Building competitive strategies for shinhan bank vietnam

ĐẠI HỌC QUỐC GIA HÀ NỘI
KHOA QUẢN TRỊ VÀ KINH DOANH
---------------------

KIM, JIHYUN

Building competitive strategies
For shinhan bank vietnam
XÂY DỰNG CHIẾN LƯỢC CẠNH TRANH
CHO NGÂN HÀNG SHINHAN BANK VIỆT NAM

LUẬN VĂN THẠC SĨ QUẢN TRỊ KINH DOANH

HÀ NỘI - 2020


ĐẠI HỌC QUỐC GIA HÀ NỘI
KHOA QUẢN TRỊ VÀ KINH DOANH
---------------------

KIM, JIHYUN

BUILDING COMPETITIVE STRATEGIES
FOR SHINHAN BANK VIETNAM
XÂY DỰNG CHIẾN LƯỢC CẠNH TRANH
CHO NGÂN HÀNG SHINHAN BANK VIỆT NAM
Chuyên ngành: Quản trị kinh doanh
Mã số: 60 34 01 02
LUẬN VĂN THẠC SĨ QUẢN TRỊ KINH DOANH

NGƯỜI HƯỚNG DẪN KHOA HỌC: PGS.TS. HỒNG ĐÌNH PHI

HÀ NỘI - 2020


DECLARATION

The author confirms that the research outcome in the thesis is the result of
author‟s independent work during study and research period and it is not yet
published in other‟s research and article.
The other‟s research result and documentation (extraction, table, figure,
formula, and other document) used in the thesis are cited properly and the
permission (if required) is given.

The author is responsible in front of the Thesis Assessment Committee, Hanoi
School of Business and Management, and the laws for above-mentioned
declaration.

Place: Hanoi, Vietnam

Jihyun Kim

i


ACKNOWLEDGEMENT

MBA program at Hanoi School of Business has encouraged me to pursue the
field of global banking at more advanced level because I became convinced of
my ability to endeavor in researching banking sector in Vietnam. Before I
started my studies with the brightest students in the most prestigious institute

in Vietnam, my passion in banking field had been enervated due to the lack of
competition in Korea. Although I worked at the one of the Asia‟s leading
financial groups, Shinhan Financial group, I only considered myself as the
frog in the wall who knows nothing of the great ocean. Moreover, I was afraid
that I would not survive in my chosen field due to extremely prominent
competitors in the countries outside of my home country Korea.

My experiences in Vietnam, however, allowed me to realize that they are not
competitors but colleagues who inspire each other and constructively
influence the world of businessmen, so that humanity can discover innovative
theories in various issues. Consequently, I realized that I wish to be able to
contribute to my chosen field substantially as a leader who has a flexible
thinking and sincerely enjoy studying and researching with outstanding
individuals leading a variety of markets of Vietnam.

I plan to pursue the career of an international banker who does his best to
contribute to banking sector of Vietnam as well as Korea. I wish to work in
Vietnam where I have had the opportunity to meet brightest students and
professors and social diversity can be strengthened in the field of banking. I
also hope to further expand my role as a group leader through designing
global business strategies and planting motivations in the mind of young
employees and give the fair chances to every employee to experience the
ii


fascination of banking industry. With strong motivation and extensive
working and studying experiences, I firmly believe that I will become the one
I want to be.

Once again, I really appreciate my company for giving me such a great

chance to learn a lot about Vietnam and also thank all of my Vietnamese
friends who have actively supported me. My memories in Vietnam will stay
with me forever.

iii


Contents

DECLARATION ................................................................................................ i
ACKNOWLEDGEMENT ................................................................................ ii
LIST OF ACRONYMS .................................................................................... vi
LIST OF TABLES ........................................................................................... vii
LIST OF FIGURES ........................................................................................ viii
CHAPTER ONE. INTRODUCTION ............................................................... 1
1. Rationale........................................................................................................ 1
2. Significance of Study .................................................................................... 2
3. Review of the Previous Studies and Researches Relating to the Thesis Title .... 3
4. Objective of Thesis........................................................................................ 5
5. Methodology ................................................................................................. 5
6. Scope of Research ......................................................................................... 6
7. Thesis Structure ............................................................................................. 6
CHAPTER TWO. BASIC THEORY ON COMPETITIVE STRATEGY AND
BANKING CONCENTRATION ...................................................................... 7
2.1. Basic Concepts and Definitions ................................................................. 7
2.1.1. Strategy ................................................................................................. 7
2.1.2. Competitive Strategy ............................................................................ 7
2.1.3. Bank Concentration Ratio .................................................................... 9
2.1.4. Herfindahl – Hirschman Index (HHI) ................................................ 10
2.2. Tools for Business Environment Analysis and Building Competitive Strat

