Formulation business strategy of Vietnam International Joint Stock Bank in the period 2011-2015

Andrews A Univ ersity

(C1

GRIGGS

CAPSTONE
FORMULATION

Global Advanced
Program

PROJECT REPORT
BUSSINES STRATEGY OF

VIETNAM INTERNATIONAL JOINT STOCK BANK
IN THE PERIOD 2011-2015

Group 09
Members:

1. Nguyén Trong Hai (C)
2. Nguyén Manh Cuong
3. Pham Hai An

4. Pham Thi Thu Huyén
Class: GaMBA01.X0410

HANOI

2011

Global

Advanced

Master

TABLE
PT
LIST OF

GUND

of Business

Adiuiunistaton

OF CONTENT:

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TABLES sasssssssssvsssveasaasivsasassasensnsosonsnsocengnensysennsevavanveenennnssmneenyesusennrazasavessvuawenvennes 7

LIST OF FIGURES, GIRRAPHS ...........
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...

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INTRODUCTION

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.................

9

1.

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Reason for researChl S€Ï€€fÏOH.............

2.

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3.

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...

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CHAPTER

1.

GENERALLY

1:

MANAGEMENT
1.1

5 5<

1919913193131 103 01 g1

ISSUES

LOGICAL

ON

gu

STRATEGY

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inne

Definitions of strategy ManageMeNt ...........ccccccccccscecsesescscecseveescsecevsvsvsvevsvevsvevevanevees 12

1.1.2.

Levels Of Strategy .......cssssssssssscseesssescsssesecesscseseesstecssseesessseseseseeceessesessscscsssecsssssenesenes 14

1.1.2.1.

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eneees 14
sceceavens

1.1.2.2.

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125,

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FUPICHOMAL STALE

1.2.

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14

1113 3 511 xnxx erree 16
219191
55s
The process of strategy formulation .........
.......

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10

Tố...

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1.2.1.1.

Analysis of External EnVITOIINII................

1.2.1.1.1.

ccsscecccsesssxrrrrersre l6
¿sec............
Analysis of General environment (PEST Model)............

1.2.1.1.2.

Analysis of Industry Environment (Five forces model)........................csccccccccccccccrcrrce 17

1.2.1.1.3.

| Matrix of External Factor Evaluation (EFE).........ccccccccccccscccccscesecsecseeseesccseeecsevsceseeaees 17

1.2.1.1.4.

| Analysis of Competitive Profile Matrix (CPM)......cccccccsssssessssssecsescseecstecsesteeeresseseees 19

1.2.1.2.

c5 5c 22 2 2x vs re
Analysis of Internal Factor EnVirOnIN€II........................
..-- 20

I.2.1.2.1. Analysis Basic Value Chaïn. . . . . . . . . . . .

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nh

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re 20

rerresoco.-22
SH
vn
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1.2.1.2.2. Internal Factor Evaluation Matrix (IEE)........

1.2.2.

ớ 23
c SH TH
ác. c 2n.............
Selection and construction of businesS S†FAf€ØV........

12.2. Ì:

Evaluation of the opportunities of strategy selection through SWOT matrix.............. 24

1.2.2.2.

Strategy selection based on the QSPM matrix ......ccccccceeeesseeesesesseseseseeecscseseseseeeseeees 25

1.2.3.

Strategy deployment and evaluation 2... cecccceesesscsecseseeseeseseesesecsecscsecssscecsseresestees 27

1.2.3.1.

The determination of Operational structure suitable with strateøy.............................. 27

1.2.3.2.

The construction and deployment of strategy implementation process and regulation28

1.2.3.3.

2c: 28
c2 .....
The construction of strategy implementation control SVSt€I..................

2|


Global

2.

CHAPTER

2:

Advanced

THE

VIETNAM

2.1.

Overview

Master

CURRENT

of Business

Adnimistration

SITUATION

OF

INTERNATIONAL

of Vietnam

BANK

BUSINESS

IN RECENT

STRATEGIES

OF

YEARS............................... 29

International Bank (VIB) v...cccccececcccecsscescecceecceececsscsceseescacens 29

2.1.1

Overview Of banking industry...

2.1.2.

Overview of VIB and VIB’s business activities ........0ccccccceccccescsescesescseseetevsnseseseeeees 29

2.1.2.1

69/2/1000/0000 000...

