STRATEGIC MANAGEMENT

Ho CHI MINH SECURITIES CORPORATION (HSC) CASE

STUDY

SUBMITTED TO:
Dr. sushil kumar
Asst. prof.
Course instructor

Submitted by:
Ananthajith Krishnan
B2449- mba a (2019-21)
Rcss
 Case Summary
Ho Chi Minh Securities Corporation (HSC) was established in the year 2003. It was the 11th
securities company to be established in Vietnam. From the very start of its operations, HSC
provided a complete range of securities and investment banking-related services. The State-
Owned Enterprises (SOEs) were underperforming with struggles in the capital front. HSC was
established as a remedy, or in other words, HSC was established to provide help to the
struggling SOEs. SOEs mainly used this to fund development projects in Vietnam.

Founded in April 2003, as a joint-stock company, the largest investors in HSC were Ho Chi
Minh City Urban Development Investment Fund (HIFU). During the initial years, the
affiliation with HIFU helped HSC gain an advantage in the securities market, since this
affiliation made way for stronger client base. But as years passed on, this proved the other way
round. HSC needed more capital to function (finance transactions), and also limited in the
expertise the company could provide, as compared to its foreign counterparts. This led to the
search for suitable investors. In 2006, Dragon Capital, a firm that had about 10% stake in HSC,
increased it to nearly 30%. This made Dragon Capital another significant stakeholder as HIFU
(which had 30% stake).
Like any other companies, there were a lot of external factors and forces that affected HSC’s
functioning. The aftermath of Vietnamese War, Unification of North & South Vietnam into
Socialist Republic of Vietnam, Government regulations and other factors significantly
impacted HSC’s plans. The government introduced and implemented various reforms, which
helped the national economy. Inflation was still a major issue to be tackled. This later led to
the decline in market and economy.
Later in 2008, the outlook of the nation’s economy changed to a positive one. This was enabled
from the rural sector, with large scale & equitable land ownership transforming the nation to a
exporter of food.

To strengthen its place in Vietnamese market, HSC adopted radical measures like bringing in
more share capital, asset-liability management and conservative financial management. It also
diversified its portfolio for investment (revenue streams). They also combined the expertise
and uniqueness of the shareholders.

Case Questions & Answers

Q1) In 2008, what were the major factors that influenced HSC from the macro and industrial
environment? What are its implications for HSC?

A: The major factors that influenced HSC from the external perspective form part of the
PESTEL analysis. PESTEL stands for Political, Economic, Social, Technological,
Environmental and Legal. An analysis of these factors surrounding a company will help us get
a better grip or idea on how it performs.
Political Factors: Government Regulations and De-regulations, Government transitions and
policy changes, Role of NGOs and other groups, Government Budget.

Economic Factors: Foreign Exchange Rate, Level of Household Income and Savings Rate,
Consumer Disposable Income among others.
Social Factors: Attitude towards Authority, Power Structure in Society, Immigration Policies
and Level of Immigration, Attitude towards Health & Safety among others.

Technological Factors: Likelihood of Technology Disruption, Intellectual Property Rights

and Patents Protection, Acceptance of Mobile Payments and Fintech Services, Mobile Phone
& Internet Penetration among other factors.
Environmental Factors: Environmental Standards and Regulations both at National & Local
Levels, Influence and Effectiveness of Environmental Agencies among others.
Legal Factors: Securities Law, Adherence to Common Law, Consumer Protection Laws,
Business Laws to name a few.

Q2) Critically analyse the resources, capabilities, core competency, and dynamic capabilities
of HSC. Determine if they help HSC to create a sustained competitive advantage?

A: We use VRIO framework to arrive at the answer to this question. It mainly focuses on the
competence of the company.

VRIO Framework
Value: Is the resource valuable to the company? As provided in the case, financial resources,
human resource are valuable to HSC.
Rare: The rarity of the resources or idea? As with HSC, it is not very rare or difficult to obtain.
This makes financial resource not so rare.

Costly to Imitate: Is the idea/product costly to imitate? Actually, as provided in the case, it is
not hard to start another Securities company, but it might be costly to imitate the management
of another securities company as it is.
Organization: The major resource- finance- need to be properly organized, diversified. For
this a securities company needs human capital.
 Q3) Using the above two analyses, create a SWOT table for HSC. Based on the SWOT, what
are your recommendations for HSC in terms of achieving future growth?

A: SWOT stands for Strengths, Weaknesses, Opportunities and Threats.

Strengths Weaknesses Opportunities Threats

Diverse portfolio Poor inventory management Increasing Standardization
Increased bargaining
power of buyers
Superior Product and Inability to harness the Changing technology US China Trade
Service Quality implemented technology landscape Relations
High Margins Lack of diversity in workforce Developments in AI Growing
Protectionism
Strong Financial Lack of critical talent Opportunities in
Statements neighbouring markets