VIETNAM NATIONAL UNIVERSITY, HANOI SCHOOL OF BUSINESS

Nguyen Huu Hung SUMMARIZE THE RESEARCH Title: Differentiation Strategy for Vietinbank Collection services

Major: Business Administration Code: 60 34 05

MASTER OF BUSINESS ADMINISTRATION THESIS Supervisors: Dr.Nguyen Viet Dung

Hanoi 2010

TABLE OF CONTENT Page CHAPTER 1 INTRODUCTION TO THE THESIS 2 1. Thesis title.. 2 2. Rationale of the Research.... 2 3. Problem statement.... 2 4. Objectives of the research....... 3 5. Research question. 3 6. Methodology.. 3 7. Structure of the Research.... 4 8. Scope and limitation.. 4 9. Time to do the Research.. 4 CHAPTER 2 THEORETICAL BACKGROUND 4 CHAPTER 3 ANALYSIS OF VIETINBANK COLLECTION SERVICES. 6 1. Main existing collection services ....... 6 2. Limitation of Vietinbank Collection Services.. 7 3. Analysis External Factors affected Vietinbank Collection Services... 8

3.1 Market Analysis... 8 3.2 P.R.E.S.T analysis... 10

4. SWOT matrix of Vietinbank in collection service field.. CHAPTER 4 RECOMMENDATIONS AND CONCLUSION 12

1. Propose Business Objectives.. 1.1 Mission... 1.2 Objectives.. 1.3 Sales target. 2. Differentiation Strategy for Collection Services. 2.1 Targeting........................................................ 2.2 Differentiation and Positioning.. 3. Improving the 7Ps in collection services.. 4. Action Plan and Implementation...... CONCLUSION..

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CHAPTER 1 INTRODUCTION TO THE THESIS 1. Thesis title Differentiation Strategy for Vietinbank Collection Services 2. Rationale of the Research Today, corporate strategy has played a crucial role in the success of all industries. Financial services sector is not an exception, especially when competition gets tougher and tougher. At the same time, the risk of starting a new market, a new business continues to soar. These conditions complicate a banks task of formulating appropriate and effective corporate strategies, as well as operational decisions. The fact is that the traditional competitive advantages in the banking service industry are not of most importance now. In any business, to be the leader, companies always have to find out a right strategy to implement at the right time. Although this is a very simple sentence, this reflects the difficulty of the choice which strategy to be applied. Almost banks in Vietnam, including foreign banks have built their own corporate development strategies. Vietinbank does not stay aside the population. It is also finding the ways towards economic profit targeted for its shareholders value. Starting from strategic intent Improving the value of life, the bank has chosen some new approaches to develop its domestic and international business. Hence, author finds it interesting to work on this thesis which is aimed at analyzing the differentiation strategy which has been in used at Vietinbank in the collections service field. With the implementation of opening the economy, diversification and multi-nationalization economic relations, Vietnam has had rapid growth of its economy. In the banking field, especially collections service, it is a very potential market for both local and foreign banks when operates in a country with a population of over 80 millions people. This paper hopes that it could contribute some opinions for those efforts to make Vietinbank completely differentiates from other competitors in customers mind. 3. Problem statement For any company or corporation, business strategy always plays a key role in their existence and development. In the era of integration, it is truly proved because competition becomes tougher. To be successful, besides building good images about the company and its products or

