Enhancing the competitiveness of BIDVs card services in the digital era

--- ĐẶNG THỊ HẢI YẾN ENHANCING THE COMPETITIVENESS OF BIDV'S CARD SERVICES IN THE DIGITAL ERA NÂNG CAO KHẢ NĂNG CẠNH TRANH VỀ DỊCH VỤ THẺ CỦA NGÂN HÀNG TMCP ĐẦU TƯ VÀ PHÁT TRIỂN VIỆ

-

ĐẶNG THỊ HẢI YẾN

ENHANCING THE COMPETITIVENESS

OF BIDV'S CARD SERVICES IN THE DIGITAL ERA

NÂNG CAO KHẢ NĂNG CẠNH TRANH

VỀ DỊCH VỤ THẺ CỦA NGÂN HÀNG TMCP ĐẦU TƯ

VÀ PHÁT TRIỂN VIỆT NAM (BIDV) TRONG KỶ NGUYÊN SỐ

LUẬN VĂN THẠC SĨ QUẢN TRỊ KINH DOANH

HÀ NỘI - 2019

KHOA QUẢN TRỊ VÀ KINH DOANH

-

ĐẶNG THỊ HẢI YẾN

ENHANCING THE COMPETITIVENESS

OF BIDV'S CARD SERVICES IN THE DIGITAL ERA

NÂNG CAO KHẢ NĂNG CẠNH TRANH

VỀ DỊCH VỤ THẺ CỦA NGÂN HÀNG TMCP ĐẦU TƯ

VÀ PHÁT TRIỂN VIỆT NAM (BIDV) TRONG KỶ NGUYÊN SỐ

Chuyên ngành: Quản trị kinh doanh

Mã số: 60 34 01 02 LUẬN VĂN THẠC SĨ QUẢN TRỊ KINH DOANH

NGƯỜI HƯỚNG DẪN KHOA HỌC: PGS.TS HOÀNG ĐÌNH PHI

HÀ NỘI - 2019

DECLARATION

The author confirms that the research outcome in the thesis is the result

of author’s independent work during study and research period and it is not yet published in other’s research and article

The other’s research result and documentation (extraction, table, figure, and other document) used in the thesis are cited properly and the permission (if required) is given

The author is responsible in front of the Thesis Assessment Committee, Hanoi School of Business and Management, and the laws for above-mentioned declaration

Author,

Dang Thi Hai Yen

ACKNOWLEDMENT

I have gained huge knowledge, skill and insights from my MBA11 course The course raised my capacity of administration and management up

to the next level I would like to extend my sincerest thanks and appreciation

to all those who have made this thesis possible

I would like to express my great gratitude to my supervisor, Assoc Prof

Dr Hoang Dinh Phi for his useful comments, remarks and engagement during

my process of doing this master thesis I would also like to thank the leaders and staff of Technology Department of BIDV, IT Center of BIDV and Card Center of BIDV who enthusiastically participated in the survey and provided

me with valuable advice and comments during my thesis completion

Sincere thanks are extended to the Hanoi School of Business & Management – Viet Nam National University, Hanoi for equipping me with huge knowledge and skills through various interesting and practical subjects I also would like to thank my classmates for their friendship and reciprocal encouragement to make our class unforgettable time

During the process of writing the thesis, although the effort has been made, due to the limitations of the level of knowledge, practical experience, experience in scientific research, the thesis is inevitably limited I would like

to receive the comments of researchers, teachers and readers so that the thesis

is more complete both scientific and practical reason

Author,

Dang Thi Hai Yen

TABLE OF CONTENTS

DECLARATION i

ACKNOWLEDMENT ii

LIST OF ABBREVIATION vi

LIST OF TABLE vii

LISTS OF FIGURE viii

INTRODUCTION 1

CHAPTER 1: THE BASIC THEORY OF COMPETITIVENESS IN BANK CARD SERVICE SECTOR 10

1.1 Competition and roles of competition 10

1.1.1 Competition concept 10

1.1.2 Roles of competition 11

1.1.3 Competition classification 13

1.2 Competitiveness and the necessity to promote the competitiveness 15

1.2.1 Concept of competitiveness of the enterprise 15

1.2.2 Concept of competitiveness of the product 18

1.2.3 Criteria to evaluate competitiveness of enterprise/product 18

1.2.4 Factors affecting the competitiveness of enterprise/product 21

1.2.5 The necessity of the competitiveness of enterprise/product 26

1.3 Bank Cards and Bank Card Services 27

1.3.1 Bank Cards 27

1.3.2 Bank Card Service 28

1.3.3 The Role of Bank Card Service 29

1.3.4 Criteria for assessing the competitiveness of bank card services 31

1.4 Concepts of digital technology, capacity of technology and digital banking 32

1.4.1 Digital technology 32

1.4.2 Digital Capability 33

1.4.3 The concept of digital banking and digital banking trends 35

1.5 The Content Research of Thesis 37

CHAPTER 2: CARD SERVICE OF BIDV AND COMPETITIVENESS OF BIDV CARDS IN THE DIGITAL ERA 39

2.1 About BIDV and Card Services of BIDV 39

2.1.1 BIDV’s General information 39

2.1.2 BIDV’s Organization Structure 42

2.1.3 BIDV’s Card Center Organization Structure 45

2.2 The current status of BIDV's card service competitiveness in Vietnam 45 2.2.1 General assessment of card business activities in Vietnam 45

