V IETNAM N A T IO N A L UN IV E R SIT Y , H A N O I
SCH O O L OF BU SINESS
M
— H s B —
IK A P K K & M tr U l H IJ v o ,
N guyen T hu Thuy
FOR M ULATING BU SINESS ST R A T E G Y F O R A SE C U R IT IE S FIRM
TH E C A SE OF KIM LONG SE C U R IT IES JO INT - STO C K
C O M P A N Y
M ajor: Business A d m ỉnistration
Code: 60 34 05
M A ST ER O F BU SIN E SS A D M IN IST R A T IO N T H E SIS
Supervisors: Dr. Chu Thanh
ĐAI c o u o e G'A r- •
TRUNG '■■■■>M uiỏNG 1IN THU VÉN

_ Â = í ữ h
■0

,
H anoi - 2010
TA BLE O F C O N T E N T S
ACKNONVLEDGEMENTS i
TABLE OF CONTENTS V
LIST OF ABBREVIATIONS viii
LIST OF TABLE X
LIST OF FIGURE X
INTRODUCTION 1
NECESSARY OF T HESIS 1
SCOPE OF W ORK S 3
METHODOLOGY 3

CHAPTER 2: KIM LONG SECURITIES JOINT-STOCK COMPANY. .27
1. In tr o d u c tio n 27
1.1. Securities industry in Vietnam 27
1.1.1. S e c u ritie s 27
1.1.2. S ecu rities C o m p a n ie s 27
1.1.3. S ecu rities m ark et developm ent and the ío u n d a tio n o f securities
com panies 28
1.2. Kim Long Securities Corporation 30
2. External analysis 31
2.1. Macro environment analysis: 31
2.1.1. Social fa c to rs 31
2.1.2. L egal ía c to rs 31
2.1.3. E c o n o m ics fa c to rs 32
2.1.4. P o litic f a c to rs 34
2.1.5. T echno lo g y ía c to rs
35
2.2. I n d u s try a n a ly s is 35
2.2.1. In d ustry e n v iro n m e n t
35
2.2.2. F ive forces m o d e l 39
2.3. Find out opportunities and threats 45
3. Internal analysis 46
3.1. Vision, Mission, motto and objectives of K L S 46
3.2. Value Chain analysis of KLS 47
3.2.1 F in a nce p ersp e c tiv e
47
3.2.2. H u m an reso urce p ers p e c tiv e 55
3.2.3 . PR and M a rk e tin g 56
3.3. Id e n tiíy su s ta in a b le c o m p e titiv e a d v a n ta g e s


Figu re 2-1: V nlndex in 2008 40
Figu re 2-2: T op 10 securities com p anies
in
term o f charter
Capital
41
Figu re 2-3: T he n u m ber o f listed com p anies 46
Figure 2-4: D em o n sừ ation o f K L S share prices in 200 8 56
Figure 2-5: K L S share price íluctuation over the H A S T C In dex 57
Figu re 2-6: W orkforce b y experlise as o f Jan ’2 010 59
ix
LIST OF TABLE
T able 2-1: A n Overvievv o f securities m arket 29
Table 2- 2: Securities indices o f diíĩerent countries in period 2007 - 2008 33
T able 2- 3: S cale o f V ietnam stock m arket 36
T able 2-4: C om pariso n o f broker m arket share in 2008 o f som e com panies 42
Table 2-5: T he num ber o f K L S ’s cu stom ers from the end o f 2008 44
T able 2- 6: R ank ed opportunities and threats 45
T able 2-7: B usiness períòrm an ce results o f the m ost recent three years 48
T able 2-8: K ey fm ancial indicators o f the m ost recent three years 50
T able 2-9: K L S ’s 2008 S taíĩìng 55
T able 2-10: Sum m ary o f ranked strengths and w eaknesses 57
T able 2-11: O verview com paring to com petitors 58
Table 2-12: T able o f sustainable com petitive advan tag es 58
T able 3 -1 : SW O T m atrix 65
T able 3 -2: P roposed com position o f K L S sales tow ards 2015 70
X
INTRODUCTION
NECESSARY OF THESIS
To 2009, V ietnam secu rities has o p erated fo r nine years. D urin g recen t tim e, foreign