services in the mind of customers, investors, and other groups, many companies now recognize the importance of strategic orientation for differentiation for their products and services. A differentiation strategy is quite a new concept but since it came in to existence, it has become golden key of success, especially in the field of service like banking. In fact, in service sector, as companies and customers have to cope with difficulties of intangible offerings, a differentiation strategy helps to differentiate services and products between providers. However, few companies have been aware of this importance, thus lessen the efficiency of their business. Those are reasons why I choose this topic for my graduation thesis, taking Vietinbank as a case study. Vietinbank, as a states commercial long-established bank, has been seen as strength of being pioneer in launching tailor-made products and services as one of critical levers for differentiation and success in a growing tougher financial market. 4. Objectives of the research The thesis has the following objectives: To sum up general theories and understanding of differentiation strategy To provide a practical case of launching collection services at Vietinbank, then find out limitations and analyze external factors affected to Vietinbank collection services. To propose a differentiation strategy to improve Vietinbank collection services. 5. Research question To achieve the objectives of the thesis, the following question needs to be answered: 1. How has Vietinbank executed collection services? 2. What are limitations and external factors that affected to Vietinbank collection services? 3. How does Vietinbank should do to gain the success in differentiation collection services? 6. Methodology The Research will cover fact, concepts, techniques includes analytical, critical, questionnaire and others. The Research uses general, analytical, comparative and statistical methods with using figures, tables and factual data for support. A great deal of secondary information is gathered and analyzed from different sources: the Internet, newspapers,

books, companys publications, press release and many other papers. From the collected information and data, the writer assesses and analyses the situation to draw conclusion and find out feasible strategy to improve Vietinbank collection services. 7. Structure of the Research The Research consists of Introduction, Conclusion and three main chapters as follows: Chapter one : Introduction Chapter two : Theoretical background Chapter three : Analysis of Vietinbanks Collection Services Chapter four : Recommend a Differentiation Strategy for Vietinbanks Collection Services. 8. Scope and limitation Business strategy is a very big subject not only because of its nature, but also its scope. Each company has its own business strategy to their success. Thus, I will just only focus on a differentiation strategy in collection services for Vietinbank (not for all banking industry). Also, this research does not mention about cost. 9. Time to do the Research Collecting data: from 2006 to 2009 Writing thesis: from April 2010 to August 2010

CHAPTER 2 THEORETICAL BACKGROUND Based on books, internet sources I have some fundamental concepts as follow: 1. Business Strategy is the direction and scope of an organization over the long-term: which achieves advantage for the organization through its configuration of resources within a challenging environment, to meet the needs of markets and to fulfill stakeholder expectations (Exploring Corporate Strategy, G Johnson, K Scholes 1997). 2. Differentiation strategy means that value is provided to customers through the unique features and characteristics of a companys products rather than by the lowest price. Because differentiated products satisfy customers unique needs or preferences,

companies can charge premium prices for differentiated products. (Source: http://www.openlearningworld.com) 3. Product differentiation is ultimately an expression of the creativity of individuals and groups within the firms. It is limited only by the opportunities that exist, or that can be created, in a particular industry and by the willingness and ability of firms to creatively explore ways to take advantage of those opportunities (Barney & Hesterley 2006, page 153). 4. Services differentiation means to create something that is perceived industry-wide as being unique. Service differentiation may be achieved in various ways through design, technology, features, customer service, and dealer network. Bases of the differentiation may be sorted into three categories. Firstly, to make service differentiation more effectively, a firm may focus directly on pro-service attributes, i.e. service features, service complexity, timing of service introduction, or location. Secondly, a firm may focus on the relationship between itself and its customers, for example through service customization, consumer marketing and service reputation. Finally, the differentiation may be carried out by focusing on the linkage within or between firms, which includes linkage within functions of a firm, linkage with other firms and service support. Ideally, the firm should differentiate itself along several dimensions, for example through ordering ease, delivery, installation, customer training, customer consulting or miscellaneous services, etc (Barney & Hesterley 2006, page 160). 5. Brand differentiation includes package designing and developing the brand identity. An efficient brand strategy can create a successful brand which will differentiate the company with its rivals. Attractive packaging, especially in the food business, is needed to reach the customers and sent the right brand messages to them. Companies have to promote new branding ideas so that it can change the brand image with the market needs which is varying from time to time (Source: http://finance.mapsofworld.com/brand/differentiation.html). Good branding points out how best to position a company. With a general demographic in mind, people can further differentiate their product. The key is zeroing in on what makes their company or service most noticeable or special. Brand differentiation is more difficult when services seem less outwardly different. For example, insurance agencies often offer the same basic types of insurance programs. In such cases,

