Building business strategy for retail banking in bank for investment anf development of Vietnam (BIDV) from 2011 to 2015

CAPSTONE PROJECT REPORT

BUILDING BUSINESS STRATEGY FOR
RETAIL BANKING IN BANK FOR
INVESTMENT AND DEVELOPMENT OF
VIETNAM (BIDV) FROM 2011 TO 2015



Nguyen The Thang
Le Thi Phuong Hai
Nguyen Hai Yen
Dang Van Hai

Class: GaMBA 01.N06










H A N O I 2 0 1 1



GRIGGS UNIVERSITY

GLOBAL ADVANCED MASTER OF BUSINESS ADMINISTRATION PROGRAM

CAPSTONE PROJECT REPORT

BUILDING BUSINESS STRATEGY FOR
RETAIL BANKING IN BANK FOR
INVESTMENT AND DEVELOPMENT OF
VIETNAM (BIDV) FROM 2011 TO 2015








Group Number : 5
Student’s name : Nguyen The Thang
Le Thi Phuong Hai
Nguyen Hai Yen
Dang Van Hai

H A N O I 2 0 1 1



ACKNOWLEDGEMENTS

We pledge that the report ―Building business strategy for retail banking in
the Bank for Investment and Development of Vietnam (BIDV) from 2011 to 2015‖
is our own research. All contents and results of the report are true and have not been
published in any other researches. Data and figures used in the report are accurate
and their sources are all clearly stated.



TABLE OF CONTENTS
CHAPTER 1 : THEORETICAL BACKGROUND OF THE CAPSTONE 3
1.1 Business strategy - Definition, roles and attributes 3
1.1.1 Definition 3
1.1.2 The roles of the business strategy 3
1.1.3 Business strategy characteristics 4
1.2 Process for building business strategy 4
1.2.1 Vision and missions 4
1.2.2 Internal and External environment analysis 5

1.2.2.1 External environment analysis 5
1.2.2.2 Internal environment analysis 10
1.2.3 Building Matrix for selecting business strategy 11
1.2.3.1 External Factors Matrix 11
1.2.3.2 Internal Factors Matrix 11
1.2.3.3 SWOT Matrix 12
1.2.3.4 BCG Matrix 12
1.2.3.5 GREAT Matrix to choose the best business strategy 13
1.2.4 Implementing process 14
1.2.5 Assessing the effects of the built business strategy 15
1.3 Introduction to the retail banking 15
1.3.1 The roles of retail banking in the commercial bank 15
1.3.2 The models of retail banking in the world 16
1.4 Retail banking environment in Vietnam banking system 17
1.4.1 The potentials 17
1.4.2 Retail banking environment 17
1.4.2.1 Legal framework 17
1.4.2.2 Overview of the retail banking in Vietnam 18
CHAPTER 2 : BIDV RETAIL BANKING RESULTS FROM 2008-2010 20
2.1 Introductions to BIDV 20
2.1.1 History and operational features of BIDV 20
2.1.2 The Bank’s organization and network 20
2.1.3 Bank operational results of BIDV from 2008-2010 20
2.2 Assessing retail banking operational results of BIDV from 2008-2010 22
2.2.1 General assessment 22



