Bbe - A2.1 [PDF]

Zitiervorschau

TABLE OF CONTENTS: A.

Political/Legal:.............................................................................................................................4 1.

Political Institution:............................................................................................................4

2.

Corruption:.........................................................................................................................4

3.

Employment legislation:.....................................................................................................4

B.

Economics:..................................................................................................................................5 1.

GDP:....................................................................................................................................5

2.

Inflation:..............................................................................................................................5

3.

Exchange rates:...................................................................................................................5

4.

Interest rates:......................................................................................................................5

5.

Five forces analysis:............................................................................................................5

C.

Social:..........................................................................................................................................6

D.

Technological:.............................................................................................................................8

E.

Environment:...............................................................................................................................9

A.

Value chain analysis..................................................................................................................10

B.

SWOT analysis..........................................................................................................................11 1.

Strengths............................................................................................................................11

2.

Weaknesses........................................................................................................................11

3.

Opportunities:...................................................................................................................12

4.

Threats:..............................................................................................................................12

5.

SWOT table:.....................................................................................................................12

6.

SWOT interrelationship:.................................................................................................12

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LIST OF ABBREVIATIONS CPI - Consumer Price Index GDP - Gross Domestic Product NA - National Assembly (of Vietnam) TPBank – Tien Phong Bank NFSC - National Financial Supervisory Commision (of Vietnam) SBV - State Bank of Vietnam VCP - Communist Party of Vietnam VND - Vietnam Dong

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INTRODUCTION TPBank is a Commercial Joint Stock bank. With the establishment of over 11 years with the mission to deliver a unique bank service among all Vietnamese users. It is now rank as the 4th most valuable bank in the whole banking system of Vietnam, especially in the e-banking sector. Following is the research into the beneficial effects that macro environment offers to this business, and the interrelationship between internal and external will be critically analysed. The tool that we included in this study includes PESTEL – to analyse each criterion regarding to the macro environment inside the company (Part 1) and the SWOT analysis determine internal strengths and weaknesses of TPBank, an evaluation of interrelationship between external and internal factors.

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Task 1: A. Political/Legal: 1. Political Institution: Investors and corporate executives, whenever accessing a local business, always consider politics in the first place. As a Socialist Republic country with a single-party system (Communist Party of Vietnam – VCP). The National Assembly of Vietnam (NA) is responsible for making governmental decisions. TPBank, working as a public joint-stock company, but still through a lot of government control, since it directly effects on national economics. This gives the government a hold to the bank and helps them monitor corruption, business activity and resolve risk whenever necessary. Nevertheless, the business is tied with government’s regulations, and not all of them are healthy to the business. 2. Corruption:

Figure 1: Corruption Perceptions Index 2017 (Source: Transparency International) According to Transparency International (TI), the Corruption Perception Index in 2018 of Vietnam is 33/100, ranking 117/180, 10 ranks lower than 2017 (107/180). This shows a high number in the corruption rate, even trending upwards. Corruption pose a negative investment on a company and therefore channel through the development of that company. High rate of corruption is one big threat to the development of a company. And it is a natural sense of citizens to distrust the State if they see corruptions. 3. Employment legislation: According

