BUSINESS TRATEGY FOR THE BANK FOR INVESTMENT AND DEVELOPMENT OF VIETNAM YENBAI BRANCH IN THE PERIOD OF YEARS 2010 2015

MBA THESIS
STRATEGIC MANAGEMENT
“BUSINESS

TRATEGY FOR THE BANK FOR

INVESTMENT AND DEVELOPMENT OF VIETNAM –
YENBAI BRANCH IN THE PERIOD OF YEARS 2010 – 2015”

TABLE OF CONTENTS
ACRONYMN TABLE........................................Error: Reference source not found
Approval by GaMBA Program:...........................Error: Reference source not found
DECLARATION................................................ Error: Reference source not found
CHAPTER I..........................................................Error: Reference source not found
INTRODUCTION................................................Error: Reference source not found
1.1. Necessity and significance of research topic:. Error: Reference source not
found
1.2. Goal of research/ objective of business development strategy.........Error:
Reference source not found

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CHAPTER II.........................................................Error: Reference source not found
COMMON ISSUES IN STRATEGIC MANAGEMENT. . .Error: Reference source
not found
2.1. Concept of business strategy...................Error: Reference source not found
2.1.1. Viewpoints in approaching corporate business strategy............Error:
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2.1.2. Concepts of corporate business strategy...Error: Reference source not
found

2.2. Features of business strategy..................Error: Reference source not found
2.3. Type of business strategy........................Error: Reference source not found
2.4. Process to build business strategy..........Error: Reference source not found
2.5. The objective necessity of the business strategy of the enterprise. . Error:
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2.5.1. The importance and benefits of business strategy.....Error: Reference
source not found
2.6. The planning of a business strategy of a enterprise........Error: Reference
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2.6.1. Requirements and grounds for the planning of business strategy.
....................................................................... Error: Reference source not found
2.6.2. Ideas to be fully understand when making business strategies . Error:
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2.6.3. Steps for making business strategies of the enterprise...............Error:
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2.6.5. Identifying objectives of the enterprise.....Error: Reference source not
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2.7. Build the strategic model........................Error: Reference source not found
2.7.1. The model of growth strategy..........Error: Reference source not found
2.7.2. Stable strategy................................... Error: Reference source not found
2.7.3. Cutting strategy.................................Error: Reference source not found
2.7.4. Combination strategy........................Error: Reference source not found
2.7.5. Outward strategy...............................Error: Reference source not found
2.8. Selection of strategy option.....................Error: Reference source not found
CHAPTER III....................................................... Error: Reference source not found
STRATEGIC ANALYSIS AT BIDV - YEN BAIError: Reference source not found
3.1. Overview of Bank for Investment and Development of Yen Bai....Error:
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3.1.1. Process of formation and development.....Error: Reference source not
found

3.1.2 Structure and management apparatus of the branch:Error: Reference
source not found
3.1.3. Human resources of the branch:.....Error: Reference source not found
3.2. External environment analysis...............Error: Reference source not found

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3.2.1. Analyzing local socio-economic environment: Error: Reference source
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3.2.2. Analyzing market share, market.....Error: Reference source not found
3.2.3 Analysis of customers.........................Error: Reference source not found
3.2.4. Competitor analysis..........................Error: Reference source not found
3.3 Internal analysis:.......................................Error: Reference source not found
3.3.1 Analysis of products and services:. . .Error: Reference source not found
3.3.2 Analysis of the model of distribution channels network.............Error:
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3.3.4 Analysis of credit operation:.............Error: Reference source not found
3.3.5 Analysis of services operation:..........Error: Reference source not found
3.3.6 Analysis of technologies:....................Error: Reference source not found
3.3.7 Analysis of the training resources:...Error: Reference source not found
3.3.8 Analysis of assets, liabilities management- risks management:..Error:
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3.3.9 Financial Analysis:.............................Error: Reference source not found
CHAPTER IV.......................................................Error: Reference source not found
BUSINESS STRATEGY FOR BIDV – YB for the period of 2010 – 2015...…76
4.1. Strategic plans of BIDV until 2015………..…………………………......76
4.1.1. Purpose – Principle Operations……………………………………..76
4.1.2 View......................................................Error: Reference source not found
4.1.3 Ten major objectives should be priorities of BIDV....Error: Reference

source not found
4.1.4.The basic targets for the period 2010-2015.Error: Reference source not
found
4.1.5. Detailed Objectives for each major business:. Error: Reference source
not found
4.2. Objectives, the guideline work, the idea of strategic business view of
BIDV – Yen Bai……………………………………………………………..79
4.3. General targets (quantitative and qualitative):…………………………… ....…84