egy ................................................................................................................... 11
2.2.1. EFE (External Factor Evaluation) Matrix .......................................... 11
2.2.2. IFE (Internal Factor Evaluation) Matrix ............................................ 12
2.2.3. TOWS ................................................................................................. 12

iv


CHAPTER THREE. ANALYSIS OF BANKING INDUSTRY IN VIETNAM
AND SHINHAN BANK VIETNAM ............................................................. 15
3.1. History of Banking in Vietnam ................................................................ 15
3.2. Structure of the Vietnam‟s Banking Sector .............................................. 17
3.3. Analysis of Banking Concentration (CR / HHI) ...................................... 24
3.3.1. Bank Concentration Ratio Result ....................................................... 24
3.3.2. The Herfindahl – Hirschman Index Result ........................................ 26
3.4. Contestability ........................................................................................... 27
3.4.1. Banking Sector Regulation in Vietnam .............................................. 28
3.4.2. Banking Sector Development ............................................................ 29
3.4.3 Financial Innovation and Technological Advances............................. 36
3.5. Shinhan Bank Vietnam ............................................................................. 37
3.5.1. EFE ..................................................................................................... 43
3.5.2. IFE ...................................................................................................... 44
3.5.3. TOWS ................................................................................................. 45
CHAPTER FOUR. PROPOSAL OF COMPETITIVE STRATEGIES AND S
OLUTIONS FOR SHINHAN BANK VIETNAM ......................................... 46
4.1. SO Strategies ............................................................................................ 46
4.1.1. Learning KnowHow from Shinhan Financial Group and Implementing “Spoke & Hub” strat
egy ................................................................................................................ 46
4.1.2. Focusing on Non Face-to-Face Transactions and ATM Business...... 48
4.2. WO Strategies .......................................................................................... 49

4.2.1. Using Global Networks with FastGrowing Economy to Overcome the Small Sized Assets and Network ...... 49
4.3. Proposal of Solutions for Implementing Competitive Strategies for Shinh
an Bank ............................................................................................................ 52
Bibliography .................................................................................................... 54
v


LIST OF ACRONYMS

SBV

State Bank of Vietnam

SCP

Structure – Conduct – Oerformance

ESH

Efficient Structure Hypothesis

CR

Concentration Ratio

HHI

Herfindahl-Hirschman Index

IFE

Internal Factor Evaluation

EFE

External Factor Evaluation

TOWS

Threat-Opportunity-Weakness-Strength Analysis

IMF

International Monetary Fund

BSA

Banking Supervisory Agency

MOF

Ministry of Finance

SSC

State Security Commission

ISA

Insurance Supervisory Agency

SOCB

State Owned Commercial Bank

FOCB

Foreign Owned Commercial Bank

JSCB

Joint Stock Commercial Bank

CAR

Capital Adequacy Ratio

CI

Credit Institution

VAMC

Vietnam Asset Management Company

vi


LIST OF TABLES

Table 2.1: TOWS Matrix ................................................................................. 14
Table 3.1: Key Statistical Ratios of credit institutions of Vietnam as of
December 2018 ............................................................................................... 19
Table 3.2: Capital Adequacy Ratio (CAR) of Banks with the Implementation
of Basel

as of November 2019 ................................................................. 24

