THEORIES OF STRATEGIC MANAGEMENT
General concept
Various authors offer differing concepts of strategy, each presenting unique interpretations and nuances This article will explore several key definitions of strategy, highlighting the diverse perspectives that shape our understanding of this critical business discipline.
In 1962, Chandler defined strategy as the identification of an enterprise's long-term fundamental goals and objectives, along with the implementation of a series of actions and allocation of essential resources to achieve these aims.
Quinn defines strategy as a cohesive plan that aligns primary objectives, policies, and actions into a unified framework This integration is essential for effective change management and organizational success.
William F Glueck defines strategy as a cohesive and comprehensive plan aimed at successfully achieving an enterprise's fundamental goals However, this viewpoint highlights a critical limitation: empirical evidence shows that even well-defined official plans can sometimes fail to deliver the desired outcomes.
Strategy is defined as the long-term direction and scope of an organization, aimed at achieving a competitive advantage by effectively utilizing resources within a dynamic environment This approach ensures that the organization meets market demands and satisfies the expectations of stakeholders.
- According to Mintzberg, strategic management is:
Strategy of ABBANK’s retail banking development for the period 2011 - 2020
+ Plan: Series of actions intended consistently.
+ Patten: Consistency in behavior in time line intended or not intended. + Position: appropriate between organization and its environment.
+ Perspective: method to deeply aware of the world.
+ Ploy: concrete method to deceive opponent.
The definition of strategy varies across different levels and perspectives, encompassing multiple aspects It is essential to identify at least three levels of strategy: corporate-level strategy, business unit-level strategy, and functional strategies Each level plays a crucial role in shaping the overall strategic direction of an organization.
Enterprise development strategy: “A series of commitments and actions applied by enterprise to gain a competitive advantage by exploiting the core capacities in the decisive market”.
In summary: Generally, it is obligatory to meet sufficiently the following factors when forming strategy:
- Being set up for a long time;
- Using all of the resources of organization effectively;
- Making the best competitive position for organization in the future.
Strategy is defined as a series of long-term actions designed to transition an organization from its current state to a desired future position This involves enhancing competitive capabilities in relation to the advantages held by other organizations in the market, as outlined by Michael E Porter in his 1996 article in the Harvard Business Review.
Strategy is an orientation and scope of an organization in long term in order to gain competitive advantage for the organization through formatting its resources in
Strategy of ABBANK’s retail banking development for the period 2011 - 2020 the changing environment, in order to meet demands of market and satisfy the related parties’ expect.
Many people view strategy as the outcome of a well-structured process led by skilled managers; however, this approach is often inefficient In numerous instances, valuable strategies can emerge organically within an organization without formal planning.
Strategic management involves a series of decisions and actions that shape a company's long-term productivity It encompasses ongoing processes such as analyzing both internal and external environments, formulating strategies, executing those strategies, and assessing strategic effectiveness Consequently, strategic research emphasizes the importance of monitoring and evaluating external threats and opportunities while considering the organization's internal strengths and weaknesses.
Strategic management is the process of arranging flexibly strategies, operation situation and business results, including personnel, leaders, techniques, and treatment methods.
Strategic management can be defined as the artistically and scientifically formation, implementation and valuation of the decisions related to functions which are enable a organization to reach its planed target
Strategic management aims to integrate the management of various business functions, including marketing, finance, production, research and development, and information systems, to achieve organizational success.
Strategic management encompasses three key phases: strategy formulation, implementation, and evaluation The strategy formulation phase involves establishing business missions, identifying external opportunities and threats, assessing internal strengths and weaknesses, setting long-term objectives, generating alternative strategies, and selecting specific strategies for execution.
Strategy of ABBANK’s retail banking development for the period 2011 - 2020
Strategic management encompasses several key components, including the establishment of the organization's core mission and objectives, a thorough analysis of both external and internal environments, the selection of strategies that align with the organization's strengths, weaknesses, opportunities, and threats, and the implementation of an appropriate organizational structure and control systems to effectively execute the chosen strategy.
Figure 1-1: Process of strategic management
Foundations of strategy
- To reach the enterprise’s target in long term (business and social responsibility), sustainably.
- How can the enterprise hold the upper hand compared to competitors in the market, with the concrete customer objects?