4.3.1 The period of 2010-2012:...................Error: Reference source not found
4.3.2 The period of 2013-2015....................Error: Reference source not found
4.4. Determine partial plans:.........................Error: Reference source not found
4.4.1. Capital mobilization plan:................Error: Reference source not found
4.4.2. Credit plans:......................................Error: Reference source not found
4.4.3. Plans for credit quality and bad debt handling:........Error: Reference
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4.4.4. Plan service:.......................................Error: Reference source not found
4.4.5. Plan for extending network and distribution: Error: Reference source
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4.4.6. Plan for human resource training and development: Error: Reference
source not found
4.4.7. Plan for development and information technology application:Error:
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4.4.8. Plans for risk management:.............Error: Reference source not found
4.4.9. Plans for operational management, business management:......Error:
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CHAPTER 5........................................................Error: Reference source not found
CONCLUSION................................................... Error: Reference source not found
REFERENCES..................................................... Error: Reference source not found

ACRONYMN TABLE
No
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24

Terms
Administrative Department
Internal Financial and Accounting Department
Credit Management Department
General Planning Department
Risk Management Department
Customer care Department
Customer Service Department
Fund Service and Management Team
Yen Binh Transaction Office
Computing team
Savings Treasures
Risk Reserve Fund
Bank for Investment and Development of Vietnam
Bank for Investment and Development Bank - Yên Bái
Agriculture and Rural Development Bank
Commercial bank
Vietnam Bank for Social Policies
State Treasure
Private Enterprises
Technology and Informatics
Public servant
Socialist
Fixed asset
People Credit Fund

Acronym
TCHC
TCKT

QTTD
KHTH
QLRR
QHKH
DVKH
QLDVKQ
GDYB
ĐT
QTK
DPRR
BIDV
BIDV-YB
NHNo & PTNT
NHTM
NHCS
KBNN
DNTN
CNTT
CBCNVC
XHCN
TSCĐ
QTDND

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Approval by GaMBA Program:

5

DECLARATION
We commit that the content of this assignment has not been provided to any Master
program as well as any other training program.
We also commit that this assignment is our collective effort of all group members.
Analysis and conclusion in this assignment (beside quote) are all the working
results of 11 members of our group.

Signature of group members
1. Dang Thi Kim Phuc
2. Nguyen Van Tri
3. Ha Cam Thuy

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CHAPTER I
INTRODUCTION
1.1. Necessity and significance of research topic:
One organization in general or one enterprise in particular, who wishes to succeed
in business market, needs to have capacity to deal with all situation – they have to
totally self-control, to make decisions, and be responsible for every operation of the
business. So it requires the organizations to grasp the changing tendency, know how
to use best the strengths and limit the weaknesses, take advantage of good
opportunities to overcome challenges. From this foundation, the creative business
steps will be performed, in other words, we must build the suitable business strategy
for ourself.
In recent years, most state-owned enterprises have operated the business without
proper business strategy. The run the business depends on the function of assigned
missions in the decision of establishing enterprise, The State will hand the annual

business plan over through the Ministries-sectors-local authority (authority in
charge). They will assign the plan to the enterprises for implementation based on
the focus planning system. That means what the enterprises produce, what kinds of
products, quantity, quality, and varieties of products, scale, technology, raw
material, distribution, and consumption, etc., are all decided by the State.
Today, in the market economy mechanism, what enterprises produce, what sort of
product, quantity, quality, varieties of products, scale, market share, market –
customer – consumer –competition, etc. will be regulated by the market and the
enterprises; The State holds the role of orientation, business guideline, legal frame
building, mechanism – regime policies for the enterprises and market.
At present enterprises frequently lose their direction if there is no business strategy.
If there are unclear objectives and purposes, business operation will run
inefficiently, which might lead to failure – bankruptcy. In addition, the business
may have no competitiveness and cannot have brand in the business market;