2.2.1.1 Mobilizing capitals from individuals and households 23
2.2.1.2 Lending activities to private customers 24

2.2.1.3 Retail banking services 25
2.2.1.4 Retail banking network 27
2.2.2 Some problems to be overcome in retail banking 28
2.2.2.1 The weaknesses 28
2.2.2.2 The causes 29
2.3 Building business strategy for retail banking in BIDV from 2011-2015 30
2.3.1 Analyzing and assessing environment on retail banking in the future 30
2.3.1.1 Macro environment (PEST model) 30
2.3.1.2 Industry analysis – Michael Porter‘s Five Forces Model 33
2.3.1.3 Competition 37
2.3.2 Opportunities and threats accessing 38
2.3.3 Building business strategy for retail banking in BIDV from 2011-2015 basing on the current
conditions 39
2.3.3.1 Resources, core value of the BIDV 39
2.3.3.2 Strengths and weaknesses 41
2.3.3.3 Building business strategy matrix 42
CHAPTER 3 : BIDV RETAIL BANKING BUSINESS STRATEGY AND
SOLUTIONS TO IMPLEMENT IN THE PERIOD FROM 2011 – 2015 53
3.1 BIDV operational targets and retail banking objectives from 2011 – 2015 53
3.1.1 Environment forecasting 53
3.1.2 Vision, core values 53
3.1.3 BIDV’s equitization process 54
3.1.4 Objectives by 2015 55
3.1.4.1 Market positioning 55
3.1.4.2 Main targets: 56
3.2 Choosing new business strategy for retail banking 57
3.2.1 SWOT Matrix synthetic 57
3.2.2 Strategy selection by Great Model 60
3.3 Solutions for business strategy for retail banking from 2011 - 2015 63
3.3.1 Operational management 63

3.3.1.1 Improving the management capacity 63
3.3.1.2 Complete the model of retail banking management and operation. 64
3.3.2 Financial solutions 64



3.3.3 Marketing management 64
3.3.3.1 Develop a solid customer base and maximize customer value 64
3.3.3.2 Enhancing research and development of retail banking products and service 65
3.3.3.3 Develop and improve the efficiency of network and distribution channels 67
3.3.3.4 Promoting communication and marketing activities in retail banking 68
3.3.4 Human resource management 68
3.3.4.1 General solutions 68
3.3.4.2 Recruitment policy 69
3.3.4.3 Training policy 69
3.3.4.4 Compensation policies 69
3.4 Plan to implement the new business strategy for retail banking 71
3.5 Recommendations to authorities 72
3.5.1 Recommendations to the Government 72
3.5.2 Recommendations to SBV 73




LIST OF ABBREVIATIONS

ACB : Asia Commercial Bank
ALCO : Asset/Liabilities Management Committee
Agribank : Bank for Agriculture and Rural Development of Vietnam
ATM : Automatic Teller Machine

BIDV : Bank for Investment and Development of Vietnam
BIC : BIDV Insurance Company
CAR : Capital Adequacy Ratio
CPI : Consumer price index
CIC : Credit Information Center
CPM : Competitive Profile Matrix
EFE : External Factor Evaluation matrix
FDI : Foreign Direct Investment
GDP : Gross Domestic Product
HR : Human resources
IFE : Internal factor environment matrix
NPL : Non-performing loan
M&A : Mergers and acquisitions
POS : Point of sale
RB : Retail Banking
RBO : Retail Banking Operation
SBV : The State Bank of Vietnam
SOEs : State-owned enterprises
VAS : Vietnamese accounting standards
VCB : Joint stock Bank for Foreign Trade of Vietnam
Vietinbank : Joint stock Bank for Industry and Trade of Vietnam
WB : World Bank
WTO : World Trade Organization



LIST OF TABLES
Table 1.1: SWOT matrix 12
Table 1.2: Strategy choices 14
Table 2.1: BIDV‘s business performances 21

Table 2.2 Retail Banking business performance result from 2008 to 30/6/2011 22
Table 2.3 Retail loan allocations according to purposes 25
Table 2.4 BIDV‘s banking network from 2008 to 6/2011 27
Table 2.5 Business performance result of ATM 28
Table 2.6 Major macroeconomic indicators 31
Table 2.7 Numbers of banks in Vietnam, 2001-2010 34
Table 2.8 Fund mobilization from 2008 – June 2011 37
Table 2.9 Outstanding retail loans, mobilized of some Vietnamese banks - 2010 38
Table 2.10 Internal Factors Matrix 42
Table 2.11 External Factors Matrix 43
Table 2.12
CPM
45
Table 2.13 Some indicators to compare between 6 banks (by the end of 2010) 48
Table 2.14 SWOT analysis for retail banking in BIDV 48
Table 3.1 Main targets for BIDV‘s RBO in the period from 2011 – 2015 56
Table 3.2 SWOT Matrix synthetic 57
Table 3.3 GREAT model to choose a suitable strategy 61
Table 3.4 The comparison of suggested strategies 62