Strategy of ABBANK’s retail banking development for the period 2011 - 2020
- Which resource does the enterprise need to use (human, skills, property, finance, and technologic secret …) to be able to reach the planned target?
- To see the implicit chances and threats from external environment can affect the implementation of enterprise’s target: environment, competition, policy, natural resources … plans for preventing risks.
Business managers must effectively identify their organization's strengths, weaknesses, opportunities, and threats to understand the current and future business landscape This analysis enables enterprises to leverage opportunities, mitigate risks, and enhance their competitive edge in the market.
- To help the enterprise to build the business strategy better through using
“system approach” method, creating foundation to increase association and attachment among members in the implementation process of enterprise’s target.
1.2.2 Types of strategy a Classification according to strategic levels:
Strategy at company level (general strategy): Strategy at company level towards the organization’s general scope and purpose
Strategy at business unit level (field): Strategy at business unit level relates to the successfully competitive mode in the concrete markets
Functional level strategy, also known as operational strategy, plays a crucial role in effectively implementing business and corporate strategies It focuses on optimizing resources, processes, and human skills to ensure that all components work together seamlessly.
Today, with the globalization tendency, companies are quickly diversifying their activities beyond national border; thence, global strategies are considered as a choice to cope with the problems in international business.
Strategy of ABBANK’s retail banking development for the period 2011 - 2020 b Classification according to contents of strategy
+ Technology strategies and technical strategies c Classification according to development processes:
According to this classification, the strategy includes:
Oriented strategies: refer to the great orientation of enterprise’s target.
It is formed based on the result of environmental analysis and internal enterprise analysis.
Operation strategies: are enterprise’s methods of operations under each concrete circumstance and plans to adjust strategies.
The process of strategic management
Strategic management involves a series of critical decisions and actions that shape a company's long-term productivity It encompasses ongoing processes such as analyzing both internal and external environments, formulating strategies, implementing them, and evaluating their effectiveness.
Therefore, strategic research stresses the monitor and evaluation threats and opportunities of the external environment in the context of internal weaknesses and strengths. a Process of forming strategy.
This is the most important period in the process of strategic management including 3 steps:
- Step 1: Choosing the company’s main target and mission.
Strategy of ABBANK’s retail banking development for the period 2011 - 2020
- Step 2: Analyzing external environment to define opportunities, threats and analyzing internal environment to define the organization’s strengths and weaknesses.
- Step 3: Choosing strategies based on seeking resources, ability, core competencies, and developing them to overcome the threats, to utility the opportunities from the external environment.
The process of forming strategy can be carried out according to the basic model of strategic management (figure 1.2)
Figure 1.2: The basic model of strategic management
Strategy of ABBANK’s retail banking development for the period 2011 - 2020 b The process of implementing strategy
Once the strategy formation process is complete, the selected strategy will be implemented by clearly defining development targets for each department during specific periods This may involve restructuring the organization, developing production and business plans, and allocating the necessary resources to ensure effective execution.
Strategy implementation involves creating an organizational structure that enables a company to effectively execute its strategy This process includes selecting the appropriate coordination methods between the organization’s structure and control systems, which are essential for achieving strategic goals, generating value, and establishing a competitive advantage.
In practice, many companies have set up strategy but unfeasibly due to shortage of necessary capacity to implement plan The implementation is the process from up to down
The implementation of a strategy serves several key purposes: enhancing organizational capacity and resource allocation, establishing a budget, and developing policies and regulations that support optimal activities and foster continuous innovation Additionally, it involves creating a robust information and communication system, linking rewards and penalties to performance targets to encourage strategic execution, and cultivating a conducive working environment to improve strategy implementation.
The necessary component parts of the strategy implementation process are shown in the figure 1.3 below:
Strategy of ABBANK’s retail banking development for the period 2011 - 2020
Figure 1.3: Eight activities of the strategy implementation and operation
In the strategy implementation process, leadership plays a crucial role in ensuring success Leaders must possess a clear understanding of the actions required to achieve desired outcomes They build a competent organization by selecting individuals who are well-suited for key positions, ensuring the organization has the necessary skills, management capabilities, technological expertise, competitive edge, and adequate resources Furthermore, leaders align the organization’s structure with the strategy being implemented, fostering unity and commitment across the organization This mobilization enables effective strategy execution while adapting organizational modes to meet strategic requirements.
