DEVELOPING STRATEGIC MANAGEMENT MODEL FOR VIETNAM DEVELOPMENT BANK VDB UNTIL 2015, STRATEGIC TASK FOR 2020

CAPSTONE

“DEVELOPING STRATEGIC MANAGEMENT MODEL
FOR VIETNAM DEVELOPMENT BANK (VDB) UNTIL 2015,
STRATEGIC TASK FOR 2020”

TABLE OF CONTENTS


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TABLE OF CONTENTS ......................................................................................... 1
LIST OF ABBREVIATIONS .................................................................................. 6
LIST OF TABLE ...................................................................................................... 7
LIST OF FIGURES, CHAT .................................................................................... 8
INTRODUCTION .................................................................................................... 9
RATIONALE ............................................................................................................ 9
CHAPTER I ............................................................................................................ 13
THEORY OF STRATEGIC MANAGEMENT .................................................. 13
1.1. OVERVIEW OF STRATEGIC MANAGEMENT ..................................................... 13
1.1.1. In military view: ..................................................................................... 13
1.1.2. In business view:..................................................................................... 13
1.2. KEY DEFINITIONS OF STRATEGIC MANAGEMENT .......................................... 14
1.3. ROLE OF STRATEGIC MANAGEMENT IN OPERATION (ENTERPRISE, COMPANY
ETC.) ...................................................................................................................... 17

1.3.1. Strategic management model: ................................................................ 17
1.3.2. Task of strategic management: ............................................................... 18
1.3.3. Benefits of strategic management
1.4. CLASSIFYING THE CURRENTLY APPLIED STRATEGIC MANAGEMENT MODELS 20

1.5. APPLICATIONS OF STRATEGIC MANAGEMENT MODEL IN VIETNAM ............. 22
CHAPTER II........................................................................................................... 24
SITUATION ANALYSIS IN VDB........................................................................ 24
2.1. OVERALL INTRODUCTION TO VDB ................................................................ 24
2.2. ORGANIZATIONAL STRUCTURE OF VDB........................................................ 25
2.3. FUNCTIONS AND TASKS OF VDB ................................................................... 25
2.4. RESOURCES: ................................................................................................... 27

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2.4.1. Fund of development bank consists of: .................................................. 27
2.4.2. Human resource: .................................................................................... 27
2.4.3. Technology and equipment: ................................................................... 28
2.4.4. Network scope: ....................................................................................... 28
The development bank network has 01 headquarter, 02 Transaction centers, 56
branches and representative offices in all over the country and overseas. ..... 28
2.5. OPERATION OF VDB DURING 2006-2009 ....................................................... 29
Major activities (investment and export credits, credit guarantee, postinvestment interest support and ODA etc.) ...................................................... 29
2.5.1. Capital mobilization: .......................................................................... 29
2.5.2 Investment loan: .................................................................................. 31
2.5.3 ODA: ................................................................................................... 32
2.5.4. Export credits: .................................................................................... 33
2.5.5. Guarantee for investment credit ......................................................... 35
2.5.6. Post-investment subsidy ..................................................................... 35
2.5.7 Other activities: ................................................................................... 36
2.5.8 Financial situation of VDB .................................................................. 36

2.6. EVALUATION OF VDB ACTIVITIES IN 2006-2009........................................... 38
2.6.1. Achievements: ......................................................................................... 38
2.6.1.1. For the economy: ............................................................................. 38
2.6.1.2. For VDB: ......................................................................................... 48
2.6.2. Weaknesses and causes for weaknesses (focusing on major weaknesses
in VDB activities and causes for these weaknesses as the foundation for
considering the relationship between the current management model and
results and objectives) ...................................................................................... 54
2.6.2.1. To the economy .................................................................................... 54
*. Modest impacts on national economic growth ......................................... 54
*. Increased interest compensation and administrative fees funded from the
State Budget .................................................................................................. 55

