Strategic Management of Agribank

ABSTRACT In the present age, spacious cities in Viet Nam ar growing at a rapid pace, especially in the economics, as a result umpteen deposits be established including commit of Agriculture and Rural knowledge of Vietnam.Founded on 26/03/1988, Agri money box has always compete the leading subprogram in Vietnams economic festering with 1034 printer depository pecuniary institutions in 95 countries and territories (since 12/2009). In the virgin spot, Agribank constantly amend their competitiveness to brinytain the number angiotensin-converting enzyme set up of commercial banks and the supreme role in agricultural and agrestic financial market, serving farmers, horticulture and rural aras. To become the member of class Finance and Banking in the country, Agribanks st prizegy is associated with the sustainable development of customers, banking, partners and communities.Based on the data obtained from a minor(ip) wonder carried come in within Agribanks employee s and reviewed literature, our projects team analyze Agribanks strategical centering. A nonher key point of this penning is providing recommendations to improve its effectiveness and efficiency. It is hoped that this empirical report gage bring the readers with a more detailed look at the Agribanks strategic worry. plug-in OF CONTENT Abstract1 I. Executive summary 3 II. foundation garment of the comp any 3 III. Managerial function.. 4 IV.Literature review.. 5 V. Strategic management.. 6 1. Step 1 aiming the banks goal. 7 2. External psycho abbreviation7 3. Internal Analysis9 VI. polish and recommendation. 12 References. 14 I. Executive summary This report was commissioned to analyze, evaluate and withal to elapse recommendation around the Strategic management of Bank of Agricultural and Rural Development of Vietnam. The seek draws commition to AgriBanks menstruum missions and goals counseling on renovating and maturation banking engineering science in a moderniz ation manner.Further habilitateigations give a SWOT analysis about AgriBank and conclusions about their status are made Internally, Agribank has quite a lot of strengths such as great number of gross capital letterital, high school prestige, modern facilities, as substantially as near failinges like foul financial capability and deplorable operation effectiveness. Besides, externally, Agribank as well has many opportunities still g all overnmental status, thrift recovery, the freshness of the domestic market, and has to deal with lots of threats from competitors, press release of well-qualified employees, or governmental policies. After care unspoilty evaluated, Recommendations are assumption(p) AgriBank should pe finalrate the market strategies to commove higher performance by focusing its sources of charitable and facilities on Main market. AgriBank should as well as spread the market strategy, which is to dart favor of its available products and helping s to enter a new market in order to expand market grapple, get more widening and coming new potential customers. II. Introduction of the company Agribank is the with child(p)st bank in equipment casualty of gunstock resources, number of employees, assets, operation interlock and customer bases with record not only in local market tho excessively international market.Agribank has always focuse on the innovation and application of banking engine room in favour of business administration and the development of an advanced banking service vane. As the report of Agribank. com. vn As of November 2011, Agribank had the total asset of VND 5240,000 billion, total justness of VND 22,176 billion, total outstanding loans of VND 414,464 billion, total fund resource of VND 478,000 billion, total stave of 35,000 people, 2,300 branches and transaction offices.Agribank is one of the leading bank in Viet Nam in terms of receipt and implementation of foreign projects, especially from Wor ld Bank, Asia Development Bank, European Investment Bank and French Development Agency. At present, Agribank is serving 10 million household and 30,000 enterprises. With the position of a leading commercial bank in Viet Nam, Agribank has sh let its great efforts and contribution greatly to the nations industrialisation and modernization as well as economic development. Due to its side and market make do, Agribanks target market is Vietnam, especially in rural areas.About target customer, in the freshman period, its target was people who did the agricultural work. However, nowadays, Agribank has no target customer as it welcome everyone who provide capital and invest in many business lines other than agriculture. III. Managerial function In the context of a profound and encyclopaedic integration, to make a engagement in how well Agribank performs as well as to cope with this c settleeful situation, Bank of Agriculture and Rural Development of Viet Nam need strategic management .Hoang Thu Hien one of the mental facultys of Agribank pointed out that One of Agribanks strategies is making great efforts in fund militarization from both local and foreign sources and maintain the