The final stage of the strategic management process is strategic control, where administrators oversee and support the implementation of strategies within the organization This process involves evaluating whether activities are conducted continuously and effectively, ensuring that the company meets its goals and objectives.
ABBANK's retail banking development strategy for 2011 to 2020 focuses on enhancing efficiency through targeted adjustments Key areas of control include monitoring operational efficiency, ensuring high-quality services, driving continuous improvement, and elevating customer satisfaction levels.
In brief, strategic management process consists of basic steps in the following model:
Figure 1.4: Basic steps of strategic management
Steps for establishing a strategy
1.4.1 Definition of mission, vision and core value: a Definition of the organization’s mission:
A mission statement serves to inform stakeholders about the existence of an enterprise, outlining the core values and principles that guide its operations It plays a crucial role in the strategic planning process by articulating the company's purpose in the market, defining who the organization is, and specifying the types of products and services it offers to customers and the community.
Vision represents a vivid image of the future of a trademark, embodying its most valuable attributes It emphasizes uniqueness, highlighting the importance of creating something truly special that sets the trademark apart.
Strategy of ABBANK’s retail banking development for the period 2011 - 2020
A vision statement serves as a roadmap for your company, articulating the desired future state and the goals you aim to achieve It defines the aspirations and objectives that guide your organization Additionally, understanding your core values is essential, as they shape the principles and beliefs that drive your company's culture and decision-making.
- Core value helps to form the psychology for enterprise, which can support or reject the personal psychology accordingly.
- Being values deeply rooted in the enterprise.
- Being a belief system influencing the behavior between individuals or among groups of people.
- Core values are “the soul” of the enterprise.
- Core values are essential and long-term guidance rules.
- Helping enterprise to orient its decisions and actions.
To effectively identify opportunities and challenges, businesses must analyze their external environment, which encompasses three interconnected types: the macro environment, the national environment, and the industry environment This comprehensive analysis enables enterprises to navigate external factors that influence their operations and strategic decisions.
Enterprises leverage data analysis to identify both opportunities and challenges within their operating environments Opportunities can arise from market potential, accessible resources, and an abundance of skilled, cost-effective labor Conversely, challenges may include a limited market, intensified competition, shifting policies, political instability in critical markets, and the rapid development of new technologies that can render existing facilities and production lines outdated.
Strategy of ABBANK’s retail banking development for the period 2011 - 2020
Analyze of internal environment is to find the strengths and weaknesses of the business.
Analyzing a business's internal environment reveals its strengths, such as skilled executives, advanced technology, a strong brand, ample cash flow, a positive public image, and significant market share Conversely, weaknesses may include inefficiencies in distribution, poor labor relations, a lack of experienced international managers, and outdated products or services, all of which can hinder competitiveness.
Strategic plans are aligned with the company's identified strengths, weaknesses, opportunities, and threats A clear understanding of competitive advantage, derived from thorough analysis, helps in identifying essential resources, capabilities, and core competencies that serve as the foundation for effective strategy development and selection.
Organizations must evaluate various plans aligned with their capabilities to achieve primary objectives Strategic plans can be developed at multiple levels, including business unit, functional, company, or global strategy, ensuring optimal adaptation to the rapidly changing global competitive landscape.
Choosing a business strategy is essential for developing a competitive advantage, as it relies on a thorough understanding and assessment of the current situation Companies can select their strategies from three primary groups, ensuring alignment with their goals and market conditions.
- Strategy of the cost leader (Lowest price)
Strategy of ABBANK’s retail banking development for the period 2011 - 2020
- Centralized strategy (focus on a market or a certain market segments or focus on a certain product groups.)
The most effective strategy involves leveraging the enterprise's strengths and resources to pursue high feasibility opportunities while establishing defensive barriers against competitive risks that could threaten the organization's interests.
Techniques for strategy analysis
Techniques for strategy analysis are used in this research subject including:
The legal and political environment significantly influences an enterprise's development strategy, with stability in politics and a robust legal framework being critical concerns for business manufacturers.
The economic environment significantly affects a company's success and strategic decisions, with key factors such as economic growth rate, interest rates, inflation, unemployment, and exchange rates playing crucial roles Changes in these elements can directly influence business operations and future trade opportunities.