2.1.22:

History on the establishment and developimehit.......................25: 25s
srrrrrxe 3]

2.1.2.3

Products and ServiCes: ......ccceceeseceseteeceseeteeessesstessesesecscsessessststesetevtssreeee
dD

2.1.2.4.

Network development? .......ccccccscesssessseseseseeteveessecsssessstsesssesevesaucescsescscsvsvsvanevseseteses 34

2.1.2.5.

The current organizational structure of VI ,....................-.-¿
: 5: : 252222221211 EEEerrree 35

2.1.3.

The business performance of VĨH . . . . . . . . . .

2%,

ccc cccecceseeessescetsssesssesesesesessessessevevsvsvsvevsvevsvevevavevens 29
ha

. . c c2: 121211121212

H HH HH re

29

36

The evaluation on the current business activities of VÍHH............................---s-c
2.2.1.

The current business orientation Of VĨ......................
c1 12121211221 12H rà, 38

2212.

Analysis of the current business activities of VIH..................... cua

2.2.2.1.

Analysis of External Environmein(...........................----- + c cccccsct cv nh n HT HH HH HH ryg 40

2.2.2.1.1.

Analysis of general environment (PEST +Mode])...................¿5c c5c2ccccccrscsererrerree 40

2.2.2.1.2.

Analysis of Industry Environment (The Five Forces of Competition Model)............. 45

2.2.2.1.3.

| Matrix of External Factor Evaluation (EFE).......ccccccccccccescssscesssvscsesseseeccescsvscevececneeees 50

2.2.2.1.4.

Analysis of Competitive profile matrix (CPM) ......c.ccccccscscsssssseseseseseeeesesesesessesesesneseees 5I

2:2.2.2.

Analysis of Internal Factor EnVirOnIT€HI.....................
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DMs

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39

2.2.2.2.2.

Distribution fAC{OF:. . . . . . . . . . . . . .

55

2.2.2.2.3.

Human resources management factor: .....c.ccccccccceccsscsesessescsssesessscecsescstesescsvscassersesenee D7

2.2.2.2.4.

Marketing&Branding ÍACfOr............................
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BY ccsssssesesssasvevevevsevasacieves ctssiscctensscesteroncetenssrescvsezecnassecsessversacusousuanarnssnuessscesacees 62

2.2.2.2.6.

Research & Development products and serVices FaCfOF.......................-5 ccccccsc+essccsee2 62

2.2.2.2.7. — Service Quality ÍACẨOT....................ccc
t t1 1211212 1111011 1n H1 HT
HH HH HH
tệ 68
2.2.2.2.8.
2.2.2.2.9...
2.3.
3.

RiSk MANAQVEMENE.....

Analysis of Internal Factor Environment matrix (IEE).....................-¿5552552 ccccccsccscee 7]
Evaluation on the feasibility of business strategies of VIB in the period 2011-2015 72

CHAPTER 3: THE

PROPOSAL

DEPLOYMENT
3.1.

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OF STRATEGY

AND SOLUTIONS TO STRATEGY

FOR VIB IN THE PERIOD 201 1-2015.........................
<< 5< «<2 73

The proposal of VIBs business strategy in the period 2011-2015............................<< 73

3.1.1.

The orientation of VIB’s business development strategy in the period 201 1-2015..... 73

3.1.2:

Evaluation of the opportunities of strategy selection through SWOT matrix.............. 75

3.1.3.

Strategy selection based on the QSPM Matrix .........ccccscccscsscssessessessessessesessesecsscsseeesees ai

3.1.4.

Identify business strategy selection in the period 201 1-20 1Š..........................cccccccs2 79

3|


Global

3.2.

Advanced

Master

of Business

Administration

VIBs business strategies in the period 201 Í-2(1 Ã......................
5-5555 sczscscscscscee
......-- 80

Dall

Corporate level Strategy: o.c.ccccccceccceecseessesetsesesssesevscsssssessvevavstsevevssateevivevsviseussesvavenees 80

3.2.2

Business level Strategy .0....cccccecceecccecccecsescsescesvetsssessvsvstvsvscsevsvevsevevavisaevevsvevivavieseveveves 80

$.2.3

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ElWWIEEIUTT (BEWVII IÊN

3.3.

Solutions to the effective implementation of VIB’s business strategies in the period
D+ ZOGS
DUE

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tgsssnvvtyDTESEĐEEEEENSSES.G715950101961831810/0
ĐÁ5304031613851165155

3.3.1

Finance solutions

3.342.

