Hoàn thiện chiến lược kinh doanh ngân hàng TMCP liên việt bank

LUẬN VĂN
Hoàn thiện chiến lược kinh doanh
Ngân hàng TMCP Liên Việt Bank
THESIS
PERFECTING BUSINESS STRATEGY
OF LIEN VIET COMMERCIAL
JOINT STOCK BANK
FOR 2015 - 2020 PERIOD

1


TABLE OF CONTENTS
COVER PAGE

1

TABLE OF CONTENTS

2

ABBREVIATIONS

5

LIST OF TABLES

6

INTRODUCTION

7

CHAPTER
1:
ARGUMENTATIVE
MANAGEMENT IN THE ENTERPRISE
1.1.

BASIS

ON

STRATEGIC

Overview of strategic management

10
10

1.1.1. Definitions

10

1.1.2. Process of strategic management

12

1.2.

13

Mission; Vision; Core Value

1.2.1. Mission

13

1.2.2. Vision

14

1.2.3. Core value

14

1.3.

15

Strategic analysis

1.3.1. Analysis of macro-environment

15

1.3.2. Analysis of sectoral environment

18

1.3.3. Analysis of internal environment

21

1.3.4. Summary of SWOT analysis

22

1.4.

24

Selection of preferential strategy

1.4.1. Corporate level strategy

24

1.4.2. Business level strategy

25

1.5.

27

Implementation & evaluation

1.5.1. Organizational structure

27

1.5.2. Control system

28

1.5.3. Route construction for implementation

29

CHAPTER 2: PRESENT SITUATION OF BUSINESS STRATEGY OF
LIENVIET COMMERCIAL JOINT STOCK BANK

30

2


2.1.

Introduction of Lien Viet Commercial Joint Stock Bank

30

2.1.1. General information

30

2.1.2. Organizational structure of Lienviet Bank

31

2.1.3. Products and services of Lienviet bank

32

2.1.4. Business performance in 2008 and the first half of 2009

32

2.2.

35

Analysis & evaluation of LienViet Bank’s present business strategy

2.2.1. Current strategic commitments of LienVietBank

35

2.2.2. Analysis of macro-environment impacts

37

2.2.3. Analysis of sectoral environment impacts

41

2.2.4. Analysis of LienVietBank’s internal environment

45

2.2.5. Current business strategies

55

2.2.6. Current organizational structure & control system

63

2.3.

Comments and evaluations on implementing the business strategy of
LienVietBank

66

CHAPTER 3: PERFECTING BUSINESS STRATEGY OF LIENVIET
COMMERCIAL JOINT STOCK BANK FOR 2015 - 2020 PERIOD

67

3.1.

Corporate development orientation

67

3.1.1. Table of summary of SWOT analysis

67

3.1.2. Development orientation

68

3.1.3. Objectives

69

3.2.

69

Perfecting strategic commitments of LienVietBank

3.2.1. Mission

69

3.2.2. Vission

70

3.2.3. Core Value

70

3.3.

Perfecting business strategy of LienVietBank in 2010-2015

70

3.4.

Solutions for perfecting strategy of LienVietBank

71

3.4.1. Technological solutions

71

3.4.2. Human resources solutions

73

3.4.3. Solutions for improvement of financial capability

75

3.4.4. Marketing solutions

78

3


3.4.5. Solution for improvement of risk management capability

82

3.4.6. Research & Development (R&D).

82

3.4.7. Solution for organizational development and expansion of business lines.

83

3.4.8. Conditions for strategic implementation.

84

3.5.

85

Perfecting organizational structure and control system

3.5.1. Perfecting organizational structure

85

3.5.2. Control system

86

3.6. Route for implementation of strategic solutions

87

CONCLUSION

88

REFERENCES

89

APPENDIX: ORGANIZATIONAL CHART OF LIENVIETBANK

90

4


ABBREVIATIONS

LVB

LienVietBank - Lien Viet Commercial Joint Stock Bank

MB

Military Bank

Techcombank

Technological and Commercial Joint- stock Bank

HSBC

Hongkong Shanghai Bank Corporate

ALCO

Assets and Liabilities Committee

MSS

Mobivi Securities Settlement

ATM

Automatic Transfer machine

GDP

Gross Domestic Product

ISO

International Standard Organization

TQM

Total Quality Management

IT

Information Technology

L/C

Letter of Credit

ODA

Official Development Assistance

POS

Point of Service

SMS

Short Message Service

WTO

World Trade Organization

USD

United State Dollar

VND

Vietnam dong

SATRA

SAIGON TRADING GROUP

SASCO

Southern Airports Services Company

CITAD

Centre for Information Technology and Development
LIST OF TABLES

Table 1.1

SWOT analysis summary

Table 1.2.