2.2.2.Evaluating competitiveness of BIDV's card services in comparison with competitors in Vietnam market 47

2.2.3 Some limitations in applying information technology in card services at BIDV 57

2.2.4 SWOT Analysis 58

CHAPTER 3 SOLUTIONS TO ENHANCE BIDV’S CARD SERVICES COMPETITIVENESS IN THE DIGITAL BANKING TRENDS 62

3.1 Digital banking trends in Vietnam, the impact on the overall competitiveness of banks and bank card services 62

3.1.1 The trend of digitilation and digital banking 62

3.1.2 The trend of digital banking and card service in Vietnam 63

3.1.3 Card services in the digital era Trends 66

3.2 Objective of card business and requirements to enhance the competitiveness of card services at BIDV 68

3.2.1 Demand for enhancing the competitiveness of BIDV's card services in the digital banking trends 68

3.2.2 BIDV's card business orientation for the period of 2019-2025 with a

vision to 2030 70

3.3 Major solutions to enhance the competitiveness of card services for BIDV in the digital banking trends 71

3.3.1 Improvethe organizational model and renew the business operation in cards sector in line with Digital banking trends 71

3.3.2 Research and development of innovative products, application of digital technology for card services 72

3.3.3 Apply digital technology to promote marketing and communication 74

3.3.4 IT application solutions for card fraud risk management 74

3.3.5 Training to Improve the quality of the human resource 75

CONCLUSION 77

REFERENCES 79

APPENDICES 1 81

APPENDICES 2 84

LIST OF ABBREVIATION

1 Agribank Vietnam Bank for Agriculture and Rural

Development – Agribank

and Development of Vietnam

Đơn vị chấp nhận thẻ (Merchant - Organization or person that accept card payment)

13 TDQT Thẻ Tín dụng quốc tế (International credit

card)

14 Vietcombank Joint Stock Commercial Bank for Foreign

Trade of Vietnam

15 Vietinbank Vietnam Joint Stock Commercial Bank for

Industry and Trade

LIST OF TABLE

Table 0.1: Assess the impact of technology on the competitive factors of the product 5 Table 0.2: Table of SWOT matrix 8 Table 2.1: BIDV’s Competitiveness - Compared to total number of Domestic Debit card 49 Table 2.2: Evaluate competitiveness of BIDV - Compared to total number of International Debit Card 51 Table 2.3: Evaluate competitiveness of BIDV - Compared to total number of International credit card) 52 Table 2.4: Evaluate competitiveness of BIDV - Compared to total number of POS 54 Table 2.5: Evaluate competitiveness of BIDV - Compared to total number of ATM 55 Table 2.6: Evaluate competitiveness of BIDV - Comparison of Scale 56 Table 2.7: Evaluate competitiveness of BIDV - Comparison of transaction turnover 57

LISTS OF FIGURE

Figure 1.1: Enterprise competitiveness pyramid model 17 Figure 1.1: Comparative competitive model (to illustrate and analyze, clarify the role of technology capacity): 34 Figure 2-1: BIDV’s Organizational Structure 43 Figure 2-2: BIDV’s Governance Structure 44

INTRODUCTION

1 Rationale of the study

The retail banking market in Vietnam has made rapid progress in recent years Banks focus on renovating, improving the quality of payment services, issuing cards and upgrading ATM and POS services to promote non-cash payment According to the Vietnam Bank Card Association, by the end of

2017 in Vietnam there are more than 132 million bank cards, the number of issued cards has been about 500 times higher than 10 years ago and has maintained a very high annual growth (there are years to reach 300% Beside that, there are about 17,500 ATMs (Automated Teller Machine) and about 270,000 POSs (Point of Sale) machines

In the past, local banks have been competing with each other in traditional ways (such as expand branch networks, ATM networks, POS networks all the country, online banking service provide base functions such

as inquery account information, money transfer inside and outside the banking system, etc.) Nowadays, in the digital age, the competitiveness of banks has been increasing, with the development of information technology, especially the development of digital technology has constantly changed life, the habit of customers with demands are higher and higher

Bank for Investment and Development of Vietnam has more than 1,800 ATMs and more than 44,000 POSs covered all 63 provinces in Vietnam The BIDV’s ATM and POS network provides basic services such as cash withdrawal, payment for goods and services, bank transfer, payment for electricity bills, buying air tickets, buying prepaid cards, balance inquiry, Also according to the report of Vietnam Bank Card Association, the total number of BIDV cards ranked fourth after three leading banks namely Vietcombank, Vietinbank and Agribank In terms of card payment on ATMs,

BIDV currently holds the fourth position And card payment on POS, transaction turnover on POS currenly has a high growth rate (about 60%) and BIDV has the opportunity to surpass Agribank to occupy the third position, but hard to catch up with the two leading banks as Viecombank and Vietinbank in the near future

In summary, BIDV's card services are now ranked after leading banks of equivalent size (Vietcombank, Vietinbank and also Agribank) and face many challenges in competition to dominate the card market in Vietnam

To survive and develop in the fierce competitive environment, foreign enterprise often use core technology capabilities to enhance the competitiveness of their products in particular and of the enterprise in general And in recent years, digital technology has been evaluated by experts and will continue to open the door for banking services in Vietnam, especially card services Digital bank means banking busisness with the application of digital technology, does business in the context of today's customers using more technological devices, more internet connections through digital technology Digital banking has become an irreversible business trend with Asian consumers increasingly fond of Internet Banking and Mobile Banking channels, the use of these channels has grown by an average of 35% in three years consecutively (up to 2013) The use of traditional branches during the this period also decreased by 27% Across Asia, on average 25% of decision making and 40% of after-sales services are made via the Internet and Mobile Most banks have acknowledged that this is a great opportunity to meet the needs of inquiries, registration and use of products and services of customers, including card services (such as POSs, ATMs, card payment,…)