the brand identity of the business must be more inherent, so these companies might be more successful by playing up the trust, loyalty, or experience angles of their reputations rather than exploiting differences where there are few. 3 Keys to successful brand development: Segmentation, Differentiation & Positioning (Barney & Hesterley 2006, page 169). 6. Collection services are services offered by collection agencies. Collection agencies are companies that track payments on debts acquired by an individual or business. These debt agencies operate as representatives for creditors. They help prevent bankruptcy within a credit company. Their job is to collect debts from the debtor in exchange for a fee or a percentage of the amount owed. A collection agency is a business that pursues payments on debts owed by individuals or businesses. Most collection agencies operate as agents of creditors and collect debts for a fee or percentage of the total amount owed (Source: http://en.wikipedia.org/wiki/Collection_agency).

CHAPTER 3 ANALYSIS OF VIETINBANK COLLECTION SERVICES 1. Main existing collection services that Vietinbank is providing are: Paper-based Collections Processing: Cash processing Local currency check Foreign currency check processing Value-added Collections Services: Post dated check custody/discounting Direct Debit (Credit Card Collections) Cash Pickup and Delivery: For Cash Pickup For Cash Delivery International Collection Services: Letters of Credit (Revocable, Irrevocable, Unconfirmed, Confirmed, Transferable Credit, Assignment of Proceeds, Revolving, Standby);

Documentary Collections (Clean Collection, Documents against Payment, Documents against Acceptance, Documents against Letter of Undertaking, Usance Documents against Payment, Aval Bill of Exchange). 2. Limitation of Vietinbank Collection Services Time processing and quality control are the most worrying concerns Vietinbank is now facing with lack of such specially trained staffs, and technologically advanced facilities to ensure her processing speed and accuracy with the security. The Supervision Process: Complications and Concerns Supervision process is an extremely vital part of a workplace that intends to maximize its success potential. It naturally follows, that poor supervision process in a workplace is among the primary obstacles to achieving potential successes by a bank. After all, employees, no matter their task, must have the proper instruction and training to ensure that they are doing their jobs correctly, and with minimal risk of error. The process of supervision is a complicated one with multiple elements and people involved. Supervisors are faced with a threefold responsibility of protecting the welfare of the client, mentoring supervisees in their professional development, and protecting the interests of the profession and public at large (Storm & Todd, 1997). Unfortunately, Vietinbank has poor supervision process. There is not enough responsibility for taking action for the prevention of problems and mistakes. This removes a very important part of the employee support process, eliminating the opportunity for reference, learning, and safety. Poor supervision process also opens the door for unethical behaviors within Vietinbank. Employees commonly feel that their work is not valued by the company, and loyalty is difficult to form if it forms at all. Without loyalty, employees are more likely to deviate from acceptable business practices. Such activities can include theft, decreased employee effort, using equipment without authorization, and falsifying documents, among other things. In a bank that intends to maximize its performance and profits, a quality supervisory team should be employed and trained to ensure the very finest results from their individual employee groups. These supervisors should have their own support system, and their importance should be

made very clear, to ensure the highest degree of productivity. All of these has been done very modest in Vietinbank. Costly: Waste Management Waste management is a costly problem that pits the limited resources of Vietinbank against her development goals. Inadequate waste management could threaten the possibility of achieving the best national bank. The fact is that many top branches managers were hiring friends or family. But when such a relationship doesn't click, it can be disastrous for Vietinbank. "Bringing a friend or relative into your business is risky," says Wilkins. "If the relationship doesn't work out, terminating it can cause serious problems." Poor Customer Services: Innovation Growth keep slow In technology-based era, banks more rely on innovation to drive their revenues and growth. Yet, rapid innovation in technology-based services often equates to a rise in complexity, which can frustrate consumers who struggle to keep up with the new technology advancements. If not dealt with through a superior customer service, banks could see their revenues and growth jeopardized by customer frustration and dissatisfaction. According to SBV report, consumers returned over VND800 billion in technology-based services in 2009. Of those, Vietinbank remarked with modest VND13 billion in 2009 that account for less than 2% percent of overall banking industry, and would not accelerate purchases until she could drive better value from their existing technology investments. For this reason, Vietinbank did not invest more on technology-based services for long time. The need for a superior customer service is not lost on innovation technology executives because of the trend is improve their in-house customer service department or work with an outsource customer management provider. Improving their customer service environment is a sure way to keep the innovation engine running and customers adopting - and buying - at a rapid pace. Convergys research shows the number one reason a customer contacts a technology-based services is to get technical support; number two is to make a purchase. 3. Analysis External Factors affected Vietinbank Collection Services