General strategies in the model “Five competitive forces” by

Table 2.1

Michael Porter
Growth of LienVietBank’s fund mobilization and lending

5

Table 2.2

Business performance results of LienVietBank (unit: VND billion)

Table 2.3

The comparison of operating situation of LienVietbank and

Table 2.4

competitors in the year 2008
The comparison between the core capacity of LienVietbank and

Table 2.5

other competitors
Evaluation the key capability of against rivals

Table 2.6

Evaluation the surpassing capability of LienVietBank

Table 2.7

General business plan in 2010 – 2012 (unit: billion VND,%)

Table 2.8

Plan for mobilization (unit: billion VND,%)

Table 2.9

Credit operation activity (unit: billion VND,%)

Table 2.10

Plan to increase total asset – capital (unit: billion VND,%)

Table 2.11

Plan for Profit (unit: billion VND,%)

Table 2.12

Business targets in 2013 – 2015 (unit: billion VND,%)

Table 2.13. Summary and analysis of business plan targets in 2010-2015
(unit: billion VND,%)
Table 3.1

SWOT analysis table of LienViet Bank

6


INTRODUCTION
1. The necessity of the theme:
Vietnamese financial market is at present growing more both in scope, form, quality
and structure of market participation. Under the process of accessing World Trade
Organization WTO and Vietnam – US trade agreement, Vietnam undertakes to

fairly treat local and foreign banks in terms of banking services to remove limits to
access into the local banking service market. However, compared with foreign
banks, the system of Vietnamese commercial banks still has such weaknesses as
financial resources, experience of management, business, technology, quality and
service as well as incapacity of risk prevention. This requires each commercial bank
to apply appropriate remedies to develop, improve competitiveness, seize the
control of the local financial market and expand into the international financial
market. In which, establishing big banks which have multi-purpose and the capacity
to catch up with fast changes in the modern world has been becoming a necessary
demand and an indispensable tendency.
On the other hand, the competition among domestic commercial banks as well as
the system of banks and local financial institutions is happening fiercely. In the
market of finance and banking, there are more and more investment funds,
insurance companies, urban banks that are newly established and the securities
market of Vietnam is taking place eventfully. All these things create more financial
and investment channels for enterprises and people to choose. These financial
institutions have the direct competition with banks in raising capital, investment and
the competition is just also fierce in the banking industry. From the above reality, in
order to exist and develop sustainably, Vietnamese commercial banks have to
construct their strategy of development in accordance with the specific industry
from time to time.
In addition, the world financial crisis & economic downturn have caused
considerable impacts on the banking sector of Vietnam. This crisis is also an
opportunity for us to have a more comprehensive and practical view of all risks,

7


opportunities, strengths and weaknesses of the system of commercial banks in the
country. This also creates an essential demand against commercial banks to

consider and make their strategy of development.
In the program of training International Master of Business Administration at the
GU with the theme “Strategic Management”, our team 7 is assigned to undertake a
major exercise through a project in connection with a certain local enterprise to
apply course knowledge to analyze & create solutions on strategic management.
With these reasons, at the same time in the team there is a member who is working
for Lien Viet Joint Stock Commercial Bank so our team has agreed to decide and
choose the theme “Perfecting the business strategy of Lien Viet Commercial Joint
Stock Bank for 2015 - 2020 period” aimed at contributing to the sustainable
development of Lien Viet Commercial Joint Stock Bank – LienViet Bank in the
current tendency of regional & global integration.
2. Study objectives:
-

Systemize theoretical matters in terms of strategic management

-

Analyze & evaluate the situation of strategic execution in the enterprise in
the past time.

-

Set forth solutions to perfect the strategy in LienVietBank for 2015 - 2020
period.

3. Object & scope of study:
-

Object: Business strategy of LienVietBank

-

Scope of study: In the market of Vietnam, it is applied from 2015 - 2020.