At BIDV, the Board of Directors determined that the years of 2018 and

2019 will be the years of digital banking During this period BIDV will prioritize the development strategy of a comprehensive digital banking in all

aspects of business operations Based on the analyzes and realities of the card services at BIDV, it is necessary to enhance the competitiveness and improve the market share and card services of BIDV in Vietnam, catch up with banks

of equivalent size (such as Vietcombank, Vietinbank), the author selected the

topic "Enhancing competitiveness of BIDV's card services in the digital

era" as the topic of graduation thesis As staff in the IT department at BIDV,

the author will focus on analyzing the strengths, weaknesses, opportunities and challenges and propose measures / solutions to apply digital technology

to improve competitiveness of BIDV’card services (all BIDV’s branch)

"Enhancing competitiveness of BIDV's card services in the digital era", actually is the application of digital technology to enhance the competitiveness of card services of BIDV compared with other banks in Vietnam

2 Objectives of the study

The purpose of the topic is to clarify the rationale, analyze the current situation, propose possible solutions (focus on digital technology) to enhancing competitiveness of BIDV's card services The following research tasks are required:

i) To systematize the general theoretical basis of business competitiveness, product competitiveness, about digital technological capability, digitization trends in general and digitization in the field bank’s cards services

ii) Analyzing the current situation, clarifying the internal demand / demand of card business of BIDV, BIDV's card service competitiveness in comparing with other banks in Vietnam Evaluate its success, limitations and causes

iii) Recommend effective proposals / measures (focus on digital technology measures / solutions) to promote the competitiveness of

BIDV's card services in the period of 2019-2025, with the vision to

2030 in the digital era

5 Research Methodology

According to American economist Michael Porter, Harvard University (USA), economic competition is gaining market share, the essence of competition is maximizing profit On the criteria for measuring competitiveness, based on the study of a number of domestic and international documents on competitive analysis, the set of criteria is used in the reports, the thematic studies to measure The competitiveness of the business is relatively diversified There is no single set of criteria that can be used to measure the competitiveness of all firms operating in different sectors, as well

as measure the competitiveness of all products

Businesses typically compete through the specific products and services For survival and development, enterprises often use core technology capabilities to enhance the competitiveness of their products in particular and

of the enterprise in general

Table 0.1: Assess the impact of technology on the competitive factors

5 Preservation and transportation

6 Marketing and sales

7 Service

8 Environment

9 Society

Maximum number of points

(Source: Hoang Dinh Phi, 2006)

Therefore, the scope of research is only BIDV's card service competitiveness and research objective only focus on technology capabilities

to enhance the competitiveness of BIDV's card service, so, the author focus

on the factors affecting the competitiveness of card services (the author select some criteria in the table above), including:

- Type of product (card services): Domestic Debit card; International

Debit Card; International credit card; Automated Teller Machine; Point

of Sale (or point of service),…

- Product quality: Product quality means to incorporate features that have

a capacity to meet consumer needs (wants) and gives customer

satisfaction by altering products (goods) to make them free from deficiencies or defects

- Product price: The costs that customers have to pay when using BIDV's

card service

- Marketing and sales: Application of digital technology in Marketing and

sales (bringing BIDV's products and card service to customers)

- Service: Software application systems for customer support and care

- Environment: Applying information technology in card services at

BIDV and Vietnam

- Society: Changes in customer habits and behavior in a digital age

- Law: Legality for the deployment of new technologies and Digital

technologies in Vietnam (like as cloud, blockchain,…)

6 Data collection methods

6.1 Collect secondary data

These data sources include:

- Internal data sources (at BIDV) are from relevant departments/

departments (Card Center, Retail Banking Development Division, IT Center, Technology Division, Research Center, etc .) The internal information, annual reports and statistical reports of BIDV, the data are synthesized and stored centrally in the BIDV’s Data Warehouse These secondary sources are mainly used to analyze and assess the competitiveness of BIDV's card services

- External data sources include from the Vietnam Bank Card Association's

report, annual report of banks of equivalent size, Internet references (like as information about new card products, application of digital technology in card area, ), international books, journals and materials on competition, digital banking trends and banking magazines Data on the status as well as development orientation of card services at commercial banks in Vietnam

6.2 Primary data collection

Primary data was collected through interviews with persons who are directly/ indirectly related to the card services (including professional staff at the head office/ card division; technical staff who support card system at IT Center)

The author conducts interviews, surveys and searches for information and data in order to understand the views of the subjects (as mentioned above)

on the assessment of BIDV's card service competitiveness, compared with those of equivalent banks (such as Vietcombank, Vietinbank) and their requirements and expectations of BIDV card services, include:

 Conducts interviews 04 managers and 13 employees who are directly/ indirectly related to the card services The purpose of the interviewing the managers and employees is to exploring issues involving the card services, especially assessment competitiveness BIDV and competitors

 Conducts interviewed 20 customers, who used BIDV card services

 The author implemented the survey to collect the Company clients’ opinions on the competitiveness by using the questionnaires Specifically:

 Distributed sheets (37 sheets);

 Qualified sheets (37 sheets);

 Survey period (June 2018);

 The Survey questionnaire is presented in details in Appendix 01 and 02

6.3 Data analysis method

The SWOT model is often used to analyze strengths, weaknesses, opportunities and threats of the enterprise So to assess the competitive of

BIDV’s card services, the author uses the SWOT matrix method with factors

as follow:

- Strengths (internal factors): Strength is an activity that the enterprise

can do well or a competitive charateristic of the enterprise/product

- Weaknesses (internal factors): The absence of strengths is considered

a weakness

- Opportunities (external factors): An analysis of the external

environment can reveal new opportunities for creating profitablility and development

- Threats (external factors): Changes in external circumstances and

environment can pose a threat to the enterprise/product

Table 0.2: Table of SWOT matrix

Opportunities (O)

Threats (T)

Strengths

(S)

S + O (Use your strengths to take advantages)

S + T (Use strong points to avoid risk)

Weaknesses

(W)

W + O (Take advantage of opportunities to overcome weakness)

W + T (Overcome weakness to

reduce risk)

7 Structure of the thesis:

Apart from the introduction, conclusion, list of tables, diagram, reference list, the thesis has 3 main chapters as follows:

- Chapter 1: The basic theory of competitiveness in bank card service

sector (such as business competitiveness, product competitiveness, about bank card services, digital technological capability)

- Chapter 2: The current competitiveness status of BIDV's card service

compared with other banks in Vietnam Evaluate its success, limitations and causes

- Chapter 3: Solutions (focus on digital technology measures / solutions)

to enhance BIDV's card services competitiveness for 2019-2025, vision to

2030 in the digital era

The thesis is organized into three chapters in details as follows:

CHAPTER 1: THE BASIC THEORY OF COMPETITIVENESS IN

BANK CARD SERVICE SECTOR

1.1 Competition and roles of competition

1.1.1 Competition concept

The term competitive in the economy can be derived from commodity production, but it is more evident when the capitalist commodity economy emerges and develops to this day According to Karl Marx (1978):” Competition is the intense battle and fight amongst the capitalists to scramble for favourable conditions in goods productions and consumption to gain the excess profits”

According to the British Business Dictionary (1992): Competition is " the intense battle, rivalry between business people fighting for the same kind

of resources or the same kind of customer on their side."

In compliance with Vietnamese dictionary (2002):” Competition can be construed as using endeavours to gain the better and winning to their side amongst the operating individuals and organization towards the same benefits”

According to many researchers, competition is a process in which one party strives to perform better than the others One side can be an individual, a business or a country Although the main purpose of competition is to win, in a civilized world, competition always has cooperation factors towards competitive activities for the reasonalble benefit of all participants and related parties

Economic competition emerged from commodity production but so far there are still many different notions of competition From the above concepts, the competition is generally broadly defined as "the intense competition between actors who are operating in the market, doing the same type of product or similar products in order to gain market share, increase revenue and profit "

1.1.2 Roles of competition

With the constant change in demand and the greedy nature of human, competition in the market economy has brought about the leaps and bounds of human society

Competition has some basic roles as follows:

a Roles on national economy

Competition is the environment and the driving force to accelerate the development of every economic components in the market economy, contributing to the elimination of monopoly, irrationality and inequality in business Competition ensures the acceleration of the development of science and technology and the labour allocation will deeper Competition promotes the diversification of products in order to meets the higher requirements of society, exciting the development demand, creating new demands, contributing to raising the social life quality and develop the economy

Besides the positive impacts, competition also creates negative issues including fake goods, trafficking and tax evasion etc leading to the instability

of the market, lost to the state and consumers

b Roles on the enterprises

Competition is regarded as “a colander” to select and eliminate the enterprises Consequently, it can promote the competitiveness of the enterprise As a result, it plays an significant role Competition determines the existence and development of an enterprise Competition creates the driving force for the development of the enterprise, accelerates the enterprise to find the solutions to raise the production and business efficiency Competition requires the enterprise to develop marketing from the initial market research

in order to define the demand of such market so that the enterprise can make the decisions on production and business to meet such demands Besides,

enterprises must improve the service activities as well as promote the advertisement, promotion and guarantee of activities etc

Competition forces enterprises to launch the products with higher quality to satisfy the frequently changed demands of the consumers In order

to do so, enterprises should apply new scientific and technological achievements into production and business process, improve the management activities, and improve the levels and the skills of the workers etc From that, make the enterprise more developed

c Roles on products

Competition creates driving force for the enterprises to cut down the expenses in order to reduce the product prices, to actively apply science and technological advances to raise the labour productivity, perform research pro manufacture the products that can meets the requirements of the consumers Thanks to competition, production quality is becoming better and better, product types and models are various, results in more and more profits to both consumers and enterprises Because of the motivation in competition, enterprises will be active in researching and developing new products including Domestic Debit card, International Debit Card, International credit card, ATM service, POS service etc to meet the higher and higher demands

of the consumers

d For the needs of consumers

Where there is demand and can make a profit, there are entrepreneurs The interaction between consumer demand and the ability of the business to respond in a competitive environment makes prices of goods and services reach the lowest possible level The demand of the consumer will orient the business activities of the business