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*. The appearance of adverse impacts on market regulation, growing
conflicts between the demand for supporting policy and implementation
capacity ......................................................................................................... 55
2.6.2.2. To VDB ................................................................................................ 57
2.6.2.3. Reasons for exisiting problems and limitations .................................. 60
*. Inappropriateness of the VDB model ..................................................... 60
*. Export and investment credit policies of the governement have not been
issued, or no timely state guidline has been worked out, regardless of
inappropriate regulations. ............................................................................. 63
*. The financial scheme is improper and the state support is not timely and
sufficient. ...................................................................................................... 67

*. Ineffective executing environment ........................................................... 68
*. Causes from VDB..................................................................................... 70
CHAPTER III ......................................................................................................... 77
DEVELOPING STRATEGIC MANAGEMENT MODEL FOR VDB ............ 77
3.1. MAJOR BASES: ................................................................................................ 77
3.2. ABILITIES TO MEET THE VDB’S OBJECTIVES UNTIL 2015 AND STRATEGIC
TASKS UNTIL 2020 ................................................................................................. 77

3.3. DEVELOPING AN OVERALL STRATEGY FOR VDB IN THE PERIOD 2010 - 2020 78
3.3.1. Forecasting - opportunities and challenges for VDB ............................ 78
3.3.2. Develop an overall strategy for VDB during 2010-2015 and strategic
task for 2020 ..................................................................................................... 80
3.3.2.1 Mission Statement and Major Goals: ............................................... 80
*.VDB Philosophy:................................................................................... 80
*. Goals: .................................................................................................... 80
*. Specific objectives: ............................................................................... 81
3.3.2.2 Strategic development orientation of VDB for 2010 - 2015 and
strategic task for 2020 .................................................................................. 82

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3.4. SOLUTIONS TO IMPLEMENT THE SET OBJECTIVES OF VDB ............................ 87
3.5. SELECTING AN EFFECTIVE STRATEGIC MANAGEMENT MODEL FOR VDB ...... 93
CONCLUSION ....................................................................................................... 96
REFERENCE.......................................................................................................... 97
APPENDICES 1 ..................................................................................................... 98

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LIST OF ABBREVIATIONS

GDP
MPI
ODA
SBV
VDB

Gross Domestic Product
Ministry of Planning and Investment
Official Development Aid
State bank of Vietnam
Vietnam Development Bank

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LIST OF TABLE
Table 1: Local mobilized capital

30

Table 2: ODA loan in VDB

32

Table 3: Export credit results

33

Table 4: The implementation results of post-investment subsidy

36

Table 5: Financial situation of the Development Cooperation

37

Fund/VDB
Table 6: Credit structure in 2001-2008

40

Table 7: Capital structure by economic sectors

44

Table 8: The value of additional fixed assets

46

Table 9: Some determinants of liquidity risk

58

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LIST OF FIGURES, CHAT

Figure 1: Strategic management process

16

Figure 2: Basic model of strategic management

18

Figure 3: Five tasks of strategic management

19

Chat 2.1: Annual mobilized revenues

30

Chat 2.2: Structure of invesment credit outstanding loan

31

Chat 2.3: Disbursement structure of export credit by product

34

Chat 2.4: Disbursement structure of export credit by market

35

Chat 2.5: Structure of investment capital

39

Chat 2.6 : VDB Gov.bond in listed securities market

43

Chart 2.7 : Frequenies of GDP nominal value and VDB’s

100

disbursement
Chart 2.8: Regression of disbursement and GDP

103

Chat 2.9 : Average interest rate, interest rate subsidy and

55

managerment fees
Chat 2.10: Some determinants of investment credit risk

57

Chat 2.11: Percentage of bad debt in investment credit

57

Chat 3.1: Present role of VDB

93

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Research paper: “DEVELOPING STRATEGIC MANAGEMENT MODEL
FOR VIETNAM DEVELOPMENT BANK (VDB) UNTIL 2015, STRATEGIC
TASK FOR 2020”.

