Subject and purpose of the research
- Subject of the research: Vietinbank - Cua Lo Branch
- Purpose of the research: Developing business Strategies for Vietin Bank Cua
Lo in the period of 2011 – 2015 and propose solutions to make it become the
1 st ranking branch in the Vietinbank system.
Research methodology
- References: primary and secondary data, data of Vietinbank Vietnam, Vietinbank Cua Lo, Reports of the People’s Committee of Nghe An
- Analyzing technique: IFE, EFE, SWOT and QSPM matrices, MichaelPorter’s five forces model of competition
Structure of the capstone
Chapter 1: Rational foundation of business strategy
Chapter 2: Business Environment situations of Vietin Bank Cua Lo
Chapter 3: Business strategy selection and implementation solutions of VietinBank
– Cua Lo for the period of 2011 - 2015.
Business strategy
1.1.1.1 Different definitions of business strategy
Alain Threlart stated that "Strategy is the art that an enterprise uses to stand against competition and win"
According to M Porter, "Strategy is the art of building solid competitive advantages to defense"
For these reasons, the authors considered business strategy as a kind of art to compete in the market and develop the enterprise
According to the viewpoint of management, business strategy is a kind of plan:
- G Arlleret stated that "Strategy is the determination of the roads and the means to achieve the objectives defined by the policy"
According to D Bizrell et al., strategy is defined as a comprehensive plan or direction that guides an organization toward its desired objectives, serving as the foundation for developing policies and operational measures.
- Gluecl stated that: "The strategy is consistent, comprehensive and integrated plan designed to ensure that the enterprise’s objectives will be implemented.
According to the perspective of consistency:
- "Strategy is the art of coordinating activities and controlling them to achieve long-term goals of the enterprise".
Chandler emphasized that strategy is about establishing the fundamental long-term objectives of an organization while simultaneously selecting the appropriate actions to achieve those goals, allocating essential resources, and executing the plans effectively.
Strategy in an enterprise involves the art of organizational design that supports the long-term objectives of the business It is closely linked to adapting to changes in the business environment and enhancing competitiveness.
Business strategy is defined in various ways by different scholars, yet a common theme emerges: it focuses on competition to achieve business objectives In this capstone project, we synthesize and explore the concept of business strategy by examining its key characteristics and significance.
1.1.1.2 Basic characteristics of business strategy
- Business strategy determines the basic objectives and business direction of the enterprise in a specific period.
- The orientation of the strategy is to ensure the continuity and firm of the development in the constantly fluctuating business environment.
- Business strategy ensures to mobilize at het maximum and combines at the optimal of extraction and use of enterprise resources at the present and in the future.
It also promotes the advantages and seizes the opportunity to competition.
- Business strategy an enterprise is reflected throughout a continuous process.
- Business strategy always peruses attacking thoughts in order to win in the marketplace.
- Business strategies are often built in a long period of time (3, 5 to 10 years).
1.1.2 The role of business strategy for an enterprise:
A well-defined business strategy is essential for an enterprise as it clarifies its purpose and sets a clear direction for all manufacturing and operational activities This strategy serves as a guiding framework for long-term success, ensuring that the business remains focused and aligned in its efforts Without a clear strategy, enterprises risk losing their way, as immediate challenges may overshadow their long-term objectives and hinder overall effectiveness Thus, a robust business strategy is crucial for navigating both present and future challenges while maintaining coherence in all business activities.
- Business strategy helps the enterprise understand and take advantage of business opportunities, and in the same time take measures to overcome the risks and threats in the competitive marketplace.
- Business strategy contributes to improve the efficient use of resources, enhance the competitive position of the enterprise and ensure its sustainable development.
A well-defined business strategy establishes a strong foundation for policy proposals and decision-making that align with market fluctuations It supports research and development, personnel training, investment, market expansion, and product innovation Many investment and technology errors stem from poorly developed strategies or challenges in setting strategic objectives.
The foundation for success or failure depends on an important factor of how the enterprise’s business strategy looks like.
This strategy aims to strengthen the competitive position of businesses by enhancing marketing efforts or adjusting market strategies, all without altering the product itself It encompasses three primary approaches.
- Market penetration: increase the market share for available products and services available in the market through marketing activities.
- Market development: Provide products and services available in the new area.
- Product development: Increasing in sales, innovating in available products and services.
Cost-leading strategy is driven by the overall action to provide products or services that have the characteristics accepted by customers with the lowest cost compare to all competitors.
The differentiation strategy aims to provide a competitive advantage by developing unique products or services that stand out to customers Companies employing this strategy seek to meet customer needs in ways that competitors cannot match, allowing them to command higher prices that exceed the industry average.
The focus strategy, one of the three generic competitive strategies, aims to meet the specific needs of a targeted group of customers Unlike the other two strategies, it concentrates on addressing a particular market gap, which can be defined by geography, customer type, or product segment.
1.1.2.3 Competitive strategies for enterprises based on market share and position:
Although they are in the same industry, but each enterprise has a different market share position:
- The leader in the market
- The enterprises that challenge the market
- The enterprises that follow the market
- The enterprises that lurk in the market
Process of developing strategy
Figure 1.1 F.David Model of Strategic Management
The process of developing is the first stage in strategic management There are four steps in building up the strategy:
1.2.1 Defining the mission and objectives
Vision: Claims of enterprise on their position in business environment in a certain period of time – is guidelines for company’s action in all the times and circumstances.