the
ưs3.
T he c atastro p h e o f n u m ero u s tak e-o v er, m ergers and o ther b ankru p tcies
th ro u g h ou t the w orld due to m o rtg ag e-related losses w as loom ing. T hese
d ev elo p m en ts cast do u b t on global íinan cial adm inistrators, institutions, researchers
and p o lic y -m a k ers o f w hat h ad b een con sid e red in th e p ast few decades as the
p o sitiv e side o f the nevv íìn ancial m an ag em ent and c o n trol th eories and ap p ro ach es.
T h e situatio n also caused them skep tical a b o u t the g ro w th o f the fínan cial m arkets,
1
the interactio n am o n g d iíĩere n t m ark et seg m ents, and th e in tergration o f reg ional
and glob al eco no m ies and stock m arkets.
T h e year 2008 e n d ed leaving the d evelopm ents o f the global íin ancial crisis in the
stage so-called “the en d o f a start Stock m ark ets w o rlđ w id e w ere all tum bling,
w hich caused h u n d red s o f peo ple to lose th eir jo b s and be destitute.
T h e U n ited States and global íìn ancial crisis also ad v ersely affected the econom y o f
V ietnam , and particularly its sto ck m arket. The V n-In dex su íĩe re d a deep
consecutive íầll o f 6 5 % 4 in its value from th e b eg in n in g o f 2008. A great m any
dom estic and foreign investors backed o u t from the m ark et, and m ad e it a lm ost
illiqu id.
R o u g h statistics by th e end o f 2008 sh o w ed th at m ost o f local securities firm s w ere
in sev ere losses. T h o se b u sin esses form ed in 2006 and 2 007 w ere in stagn ant
o p e rations d u e to the gloom y d o m estic bourse. T h eir key serv ices such as securities
pro p rietary d ealin g , and u nderw riting w ere less p ro fita b le due to the large drop in
the price o f the m ạịority o f listed shares o v er the initial value o f the investing
com pany and b o o k ed valu e o f the listed com p anies.
In th is con text, th e re íò re, the d e v e lo p m en t o f a sustain able and strategic instru m ent
to pro m o te b usin ess operatio ns o f sm all an d m ed iu m , and new ly-establish ed
securitie s com p a n ies is essential.
E fficient busin ess strateg ies con trib u te to stable and su stain able develo pm ent o f a
securitie s co m p any w hile acting as e ffective in stru m ents to stabilize and boost the

am o n g securities com pan ies. The th esis is targ e ted to se curities co m panies, and
p articip atin g o rg an iz atio n s and individuals on the secu rities m arket - a grovving
sector th ai is
Central
interest o f local and íoreig n investors.
T h e th esis p ro v id es K L S w ith a full p icture o f its b u sin ess p erío rm ance in rece n t
y ears, an analysis o f its busin ess strateg ies and pro p o sed m easures tovvards a
d o w n size d ad m inistrative structu re and stream lin ed in v estm ent. A ỉl o f th ese efforts
are steered tow ard s th e ultim ate goal o f m itigated risks, in creased co rporate value
and stre n g th e n e d re sourc es for K L S in the contex t o f o ngoing global adverse
d evelopm ents.
3
B eyond th ese. th e p a p e r can be u sed as a reíe ren c e fo r o th e r studies or researc h
vvork on the a d m in istratio n o f m ark et bu ild ers, an d K L S 'S bu sin ess e ffìcie n c y in the
past period. M o reo v e r, th e study is th e o re tically v alu ab le and giv es insig h t o f th e
new business stra te g ie s and o p e ra tio n al m a n ag em ent m o d alities o f securities
com pan ies, w hich are in g reat d ifference from th e ir tra d itio n al strategic analysis and
ap p ro ach es.
4
CHAPTER 1. THEORY ON FORMULATING BUSINESS STRATEGY
1. Strategy defínition and cIassification
1.1. Definition of strategy
T h e term “ stra teg y ” used in scope o f th is thesis ju st m entions about strategy in
b o u n d ary o f eco nom ics.
A sim ple vvay. strateg y is an action that a fìrm tak es to obtain su p erio r p e río rm a n ce.
It is o bviously that to ach ieving a superio r perío rm ance, the fírm m u st not only
spen d com p letely its reso u rces b u t also it lasts in a long perio d. The w ay th at the
firm plans to get its long -run objectives is called strategy.
F rom the point o f v iew o f M ich ael P o rter5, a strateg y can be deíìned as “the study to
id en tiíy the m o st suitable com p etitive p o sition for an industry, and m ajor scope o f