credit harvest-feast at a reasonable aim. some other way is well-favored priority in investment in agriculture, farmers especially to farm households with agricultural, forestry, piscary and salt production. She also reveals that those strategies is built in the period 2000 2010 by a group of financial experts hired by Agribank. They are still used straight off and other details of the strategic management are kept as secret database of the bank.The world-wide strategy of Agribank this period is it ordain barf forth a number of solutions which are following the policy of the administration and the State Bank of Viet Nam on mo scratchary policy in 2011 and for attack years (n. d. ). First of all is speeding up the fund mobilization from different sources for serving agri culture, farmers and rural areas wherefore setting up the supercharge on implementing the Circulation 13, 19 of SBV on safe index for credit institutions or following the SBVs Governor and relative agencies for adding fund in 2011 and growing strategy on international cooperation and foreign fund projects for 2010-2015.Secondly, Agribank has completely changed into Ltd accompany with 100% capital of State and pushing up the modern banking applied science based on IPCAS II which is used to develop the new products and run with high prize to better serve the customers. Thirdly, Agribank is trying to train the staff about the core cultural values including honesty, discipline, creativity, timbre and efficiency. Finally, Agribank plans to carry out the project on business development strategy for 2011-2015 towards 2020 to prove the prestige of the largest commercial bank-financial institution in Viet Nam.IV. Literature review Regarding Strategic management, many scholars fix researched about it so as to find out the outflank way to establish strategy and manage it. Stephen P. Robbins and Mary Coulter with Management tenth edition have drawn the most detailed and comprehensive picture of Strategic Management. According to their theory, strategy is plans for how an fundamental law leave do what its in business to do, how it will compete undefeatedly, and how it will attract and play its customers in order to achieve its goals (Stephen amp Mary 2009, p. 163). And then strategic management is defined as what managers do to develop an organizations strategies. There are three reasons why strategic management is beta which are stated that it makes a difference in how well an organization performs, it is necessary to cope with uncertain situation and to provide organizational goals for each part of the organization to work toward. After clarifying the vastness of strategic management, those two authors draw a big picture of the strategic management ru n.There are all 6 step in the process which the starting signal 3 are most important. The first step is to see the organizations current mission, goals and strategies. Mission is defined as a statement of the purpose of an organization and goals are lowstood as mensurable performance targets. Identifying those concepts will help the organization draw a full general path to follow. The next two steps brush aside be unite as SWOT analysis which analyze 4 main factors strengths, impuissancees, opportunities and threats.It can also be defined as doing external analysis environment around the organization and its effect- and internal analysis the organizations special(prenominal) resources and capabilities. The next step namely Formulating strategies is done after all the analysis and is to establish a detailed path for the organization to follow. The last 2 steps are about implementing and evaluating the strategies that have been built up in the last step. Agreeing with those two authors theory, we have conducted interview and done some research and analysis about Agribank Vietnam. V. Strategic ManagementTo research about the companys strategic management, we are required to conduct the first three steps of Agribanks strategic management process. Our project team will identify the Agribanks missions and goals and do the internal (SW) along with the external (OT) analysis. Furthermore, the recommendations will be set up to uphold the strengths, overcome weaknesses, maximize opportunities and eliminate any threats or turn them into opportunities. 1. STEP 1 IDENTIFYING THE ORGANIZATIONS circulating(prenominal) MISSION AND GOALS To maintain the leading bank, provide the modern and high flavor products nd go, meet the demand of customers and increase the non-credit income, Agribank is focusing on renovating and developing banking technology in a modernization manner. That is its mission in 2011 and for the sexual climax years The Agribank An Phu pointed o ut that Agribank expects to reach the goals for 2012 as follows the fund resource increases by 15-17% compared with 2011, outstanding loans rises by 11-12%, the rate of loans to agricultural and rural areas is 70%, NPLs on a lower floor 3%, non-credit income goes up by 10%, CAR complies with international standard.In general, Agribanks goal is bringing prosperity to the customer. 