An organization's mission defines its core purpose and reason for existence, guiding its establishment, survival, and growth It answers the fundamental question of why the organization was created and what objectives it aims to achieve.
The objective of an organization defines the specific outcomes it aims to achieve within a set timeframe, often focusing on profitability, excellence, and market leadership Additionally, organizations strive to attain significant capabilities that contribute to their overall success and effectiveness.
External forces and elements significantly influence the operation and performance of a business, despite being beyond the control of its management.
The environment of an enterprise includes:
+ Macro-environment (general environment) includes factors like the economy, politics, legislation, technology, culture and society, nature.
+ Micro-environment (specific environment) includes factors like customers, suppliers, industry competitors, potential competitors, replacement products.
The aim here is to identify and understand the related environmental conditions to clarify the environmental factors that are likely to influence the decisions of the enterprise.
Assessing the external environment's opportunities and challenges is crucial for enterprises to formulate appropriate business objectives and establish clear policies aimed at achieving their goals.
1.2.3 Analyzing the enterprise’s internal environment
Evaluating the internal environment of a business is essential for identifying its strengths and weaknesses, uncovering strategies to gain a competitive edge, and understanding the significance of various resources and capabilities in establishing and sustaining a competitive advantage.
The internal environment is analyzed based on functional activities such as human resources, technical infrastructure, technology and finance
In order to develop effective strategic plans, enterprises must analyze both macroeconomic and business environments to identify external opportunities and risks, as well as internal strengths and weaknesses This comprehensive assessment often employs the SWOT Matrix technique, which facilitates a clear understanding of the organization's position and informs future direction.
SWOT analysis is a valuable tool for aligning an enterprise's resources and capabilities with its competitive environment, aiding in strategic planning and decision-making The SWOT Matrix effectively evaluates the strengths, weaknesses, opportunities, and threats that an organization faces.
The SWOT Matrix is a valuable tool for strategic analysis, enabling businesses to assess their position and direction effectively It is particularly beneficial for group work and is widely utilized in various areas such as business planning, strategy formulation, competitor assessment, marketing, and product and service development.
SWOT Analysis is a valuable tool for assessing strengths, weaknesses, opportunities, and threats, providing a comprehensive understanding of a situation This four-dimensional evaluation extends beyond traditional two-dimensional analyses, fostering positive thinking and informed decision-making To effectively utilize SWOT, it's essential to clearly define the target purpose, enabling collaboration in the analysis process Stakeholders can then grasp the significance of analytical methods and the interplay between various SWOT factors This straightforward approach is easily applicable across diverse business areas, making it an essential component of strategic planning.
When selecting a strategy, businesses must evaluate various objective and subjective factors that influence their decisions Key considerations include the strengths of both the industry and the enterprise, the strategic objectives of the organization, the attitudes of its leaders, available financial resources, the capabilities of managers, stakeholder feedback, and project timelines.
Some foundations for selecting strategies
- The power of the enterprise and the industry in comparison to other competitors that may influence the strategic choices.
The board of directors establishes a system of tasks and objectives that can significantly influence strategic decisions It is crucial to select a strategy that aligns with the company's goals and responsibilities, rather than solely focusing on profit or growth.
- The viewpoint of the executive director has a direct effect the choice of the strategy, especially the attitude of the executives towards risk
The financial capacity of an enterprise significantly influences its strategic choices, often exerting pressure on decision-making Companies with substantial and convertible capital can more easily seize opportunities, while those with limited financial resources may be forced to forgo potential prospects.
The capabilities and qualifications of business administration staff significantly influence the selection and implementation of strategies within an enterprise, ultimately impacting the success of those strategies.
- The time factor: The success of a strategy may depend heavily on identifying the right time for implementation.
- Results of the current strategic review of your business: Identifying the exact current strategy of the enterprise as a basis for choosing the new strategy and confirm the current strategy.
Tools for strategic analysis
1.3.1 Using PEST Method to analyze macro factors
PEST studies the impacts of the factors in the macro environment Those factors are:
Four key factors significantly influence the economy, alongside natural conditions that serve as external influences on both enterprises and industries Businesses must consider these external impacts as objective elements when formulating effective policies and strategies for their operations.
1.3.2 Using Michael Porter’s Five Forces of Competition to analyze micro factors
Porter’s Five Forces Model, introduced in the Harvard Business Review in 1979, serves as a vital tool for understanding the factors that drive profitability in business This model not only identifies the sources of profits but also provides competitive strategies that enterprises can leverage to sustain and enhance their profitability.