Table 3.3: Bank Concentration Ratio Results ................................................. 25
Table 3.4: HHI Resutls .................................................................................... 26
Table 3.5: Shinhan Bank Vietnam Performance 2017-2018 ........................... 42
Table 3.6: EFE Analysis .................................................................................. 43
Table 3.7: IFE Analysis ................................................................................... 44
Table 3.8: TOWS Analysis .............................................................................. 45
Table 4.1: Opening New Branches Status ....................................................... 50

vii


LIST OF FIGURES
Figure 3.1: Structure of the Industry of Banking and Finance in Vietnam as of
December 2018 ............................................................................................... 18
Figure 3.2: Structure of Banking Sector as of December 2018 ...................... 19
Figure 3.3: Market Share by the Number of Banks in Vietnam as of December
2018 ............................................................................................................... 21
Figure 3.4: Credit and Deposit Growth ........................................................... 21
Figure 3.5: Bad Debt Ratio and ROE ............................................................. 22
Figure 3.6: Total Number of Banks in Vietnam from 2012 to 2018 ............... 23
Figure 3.7: Bank Concentration Ratio Trend .................................................. 26
Figure 3.8: HHI Trend ..................................................................................... 27

Figure 3.9: Shinhan Financial Group‟s Net Income by International Business .... 38
Figure 3.10: Shinhan Financial Group‟s Asset by International Business ...... 38
Figure 3.11: Shinhan Financial Group‟s Net Income & Asset Composition as
of December 2018 ........................................................................................... 39
Figure 3.12: Golden population of Vietnam as of December 2017 ................ 40
Figure 3.13: Market Position Analysis of Vietnam‟s Banking Industry as of D
ecember 2018 .................................................................................................. 41
Figure 4.1: Income Bracket of 5 Major Cities of Vietnam (%) ...................... 47
Figure 4.2: Increase in Non Face-to-Face Transaction ................................... 48
Figure 4.3: Shinhan Fianncial Group‟s Indochina Region ............................. 50
Figure 4.4: The Spread of Population in Vietnam Based on Region and Incom
e Level ............................................................................................................. 51

viii


CHAPTER ONE. INTRODUCTION
1. Rationale
Vietnam‟s economy has experienced strong growth, driven by international
trade and foreign investment since the 2000s. Favorable government policies
and laws, in combination with Vietnam‟s young, educated workforce and
other advantages have allowed the country to develop into an attractive place
to invest in South East Asia.

In 1987, the National Assembly passed the Law on Foreign Investment and
today, the country is reaping the benefits 30 years later. Between 2002 and
2018, more than 45 million people were lifted out of poverty. Poverty rates
declined sharply from over 70% to below 6%, and GDP per capita increased
by 2.5 times, standing over US$2,500 in 2018.
Meanwhile, Vietnam‟s banking and financial services sector is still underdeveloped but boasts high growth potential. Within this sector, according to

the research from PwC Vietnam, growth is expected much more in retail
banking, in particular payment cards and wealth management services.
Demand for a range of retail banking products is set to grow due to the huge
untapped market. There is also opportunity to modernize Vietnam‟s cashbased society where 90% of payment transactions are stillin cash and the
market for payment cards is relatively untapped.

Since Shinhan Bank Vietnam has been focusing on retail business in Vietnam
and has acquired ANZ Vietnam successfully in 2018, analyzing banking
sector of Vietnam and finding competitive strategies for it will be meaningful.
Moreover, in recent years, the Vietnam banking system has gone through a
1


big wave of restructuring where smaller and weak banks were acquired by or
merged with bigger banks or came under supervision by the State Bank of
Vietnam (SBV).

In order to provide Shinhan with competitive strategies, analyzing the
banking sector of Vietnam should take first priority to figure out the degree of
concentration and competition. According to Sanya and Gaertner (2012),
competition is the driving force to enhance the role of banks in an economy.
Without competition, it is implausible to bring about efficiency and foster
financial sector development. When there is a lack of competition in the
market, banks exercise monopoly power and sets higher rates for loans and
lower rates for deposits.

Based on the empirical findings and the analysis using a variety of tools, this
study focuses on suggesting competitive strategies for Shinhan Bank Vietnam
to compete with Vietnamese commercial banks.