4. Study method:
It is to apply qualitative methods as follows:
-

Apply methods to study available documents (secondary documents) to
consider scope, structure and tendency of market movement.

-

Study, investigate, survey to collect primary data.

5. Expected results:

8


It is expected to help business leaders to re-consider tendency and business plan so
with those matters, it is based to prepare a business strategy in 2015 - 2020 to
increase competitiveness and ownership value.
6. Layout of the theme:
In addition to the introduction and conclusion, main contents are included in 03
chapters:
-

Chapter 1: Argumentative basis on strategic management in the enterprise

-

Chapter 2: Present situation of business strategy of LienViet Bank

-

Chapter 3: Perfecting the business strategy of LienViet Bank for 2010-2015
period.

7. Assignments undertaken by team members:
Based on contents & structure of the theme mentioned above, our team 7 agrees to
provide team members with assignments as follows:
Team members
Tran Ngoc Tuan
Vu Duc Hung
Dang Thi Hoang Ha
Tran Manh Cuong

Chapter
Introduction
Chapter 1
Chapter 3
Chapter 1
Chapter 2
Chapter 3
Chapter 2
Chapter 3
Chapter 3
Conclusion

9

Section
1.3; 1.4; 1.5
3.1; 3.3
1.1; 1.2
2.2.4
3.2
2.1; 2.2
Collect & Select the data of LVB
and the banking sector.
3.4; 3.5; 3.6


CHAPTER 1
ARGUMENTATIVE BASIS ON STRATEGIC
MANAGEMENT IN THE ENTERPRISE
1.1.

Overview of strategy and business strategy.

1.1.1. Definitions.
1.1.1.1.

What is the strategy?

Strategy is simply known as a plan to create a competitive advantage for a certain
organization compared with its competitor. The strategy must be understood as
what the enterprise is doing and preparing its plan to achieve. A good strategy will

help managers and staff to define any objectives, recognize the line of action and
contribute to the success of the organization. On the contrary, if a certain enterprise
does not have any specific strategy or operation orientation, it will be like a boat
without sailor. To further recognize strategy definitions, let’s see some economic
viewpoints as follows:
Point of view 1: Strategy is a special plan
-

G. Arlleret - “Strategy is aimed to define ways and means to achieve
objectives set through policies”

-

D.Bizrell and group of authors - “Strategy is a general plan leading or
orienting a certain enterprise to achieve expected objectives. It is the basis
to prepare policies and operating skills”.

-

Gluecl - “Strategy is a united, comprehensive and general plan designed to
ensure that enterprise objectives will be executed”.

Point of view 2: Strategy is an art
-

Alain Threlart said “Strategy is an art that an enterprise uses to against
competition and win the victory”

-

M.Porter said “Strategy is an art applied to establish firm competitive
advantages to defend”

10


Therefore, these authors consider the strategy as an art to compete in the market and
develop the enterprise.
Point of view 3: Strategy is both a plan and an art
-

“Business strategy is an art to combine and control activities to achieve long
term objectives”.

-

“Business strategy is an art designed to organize means to achieve long
term objectives in accordance with the change of the business environment”

Through these viewpoints, we can see the strategy related to enterprise objectives
and if a strategy is established, it will have to help achieve objectives set forth .
However, it is not enough to prepare and decide any target-based strategy and it
must provide specific actions from time to time to realize targets. The strategy does
not only provide what an organization wants to execute but it is also the way to
execute these things. A separate action is not just a strategy. The strategy must be a
series of actions and decisions in terms of close connection. All strategies must be
aimed at enterprise objectives and established on the basis of internal resources
(strengths and weaknesses), external factors in the outside environment
(opportunities and threats).
In short, we can define the strategy in a general manner:

“Strategy is a series of integrated actions to mobilize resources in a certain
organization to achieve a certain objective.”
1.1.1.2.

What is a business strategy?

As mentioned above the strategy related to objectives, if a strategy is established, it
will have to help a certain enterprise to achieve its objectives set forth. However,
the business strategy is more related to how the enterprise can succeed in a specific
market. It is related to strategic decisions on product selection, customer
satisfaction, gaining competitive advantage compared with competitors, develop
and create new opportunities and so on.
According to Fred R.David, it is “Strategy of business is means to achieve long
term objectives.”