With competition, the goods will have better and better quality, more beautiful models, more diverse and better meet the requirements of consumers

in society Consumers can easily and comfortably choose the right products for their wallet and preferences The benefits that they gain from the goods are increasingly enhanced, better satisfying their needs with prior, during and after-sales services, which are of greater interest These are the benefits that consumers get from competition

e T o promote the application of scientific and technical advances in business

The demand for profit will encourage enterprises to apply advanced scientific advances to improve product quality and reduce production costs in order to better meet market demands The constant change and development

of the information technology system clearly shows the role of competition in promoting scientific and technical progress

1.1.3 Competition classification

In accordance with Hoang Trung (2015a), based on the different concepts and roles of competition, competition can be classified into various form:

a Based on the subjects participating competition

Competition between the buyer and the seller: This is the competition

happens according to the law of cheap purchase and expensive sales, both sides wish to optimize their benefits The sellers wish to sell at the highest price to optimize profit whilst the buyers wish to buy at the lowest price with ensured quality and the final price level is the price agreed between two sides

Competition between buyer and buyer: This is the completion in the

basis of law og supply and demand when on the market, the supply is less than the demand At this time, there will be shortages The buyers in order to satisfy their wishes, are willing to buy at higher price; therefore, the competition level will be more intense amongst the buyers This leads to the increase in the prices of goods

Competition amongst the sellers: This is the most intense and fierce

competition when in the market economy, the supply is much larger than demand, customers are considered to be the gods of the sellers and the crucial element of the existence and development of an enterprise

b Based on the economic scope

Competition within an industry: Is the competition amongst enterprises

Competitions amongst different industries: is the competitions amongst

different economic industries to gain the highest profits It can be the competition amongst the enterprises or allies of the enterprises in a industry with the other ones

Competitions amongst countries: is the battle amongst the countries to

promote strengths of the countries to create the competitive advantages to control the global market

c) Based on the characters and degrees of competition

Based on this criterion, competition can be classified into two types:

Perfect competition: is solely the competition which is a simple form of

the market in which the buyer and the seller are not big enough to affect the market price The group of buyers participating in this market can only adjust

to the offered price level because the demand on the market is free to form, the price is set by the market

Imperfect competition: This is the common competition in the market in

which the enterprise with sufficient strength can control the prices and types

of products Imperfect competition is the competition in which majority of the projects are inconsistent, each product has different labels and characters With consideration of the quality, there is not much difference but the default price level is much higher Imperfect competition has two types:

+ Monopoly competition which is the competition in which one or a few subjects with big influence can force their partners to sell or purchase their products at high prices and may change the market price

+ Monopoly corporation: This competition exists in a several production industries in which there are few producers At this time, competition will happen amongst a small number of enterprises

1.2 Competitiveness and the necessity to promote the competitiveness

1.2.1 Concept of competitiveness of the enterprise

Theoretically, Vietnamese scholars still have not agreed on the use of any

of the terms "competitiveness", "competing capability" or "competing power" It can make it difficult for many people to use a consistent and accurate concept However, in management science it is difficult to have a concept that is absolutely precise, so one can use one of these concepts with a common purpose

to describe the competitiveness of individuals, businesses or nation

Using the term "competitiveness" is more accurate both in terms of

language and reasoning, because: firstly, a business can have many different kinds of competencies such as: production capacity, marketing capacity and when combined to a certain extent and for a specific purpose, they will create competitiveness; Secondly, in most competing research works, international organizations and well-known scholars use the term "competitiveness", which, according to most dictionaries

Competitiveness is the degree to which individuals, businesses or countries use the capacities needed to achieve the desired results

Businesses typically compete through the specific products and services they create But the competitiveness of the product is different from the competitiveness of the business, because their goals and development cycle are not the same A product may be out of competition after a development cycle, but a business can not lose its competitive edge if it still has the potential, such as factories, capital, technologies and leaders who still have the will and talent.

The competitiveness of enterprises is the strength and advantages of enterprises compared with competitors in meeting the needs of customers to get higher and higher profit and improve its market share compared to competitors in the market

Competitiveness is reflected in the evaluation criteria in terms of technology, finance, human resources, corporate governance, when compared with competitors operating in the same market In fact, no business can satisfy all the requirements of the customer, usually the business has advantages in this and other restrictions

Competitiveness is therefore a dynamic concept, made up of many factors and influenced by both micro and macro environments Based on an analysis of the theoretical perspectives on national competitiveness and through the lively observation of entrepreneurial business processes, Dr Hoang Dinh Phi presented the basic concept of competitiveness of the business as follows:

“The competitiveness of a business is the level at which, in conditions of free and fair markets, it can produce products and services with high productivity, Competitive pricing, meeting the challenges of market and customer demand, while growing market share and increasing profitability”

(Source: Study and technological innovation, Hoang Dinh Phi, 2009)

The author also presents the following enterprise competitiveness pyramid model with four parts, identifying four sets of internal factors that merit the competitiveness of the enterprise This tower has a new message that the competitiveness of enterprises is built firmly from the ground foundation of efficient management of investments towards the goal of building and developing the necessary capacity It has the capability to produce products and services that meet the increasing demands of customers

Figure 1.1: Enterprise competitiveness pyramid model

(Source: Hoang Dinh Phi, 2006)

The concept of competitiveness was first introduced in the USA in the early 1980s According to Aldington Report (1985):”The enterprise with competitiveness is the enterprise which can produce the products and services

of outstanding quality and lower price than the local and international competitors Competitiveness also means the achievement of long term benefit of the enterprise and the ability to ensure the incomes of the employees and the owners” This definition was mentioned again in the White book on the Competitiveness of England (1994) In 1998, Ministry of Commerce and Industry (England) provided the definition: “ For the