❖ A
strategy
d e íìn e s the clear scope o f com p etitio n o f an en terprise.
T he essence o f this characteristic is to id e n tiíy clearly the busin ess scope o f an
enterprise. Th is is an im portant step o f an en te rp rise in reílectin g b u siness
env iro n m e n t, po sition in g strategies, allocating reso u rc es and ad m inisterin g its
inv estm en t p o rtío lio . T w o basic q u e stio n s raised are:
W ho w e are in com parison to our com p etito rs? H o w to g et o ur o bjectiv es?
T h is is a relatively com p lex p ro b lem since th e m a rk et segm entatio n has a g reat
im pact on id en tiíic a tio n o f org anizatio n al stru cture o f a com p any.
❖ A strateg y reílects the intersection betw een o p p o rtu n ities and th reats o f a
com p any, and b etw een its strength s an d vveaknesses, from w h ich its
com p e titiv eness is built. In o th er w ord s, it is sh o w h o w the firm c atches its
opportu nities, avoid th reats from extem a l enviro n m ent, take its strengths and
ov erco m e its w eak n esses.
6
T h is feature reveals a key aspect o f strategy - the long -term susta in able c o m p etitive
advan tag e o f a fìrm o v e r its m ajo r c o m petitors in the in vo lving business sector.
Facing w ith com p etitiv eness, the successíìil corp o rate strategist is th e p erso n w ho
can find out exactly íim v s p osition on the m ark et w h ere the ílrm can w ell p erío rm
its ca p ab ilities and defend against o th e r com petitors, b oth existing com p etito rs and
p otential com petitors.
S trategy plays very im p o rtant roles. In the corp o rate level, it pro vides the d irection
to ensu re the firm g oes on the right w ay to achiev e its objectives. L o oking dovvn to
individual b u sin ess o f the firm , strateg y p e río rm s the roles th at are m ore
detail.
It
sho w s how the firm can co m pete to o th e r com p etito rs in th e sam e b u sin ess on the
m arket. A í functio nal activities, su ch as h u m an reso u rces, íĩnan ce, m ark eting, and
Service operation etc strategy

unit o f the fĩrm vvhere it p ro vides a set o f sp e ciíìe d p ro d u ct, it has itse lf custo m er
seg m en t, an d it can dete rm in e its o w n com petito rs.
T h erefore, b usin ess strategy íb cu ses on h o w to c o m p ete in a g iv en business.
1.3.3. Fu n ctio nal sư ategies
F u nctio nal strateg ies are to ols to realize co rp o ra te strateg y an d busin ess strateg y.
P u nctio nal strategies đ eal w ith the a ctivities o f the íu n c tio n a l areas o f a b u sin ess
such as m ark eting, pro d u ctio n , R & D , íĩn ance , personnel, e tc
8
2. Strategy íbrmulation process
2.1. Mỉssion and objectives
2.1.1. M ission
M ission o f an o rg an ization is an o v erall goal o f the organization. W ithout a clear
m ission . an o rg a n ization can m iss lead in g and cannot d evelo p its o b jectiv es and
strateg ies. O rg anizatio n al m ission should d eíĩn e w h ich busin ess it w ill p u rsue, w hat
kind o f Products and Service will be provideđ to the market.
A ll
o f these must be
id en tiíle d v ery clea r in the org an ization al m issio n . A n effective m ission sho uld be
challeng ed to the organ izatio n but also should be ach ievab le.
In w ritin g the m issio n statem en t, it is necessary to take into account noí o nly the
w ish e s o f the o w n er, th e leaders, b ut also the in tem al and e x tem al factors o f the
com pany.
2.1.2. O bjective
A co m pany's ob je ctiv es p resent c lear o rien tations that it p ursues, and inA uences its
b u siness p e rfo rm ance. F o r exam ple, the increase o f 15% in the co m pan y ’s m arket
sh are requires vario u s action s to enh ance its productiv ity. C orporate o b jectives are
also goo d in centiv es. F or instance, to achiev e the revenue o f o ne billion in the next
y ear can b e a c h a llen g e to an enterprise. Finally, a com p any 's objectives are used as
an in stru m ent fo r assessm ent and control. It allovvs the com pany to check w h ether
the plan n e d b u sin ess outco m e is c o n sistent w ith its re q u irem ents like vvhether the