1.3.3 Using EFE Matrix to analyze the Opportunities and Threats
The specialists have come up with the EFE Matrix to evaluate the external factors
External Factors Weigh Rating Weighted Score
List all the external factors of the enterprise
1, the higher the weight, the more important the factor
1.3.4 Using IFE Matrix to analyze the strengths and weaknesses
Specialists have come up with the IFE Matrix to evaluate the internal factors:
Internal Factors Weight Rating Weighted Score
Listing all the Grading from 0 to 1, 1 = weakest point (4) = (2)x(3) internal factors of the enterprise the higher the weight, the more important the factor
1.3.5 Using SWOT Matrix to qualitatively analyzing the strategy
Analyzing the Strengths – Weaknesses – Opportunities – Threats
SWOT stands for Strengths (S), Weaknesses (W), Opportunities (O) and Threats (T) This is a very useful matrix that helps us to study an issue or make decision in managing or organizing in business
Internal Environment of the enterprise
Strengths (S) List all the important strengths from the Table of internal factors of the enterprise
Weaknesses (W) List all the important weaknesses from the Table of internal factors of the enterprise Opportunities (O)
List all the important opportunities from the
Table of external factors of the enterprise
Make advantage of the enterprise’s strengths to develop the opportunities in the external environment
Make use of external opportunities to overcome the internal weaknesses of the enterprise Threats (T)
List all the important threats from the Table of external factors of the enterprise
Make use of the internal strengths to reduce the impact of external threats
Combination of protecting strategies, which is overcoming weaknesses and reduce or avoid external threats
S-O Strategy: using the strengths of the enterprise to make advantages of the external opportunities
W-O Strategy: overcome the weaknesses to make advantage of external opportunities
S-T Strategy: using the strengths of the enterprise to deal with the external threats
W-T Strategy: overcome the weaknesses to reduce the external threats
1.3.6 Using QSPM to analyze and select strategies
The Quantitative Strategic Planning Matrix (QSPM) utilizes input data from prior analyses to assist strategists in objectively identifying the most suitable strategy among various alternatives for achieving the company's objectives effectively.
Table 1.4 Quantitative Strategic Planning Matrix
A Quantitative Strategic Planning Matrix (QSPM) allows for the evaluation and comparison of strategies within the same group, ensuring coherence in analysis While it can encompass various strategy groups, it is essential that only strategies from a single group are assessed together, as this maintains the integrity of the evaluation process.
The Quantitative Strategic Planning Matrix (QSPM) effectively highlights the comparative attractiveness of alternative strategies and aids in selecting the most suitable product strategy However, it has limitations and requires specific conditions for practical application A significant drawback is the reliance on intuitive judgment to assign attractiveness scores, even though these scores are informed by prior environmental analysis To maximize the effectiveness of QSPM, strategists must engage in thorough discussions to achieve consensus on the scoring criteria used in the attractiveness score column.
Strategy selection is a pivotal step in both the development and implementation phases of a business strategy Choosing the right strategy is essential for success in the marketplace, as it outlines the necessary actions for a viable business approach Once a strategy is selected, effective implementation is crucial to transform the company's strategic goals into tangible outcomes.
General introduction
VietinBank Cua Lo, formerly a second-level branch of Nghe An Bank of Industry and Trade, was officially upgraded to a first-level branch of Vietnam Bank of Industry and Trade on August 1, 2006, following decree No 197/QD-HDQT-NHCT1 issued on July 4, 2006.
VietinBank Cua Lo is responsible for a range of financial services, including currency trading, credit offerings, and banking services Additionally, it engages in foreign currency and gold trading, financial consultancy, and commission-based activities The bank acts as an agency in commercial banking sectors and provides insurance services compliant with legal standards It also offers services for preserving valuable possessions and documents, leasing lockers, and mortgage services, all in accordance with Vietnam's legal regulations.
At its establishment, VietinBank Cua Lo had a net balance of 35 billion VND and raised 26 billion VND in capital The bank employed 35 staff members and was headquartered at No 190 Binh Minh Street, Cua Lo town, Nghe An The head office comprised five departments: Administration, Accounting, Customer Service, Currency Treasury, and Risk Management.
Figure 2.1: Organizational chart of VietinBank system
As a premier banking group in Vietnam, our mission is to enhance the quality of life for our customers by offering a diverse range of internationally standard financial products and services.
To become a leading, modern and effective financial - banking group in Vietnam and in the world
- All activities are customer-oriented;
- Dynamic, creative, professional, dedicated, transparent and modern;
Employees are motivated to put forth their best efforts and make meaningful contributions, with the expectation that their rewards will reflect the quality, results, and effectiveness of their individual work Exceptional and dedicated team members are recognized and honored for their hard work and achievements.
- Security, efficiency, sustainability and international standards;
- Solidarity, cooperation, sharing and social responsibility;
- The prosperity of customers is the success of VietinBank.
Slogan: Improving the value of life.
At the Vietnam Joint Stock Commercial Bank for Industry and Trade, customers can expect exceptional products and services delivered with professionalism and enthusiasm Our commitment is encapsulated in our motto: "Trust, Effectiveness, Modernity."
VietinBank - Cua Lo is a 1 st - level branch
Figure 2.2: Organizational Chart of VietinBank Cua Lo
After 05 years of operating, VietinBank Cua Lo has achieved significant development in the size of business Though the head office is located in no.190 Binh Minh Street, Cua Lo town, the branch has expanded the distribution network to the entire Vinh City and Nghi Loc District, with 05 transaction offices: Hong Son transaction office at no.32-34 Ngo Duc Ke Street, Vinh City; Tran Phu transaction office at no.24 Tran Phu Street, Vinh City; Phong Dinh Cang transaction office at no.274 Phong Dinh Cang Street, Vinh City; Hung Phuc transaction office at no.159 Nguyen Phong Sac, Vinh City and Mai Trang transaction office at Nghi Xuan village, Nghi Loc District, Nghe An; 02 ATM machines placed at the head office.
The current service offerings of VietinBank Cua Lo are quite diversified and providing all services of VietinBank Vietnam.
Capital mobilization services encompass a range of offerings, including the acceptance of unlimited and limited term deposits in both Vietnamese dong and foreign currencies from businesses and individuals These services also feature diverse and appealing savings options, such as term and demand deposits in various currencies, promotional savings, and accumulated savings Additionally, the issuance of promissory notes and bonds is part of the capital mobilization framework.