Branchs Transformation system follow new sales& service model.................-.ccsccccc¿ 83

3.3.3.

Marketing& Branding SOlUtions......ccccecececsesesecscscssssesessssescscsessvscstacsevsvsceveveveveeeaeey 84

3.3.4.

R&D products & service SOLUtIONS: oo... ceecccesescsesesccscsessescsesesecscsesenececsessisasesseeeeey 88

3.3.5.

CHBEIIE] SONOS ssasensiaswanirssvinsasednondoonenenencneemcanenencnareoaneneanexeenuredmnmnoneaswennsvevusesaesenseset 90

3.3.6.

Technology SỌULOTS.................

3.3.7.

Human resources SOIUtIONS ........cececeesesesesenetetsesseesescscsessseseseseseseceeseecsesereseetieaeieeeaes 92

3.3.8.

Risk management SỌỤOS..................

3.4.

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HH HH

tre 91
ưu 94

The completion of operational structure to the strategy implementation................. 94

3.4.1.

Operational structure re-adjustment in correspondence with business strategies ........ 94

3.4.2.

The construction of strategy implementation control SyStem................................-ccccsce¿ 95

3.5.

Roadmap of the strategic solution implementation ..............ccccccssesessseseeseeeesseseseseeeers 96

3.6.

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- 5< <
Proposal & Recommen(afÏOI..................
............--.
.......c.ccccccccccesccerececccsecscecseeseeaes 97

3.6.1.

Proposals to The Vietnam International Bank( VIB)

3.6.2.

Proposals to The State bank Of Vietnam ........c.ccceccccsccesesecseseescsesesecsssssceseecsvscscsesssseees 98

3.6.3.

Proposals to Government Of VÏ€fAIN..............

CONCLUSION................................. 10008104

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001000900 99
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008 00 000.00

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REFERENC Eoicssssosscsossnssssonenssevssssscsssescezasesssssessees ãBfSstkš%0451559456151485615618 Ä8458E4243843s«sổ9.50

4|


Al nse

CS

Global

Advanced

Master

of Business

Administration

Ầ

CC

VietnamInternational Commercial Joint stock Bank

No 198B, Thai Ha Street, Dong Da District. Ha noi City

To:

Center for Educational Technology and Career
Hanoi National University
Global Advanced Master of business Administration Program

Griggs University

AGREEMENT

Company has create favorable conditions to collect and complete this capstone, but
ask to keep confidential all information disclosed to concerning Company business
and will not make public of such information.
We will consider such solutions and proposal would useful in actual business
strategies for upcoming years

5 |


Global

Advanced

Master

of Business

Adiinistiation

Class

GaMBA.X0410,

ACKNOWLEDGEMENT

All

members

of

Team

9,

in

the

subject

of

Strategy

Management would like to say sincere thanks to:
[he

teachers

who

spend

time

and

efforts and

enthusiastically

impart

ideas and

instruct is to complete this report.
They have imparted us useful knowledge and valuable lessons which help us enrich
a new understanding of the combination between theory and reality. This plays an
important role in our completion of this report and our daily dealing with business
issues.
The Board of Managers of Vietnam International Bank has supported and consulted

us to complete this report.
All

6 |

members of Team 9, Class GAMBA.X0410


Global

Advanced

Master

of Business

Adnunistration

LIST OF TABLES
Table 1.1. Overview of general business-level
SIrateGicS ccccccsssccssssessecseecsescesssacscaesesesenssesesescasscavseee I4
table 1.2 External Factor valuation Matrix (EVE) sscesssscssssscscsssceccsssscecsesssasscsssacscaessvsvacssecseaseass 19
Table 1.3 Competitive profile Matrix (CPM) veesecsssscssssssssssscscssscssssssscsscssesscessescsssencacaeasasseacasasavaseees 20
Table 1.4

Internal Factor Evaluation Matrix (IEE) sesccccssssscscsssssssssssecessscsesescssssesssesssscsessissscscssassees 23