The social and cultural environment significantly impacts strategic management, as cultural and social factors are subject to rapid changes As lifestyles evolve with integration trends, consumer attitudes shift accordingly Higher levels of education among consumers correlate with an increased demand for quality and a wider variety of product categories.
The technological environment plays a crucial role in shaping business strategies across various industries, significantly impacting the product and service life cycles Therefore, enterprises must make informed decisions regarding technology to remain competitive and relevant in the market.
Strategy of ABBANK’s retail banking development for the period 2011 - 2020 at creating opportunities for the enterprise in the development of products and services.
By analyzing the external environment, business managers can identify opportunities and threats, providing a solid foundation for developing effective strategies Macro-level changes can significantly influence industry forces, altering their relative strengths and ultimately affecting the sector's overall appeal.
1.5.2 Analysis of M.Porter’s five forces model
Analysis of sector environment needs the assessment of competitive structure within a sector, including competitive position of a central organization and principal competitors, and development stages of the sector as well
M Porter, professor of Harvard Business School draws out a framework which helps administrators find out opportunities and threats facing the enterprise in the sector.
Figure 1.5: Michael Porter’s five forces model
According to Michael E Porter, competition in an industry depends on five basic factors, such as the bargaining power of customers; bargaining power of
ABBANK's retail banking development strategy for 2011-2020 is significantly influenced by an analysis of market dynamics, including supplier relationships, the threat of substitute products and services, and competition from new entrants and direct competitors, as outlined by E Porter in 1998 This comprehensive evaluation of five market forces is crucial for formulating effective business strategies.
The bargaining power of customers is influenced by market dynamics, with competitive markets offering greater power due to a wider array of product choices In contrast, customers face diminished negotiating power in monopoly markets Additionally, the level of bargaining power is affected by the quantity of products purchased, particularly for items with low chemical specificity.
The influence of suppliers is determined by the uniqueness of their products and the availability of alternatives in the market This power is evident in their ability to increase prices or diminish the quality of goods and services they provide.
Enterprises face increased competitive pressure when there is a growing availability of appealing substitute products and services that provide similar satisfaction to customers The intensity of this pressure is influenced by factors such as product quality, buyer acceptance, and pricing.
The threat of new entrant
The entry of potential rivals into the industry is significantly influenced by government regulations, but several barriers also play a crucial role These barriers include economies of scale, product differentiation, retraining conversion costs, expenses related to ancillary equipment, product design costs, and access to distribution channels Additionally, government policies may restrict or completely prohibit participation in certain sectors, further complicating market entry for new competitors.
Strategy of ABBANK’s retail banking development for the period 2011 - 2020 sectors through the grant or restrict access to material inputs, brand recognition, capital investment required (E Porter & Nguyen Phuc Hoang translation, 2009)
Competition in the industry is driven by factors such as pricing, marketing, advertising, customer service, and product quality The intensity of this competition is influenced by the number of businesses in the sector and the overall profit margins Competitors are motivated by the pressure to excel or the chance to enhance their market position Notably, price competition can be volatile, posing risks that may undermine the profitability of the entire industry.
Michael Porter illustrates that as competitive forces intensify, companies face greater limitations on their ability to raise prices and enhance profits According to Porter's Five Forces model, a strong competitive force poses a threat by diminishing a company's profitability To navigate increasingly fierce competition, businesses must invest more in product differentiation, accessible services, or price reductions The level of competitive intensity within a sector is influenced by various factors.
+ Quantity and capability of the company in the sector.
+ Market need: Need for products, services of the company
Task of administrators is to be aware of opportunities and threats which the change of these five forces can bring in, accordingly building up suitable strategies
The SWOT analysis model is an essential tool for businesses, enabling them to make informed decisions in various situations By examining Strengths, Weaknesses, Opportunities, and Threats, organizations can effectively analyze their strategies and assess their overall position and direction in the market.
ABBANK's retail banking development strategy for 2011-2020 emphasizes the use of SWOT analysis as a vital tool for group work and strategic planning This approach aids in crafting effective business strategies, evaluating competitors, enhancing marketing efforts, and innovating product and service offerings.