INTRODUCTION
RATIONALE
Thanks to over 15 months of well-organized and quality training in the Master of
Business Administration provided by Hanoi National University , our group comes
to aware that business administration is an essential but challenging task for

trainees. The task requires a harmonious combination between theory and working
experiences of each trainee in order to come up with important decisions in
business.
Though, our group finally agrees that it will be difficult to be successful in business
without being equipped with knowledge from this MBA program.
Strategic Management is the final subject in the MBA program. It reviews all
theories and practical application of subjects from the beginning of the program is a
systematic way. Specifically:
 Knowledge in the MBA is arranged systematically and logically, from the
first to the last subject.
 Business administration (in nature is Strategic Management), the key
problem of the business administration process, is developed on the
foundation of areas which are arranged logically, including economics,
accounting, financing management, organizational behavior, accounting
management, economics management, financial enterprise, financial

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accounting, business statistics, negotiation, marketing management, human
resource management, leadership, operational management and finally
strategic management.
 The practical element or the actual experience of each case/situation plays an
important role. Trainees can come up with various solutions in their business
based on the theories obtained from the Program and the actual business
situation of the enterprise.
 The Strategic Management subject proves that Business Administration is

highly linked to practical situation in the economy.
We have chosen a specific enterprise which is the Vietnam Development bank
(VDB) to understand, analyze and develop a strategic management model for this
bank. This choice has been our strength due to the following reasons:
-

Banking is one of the “sensitive” areas and has great influence on the economy.
In fact, banking has contributed significantly to the economy in recent years. It
accounted for 8.5% in total services and made up 4.5% of total GDP in 2008.
Research of the Strategic Development Institute of the Ministry of Planning and
Investment (MPI) shows that banking sector continues playing an important role
in Vietnam economy in the coming years, particularly when Vietnam is moving
out of economic downturn and entering a new development cycle.

-

VDB is a special bank (government bank) so it requires a special strategic
management model. VDB was set up to serve objectives of the Government of
Vietnam. It has the functions and tasks in mobilizing medium and long-term
capital, receiving and managing State fund for implementing the government 1
credit investment policy and export credit targeting at promoting investment for
economic development and export (through preferential interest rate) for all
types of businesses. VDB has fulfilled the tasks set by the Government
successfully during 2006-2009 and has made remarkable achievements.
However, in order to improve its administration model in the coming years and

1

Decision No 108/2006/QĐ-TTg on 19/5/2007 of the Government on the functions, tasks and rights of VDB

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with a development spirit, VDB wants to develop an effective strategic
management model which deserves the name of a Government bank.
-

Our research group consists of four members in which one member is holding
the management role in VDB. Bearing in mind the concern to have a modern
strategic management model for VDB which meets the objectives and equals to
the management level of other similar banks, our group members agree to use
VDB as the research object for our graduation assignment entitled: “Developing
strategic management model for VDB until 2015, strategic tasks for 2020”.

With regards to the research content as mentioned above and on the basis of original
data provided by VDB, we use various research methods such as collecting,
classifying, analyzing and comparing in undertaking this research in order to come
up with the strategic management model for VDB.
With regards to the theory, we use information from the government sources such
as:
-

“”Strategic management: Competitive and Globalizations”, by R. and
Hoskinsson, R., 7th edition, Thomson Southwestern;

-

“Strategic Management”, by Associate Prof. Dr. Lê Thế Giới, Dr. Nguyễn
Thanh Liêm, MA. Trần Hữu Hải – Statistics Publishing House - Hà nội
2007;

-

“Strategy Analysis: Concepts, Techniques, Applications” by Grant,
RobertM., Contemporary. 5th edition, Blackwell 2005;

-

“Economics of Strategy”, Besanko, David, David Dranove, Mark Shanley
and Scott Shaefer. 3rd edition, John Wiley& Sons;

-

“Competitive: techniques for analyzing industries and competitions” Michael
Porter. 1st edition, Freedom Publishing House, 1998.

-

Websites.