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It is possible to say that the role of business strategy is getting more particularly
important to enterprises, especially in the context of global economic integration.
BIDV has complied with the requirements – missions of the Government and of the
State Bank of Vietnam for the recent years. It has built up its business strategy and
then deploys the annual business plan. However, the building of business strategy
and business plan deployment remains inefficient and is left beyond the growth.
The scale simply focuses on volume, not aware of quality and efficiency; portability
– creativeness – breakthrough in business not yet to improve; Compliance –
transparency is still weak;
Business strategy building is extremely important for each enterprise to develop; the
strategy is considered as a guiding star, a compass that conduct business ship in the
right direction and objective, it will also be a will- fundamental method – business

manner which indicates core persistent value of the enterprise.
1.2. Goal of research/ objective of business development strategy
Originating from the goal-objective business, which is to make profit, BIDV aims to
become a multi-purpose and multi-possess commercial bank that offers
diversifications and standard-criterion heading for international practices. It expects
to have a quality similar of that of regional banks; it aims to be the top leading bank
in Vietnam and gain a firm position in Asian region.
Gradual integration in the direction of being a modern bank operating under the
guided practice-standard basis will help BIDV be strong enough to compete and to
exist as well as make persistent development.
In order to complete this task, BIDV needs to renovate mindset, innovate activities,
reform business management and executive management, make breakthrough for
foundation of growth. More important, it is necessary to set up business plan from
branch level to the entire bank network.

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CHAPTER II
COMMON ISSUES IN STRATEGIC MANAGEMENT
AND BUSINESS DEVELOPMENT STRATERGY
2.1. Concept of business strategy
2.1.1. Viewpoints in approaching corporate business strategy.
The term of strategy existed for a very long time, previously the term first used in
the military. Today, it is widely used in most fields of economy, politics and social
culture. Particularly in the economy field both in micro-economy and macroeconomy. In macro-economy, we may find the concept such as “industry
development strategy”, “industrialization of exports strategy”, in micro-economy,
the strategy term combines with the concept of corporate management; some
popular terms are “marketing strategy”, production strategy”,” business
strategy”..

The appearance of business strategy concept is not simple borrowing but it
originates from the necessity reflecting the actual objective of corporate
management in the market mechanism.
We will find out some methods in approaching corporate business strategy as
follows
* Classical viewpoint.
This viewpoint came out before the 1960s, based on this viewpoint, the enterprise
can optimize and plan for all input factors so that it can create long-term favorable
competitiveness edge in an aim to achieve goals efficiently and maximize profit.
In reality, year 1970 this approach lost its meaning, due to not mention to the
external environment and whole activities of the enterprise was directed by chief
accountant and director. On the other hand, the competition appeared among the
regions North America, South America, Eastern Europe became more severe at that
time. It required the enterprises to have common voices of collaboration and to
figure out the competitiveness factors.
* Evolutional viewpoint.

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This viewpoint sees “The enterprise is the living body that is affected by external
environment, meanwhile this living body controls itself to adapt to the surrounding
environment”. So this viewpoint does not regard the enterprise as a black box. On
the contrary, the enterprise is the open system influenced by external environment,
“The business is unable to sit in four walls that it must open window to observe the
sky of full stars”, in an effort to seek business opportunities and detect the threats to
the business.
* Processing viewpoint.
Pursuant to the processing viewpoint, the enterprise wants to succeed in the market;
it must go through a long process of doing business. During the period, the

enterprise will gradually accumulate experience to acquire the business secret.
According to the calculation of American Harvard University: It takes three and
half years for a business to integrate into the market and three to five years to affirm
its position and over eight years to succeed in the business market. Thus the
business must possess the long-term plan and must build long-term business
development plan in its market
(Website://bwportal.com).
* Systematic viewpoint.
This systematic viewpoint assumes that business enterprise is the element of
economic system in which the enterprises have the relationship one another, they
are strictly governed and impacted by their environment (environment of economic
system includes collective element, subsystems such as politics, law, social
culture…) or economic system influences on its environment. Hence each
enterprise (element) when conducting business activities not only look at enterprise
itself but also pay attention to the influence of other element in the system (industry
environment) as well as the external system and it’s called external environment of
enterprise. In such a way, it is essential matter for enterprise to make environmental
analysis.