LIST OF FIGURES, GRAPHS
Figure 1.1: Business Strategic Planning Process 5
Figure 1.2: Macro Environment 6
Figure 1.3: M. Porter Five Forces Model 9
Figure 2.1 BCG Matrix of BIDV 50

1

INTRODUCTION

In the context of deeper and more comprehensive integration of Vietnam into the
international economy, Vietnamese commercial banks have been facing with many
challenges, such as the participation of multinational corporations which are
powerful in finance, engineering and technology. In this situation, commercial
banks are forced to have strong innovation in their business strategies. Once the
economy was integrated, especially with the commitment of Vietnam to open
domestic financial market for foreign investors, foreign commercial banks have
powerful internal force as capital and technology will take many advantages to
dominate the domestic market. How to stand firmly in the face of fierce competition
of foreign banks is also the biggest challenge towards Vietnamese commercial
banks. Answer to it, many commercial banks has chosen to develop retail banking
services as their sustainable and long term strategy. Practical experience has been
proving the appropriateness of this strategy. Any commercial banks which built the
strategy targeting to retail banking services gained success in dominating market
and having marked revenue. Even though the initial revenue has not been
significant yet but this is the sustainable revenue and could bring the long term
development to the banks.
Vietnam retail banking market is assessed as a renewal and extremely potential
market. Until now, most of commercial banks in Vietnam recognized the
importance of developing retail banking service. Hence, the competition between
commercial banks in Vietnam in the field of retail banking is increasingly strong.
Typical rivals are large commercial banks with optimum strategies built since the
initial establishment, State owned banks with strength of scale and human resource
and foreign banks with full experience and modern technology which are
penetrating deeply into the retail banking field.

BIDV is a commercial bank with long history of operation, experience and takes
advantage in providing banking service for large enterprises. BIDV‘s service for

2

individuals and households has limited and still not been taken care in adequate to
its potential. To accomplish the objectives of developing stably, safely, effectively,
meeting the requirement of international integration as well as reaching to
international practice and standard, BIDV need to boost its retail banking service,
expand and strengthen it and take it to be the core activities of BIDV. During recent
years, in order to enhance its competitive capacity, BIDV has been diversifying,
pushing some activities such as investing in technological base, developing banking
service, enlarge the network of branches, transaction offices, ATM system, internet
banking distribution channel…These are extremely important foundation to
improve retail banking service of BIDV in future.
Retail banking business is a rather new activity of BIDV, thus, it is absolutely
necessary to build the “Business strategy for retail banking in BIDV in the period
from 2011-2015” to bring awareness of position and importance of retail banking
activities, in line with determining clear objectives, orientation and logical route for
the development of retail banking business. The capstone consists of three chapters
as follows:
CHAPTER 1: THEORETICAL BACKGROUND OF THE CAPSTONE
CHAPTER 2: BIDV RETAIL BANKING RESULTS FROM 2008-2010
CHAPTER 3 : RETAIL BANKING BUSINESS STRATEGY AND
SOLUTIONS TO IMPLEMENT IN THE PERIOD FROM 2011 – 2015

3

CHAPTER 1 : THEORETICAL BACKGROUND OF THE CAPSTONE

1.1 Business strategy - Definition, roles and attributes
1.1.1 Definition
Each researcher has his own opinions, views and remarks on strategy. In this
capstone, we mention some definition of strategy as followings:
Quinn (1980) defined strategy as an illustration or plan which integrates key
objectives, policies and chain of activities in a whole tight composition.
William F.Gluek (1972) defined strategy precisely as: ―A unified, comprehensive
and integrated plan designed to assure that the basic objectives of the enterprise are
achieved‖. The three adjectives, which Gluek has used to define a plan, make the
definition quite adequate. ‗Unified‘ means that the plan joins all the parts of an
enterprise together; ‗comprehensive‘ means it covers all the major aspects of the
enterprise, and ‗integrated‘ means that all parts of the plan are compatible with each
other.
Johnson and Scholes (1999) described ―Strategy is the direction and scope of an
organization in the long-term in order to achieve advantage for the organization
through its arrangement of resources within a demanding environment, to meet the
markets and to complete the stakeholder expectations‖
Le el at (2009) summarized that strategy is an orientation and scope of an
organization in long term in order to gain the competitive advantage for institution
by defining all resources in a changing environment to meet the market demand and
satisfy expectations of stakeholders.
1.1.2 The roles of the business strategy
- Business strategy helps the firms clearly define its objective; its target basing on
that, the firm has the right direction for the business operation.
- Business strategy helps the firm to see the opportunities and threats that may
happen in current and future business in order to make analysis and forecast the