ỉconoinic j
'MÊÌ,
P o litical
Ị
w
Macro
Factors
i ®
L
So cial
ầ
1
Legal
i
if p
r
• E conom ic factors: hav e g reat in ílu e n c es on enterp rises and th e m ost
ữ eq u e n tly m o v ab le factor, the m o st d ifficult factor to fo recast am ong m acro
ones. Its m o v em ent alw ays c o n tain s both o p p ortu nities and c h a lle n g ies for
enterp rises, o f w hich the fo llo w in g m o v in g tre nds are th e m ost p rom in ent:
G D P and G N P trend: directly a ffects the g ro w th rate o f the eco nom y, the
g ro w th o f d isp o sable inco m e o f the po p u lation. It shall m ake changes in
consum ers, needs, consumption market scale, affecting demanđ-suppỉy
balance o f p ro d u cts.
In terest: is a facto r that hav e im p acts on co n su m p tio n sav in g and investm ent
trends; m ak e consu m p tion needs rise up o r slide dow n, stipulate o r lim it
in v e stm e n t in pro d u ction exp ansion.
In ílatio n rate: affects p re d ic tio n p o ssib ilities o f in vestors, high inílation rate
sh all m ak e prediction m o re d ifficult, investm en t m o re risky, brin g in g about
reduced in v estm ent, p ro d u ction and hav in g im pacts o n secto r com petition .

12
The last factor is legal. B u t this is the m o st im portant facto r w hich w ill effe ct on
ever activities o f the organ ization.
L aw s in ílu en ce th e h irin g a n f firing o f em p lo y ees, c om p ensation, w ork in g hours
and w ork in g co n d itio n s. L aw s also in ílu en ce advertisin g ex p enses, the p ricing o f
p ro d u cts and c o rp o rate g row th by m erges and acquisitio n s. G overnm ent tax p olicies
also a ffe ct the íĩnan cial structu re and inve stm en t decision.
2.2 .2. In d u stry analysis
Industry en v iro n m en t closely attach es activities o f an en terprise, factors o f the
operatio n env iro n m e n t shall decide the in v estm e n t environm ent, co m petition
strength and p ro íits in th e sector. A cco rd in g to p ro fessor M ichael P o rter, the contex t
o f the o p eration enviro n m ent is sub ject to in ílu n ences o f five com p etitive forces:
threats o f entry, com p etitive rivalry w ith in the in sd u stry , barg ain in g pow er o f
custo m ers, b arg a in in g pow er o f su p p liers, threats o f substitutes.
Bargaỉning
power of
suppliers
Bargaining
power of
Threats of
substitutes
m B Ê m
Source: S trategic M anag em ent, L .L .B yars
13
Threat of Entry by potential competitors:
Potential co m petito rs are com panies that are cu rrently no t p articipatin g in
com p etitiv e riv alry w ith in b u t are likely to p enetrate into the industry. T h eir
appea rance shall increase co m p etitiv e in ten sity , d ecrease p ro íĩts w ithin the indu stry.
T he p enetration cap acity o f potential e n trants w ill depen d on the extent to w hich
there are b arriers to entry. T h e h ig h er p enetratio n b arriers are, the m ore d ifficult it is