3.1 Market Analysis

a. Market growth Vietnam had an average growth in Gross Domestic Product (GDP) of 7.1% per year from 2000 to 2004. The GDP growth was 8.4% in 2005, the second largest growth in Asia, trailing only China's. Government figures of GDP growth in 2006, was 8.17%. In 2007, it continued to rise at 8,44%. Though Vietnam has been impacted by the global economic crisis, its GDP growth in 2008 is 6,23% and is predicted around 5,8% in 2009 by Asian Development Bank. In 7 November 2006, Vietnam became WTOs 150th member, after 11 years of preparation, including 8 years of negotiation. Vietnam's access to WTO has provided an important boost to Vietnam's economy and should help to ensure the continuation of liberalizing reforms and create options for trade expansion.(Source: Ministry of Planning and Investment, 2009). Such good results are really of great attraction to manufactures, exporters and investors etc. in Vietnam. Thus, it is getting more and more integrated into the worlds market. b. Evolution of demand in collection services The banking sector in Vietnam at present has rapid development. With a total population of approximately 87 million people (the 13th largest in the world), there are only an estimated seven million bank accounts in Vietnam, six million of which were opened in just the past two years. This represents a penetration rate of around 8%, which is amongst the lowest rates globally. Furthermore, currently 72.9% of the population live outside of urban areas and do not have access to banking facilities, such as branches or Auto Teller Machine (ATM) network. In recent years, however, Vietnam has been undergoing rapid urbanization with the urban population increasing at a compound annual growth rate of 3.6% between 2000 and 2005. Furthermore, many Vietnamese companies have good understanding of advantages through collection service in business affairs and the number of transactions carried out by collection service in banks has increased rapidly. Thus, base on these overviews of the market, we can see Vietnam is now a very potential market for collection services. c. Market segments Compared to other banking markets around the Asia Pacific region, the level of competition within the Vietnamese banking sector is relatively low. This situation is largely attributable to the dominance of the four large SOCBs which, between them, control 75-80% of total bank sector

assets (2008). While the growth of the joint stock banks since the beginning of the 1990s has been rapid, their growth has been constrained by the segmentation of the market the markets for SOCBs and JSCBs are apparently separated in terms of deposits and borrowers. Another factor contributing to the lack of competition amongst financial institutions has been the difficultly in introducing new products and services because the approval process of new products by the central bank can take anywhere from 3 months to over a year. Constraints placed on the level of access and scope of operations of foreign banks has also impeded the level of financial sector competition. The recent investments made and technical assistance agreements signed by Standard Chartered Bank, ANZ and HSBC in joint-stock banks between 2005 and 2006 should also accelerate the level of competition in the banking sector, although at a comparatively modest pace. One area where reforms designed to improve competition is unlikely to change in the intermediate term is the Vietnamese rural financial sector a key area given that approximately 80% of the population lives in rural areas.