Table 1.5 SWOT Matrix... 48688886568 N3SÿáZ05956x«sssso.sss9ssgx
94 Z9 45991988915 59949994593945190982550382840158607351380V% 25
Tuble 1.6 Quantitative Strategic Planning Matrix (OSPM) susssssssssecssssssssscsescsesssssenssssssessrssssacssesees 26
Table 2.1 Network of branches/ transaction OffiCeS sscscsssssscssssersesessssssscsssassecsssscssssesscecsscsesesecscsecsess 34
Table 2.2

Macroeconomic criteria in the period 2000 -201 1 (part 1) sccscsssssssssssecsssssssssecsessssszscassens 39

Table 2.3 Macroeconomic criteria in the period 2000 -201 1 (part 2) s.............secTable 2.4: Some criteria of credit organization system in Vietnam

(on 31⁄/12/20110)...........ee<< 49

Table 2.5 External Factor Evaluation matrix (EF E) ssssssscssssssscsssscsssscscssssssssssssssacsesssssseseasessasscscaees 50
Table 2.6 Comparing financial criteria in the top 10 Vietnamese Danks ccscccccsscsssssscsssscecsescessecsecesee 51

Table 2.7 Competitive Profile Matrix (CPM) wu.

110001002.
7a ca nan

52

Table 2.8 Summary result business VIB GMONg fiVE VOAPS sessscsssssssssssssssssscscssssscssssssccssacscsssesesesesesece 53
Table 2.9 Internal Factor Environment matrix (IFE).......... 9993499965696555595515684461514983583)5566858365845585666886 7I

Table 3.1 SWOT matrix wu... saascansasess sưa8i601s6 eer

eee "....

.75

Table 3.2 QSPM matri........ sE943555995944999090/408 S34053556589554860888 33E§Š79vS4560585.016w655868196635555858 lẽtkfSXE64065skdas64 .77
Table 3.2 VIB roadmap to implement strategy sus esesoseeensvenounossssnsesensonsssunssesnseusevestesevsuserexeys .. 9695
Table 3.3 \IqFkelting HHỈN ÍOF SCĐHICHÍQÏQH....c...e
<5 << se S3 SA 939 E8 SE SESEESEESEESEeEsEteesetsersers ..-. 9887
Table 3.4 Bundle products for eạch segieHIdtÏOH ..............«« Gà 199505956.01958g663388340551854158918485458556158 8988

Table 3.5 Branchs & Alternative Channel SOLUIION sesssesecerssererereeressssssssvssssssssssssssscssscssssscssscsesees 9190
Table 3.6 Compensation policy srereereseeresees Setdasenesesvaesevess 44833436435865555.05568558 4šÿ9355566560595515u588 senses 9493
Table 3.7 VIB roadmap to implement Strategy .sssesereresessersrersersees LH

7|

09 6 ve (1110/1010 001.2.125 9695


Global

Advanced

Master

of Business

Adnan

Figure 1.1: Strategic management Process MOL sessecssecsecseersenss dọn

ng TH

E0

K1 vn

I

nw

LIST OF FIGURES, GRAPHS

Fipgurâ | 2- PESTT MO(Gẽ..............eeecseee

Figure 1.3: The Five Forces of Competition Model wrcscccccccssccsssccsseccessesssscssecesssesssccesssceccseese 155855505 1 /
Figure 1.4: Components of Internal ANAIVSIS sssscccsscccssscceesscceseeeee H000

nen ve, th vs,

21

Fieure l3: The Basic_alue Chai.................... S6vSS6SS51385590515/59495565%51ã158 860548158485 sss.eesesetdeseeeeee ........ 22

Figure 2.1. Current Organization CH tsscsccsscsscssesssscsssssessssscssssscsecescesceseesesscsscssessesssssssscsessesssssceene 3O
Figure 3.1 Vision, Mission and Core Value Statement srscicscrssrecseseeceeeee "

KH

11

re .74

Figure 3.2 Functional Stratery cesccsssscssssrerceseresssssssersssessssssssscssssesscssescescsssssssessssssenssecssstscsssesesens

BLSO

Figure 3.3 Branch Transformation system follow new sales& Service MOC

8483

Figure 3.4 Segmented by age ANA INCOME ve. cececcecsecses sex
Figure

à

3.5 Summary

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esssssesssse `".

life-stage ANd QDĐECQC SIF(ÍCE ceecseeseeseeseesessesseesee

ae

8685
s6bsisssrsorssssass ĐOS

Figure 3.6 VIB Organization PO-SIUCIUTCssssersscssesssssscsesnsnecessnsssssecsssesesssssssssssssessscssscssassssceseacees 9594
Figure 3.0 [HG PRIORI ADLEMERE GHIỄN kaggggagngaahinaBidtoiltioiritotd0xinattlsassayiarepdsosaaasiadasasasssas.
SG

8 |


Global

Advanced

Macter

of Business.