to

38/2019/NĐ-CP,

the

minimum

4

wage

will

increase

from

VND1.390.000/month to VND 1.490.000/month from July 1 st, 2019. Therefore, the ceiling price will also be increased this does not only gives mere effects on low-key workers but also affect the higher ones, since corporations have to adjust the wages to satisfy their workers. By enforcing the law, TPBank will have the government’s protection to information and rights. B. Economics: Economics factors affect directly on the longevity of a banking business. It is the most important determinant, as the economics affect the price and the price affect bank’s healthiness. Economic factors will be separated to 3 main Levels: Market, Industry, National economy. 1. GDP: As reported from The World Bank, up until 2019, Vietnam has reported with VND223,9 billion, approximately VND5.206.794 billion. Its growth level was 6.88% at 2018 and on the rising trend. GDP has a very positive effect to banking as it encourages people to invest on bank, as the economic grows, GDP grows, following with transactions and profits to the bank. 4. Inflation: Although there are fluctuations in the inflation rate, one must say that Vietnam’s inflation rate is unpredictable at the moment. Since April 2018, the inflation rate starts dropping from 4.6% down to a 2.6% in January 2019, but until now, the numbers are on the edge of rising. Inflation rate have negative effects on bank, especially interest rate since it is one of the main reasons why people should but their money into the bank. 5. Exchange rates: Tradingeconomics.com stated for the last 3 years, the exchange rate has been following a gradual rise, average 1.01% per year. The percentages are within limit and completely stable for TPBank to have this as a leverage over making profits from international transactions.

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6. Interest rates: According to tradingeconomics.com, the interest rate of 2019 is fluctuated at 6.25%, on the TPBank website, they stated that if only the deposit last for 12 months at least, people will get the real interest rate. And the Loan-to-Deposit Rate of TPBank in 2017 has gone too far from the acceptable amount that the State Bank allows (97% to 90% acceptable).

Figure 2: Deposit interest rate for personal customers 7. Five forces analysis: Porter’s Five Forces analysis model (1998) was applied to analyse TPBank: a) Threats of new entrants: Low Entering the banking business in Vietnam, to open a commercial bank, at first requires VND3000 billions for the capitol, that is not a small amount of money for any organization neither individual. In addition, every banking activities have to go through the State Bank of Vietnam (SBV). To open a bank, one must have a legal credential to be allowed business activities and making profits. b) Bargaining power of buyers: Low 6

Since TPBank is offering premium service, every rule is stated strict in the guidelines. Every service comes with a fixed money fee; therefore, bargaining is impossible. c) Threat of substitutes: High TPBank is only the best digital bank, they have good service, but their interest rate is lower than other banks. For instance, borrowing money from TPBank will give them 67% of interest per year while others vary from 7-8%, this may be a small difference but whenever someone with a high investment will see this as a threat and immediately choose another bank. Moreover, what make they stand out in the business is their modern technology over digital banking, allows customers to have the best ATM service (eye scan, fingerprints,). If another foreign bank discover that this is new to Vietnam, they will come to investment and give TPBank a competitor. d) Bargaining power of suppliers: Low In the case of a bank, any buyer can be considered a supplier, since buyers are the ones who are using the service, and suppliers are the ones who withdraw their money into the bank. This makes a buyer impossible to bargain, too. e) Competition between rivals: Low Bank rivalry is common, nevertheless, it is different with TPBank. Investing in digital banking is good for customers, but although not necessary, therefore, other banks choose the traditional path and serve their customers with the low-cost method. This provide 100% the service without losing an amount of money in technology. For this, TPBank will have no competitors until another digital banking brand shows up. C. Social: The social forces affect the major factors of the society such as basic values, preferences and behaviour. The reason behind this is that people of the society is under a cultural group that shaped by belief and values. Different countries have different social behaviours based on different religion, social regime, and belief. To understand these forces, we could use the Hofstede's cultural dimensions theory. After putting years into researches, Hofstede created a six-dimensions model of international comparison between cultures and society. In that research, we can apply it to Vietnamese culture and, more specific, TPBank’s case. According to the six-dimensions model, there are 6 7

different terms such as: Individualism vs Collectivism, Power distance, Masculinity vs Femininity, Uncertainty avoidance, Long-term vs Short-term Orientation and Indulgence vs restraint (Hofstede, 2015). Vietnamese culture will be divided into some extend of those dimensions. However, with the application of TPBank’s situations and the information, we can only apply Individualism vs Collectivism, Indulgence and Power distance. To begin with the first dimension, Vietnamese people are classified as Collectivism.