11


It is possibly said that the business strategy is means to help enterprises to achieve
long term objectives. The business strategy is not aimed to specifically guide how to
do, but it is a general program which provides solutions to effectively mobilize
resources to realize objectives.
The business strategy can be generally defined as follows: The business strategy is
a series of commitments and actions that a company applies to gain a competitive
advantage by developing core capacities in a certain market.
1.1.1.3.

Basic matters of business strategy:

The business strategy must define three basic matters:

-

Who is targeted?

-

What demand it is satisfied?

-

How these demands are satisfied?

1.1.1.4.
-

Role of business strategy:

It helps to recognize targets and orientations as guidelines for production and
business activities.

-

It helps to catch and take any advantage of business opportunity at the same
time it creates active measures to overcome dangers and threats in the market.

-

It contributes to improve how to effectively use resources and enhance the
competition position to ensure sustainable development.

-

It creates stable foundations so as to set forth policies and decisions on
production and business in accordance with market movements.

1.1.2. Process of strategic management.
The process of strategic management is a series of activities, including
commitments, decisions and actions to achieve such advantages of strategic
competition and sustainable competition and profit at an above-average level.
It can be divided into 04 phases:
-

Phase 1: It is to define corporate targets to establish mission, vision and core
value through considering and analyzing environmental factors and it is also to

12


define risks, opportunities, strengths, weaknesses then core capacity and
competitive advantage of the enterprise.
-

Phase 2: Construct & select an appropriate strategy for the enterprise
(strategy making).

-

Phase 3: Execute the strategy

-

Phase 4: Check & evaluate the execution of strategy.

1.2.

Mission, Vision and Core value.

1.2.1. Mission:
Defining a declaration of mission in an appropriate manner contributes a very
important role into the success of a certain brand name. At first, it creates an
important basis to appropriately choose targets and strategies for the company. On
the other hand, it has the effect to create and strengthen the brand name in the social
public as well as draw attraction from such concerned objects (as customers,
shareholders, agencies, suppliers, bankers, governments…). The enterprise
thoroughly knows its mission so that it will have opportunities to succeed more than
any companies which do not clearly express their existence.
A good mission declaration must be made on the basis of customer orientation,
meaningful expression, product benefit, service and corporate activities.
What is the mission? The mission is a declaration aimed to announce the
existence of an enterprise and it also defines values and enterprise control rules;
it is a primary part of the process of making strategy.
Missions can be different in length and they talk about business, targets and values.
The corporate mission is the reason why the company exists in the market; who are
you and what products and services will you bring back for customers and the
public. Decisions in the process of making strategy and the control of the company
must be always in accordance with the declaration of mission”
The declaration is the basis of corporate mission. The good declaration can be a
driving force to promote staff when sending corporate targets and values to
customers and people.

13


1.2.2. Vision:
Vision is a lively brand image which will be likely in the future. When mentioning a
certain intention or a strategic target, we often consider it as a future image. It
comprises the meaning of an excellent and ideal standard. It is selected among one
of the most wonderful values of a brand name. With its unique property, it implies
to create something special.
So what is the vision? The vision is “A declaration of vision is a report which says
about the position in a certain company you expect to achieve. The declaration
provides the future of the company where you achieve your objectives. Vision
declarations can be different in length; it is possibly a short sentence and it can
be a long paragraph but it is required to define your final target”.
1.2.3. Core value:
Core value is all what a company cannot make payment or change. Core values
create a foundation to set up regulations in the company. Core values can be defined
as follows:
-

It is a belief system which influences on behaviors between person to person or
among groups;

-

Core values are the "soul" of the organization;

-

They are effective values which are deeply attached to the organization.

-

Core value helps establish the organizational psychology and then it can support
or eliminate the individual psychology.

-

Core values are long term instruction rules as required:
+ To help orient decisions and actions in a certain organization;
+ Those are not cultural actions or specific activities;
+ It is not constructed for financial targets or short term opportunities;
+ The organization wants to keep the core value even when its mission is
already changed.

14


-

They are long term and necessary principles of a certain enterprise – set of
detailed instruction rules which cause a deep influence on what people think
and act in the enterprise.