3.2 P.R.E.S.T analysis

a. P.R.E.S.T analysis PREST Analysis on Collection Services in Vietnam Source: Prof.Jean-Paul Lemaires speech, 2009

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b. Competitor analysis
First as a general note, the close analysis of the competitors of Vietinbank is limited to including only the other collection services suppliers in the market, the primary competitors. I will give examples of the five forces in collection services in the figure 3.5 as followings: Competition Forces

Source: Michael Porter, 1987 Potential entrants: New collection service suppliers (foreign banks, foreign bank branches, state owned commercial banks, joint stocked commercial bank) Substitutes: Currently there is no product to replace collection services Suppliers: Vietinbank Buyers: Customers in target area: global corporate, commodity corporate, local corporate, financial institutions. Industry competitors: State Owned Commercial Banks (SOCBs) Joint Stock Commercial Banks (JSCBs) Foreign Commercial Bank Branches The following table shows the services offered by the competitors:

Collection Services offered by main competitors

Banks Paper-based collections processing Value-added collection services Direct Debit (credit card collection) Cash pick up and delivery services

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ANZ Vietnam Limited HSBC Vietnam Limited Standard Chartered Limited Citibank Hanoi Branch

Yes Yes

Yes Yes

Yes Yes

Yes Yes

Yes Yes

Yes Yes

Yes No

Yes No

Source: Self-survey 2010 As we can see, all of the competitors offer very similar services. This reflects the high competition of collection services suppliers in Vietnam market. 4. SWOT matrix of Vietinbank in collection service field Strength After those efforts of differentiating & positioning, Vietinbank has created its own brand identity. National customers have been getting used to a red & blue color brand on the logo of Vietinbank. Hereunder, I would like to mention about the footprints of Vietinbank: Utilize Vietinbank 's network of more than 150 branches for local bank transfer, cash deposit, cash pick up, cash withdrawal, cash delivery, direct debit and payroll payment. Utilize correspondent relationships network of 850 banks worldwide for collection services. Corporate value Courageous Responsive International Creative Trustworthy Weakness It has been observed from Vietinbanks client database during the last three years that many foreign companies have rarely succeeded in approaching the bank for collection services. The bank has turned off most of the cases or provided inappropriate quality service. This leads to the result that Vietnamese customers base becomes stagnant, if not say in decline over times. Looking at other peers including joint stock banks in Vietnam, the same situation has not been observed.

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Vietnamese companies take a larger part in their portfolio. Fiercer competition led to the reducing profits from Vietinbank. It lost a lot of new customers as well as traditional customers. The main reason is just because of low quality of service but not high pricing. Opportunity Vietnam is now a member of WTO. That goes together with the compulsory requirement in improving the legal framework and more open in the banking service industry. Moreover, according to the BTA, Viet Nam has to liberalize its financial and banking services for US banks in compliance with the road map agreed by the two parties. Viet Nam must comply with the ASEAN Free Trade Area (AFTA) road map for tariff removal, implement the BTA guidelines for banking services, train banking staff, and apply information technology (IT) and other technologies in banking services. Those changes really bring Vietinbank a big change to do a break through. Vietinbank is a famous and very experienced bank in Vietnam and region. Vietinbank is not only successful in one country but in other countries. Such a huge experience is very helpful for Vietinbank in exploring the unexploited market in Vietnam and world. In order to compete well in Vietnamese banking market, Vietinbank has to get aims to be the right partner for its customers. The bank combines deep local knowledge with regional capability. A complex interdependent business serving global and local clients, Vietinbank focus on 4 segments (wholesale banking): Global corporate (multi-national companies) Commodity corporate (corporate manufacturing such commodities as gas, petroleum, food, beverage etc) FIs (financial institutions) Local corporate (state owned enterprises) Threat Vietnam is a new market with many opportunities as above. So, not only Vietinbank but also many other banks/companies are now starting penetrating on this potential market. Besides, the Vietnamese policy is now becoming more open for foreign partners to open a 100% foreign bank or branch in Vietnam. So, Vietinbank will face more competitors, and even stronger competitor if they may have local unit in Vietnam in near future.