The services offered encompass short-term lending in both Vietnam dong and foreign currencies, as well as medium and long-term lending options Additionally, they include support for export and import financing, discounting export documents, and co-sponsoring large projects with extended payback periods Other services involve project financing and commissions for initiatives like Dai Loan (SMEDF) and Viet Duc (DEG, KFW), alongside structuring credit agreements and providing overdraft and consumption loans.
The bank offers guarantying, re-guarantying (domestically and overseas); contract biding guarantying; contract fulfillment guarantying; payment guarantying.
Payment and commercial sponsorship services encompass the issuance and processing of import letters of credit, as well as the confirmation and payment of these letters They also include import and export collections, draft payment, and draft agreement collections Additionally, these services facilitate domestic and international currency transfers, including express transfers through Western Union Other offerings involve processing orders for collection and payment, managing cheque and salary payments through bank accounts and ATMs, and handling currency exchanges from overseas.
Funding services encompass a variety of financial activities, including trading foreign currencies through spot, forward, and swap transactions They also involve trading securities such as government bonds, treasury bonds, and bills Additionally, these services provide cash and foreign currency collection and payment solutions, as well as locker leasing for secure storage Furthermore, they offer the safeguarding of valuable assets, including gold, jewelry, important documents, and patents.
Bank cards and digital banking services
These services include: issuing bank card and processing domestic credit cards, foreign credit cards (VISA, MASTER CARD…); ATM card services, cash cards; internet banking, phone banking, SMS banking.
In 2010 VietinBank was proudly selected into the Top 5 brands of trust worthy banks and Golden quality by consumers.
In April 2011, VietinBank was recognized by Western Union for its rapid and effective network expansion in the Asia Pacific region, with VietinBank Cua Lo being awarded as the leading transaction office in development.
2.1.5 Business performance throughout the years
(Source: Business performance report year 2008, 2009, 2010 of VietinBank Cua
Analysis of factors affecting the operations of VietinBank Cua Lo
In 2010 and early 2011, Vietnam's macroeconomic environment was significantly impacted by global issues such as the public debts of the U.S and European nations, security concerns, climate change, and fluctuations
In early 2011, the global economic recovery faced significant hurdles, including Japan's deflation, China's slowing growth rate, and public debt crises in Europe Additionally, political unrest in 11 countries across North Africa and the Middle East, along with natural disasters in Japan, contributed to an estimated 5% decline in global economic growth These factors compounded the challenges confronting the global economy during this period.
Inflation has become a significant issue globally, with raw material prices increasing by 8% in just a few months due to monetary easing in major economies and political unrest in North Africa and the Middle East Many Asian countries are experiencing high inflation rates, with China at 5%, India at 8.2%, and Korea at 4.7%.
Rising prices of essential commodities are posing a significant threat to global energy and food security, with crude oil prices reaching a two-and-a-half-year high of $113 per gallon on April 8, 2011, marking a 30% increase from the previous year Similarly, gold prices have surged to $1,473 per ounce, while silver prices have followed suit Additionally, food prices have experienced a dramatic rise of 30% since mid-2010, with cereal prices soaring over 40%, raising concerns about a potential global food crisis.
International financial and monetary markets have experienced significant volatility, with the global stock market facing declines due to political instability and natural disasters Following the recent natural disasters in Japan, the international stock market incurred a loss of $1.6 trillion, accompanied by a substantial ongoing withdrawal of capital from Arab nations.
In the first quarter of 2011, Asian emerging markets saw a record withdrawal of nearly $25 billion from investors, the largest since Q3 2008 Concurrently, the international bond market faced turbulence as Japan shifted its bond investments to prioritize national rebuilding, while China showed no interest in purchasing additional U.S government bonds The dollar continued to depreciate against major currencies, while the Euro recorded a historic 3.5% increase in value Additionally, the real estate markets in the U.S and China remained stagnant, exerting negative pressure on their banking systems.
Forecasts indicate that policies focused on fiscal restraint and monetary tightening will lead to a slowdown in global economic growth in the short term Inflation is likely to remain manageable, provided there are no significant challenges related to oil and food prices However, in certain nations, economic disturbances could escalate into sociopolitical unrest.
Despite significant global economic turmoil over the past three years, Vietnam's economy has maintained a strong growth rate within the region However, it faces emerging challenges such as inflation, trade deficits, and exchange rate fluctuations that could impact its future stability.
Table 2.1: GDP growth rate of Vietnam and regions including Nghe An and
Cua Lo as a function of time
(Source: Website: www.mof.gov.vn and Report of socioeconomic situation in Nghe
For Nghe An: Nghe An is a province located in the center of North Central
The Coast has a rich history of development and has recently focused on enhancing its infrastructure and industrial sectors By leveraging its geographic advantages, the region has successfully developed industries such as fish processing, travel services, and agricultural production As a result, its GDP growth consistently outpaces the national average in Vietnam.
For Cua Lo Town District: This is where the headquarters of Vietinbank
Cua Lo, a district known for its focus on socioeconomic development, has made significant strides in enhancing travel services, fishing, fish farming, and fish processing In recent years, the district has experienced high and stable GDP growth rates, reflecting its commitment to sustainable economic progress.
Impacts of gold market on banking operations
In 2010 and early 2011, fluctuations in the gold market significantly impacted the macro economy, as rising gold prices led individuals to withdraw funds from banks to invest in gold rather than saving This shift in capital allocation restricted the ability of commercial banks to mobilize funds, ultimately hindering the overall operations of the banking system and the broader economy.