We use the following information sources for in-country data.
-

Ministry of Planning and Investment (General of Statistics of Vietnam);

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-

State Bank of Vietnam;

-

Research institutes in Vietnam;

-

Websites

In addition to the Introduction and Conclusion, the assignment includes three
chapters:
-

Chapter I: Theory of Strategic management

-

Chapter II: Situation analysis in VDB

-

Chapter III: Develop strategic management model for VDB

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CHAPTER I
THEORY OF STRATEGIC MANAGEMENT
1.1 Overview of Strategic management
Nowadays, the terms “strategy” or “strategic management” or “strategic
partnership” are used in many fields.
The term “strategy” was firstly used in military, then used widely in politics,
economy and society. Scientists agree that strategic management started in the 60s
of the XX2 century. We limit the scale of this research in strategy and strategic
management in business3.
1.1.1. In military view:
+ In Alexander era (330 BC), strategy is the skill in exploiting forces and setting up
management regime.
+ Basic concept: it is possible to combat the enemy, even stronger one if one is able
to lead the struggle and put the enemy in a situation which is favorable for one’s
ability.
1.1.2. In business view:
Basic concept: Strategy should be appropriate with one’s outstanding competencies
and outside environment.
+ In Chandler’s view (1962): It is the identification of basic and long-term
objectives and purpose; application of a series of action and allocation of necessary
resources;
+ In Quinn’s view (1980): “Strategy is the pattern or plan of integrated key
objectives, policies and actions in a comprehensive and consolidated way”

2

Mintzber, H. Ahsran, B., Lampel, J (1998). Strategy Safari: A guided Tour Through the Field of Strategic
Management, Prentice Hall Europe.
3
Sđd, Strategic Management, Associate Prof. Dr Lê Thế Giới et al. Statistics Publishing House 2007, p. 7

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+ In Johnson and Scholes’s view: “Strategy is the long-term orientation and scope
of an organization in order to achieve the competitive advantage through the
identification of resources in a changing environment, meeting the market demand
and satisfying expectations of relevant stakeholders”.
+ In Mintzberg’s view4: Strategy consists of 5 P.
- Plan: consistent series of intended actions;
- Pattern: consistency in behavior;
- Position: Relevance between organization and its environment;
- Perspective: Way of understanding/awareness;
- Ploy: Behaviors to enemy.
1.2. Key definitions of Strategic Management
After studying the definitions as well as views of scholars and understanding the
role and position of strategic management in enterprises, we think the following
statement is the most fundamental and comprehensive definition of strategic
management:
Strategy is the comprehensive, long-term and fundamental intention5.
Strategy is the art or the skill of using stratagems in endeavors such as politics and

business).6
Therefore, strategy is a combination of several skills or the art in implementing
objectives set in business. It is required to manage the implementation of objectives
if one wants to realize the strategic objectives. Then the definition of strategic
management arrives. It is possible to consider the following definitions of strategic
management:

4

Sđd, Strategic Management, Associate Prof. Dr Lê Thế Giới et al. Statistics Publishing House 2007, pp. 6-7
Sđd, Economic – Society Development Planning. Theories and practicalities. Development Strategy
Institute. National Politics – Truth Publishing House, Hanoi 2003, p.26.
5

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Strategic management is the set of management decisions and actions defining the
long-term efficiency of an enterprise7.
Strategic management is the science and art in strategy in order to develop the
business orientation and objective, implementing short-term and long-term plan on
the basis of available reserouces assisting organizations to achieve its long-term
objectives8.
Strategic management is the process of arranging flexibly strategies, operation and
business outcomes.It includes human resource, leadership, techniques and method
of handling9.
It can be seen that strategic management is a process consisting of such steps as

understanding, evaluating the internal and external environment (SWOT model);
developing strategy; evaluating and monitoring strategy. Only by following these
steps, can strategic management demonstrates its role in the business operation of
enterprises (even organization).
Based on these views, it is possible to come up with the following definition of
strategic management:
Strategic management includes the identification of mission and key objectives of an
organization; analysis of internal and external environment; use of appropriate
strategies for the strengths and weaknesses; acceptance of the organizational
structure and control systems to implement the chosen strategies6.
We think it is the most complete and comprehensive definition of strategic
management. This definition indicates the need to define the organization mission
and specific objective (consistent series of intended actions - Plan, the first P in 5P
model). Then, the analysis of internal and external environment is required
(relevance between organization and its environment – Position, the second P) or
6

Sđd, Sđd, Strategic Management, Associate Prof. Dr Lê Thế Giới et al. Statistics Publishing House 2007,
p.45.