SWOT analysis evaluates a company's internal strengths and weaknesses alongside external opportunities and threats, providing insights into its competitive capabilities This method is often integrated with the PEST analysis, which examines political, economic, social, and technological factors affecting the market By organizing data into the SWOT framework, businesses can facilitate better understanding, presentation, discussion, and decision-making, ultimately enhancing their strategic planning.
General introduction of ABBANK
ABBANK (An Binh Commercial Bank) is established according to license no 535/GP-UB issued by People’s Committee of Ho Chi Minh city on May 13 th ,
Established in 1993, ABBANK specializes in mobilizing short-term, medium-term, and long-term capital through various instruments, including deposit accounts and certificates of balance The bank engages in authorized capital investments, secures funding from the State Bank of Vietnam and other credit agencies, and offers loans aimed at enhancing rural economic development Additionally, ABBANK provides services such as discounting commercial papers, bonds, and valuable securities, as well as capital contributions and joint ventures, alongside facilitating payment services between banks.
In 2002: ABBANK reformed structure and human resources to focus on specialty of trading in commercial bank.
In 2004: ABBANK increased charter capital to VND 70, 4 billion.
- Strategic shareholder: Vietnam Electricity Corporation (EVN)
- Other big shareholders: Petrol Vietnam Finance Corporation (PVFC), Hanoi General Export Import Corporation (Geleximco)
In 2006: Charter capital was increased from VND 165 billion to VND
In 2007: ABBANK signed strategic cooperation with Agribank and member corporations of EVN such as PC1, PC2, PC3, etc.
- ABBANK became a member of PAYNET
Strategy of ABBANK’s retail banking development for the period 2011 - 2020
- Charter capital of ABBANK was raised to VND 2,300 billion.
In 2008, ABBANK successfully implemented core banking software across its entire system, enhancing operational efficiency Maybank, a strategic foreign shareholder, holds a 15% ownership stake in ABBANK, which has increased its charter capital to VND 2,705 billion.
In 2009: ABBANK cooperated with Prudential Vietnam and Deutsche bank In July 2009, ABBANK raised charter capital to VND 2,850 billion.
In September 2009, ABBANK established its new headquarters at 170 Hai Ba Trung, Da Kao Ward, District 1, and began conducting street transactions at its transaction office By December 2009, ABBANK increased its charter capital to VND 3,482 billion.
In 2010, ABBANK established a connection with the VNB network system via Smart Link and launched a sponsor center dedicated to supporting Small and Medium Enterprises (SMEs) The bank also took part in the Small & Medium Enterprise Finance Program III (SMEFP III) and expanded its collaboration with various internal and external partners, including the Southern Power Corporation (EVN SPC) and VN Prevoir.
With over 15 years of growth, ABBANK serves more than 10,000 corporate and 100,000 individual customers across 29 provinces and cities in Vietnam, operating 115 branches and transaction offices As of December 2010, ABBANK's charter capital reached VND 3,831 billion, with total assets amounting to VND 38,015 billion.
ABBANK targets a diverse range of customers, including the Corporate Customer Group (CCG), Individual Customer Group (ICG), investment clients, and EVN customer groups along with their member units The bank is committed to researching and developing service products that maximize benefits and fully meet the needs of its customers.
Analyze the state of An Binh Commercial Joint Stock Bank
2.2.1 Analyzing factors of external environment
Strategy of ABBANK’s retail banking development for the period 2011 - 2020
The external environment encompasses various macroscopic factors, including politics, economy, socio-culture, natural environment, and technology Additionally, M Porter identifies industry-specific elements such as competitive intensity, the threat of new entrants, bargaining power of customers, supplier power, and the risk of product or service substitutes These factors significantly influence the operations of enterprises and economic organizations, making them crucial considerations in strategic decision-making For ABBANK, these external factors manifest in specific ways that impact its business strategies and performance.
2.2.1.1 Macroscopic environment a Environment of politics and law
- Vietnam is a country having stable politics and an interesting investment environment
Vietnam's legal framework aligns more closely with international standards, making it an attractive destination for foreign enterprises and investments This presents significant opportunities for credit organizations to expand their customer base, increase market share, and enhance their investment activities.
International integration has led to significant improvements in tax and financial-banking policies, enabling banks to better align with global standards These enhancements are essential for creating a competitive environment, allowing local institutions to effectively compete with powerful foreign competitors as market-opening commitments take effect.