2. EXTERNAL ANALYSIS After decision making the mission and goals of Agribank, the important thing is to conduct an external analysis, which includes the two components the general and the specific environment. Each factors in the components maybe an prospect or a threat to Agribank, basing on how they can affect Agribanks market. A. Opportunities As to remark about the general environment, it is reported that the worlds and Vietnams economy are recovering from the crisis and are predicted to be growing in the approximative future.A recent article from the famous BBC (9 October 2012) has reported What is happening is a re-balancing of our economy. We have created a million net new byplays and we are now a net exporter of cars, but it is a slow process. With the economy flourishing, Agribank has an opportunity to expand the market size and provide more services to the customers. In rise to power to the countrys economy recovery, Agribank also benefits from the fact that Vietnam has officially entered the WTO. By joining the worlds economic flow, Agribank has more chances to meet big partners and to develop itself.For example, the bank can learn from the foreigners about the new technology and inquire their way of working and technical skills. And, as to mention the political conditions, Vietnam is a collected country with no terrorists or civil wars which encourages the development of law and economy, and Agribank can make use of this to complete their working system. The opportunity for Agribank does not only come from the general environment but also the specific environment, especially from the customers.According to the Standard Charter Banks CEO, motto to baomoi online newspaper (Phuong 2009), Vietnam has a young and fresh banking market, which is not fully exploited. He also points out that in the recent years, the number of banking service users rises bit by bit and it will continue to rise in the next 5 years. Furthermore, jibe to the vietnamplus. vn (Son 2009), Vietnams average age tends to become higher, consequently, many people will begin to consider saving for their pension plan.Agribank can take returns of this opportunity to reach more to the customers need. B. Threats Besides the opportunities, there are also threats that Agribank has to deal with. The fact that Vietnam has entered the WTO also brings along the trouble of the market share be downsized because Vietnam banks and companies are now freely get investments from foreign companies. It will also increase the competition between Vietnam and other WTO countries, creating great s train to Agribank. In addition to this, the Government policies are also putting Agribank under pressure.The current ceiling interest rate is kept really low at 9% started from 11th June, but its also predicted to be lower, according to Dr. Vu Dinh Anhs analysis (Thanh 2012). This policy makes it hard for Agribank and other banks to ride capital from people, and so on earn less profit on lending other companies money. In addition to the general environments influences, the specific environment, too, holds some menaces. The number of competitors growing rapidly in todays time of high-technology, following with the decrease in number of high-quality employees is current problems that Agribank have to pose.Nowadays, joint-stock company banks such as Vietcombank, Vietinbank or ACB bank are playing their leading roles in banking industry in Vietnam, alluring a large number of users comparing to AgriBank. Not as powerful as JSC Banks, but the banks with foreign investments like the Sta ndard Charter Bank being equipped with higher quality and credit funds and non-bank credit organizations are acting as the harbingers to Agribank. According to Vietnam Credit Information and Rating corporations report (Thanh 2012), 32 banks are rated to be highly competitive.Unfortunately, Agribank is not listed. Adding to the threats from competitors, the upcoming workforce in banking being estimated to be really large but cannot be so sure about the quality is also a trouble for Agribank. The best workers tend to chase for high position with high salary in foreign countries or other bank rather than Agribank while the rests are not really well-trained. In general, the threats to Agribank are surpassing the opportunities that the bank can get, but its whole banking business is predicted to be growing. 3. INTERNAL ANALYSISBeside external analysis, it is also very important to explore and value the internal factors of Agribank which are its strengths and weaknesses. Understanding ab out those internal elements will give us the knowledge of Agribanks ability to take benefit from the opportunities and to face the threats. A. Strengths The first and the most powerful strength of Agribank is that it has the largest total capital, the biggest operation network and the hugest source of labors and customers in Vietnam. According to the article 3 ngan hang thuong m? i nha nu? c co v? n di? u l? tren 1 t? USD on gafin. n (23 March 2012), a familiar website for investors, Agribank is the commercial bank that has the greatest amount of total capital in Vietnam which is over 29. 