CASE STUDY - 1

HO CHI MINH
SECURITIES
CORPORATION:
SEEKING COMPETITIVE ADVANTAGE IN
VIETNAM’S EVOLVING FINANCIAL SECTOR

INDIVIDUAL SUBMISSION

CHRISTO FRANCIS
B2520
MBA B 2019-21
In 2008, what were the major factors that influenced HSC from the macro
and industrial environment? What are its implications for HSC?
MACRO FACTORS
The factors that influenced HSC in the macro environment during the period of 2008, includes
the different economic, political and legal factors which had serious implications.
Economic
The economic factor includes: The VN – index dropped almost 70% which has serious
repercussions on the equity market as whole and HSC. This mostly came due to the global
economic subprime crisis which started in America. So gradually the price of the stock of HSC
reduced in market as it was particularly relating to economic and financial reasons and
company’s core revenue source included trading in equity. The economy also went into a phase
of inflation which had the issues and implication such as –
 Increase in base interest rate and the prime lending rate which made the debt financing
more difficult. Financial services of HSC and other competitors in the market as well
as other industries such as real estate, export manufacturing were affected.
 The buying and selling of securities got affected due to the economic recession. Many
firms which planned to get into the IPO’s dropped their plans. HSC found it difficult to
raise the supporting capital to run the business.
 Due to the issue, the government in order to bring back the economy took decisions to
regulate and empower the financial sectors. The government operated Hanoi Trading
Centre was given more responsibilities to regulate the trade and finance in the country.
Legal
Some legal factors which made implications are the amendments made in the regulating laws
of the trading and securities exchange in the country. The government in order to bring back
the lost pride of the economy did this to ensure transparency in the trading and securities
exchange. 2007-2008 was also the time which saw the peak of privatization in the Vietnam
economy.
Political
The entrance of foreign players in the financial market posed a threat to HSC in the form of
finance, marketing and operations.
INDUSTRY FACTORS
There are some factors which have effects on the industry. Some of the factors which affected
the industry are:
 Being in the financing and capital markets industry, the economic recession had
definitely hit HSC and its competitors. The cash flow and the income statement shows
the decrease from 2007 to 2008. The company being the top in the industry had
difficulties in the time. So we can imagine the loss occurred to the competitors too. The
prices of the companies in the market had gone way down including HSC.
  The firms including HSC under the bad economic condition of the securities trading,
went for the mere substitutes like trading in swaps, futures and options etc. which had
an element of risk management for the companies.
 The rivalry among the competitors were high. Each companies had hired many
employees in 2006-07 due to the bullish growth of stock market in Vietnam. But in
2008 in the crisis, the companies had to lay off the employees in order to reduce the
cost. This affected the credibility of firms.
 These firms then tried to get alliances or merger with foreign players to gain the market
share. This further enhanced the rivalry and the need for competitive advantage for
HSC.