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As an national bank, main rivals of Vietinbank in payment services are other states commercial banks, join stock banks, and foreign banks such as Hong Kong and Shanghai Banking Corporation (HSBC), Australian and New Zealand Bank (ANZ) and Citibank. As trade becomes more and more complicated and developed, traders and manufacturers are getting more demanding. These banks are Vietinbank 's rivals in product diversity and quality to meet the very specific needs of their customers in foreign exchange, service quality, turn around time, cash management, etc. All these banks try to induce as many of corporate customers as possible to use their banking products and facilities. In another aspect, top foreign banks usually give attractive offers to endure talents from its competitors to work with it since these talents can bring with them good customer bases.

CHAPTER 4 RECOMMENDATIONS AND CONCLUSION

1. Propose Business Objectives 1.1 Mission

Along with this local presence, Vietinbank franchise has established itself as a recognized bank in the Collection Services with the mission statement as: To be the leading collection services provider in Vietnam by delivering tailored solutions to our customers through superior service, exclusive kinds of products, teamwork and shared values.

1.2 Objectives
The objectives for half final 2010 and the whole year 2011 are as follows: To offer customers convenient and reliable access to the widest range of collection products, to-date local market information, country-specific global risk management strategies, and customized service quality solutions. To have at least 1000 big corporate customers and 40 financial institutions (investment funds and development organizations) on collection services in 2011. To sustain as many of the current customers as possible. Focus on Quarter 3 and Quarter 4 of the year, which are the peak months for payments.

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Expand the awareness of potential customers from the present to double the number. Improve the internal communication between Vietinbank and other partners banks. Gain 20% of Vietnamese market share of collection service in 2011. To have about 400 current customers to use these products and 300 new customers in Q4 of 2010 and 1500 new customers in the year 2011. To achieve a revenue of 5 millions US dollar per year from collection services.

1.3 Sales target

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2. Differentiation Strategy for Collection Services 2.1 Targeting

The scope of business customers of Vietinbank consists of two main types of core customers: from Development Organizations and others from Corporate. With the former type, as internally regulated by the Group, Vietinbank sets relation with Non-government Organizations (UNDP, UNIDO, Action Aid, GTZ Hanoi, etc.), Foreign Embassies (British Embassy, Spain Embassy, Embassy of Ireland etc.). In corporate banking, the banks customers are multi-national companies (Prudential, Somerset Grand, Total, Shell etc.), Asian network names (Formosa, Pou Yuen etc.), large state-owned enterprises (Vietnam National Coal and Minerals Group-VINACOMIN, Electricity of Vietnam-EVN, Vietnam Airlines, etc.).To penetrate this segment, Vietinbank needs innovation the products to meet this segment's demands. This conclusion is based on the data received from the competitor survey and also data from a quality survey that was implemented by Vietinbank in recent 2009.

2.2 Differentiation and Positioning

When the target segment is identified, it's necessary to think about ways to differentiate Vietinbank services from the competitors. Three-step process is used here to identify the main features which differentiate our services and gain competitive advantage. The first step is to define all the products and service factors that might influence the perception of value of our target customers. The features are listed as following: Differentiation Product differentiation:

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Feature: Vietinbank will offer added features such as: sending the matrix for supporting document for each payment type; updating the weekly/ monthly/ quarterly/ yearly report on each product customers use; Reliability: Before being launched out, all the products have been thoroughly researched, analyzed in order to meet the requirement from both the customer side in terms of benefit, convenience capability and from the banks side in terms of risk and revenue. Customer can enjoy the tailor-made products which suit them most. Services differentiation: Training: Vietinbank do not only sell product but make sure that all customers receive high-quality training class on using the products which is held on a bi-weekly basis and professional support from a unique hot line for customer to contact at anytime, anywhere. Customer will receive the premium support which is controlled by customer relation management system. Customer consulting: Customers will receive regular and useful consultancy from our experts in each specific fields. Vietinbank recognizes that it will only succeed if it offers the highest standards of service to the customers, retaining the loyalty and confidence of existing customers and winning the support of new ones. It has set itself the task of improving all aspects of customers service through our Out-serve program with 6 components: listening to the Voice of Customer, process improvements, metrics and measurements, Feedback & Complaints Management, Retention Management and Service Culture. Vietinbank Out-serve Model