Investment in production and business (factory, technology,

human resources, training, )

Products and value for customers

(productivity, quality, price)

Market share Market share

enterprise, competitiveness is the ability to produce the right products, determine right the price at the right moment This means that satisfying the customers’ demands with greater output and effect than other enterprises”

1.2.2 Concept of competitiveness of the product

The pyramid model (as above) shows "competitiveness of product" is one of internal factors that merit the competitiveness of the enterprise Competitiveness of products can be understood as superior to other products

of the same type The competitiveness of the product is composed of many factors, such as: product quality, price factor, design, product design, consumption, advertising, sales,

The competitiveness of products is a complex characteristic which takes into account a large number of interrelated factors The companies requires continuous improvement of products competitiveness, increase of sales volumes in the market segment by improving the quality of existing, or issuing new products that meet the needs of consumers at a higher competitive level

Thus, there are different views on the competitiveness of enterprises, but generally the views on the competitiveness of enterprises are closely tied to the competitiveness of the products of enterprises Businesses typically compete through the specific products and services Therefore, in the scope of research of the thesis, the author will select, use the appropriate criteria (product competitiveness, enterprise competitiveness) to assess competitiveness for card products of BIDV

1.2.3 Criteria to evaluate competitiveness of enterprise/product

a Group of criteria reflecting business results and efficiency:

This is a Group of quantitative criteria , including:

- Revenue:

Revenue is the amount of money the enterprise earns when selling products or services Therefore, revenue can be considered as the most powerful index to assess the competitiveness of enterprises (based on the revenue targets through different periods or years, we can evaluate the business result to grow or decline, in a good or bad trend) But, topic

"Enhancing competitiveness of BIDV's card services in the digital era" actually is the application of digital technology to enhance the competitiveness of card services of BIDV (only one product group) compared with other banks in Vietnam Therefore, the author does not use this criterion

(Source: Hoang Dinh Phi, 2009).

b Criteria group reflecting strengths and business advantage of the enterprises

This qualitative criterion group includes:

The level of satisfying customers' demands reflects the right supply of goods to customers at the right time with reasonable prices, reflecting the business capability and prestige of enterprises;

Attached service includes manual, after-sales service is important factor

to create trust for customers, strengthen and develop customer relations to improve the competitiveness of goods

- Adaptability and innovation of the business

In the context of globalization and international economic integration with many changes, enterprises must be able to adapt and innovate swiftly with changes in domestic and international markets (preferences, price, quality, design .) and changes in the business environment such as government policy, changes of business partners, competitors etc This is considered as prerequisites for the existence and development of the business This indicator is determined by a number of indicators such as number of improvement, product innovation, production process improvement, enterprise restructuring

- Ability to organize services

One of the factors determining the competitiveness of the business is the ability to serve and create credibility in the customer Serving capacity expresses the desire and willingness to provide timely service to bring satisfaction to customers It is reflected through the attitude and skills of the staff during the service

- Ability to attract resources

To ensure stable production and business activities, develop and enhance the competitiveness in the long term, enterprises must be able to attract inputs such as qualified human resources , modern technology, materials - raw materials, capital

- The ability to link and cooperate of the enteprise

Competition in the present condition does not necessarily mean that one destroys one another but puts in association and cooperation to compete higher The ability to link, cooperation is considered one of the premise for effective business This criterion is reflected in the number and quality of relationships with partners, joint ventures and territorial business networks In the context of Vietnam, the majority of medium and small enterprises, the association and cooperation is significant to survive, develop business and improve the competitiveness of enterprises

- Brand, reputation, image of the enterprise

The goal of the business is revenue, market share and profit But in order to achieve these goals, businesses have to build their reputation in the market, to create their position in the eyes of customers The basis, the premise to create the prestige of the enterprise depends on the resources of the enterprise (capital, technology, human resources ) The brand's strengths are

in recognition, enjoyment, level of use, relevance, difference and loyalty

Highlights to assess the competitiveness, the reputation of the enterprise is the product brand Good product brand and impressive contribution to the success

of the product It distinguishes the company's products from other competitors and

is a tool for businesses to locate products on the market The value of the product's brand is due to the brand's credibility and should be managed appropriately

1.2.4 Factors affecting the competitiveness of enterprise/product

a Factors inside the business

The subjective factors are intrinsic factors inside the enterprise, usually including the following factors:

- Human resource

People is always the most significant and critical element for the operation of every enterprise

Manpower is the creative labour force of the enterprise including the management labour, research and development labour, and the labour directly participating in the production process To promote its competitiveness, the enterprise should pay attention to all the people in the enterprise, from the low- level employees to the manager of the highest level Each person plays

an important role in the business activity of the enterprise from goal identification to the performance to achieve the planned goals

- Financial capability

Financial situation directly has effects on the business results and efficiency in every development period of the enterprise With every decision made, the enterprise should consider in the first place the financial condition

of the enterprise Therefore, for the enterprises with weak financial potential,

it is difficult to neither participate into the market nor succeed When assessing the financial situation, it is necessary to focus on the main issues including: total capital, capital attraction capability, capital use efficiency, the general financial index to assess the position of the enterprise