- Foreign relationships extension (WTO, Asean, bilateral relationship, etc.) is premise to develop economy, commerce and attract foreign investment capital
- 2010-2015 is period of innovations such as innovation of growth model,economic structure in order to stabilize macroeconomics, restrain inflation
ABBANK's retail banking development strategy for 2011-2020 focuses on enhancing social security while adapting to evolving government policies and legal frameworks to meet development objectives The economic environment plays a crucial role in shaping these strategies, necessitating a responsive approach to ensure sustainable growth and compliance with regulatory changes.
The global economy is currently in a rehabilitation phase, yet it faces the looming threat of a double-dip recession Unemployment rates remain stagnant in many nations, while deficits and public debt continue to reach alarming levels Additionally, the rapid development in China poses significant risks that could hinder the recovery of the global economy.
Vietnam's economy is currently in a rehabilitation phase, with signs of GDP growth emerging The global economic recovery is expected to positively influence investment capital flows into Vietnam, albeit at a slower pace compared to previous years.
The capital market is experiencing significant growth, with private and foreign-invested enterprises expanding rapidly Capital disbursement has accelerated, with foreign direct investment (FDI) reaching USD 4.5 billion, marking a 7.1% increase from the same period in 2009 Additionally, FDI exports surged to USD 13.8 billion, reflecting a 25.9% rise, while imports rose to USD 13 billion, a notable 50.5% increase compared to 2009 This trend highlights the dynamic activity within the FDI sector and signals a recovery in the global economy.
Vietnam's economic landscape is characterized by the establishment of industrial parks and major economic centers, leading to a shift towards a service-oriented economy and a decline in agriculture The country's integration into the global economy, marked by its accession to the ASEAN Free Trade Area in 1996 and the World Trade Organization in 2007, has facilitated trade liberalization and investment This has resulted in a significant increase in exports and foreign investment, allowing Vietnam to benefit from globalization while also facing new challenges.
Strategy of ABBANK’s retail banking development for the period 2011 - 2020 with threats of complicated economy management and being impacted from outside fluctuations.
- Transparency, equality, self-control in business of economic sectors and international commitments implementation of Vietnam will develop well.
- Inflation runs the risk of breaking out and is difficult to control.
Loan rates remain elevated, causing fluctuations in internal gold prices that are closely tied to international gold market trends These dynamics significantly affect bank interest rates and operational strategies, making it challenging for individual customers and small to medium-sized enterprises (SMEs) to access bank funding.
- Retail market is potential with large population, young population structure (According to Central Statistical Office of population density, the main force age group of labor force 15-64 increased from 61,1% to 69,1%)
Vietnam's society is experiencing continuous development, with per capita income steadily increasing According to the draft Economic and Social Development Plan submitted to the Government by the Ministry of Planning and Investment, the GDP per capita in Vietnam is projected to reach USD 1,200 by 2010.
By 2015, the estimated income was projected to reach USD 2,100, reflecting a 1.7-fold increase from the 2010 average, and expected to rise to USD 3,000 by 2020 As living standards continue to improve, individuals are shifting their focus from saving to meeting current consumption needs to enhance their quality of life This trend is particularly evident among young families with stable incomes, who are increasingly adopting credit consumption habits, such as installment purchases for homes and cars This shift presents a promising opportunity for the growth of financial and banking services.
- Intellectual standards of the people have improved and the urbanization process has happened strongly.
- The habit of using cash in consumption limiting the application of new services in finance for individual customers’ group is difficult to strategy of
ABBANK's retail banking development strategy for 2011-2020 focuses on enhancing service rates in the financial sector However, the tendency of some individuals to hoard gold and foreign currency has led to decreased circulation in the financial market Additionally, the technological environment plays a crucial role in shaping banking services and customer engagement during this period.
Vietnam ranks among the top 10 countries globally with the fastest information technology growth, contributing nearly 7% to its GDP Since the introduction of internet services in 1997, the usage rates in Vietnam have consistently risen each year This trend presents significant opportunities for the economy and banking sectors to enhance their business operations and drive development.