Figure 3: Collectivism - Individualism World map Vietnamese people usually tend to live in extend families and focusing on building their home bigger. From many generations, Vietnamese people have been living that way, therefore, businesses also work in traditional style. In this case, TPbank also adapt to the collectivism lifestyle of Vietnamese people by giving lots of promotions and service packs for families to use such as TPbank’s family savings pack.

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Figure 4: Indulgence - Retraint World map (based on WVS) Another dimension named is Indulgence which Vietnam stayed in the middle. This refers to the fact that Vietnamese have normal degree of freedom which could be considered as being free enough to be able to fulfil their own basic human desired related to enjoying life and having fun if only it is in order by the law. In this circumstance, businesses will take advantage and gives services that also help Vietnamese citizen enjoy their life in leisure activities, especially TPBank’s promotions which could earn customers their holidays. Last but not least is the power distance in Vietnamese culture.

Figure 5: Power Distance World map As we can see from the graph, Vietnam have a rather large power distance. This means that hierarchy in Vietnam is distributed clearly and executed in society, without doubt or reason. The members of organizations and institutions of a business will also have their 9

own power established so that it can function properly. This part is most used in TPbank’s human resource’s environment. They always try to make the working environment friendly and employees have their equal chances of learning and developing themselves. D. Technological: Technological in business affect crucial aspects such as research and development, technology incentives and the rate of technological changes. Therefore, may determine the barriers to entry and result in decision making. However, the technological changes will affect the cost and quality but could outcomes innovation. In the innovating world of the 4.0 revolution, the technology is all in full development in wireless communications, smartphones, artificial intelligence and so on. Therefore, in order to stay ahead of time, the marketer have to stay alerted to the changes in technological environment and adapt. Otherwise, the products and services will soon be outdated and the company itself will miss multiple opportunities in the market (Claessens, 2015). Luckily, with Tien Phong bank, the focus in technology is one of their strength. Nowadays, people have more access to the internet and smart devices than ever before and will prefer what is inconvenient then others. Had the idea of that, Tien Phong bank marketers have created the Live Bank which operates 24/7 with all features such as receiving and sending money in high security rooms using only an ATM. With the latest trend of smartphones being able to use QR code scan, TPBank also introduce a new service called Quickpay, which is paying using only QR code scanning devices. Nevertheless, TPbank also have old, obsolete machines and services. Opened for over 10 years, it is inevitable that some of their technology will became obsolete over time, not to mention the fact that technology is changing faster than ever before. Therefore, lots of their available ATM are slow and inconvenient. To tackle that situation, besides investing in new services, TPBank also take their time to listen to what customers say via T’Aio – their virtual assistant using artificial intelligent technology. After that, they will upgrade the out of date machines and replace them with a new Live Bank system, for example. In conclusion, in the scale of the macro environment, technology is one of the key factors that could affect the system of the company. Therefore, TPbank has taken advantage of their leading technology to attract customers and keep upgrading and innovating to strengthen the relationship between customers and the service providers themselves. 10

E. Environment: Ecological forces are one of the most important factors affecting business. The business work will have some impact to the natural resources and the natural environment. However, in the banking system, the affection to the eco system will be little to nothing so this section would not be mentioned in the impact of the macro environment to the business system of TPBank.

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Task 2: A. Value chain analysis 1. Support activity a) Human resources management: The bank has made an adjustment of the wages and welfare of staff throughout the system to enhance competitiveness, attract and retain staff. It has built and improved the sales incentive mechanism and indirect titles to promote work motivation and increase productivity. They also have a training centre coordinated with other divisions conducting periodic review of the entire training programs, adjusting better content and duration, thus improving the quality of the trainees, and fulfilling business unit work requirements. b) Technology development: In order to affirm the name of TPBank's Digital Bank, in 2017 IT Division deployed and went live a number of large technology projects to meet the Bank's business demand ; actively researching and applying new technologies and functions to help increase productivity and make a difference in both the operation and the Bank's products ; actively researching and applying new technologies and functions to help increase productivity and make a difference in both the operation and the products of the Bank ; enhancing information security and security ; investing in upgrading security systems ; maintaining stable, secure, cost-effective operation of the system ; and improving customer service quality. 2. Primary activity a) Operations: Their mission is to offer most effective banking & finance solutions to our customers, especially the young and active segment. TPBank has always been a pioneer in setting trends in modern banking services with the goal of becoming Vietnam's leading digital bank. b) Marketing and sales: TPBank introduce a new eBank variant on a regular basis annually, providing more 12

