCOMBANK-MTV MasterCard in 2006 and till 2007, VIETCOMBANK issued Visa Debit

Table 2.4: MasterCard and Visa Debit issuance of Vietcombank in the period

MTV 11,553 20,505 20,101 17,632 35,287 77.49 -1.97 -12.28 50.03

Total 11,553 65,543 98,053 156,490 114,657 467.32 49.60 59.60 -26.73

(Source: Card report in 2007, 2008, 2009,2010 – VIETCOMBANK )

Figure 2.5: Chart on international debit card issuance of Vietcombank

in the period of 2006-2010

(Source: Card report in 2007, 2008, 2009,2010 – VIETCOMBANK

In 2009, total quantity of international debit card that VIETCOMBANK issued were 156.490 cards, equivalent to 159,6% compared to that of 2008 In particular, quantity of Via Debit continued to increase greatly to 138.858 cards Till the end of

2009, total quantity of international debit card that VIETCOMBANK released were 331.639 cards

In 2010, total quantity of international debit card that VIETCOMBANK released were 114.657 cards, equivalent to 73% compared to that of 2009, contributing total quantity of VIETCOMBANK card up to 446.296, taking the lead with the market share

of more than 30%.

3.2.1.3 Issue Domestic Debit Card

In 2002, Vietcombank is the first bank issuing domestic debit card Connect 24 in Vietnam Spending years of harsh competition with other banks, Connect 24 of VCB still kept its growth speed, especially in 2007; it is assessed to be one of the minorities of national brand products

Till the end of 2010, total quantity of Vietcombank Connect 24 were 4.701.731, ranking the 3 rd position on the market with the market share of 18%, behind Agribank with above 6 million cards (more than 20%) and EAB with nearly 5 million cards (more

than 19%) Domestic debit card issuance operation of Vietcombank is reflected through

the following table:

Total

Chart on international debit card issuance of Vietcombank

Table 2.5 Quantity of debit card issued of VCB in the period of 2006-2010

(Source: Card report in 2007, 2008, 2009, 2010 – VIETCOMBANK )

Figure 2.6: Chart on domestic debit card issuance of VCB in the period of 2006-2010

(Source: Card report in 2007, 2008, 2009, 2010 – VIETCOMBANK )

3.2.2 Payment operations:

3.2.2.1 Revenue on credit card payment:

International card payment operation is always the strength of VIETCOMBANK since card service began to form in Vietnam in early 90s and this is also the aspect which plays an important role in plans of VIETCOMBANK card business development During 2009, along with completion of ICO PULSE system connection, VIETCOMBANK has become the unique bank containing an advantage of payment acceptance for 7 types of international card such as: Visa, MasterCard, Amex, JCB, Diners Club, CUP and DiscoverCard, while VIETCOMBANK continued to be the exclusive bank for Amex payment in Vietnam territory

Table 2.6 Revenue on credit card payment in the period of 2006-2010

Domestic debit card