Without care of public opinion, the core value has a real value and it is very
important to people in the enterprise. Core values are several rare instruction rules
leading to a great impact possibility and they are the soul of the organization; those
values are aimed to guide all actions.
Core value have the depth and those are very important values. Those values have
little change under the change of the market. On the other hand, enterprises will

change the market if it is necessary to keep their actual core values.
1.3.

Strategy analysis.

Each enterprise has all activities which are impacted by factors from the macroenvironment (the common environment) and the micro-environment (the sectoral
environment & internal environment) so to prepare any strategy for the enterprise,
we need to analyze how environmental factors influence on the enterprise.
1.3.1. Analysis of macro-environment.
Analysis of macro-environment helps recognize and evaluate: O – Opportunities in
the environment a certain enterprise can take advantage and T - Threats that
enterprise can have to cope with. Next, it allows to organize and construct specific
business tasks, define long term and feasible targets and design a strategy in
accordance with business targets.
We can use such a model as PEST to analyse the macro-environment. This model
uses factors as follows:
-

Political (Institution-Legislation)

-

Economic

-

Sociocultural

-

Technological

15


These are four factors which directly influence on economic sectors as they are out
of the enterprise and the sector. The sector has to suffer from its impact considered
as objective factor. Based on impacts, enterprises will put forth policies and
business activities in an appropriate manner.
1.3.1.1. Political (Institution – Legislation) factors:
These factors have the influence on all business lines in a certain territory. They can
also threaten the existence and development of any sector. When operating in a
certain administrative area, enterprises will have to conform to institution and
legislation factors in that area.
-

Stability: We need to consider stability in political and diplomatic conflict
factors in institution and legislation. If a certain institution has high stability, it
will create good conditions for business and if not, a conflict will happen and
impact business activities in the territory.

-

Tax policies: Policies on ex-import duties, consumption tax and income tax...
will impact the revenue and profit of an enterprise.

-

Relevant laws: Law on investment, enterprise law, labor law, antitrust law, antidumping law ...

-

Policies: State policies will cause a certain impact to enterprises so it can create
any profit or challenge. These policies include trade policy, industry
development policy, economic development policy, tax policy and policies on
competition regulation and consumer protection...

1.3.1.2. Economic factors:
Enterprises need to pay attention to economic factors in aspects of short term, long
term and government interference in the economy.
Often based on economic factors, enterprises will decide to make investment in
lines and sectors of business.
-

Economic situation: Every economy has its own cycle and during a certain
period of the economic cycle, enterprises will make their own decisions in an
appropriate manner.

16


-

There are such factors to impact the economy as: interest, inflation…

-

Economic government policies: basic wage law, government strategies on
economic development, preference policies: tax reduction, subsidy....

-

Future economic outlook: speed of growth, GDP increase, GDP rate per
investment...

1.3.1.3. Sociocultural factors:
Each nation or territory has its specific cultural values and social factors and these
factors are customer characteristics in those regions.
Cultural values are to create a society so they can make that society exist and
develop. Therefore, cultural factors are often protected in a close manner and
especially they are spirit cultures. However, we cannot deny cultural interferences.
The cultural interference will change consumption psychology, lifestyle and create
the prospect of development in different sectors.
In addition to culture, social characteristics also make enterprises pay attention
when surveying the market. Social factors will divide the community into customer
groups and each group has its own different characteristics, psychology, income etc:
-

Life expectancy, health status, regime of nutrition, diet

-

Average income, distribution of income

-

Life style, knowledge, viewpoints of aesthetics and life psychology

-

Living conditions

1.3.1.4. Technological factors:
Related to the level and direction of technological advance or innovations in the
society there are products, technological process or new materials; common level of
science and scientific advances in a basic manner.
In addition to basic factors under the above PEST model, nowadays when surveying
the market, the globalization factor (integration) is often considered becoming a
macro factor which impacts the sector.
1.3.1.5. Integration factors:

17


It is not denied that the globalization is a tendency which does not create the
opportunity for enterprises and countries in developing productions and businesses.
-

The globalization creates pressures of competition so competitors come from
different regions. The integration process will make enterprises adapt to
advantages of competition, labor assignment in the region and the world.

-

The importance is when the integration is executed, trade barriers will be
gradually removed so enterprises have more trade opportunities with their
business partners which come from different geographic areas and their
customers are not only local but also foreign customers coming from different
areas.

