Strategic Management of Agribank

ABSTRACT In the present age, big cities in Viet Nam ar growing at a rapid pace, especially in the sparings, as a result many confides are scoreed including swan of husbandry and Rural Development of Vietnam.Founded on 26/03/1988, Agribank has al com tutelages played the stellar(a) type in Vietnams economic fuck offment with 1034 correspondent banks in 95 countries and territories (since 12/2009). In the forward-looking period, Agribank constantly amend their fight to maintain the matter adept position of commercialised banks and the dominant role in agricultural and bucolic pecuniary market, serving farmers, agribusiness and rural areas. To become the member of Group Finance and Banking in the coarse, Agribanks dodging is associated with the sustainable development of customers, banking, partners and communities.Based on the data obtained from a small-scale converse carried unwrap within Agribanks employees and reviewed literature, our exteriorizes team lear n Agribanks strategical trouble. A nonher key point of this reveal is providing recommendations to improve its effectiveness and efficiency. It is hoped that this empirical report stand bring the readers with a more(prenominal) detailed look at the Agribanks strategic Management. TABLE OF confine Abstract1 I. Executive summary 3 II. Introduction of the lodge 3 III. Managerial function.. 4 IV.Literature review.. 5 V. strategic management.. 6 1. Step 1 identifying the banks finishing. 7 2. External Analysis7 3. Internal Analysis9 VI. Conclusion and recommendation. 12 References. 14 I. Executive summary This report was commissi unrivaledd to analyze, evaluate and excessively to give recommendation intimately the strategical management of Bank of Agricultural and Rural Development of Vietnam. The research draws attracter to AgriBanks ongoing missions and polishs instructioning on renovating and developing banking applied science in a freshization manner.Further investi gations give a SWOT abbreviation rough AgriBank and conclusions more or slight their place are made Internally, Agribank has quite a drove of strengths such as round number of gross slap-up, steep prestige, modern facilities, as well as somewhat weaknesses like bad financial aptitude and measly operation effectiveness. Besides, externally, Agribank as well has many opportunities peaceful semipolitical status, economy rec everywherey, the freshness of the domestic market, and has to aim with lots of banes from competitors, loss of qualified employees, or organisational policies. After carefully evaluated, Recommendations are given AgriBank should circularize the market strategies to array luxuriouslyer action by focusing its computer addresss of tender-hearted and facilities on Main market. AgriBank should besides dissipate the market outline, which is to take return of its procurable products and service to enter a unfermented market in night club to pad market share, get more output and address new potential customers. II. Introduction of the go with Agribank is the largest bank in scathe of fund re beginnings, number of employees, as decorates, operation authorizework and customer bases with reputation non only in local market scarcely also foreign market.Agribank has al way of lifes focused on the innovation and application of banking technology in favour of business administration and the development of an advanced banking service network. As the report of Agribank. com. vn As of November 2011, Agribank had the pith summation of VND 5240,000 billion, total equity of VND 22,176 billion, total superior loans of VND 414,464 billion, total fund election of VND 478,000 billion, total ply of 35,000 people, 2,300 branches and action offices.Agribank is one of the leading bank in Viet Nam in terms of acknowledge and implementation of foreign projects, especially from World Bank, Asia Development Bank, European inves ting Bank and French Development Agency. At present, Agribank is serving 10 zillion household and 30,000 enterprises. With the position of a leading commercial bank in Viet Nam, Agribank has shown its great efforts and contri solelyion greatly to the nations industrialization and modernization as well as economic development. Due to its location and market share, Agribanks bell ringer market is Vietnam, especially in rural areas.About designate customer, in the frontmost 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 fields other than agriculture. III. Managerial function In the setting of a profound and comprehensive integration, to cook up a difference in how well Agribank performs as well as to cope with this uncertain situation, Bank of Agriculture and Rural Development of Viet Nam need strategic management.Hoang Thu Hien one of the staffs of Agr ibank pointed out that One of Agribanks strategies is making great efforts in fund mobilisation from both local and foreign sources and maintain the credit growth at a reasonable level. Another way is giving precedency in investment in agriculture, farmers especially to farm households with agricultural, fores act, fishery and common salt production. She also reveals that those strategies is built in the period 2000 2010 by a collection of financial experts hired by Agribank. They are still used instantly and other details of the strategic management are kept as secret database of the bank.The general schema of Agribank this period is it bequeath put forrad a number of solutions which are by-line the policy of the Government and the articulate Bank of Viet Nam on monetary policy in 2011 and for coming age (n. d. ). First of all is pep pilling up the fund mobilization from diverse sources for serving agriculture, farmers and rural areas then setting up the progress 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 developing strategy on international cooperation and foreign fund projects for 2010-2015.Secondly, Agribank has completely changed into Ltd Company with degree centigrade% capital of State and pushing up the modern banking technology ground on IPCAS II which is used to develop the new products and services with high quality to better serve the customers. Thirdly, Agribank is trying to train the staff about the core cultural values including honesty, discipline, creativity, quality 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 convey researched about it so as to find out the best way to esta blish strategy and manage it. Stephen P. Robbins and Mary Coulter with Management 10th edition go drawn the most detailed and comprehensive skeleton of Strategic Management. According to their theory, strategy is plans for how an arrangement will do what its in business to do, how it will compete successfully, and how it will attract and gratify 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 transcriptions strategies. There are three reasons why strategic management is of import which are stated that it makes a difference in how well an organization performs, it is requisite to cope with uncertain situation and to provide organizational goals for each(prenominal) part of the organization to work toward. After clarifying the importance of strategic management, those two authors draw a big picture of the strategic management process.There are all 6 locomote in the process which the offset printing 3 are most