Adnunistration

INTRODUCTION

The cooperation and integration is the inevitable trend of the global economy
and

lay a foundation

tendency

of

the

transnational
banking

for each

world

capital

integration

economy

flowing
and

national economy
by

through

taking

to take part in the common
advantage

the banking

the construction

of

system.

The

of a transparent

the

enormous

growth

banking

in the

system

to

become the pillar in capital circulation for the capital-demanding economy like
Vietnam are significant strategies to gradually move capital structure based on
the orientation of the industrialization and modernization
According to this tendency, since becoming one of WTO’s official members on
11/01/2007, Vietnam is facing with many new challenges and opportunities. The

banking

industry

financial

has witnessed

organizations

can

a lot of basic changes

hold

shares

of

when

Vietnam

many

foreign

commercial

banks.

Especially, the emergence of banks with 100% foreign capital in Vietnam will
promisingly cause changes in the percentage of market share.

The period 2007-2011

provides the most obvious picture of opportunities and

challenges with Vietnam banking system. The capital rapidly heated growth and
dramatic decline, high inflation, the fluctuation in exchange rate, unemployment

and business inequality,... the competition among domestic nag foreign banks,
the increasing trend of dissolution and

mergence,

a lack of efficiency

in the

operation of small banks, large banks under the pressure of the growth in capital,
human

and

infrastructure to ensure their competitiveness

in comparison

with

foreign banks. All these factors are putting a great pressure on the local banking
system,

forcing domestic

banks to quickly conduct

plans in order to increase

their competitiveness to deal with challenges.
Betore

these

difficulties

and

challenges,

Vietnamese

commercial

banks,

especially joint stock banks, including Vietnam International Bank, need to have

9 |


Global

Advanced

Master

of Business

Adnimistration

strategies and detailed orientation to enhance

their competitiveness

in order to

sustain and develop in the new period
In this common
elforts

to affirm

trend, the Vietnam
its position

International

in the

top

Bank

is step-by-step making

Vietnamese

commercial

banks

and

strengthen its competitiveness in the financial and banking market.
From this reality, our team has researched and finally decided the project * The

construction of business strategies of Vietnam

International Bank

in the period

2011-2015” with hope of contributing to the evaluation of the current business
strategy

deployment

in

recent

years

and

the

construction

of the

business

strategies of Vietnam International Bank in the period 2011-2015

Systemize the generally logical issues on strategy management

Analyze

and

evaluate

the

situation

of strategy

implementation

at Vietnam

International Bank in the period 2008-2011 through achievements and obstacles.
Propose solutions to construct and complete strategies of Vietnam International
Bank in the period 2011 — 2015.

The

project

statistical

uses

quantitative

methodology

and

combined

qualitative
with

methods

diagrams

and

and
tables

comparison
to

present

and
the

theoretical and factual contents. Then, we draw a conclusion and select business
strategies at Vietnam International Bank (VIB)

Analyze

and

evaluate

the current

business

strategy

deployment

of Vietnam

of Managers

of Vietnam

International Bank
Propose

solutions and business strategies for Board

International Bank (VIB) to have an overview of the current business in order to
make more efficient policies in the period 2011-2015

10 |

CS

Global

Maste:

of Business

CHAPTER

1: GENERALLY

CHAPTER

2: THE CURRENT

SITUATION

VIETNAM

INTERNATIONAL

BANK

CHAPTER

3: THE PROPOSAL

STRATEGY

11|

Advanced

DEPLOYMENT

LOGICAL

Adiimi5tểrtion

ISSUES ON STRATEGY
OF BUSINESS

IN RECENT

OF STRATEGY

MANAGEMENT

STRATEGIES

YEARS

AND

SOLUTIONS

FOR VIB IN THE PERIOD 2011-2015

TO

OF


Global

Advanced

HAPTER

{

i:

Pheoretical
|

af

1

The

Master

GENERALLY

background

Definitions

Adminstration

LOG!

of strategy

of strategy

terminology

of Business

m:

management

“Strategy”

originates

from

military

art

in the

past.