1.3.2. Analysis of sectoral environment.
There are many models to analyse the sectoral environment and in which it is
popular that there is the model “Five forces of competition” by M.E. Porter.
This model is applied to analyze the environment through evaluating 05 forces
which affect activities in the enterprise as follows:

1.3.2.1. Competition pressure from suppliers:
Suppliers can cause the pressure on enterprises as follows:
-

Number of suppliers: it will decide the pressure of competition, the right of
negotiation in the sector. If in the market there are only some big scale suppliers

18


which will create the pressure of competition to affect all production and
business activities in the sector.
-

Scope of supplier: Suppliers which have their big scale of operation will gain a
stronger position than customers.

-

Quantity of appropriate substitute products: the pressure of a supplier will go up
if there are a few appropriate substitute products.

-

High quantity of individual customers compared with big customers: Suppliers
will have more pressure than individual customers.

-

The product importance of a supplier in the success of a customer: A product of
the supplier plays a very important role in activities of the customer so the
supplier will cause a higher pressure.

-

The level of cost is applied to converse the product if it is required to replace
the supplier: The supplier will have its higher pressure if the level of cost so that
the customer converses to use any other product is rather high.

-

The penetration of a supplier in the business field of a customer: If the supplier
has the capacity to enter the field where the customer is operating so it will
make a higher pressure than that of the customer.

1.3.2.2. Competition pressure from Buyers:
Buyers make a pressure of competition which can directly impact all production and
business activities in the sector.
Buyers cause a pressure to the enterprise on price, quality of product or service
attached and they control the competition themselves in the sector through the
decision of buying.
The customer has his increasing right of negotiation when:
-

There are a limited number of buyers, who are big customers.

-

Buyers consume most of products in a certain sector.

-

The buyer account for a high rate of annual revenue of a seller.

-

Expense to change into using any other product is low.

-

The buyer has enough information on market and business lines of the seller.

19


-

The buyer has the capacity to enter a certain sector of the seller.

1.3.2.3. Competition pressure from potential competitors:
According to M-Porter, potential competitors are enterprises which have not yet
existed in the sector but they can cause any impact on the sector in the future. How
much or little pressure potential competitors make in the sector is subject to the
followings:

-

Sector attraction: This factor is shown through such criteria as rate of return,
quantity of customers and quantity of enterprises in the sector.

-

Barriers of entry: they are factors which make the accession into a certain sector
more difficult and more expensive (scope advantage; product difference;
demand of capital; cost of conversion; access to distribution channels;
disadvantage of cost; government policy; possible action).

1.3.2.4. Pressure of competition from substitute products:
Substitute products and services are aimed to meet the same demand as those
products and services in the sector.
The threat from substitute goods increases when:
-

Cost to converse any product for the buyer is low.

-

Price of substitute product is lower.

-

Quality & effect of substitute product are better than those used now.

Those products which are especially and highly evaluated by customers will be
slightly influenced by the threat.

1.3.2.5. Pressure of competition in the internal sector:
Enterprises which are operating in the sector will directly compete with each other
to put pressure on the sector and create a certain intensity of competition. The
intensity in the sector will go up when:
-

There are many competitors or competitors have the same strength.

-

That sector has its sluggish or declining growth: All competitors find out the
way to increase competitiveness to exist in the market.

20


-

Fixed cost or store cost is high: It is a rare possibility to converse into other
sectors or other products.

-

It is a rare chance to create any difference or low conversion cost: Competitors
have similar operations, products, prices, after-sale services…

-

When the strategic benefit is high: All competitors find out the way to exist in
the market.

-

Exit Barriers: Like entry barriers, exit barriers are obstacles in the path of an
organization which wants to leave a given industrial sector (including factors
involved in technology, high investment capital, redundancy costs, government
and other relevant stakeholders, strategies and plans).