helpful and comfortable customer characteristics. TPBank eBank has attracted a substantial number of clients over the past few years with pleasant criteria velocity, safety. This implementation currently has approximately 500,000 clients with an average amount of operations of more than 30 million transactions per year. In which, in 2017, the number of new subscribers was over 150,000. Not only that, TPBank also regularly introduces to users new products and services such as TPBank QuickPay - an application that allows customers to transfer money to each other or pay goods bills by mobile phone via QR code ; or TPBank Savy application smart savings application on the phone with suggestions on goals and reminds users about serious implementation of the set goals. With client orientation as the mission, TPBank always gives close attention to the quality of service in order to deliver the greatest client experience. Investing and creating the electronic finance technology and service base is the objective this bank focuses on enhancing competitiveness and attracting clients. This is also a bank with a scheme of contemporary transaction centres and services with enthusiastic employees. c) Service: Analyse existing portfolios of customers to identify potential cross-selling customer segments. Construction of a set of products to meet 06 customers’ needs groups: account–transaction, deposits, loans, credit cards, insurance and investment. Deploying new and diversified products to meet changing customer demands (deposits, loansparticularly trust loans, cash-free cards, prepaid cards, etc.) With particular regard to card products, create a list of additional features such as: 3D Secure, Instalments, Digital PIN, Loyalty, etc. New technologies are introduced: Visa Debit Cash Free & Virtual Card Prepaid. Continuing to develop and establishing digital banking products, applying IT to be a leading digital bank in Vietnam (QPay, Savy, etc.) and a pioneering bank that applies

Fintech

to

business.

In order to satisfy the needs of customers closely, Corporate Banking Division issued a series of fundamental, component and innovative products. Intensively adopted customer development and customer care promotion programs and marketing campaigns. TPBank had eBank Biz 3.0 making an announcement in 2017 with many outstanding new features like Online International Money Transfer; Credit Transactions; Guarantee; L / C via eBank.

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F. SWOT analysis 1. Strengths Despite being a young bank and having undergone a strong restructuring under Tien Phong Bank, but after finding new potential investors (currently managing the bank), TPBank has not only improved its business but has also continuously launched new business models with a strong digital banking stamp. With relentless efforts, TPBank is the first bank in Vietnam to receive from Vietnam's leading prestigious banking and financial magazine the most innovative Digital Bank (Internet Banking and Mobile Banking) award Global Review of the Financial Market (GFM). Currently, this bank is applying the service of "5-minute bank, 5-star service" to minimize the waiting time for customers' transactions. TPBank also improved many alternative sales channels so that customers have more choices when dealing with banks, not only guaranteeing safe service and transaction styles but also actively and convenient, fast for customers. Being evaluated as a bank with many distinctive banking goods and facilities, TPBank met the requirements of today's clients through periodic updates, changes as well as presenting goods and facilities to clients, distinctive electronic banking service. Designed according to the international standard multi-point transaction model, with the brand statement "Because we understand you" and the quality of service according to the standard "5 minutes 5 stars" of the bank, the transaction points of TPBank promises to bring customers a safe and reliable financial transaction destination. 8. Weaknesses Started in 2008, in the midst of an economics crisis, TPBank is nearly invisible on the market. They have zero impression on the finance market, tend to take risky investment. The whole system had 34 branches with 700 staffs, standing no chance to compete with other brands. 29/2/2012, TPBank was in serious debt, with 1360 billion VND deficit and 6% bad debt. Reengineering is inevitable. Until now, although reengineered, TPBank still have to face numerous problems such as they have a very broad competitive set, and have to work in fear that another worthy competitor will join the market anytime. If another better digital bank appears, TPBank will have to deal with the risk of bankrupt, put them in the former condition.