which

is

con sidered as the art of leading vehicles to gain victory. There are many viewpoints
ols trategy such as:

Strategy is the art of building up firm competitive advantages to self-protect and
defend (M.Porter).
Strategy is the determination of roads and vehicles to reach target goals through

policies (General Aileret).
Strategy is the art of action combination and control in order to achieve longterm objectives (G.Hirsch).
In another approach, Strategy is one way by which enterprises can answer the

question: Where do we want to go? How do we do to get there? Which recourses
do we have to go and what are obstacles that we need to overcome in the road?
In short, business strategy is the art of the optimal combination
proposals

and

environment

suitable

to gain

decisions

victory

implementation

in the competition

with

the

in order

of resources,
fluctuations

to reach

in

long-term

objectives in business.
Roles of business strategy:
Business

strategy

helps

corporate

acknowledge

obviously

the

purpose

and

direction which are considered as a basic compass for all their manufacturing
and business activities.
Business

strategy helps enterprises catch up and seize business opportunities,

and at the same time, have active solutions to get over threats and hazards in the
competitive market

12|


ïN

Global

e

Advanced

Master of Business

Administration

|

Grice)

Business strategy contributes to the efficiency enhancement of resource uses and
strengthens corporate’ competitive position in order to ensure their sustainable
development.

e

Business

strategy

creates

a basic

foundation

for

policies

and

decisions

of

suitable business and manufacturing with fluctuations in the market.
The process of strategy management includes three main phases:
e

The phase of building up and selecting suitable strategies with organizations
(strategy formulation)consists of:
-

Determining the vision, mission and core values of organizations. Setting up
objectives and making suitable policies.

-

Analyzing external and internal environment based on the following models:
PEST+,

Porter’s

five

forces

SWOT,

QSPM

to

set

up

strategies

for

includes

the

determination

of

enterprises.
e

The

phase

of

strategy

implementation

operational structure suitable with strategies and making plans and management
process of budget, technology, human....
e

The

phase

of evaluation

and

control

(Strategy

evaluation)

consists

of

building up the control and evaluation system of strategy implementation and
providing necessary changes.

Develop
Sa.

lo
S so

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Imipleme
4
strategies

Measure
od
Evatuate


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be

Advanced

Master

of Business

Administration

beds bi,

Corporate strategy

is the strategy at the corporate level aiming to the objectives aid

overall range of a corporate

to meet

the expectation

of shareholders.

It contains

specific activities that a company implements to gain the competitive advantages by
selecting and managing a group of different business activities and competing
some

certain

industries

and

markets.

For example:

Strategies

in

of differentiation,

Focused growth strategy, Integration development strategy, Decline strategy
] A Beds

Business strategy is more related to how a corporate can successfully compete in a
certain market. Based on available advantages, the corporate will choose strategies

such as low cost strategy, differentiation strategy and focusing strategy.
1.1.2.3.

Function

strategy

is strategy supporting

the efficient

and corporate strategies thanks to contributors

implementation

in the fields of human

of business
resources,

process and necessary skills. This is the strategy which is set up in order to support

the implementation of business and corporate strategies. For instance, strategy of
product research and development, marketing strategy and human resource strategy,
etc.

lable 1.1. Overview

of general business-level strategies

Corporate strategy

Detaili Corporatete

group

Strategies

ondition to appl
pply
Condition
strategies

I. Enter market

demand, cost savings

Focused growth

strategy (relationship
between Enterprise —
Customers)

:

(Available
products —
;

Usually unsaturated

Foster marketing
°
~
efforts

increases advantages.

aVailable market)

2. Develop market
.
(Available products —
New markets)

14|

Content and solation

Approach and develop

pproacn

¢
new customers

P

Flexible distribution
channels, customers

change their interest


Global

Advanced

Macte:

of Business

3. Develop products
(new products
available market)

‹
Adaiinistration

Enhance available

products and services

to be suitable with
interest

Products innovate and
support current

products

Advantages in terms
of technology
High-pressure
suppliers, potential
business and unique

1. Integrate above
(Enterprise - Supplier)
Integration growth
strategy (Relationship
between Enterprise —
Intermediary and
Competitor)

Merge or add more
benefits for material
suppliers

and high profitability
Merge or add more

(Enterprise —

Distributor)

3. Horizontally
integrate (Enterprise
— Competitor)
1. Concentric
Diversification
(New products with

available technology).