Critically analyse the resources, capabilities, distinct competency, and

dynamic capabilities of HSC. Determine if they help HSC to create a
sustained competitive advantage.
Resources
 HSC has went for the online presence. It has been bringing in investments in providing
strong IT infrastructure. The HR department complimenting with it helps to achieve the
goals and vision of HSC.
 The financial management has also been improved. HSC giving more importance to
long term investments has restructured the financial statements, which gives good
accounting ratios and help in more revenues and capital acquisition.
Capabilities
 The goodwill and reputation of HSC lies to an extent on the experienced board of
directors and the fresh talents which they acquire through their efficient HR strategy.
 The skilled HR personnel from Dragon Capital as well as HIFU has provided the much
needed customer base through the expanded sources of revenue and corporate culture
formation.
 The company following the stipulated code of conduct has helped to manage the
available resources for value creation.
Distinctive Competencies
 The investors there in Vietnam prefer to use mother tongue for their transaction
around. But the foreign players lack such an expertise while HSC has got a whole lot
of directors as well as employees who handle the Vietnamese language easily. This
gathered a lot of customers to HSC.
 Since HIFU being a government based organization, it has helped HSC to create a
market niche for the SOE investor firms. This connection or HIFU being the major
shareholder in HSC helped it to be the sole distributor of Ho Chi Minh City Municipal
Bonds which had less risk when compared to other securities.
 The state of the art set up of the HSC organizational culture was one of its kind to be
introduced in the Vietnam securities and trading industry. The competitors were
lacking such a competency.
  The distinctive HR strategy also provided HSC with less employee turnover when
compared with competitors. HSC was able to retain the experienced personnel who
could have joined other firms if not properly considered.
 HSC was able to be the first firm in the industry to introduce the Repurchase
Agreements. This helped in the risk management for the respective investors or
customers in HSC.
 HSC with its competitive employees and experienced directors in the board were able
to introduce “HSC Daily Market Watch Report” for the institutional investors. This
publishing gave important information relating to trading and other financial
activities.
Dynamic Capabilities
 HSC was able to see the upcoming opportunities in high yield, low risk government
and corporate bonds. HIFU was an integral part in helping HSC to achieve this
capability.
 The strategy to move from short term assets to long term assets was pertaining to avoid
situations like the economic crisis which occurred in 2008. This also helped to attract
more risk averse investors which constitute the major share in the whole investor
segment.
 Diversification of business in R&D, investment banking and brokerage market was also
done in order to achieve a sustainable competitive advantage for the firm.
The HR strategy and the organizational cultural setup has presently given a temporary
competitive advantage. But the competitors are also slowly trying to get in touch with these
capabilities of HSC.
The market niche for SOE investor firms as well as the market watch report has certainly
given HSC a sustainable competitive advantage which could be carry forward in order to
achieve the envisioned market capitalization target as well as be the market leader.

Using the above two analysis, create a SWOT table for HSC. Based on the
SWOT, what are your recommendations for HSC in terms of achieving
future growth?
Strength
 The strong IT infrastructure developed with help of Dragon capital gave HSC a
competitive edge. The future for online transactions were sought from these actions of
HSC.
 The strong HR policy initiated as well as the corporate organizational culture has helped
HSC in maintaining employees, earn revenues and increase the market share.
 The diverse services provided by HSC and initiation of risk management tools like
swaps has attracted customers. Also the R&D work supports the future endeavours.
Weakness
 There may occur some liquidity issue as the company has shifted investments from
short term assets to long term assets. So this is a threat if any black swan event arises
again.
 HSC has only a domestic presence within Vietnam as of now in case. Global
expansion is required in case of sustainability.
 The financial statements as well as ratios shows that the returns on investment for
HSC was not satisfactory. This will create problem among the stakeholders of HSC.
There is an arising of customer dissatisfaction among the prospective customers.
Opportunities
 During the crisis only there was emergence of risk management tools like swaps,
options and futures. So HSC could add a segment to such tools in their portfolio.
 HSC could go more into the niche marketing with the existing shareholders influence.
More SOE’s could be brought in as customers as well as HSC could absorb more
transactions which are unregulated.
 The future in the sector would be for the AI driven technologies. HSC could give more
focus onto that to achieve competitive edge.
Threats
 HSC has very diversified portfolio of services. But no much diversity in case of
customer segmentation. This could lead to underutilization of existing resources.
 The competition in this industry is increasing by the bullish movement in the market.
More foreign players are entering in order to acquire the market share of HSC.
 Political issues happening around the world like the Brexit issue, Trade war between
countries has affected the stock market as well. Vietnam having alliances or business
with such countries would affect the trading activities and VN index.
Some ways that HSC could achieve future growth could be:
1. The future is obviously IT technology powered with AI. HSC certainly has to do
investments in technological R&D in order to sustain in the business.
2. Customers must be properly targeted and positioned. Customized services for each
customer segment would be the key for future growth. Only by understanding what
customer need, the company could increase the market share and market capitalization.
3. Bring in more brand image and differentiation through ethical organizational culture,
Corporate Social Responsibility so that HSC would be in the top of the mind to recall
for prospective customers.