important. The first step is to identify the organizations authentic mission, goals and strategies. Mission is defined as a tale of the purpose of an organization and goals are understood as measurable performance targets. Identifying those concepts will help the organization draw a general street to follow. The near two locomote can be combined as SWOT analysis which analyze 4 main factors strengths, weaknesses, opportunities and threats.It can also be defined as doing external analysis environment well-nigh the organization and its effect- and intimate analysis the organizations precise 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 live 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 a nd 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 intrinsic (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 CURRENT missionary station AND GOALS To maintain the leading bank, provide the modern and high quality products nd services, 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 coming old age The Agribank An Phu pointed out 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 below 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 deciding the mission and goals of Agribank, the important thing is to conduct an external analysis, which includes the two components the general and the special(prenominal) environment. Each factors in the components whitethornbe an hazard or a threat to Agribank, basing on how they can affect Agribanks market. A. Opportunities As to mention about the general environment, it is describe that the worlds and Vietnams economy are recovering from the crisis and are predicted to be growing in the near future.A upstart word 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 jobs 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 addition to the countrys economy recovery, Agribank also benefits from the fact that Vietnam has authorizedly 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 ask their way of working and technical skills. And, as to mention the political conditions, Vietnam is a peaceful country with no terrorists or civil wars which encourages the development of fair play and economy, and Agribank can make use of this to complete their working ashes. The opportunity for Agribank does not only come from the general environment but also the special environment, especially from the customers.According to the Standard Charter Ban ks CEO, saying 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 gradually and it will continue to rise in the next 5 years. Furthermore, correspond to the vietnamplus. vn ( tidings 2009), Vietnams average age tends to become higher, consequently, many people will bring down to consider saving for their pension plan.Agribank can take advantage 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 existence 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 tension 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, accord to Dr. Vu Dinh Anhs analysis (Thanh 2012). This policy makes it hard for Agribank and other banks to mobilize capital from people, and so on earn less profit on change 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 succession of high-technology, following with the decrease in number of high-quality employees is current problems that Agribank have to face.Nowadays, joint-stock company banks such as Vietcombank, Vietinbank or ACB bank are vie 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 Standard Charter Bank being equip with hi gher quality and credit funds and non-bank credit organizations are acting as the harbingers to Agribank. According to Vietnam Credit Information and Rating Companys 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 quite a than Agribank while the rests are not really well-trained. In general, the threats to Agribank are majestic the opportunities that the bank can get, but its whole banking business is predicted to be growing. 3. cozy ANALYSISBeside external analysis, it is also very important to explore and assess the internal factors of Agribank which are its strengths and weaknesses. Understanding about 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, Cambodia 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 controlled 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 rank of pretend 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 trust 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 approve 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, Viettel would coordinate with Agribank totally wit h its telecommunication infrastruction. The conclave of those two giants will be an extreme advantage for Agribank to upgrade 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 up(p) to get the highest performance. The first appalling weakness is its bad financial capability. Although its system is modern and successful in Vietnam, Agribanks financial control is still weak compared to the global 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 Outlook is Stable.At the like time, the agency has affirmed Agribanks Viability Rating (VR) at ccc and set up Rating Floor at B. A full military rating breakdown is provided at the end of this release. Also according to this rating a gency, 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, in concert with a high level of special mentioned loans (SMLs) and a slower economic backdrop, is likely 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 lite weakness of Agribank is that its operation effectiveness is not high enough. Although the bank was conventional in 1988, it still hasnt made huge impact on Vietnams agriculture.Farmers still do the farming work with traditional methods and do not use much technology in working. The rate of pathetic 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 valet resource is huge but not qualified enough. There is a troubling 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 meliorate well enough still have good job and settle the destiny of the bank. Therefore, its human resource can not satisfy the urgency 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 capital, high prestige, modern facilities, and weakness es 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 supporting small and average-scale business. Another met hod is alter the quality of credit service by using up the capacity of the staff to do research on reducing some steps of procedures so that the achievement duration will be minimized which makes it high-speed 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 condition 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 intensifying the process of constructing material facilities or, in detail, purchasing 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, retraining 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 operate 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, and bringing new benefits to customer.For loc ation, it can claim the most convenient location so that customers can easily make transactions. For advertising, 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 means 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 executive 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/101/786/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? 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