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In summary, no matter what viewpoint in approaching business strategy, all in all
we have common target, which is that to grow fast, consistently and to maximize
profit in the more changing fluctuation and tough competition market.
This fact can also be seen clearly at Bank for Investment and Development of
Vietnam – Yen Bai Branch. The economic growth rate in 2008 is estimated at
12,5%, in which: agriculture – forestry - fishery sector increases by 4,38%, industry
– construction sector increases by 18,95%, service sector increases by 14,1%. The
economic structure is moving in the right direction, in which agriculture – forestry fishery sector accounts for 35,05%, industry – construction sector account for

31,93%, service sector accounts for 33,02%. GDP per capita is estimated at 7,5
million dong. (2008 Report of Bank for Investment and Development of Vietnam –
Yen Bai Branch)
2.1.2. Concepts of corporate business strategy
Because of having different kinds of approaching in the strategy, a common concept
has not been defined so far. Some concepts are indicated as follows:
- “Strategy is decisive factor of long-term objective of organization” (Prof. Alfred
D. Chandler, 1962);
- “Strategy is structure of goals, objectives and plans to reach goals” (Prof.
Kenneth L. Andrews, 1965);
- “Strategy is red thread through organization operations” (Prof. H. Igor Ansoff,
1965);
- “Strategy is an art of establishment of competition advantages” (M.Porter, 1980)
- “Strategy aims to illustrate long-term strong solid orbits of which surrounding
orbits can arrange accurate decisions and actions of the enterprise” (Alain Charles
Martinet, 1983).
-“Strategy outlined as plan or general guide operation chart or lead organization
to desired goal. This general operation plan lays foundation for policies
(orientation through decision) and operation mechanism” (Group authors: D.Smith,
DannyR.Arnold, Bopby G.Bizrell in book “Strategy and Tactics Business”.

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- “Business strategy covers basic long-term gain targets of business unit,
meanwhile selection of method or process or process of operation and allocation of
essential sources to implement that target” (Alfred Chandle, 1989, Task of
Strategy. New York)
In general, the mentioned-above concepts in strategy term sense all imply and
reflect the following issues:

+ Objective of strategy
+ Time of implementation
+ Process of strategy decision making
+ Factors of environmental competition
+ The strengths and the weaknesses in general and depending on each business
activities in particular. Hence can we see that the enterprise’s strategy is “product”
in combination with given environment? What can enterprise do? In addition, what
does enterprise expect?
In short, in the enterprise’s operation, strategy will be: An art of design, organizing
means in an aim to achieve long-term objectives in relation to the changes in
environment and competition.
2.2. Features of business strategy.
To further understand the category of business strategy, we need to revise their
features to classify relevant concepts.
Business strategy features the following basis:
-Business strategy frequently determines basic objectives, business direction of each
enterprise in specific stage and masters all aspects of production activities fully to
ensure that enterprise grows constantly and firmly (more than 1 year)
-Business strategy ensures to mobilize and combine the exploitation and the use of
human resources of enterprise in present and future, enhance its advantages and
grasp opportunities to gain premium position in the business market.
-Business strategy must reflect the constant process of strategy building,
organization, implementation, check, evaluation and strategy adjustment.

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-Business strategy must possess a mindset to assault for achievement gain in
business market (must maximize best use of its advantage to win.)
-Business strategy is usually set up for relatively long period (3 to 5 years), and can

be shortened depending on features of specific commodity industry.
From the mentioned-above features, it is easy to distinguish strategy category from
related concepts. The closest meaning between concepts with strategy is “plan”, in
reality; these two concepts are sometimes mistaken for each other.
In the view of approach sequence that business strategy is formed on basis of
environment analysis and diagnoses, then strategy will be the platform for
deployment strategy plans. Main striking feature of strategy provides quantitative
and determines solutions. Policies and objectives, and plans link to each other to
become criterion system that reflects the enterprise’s comprehensive business
operation.
2.3. Type of business strategy
Depending on each sort of classification we will discuss different types of business
strategy:
a. Based on domain of strategy:
+ General business strategy:
General business strategy refers to the most important and most comprehensive
issues and it specifies long-term significance and decides vital factors of enterprise
as well as the long-term motto and objective.
+Specific domain business strategy: it relates to the concrete fields in production of
enterprise, from this point, implementation of general business strategy such as
product strategy, marketing strategy, finance strategy, human resources strategy,
technology strategy etc...
b. Based on level to formulate business strategy as follows:
+Business strategy at corporate level: it refers to overall strategy, determines longterm goals and formulas to achieve that goal in each period.