2. Significance of Study
As explained in the previous chapter, this study aims to build competitive
strategies for Shinhan Bank Vietnam based on the characteristics of Vietnam‟s
financial market. Closely looking at the the Vietnam‟s market will give
Shinhan Bank Vietnam meaningful messages because the banking industry of
Vietnam is now attractive for all commercial banks including foreign banks
like Shinhan in terms of a lot of opportunities from the fast growing economic
environment, cash-based society, and the high demand for advanced retail
banking services.
Moreover, the degree of concentration in Vietnam‟s banking sector will
2


provide Shinhan with insights when establishing competitive strategies based
on IFE, EFE and TOWS because according to the characteristics of banking
sector, diverse strategies should be built so that Shinhan Bank Vietnam
competes effectively and efficiently.

3. Review of the Previous Studies and Researches Relating to the Thesis Title
The purpose of this section is to concisely review significant studies carried as
part of the current study. Numerous researchers in developed countries have
studied concentration and competition in the banking industry from different
perspectives. However, little is known regarding Vietnam‟s banking sector in
terms of concentration and competition. In addition, there have been no
investigations for Shinhan Bank Vietnam from its point of view. Therefore,
this review will focus on theoretical literature on measurement of competition
and the review of relevant empirical studies on Vietnam‟s banking
competition.

The fact that competition is a complex concept and not directly observable,

has resulted in the development of many techniques for its assessment. One
approach assesses competitiveness following the structure – conduct –
performance (SCP) paradigm and the alternative efficient structure hypothesis
(ESH). The SCP and ESH are the most commonly used approaches to gauge
the effect of concentration on competition. The structure – conduct –
performance joins structure and performance and defines the market structure
by the level of concentration meaning that high concentration in the market
implies high market power and it will lead to less competition while in a less
concentrated market there will be lower market power and high competition.
The SCP is formerly developed by Bain (1956), this approach evaluates
banking competition by applying concentration ratios and indexes. The two
3


broadly utilized methods of market concentrations are bank concentration
ratio and the Herfindahl-Hirschman Index (HHI). The bank concentration
ratio sums only the market share of the largest banks in the industry, but HHI
includes the market share of all banks in the industry to measure the level of
concentration.

Le Hai Trung (2014) investigated the competitive conditions and
concentration of Vietnam‟s banking sector by using both concentration ratio
and HHI Index for the period from 2007 to 2012. His findings show that there
had been a significant decrease in the market share of four largest banks and
six largest banks suggesting the changing in the market structure in Vietnam‟s
banking sector to a more competitive nature. However, the main drawback of
using “k largest banks” ratio is that it does not account for the number of banks in
the market although it introduces a direct indication to measure the concentration
and competition in the industry. Herfindahl-Hirschman Index is usually used to
overcome this disadvantage. The changes in value of HHI confirm a decreasing

trend in market concentration and increasing competitive nature in Vietnam‟s
banking sector. All ratios he computed demonstrates that a decreasing trend in the
concentration of Vietnam‟s banking industry as a result of financial liberalization,
deregulation and loosening entry to foreign banks due to wider assess of the
country to global trade.

The main reason of the discussion above is that it is necessary for Shinhan
Bank Vietnam to understand the degree of concentration and competition of
Vietnam‟s banking industry so that it finds competitiveness and build
strategies based on analytical tools such as IFE, EFE and TOWS. There is a
big difference between doing a business in a competitive and non-competitive
environment.
4


4. Objective of Thesis
This paper has a lot of attention to analytical tools and a variety of data to
investigate the business environment and the other factors in order to build
and propose competitive strategies for Shinhan Bank Vietnam.

The general objective of the study is to investigate the trend and degree of
concentration in the banking industry of Vietnam and to suggest competition
strategies for Shinhan Bank Vietnam. Based on the general objectives above,
the study has specific objectives as below.
1. To determine the degree of concentration in the banking industry of
Vietnam
2. To survey the theoretical and empirical literature on banking
concentration and analyze the Vietnam‟s banking system from 2012 to
2018
3. To provide competitive suggestions for Shinhan Bank Vietnam based

on the investigation 1 and 2 above

5. Methodology
Based on the study of theory of business strategy and the degree of
concentration in Vietnam‟s banking sector by using CR(Concentration Ratio)
and HHI(Herfindahl – Hirschman Index), this study aims to use tools such as
IFE(Internal Factor Evaluation), EFE(External Factor Evaluation), and TOWS
and suggests competitive strategies for Shinhan Bank Vietnam.