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the selection of strategy which corresponds the strengths and weaknesses with
opportunities and threats (ways of understanding – Perspective, the third P) in order
to position the organization in the business environment. Then appropriate actions
will be taken to serve the existence and development of an organization and finally

to accept the organization structure and its control system (the consistency in
behavior – Partern, the fourth P and lastly the fifth P– Ploy on handling in
business).
On the basis of our presentation above, again we need to state that there are various
definitions of strategic management but its content remains unchanged.

Input

Internal
environment

Strategic
intention
Strategic
task

External
environment

Strategic results

Strategic action

Developing strategy
Business
strategy
Integrate and
restructure

Dynamic

competition
Global strategy

Strategic
Management
Process
Implementing strategy

Corporate
strategy

Enterprise
manageme
nt

Structure and
control

Cooperation
strategy

Leadership

Business Start up &
innovation

Competition strategy and
above average profit

Feedback

5

Figure 1: Strategic management process11
The firgure indicates that major contents of strategic management are illustrated
clearly in the process. The steps are independent but there is a close link among the
steps. The process enables us to have an overview of strategic management, to
develop and implement it in the enterprise. The internal and external factors are the
first step of the process. The “input” is important in forming “strategic intention”

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which is the 2nd step. Then, two areas of the process are formed, which are “strategy
development” and “strategy implementation”. The implementation of “strategy
development” and “strategy implementation” leads to the next step of “competition
strategy” by the enterprise in order to specify steps of the process. The next step is
again “input” for the step 1 which involves “evaluation of internal and external
factors”.
1.3. Role of Strategic Management in Operation (enterprise, company etc.)
It is possible to say that an enterprise can not exist or develop if it does not have a
strategy (vision). If it has a “vision” but objectives for implementing the “vision”
are not developed, then the company cannot go far. This confirms the role of
strategic management in the “life circle” of enterprise. It has an enormous effect on
the entire operation of enterprise. Understanding this issue, many enterprises have
invested significant effort in strategic management of their enterprises in order to
bring them success.
To understand the role of strategic management, firstly, it is neccessary to study the

basic model of strategic management. Any model has to be based on the
fundamental principles of the following model.
1.3.1 Strategic management model:
The strategic management model in Figure 2 shows that:
-

The choice of mission and major objectives by organization/enterprise;

-

Analysis of external environment to identify opportunities and threats;

-

Analysis of internal environment to identify strengths and weaknesses;

-

Selection of strategies on the basis of seeking resources, capability and core
competencies, developing these core competencies so that threats are
addressed and external environment is fully exploited;

-

Strategy implementation involves the design of appropriate organization
structure and control system.

Based on the steps of the strategic management model as analyzed above, we can
see that strategic management has the following tasks:

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Figure 2: Basic model of strategic management12
A
Mission and purpose

External analysis
(Opportunities? Threats?
)

Internal analysis
Identify
resources, capabilities
(
And core competencies )

Select and develop
strategies

Function strategy

Business strategy

Global strategy

Corporate strategy

Organization structure

Appropriate strategy
Structure ad control

,

Design control

Change strategy

1.3.2. Task of strategic management:
Strategic management has 5 significant tasks which are closely related.

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---------------------------------------------Develop
Strategy
and mission

Set up
objectives

Adjust if
required

Adjust if

required

Develop
strategies
to achieve
objectives

Implement
and manage
selected
strategies

Improve/
Change if
required

Improve/
Change if
required

Evaluate,
monitor,
adjust.

Restore
1, 2, 3, 4
If required

Figure 3: Five tasks of strategic management7
The figure indicates that each task is an important element of five integrated

objectives based on the cause and consequence effect. Each task not only
demonstrates its position and role but also shows a close linkage to the next step.
“Developing strategy and mission” is the first out of five tasks. This task shows
that it is important to set up a “vision” and mission for a company. This task
demands investors to have ethics, a vision and to be ambitious for themselves and
for their companies.
On the basis of the first task, managers can develop goals as well as targets and
implement them. This is the content of the 2nd task, which is “setting up
goals/targets”.
“Developing strategies to achieve objectives” is the 3rd task. In this task, it is
important to implement strategies. It is the key mission to complete the entire task
of strategic management. In this task, it is compulsory to mitigate any minor
mistakes and supplement timely in order to avoid the situation of going away from
the set objectives of companies.