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+Business strategy at sector level: it refers to the concrete goals and how to gain
that goal in its scope on basis of overall goals from the upper department.

+Business strategy at functional level: it refers to the strategy that supports for
corporate business strategy and sector business strategy.
2.4. Process to build business strategy.
As stated above, due to different concepts of business strategy presented, there are,
therefore, a wide range of opinions of strategy as a result. However, there is still one
common point among those opinions, that is, the business strategy of a enterprise is,
in fact, a general strategy of a enterprise in business activities. Business strategy
refers to most important, long-term and decisive issues to the survival of the
enterprise. The business strategy covers both general and partial strategies which
are closely combined to form a comprehensive one covering all activities of the
enterprise. Any strategies, whether in case of partial or general one, have, in
general, their major contents as follows:
2.4.1. The opinions and ideas of which the center point is about the philosophy of
business of the enterprise will answer the questions of what basic beliefs,
expectations and prior philosophy of the enterprise are.
2.4.2. The business strategy of the enterprise will determine objectives of business
and operations of the enterprise in each period and scope for determining strategies
made. In addition, the business strategy will also direct the enterprise to focus on
important issues and determine proper objectives of the enterprise to achieve.
2.4.3. The business strategy of the enterprise is made in order to determine the way
and method to realize objectives. This method is selected among other methods
made based on technical analysis and current capacity of the enterprise and in order
to select a proper method for the enterprise.
2.4.4. The business strategy of the enterprise presents the determination of selected
strategic method. The determination refers to detailed solutions for all operations of
the enterprise based on the analysis and assessments made on real situations of
operating of the enterprise apart from expected outputs which may be achieved.

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2.5. The objective necessity of the business strategy of the enterprise.
2.5.1. The importance and benefits of business strategy.
* The importance.
The building (planning) and information of business strategy are those among most
important activities carried out by senior business managers. One enterprise without
a business manager may be seen as a ship without a steering wheel. And most
failures in business are due to lack of strategies, mistaken strategies or failure in
implementing a right strategy for the enterprise. Without a proper business strategy
or effective implementation of such strategy planned, failure is a result of course.
Sometimes, the planning of business strategy is ignored due to the lack of full
understanding of the manager on (1): the question what strategy is and the reason
why it is so important, (2) how to combine all processes of planning for business
strategies altogether, (3) how to build business strategy and (4) how to implement
such business strategy by connecting it to existing determination.
* Benefits.
The business strategy will bring real benefits for the enterprise as follows:
+ Business strategy helps find out the way in a future time for the enterprise in order
that managers may consider and determine which way the enterprise will take to
achieve its objectives or targets planned.
+ Business strategy helps managers of the enterprise to be always active and face
with any changes of the environment: managers may successfully identify both
opportunities and risks of its existing operating in order to make analysis,
assessments and estimation on conditions of business environment of the future
time for the enterprise. Based on this condition, the enterprise may make the best
use of opportunities granted and eliminate risks in order to finally achieve its
victory and success in the market.
+ Business strategy also helps the enterprise employ and use its own resources and
potentials at a maximum level to maximize the strength of the enterprise for a
growth and development of the enterprise.