benefits for
distribution and
marketing
intermediary.
Cooperate and
compromise with
competitors

Invest and develop
new products on the
basis of current
products

Diversification
(Investment activities

of enterprise)

2. Horizontal

diversification (new

products different

from current products)

3. Mixed
diversification (New
products, new fields)

15 |

Inadequate distribution
channels, competition
is often fierce,
dominant intermediate

2. Integrate below

growth strategy

requirements of raw
materials supply

Research and develop

new technology in the

current fields

Orient towards
business and new
customers

Stable demand, not
serious competition,
enterprise with
financial strength

Current products start
to be saturated,

seasonal and not
seriously competitive
New products can
overcome “seasonal”
and be competitive
with advanced

technology, suitable
marketing and
distribution system
This market is
saturated and many

changes to innovate
emerge


sO

1.2.

The

Global

Advanced

process

of strategy

Master of Business

Administration

|

mem)

formulation

The process of strategy analysis is a chain of logic activities based on methodology
in order to determine business objectives, find out advantages and disadvantages,
accurately

evaluate the internal capability

and give ways

to deploy

and control

stated objectives
1.2.1.

Strategy

Strategy

analysis

analysis

is the

process

of analyzing

influential

factors

from

external

environment, evaluating the organizational internal capability to seek new business
opportunities, control risks in current business activities
1.2.1.1.

Analysis of External

Environment

Analysis of External environment is the process of analyzing impacts from macro
environment through Pest plus Model, then analyzing opportunities and challenges
from

industry environment

determining

primary

through The

competitors

Five Forces of Competition

of the organizations through

CPM

Model

and

matrix,

and

finally providing comments on opportunities and challenges from external factors
through EFE Matrix (External factor Evaluation matrix)
1.2.1.1.1.

Analysis of General environment (PEST Model)

Macro economy

including many

factors, institutions outside the enterprise has a

great impact on the organizational operation. They are politics, legal system, social,
economic, social/culture, Technology, Demographic, global:
Demographic Segment

* Population size

* Ethnic mix

Economic Segment

+ Inflation rates
+ Interest rates

+ Trade deficits or surpluses
+ Budget deficits or surpluses

+ Personal savings rate
* Business savings rates
+ Gross domestic product

Political/Legal Segment

+ Antitrust laws
+ Taxation laws
+ Deregulation philosophies

* Labor training laws
+ Educational philosophies and policies

Sagiocyltural Segment

+ Age structure
+ Geographic distribution

»* Women in.the workforce

+ Cancems about.the environment.

+ Workforce diversity
+ Attitudes about the quality
of work life

* Shifts in work and career preferences

+ Shifts in preferences regarding
product and service characteristics

Technological Segment

+ Product innovations
+ Applications of knowledge

+ Focus of private and governmentsupported R&D expenditures
+ New communication technologies

Global Segment

* Important political events
* Critical global markets

+ Newly industrialized countries
+ Different cultural and institutional

`

16
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* Income distribution

.......

_——

Global

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Advanced

(

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Master of Business

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Environs

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Administration

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mode

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Research on macro economy is a very important and indispensable in the process of
Strategy

management.

environment/industry
enterprise.

Most

Macro

environment

environment,

of operation

is the

and

which

is

environment

competition

of the

also

called

directly

competitive

related

to each

enterprise occur

in

this

environment
Michael

E.Porter, a famous

professor of business

School,

provided

of 5 Competitive

managers

the model

analyze

microenvironment

strategy

Forces

of Harvard

Business

in order to help strategy

and identify opportunities and threats from

this environment. According to Porter, 5 competitive forces are:
Threat of
Substitutes
*

Protection against imports of substitutes

Bargaining Power
:
of Suppliers
*
*

T0

Foreign providers of know

The

7

792

II)

Vlatrix

matrix

opportunities

of
and

oO;

* Fragmentedésmall local buyers

regulation
* Protection against imports
* Cartels

EX

EFE

* Weak consumer protection laws

* Monopoly licenses and concessions
* Distortions of competition due to

Protection of local suppliers
limits competition

>

Bargaining Power
Chee

y/Vhống

Existing Competitors

how and licenses have

pover

=

al

*

High barriers
to ertry

*

Protection limits foreign erfry

1Í

is

threats

hút

used
from

for

“val

to

synthesize.