The banking sector is experiencing significant technological advancements, with banks prioritizing investments in technology to enhance their services Key developments include the modernization of core banking systems and the implementation of payment services such as internet banking and SMS banking Additionally, the transition from magnetic storage cards to secure chip cards improves security and efficiency While these innovations offer substantial benefits in system control and service expansion, they also necessitate considerable capital and strategic investment.
By 2010, telephone density is projected to reach between 32 and 42 telephones per 100 people, with fixed telephone density accounting for 14 to 16 phones per 100 individuals Additionally, internet subscriber density is expected to achieve 8 to 12 subscribers per person, while the internet usage rate will rise to between 25 and 35% Furthermore, the average density of personal computers is anticipated to exceed previous levels.
10 computers/100 people 100% of communes have telephone; 70% of communes have internet asses point, 100% of districts and almost of communes in main economic region are served broadband Internet.
- Transaction environment and e-commerce were formed and developed fast.
It is expected that 25-30% total transactions of economic sectors will be implemented via e-commerce and transaction system E-commerce transaction will be 10 times in 2010 compared to that in 2002. e Integration environment
Strategy of ABBANK’s retail banking development for the period 2011 - 2020
STRATEGY FOR DEVELOPMENT RETAIL BANKING OF
AN BINH COMMERCIAL JOINT STOCK BANK
FOR THE PERIOD 2011 - 2020 3.1 Vision, mission and core value.
ABBANK aims to establish itself as a leading commercial bank in Vietnam by adopting a retail-focused banking model that integrates best international practices with cutting-edge technology This approach enhances its competitive edge against both domestic and foreign banks in the Vietnamese market.
ABBANK is committed to achieving comprehensive and sustainable growth while enhancing shareholder value The bank prioritizes customer service by offering safe, effective, and flexible financial products Additionally, ABBANK invests in its human resources as a fundamental strategy for long-term development.
Focused on achieving results, we strive for victory by maximizing our efforts and making significant contributions towards our goals We prioritize finding effective solutions quickly and efficiently, ensuring we minimize costs while maximizing outcomes.
- Responsibility: Understanding thoroughly and maintaining the obligations not only for it but also for others to achieve results consistent with orientations of the organization.
At ABBANK, we focus on creating added value by continuously innovating solutions that blend existing assets with fresh ideas By tackling challenges from unique perspectives, we strive to differentiate ourselves and enhance the interests of our shareholders, customers, and employees.
- Friendliness and sympathy: Always communicating with others in a sincere, active, and open-minded way, believing and respecting all people inside or outside the organization.
Strategy of ABBANK’s retail banking development for the period 2011 - 2020
Our commitment to serving our customers focuses on transforming target audiences into loyal clients, fostering long-term partnerships through shared solutions that benefit both parties We prioritize professionalism in our interactions, ensuring that both external and internal customers receive the highest level of service.
3.2 Targets of ABBANK’s retail banking development for the period 2011-
- Growth rate of total assets: projected from 25- 30% for the period 2011-
2016 and from 20- 25% for the period 2016 – 2020 Market share of total assets achieves 2.6% in 2016 and 3.9% in 2020.
- Rate of retail operation makes up 50% in 2016 and 60% in 2020.
- Credit growth of individual customers compared with corporate customer accounts for a rate of 50/50 in 2016 and rate of 60/40 in 2020 Overdue debt is below 2%.
- Mobilization growth of individual customers compared with corporate customer makes up a rate of 50/50 in 2016 and rate of 60/40 in 2020.
- Customer growth in average achieves 25% per year, of which rate of individual customer’s accounts for 75% among total customers
- In 2016, the projected number of ATM is 510 pieces and 1.200 pieces in
2020 ABBANK is projected to equip ATM machines at almost its branches, transaction offices in 2020 and at some convenient locations in commercial centers, schools, hospitals, etc
- Building risk management system under the international standards and practices and meeting the State Bank’s requirements.
To capitalize on economic growth opportunities in densely populated regions with high average per capita income, it is essential to expand networks strategically Leveraging the existing EVN infrastructure can facilitate the enlargement and enhancement of our own network, ensuring robust development in these key areas.
- Investing into Information Technology infrastructure, developing T24 core banking system, developing high-technology products such as SMS banking, mobile banking, internet banking.