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+ Business strategy helps the enterprise successfully allocate its own resources in
each field and activity in each period and time.
+ Business strategy helps combines staffs and managerial officers together in
realizing objectives of the enterprise to create an internal strength of the enterprise.
+ Business strategy helps increase sales, productivity and efficiency of the
management of the enterprise and prevents risks and difficulties which may affect
the enterprise.
2.5.2. Indispensability and objectiveness of the planning business strategy of
the enterprise in recent economic conditions of Vietnam.
In time of subsidiary, the concept of business strategy of a enterprise was less used
and employed when enterprises did not focus on building their own business
strategies. It can be mainly explained by quotas set and determined by leaders and
higher authorities. But the business strategy in recent time is an important and
necessary link of planning the national economy carried out by higher authorities.
Most ideas are that the State is mostly responsible for planning the business
strategies for the whole national economy as for sectors: society and production.
The growth of the country is under the control and management by the Government.
So, most enterprises build their own business strategies according to an inflexible
model.
The consequences of such model are:
- The speed of investment and development of infrastructure is slow.
- Shortage, imbalance and asynchronousness resources for the development
- Impractical business strategies introduced in the market.
- Those business strategies introduced in the market are too general and impractical.
- Methods and ways to build business strategies are almost based on experience and
mechanically applied following the models used by other socialist countries.

- In practice, enterprises did not build their own business strategies or restricted the
advantages of those methods so they failed to unveil the importance and necessity
of these business strategies for their enterprises in subsidiary time.

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However, enterprises have been active to run their business operations, finding their
own ways for development in a new stage of new mechanism since 1986 when
Vietnam implemented and applied the policy of doi moi, especially the renovation
of national economy by eliminating the red tape, developing a multi-sector
economy to transfer into a policy of business accounting according to socialist
orientation. That is also the reason why business strategy is an important and
necessary component in a new period.
In recent time when Vietnam has transferred to a business accounting mechanism in
a market-oriented economy, enterprises have to face with more and more
challenges, difficulties and risks in running their business. It is necessary for such
enterprises to get familiar with changes of market. This method is a decisive
condition which determines the success or failure of these enterprises. In practice,
failure or success in running business has been also identified. Some businessmen
gained their success and became billionaires from nothing due to right business
strategies whereas some lost their business to competitors in a short time due to
errors in policies on running business. The closing of losing enterprises and
development of high effective enterprises actually depend on business strategies of
enterprises, especially in such a time of market-oriented economy.
Due to the rapid changes of environment, increasingly severe competition and
shortage of natural resources, needs of society, enterprises and from individuals
have been on a rise which shows the increasing importance of business strategy of a
enterprise.
The objective necessity for building a business strategy of a enterprise is made clear

in the following aspects:
The business strategy helps the enterprise determine their purpose and ways.
Because of rapid changes of business environment of the enterprise which may lead
to both opportunities and sudden risks, the building of business strategies will help
such enterprises make the best use of opportunities and minimize risks to increase
the competitiveness of the enterprise accordingly.

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The business strategy helps the enterprise combine their decisions with conditions
of business environment. In other words it helps the enterprise be active in making
decisions.
The building of business strategies helps the enterprise make and prepare better
business strategies by applying the method of system-access, increasing foundation
and combination, and increasing the combination between staffs and managerial
officers in realizing objectives of the enterprise.
Business strategies help the enterprise employ their resources most effectively.
With above reasons, it is possible to make a conclusion that the building of
favorable business strategies is extremely important and necessary for not only
home enterprises but for enterprises in other countries. It may be seen that “The
business strategy is considered as a steering wheel of a ship which will leads the
ship to a victory over a high sea”.
2.6. The planning of a business strategy of a enterprise.
2.6.1. Requirements and grounds for the planning of business strategy.
* Requirements.
When planning business strategies, enterprises must satisfy the following
requirements:
- To ensure an increase in strength of the enterprise and make the advantages in
competition of the enterprise in the market.

- The enterprise must determine their own targeted market and then determine a
safety region and scopes for running business as well as decree of accepted risks.
- To clearly determine key and important objectives and primary conditions for
implementing such objectives.
- To get information and achieve a large and required amount of talent and
knowledge and information, especially information on market, customers and
competitors.
- Apart from existing business strategies, enterprises should build their auxiliary and
alternative strategies.