4

future market, take full advantage of opportunities, reduce the threats, improve the

competitiveness of enterprise, and achieve great success.
- Business strategy helps to improve the usage of the firm‘s resources, increase its
competitiveness position in the market in order to ensure the sustainable
development of the firm.
- Business strategy helps the firms to create solid bases for setting the policies and
decisions on the business in compliance with the market movement.
- Compare strengths and weakness of the company, the mutual supporting relation
between opportunities and challenges outside the company, and then create the
competitive advantage for enterprise.
1.1.3 Business strategy characteristics
- Business strategies shall recognize clearly necessary objectives which need to
achieve in a specific period and shall be fully aware of at every aspect and any
levels of the firm.
- Business strategy shall establish a relationship between the firm‘s strengths and
weaknesses and a mutual relationship between opportunities and threats to the firm
to gain competitive advantages.
- Strategy is an instrument to put long-term objectives of the firm.
- Business strategies shall make sure the maximization of resource utilization within
the firm, the exploitation of strengths and taking of opportunities to gain
competitive.
- Business strategy shall be reflected in a continuous process.
- Business strategy shall classify obviously reasonable scope of the firm.
1.2 Process for building business strategy
1.2.1 Vision and missions
To build a business strategy, we first identify the firm‘s main visions and missions.
This stage provides a context for the firm‘s strategies. What the business is trying to
achieve in long-term is the vision of the firm. Missions explain the purposes and
products of the business. We only have a good mission statement when we have the

5

purposes and bases which differentiate with the rest. A mission statement may
include the firm‘s business viewpoint and its behaviour to employees. Regarding
the firm‘s tasks, missions provide expectations of its employees and its overall
image to stakeholders.
Figure 1.1: Business Strategic Planning Process










(Source: Strategic management slide lecture, GaMBA program, Griggs University)
1.2.2 Internal and External environment analysis
1.2.2.1 External environment analysis
The second step is analyzing the external environment of the firm. This analysis
enables the firm to identify opportunities (O) and threats (T).
PEST analysis is a technique people use to identify, assess and evaluate external
factors affecting the performance of an organization. A PEST analysis is undertaken
to help an organization gain an understanding of the wider business environment
and may be carried out as part of an ongoing process of environmental analysis or
scanning. The aim is to provide information to assist those responsible for strategy
development and decision making. PEST analysis may be used in the context of
overall organizational strategy or more specifically to evaluate the feasibility of a
new product or service, or expansion into a new market.
Main objectives and

missions
Analysis of internal
environment (S, W)

Analysis of external
environment (O, T)
Strategic choice

Strategy implementation

Result evaluation

Feed back

6

The factors in PEST analysis are (1) political/legal, (2) economic, (3) socio-cultural
and (4) technological elements.