- Organization and management level of the enterprise

The management system of the enterprise impacts aggregately on the efficiency of the business activity in general as well as the competitiveness of the enterprise in particular The enterprise management system has the similar importance as the human brain In order to defeat the competitors in the competitions, the enterprise is requested to be sensible, and active at every market situations, be ahead to the competitions in meeting the new demands etc All of such activities depend on the enterprise management system

- Business strategy

Business strategy of the enterprise plays an important role, helping the enterprise to achieve high efficiency as well as to tackle the 5 competitive forces according to Michael Porter’s model With clear direction, objectives,

operation method, the enterprise may limit the risks, overcome difficulties and challenges to get to success

- Production, research and development and science and technical capability

Production capability, science and technical competence will reflect the strength of the enterprise compared to the competitors whether the current equipment is utilized and exploited during the operation process to obtained the planned objectives This is shown by the scale, structure, technical levels, and equipment life etc This directly impacts the business costs as well as the production period and satisfaction of product and service needs This is the essential conditions to create the enterprise’s competitiveness

- Marketing activity

Marketing is the process of planning and implementing the ideas relating to the formation and determination of prices, promotion and distribution of products and goods to create changes to satisfy the demands of the market and bring to the consumers/ customers, in order to help the enterprise to win the victory in competition and earn long term profits

The traditional marketing activity normal focuses on types, product differentiation quality, market shares, prices, customers’ trust on the products, product distribution costs, advertisement activity efficiency and sales promotion etc The modern marketing activities are also performed inside the industry and with the distributors, etc

- Other elements

The relationship of enterprises, especially with state management agencies at all levels, with partners in business, depending on the socio-economic development of the region also impact and affect the competitiveness of the business

b External elements of the enterprise

They are the system of the external elements of the enterprise which is relating to or affecting the process of existing, operating and developing of the enterprise The objective elements in bank sectors includes:

- Impacts of the macro environment

+ Impacts of the economic elements: The elements which affecting the strongest the business activities of the enterprise are normally concerning the development status of the national economy such as the growth rate, inflation, unemployment, foreign exchange rate etc Inflation rate and unemployment rate directly have effect on both side of the production and consumption + Influence of the legal elements and State management on economy: The creation of healthy business environment depends on the laws and state management on economy Equal business environment makes the condition for every enterprise to have the chance to compete healthily, do good business, and have responsibility for the consumers On the contrary, it will negatively influence the living environment, living of the consumers and it badly affect the production activity of the enterprise

+ Impacts of the technical and technology elements: Within the scope

of the national economic environment, the technical and technological elements is playing an more and more important role in determining the competitiveness and business efficiency of the enterprise If the enterprises wish to speed up quickly, create high competitiveness in order to stand strongly in the national economy, expand to the regional and international market, it is impossible for them to neglect the development and research, not only the transfer but also the master of the imported technology It is essential for them to create advanced techniques (Hoang Trung, 2015c)

+ Impacts of the cultural and social elements: Culture and society influence deeply the business and production activities of the enterprise It

directly affect the formation of the enterprise cultural environment, group culture as well as the attitude and behaviour of the managers and employees when contacting the business partners as well as customers

+ Impacts of the natural conditions: Natural conditions of each geography regions influence the development of infrastructure hence impact the decision on selection of the investment location of the enterprise It affects

in the two trends: positive or negative Consequently, it will affect the business and competitiveness of the enterprise

- Impacts of industry competitive environment

The impacts of the industry competitive environment on the enterprise is demonstrated through the model of the 5 competitive forces by Michael Porter (2009a), in which, the five forces affecting the enterprise’s competitiveness are:

+ Industry competitors: The power of the industry competition force will determine the investment level, competition intensity and the profit level

of the industry The stronger the competition intensity is, the lower the profit

is and the ability for the companies of the same industry to increase product prices will be limited Vice versa when the competition intensity is weak, this will be the chance for the companies in the industry to gain high profits It is necessary for the companies to study the current situation and the trend of the competition intensity and based on their internal conditions to choose a suitable position in the industry to deal with the competitive forces in the best way or may affect them in the method that is beneficial for the companies + Bargaining power of buyers: Buyers’ trust is the valuable asset to the firms However, the buyers possess dominance, they can reduce the profits of the firms by price squeezing or higher quality requests

+ Bargaining power of suppliers: When the suppliers have advantages, they can create the negative pressure to the firms

+ Threats from new entrants: When the new competitors enter the industry, the market shares and the profits of the firm will be decreased In order to protect their competitive position, the enterprise should raise the barrier to block the entrance to the industry by the methods including diversity the products, raise the advantages in terms of scale and limit the ability to approach the distribution channel or large initial investment costs when first entering or high product change cost

+ Threats of substitute products and services: The substitute products limit the potential profit level of the industry by setting the maximum level for the prices that the companies in the industry may earn

1.2.5 The necessity of the competitiveness of enterprise/product

Due to the impact of science and technology, the economy is growing, the demand for human life has been raised and accordingly, the demand of customers has become higher and more strict Therefore, enhancing competitiveness of enterprises and their products is very necessary, it is expressed in the following aspects:

a It is essential for the enterprise to promote the competitiveness for existence

Originating from the law of market mechanism, competition means elimination of the out of date ones, selection and recognition of the advanced ones to accelerate the products to develop with the purpose of satisfying the most the customers’ needs