external

((I1O11

(E]

fk)

summarize

environment

(such

and
as

evaluate

economy,

main
culture,

society, demography. politics, law, technology and industry competition) that have

17|


Global

an

Master

of Business

Administration

impact on the operation of enterprise. It helps Board of Directors evaluate the

adjustment

of the enterprise

acknowledge
eny

Advanced

beneiicial

to opportunities

factors

and

and

threats.

difficulties

of {

the

and

at the same

enterprise

in

time

business

ronment

Building up the matrix of EFE requires 5 steps:

Step 1:Make a list of main opportunities and threats that have great influence on
the success and business field of the enterprise

Step

2:

Sort

important)

the

significance

for each

factor.

The

level

from

0.0

significance

(not

important)

to

of each

factor

depends

influence on the success of the enterprise in its business

1.0

(very
on

its

field. Normally, the

significance of opportunities is often higher than that of threats. However, some
threats are considered to have high significance if they can put serious impacts
on the enterprise. Sorting level is determined on the basis of making comparison
with competitors

or group

discussions;

the result

is based

on the agreement

among team members. The total sorted level fixed for factors is equivalent to
1.0.
Step 3: Determine the sorting coefficient from

1 to 4 for each factor; coefficient

of each factor depends on the response of the enterprise to that factor, in which:

4 — good response, 3 — over average response, 2 — average response, | — weak
response. These coefficients are determined by the expert method on the basis of
outcome

(the

efficiency

sorting the significance
coefficients

at Step

3

of current

strategies)

at Step 2 is based
is based

on

the

enterprise.

Therefore,

on the industry while

the sorting

current

of the

situation

of the

enterprise’s

the significance of each factor to its coefficient

in order to

response
Step 4: Multiply

determine the enterprise’s score of significance
Step 5: Sum all scores of significance of all factors to determine the total score
of significance for the enterprise. Whatever the sum of main opportunities and

18|


Global

Advanced

threats determined

Master

of

is, the maximum

Business

Adnunistration

total score that an enterprise can gain is

only 4.0 and the minimum is 1.0. The average total score of significance is 2.5.

Key External

ID

Weight

factors

Weighted

Rating

score

Opportunities
to

Politics/legal

C2

Economic

+

Technology
Threats

Conan

Competitor
Customer

Supplier
Total

1.2.1 1.4.

1,00

Minl to Max 4

Analysis of Competitive Profile Matrix (CPM)

Among influential factors from industry environment, competition is considered as
the most important. Competitive Profile Matrix helps identify main competitors ofa

company, both advantages and disadvantages of competitors and its competitive
advantages and shortcomings. Competitive Profile Matrix is different from External
Factor Evaluation Matrix in analyzing and comparing the significance of internal
factor

of

customers’

each

enterprise

loyalty,

etc,

such

direct

as

financial

competitors

capability,

in the

same

stability,
reference

trademark,
system

with

different proportions.
There are 5 steps to make the Competitive Profile Matrix:

e

Step

1: Make

the list of factors impacting significantly the competitiveness of

the enterprise within the industry

19|


Global

e

Step

2:

important)

Sort
lor

Advanced

the

Master

significance

each

factor.

of

Business

level

from

The

Adnunistration

0.0

significance

(not

important)

to

1.0

of each

factor

depends

(very
on

its

miluence on the competitiveness of the enterprise within the industry. The total
sorted level fixed for factors is equivalent to 1.0.
e

Step 3: Sort from

| to 4 for each

factor; type of each

factor depends on the

response of the enterprise to that factor, in which: 4 — good response, 3 — over

average response, 2 — average response, | — weak response.
e

Step 4: Multiply the significance of each factor to its type in order to determine
the score of significance

e

Step 5: Sum all scores of significance of all factors to determine the total score
of Competitive Profile Matrix for each compared enterprise.

ID

Critical success
factors

Weight
important

Competitors

Competitive

company
Rating

Competitor 1
Score

Rating

Score

Competitor 2
Rating

Score

Capital
Organizational
structure
Brand
Network

Dn

on

+

C2)

Wb

Quality of human
resource

Total

score

1,00

Internal environment of an enterprise includes internal factors that the enterprise can
control. Analyzing internal environment help enterprises identify their strengths and
weaknesses,

and

then

overcome disadvantages.

20|

selected

strategies

can

maximize

their

advantages

and