Figure 1.2: Macro Environment


(Source: Strategic management slide lecture, GaMBA program, Griggs University)
- Political and legal environment: Politic and legislation factors affect developing
strategy of enterprises in different directions. They may be opportunities to this firm
but in contrast, be disadvantage to other firms. Stable politic brings good condition
for developing economy, vice versa, unstable politic will have negative influences
on economy. Besides, running in an economy which are adjusted by strict law
system, enterprises may face both advantages and disadvantages because a clear and
full law system will create healthy competitive environment and be a foundation for

an attractive environment in the future. One of the typical trends in recent years is
the redirection to deregulation. The eradication of exhibitions and regulations makes
the import barrier become lessen and creates an intensive competition in some fields

Supplier power

Buyer power

Rivalry
Threats of
substitutes
Threat from
new entrants







Political - Legal
Economic
Global

Demographical
Cultural
Social

Technological

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of industry. In addition, the policy of encouraging various economic elements to
include actively in business activities is the risk for state owned firms but the great
opportunity for private enterprises because they can participate in the market more
conveniently and easily.
- Economic environment: In the economic environment, the organizational analysis
should centre on those aspects of the economic system that directly impact the type
of project being considered. For example, inflation, labour laws, and opportunity
costs for researchers in public institutions directly impact organizational activities.
- Cultural and Social Environment: Social and cultural forces at local, national,
and often regional levels have profound influence on the way organizations conduct
their work and on what they value in terms of outcomes and effects. For example,
the mores of an indigenous culture have a bearing on the work ethic and on the way
in which people relate to one another. Undoubtedly, the most profound cultural
dimension is language. The extent to which organizational members can participate
in the discourse of the major scientific language will determine the extent to which
research efforts focus inwardly or contribute to regional and global research
agendas. Understanding the national/regional/local values toward learning and
research provides insight into the type and nature of research that is valued. For
example, what is the relative priority placed on contract research in partnership with
local clients, e.g. testing products and procedures with indigenous populations, as
opposed to sharing information with academic peers internationally, or generating
biostatistician data that will shape national or regional policy? Arriving at these
priorities involves culture-based decisions.
- Technological Environment: Technical progressions have influence on many
aspects of the whole society. These impacts are through products, technical process
and new materials. Directions and fluctuations in technology may be chance for
enterprises which are able to mobilize capital quickly and effectively, but vice
versa, it is threat for firms fixed with old technologies and slow to adjust. One of the

most important effects of changing technology is on barriers of import and export

8

and the restructuring thoroughly sector‘s structure as well as on the creation of new
jobs.
According to M. Porter (2009), technological change is not important to
technological benefit itself, but it is important if it impacts on competitive
advantages and sector‘s structure. On the other hand, the development of
technology will shorten product circle, thus, firms should pay attention to the trend
of technological innovation. Every firm has relation with many different and related
kinds of technology. Its business activities also have that various relation.
Therefore, a technology is very important to competition if it impacts on firm‘s
competitive advantages or on structure of financial sectors.
In sum, PEST is useful before SWOT - not generally vice-versa - PEST definitely
helps to identify SWOT factors. There is overlap between PEST and SWOT, in that
similar factors would appear in each. That said, PEST and SWOT are certainly two
different perspectives: PEST assesses a market, including competitors, from the
standpoint of a particular proposition or a business. SWOT is an assessment of a
business or a proposition, whether it is your own or a competitor's. Strategic
planning is not a precise science - no tool is mandatory - it's a matter of pragmatic
choice as to what helps best to identify and explain the issues. PEST becomes more
useful and relevant the larger and more complex the business or proposition, but
even for a very small local businesses a PEST analysis can still throw up one or two
very significant issues that might otherwise be missed.
Besides PEST we can use Porter‘s five forces model to access the industry
environment. Michael Porter five forces model provides useful input for SWOT
Analysis and is considered as a strong tool for industry competitive analysis.
Porter‘s model of competitive forces assumes that there are five competitive forces
that identify the competitive power in a business situation: the substitutes, new

entrants, intense rivalry, bargaining power of suppliers and bargaining power of
buyers.