Source: Vietinbank strategy for development 2009

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Personnel differentiation: Competence: All Vietinbank employees are professionals and sustain their knowledge by regular training. Channel differentiation: Coverage: Vietinbank operates on basis of a so-called active customer search. We do not wait for the customers to find us but invite them personally. Image differentiation: Atmosphere: Vietinbank is proud of its high credit rating and professional standing. Its listed on HCMC Stock Exchange and is a leading bank with operations nationwide. Events: As mentioned in the "Feature" part, Vietinbank offers unique events only for our customers. Below is Vietinbank Out-serve Ambition for being differentiate: The Wholesale Bank & Retail Bank Out-serve Ambition The Wholesale Bank & Retail Bank Outserve Ambition
We will achive our Outserve Ambition when: Clients recomment Vietinbank Clients call us first Clients are pround to use Vietinbank Clients ask their other banks to match what we do We always look for better ways to do things We lead the competitive benchmarks for responsiveness, reliability, TAT We identify and migrate best practice around the group Everyone is involved Individual and teams make a difference People magnet with strong staff retention

Share of mind

Quality of Delivery Staff Engagement

Source: Vietinbank Strategy for development, 2009 Second step is to build the customer value hierarchy. The value hierarchy starts from the basic features all customers would expect and continues to the unanticipated features which build additional value.

Customer value hierarchy 17

Levels 1. Basic 2. Expected

Description Using collection services International standard service quality Accurate and timely Usage of product easily and conveniently Reasonable price Good customer service. Clear guidance. 24-hour availability of the service. Continuous support. Campaigns with which the initial fee is reduced. Special offers. Using product via Internet (Vietinbank at Home). Free use of the alliances Call visit from Vietinbank

3. Desired

4. Unanticipated

Source: Self-survey, 2009 Finally, Vietinbank will combine all the advantages of its products/services to introduce to its customers. A professional and well-trained human resource of Vietinbank will define the most common thing of Vietinbank position as the map below: Perceptual map of the Vietinbank service

Source: Self-survey 2009 Positioning

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Currently, the market share of Vietinbank in banking industry is as follows:

In the context of fiercer competition in the banking sector, Vietinbank has developed steadily and continued to be the top of 3 states commercial banks in terms of business scale and profitability. Along with the development of business volume, Vietinbank paid proper attention and control to operation quality. The accounting and management system was notably improved towards international standards and Vietnamese accounting standards.

3. Improving the 7Ps in collection services

Nowadays, the 7Ps model is more and more popular in corporate strategy. These include the following: Product Price Place Promotion People Process Physical evidence

4. Action Plan and Implementation

In carrying out any business strategy, all companies firstly must have an action plan and then implement it. With 6 years working experiences at the Vietinbank and through making research on its business strategy, I suggest a 6-step process: This process will help us: Understand customer requirements better at operations level on an ongoing basis. Proactively identify service gaps and to put in place initiatives for service recovery. Strengthen the relationship at working level.

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Identify cross-sell opportunities for business/revenue. Proactively seek feedback that can be communicated and leveraged. Below are the details of the process:

incremental consolidated,

6 Step Process of implementing differentiation strategy Period 1: Planning & Preparation Target customers

Source: Vietinbank strategy for development, 2009 Period 2: Execution In this period, we need to confirm the client names with and notify the selected clients of the purpose of the differentiation strategy for offering the