Impacts of foreign currencies market on banking operations
Dollarization in Vietnam is evident not only in the proportion of foreign currency savings within the banking system but also in the volume of foreign currencies circulating outside of it As gold prices increase, the demand for USD in free markets rises, resulting in illegal gold imports and an uncontrollable surge in the USD exchange rate.
Impacts of inflation on banking operations
Capital mobilization has become increasingly challenging for banks due to high inflation To retain their capital and prevent outflows to competing banks, institutions must adjust their mobilization interest rates to align with current market conditions However, determining the appropriate rate increase can be complex for each bank A competitive surge in mobilization rates, often reaching 17-18% annually for short-term deposits, can establish a new benchmark, leading to further rate hikes as banks vie for deposits In some instances, banks may set their mobilization rates too close to credit interest rates, risking significant losses and threatening the stability of the entire commercial banking system.
High inflation has compelled the State Bank of Vietnam to tighten monetary policies, reducing the money supply Despite the high demand for capital among businesses and individuals, banks can only accommodate a limited number of clients with pre-existing contracts or viable plans that present acceptable risks Additionally, elevated mobilization interest rates translate to higher lending rates, creating challenges in the banking investment environment and increasing the potential for moral hazard As the purchasing power of the Vietnamese dong declines and the prices of gold and foreign currencies rise, banks face difficulties in attracting long-term deposits, while the demand for mid-term and long-term loans remains significant Consequently, banks are likely to rely on short-term capital to finance longer-term loans, adversely impacting their liquidity and exposing them to term and exchange rate risks.
High inflation has led to a cash shortage in Vietnam, where 35% of cash is in circulation and 50% of trades occur outside the banking system, according to a World Bank study With 90% of the population making payments without using banks, the State Bank of Vietnam faces challenges in monitoring cash flow This situation complicates the ability of commercial banks to enhance noncredit services, particularly payment solutions Consequently, many businesses resort to credit transactions, resulting in increased debt payments and operational strain.
Analysis of internal factors of VietinBank Cua Lo
The current employee structure at Vietinbank Cua Lo is:
- Amount: 53 full-time employees and 7 on temporary contract
- Qualification: 92% university under-graduates and graduates
- Average age: 33 years oldSenior Managers: 3 people, in which one is director and two are vice directors They all have years of experience in the industry
Departmental Managers: These employees can be responsible for professional work They are all enthusiastic, dynamic and creative people
Executives: Most of the staff at the Branch is young, qualified, enthusiastic, good-looking people
VietinBank has created a corporate culture handbook to guide its employees on customer interactions and workplace communication The Cua Lo branch actively enforces these guidelines and routinely assesses its staff's adherence to the established standards.
VietinBank, officially known as the Bank of Industry and Trade Vietnam Commercial Joint Stock Bank, is recognized as one of the four largest commercial banks in Vietnam, establishing itself as a trusted brand with extensive connections across various sectors With relationships spanning over 850 banks globally, VietinBank is the first bank in Vietnam to achieve ISO 9001:2000 certification Additionally, it is a member of several prestigious organizations, including Vietnam's banking associations, the Asian Banking Association, and SWIFT, as well as being an issuer of VISA and MasterCard internationally.
VietinBank’s slogan, "Improving the values of life," embodies its unique identity and commitment to delivering exceptional services and products Distinct from other banks, VietinBank fosters a close and honest relationship with its customers With the core message of "Reliability, Efficiency, Modernization," the bank emphasizes its brand's essential traits, highlighting its consistency and financial stability This approach ensures optimal service delivery while propelling the bank towards future growth.
VietinBank Cua Lo, a branch of the esteemed VietinBank system, is gaining recognition among customers in Nghe An However, its promotional activities lack effectiveness, with no targeted promotion programs in place As a result, VietinBank Cua Lo has yet to establish itself as a model branch within the VietinBank network.
VietinBank Cua Lo features a structured organization divided by services and products, comprising an Administration Department, Customers Department, Accounting Department, Monetary Department, Risk Management Division, and Transaction Office This structure allows both employers and employees to concentrate on their specific roles, fostering skill enhancement and professional development.
However, with the expansion of network, the increase in customer volume as well as the needs for diverse banking products, this organizational structure remains some disadvantages
- The customer management does not have a good well distribution of responsibilities between departments when they have to manage the same customers.
The bank's division of tasks among specialized departments results in a lack of communication, causing employees to be unaware of each other's responsibilities This disconnect can lead to errors in customer service and challenges in effectively introducing services to clients.
Vietinbank Cua Lo has established a strong corporate culture and organizational behavior that fosters creativity and responsibility among its employees The bank implements effective internal mechanisms that incentivize staff to work diligently and passionately Additionally, the compensation and income structure aligns with the productivity, quality, and effectiveness of each employee's contributions.
Vietinbank Cua Lo is run by a team of qualified and experienced leaders, having worked many years in the banking sector.
The bank has strengthened its self-inspection and control measures across all operational areas, including credit, accounting, and treasury This proactive approach aims to address and rectify any business shortcomings, thereby ensuring secure and sustainable development.
- Effective post-inspection activities have been implemented The bank has carried out cross-checking within each department and between departments in order to identify mistakes and timely correct them
- However, risk management activities of the banks fail to meet the requirements due to the lack of human resources
- The organizational structure has not followed the customer-oriented principle Some departments such as product research and development department and customer service department are still lacking
The financial capability of a bank, which encompasses its ability to generate and utilize capital funds from its operations, is demonstrated through key indicators such as the size of owner’s capital, asset quality, capital quality, profitability, and operational security.