Bank-level data used for this study was collected from the financial statement
of each bank from 2012 to 2018. Country-level data were gathered from State
Bank of Vietnam (SBV), International Monetary Fund (IMF), the World Bank
and from diverse papers with proper quotation.
5


6. Scope of Research
This paper deals with the amount of assets of 29 banks in Vietnam from 2012
to 2018 in order to analyze how concentrate the Vietnam‟s banking industry is,
which allows Shinhan Bank Vietnam to build strategies toward them.

7. Thesis Structure
The study is organized into six chapters. The chapter one introduces
background of the study, significance of the study, review of the previous
studies and researches relating to the thesis title, objective of studies,
methodology, data, and scope of research. Chapter two discusses basic
concepts and definitions such as strategy, competitive strategy, bank
concentration ration and Herfindahl – Hirschman Index, and tools for
business environment analysis and building competitive strategy. Chapter
three provides analysis of banking industry in Vietnam and Shinhan Bank

Vietnam by taking a closer look at history of banking in Vietnam, structure of
the Vietnam‟s banking sector and by using tools EFE, IFE and TOWS. Finally,
chapter four constitutes the conclusion of the study and gives strategic
recommendations for Shinhan Bank Vietnam.

6


CHAPTER TWO. BASIC THEORY ON COMPETITIVE STRATEGY
AND BANKING CONCENTRATION

2.1. Basic Concepts and Definitions
2.1.1. Strategy
There are several definitions of strategy. Firstly, as quoted by Thomas
Wheelen, a strategy of a corporation forms a comprehensive master plan stating
how the corporation will achieve its mission and objectives. It maximizes
competitive advantages and minimizes competitive disadvantages. Secondly,
strategy is the pattern of decisions in a company that determines and reveals its
objectives, purposes, or goals, produces the principal policies and plans for
achieving those goals and define the range of business the company is to pursue
(Adnrews, Kenneth R., 1987, The concept of Corporate Strategy, 3rd edition,
Irwin) Strategy refers to the top management‟s plan to attain outcomes consistent
with the organization‟s mission and goals. (Wright, Peter L., Mark J.Kroll and
John Alan Parnell, 1998, Strategic Management, 4th edition, Prentice Hall)

2.1.2. Competitive Strategy
Competitive strategy is a long-term action plan of a company which is
directed to gain competitive advantages over its rivals after evaluating their
strengths, weaknesses, opportunities and threats in the industry and compare it
with your own. According to Michael Porter, a professor at Harvard, tt is

necessary for businesses to understand the core principles of this concept that
will help them to make a well-informed business decisions in the course of
action. This strategy is very important when firms have a competitive
marketplace and several similar products available for consumers like
banking services. Michael Porter divided competitive strategy in for different
type of strategies.
7


Cost Leadership Strategy
Cost leadership strategy is difficult to implement for small scale business as it
involves making long term commitment for offering products and services at
lower prices in the market. For this purpose firms need to produce products at
low cost otherwise it will not make profit. Since the cost leadership means to
become low cost producer or provider in the industry, any large-scale business
which can provide and manufacture products such efficient operation, large
distribution channels, technological advancement and bargaining power.

Differentiation Leadership Strategy
Identifying attribute of a product which are unique from competitors in the
industry is the driving factor in the differentiation leadership strategy. When a
product is able to differentiate itself from other similar products or services in
the market through superior brand quality and value added features it will be
able to charge premium prices to cover the high cost.

Cost Focus Strategy
This strategy is quite a resemblance to the cost leadership strategy. However,
a major difference is that the cost focus strategy business target a particular
segment within the market and that segment is offered the lowest price of the
product or services. This type of strategy is very useful to satisfy your

consumer and increase brand awareness.

Differentiation Focus Strategy
Similar to the cost focus strategy, differentiation focus strategy targets a particular
segment within the market. However, instead of offering lower prices to consumer,
firms differentiate itself from its competitors. Differentiation strategy offers unique
features and attributes to appeal its target segment.
8


2.1.3. Bank Concentration Ratio
The K-bank concentration ratio is one of the most frequently used measures
of concentration in the empirical literature. It means the extent of
concentration in the banking industry by computing the market share of the
top k largest banks (typically three or five) in the market
CRk = ∑k𝑖=1 s𝑖
Concentration ratios range from 0 to 100 percent. The levels reach from no,
low or medium to high to “total” concentration.