■S
Size o f com p anies in the industry:
C om petitio n is likely to increase w hen com p anies are sim ila r to each o ther in size.
In th is situ ation, th ere is no industry leader and com pa n ies w ill com p ete to
distin guish them selv es from their rivals.
s
D iversity o f com petitors in tensifies com p etition.
In th e industries, if th e com p anies o rig in from differe n t natio n s, cu lture, and g oals,
the com p etitio n vvill be high.
s
Industry g ro w th ’s rate is slow .
In this situatio n , co m p a n ie s m ust w o rk hard to m aintain th eir m arket share.
s
H igh íĩxed costs w ill p re ssure co m p anies to pro d u ce n ear its cap acity. In
tu m , this m ay lead to aggressiv e m ark etin g and price-cu tting.
Bargaining power of buyers
In so m e in d u stries, bu y ers have con siderab le in ílu en c e on produ cers. It m ay h appen
und er the fo llow in g c onđitions:
s
B u yers are few and they buy in large v o lu m e relativ e to the to tal industry
sales.
s
The p ro d u ct represents a m ajor com p o n e n t o f the b u y e r’s cost.
s
T h e p ro d u c t is not d ifferentiated and easily to sub stitu table.
•/
T h e b u y er e a m s low p ro íits and is p ressu re d to reduce costs.
s
T h e b u y er has little sw itch in g costs.
s

industry
b o u n d aries are vag ue. A t this startin g point,
the ru le o f the gam e is u n d eíĩn ed; P roducts are not stan d ard ized; the entry b arrier or
w ith d raw in g from the m ark et is also easy o r very low . T h is stage also im plicits a
h ig h poíential co m petition. In the earlier perio d o f em erging stage, the
com p etitiv e n e ss in tensity is Iow b u t the pro fitability o f ind u stry is high. It id entiíĩes
th at th e m ore the firm ju m ps in the m ark et in th is p h ase, th e m o re b en eíĩt the firm
can e am . A bove all, in this situatio n , the fírm can sustain a stro ng positio n w ith in
the in d u stry. O f co u rse, belong in g vvith th e success, the ía ilu re o r risk y o f new
in d u stries is also v ery high.
16
Figure 1-4: The industrv life cycle
Source: S trategic M anagem ent, L .L .B yars
G ro w th sta g e : T h is m ay be the m ost excitin g phase o f the industry life cycle.
C om pan ies th at surv iv e the em e rg in g phase look forw ard to b uilding th eir bran d
nam e, recognition , acqu irin g m arket share and achievin g p ro íìtability . C o m p anies
achieve these goals as industry sales e xp and, th u s allow in g th em to b e n e íìt from
produ ct d iffere n tia tio n and a g g ressive m ark etin g cam p aign. W ith the tech no lo g y
dom inant, com p a n ies can n ow stan d ard iz e th e ir operations and ach ieve econom ies
o f scale. T he su ccess one in this stage is not alw ays go to the p ioneer. S o m etim es,
late com ers can be succe ssíu l because it n o t on ly can av oid som e challe n g es o f
em erging phase, but it also leam s experiences from the pioneers.
A n im portan t sig nal th a t the industry enters a d iíĩe re n t stage is the em erg e n ce o f a
dom inan t d esig n, w h ic h reílect c u sto m er’s taste s, and p re íe ren c e o f products. T hen
this design will become
the
Standard in
the
industry.
T his

are harder to co m e b y vvhile in tem a tio n a l com petitio n in creases. F acing to th is
situ ation , th e key issu es in d e te rm in in g stra tegy are:
s
Stak ing out a susta in ab le co m p e titiv e ad v a n ta g e th at w ill p ro v ide a basis for
com peting a g ain st o th e r íìrm s;
S
F o cusin g g reater attentio n on costs th ro u g h stra te g ic co st analysis;
s
D eveloping o rg an iz atio n al stru c tu re s and sy stem s th at can facilitate the
transition;
s
C o n íĩg u rin g the p ro d u c t lin e;
s
P ro d u ct and g e o g ra p h ic d iv e rsiíìc a tio n ;
A s result, som e com p an ies m ay exp lo re g ro w th o p p o rtu n itie s in related o r un related
industries th rough m erg e rs an d acq u isitio n . S o m e e v en a tte m pt to rese rv e the
m aturity o f th e industry by in v e stm e n t in cre a tin g an d ado p tin g inno v a tiv e
techno lo g ie s. H o w ever, in m ature ind u strie s, th e re is no m uch ro o m to im p ro v e
tech no lo g y. H o w ever, th ere are also o ccasio n s w h e re an in d u stry m o v e s in to
decline.
Decline phase:
the p ro o fs sh o w th a t an indu stry starts đ e c lin e are:
s
D eclin in g
dem and for Products
S
S h rin k in g p ro fit m arg in s
S
Pru n ing o f p ro d u ct lin es
18