606 billion VND. It is an advantage for Agribank as it can invest in a lot of fields and activities with its huge capital. About its operation network and source of labors and customers, Agribank has over 2. 300 branches and office and 37. 500 staffs all over the country. Moreover, according to the official website of Agribank (n. d. ), it also signs contract with other foreign banks from Laos, Cam bodia and china to expand its market.Another strength is that it is the unique and main bank that focuses on the field of agriculture and rural areas. In Vietnam, only Agribank is the commercial bank that is nurtured and falsifyled by the government to develop agriculture and support agricultural workers. Vietnam is the country that has the main focus on agriculture and producing food so that this market share would be a big benefit for Agribank. Moreover, Agribank is considered as having the lowest crop of risk due to its support from the government and it also has the prestige of a governmental bank with tradition and experience.This advantage can gain the customers assertion that not all other rivals can do. Last but not least, one more strength of Agribank is that its high technology applying in its infrastructure. To pass this point, the article Viettel va Agribank ky k? t th? a thu? n h? p tac toan di? n on danviet. vn (D? c 2011) states that from November 20th, 2011, Vie ttel would coordinate with Agribank totally with its telecommunication infrastruction. The combination of those two giants will be an extreme advantage for Agribank to pull ahead its system and bring better products to its customers. B. WeaknessesIt is undeniable that Agribank is one of the strongest banks in Vietnam at this time however, it still has its own weaknesses that need improving to get the highest performance. The first alarming weakness is its bad financial capability. Although its system is modern and triumphful in Vietnam, Agribanks financial control is still weak compared to the planetary standard. Stockbiz. vn reported that Fitch Ratings has affirmed Vietnam Bank for Agriculture and Rural Developments (Agribank) Long-Term Foreign-Currency Issuer Default Rating (IDR) at B (12 July 2012). The wit is Stable.At the same time, the agency has affirmed Agribanks Viability Rating (VR) at ccc and Support Rating Floor at B. A full pass judgment breakdown is provided at th e end of this release. Also according to this rating agency, Agribank has low rank of risk thanks to the support from the government, not from its own ability. The banks reported non-performing loans (NPLs) are the highest among domestic peers. Its low level of reserves, together with a high level of special mentioned loans (SMLs) and a sulky economic backdrop, is possible to keep credit costs elevated in the near- to medium-term.As a result, Fitch expects the banks profitability to remain low, given also potential margin squeeze from a regulatory cap on lending rates on the agriculture sector. Therefore this weakness may not affect Agribank immediately in the domestic market, but if it wants to expand to the oversea market, it has to improve its financial capability a lot. Another clear weakness of Agribank is that its operation effectiveness is not high enough. Although the bank was established in 1988, it still hasnt made huge contact on Vietnams agriculture.Farmers still do t he farming work with traditionalistic manners and do not use much technology in working. The rate of poor households in rural areas is still high after years. This weakness could be very dangerous as it would lose the customers and governments trust, which can reduce its total capital. One last weakness of Agribank is that its human resource is huge but not qualified enough. There is a sad truth in Vietnam that people who have social relationship with some big men inside the company are likely to get the job. And Agribank is not an exception.Due to this terrible truth, many people who are not educated well enough still have good job and decide the destiny of the bank. Therefore, its human resource can not satisfy the requirement of the global standard, which would be a disadvantage for it when expanding to the bigger world. VI. Conclusion and Recommendations In conclusion, like other corporations and organizations, Agribank has its all strengths such as large number of gross capit al, high prestige, modern facilities, and weaknesses namely bad financial capability and low operation effectiveness.Beside these internal factors, Agribank also faces up with opportunities peaceful political status, economy recovery, the freshness of the domestic market, and threats from competitors, loss of well-qualified employees, or governmental policies. Therefore, based on the analysis of SWOT and the wholesome interview of sole employee, we have drawn up the strategies for Agribank to achieve more success in the next five years. 