7

Sđd, Strategic Management, Associate Prof. Dr Lê Thế Giới et al. Statistics Publishing House 2007, p.12,
Figure 1.3. Five tasks of strategic management.

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“Implementing and managing chosen strategies” is the fourth task. This task
requires managers to use all inputs including capital, human resource, technology,
information etc) to implement effectively strategies selected in earlier task. This
task is equally important to the third task and should not be undervalued. It is

important step in implementing strategic management tasks. The task of
“evaluating, monitoring and adjusting” is the final step in making final decision in
the strategic management model. In this task, it is essential to evaluate in the most
comprehensive way of the 5 strategic management tasks so as to make appropriate
adjustment for the management model.
1.3.3. Benefits of strategic management


Overall benefits of strategic management

The immediate benefit of strategic management is to bring about an overall view of
the development path for the organization/company. Then the company can develop
the most appropriate strategic management model based on the basic principles of
strategy. In strategic management process, “strategists” have to follow 5 tasks
closely as shown in Figure 1. On that basis, companies have a full understanding for
setting up and implementing tasks suitably to their actual situation.
The other benefit of strategic management lies in the close and accurate
implementation of strategic management principles (tasks). This helps companies in
locating their position in the market, gradually adjust their tasks so as to achieve the
targets and goals.


Specific benefits of strategic management
-

Clearer understanding of strategic mission of organization/company

-

More accurate focus on significant aspects of strategy

-

Improved understanding of the rapid changing in the environment14

1.4. Classifying the currently applied strategic management models
As presented above, the world is currently using various strategic management
models. Every model strictly follows the basic principles/tasks of strategic

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management, however, the application depends on the goals and targets of each
organization/company. Within the scope of this assignment, we present the most
representative models.


The internal strategic management model is represented by Chandler 1962
with his work “Strategy and Structure”8.This research focuses on big
companies which have new management structures to cope with development
and strategic changes leading to structural changes16. This model has the
strength by focusing on the structure of management in order to affect the
strategy and vice versa. In addition, Ansoff model should be mentioned.
Ansoff focuses on strategies as the “common linkage” between company
operation and the market. The linkage includes four parts namely market scale
– products, development vector (changes implemented by companies in the
market), competitive advantage and resonance17



The strategic management of sector structural is represented by Michael
Porter. He researched the sector structure with five competition forces18. The
core principle of this model lies in the identification of the sector attractiveness
which is the base for setting up competition strategy19/20. Michael Porter
highly values the sector as an uniform unit. This development helped strategic
management to come back to companies21.



The strategic management of enterprise resources is represented by Barney
with researches on the specific frameworks to identify reserources which
create competitive and sustainable advantage. He proposes four criteria for
evaluating resources including valuable, rare, unique and irreplaceable10. In
addition, it is necessary to mention Hamel and Prakalad in companies’
resource research. The two scholars introduce the concepts of “core
competencies” and “strategic intention”11.

8

The concepts of accessing the

Chandrer, A. (1962), Strategy and Structure, Cambrige, Massachusettes. MIT Press.
Porter, ME. (1980), Competitive strategy. New York, Free Press
10
Barley, J.B. (1991), Firm resources and sustainable competitive advantage. Journal of management 17. 99120.
11
Prakalad, CK ., Hamel,G. (1990). The core competencies of the corporation. Havard Business Rewiew. 68

(3) May- June 79-91.
9

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companies’ resrouces based on “core competencies” and “strategic intention”
is an interesting approach and useful for applying in Vietnam.
Though the above models vary in their approach but they share “great thought” on
strategic management. They are important concepts for our research and proposal of
the strategic management model for VDB in the coming chapters.
1.5. Applications of Strategic Management Model in Vietnam
We faced with difficulty in presenting clearly the possible strategic management
models that can be applied in Vietnam.
As we know, Vietnam has an emerging ecnomy which has incomplete feature in the
economic regime to market factors. In such context, it is difficult to introduce a
standard strategic management model for Vietnam.
However, we agree that considering the current development situation of Vietnam
and the special feature of Vietnamese companies/enterprises, the most feasible and
applicable strategic management model is the mix strategic management model.
According to the studies of the General Statistic Office of Vietnam, over 85% of
Vietnamese companies are small and medium enterprises (SMEs) by April 2009.
The choice of any strategic management model will always be applied for these
types of enterprises.
In fact, we realize there are several effective strategic management models by
Vietnamese enterprises. These models have been researched, developed and applied
successfully. The strategic management models of two joint stock commercial