9

Figure 1.3: M. Porter Five Forces Model
-
(Source: Michael E.P. (1980), Competitive Strategy, Free Press, New York)
- Threat of substitutes: means how easily your customers can switch to your
competitors product. Threat of substitute is high when there are many substitute
products available, customer can easily find the product or service that you‘re
offering at the same or less price, quality of the competitors‘ product is better,
substitute product is by a company earning high profits so can reduce prices to the
lowest level. When there are actual and potential substitute products available then
segment is unattractive. Profits and prices are affected by substitutes so; there is
need to closely monitor price trends. In substitute industries, if competition rises or
technology modernizes then prices and profits decline.
- Threat of new entrants: A new entry of a competitor into your market also
weakens your power. Threat of new entry depends upon entry and exit barriers.
Threat of new entry is high when capital requirements to start the business are less,
few economies of scale are in place, customers can easily switch (low switching
cost), your key technology is not hard to acquire or isn‘t protected well, and your
product is not differentiated
- Industry Rivalry: Industry rivalry means the intensity of competition among the
existing competitors in the market. Intensity of rivalry depends on the number of
competitors and their capabilities. Industry rivalry is high when there are number of
small or equal competitors and less when there‘s a clear market leader, customers

10

have low switching costs, industry is growing, exit barriers are high and rivals stay
and compete, fixed cost are high resulting huge production and reduction in prices.
- Bargaining power of supplier means how strong is the position of a seller, how
much your supplier has control over increasing the price of supplies. Suppliers are
more powerful when suppliers are concentrated and well organized, a few
substitutes available to supplies, their product is most effective or unique, switching
cost, from one suppliers to another, is high, you are not an important customer to
supplier
- Bargaining power of buyer means how much control the buyers have to drive
down your products price, can they work together in ordering large volumes.
Buyers have more bargaining power when few buyers chasing too many goods,
buyer purchases in bulk quantities, product is not differentiated, buyer‘s cost of
switching to a competitors‘ product is low, shopping cost is low, and buyers are
price sensitive.
1.2.2.2 Internal environment analysis
The third step to establish a business strategy is analysing internal environment to
find out the firm‘s strengths (S) and weaknesses (W). Hence, chosen business
strategies would help the firm make use of strengths and overcome weaknesses. The
internal environment analysis of strengths and weaknesses focuses on internal
factors that give an organization certain advantages and disadvantages in meeting
the needs of its target market. Strengths refer to core competencies that give the
firm an advantage in meeting the needs of its target markets. Any analysis of
company strengths should be market oriented/customer focused because strengths
are only meaningful when they assist the firm in meeting customer needs.
Weaknesses refer to any limitations a company faces in implementing a strategy.
Weaknesses should also be examined from a customer perspective because
customers often perceive weaknesses that a company can not see. Being market
focused when analyzing strengths and weaknesses does not mean that non-market
oriented strengths and weaknesses should be forgotten. Rather, it suggests that all

11

firms should tie their strengths and weaknesses to customer requirements. Only
those strengths that relate to satisfying a customer need should be considered true
core competencies.
1.2.3 Building Matrix for selecting business strategy
1.2.3.1 External Factors Matrix
Analysing external environment is qualitative, subjective and abstract. Therefore
two suggested tools to score and to quantify impacts of the external environment to
a firm are external factor evaluation matrix (EFE) and company profile matrix
(CPM).
The EFE matrix is the strategic tool used to evaluate firm existing strategies, EFE
matrix can be defined as the strategic tool to evaluate external environment or
macro environment of the firm include economic, social, technological,
government, political, legal and competitive information.
The EFE matrix is similar to IFE matrix. The only difference is that IFE matrix
evaluates the internal factors of the company and EFE matrix evaluates the external
factors.
Wheelen and Hunger (2005) demonstrated the steps to develop the EFE matrix: (i)
Identify a list of KEY external factors; (ii) Assign a weight to each factor, ranging
from 0 (not important) to 1.0 (very important); (iii) Assign a 1-4 rating to each
critical success factor to indicate how effectively the firm‘s current strategies
respond to the factor; (iv) multiply each factor‘s weight by its rating to determine a
weighted score; (v) Sum the weighted scores. The higher the total score is, the
better the firm responds to external factors. Average total weighted score is 2.5.
1.2.3.2 Internal Factors Matrix
Similar to analysing the external environment, internal factor environment matrix
(IFE) is suggested to quantify the internal environment assessment: (i) List key
internal factors as identified in the internal audit process; (ii) Assign a weight that

ranges from 0.0 (not important) to 1.0 (the most important) to each factor; (iii)
Assign a 1 to 4 rating to each factor to indicate whether that factor represents a