Financial capacity is assessed by quantitative and qualitative criteria.
+ Quantitative criteria indicate the available financial resources including: the size of capital, asset quality, liquidity and profitability
+ Qualitative criteria indicate the ability of exploitation, management and use of financial resources, reflected by the organization, management and technology capabilities and the quality of human resources
VietinBank Cua Lo has consistently enhanced its financial capabilities over the years, with annual total assets, net balance, and mobilized capital sources showing continuous growth compared to the previous year.
As of 30/06/2011, the total capital of Vietinbank Cua Lo was 1,166.99 billion
However, the financial capacity of Cua Lo Vietinbank is still limited compared with the strengths and development potential of the branch
Vietinbank Cua Lo's current research and development efforts are minimal, lacking specific studies tailored to local conditions Additionally, the bank has not made adequate investments in market research, strategic business planning, or network expansion.
VietinBank has successfully completed the first stage of its information technology project, utilizing HP Business Technology Optimization (HP BTO) software solutions This initiative enables the bank to gain a comprehensive overview and control over its IT infrastructure and services, effectively managing its IT system across three regional centers, 150 branches, and around 900 transaction offices nationwide, ultimately leading to significant cost savings.
The HP BTO solutions deployed in VietinBank include:
The Operations Centre empowers the IT system operation team to effectively manage, diagnose, and prioritize issues related to infrastructure, focusing on the impact these problems have on business operations.
Besides, VietinBank is the first organization in Vietnam to use the IBM mainframe servers to prevent risks
2.3.8 Evaluation of strengths and weaknesses
From the analysis of the internal factors of VietinBank Cua Lo, some outstanding strengths and weaknesses of the branch can be identified as follows:
1 VietinBank has a strong brand with 20 years of reputation
2 VietinBank has an advantage of human resources: qualified, experienced and professionally trained employees
3 Another strength of the bank is effective internal mechanism and motivation which encourages every employee to work creatively, responsibly and enthusiastically Salary and Income are based on the work efficiency, quality and performance of each employee
4 Effective human resource training and development activities
5 The bank’s technology system, products and services are constantly upgraded, advanced and modern
1 Lack of clear and obvious business strategies
VietinBank Cua Lo stands out among other banks due to its strong brand reputation, highly qualified employees, exceptional customer service quality, and a motivated internal culture These core competencies are key differentiators that contribute to the bank's success and competitive edge in the financial sector.
2.3.9 Internal Factor Evaluation (IFE) Matrix
Table 2.8: The IFE Matrix of VietinBank Cua Lo
3 Effective internal mechanism and motivation 0.10 3 0.30
4 Effective human resource training and development activities
5 Modern technology system and good products and services systems
6 Lack of clear and obvious business strategies 0.15 1 0.15
Matrix analysis
Table 2.9: The SWOT Matrix of VietinBank Cua Lo
1 Integration of the banking industry of Vietnam into the world economy
2.Opening of financial service market
3 Increasing demands for banking products and services
4 Stable political situation, continuously developing economy
1 Increasing competitive pressure in the banking sector.
2 Brain-drain to other banks 3.Increasing risk of bankruptcy of traditional clients
5 Pressures from customers and suppliers
3 Effective internal mechanism and motivation
4 Effective human resource training and development activities
5 Modern technology system and good products and services
S1,S2,S5+O1,O3,O4: Expand the network and increase the market share
S1,S2,S3,S4+T2: Develop human resources with long-term commitment
1 Lack of clear and obvious business strategies
W1,W2+O1,O2,O3: Develop business and marketing strategies W3,W4+O5: Apply technology to manage and overcome risks W3+O1,O2: Take advantage of the capital sources from external partners
W1,W2,W3,W5+T1: Improve marketing and financial capabilities; expand the network to reduce the competitive pressure.
Strengthen the operation and financial capabilities to reduce risks.
2.4.2 Proposed strategies from the SWOT Matrix
S1,S2,S5+O1,O3,O4: Expand the network, increase the market share
S1,S2,S3,S4+T2: Develop human resources with long-term commitment
W1,W2+O1,O2,O3: Develop business and marketing strategies
W3,W4+O5: Apply technology to manage and overcome risks
W3+O1,O2: Take advantage of the capital sources from external partners
W1,W2,W3,W5+T1: Improve marketing and financial capabilities; expand the network to reduce the competitive pressure.
Strengthen the operation and financial capabilities to reduce risks.
Business goals and objectives of VietinBank - Cua Lo Branch
VietinBank aims to establish itself as a leading financial and banking corporation in Vietnam and achieve a prominent position globally The bank operates on core principles of safety, efficiency, modernity, and sustainable development, with a strong emphasis on both commercial and investment banking.
For Vietinbank - Cua Lo Branch
VietinBank - Cua Lo Branch aims to establish itself as a premier banking institution in Nghe An Province, focusing on the core principles of Safety, Efficiency, and Modernity to deliver top-quality products and services to its customers.