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- To acquire and make the best use of opportunities as well as being a little
adventurous.
* Grounds.
As we know that, one of the objectives of the enterprise is maximizing its profits by
providing products and services to customers. In order to have their products and
services supplied to customers, the enterprise must employ inputs and technologies
to produce such products and services. In other words, the enterprise must best use
their internal factors. However, there are also other enterprises providing such
products and services (competitors). So, to attract and win more customers, the
enterprise must improve and make better models and quality of products and
services than those of their competitors. It means that the enterprise must win over
their competitors.
From this point, we can determine the most important grounds for planning
business strategies of the enterprise, they are:
+ Customers
+ Competitors
+ Enterprise

These three entities are considered as “strategic trio” by economists on which
enterprises have to rely to build their own business strategies.
a. Customers
As the embodied entity of the “needs” of the market, the concept of customer refer
to a wide range of needs, motives and purposes of different groups of people to
form segments of markets that the enterprise cannot fully cover. The business
strategy of a enterprise must be made based on customers, that is, it will to identify
one or more than one group of dominant customers in forming a market segment
which is big enough so that the enterprise will focus on satisfy the needs of such
customers in that market.
In order to do so, the enterprise must classify and group such customers into groups
according to criteria such as education, income, age and lifestyle.

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By this classification, the enterprise may identify a targeted market segment and
thence to focus its resources to satisfy the needs of such market.
b. Competitors.
It is not difficult to understand that competitors of a enterprise also have the same
ambitions, methods and expedients as the enterprise has considered before. So, the
business strategy of the enterprise must focus on making a distinction over its
competitors in major sectors and fields by making a comparison of such stated
issues with those of competitors.
The distinction to be identified and determined is existing advantages of the
enterprise or those that the enterprise may make including both intangible and
tangible values.
The tangible categories include:
+ Production capacity of the enterprise.
+ Systems of distribution and marketing.

The intangible categories include:
+ Reputation and trustworthy of customers.
+ Quality and styles of products.
+ The know-how of technologies.
+ Advantages in terms of place of operation, location near material sources for
production.
+ Traditional customers and relationship with authorities of various levels.
+ The professional workmanship and experience of managerial officers.
c. Enterprises (the real capacity of the enterprise).
The business strategy of a enterprise must be made based on the real capacity of the
enterprise in order to exploit and employ its resources at maximum degree to apply
into most important fields and operations which determine the success of the
enterprise in trading identified products, services and in those to be identified in a
future time. Such sectors may be identified according to bases as follows:
+ Which products and services to invest into?

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+ Which technologic period for investment?
+ Whether to concentrate on a developed scale or reduce costs?
+ Whether to organize a comprehensive production of complete products or to
purchase semi-finished products for assembly?
The right determination of business lines and functions of the enterprise will
facilitate the orientation and concentration of the enterprise into key links in order
to create the competitive advantages in the determined market.
Based on the grounds of the strategic trio as stated above, the business strategy of
the enterprise may gain its necessary trust. However, business environment requires
more than those factors as stated above. It requires other factors of a macro business
environment in each situation such as: politics, law, technologies and science and

those of a micro-environment like suppliers, alternative products in order to
determine and select higher reliable business strategies for the enterprise.
2.6.2. Ideas to be fully understand when making business strategies.
When making business strategies, the following ideas and opinions should be fully
understood:
+ The making business strategies must be based on exploitation and employing key
factors as advantages of the enterprise for success.
+ The making business strategies must be based on making the best use of strength
and competitive advantages.
+ The making business strategies must be based on exploitation of new factors and
new creativeness.
+ The making business strategies must be based on full exploitation of all factors
with a concentration on key factors.

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2.6.3. Steps for making business strategies of the enterprise.
Chart 2-1
Modeling of steps for making strategies
Determining policies
(B1)

Research and
estimates (B2)

Determining strategic objectives
(B3)
Building strategic methods (B4)

Selection of best strategies (B5)

Determining the strategies
(B6)
* Determining right policies.
Determining right policies is the determination of historic mission of the enterprise.
This mission is a message to express the reason for the existence of the enterprise.
In other words, what is the purpose for the existence of the enterprise? This is the
prerequisite for determination of methods of action of the enterprise.
In the stage of market mechanism, any enterprise has their certain functions and
tasks when establishing and running their business. However, in practice, “what is
the business of the enterprise” or “what is tasks of the enterprise” are always the
questions having no ultimate answers. In order to make answers for these questions,
the enterprise must present a report of their tasks and duties in business. That is the
historic mission of the enterprise and the mission conveys nine questions as follows:
Customer: Who buy products of the enterprise? What are products and services of
the enterprise?