12

major weakness (rating = 1), a minor weakness (rating = 2), a minor strength (rating
= 3), or a major strength (rating = 4). Note that strengths must receive a 4 or 3 rating
and weaknesses must receive a 1 or 2 rating; (iv) Multiply each factor‘s weight by
its rating to determine a weighted score for each variable and (v) Sum the weighted
scores for each variable to determine the total weighted score for the organization.
The final value of total weighted score should range from 1.0 (low) to 4.0 (high).
The average weighted score for IFE matrix is 2.5. The total score indicate how the
firm responds to its current and expected internal factors.
1.2.3.3 SWOT Matrix
SWOT matrix is a tool to combine strengths (S), weaknesses (W), opportunities (O)
and threats (T) to formulate and choose from four types of strategy as following:
+ SO strategies: apply internal strengths to take advantage of external opportunities.
+ WO strategies: take advantage of external opportunities to improve internal
weaknesses.
+ ST strategies: apply the firm‘s strength to avoid the impact of external threats.
+ WT strategies: are defensive tactics directed at reducing internal weaknesses and
avoiding external threats.
Table 1.1: SWOT matrix

S - Strengths
W - Weaknesses
O- Opportunities
S-O strategies
W-O strategies
T- Threats

S-T strategies
W-T strategies
(Source: Strategic management slide lecture, Griggs University)

1.2.3.4 BCG Matrix
In the early of 1970‘s, Boston Consulting Group, a leading management
consultancy in USA developed BCG matrix. It helps enterprises to evaluate
business activities of strategic business units. BCG matrix provides a framework for
a company to allocate its resources among different business units and allow one to
compare many units. The BCG matrix is an important internal business analysis tool

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that puts into perspective the growth rate and the market share of a company's
products. A product might either have low or high growth rate and again low or
high market share. It classifies products according to the following four criteria:
1. Stars, a product that has a star attribute is one that has a high market share
accompanied by a high growth rate. A star product can contribute to a company's
success in that it its high market share and its high growth rate means more sales
and more returns from it.
2. Cash cows, cash cows are products that have high market share in a market with
low growth rate. These types of products also have a big chance of success because
the growth rate might be low but the high market share will have a say in the
success of the said products.
3. Dogs are products that have the characteristics of both low market share and low
growth rate. The chances of a success coming out of products that exhibit dogs are
low. Also these are types of products that no company wants to be associated with
them because they practically see nothing useful coming out of it at both the short
and the long run.
4. Question marks, these are products that have the potential to either succeed or

fail. They can become tomorrow's star or likewise tomorrow's dog. Investing with
these types of products can either be risky or lucrative and either way is a possibility
and a company can either have them or avoid them at all costs.
1.2.3.5 GREAT Matrix to choose the best business strategy
The next step is choosing the business strategy. After develop the matrixes above,
the firm can choose its own business strategy. They need to select an optimum
strategy because they can not implement all strategies at a time or each strategy by a
random order. It will cost time, efforts and resources. That‘s why it‘s necessary to
do selection for a best strategy which will serve well the development objectives of
the enterprise given its advantages and disadvantages.

14

On the synthesis of all strategies which has been figured out through the SWOT
analysis S-O, S-T, W-O, W-T, we can use GREAT matrix to identify fundamental
features of each strategy, which will help us to find out the desired strategy.
Table 1.2: Strategy choices


Criteria
Weights
Strategies
Strategy 1
Strategy 2
Strategy 3

Strategy n
Rating
Score
Rating

Score
Rating
Score

Rating
Score
1
2
3
4=2x3
5
6=2x5
7
8=2x7

I
J=2xi
Gain (G)










Risk (R)

Expense (E)










Achievable (A)

Time (T)










Total


xx

xx

xx


xx
Source: Strategic management, GaMBA program, Griggs University, USA
Step 1: Recognize key aspects to be considered as criteria in column 1
Step 2: Anticipate the impacts of those criteria on the general strategy; use the
weight of impacts to show the importance and its degree of influence on strategic
factors (weight in the range of 0-1, with the total of weights is 1)
Step 3: Evaluate and Grade every criterion in each strategy. The grade scale is 1-5,
which is equivalent to 5 levels: poor, average, above average, good, and excellent.