- Compete the process of issuing ISO Certificate
- Transform to the operation model of a retail bank’s branch in Nghe An
- Strive to become a 1 st class branch
- Expand the network, establish more transaction offices
- Focus on developing some advantageous services such as international payments, ATM cards
- Improve the management, governance, internal control and risk management capabilities
Selection of feasible business strategies
After classifying different groups of strategies by the SWOT Matrix, we are going to develop the QSPM
Table 3.2 The QSPM of Vietinbank Cua Lo Key factors Weight Strategic Alternatives
Market Competitive Product Risk development capacity improvement Development Reduction
AS TAS AS TAS AS TAS AS TAS Strengths
Effective internal mechanism and motivation 0.10 2 0.2 3 0.3 1 0.1
Effective human resource training and development activities
Modern technology system and good products and services systems
Lack of clear and obvious business strategies
Integration of the banking industry of
Vietnam into the world economy
Opening of financial service market 0.15 2 0.3 2 0.3 2 0.3 2 0.3
Increasing demands for banking products and services 0.10 2 0.2 3 0.3 1 0.1
Stable political situation, continuously developing economy
Increasing competitive pressure in the banking sector 0,10 2 0.2 2 0.2 2 0.2 3 0.3
Brain-drain to other banks 0.05 1 0.1
Increasing risk of bankruptcy of traditional clients 0.05 4 0.2
Pressures from customers and suppliers 0.05 2 0.1 3 0.2 2 0.1 3 0.2
From the QSPM, it can be seen that:
The market development strategy is scored: 4.2
- The competitive capacity improvement strategy is scored: 3.8
- The product development strategy is scored 3.5
- The risk reduction strategy is scored: 3.4
Therefore, the 3 highest - score strategies should be selected
Based on the analysis of SWOT and QSPM matrices, VietinBank - Cua Lo Branch should focus on the 3 following strategies:
Strategy 1: Network and market share expansion
This strategy concentrates on expanding the network of transaction offices and developing advertisement, marketing and sales promotion activities in order to increase the market share.
Strategy 2: Competitive capacity improvemeny by differentiation and customer service
The strategy emphasizes enhancing customer service in retail banking To successfully implement these services, the bank must attract new customers while also consulting and nurturing existing ones to ensure customer retention and growth.
Strategy 3: Developing technology-based products
This strategy emphasizes on the exploitation and development of technology- based products such as SMS Banking, Internet Banking to save costs, shortens the time spent on customer services.
3.2.3 Strategic position of Cua Lo Branch in comparison with the system of Vietinbank
VietinBank - Cua Lo Branch is becoming a 1 st class branch of VietinBank and converting into the model of retail banking in Nghe An province The position of
VietinBank Cua Lo is defined in the general strategy of VietinBank Vietnam
The business strategy of Vietinbank Cua Lo is a part of the general strategy of
The business strategy of Vietinbank Cua Lo concretizes the general strategy of Vietinbank in the area of Nghe An province considering the unique characteristics of Nghe An market.
Strategy implementation solutions
VietinBank Cua Lo recognizes the development of human resources as a crucial strategy for expanding its network and enhancing customer service This initiative aligns with VietinBank's broader goal of transitioning from a state-owned commercial bank to a joint-stock commercial bank.
The existing workforce of the bank, originating from the era of state-owned commercial banking, may not adequately meet the manpower requirements for transitioning to a retail banking model While these employees possess valuable experience that contributes to operational effectiveness, they need time to adapt to the new market-driven business mindset and culture Despite their foundational knowledge and experience, there is a notable gap in their understanding of banking products and services, as well as in their management, financial, and credit analysis skills.
Professional soft skills, including selling, effective communication, brand promotion, conflict resolution, and negotiation, are crucial for roles like tellers, customer relationship executives, and marketing executives However, these skills often receive inadequate focus, leading to limited efficiency in retail network expansion and customer attraction.
Currently, Vietinbank has clear recruitment mechanisms; and the bank has assigned Vietinbank School of human resource delelopment and training to be in charge of the recruiment work
When Vietinbank Cua Lo has recruitment needs, it should clearly communicate its human resource requirements to the VietinBank Head Office The recruitment board places a strong emphasis on not only qualifications and professional skills but also on candidates' self-learning abilities and sense of responsibility in their work.
VietinBank Cua Lo will not recruit any unqualified personnels for the purpose of managing relationships.
To successfully implement the retail banking service development strategy, the human resource training activities of Cua Lo Vietinbank should focus on the following key points:
To address the growing demands for skilled human resources and navigate the challenges of a competitive business landscape, it is essential to prioritize the training, retraining, and updating of employees' fundamental knowledge of market mechanisms.
The bank must enhance awareness of business and corporate culture by identifying, defining, and honoring the core values rooted in the ideological and spiritual foundations of Vietnamese business culture.
Emphasizing soft skills and management training for middle and top-level managers is crucial for fostering innovative thinking and enhancing management capabilities This focus prepares them to adapt to market mechanisms, facilitating the successful implementation of reform plans and promoting acceptance of change at both executive and operational levels.
To enhance the modern business approach of retail banking, it is essential for banks to diversify the training programs for tellers and customer relations specialists at transaction points Emphasizing soft skills training for operational staff will transform their knowledge into effective performance, ultimately maximizing the bank's existing resources and meeting the evolving demands of the retail network.
To thrive in a globally integrated economy, banks must prioritize foreign language training, particularly in English, for their transaction offices in major cities This focus will enable them to seize business opportunities with foreign clients and strengthen relationships with international banks operating in Vietnam and beyond.
3.3.1.3 Human resource management and reward & compensation policies
To enhance operational efficiency at VietinBank Cua Lo, it is crucial to implement effective employee allocation policies and to part ways with unqualified and unethical staff This strategic approach will pave the way for the recruitment of qualified employees who meet the necessary work standards.