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products and services. Where necessary/ appropriate, careful preparation of product brochures/corporate gifts for the interviewees will be useful. Schedule appointments with the clients and prepare a timetable for offering existing and new products or services in the differentiation strategy; plan carefully to avoid clashes with external schedules. After that, we will decide on the approach (who covers what) to be taken during the meetings Recommended attendees are as follows: 1. Head, Ops (recommended leader) 2. Relevant Product Partners (e.g. Cash, Trade, Global Market, Transaction Banking) 3. Head, Customer Service Group 4. Local Product Management 5. Transaction Sales 6. Wholesales Bank Out-serve Champion (recommended facilitator) 7. Any other key stakeholders Period 3: Post-review analysis Immediately after the interview, we will send out thank you notes to clients and resolve quick wins based on the customers feedback about our products or services. We should also complete a call report within 24 hours of the interview, just like after any other client meeting, outlining the discussion and the action points agreed and making research on the clients answers to have appropriate changes. After the changes, the revenue/ transaction volumes with the client will be tracked. Period 4: Building Action There are two levels of action planning: Immediately following a client service review to address any client specific issues (these are the quick wins mentioned above) and offering the new products as per customers need. Sales personnel need to do extra effort visit customers and getting contracts by different ways of delighting customer such as: offering free training; waive 1st monthly fee, etc. so that they are positively surprised and new customers can feel the atmosphere. Monthly through a workshop to address any common themes and competitive weaknesses. Before convening the action planning workshop, we need to prepare an action plan template.

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The workshop should be organized as a round-table forum but it is advisable to appoint a leader and make all attendees aware of the objectives and desired outcomes of the session. The workshop should be based on the full findings report and the material obtained from the discussion used to complete the action plan template. To ensure the right quality of outputs is obtained from the action planning workshop, the plans should be SMART: Specific - do we have clear steps to achieving the goal? Measurable - what is the primary metric that we are trying to improve? Achievable - do we have the resources required for the change? Realistic - is the scope to broad? Time bound - do we have interim milestones? After the plans are decided, test their robustness using the questions below. What are we trying to improve? Do we have a clear and measurable goal? Do we have a baseline measure? If not, how will we know we have succeeded? What is the action? When will it happen? Do we have clear timelines and milestones to track progress? Who will be responsible? What are the resources required, including cost? How will the clients feel the difference? Period 5: Implementing Action The offer to each customer and the proposed agreed actions need to be communicated internally to the locations around Vietinbank. Then, actions that require changes to global processes, products or channels need to be passed to Global Product Heads for ownership. After the action plans have been endorsed, a copy of the final offering pack and action plans must be copied to the Relationship Manager. A communication letter should also be sent to the clients to inform them of the product and service improvement initiatives undertaken as a result of their feedback. Period 6: Monitoring Action

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The quarterly action plan review call with regional Relationship Managers and the WB Heads is the primary tool for monitoring of action plans. In addition to the call, big initiatives are also tracked in the process improvement scorecard. The key activities of action plans and implementation are listed as below:

6 periods in implementation action plan for differentiation strategy

Period 1
Identify target clients for product offering Finalize service level agreement (optional) Finalize service report format and content Confirm contact names Notify clients about purpose of differentiation strategy Schedule appointments and prepare time table for reviews Arrange product brochures/corporate gifts (optional) Decide approach to be taken during the meetings Send a Thank you note to customers Prepare and circulate call report Resolve / act on customers feedback Track the deals Track revenues / volumes after client visits Create quarterly reports using best practice template Report findings Sales Personnel to get the deals Prepare action plan template for planning workshop Carry out action planning workshop every month Create written action plans that are SMART Query the robustness of the plans Present to senior management and Group Product Head Get endorsement for action plans Copy offers and action plans to Relationship Manager Client commitment/communication Tracked on process improvement scorecard Quarterly Voice of Customer action plan review calls with Relationship Managers and WB Heads

Period 2

Period 3

Period 4

Period 5

Period 6

Source: Vietinbank strategy for development, 2009

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CONCLUSION 1. Practical applicability - This research can be applied on Vietinbanks training programs or her actual business practices. - This research is the foundation for further study of Vietinbank in strengthening the efficiency of Collection Services such as: Solution for strengthening Vietinbank quality services. 2. Further research directions There are 2 directions for developing this research as: Firstly: Strengthening the capability of Collection Services Staffs. Secondly: Improving Quality control in Vietinbank Collection Services.

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