Step 4: Calculate the grades into equivalence by multiply column 2 with the
responsive weight, then we come up with the total grade for each strategy in the
final row.
Finally, we highlight 1-3 strategies with highest grades, which are strategies to be
focus on.
1.2.4 Implementing process
In many cases, business strategy does not succeed due to the lack of necessary
resources. Developing a strategic plan is a top down process. If the management
team don‘t give out a right conclusion at this step, the strategic plan will not work at
the following steps. So:
Being proactive in implementing the strategic plan is the key mission of any
manager. Companies don‘t implement the strategic plan itself, but the human beings

15

do. The tasks of strategy implementation including: Building capacity, ability and
resources, setting up a budget, establishing supporting policies and regulations,
Selecting best practices and encouraging the innovations, Setting up the information
system, Connecting and running, attaching penalty or bonus to the business target in
order to enhance the business implementation, create strategy oriented working
environment and make necessary decisions to implement better the strategy
1.2.5 Assessing the effects of the built business strategy
Although control systems must be tailored to specific situations, such systems
generally follow the same basic process. Feedback from evaluating the effectiveness
of the strategy may influence many of other phases on the strategic management
process. A well-designed control system will usually include feedback of control
information to the individual or group performing the controlled activity. Simple
feedback systems measure outputs of a process and feed into the system or the
inputs of system corrective actions to obtain desired outputs. The consequence of
utilizing the feedback control systems is that the unsatisfactory performance

continues until the malfunction is discovered. One technique for reducing the
problems associated with feedback control systems is feed forward control. Feed
forward systems monitor inputs into a process to ascertain whether the inputs are as
planned; if they are not, the inputs, or perhaps the process, are changed in order to
obtain desired results.
1.3 Introduction to the retail banking
1.3.1 The roles of retail banking in the commercial bank
Providing personal financial services or retail banking operations (RBO) is one of
the traditional activities that form the system of commercial banks in the world.
Along with the evolution of the economy, the banking and financial services are
also constantly diversified and increased to meet the needs of society better. Today,
many commercial banks operating in the world considered RBO as a core activity to
build, consolidate and develop a solid customer base and thereby expand other
businesses of the bank.

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Now there are many different concepts and definitions of RBO but generally RBO
is understood as a bank‘s activity towards customers including individuals and
small business households, and in some cases they may include small and medium
enterprises, depending on the specific strategy of each bank.
As for banks‘ RBO with an target customers of very large number of individual
ones and households, has and will bring stable and dispersed income and reduce
risks and contribute an important part in expanding the market, improving
competitiveness and creating a solid foundation for the operations of banks.
RBO increasingly plays an important role in the operations of commercial banks in
the world, ensuring the sustainability of the bank. In particular, the recent global
economic crisis showed that while most banks have a concentrated strategy on retail
operations are able to withstand, the large investment banks primarily serve the
corporations has been in troubles, even bankruptcy (like Merrill Lynch, Lemon

Brothers ). So the trend today is that most banks in the world develop RBO.
1.3.2 The models of retail banking in the world
There is currently no standard organizational model for RBO in the world. Each
bank depends on its specific features and business strategies to organize RBO in a
suitable way. However, generally it can be classified into three basic types of RBO
organizational model as follows:
- Vertical organizational model: banking activities are divided into two separate
ones: wholesale banking and retail banking (RB). RBO is governed by the
following basic units: Card service management unit, financial services and
individual investment management unit, Personal payment service management
unit, E-banking service management unit, Personal credit services management
unit. Each unit will be responsible for all phases of market research, product &
services development, bringing products to the market, monitoring and evaluating
products, marketing products, risk management, operational activities.