- Deploy the People Soft human resource management software of VietinBank
- Implement the review of staff allocation in all Divisions, Departments of the Branch in order to organize the work effectively, productively and with higher quality.
- Implement the staff planning activities for each position and title of all
Divisions and Departments in accordance with the policies of VietinBank.
- Apply work performance management and evaluation program in order to monitor and improve the work performance, thereby motivate the staffs and create positive competition throughout the Branch
Implementing marketing principles in customer relationship management is crucial for businesses This strategy focuses on aligning skilled personnel with optimized processes and advanced technology to achieve a balance between the bank's profitability and the highest levels of customer satisfaction.
The following solutions should be implemented in order to improve the marketing efficiency and customer satisfaction:
VietinBank Cua Lo's customer service department plays a crucial role in ensuring that customers feel respected and valued during their banking experience This department is dedicated to assisting new customers by providing essential information for transactions, addressing inquiries, and promoting the bank's products and services It fosters a professional transaction culture reflective of an industrial and commercial bank, characterized by the courteous and civilized demeanor of retail staff, which enhances the overall customer experience.
Vietinbank brand identified by its unique uniforms.
VietinBank Cua Lo should implement targeted marketing strategies to effectively promote its products and services, ensuring that customers can easily access this information and develop a habit of using its offerings The bank must broaden its services to cater to enterprises of all sizes and ownership structures While it is essential to maintain strong relationships with existing depositors, VietinBank should also focus on attracting new clients, including joint stock companies and profitable limited liability firms, to diversify its customer base.
ISO standards should be applied in the service sector.
To effectively dominate the market, it is essential to analyze and evaluate market potential while formulating a capital growth strategy The bank must manage regional capital resources efficiently and redefine loan and credit conditions based on clients' financial capabilities, risk tolerance, and business potential Additionally, actively seeking out projects and profitable customers is crucial for providing loans that align with the current credit policy.
To successfully transition to a retail banking model, VietinBank Cua Lo should focus on individual customers to enhance market share and reduce business risks Implementing tailored product packages is a strategic approach for future growth Learning from the successful experiences of other branches, such as the Ho Chi Minh City Branch's overseas study support package, will be crucial Additionally, thorough preparation in resource allocation and market analysis is essential for making informed pricing decisions.
The Marketing Mix consists of 7 elements: Product, Price, Place, Promotions,
Implementation progresses
Stage 1 (From the present to the end of 2011):
- Focus on employee re-training activities in order to accomplish the objective of transforming to the operation model of a retail bank.
- Recruit marketing specialists, develop specific marketing programs
- Search sites to open more transaction offices, install ATM machines; prepare the capital sources to invest in those transaction offices and ATM machines.
- Focus on the establishment of at least 03 to 05 transaction points in Nghe
- Deploy pilot customer consulting services, marketing solutions at 03 transaction offices
- Establish Vietinbank ATM points of sales in hotels, restaurants and resorts in Cua Lo
- Evaluate the performance after the implementation of solutions
- Correct some mistakes or failures of the pilot solutions implemented in the selected transaction offices.
- Expand the network of transaction offices and ATM machines
- Synchronously implement the strategic solutions in transaction offices
- Evaluate the strategies implemented in the period of 2011 - 2015
- Formulate the business strategies for the period of 2016 - 2020
Potential problems and solutions
In the process of implementing the business strategies for the period of 2011
- 2015, it is anticipated that VietinBank Cua Lo may encounter the following problems:
VietinBank Cua Lo faces challenges in reallocating staff to align with business strategies, which may result in unqualified personnel being reassigned or laid off, potentially straining relationships within the organization However, to ensure a competent workforce and effective management, the bank must embrace this risk The key to addressing this issue lies in adhering strictly to the bank's human resource policies regarding employee reallocation and turnover.
Employee re-training programs aimed at transitioning to the retail bank model are essential for the success of Vietinbank Cua Lo, despite the high financial and time costs involved As human resources play a critical role in this transformation, it is vital to create tailored training plans for different sections and employee groups This approach ensures that training activities are conducted without disrupting the bank's overall operations.
Expanding the network of transaction offices and investing in technology for operational management will initially raise investment costs and reduce short-term profits; however, this strategy is expected to yield long-term gains To address these challenges, it is crucial to focus on thorough investment in the construction of each transaction office, coupled with efficient investment management to minimize losses and waste.
In the increasingly competitive banking market of Vietnam, particularly in Nghe An province, bank branches are now operating with greater autonomy and accountability for their business results This shift has prompted each branch to formulate distinct business strategies to enhance their competitive edge With advancements in information technology supporting various banking activities, the primary objective for banks is to attract a larger customer base To accomplish this, it is essential for banks to establish clear and effective business strategies, accurately identify target customers, leverage their strengths, capitalize on opportunities, address weaknesses, and mitigate potential threats.
The project focuses on formulating effective business strategies for VietinBank Cua Lo, grounded in strategic management theory and a thorough analysis of both internal and external factors This approach aims to identify the most suitable strategies and outline specific solutions for implementation.
This Capstone project adheres to the guidelines set forth by the Master of Business Administration Program at Griggs University, USA The team has diligently researched diverse materials to perform analyses that fulfill both content and presentation standards, ensuring that all data and references are accurately and clearly cited.
1 Ngo Kim Thanh Prof Dr., (April 2011), Strategic Management, National
Economics University Publishing House Hanoi
2 Fred R David (2006), Concepts of Strategic Management, StatisticalPublishing House.