Perfect competition
If there are K firms in an industry and we are looking at the top of n of them,
equal market share for all of them means that CRk = k/K. All other possible
values will be greater than this.

No concentration
If CRk is close to 0, (which is only possible for quite a large number of firms
in the industry N) this means perfect competition or at the very least
monopolistic competition. For example if CR4 = 0, the four largest firm in the
industry would not have any significant market share.

Low concentration
If CRk is between 0 and 0.4, this category ranges from perfect competition to
an oligopoly.

9


Medium concentration
If CRk is between 0.4 and 0.7, an industry in this range is likely an oligopoly.

High concentration
If CRk is between 0.7 and 1, this category ranges from an oligopoly to
monopoly.

Total concentration
1 means an extremely concentrated oligopoly. If for example CR1=1, there is
a monopoly
2.1.4. Herfindahl – Hirschman Index (HHI)
The Herfindahl-Hirshman Index (HHI) is commonly used measure of market
concentration that measures the size of the bank in relation to the industry and
serves as an indicator of the degree of competition among banks. It is the sum
of squared market shares of all banks operating in the market. The major
advantage of the HHI over the concentration ratio is that it comprises the
number of firms in the industry which is not included in the k-bank
concentration ratio. The HHI increases both as the number of firms in the
market decreases and ad as the disparity in size between those firm‟s increases.
The HHI is computed as,
2
HHI = ∑N
𝑘=1(MS𝑖)

Where MS is the market share of firm ith in the market and N is the total
number of firms in the market. The result of HHI is interpreted as follows. If
the value of HHI is less than 0.01 the banking industry is considered as a
highly competitive market, if HHI is below 0.1 it indicates that the market is
10


unconcentrated, if the HHI lies between 0.10 and 0.18 moderate concentration,
and finally the HHI index more than 0.18 indicates highly concentrated market.

2.2. Tools for Business Environment Analysis and Building Competitive
Strategy
2.2.1. EFE (External Factor Evaluation) Matrix
The External Factor Evaluation (EFE) matrix is the strategic tool used to
evaluate firm existing strategies, EFE matrix can be defined as the strategic tool
to evaluate external environment or macro environment of the firm include
economic, social, technological, government, political, legal and competitive
information. The EFE matrix is similar to IFE matrix but the only difference is
that IFE matrix evaluates the internal factors of the company and EFE matrix
evaluates the external factors. Rating in EFE matrix represents the response of
firm toward the opportunities and threats. Highest the rating better the response
of the firm to exploit opportunities and defend the threats. Rating range from 1.0
to 4.0 and can be applied to any factor whether it comes under opportunities or
threats. If the response is poor, average, above average and superior, then the
rating 1.0, 2.0, 3.0 and 4.0 will be applied respectively. Weight attribute in EFE
matrix indicates the relative importance of factor to being successful in the firm‟s
industry. The weight range from 0.0 means not important and 1.0 means
important, sum of all assigned weight to factors must be equal to 1.0 otherwise
the calculation would not be considered correct.

The sum of all weighted score is equal to the total weighted score, final value
of total weighted score should be between ranges 1.0 (low) to 4.0(high). The
average weighted score for EFE matrix is 2.5 any company total weighted
score fall below 2.5 consider as weak. The company total weighted score
higher than 2.5 is consider as strong in position.
11


2.2.2. IFE (Internal Factor Evaluation) Matrix
The Internal Factor Evaluation (IFE) matrix is a strategic management tool
for auditing or evaluating major strengths and weaknesses in functional areas
of a business. IFE matrix also provides a basis for identifying and evaluating
relationships among those areas. The way of calculating for ICE is same as
the one used for EFE.

2.2.3. TOWS
The TOWS Matrix is derived from the SWOT Analysis model, which stands
for the internal Strengths and Weaknesses of an organization and the external
Opportunities and Threats that the business is confronted with. The acronym
TOWS is a variant of this and was developed by the American international
business professor Heinz Weirich. The TOWS Matrix is aimed at developing
strategic options from an external-internal analysis and is a practical tool,
particularly in the fields of business administration and marketing.