1.3.3. Internal environment analysis.
An enterprise’s internal environment is composed of elements within and under the
control of the organization. Internal environment analysis requires collecting and
processing information about finance, organizational structure, personnel, research
and development, marketing and business performance of such organization.
An assessment of an organization’s internal factors is frequently made through
appraisals on functional business divisions of such organization including
managerial board, marketing department, financial and accountant department,
manufacturing/professional department, research and development department,
information system, organizational structure, implemented and implementing
strategies.
Internal environment analysis enables a firm to identify its strengths as well as
weaknesses and then to select strategies that take best advantage of the strengths
and minimize the weaknesses.
Strengths are things that a company is good at or attributes that help a company to
enhance its competitiveness, including:
-

Valuable capabilities or know-how

-

Valuable tangible assests

21


-

Valuable human-assets

-

Valuable organizational assets

-

Valuable intangible assets

-

Forming alliances or cooperating with partners

-

Prominent key competences

-

Important competitiveness

Internal environment analysis results in the identification of a firm’s resources,

capabilities and core competence in order to generate its competitive advantage and
strategic competitive advantage.
1.3.4. Summary of SWOT analysis
SWOT is an acronym for Strengths, Weaknesses , Opportunities and Threats. It is a
very helpful tool that enables us to study issues or make decisions on organization,
management as well as business. In imaginable words, SWOT is a theoretical
framework to be used as a basis for reviewing all strategies, identifying an
organization’s/firm’s position and direction, analysing business proposals or any
idea relating to its benefit. And in fact, the use of SWOT in build a firm’s business
plan, strategic planning, assessing rivalries, carrying out market research,
developing products and research reports has been increasingly selected by firms.
SWOT analysis brings companies a clear awareness of:
-

Its strengths

-

Its weaknesses

-

Its best opportunities

-

Its fundamental threats.

SWOT analysis enables a company to determine which one is the best to be done to
mobilize its resources based on its internal and external conditions.

Table 1.1. SWOT analysis summary

22


O: Opportunities

T: Threats

- Expand additional groups - Appear
of customers.

many

new

entrants

- Develop its presence in - Losing turnover because
SWOT Matrix

-

S: Strengths
-

Strong strategy
Healthy finance
Good reputation
Market Leader

Unique techniques
Price advantage
Strong advertising
Skills in innovating production
Good customer services
Better product quality
Alliance or joint ventures

W: Weaknesses
- Without
Inexplicit
strategic
-

orientations
Obsolete equipments
Bad
accountant,
high
nonperforming debts
Overall cost is higher than that of
the rivalries.
Lack of basic skills/competence
Gaining loss
Face problems in production
Lag behind in R&D

new geographical areas.
Extend product lines
Transfer skills to a new

product
Vertical integration
Expand in order to gain
market share from the
competitors.
Take over the competitors
Form alliances or jointventures for improvement
of its presence
Develop in order to exploit
new opportunities.
Develop for enhancement
of its brand name/image

-

of substitution products.
Low growth of the market
Unfavourable changes of
foreign exchange rate and
trade policy.
Costly new regulations
Vulnerable
to
effect
before business cycle
More advantages adding
to customers or suppliers
Change
customers’
demand

Change population

S-O strategies

S-T strategies

Use strengths to take
advantage of opportunities.

Use strengths to neutralize
threats

W-O strategies

W-T strategies

Minimize weaknesses and
take advantage of
opportunities

Minimize weaknesses and
avoiding threats

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- Narrow product lines
- Weak marketing skill

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1.4. Selection of preferential strategy.
1.4.1. Corporate level strategy.
They are specific activities that a company wants to do to achieve its competitive
advantage by selecting and managing a group of business activities and competition
in some certain sectors and markets.
1.4.1.1. Strategy of diversification:
This strategy is suitable for companies that can not reach their growth goals in
current production with their existing products and market. This type of strategy
includes: Concentric diversification strategy, horizontal diversification strategy,
conglomerate diversification strategy.
1.4.1.2. Focus development strategies:
Focus development strategies are core strategies aimed to improve normal products
or markets without making any change in factors.
There are 3 types of strategies for selection of focus development including
marketing penetration strategy, market development strategy and product
development strategy.
1.4.1.3. Integration strategies:
This type of strategy is suitable to enterprises which operate in a strong production
sector but hesitate or cannot perform one of the possible focus development
strategies because of the saturated markets.
2 corporate level strategies for the integration development are forward integration
strategy and backward integration strategy.
1.4.1.4. Endgame strategies :
This strategy is appropriately applied when companies find it necessary to focus on
improving their capacity after the period of rapid development; when long term
opportunities and development are not available in a certain period, other
opportunities are more attractive than pursuing opportunities. There are four kinds
of strategies such as simple adjustment strategy, retrenchment strategy, divestiture

strategy and liquidation strategy.

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