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Despite all the technologies, they are still having a hard time advertising their product online and have limited social media reach. Although the service and products are exquisite but to earn the people’s trust is another problem 9. Opportunities: TPBank has multiple noticeable opportunities opening in the next few years. Based on the report from 2018, we can say TPBank has risen dramatically in profit. By the end of 2018, TPBank has reached 2.258 billion VND in profit, doubled compared to 2017 and overcome the goal for 2018. This is due to the fact that TPBank’s scale is getting bigger than ever with more services and more branches opening everywhere in Vietnam (tpb.com, 2019). With the entrance of new promotions regularly, the service fees also add up to the profit. Therefore, there will be plenty of budget for TPBank to expand their business which will open more opportunities for them in the next few years. On the other hand, TPBank also holding advancement in technology which help them saving a lot of labor cost, and could reach more customers. 10. Threats: Being well-known about their specialize in technology, TPBank has changed the way of banking and running businesses around Vietnam. Although it might sound revolutionary, there are still threats of being the pioneer. Firstly, when TPBank first change their way of banking by making it easier and much more convenient then other banking systems in Vietnam, respectively. However, TPBank have to face the change in business models and business culture. Being in the banking industry, TPBank has to get involved in other business and it would take time for them to change and upgrade their system to match how TPBank is working. Another reason is that to be able to work with a high-tech bank requires good human resource that can handle advance machinery and technology/ (Nguyen Hung, 2017). 11. SWOT table: Strengths  The first most innovative Digital bank.

Weaknesses  Broad competitive set.

 Convenient, fast for customers.

 Fear

15

of

having

a

digital

bank

 Applying the service of "5-minute

competitor.  Limited advertising experience.

bank, 5-star service".  Distinctive electronic banking service.

 Limited social media reach.

Opportunities  Bigger scale and still growing.

 Problem with earning users’ trust. Threats  Other business has to change their

 Higher GDP

business model to work with TPBank.

 People have more chance to interact  Requires highly trained workforce. with higher technologies. 12. SWOT interrelationship: At this section, SWOT’s interrelationship will be analysed when one meets another, as the figure displayed:

Figure 6: The interrelationship of SWOT 12.1.

S-O:

TPBank has multiple noticeable opportunities opening in the next few years. Based on the report from 2018, we can say TPBank has risen dramatically in profit. By the end of 2018, TPBank has reached 2.258 billion VND in profit, doubled compared to 2017 and overcome the goal for 2018. This is due to the fact that TPBank’s scale is getting bigger than ever with more services and more branches opening everywhere in Vietnam (tpb.com, 2019). With the fast-growing GDP, (Tradingeconomics.com, 2019) people will use more banking services, therefore create more jobs in banking industry and TPBank will have more opportunities to interact with customers and broaden their services. Lastly, in the 4.0 revolution, people have more chance to interact with high-tech 16

equipment. 12.2.

S-T:

In order to dominate in the digital bank industry, TPBank will have to acknowledge their threats that other banks will eventually adopt the replica technology they have and become hard competitors. Their technology will always have to be upgraded, perfected and protected. Moreover, human resources have to work at their highest capacity to recruit talented applications in order to control the system smoothly. Especially ones with technology skills, since 70% of TPBank relies on their machinery. 12.3.

W-O:

In the new era, the era of technology, people have the tendency to rely on high-tech inventions. And in this case, TPBank has the best technology over the banking sector. This is an opportunity for them to really broaden their scale to the Asia sector and worldwide. Despite the weakness of having envy competitors, TPBank can always choose to cooperate with them, since they need our technology and we need to eliminate competitors on the market.

12.4.