1. Penetrating market strategies In this strategy, we would focus our resources of human and facilities on Main market to get higher performance.To get the strategy accomplished effectively, some methods must be applied such as Improving the mobilization capital by allowing wide range of maturities, or periods, interests rate or accumulated interests. Furthermore, the bank can also try to attain sponsored -agricultural projects or projects of suppo rting small and average-scale business. Another method is improving the quality of credit service by using up the qualification of the staff to do research on reducing some steps of procedures so that the transaction duration will be decrease which makes it faster and more convenient to deposit.Another effective solution is diversifying and developing the quality of the services because at the moment most of Agribank products are traditional ones, so it is less competitive. Therefore, the bank should introduce new advanced and convenient services and products to ensure the ability of serving customer efficiently. This method also heightens the administrative status of the management. 2. Expanding market strategy This is the strategy in which Agibank would take advantage of its available products and services to enter a new market in order to expand market share, get more output and approach new potential customers.There are some methods that can be applied, the first one could be i ntensifying the process of constructing material facilities or, in detail, purchase necessary assets especially IT equipments, strongboxes, electric generators. Secondly, it could develop the network by establishing more transaction posts which help popularize brand name. Thirdly, Agribank can enhance the quality of the staff by focusing on recruiting, introducing new reserving reward policies, retrain the current staff to get higher qualification and ability.Furthermore, in the period of expanding to new market, Agibank may appoint the most important and experienced cadres (skillful employees) to new brands in order to make sure that new brands can perish effectively. Beside those, Agribank should speed up marketing operations/ activities because marketing plays an important role in popularizing and giving products to the public. Some methods for developing marketing performance are for products, improving traditional products and services, shortening procedure of transaction, a nd bringing new benefits to customer.For location, it can choose the most convenient location so that customers can intimately make transactions. For advertisement, it is advisable to use radio, television, newspaper and the internet as the important way to advertise the bank. Furthermore, it is the way we serve that is one of the most nitty-gritty of advertisement to customers. Last but not least, we recommend to reinforce the control of internal activities which means that does not merely check the account or the asset of the bank but verify the quality of credit, the efficiency, safety so that administrator can easily find out and re-correct defects and mistakes.References Agribank An Phu official website n. d. , D? nh hu? ng phat tri? n c? a Agribank Vi? t nam, viewed 17 November 2012, http//agribankanphu. com. vn/vn/company/details/dinh-huong-phat-trien-cua-agribank-viet-nam6. html Agribank Vietnam official website n. d. , Agribank phat tri? n b? n v? ng vi s? th? nh vu? ng c ? a c? ng d? ng, viewed 17 November 2012, http//www. agribank. com. vn/ one hundred one/786/gioi-thieu/dinh-huong-phat-trien. aspx Agribank Vietnam official website n. d. , M? ng lu? i ho? t d? ng Agribank hon 2300 Chi nhanh, Phong giao d? ch tr? dai cung hinh ch? S, viewed 21 November 2012, http//www. agribank. com. vn/101/790/gioi-thieu/mang-luoi-hoat-dong. aspx BBC 9 October 2012, viewed 18 November 2012, http//www. bbc. co. uk/news/business-19876587 D? c Hi? u, Viettel va Agribank ky k? t th? a thu? n h? p tac toan di? n, 21 October 2011, viewed 21 November 2012, http//danviet. vn/62504p25c50/viettel-va-agribank-ky-ket-thoa-thuan-hop-tac-toan-dien. htm Gafin 23 March 2012, viewed 23 November 2012, http//gafin. vn/20120323104832101p0c34/3-ngan-hang-thuong-mai-nha-nuoc-co-von-dieu-le-tren-1-ty-usd. tm Phuong Nhi 2009, Th? tru? ng ngan hang Vi? t Nam r? t tr? , Baomoi, April 2009, viewed 20 November 2012, http//www. baomoi. com/Thi-truong-ngan-hang-Viet-Nam-rat-tre/126/2960677. ep i Thanh Thanh Lan 2012, L? n d? u tien x? p h? ng nang l? c c? nh tranh ngan hang, Vnexpress, 8 September, viewed 19 November 2012, http//ebank. vnexpress. net/gl/ebank/tin-tuc/2012/09/lan-dau-tien-xep-hang-nang-luc-canh-tranh-ngan-hang/ Thanh Thanh Lan 2012, Tr? n lai su? t huy d? ng co th? v? 8% m? t nam, Vnexpress, 29 August, viewed 18 November 2012, http//ebank. nexpress. net/gl/ebank/tin-tuc/2012/08/tran-lai-suat-huy-dong-co-the-ve-8-mot-nam/ Son Bach 2009, Vi? t Nam co co c? u dan s? vang, tu? i th? tang, Vietnamplus, 31 December, viewed 19 November 2012, http//www. vietnamplus. vn/Home/Viet-Nam-co-co-cau-dan-so-vang-tuoi-tho-tang/200912/29400. vnplus Stockbiz 12 July 2012, viewed 23 November 2012, http//en. stockbiz. vn/News/2012/7/12/309322/text-fitch-affirms-vietnam-s-agribank-at-b-outlook-stable. aspx *** Group tasks No ID Name Task Report