Whereas SWOT Analysis starts with an internal analysis, the TOWS Matrix
starts the other way around, with an external environment analysis; the threats
and opportunities are examined first. From that standpoint, an organization
gets a clear picture of its environment and the opportunity to think about
strategy and what direction the company will go in. Next the company‟s

strengths and weaknesses are considered; what it‟s good at internally and
what it‟s not so good at. The external analysis is linked to the analysis and the
resulting TOWS Matrix can help an organization to make decisions better,
seize opportunities and protect itself better against threats.

The TOWS Matrix helps businesses to identify their strategic options. An
organization gets the opportunity to make the most of its strengths and get
12


around its internal weaknesses and learn to deal with them properly.
Externally, an organization learns to carefully look for market opportunities
and recognize possibilities. And they learn how to control and overcome
potential threats.

The TOWS Matrix can also help with brainstorming and developing great
ideas to generate effective marketing strategies and tactics. Furthermore, the
model goes beyond merely finding out the strengths and weaknesses within
an organization and what opportunities and threats there are in its
environment. It forces organizations to really think about how they can
improve themselves, how they can guard against threats and become more
aware of their expertise and potential shortcomings.

The TOWS Matrix is not just meant for the highest levels of management in
an organization. It can be a very useful tool for departments (i.e. a marketing
or sales team) or for individual employees on an operational level. Once its
employees or a department‟s strengths are known, these can be improved
further to become even better. The TOWS Matrix emphasizes on the external
environment.

It begins with analyzing external opportunities and threats. Up next are the
internal strengths and weaknesses, which will subsequently be linked to the
external analysis. And this is where it goes a step beyond the traditional
SWOT analysis; strategic tactics emerge by opposing S-O (StrengthsOpportunities), W-O (Weaknesses-Opportunities), S-T (Strengths-Threats)
and W-T (Weaknesses-Threats).

13


A next step in the analysis helps when thinking about the option they want to
pursue. Here the external opportunities and threats are compared to the
internal strengths and weaknesses to help identify strategic options. Firstly, by
combining internal strength and external opportunities (S-O), the question
will arise “how can they use the strength to benefit from existing external
opportunities?” Secondly, with internal strength and external threats (S-T),
“how can they benefit from their strengths to avoid or lessen external threats?”
Thirdly, with internal weakness and external opportunities (W-O), “how can
they use opportunities to overcome the organization‟s internal weakness?”
Lastly, with internal weakness and external threats (W-T), “how can they
minimize weakness and thus avoid potential threats?”
Table 2.1: TOWS Matrix

(Source: Expert Program Management)

14


CHAPTER THREE. ANALYSIS OF BANKING INDUSTRY IN
VIETNAM AND SHINHAN BANK VIETNAM

3.1. History of Banking in Vietnam
Before the August Revolution in 1945, Vietnam was a feudal-colonial country
under the French colonialists‟ rule. The banking and credit system was
founded and protected by the French colonialists through the Indo China bank.
It functioned as both the central bank of the whole Indochinese region
(Vietnam, Laos and Cambodia) and a commercial bank with commercial
banking operations and investment.

After the August Revolution, one of the key tasks of the August Revolution
then, was to build an independent and autonomous monetary and banking
system to serve for the national cause of revolution and construction. The task
was fulfilled by 1950, when the anti-French resistance war grew stronger,
obtaining many triumphs in the battled field, and expanding the liberalized
region. In this context, the development required economic and financial
activities to be improved and promoted to meet new demands. On the basis of
the new economic and financial policy set out in the 2nd Congress of the
Vietnam Workers‟ Party (February,1951), President Ho Chi Minh signed
Decision 15/SL on the establishment of the Vietnam National Bank – Bank of
the first people‟s democratic state in Southeast Asia in order to carry out five
urgent missions: issuing banknotes, managing treasury, carrying out credit
policy in order to facilitate production and coordinating with the trade
authorities for monetary management and struggling against the enemy. The
foundation of the Vietnam National Bank was the result of the struggle
process to develop an independent, and autonomous monetary and credit

15