W-T:

TPBank has a broad set of traditional competitors, and will have to face new threats in the future. To ensure that they won’t have any struggle in the near future, the only way is to always keep one step ahead of other companies. The weakness of online advertising must be eliminated soon, and marketing campaigns must be carried out. TPBank should allow their customers to use their products for free in a period of time to show that the new technology is what people really need nowadays, not the traditional bank anymore.

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CONCLUSION Macro environment factors have been analysed alongside with the PESTEL model under TPBank’s circumstances. Given with the SWOT analysis, TPBank’s marketing and business strategy is also been given as to make the most profit. Their strength and opportunities are all involved in technology and the fast pace growing rate of Vietnam’s economy. However, the weakness and threats should also be taken into consideration in order to avoid unnecessary lost in customers and overcome to reach maximum income.

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REFERENCE LIST 1. PESTLE analysis history and application, CIPD. Retrieved 2009-10-21 [Accessed 15 May 2019]. 2. Claessens, M. (2015). The Macro Environment - Six Forces (DESTEP). [online] MarketingInsider. Available at: https://marketing-insider.eu/macro-environment/ [Accessed 14 May 2019]. 3. Hofstede, Geert. "Dimensionalizing Cultures: The Hofstede Model in Context". ScholarWorks@GVSU. [online] Online Readings in Psychology and Culture. Retrieved 6 September 2015 [Accessed 15 May 2019]. 4. Tpb.vn. (2019). Kết thúc năm 2018, lợi nhuận trước thuế TPBank đạt 2.258 tỷ đồng, tăng gần gấp đôi cùng kỳ 2017 và tăng gần gấp 4 lần chỉ sau 3 năm kể từ khi ngân hàng tái cơ cấu thành công và bắt đầu có lãi. TPBank đã làm thế nào để có được thành công như hiện tại và lợi nhuận của ngân hàng chủ yếu đến từ đâu? [online] Available at: https://tpb.vn/tintuc/tin-tpbank/nam-2018-loi-nhuan-tpbank-tang-manh-do-dau [Accessed 15 May 2019]. 5. ĐTCK. (2017). CEO TPBank: Chuẩn bị sẵn sàng trước làn sóng công nghệ mới. [online] Available at: https://tinnhanhchungkhoan.vn/tien-te/ceo-tpbank-chuan-bi-san-sang-truoclan-song-cong-nghe-moi-187708.html [Accessed 15 May 2019] 6. Claessens, M. (2015). SWOT Analysis - Matching Organisation and Environment. [online] Marketing-Insider. Available at: https://marketing-insider.eu/swot-analysis/? fbclid=IwAR12LjJ5TKuZLLLBGsSg7wS_Hfe6SAY0K9rnSeNaNMhChK78vwepSWuMKc [Accessed 15 May 2019]. 7. Tradingeconomics.com. (2019). Vietnam GDP Annual Growth Rate | 2019 | Data | Chart | Calendar | Forecast. [online] Available at: https://tradingeconomics.com/vietnam/gdpgrowth-annual [Accessed 15 May 2019]. 8. Claessens, M. (2019). SWOT Analysis - Matching Organisation and Environment. [online] Marketing-Insider. Available at: https://marketing-insider.eu/swot-analysis/? fbclid=IwAR29vz14nfXoO1U3QF_m7T4uvjLFIPm7CnE1ejjx8-Xo-8baHPXlT-lh7Ng [Accessed 15 May 2019].

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A.INDIVIDUAL CONTRIBUTION FORM Module: Business and the Business Environment (BBE) Assignment title: BBE_A2_S2_18-19 Student name: Nguyen Trung Kien Group member’s name

Group member’s part of contribution

Semester 2, 2018/19 Group number: 09 Student ID: 10180250

Are you satisfied with his/her work and attitude? (Why?)

Contribution evaluation (scale 0 to 100)

Nguyen Trung Kien

100

Vu Nguyen Long

100

Ha Quang Thinh

100

(1) What part(s) of group assignment you have contributed? (2) Did you face any difficulty when doing group work? (3) How did you solve that problem? (4) What your future plan to deal with group work?

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