In the market economy, competition is an indispensable law, it always exist despite of the wish of human Enterprises wish to exist strongly in the market all experience strong competitions with each other, competitions to gain the customers and to sell the products In order to d so, they should create the favourable conditions to meet the customers’ needs, to make the customers trust, like and consume their products Which enterprises can

satisfy well the customers’ demand and provide them with the convenient and best services at reasonable price, will exist for long term

b The enterprises should promote competitiveness to develop

Nowadays, in the market economy, competition is a condition and anelement promoting business Competitive law is the driving force of the production development The more the products, the more suppliers, the fiercer the competition is The result of competition is the elimination of the companies with ineffective business results, low productivity and quality and

on the contrary, it push up the companies with effective business results, high production and quality Therefore, in order to exist and develop, the enterprise should compete and find all the methods to promote their competitiveness to satisfy the customers’ demand

c Enterprises should compete to implement their targets

Any enterprises, big or small, when performing the business activities all have their own targets Depends on each development phase of the enterprises, the enterprises set the different targets To obtain the objectives, the enterprise should compete Only through competition, the enterprise can find the optimal methods, the solutions to create and make products with better quality, supply better services than the competitors, and satisfy the more and more increased customers’ need Only by competition, the enterprises can exist and develop

1.3 Bank Cards and Bank Card Services

1.3.1 Bank Cards

Bank cards are a means of non-cash payment, arising from the mode of retail purchase and development associated with the application of information technology in the sectors of banking and finance They are the payment instruments issued by the issuing bank for customers to pay for

goods or services or to withdraw cash within the limits of their balance or the credit limit granted at the ATM

From the viewpoint of the State Bank of Vietnam in the Regulations on the Issuance, Payment, Use and Support of Banking Card Operation, issued in conjunction with Decision No 20/2007/QD-NHNN dated 15/5/2007 of the Governor of the State Bank: "Bank card is a means issued by the card issuer

to carry out card transactions in accordance with terms and conditions mutually agreed upon by the parties."

Depending on their nature, bank cards can be classified into several categories, such as:

+ Classification according to the territorial scope of card use,

including: domestic card (domestic card is a card issued by a card issuer in

Vietnam for transaction within the territory of Vietnam) and international card ( issued by a card issuer in Vietnam for transactions inside and outside the territory of Vietnam, or a card issued by a foreign organization and transacted within the territory of a State of Vietnam);

+ Sort by financial source to ensure the use of the card, including: Debit

card (Card allows cardholder to carry card transactions within the amount on the deposit account of the owner a card issued by a payment service provider authorized to accept demand deposits); Credit card (a card that allows cardholders

to carry out card transactions within the credit limit granted); Prepaid card (A card that allows the card holder to carry out card transactions within the value of money deposited in the card corresponding to the amount paid by the card holder for card issuers, prepaid cards have different characteristics than debit cards and credit cards that card holders do not need have bank accounts)

1.3.2 Bank Card Service

The banking card service is a whole or a combination of services provided by a commercial bank that allows customers of a commercial bank

to use the card as a replacement for payment facilities and satisfy other financial services needs (such as cash withdrawal, balance inquiry, transfer) Banking card services are one of the most popular services in the world and growing strongly in Vietnam Card products are diversified, including card products (such as debit cards, credit cards, prepaid cards), POS payment services and ATM value-added services Card products and services are highly customizable for each customer and are often high-tech, always requiring changes, improvements, upgrades, and updates with the rapid changes in technology of the market

1.3.3 The Role of Bank Card Service

a For the Bank

In terms of banks, card services firstly bring in cheap deposits The bank will always have a huge source of deposits from the client's trading account that has to pay a very low

interest Increase the number of trading accounts, allowing for non-cash payment expansion

Generating income from services: When providing card services, card

issuers have revenues from fees, such as issuance fees, annual fees, transaction fees, credit granting fees, foreign exchange money, interest from credit card or debit card overdrafts, etc The payment bank can increase the profit from the commissions paid to intermediaries, new payment services are available to serve existing customers, contributing to maintaining customer loyalty

Modernizing banking technology: When deploying card services, banks

must upgrade and modernize their IT systems and payment systems, thus enabling banks to have access to advanced technologies in the world and contribute to improve the level of card professional in particular and the bank in general

Increase distribution channels of banking products: The development of

ATM / POS systems is the development of distribution channels for banks

This distribution channel is not limited to working hours and can provide 24/24h banking services, helping customers to trade quickly, reducing transaction at bank counters

Help save time and effort in tallying, sorting, storing and shipping cash Avoiding mistakes in counting money, distinguishing real money from counterfeits and being more transparent in financial transactions

Expanding the market and customer relationship: Participating in bank card

payment helps diversify bank services, attract new customers to use card services and other banking services, contributing to creating long-term, stable partners Create invisible values for the bank such as enhancing the position, prestige

of the bank, promoting the brand image, raising the level of banking brand

b For the Customers

Helping create convenience and flexibility for customers in domestic and overseas payment: Bank cards allow cardholders to purchase goods and services through a wide network of card acceptance points, or withdraw cash

as needed Set up and perform other services such as account inquiries, bank transfer, etc at ATMs everywhere with no time limit

In terms of security, bank cards are a convenient and safe means of transportation because cardholders are the only holders of the card In addition, bank cards are always used in high tech production, creating smart cards with increasing safety

Compact, fast and efficient: When shopping for goods and services, consumers do not have to carry cash, do not have to spend time counting money because there are cards with compact size, easy to carry, make you feel comfortable when shopping even with large payment volume On the other hand, customers can approach indirect purchase methods such as telephone orders, online purchases, etc