Strategy of ABBANK’s retail banking development for the period 2011 - 2020
To achieve its objectives, ABBANK must implement an effective strategy for resource distribution that enhances its competitive edge in the retail market segment By utilizing the SWOT matrix, we can identify strategies that leverage ABBANK's strengths, address its weaknesses, capitalize on opportunities, and mitigate threats, ultimately facilitating its development process.
Based on anslysis of business environment and internal environment of ABBANK in Charter 2, we have built SWOT matrix to choose the bussiness strategies as follows:
Strategy of ABBANK’s retail banking development for the period 2011 - 2020
Strategies (SO): are strategies helping ABBANK to take full advantage of external opportunities and internal strengths to develop
- Extending networks to develop the Bank orienting mainly retails base on EVN’s customers by strategy co-operation
- Applying the most technology, developing the high-technological products (SMS banking, internet banking, mobile banking, online banking, types of card).
To enhance competitive capacity and market development, we aim to expand strategic partnerships with member units such as ABS, ABF, ABL, and AMC, as well as with key partners like EVN, IFC, and Maybank This collaboration will focus on creating value chains, offering comprehensive package services and products, cross-selling offerings, and fully leveraging our human resources, networks, and customer bases.
- To increase promotion for image and marketing for products of the Bank in areas which have economic potential, large population and a little of banks t extend market share
Strategies (WO): are strategies helping ABBANK to overcome its weakness by taking advantage of opportunities
To enhance ABBANK's image, brand, and prestige among customers, it is essential to strengthen multilateral cooperative relationships with strategic partners such as EVN, Maybank, and IFC By leveraging the partnership with EVN, ABBANK can effectively develop its network and marketing strategies, targeting a diverse range of customers, including those connected to EVN and electricity users.
- Cooperating with strategic partners May bank, IFC in building and completing the processes of banking profession, investing in IT, training and developing human resources, risk management, developing products
- Strong investing, developing in technology in the Core Banking, developing products, managing the banking information to enhance the Bank’s operation efficiency.
Strategy of ABBANK’s retail banking development for the period 2011 - 2020
Strategies ST: are strategies helping ABBANK to use internal strength to limit risks, threats from external environment
To enhance management capabilities and solidify the organizational structure, it is essential to strengthen cooperative relationships with key stakeholders such as EVN, Maybank, and IFC This collaboration will focus on improving human resources and risk management while ensuring continuous investment in advanced IT systems.
- Building policy on attracting human resources, building An Binh’s culture to make the attachment in staff group
Strategies (WT): are the defense strategies helping ABBANK to limit the internal weakness and prevent the threats from external environment
- Developing and expanding trademark, extending market, diversifying products enclosed the other strategies in order to increase competitive capacity, service capacity corresponding to the service increase of customers.
ABBANK's retail banking strategy for 2011 to 2020 focuses on leveraging its strengths, such as strategic partnerships with EVN for grid development and collaboration with Maybank to enhance management capabilities By analyzing the macro environment's opportunities and challenges, ABBANK aims to capitalize on its distinctive advantages and technological applications in business operations, adopting an SO strategy as the optimal approach for growth in the retail banking sector.
SO strategies enable ABBANK to leverage external opportunities and internal strengths for growth Key focus areas for these strategies include enhancing retail banking, expanding joint ventures with strategic partners, diversifying product offerings, broadening the network, and investing in information technology The subsequent content will detail specific measures to effectively implement these strategies.
3.4 Several solutions for retail banking development
Strategy of ABBANK’s retail banking development for the period 2011 - 2020
3.4.1 Construction for organizational model of retail banking
ABBANK's business model outlines its strategic approach for a designated period, focusing on key activities that enhance its strengths and capabilities while targeting potential future markets.
To effectively implement its retail banking strategy, ABBANK must establish a comprehensive organizational model tailored for retail banking functions Currently, the organization is divided into two distinct groups: individual customers and corporate customers However, this model is only newly established at the headquarters level, while many ABBANK branches and transaction offices continue to manage both customer segments simultaneously This dual approach hampers the bank's ability to expand its individual customer base.
In new organizational model proposed for ABBANK, retail bank shall be organized according to functions, products, areas; operate by the process, flow chart, work description, vertically information processing.
At the headquarters, the operations are divided into two main groups: individual customers and corporate customers These groups are responsible for directly managing and regulating the procedures and rules that govern the relevant business units within the system.