Vietnamese banks can be named, namely Asia Commercial Bank and Saigon
Commercial Bank (STB). These banks use a modern strategic management model
with a target to become the leading financial corporation and banks in Vietnam in

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2020. They pilot the idea of making members of the Board of Director to be
independent members and do not own shares in these banks. The purpose of using
independent members to participate in the bank management is to increase the
transparency and efficiency of the bank and gradually improve the strategic
management model in these banks.
The above example illustrates our group’s view that the identification of a strategic
management model for VDB does not mean that VDB is not operating effectively.
It aims at a further goal that we are trying objectively to find out the most effective
strategic management model for VDB, a government bank which provides
investment and export credit for the economy, setting the standard and reputation in
the region and the world in banking operation and enterprise community.

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CHAPTER II
SITUATION ANALYSIS IN VDB

2.1. Overall introduction to VDB
On 19/5/2006, the Prime Minister signed the Decision No 108/2006/QĐ-TTg on the
estbablishment of the Vietnam Development bank – VDB which initially was the
Vietnam Development Support Fund. VDB has the function and task to mobilize
medium and long-term capital, receive and manage fund sources of the State for
implementing investment credit policies and export credit. Recently, VDB has been
assigned by the Prime Minister to be in charge of other tasks such as investor of the
Hanoi-Hai Phong highway, provision of guarantee for the enterprises in getting loan
from commercial banks.
VDB network officially came into operation nationwide since 01/7/2006 in
accordance with the Charter on organization and operation approved by the Prime
Minister in Decision No 110/2006/QĐ-TTg on 19/5/2006. Its mechanism is
structured from the central level to provinces, cities attached to the Central level
management. VDB focuses on supporting sectors, and important economic
programs of the country and regions and disadvantaged areas.
In addition, VDB is non-profit bank and its compulsory reserve rate is 0%. It is not
required to take part in saving insuring deposits; is guaranteed by the Government in
the payment; is exempted from tax and contribution to the state budget in accordance
with the law.
VDB has a legal status, registered capital, its own seal and account in the State bank
of Vietnam (SBV), State Treasury of Vietnam (STV), local and foreign commercial
banks. It participates in the payment network with other banks and provide payment
services in accorance with legal regulation.
VDB has an operation duration of 99 years since its establishment decision issued
by the Prime Minister in the Decision No 108/2006/QĐ-TTg on 19 May 2006.

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Assignment of group 5 – Strategic Management

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2.2. Organizational Structure of VDB
 Description of VDB organizational structure
VDB organizational structure includes:
- Board of Director (BOD) has 06 members including 03 permanent members who
are Chairman, General Director and Inspection Head and 03 semi-permanent members
who are Vice ministers of Ministry of Planning and Investment (MPI), Ministry of
Finance (MOF), State Bank of Vietnam (SBV).The Secretary Board to the BOD
includes 03 permanent staff and 03 semi-permanet members who are department leaders
from MPI, MOF and SBV.
- The Board of Supervisory includes 06 members.
- The Board of Management include General Director and 6 Deputy General
Directors;
The management mechanism includes headquarter in Hanoi; transaction
centre, branches, representative offices in and outside the country.
2.3. Functions and Tasks of VDB
VDB undertakes the following work:
Functions and tasks of VDB:
- Mobilize, receive fund of local and international organizations to implement credit
develoment investment and export credit of the State as regulated by the
Government.
- Implement investment credit policy including investment loan, post-investment
support and investment credit guarantee.
- Implement export credit policy including export loan (providing loan to importers
and exporters); export credit guarantee; tender guarantee and export contract
implementation guarantee.

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