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Market: Where does the competition of the enterprise take place?
Technology: Is technology firstly concentrated and concerned by the enterprise?
Technology is the life-and- death issue, the growth and profitability for the
enterprise.
Business philosophy: What are the basic belief, value and expectation and priority
for the philosophy of the enterprise?
Self evaluation: What are special capacity and primary competitive advantages of
the enterprise? What are the concerns of the enterprise in their social
responsibilities?

Cares of the enterprise for their employees: What are the attitudes of the enterprise
towards their employees and staffs?
*Research and making estimates.
If the enterprise wants to build a good strategy, the enterprise must have a good
standing of conditions of business environment which the enterprise is working in.
The business environment has its strong influences for it affects all steps of the
building business strategies. The ultimate strategy should be built based on expected
conditions. So, it is necessary to carry out the research and making estimates for the
business environment of the enterprise.
2.6.4. Research and making estimates of outside business environment of the
enterprise.
The outside business environment of the enterprise covers both macro-environment
and micro-environment.
The making analysis of the outside environment of the enterprise is carried out in
order to identify both opportunity and risks of the operations of the enterprise.
a. Macro-environment
Economic factors.
The real situations and future trends will have effects on the success and strategies
of a enterprise. The growth rate of the economy, interest rates, exchange rate and
inflation are main targeted factors in the analysis of the enterprise. Thus, the

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different growth rates in the time of a rise and a decline and recovery of the
economy will affect the consumption in the market. When the economy is in the
high growth, it will offer more investment opportunities and developed operations
of the enterprise. In contrast, when the economy is in a decline and recession, it
reduces the needs for consumption and increases the numbers of competitors. In
general, when the economy is in a recession, there will be a struggle over price in

production sectors, especially for mature sectors. The interest rate will affect and
determine the needs for products of the enterprise. Monetary policies and exchange
rates may also offer both opportunities and risks to the growth of such policies.
Inflation and the issue of disinflation policy must be necessary factors to be
considered and analyzed. In practice, if the inflation is high, it is impossible to
control price and wages. If the inflation is in a rise, it will be adventurous for
investments and the enterprise must consider and lower their attentions for
investment for production. So, a high inflation is a thread to the enterprise.
Politics:
Politic and legal factors have increasing influences to enterprises. These factors may
offer not only opportunities but also risks for enterprises. They are included:
+ Political stability, the consistent opinions and policies are always attractive to
investors. The legal system fully built and finished will be good foundations for a
stable business of enterprises.
+ Regulations on advertisement in business will be threads to enterprises and the
good example may be the case of alcohol or tobacco enterprises and suppliers.
+ Regulations on duties, fees and charges may be opportunities and risks for
enterprises which affect the developed production of these enterprises.
+ Law on labor, regulations on employment, appointment and dismissing of
employees must be considered by enterprises.
+ Regulations on safety and environmental protection.
Social factors:

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In both medium and long-term strategies, social factors change quickly according to
the trends of importing and adoption of new lifestyle and this will be good
opportunities for production enterprises. The enterprise must also consider the
attitudes of consumers, changes in of age tower, work place and homes of

consumers. The incoming of consumers’ associations will be a question requiring
the concerns of the enterprise. It is necessary for enterprises to pay attentions to and
make a deep analysis on social factors and risks which may come.
Social factors are included:
+ Living standard which influences the expansion and restriction of production
scales.
+ Customs and habits of consumers.
+ Regional cultures.
+ Psychology and lifestyles.
+ Rate of marriage and birth rate.
Natural factors:
It is recognized that natural factors affect the policies and decisions of enterprises.
In recent years, environmental pollutions, shortage of energy, waste of natural
resources whereas the needs are in a rise and shortage of resources, it drives
enterprises to change their decisions and modes of operating.
Wise strategy planners always pay more attentions to the environment and ecology.
Production and service enterprises have considered and calculated the unforeseeable
threads of climate according to their seasons of production.
Technological factors.
This is the direct and key factor affecting the business strategies of enterprises. In
practice, the world has witnessed remarkable changes in technologies and created
new and more finished sectors of business. The twentieth century is considered as
century of technology and science. It is, therefore, more important and necessary to
make analysis and estimates of technological changes than ever. Good examples
may be the coming of electronic, informatics and bio-technologies. It is sure that

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