INTRODUCTION

Our company Wells Fargo successfully implemented a project of researching and choosing a
business organization with development potential for strategic investment. In compliance
with the assigned duties, I, as a business analysis of the company, have seriously researched
and found that Joint Stock Commercial Bank for Investment and Development in Vietnam
(BIDV) is suitable for our project. In the previous report, the internal factors of this bank
such as types, purposes, size, scope and organizational structure were highly appreciated by
the managers at Wells Fargo, and that BIDV might be able to make a profitable investment.
However, whether BIDV will truly grow and sustainably in the Vietnam market in the future,
and whether or not Wells Fargo's investment has any risks depends much on the macro and
micro environment in Vietnam. Although the Vietnamese market is excelling at its growth as
well as ability to attract foreign investments, its fluctuations and fierce competition can
negatively affect operations of BIDV. Therefore, I continued to conduct a deeper analysis
into Vietnam in general and this bank in particular and completed the following report. This
report clearly and detailed analysis of the macro and micro environment in Vietnam,
strengths and weaknesses regarding internal factors of BIDV as well as the interrelation
between all of these factors in business decisions of this bank. I also applied the Pestel
analysis, Five Forces model and SWOT model in the report.
I. MACRO ENVIRONMENT

1. POLITICAL FACTORS

The Government of Vietnam always maintains stability now and in the future. The country
has the full name of the Socialist Republic of Vietnam, the internal political system is stable
and conflict-free because Vietnam is a one-party state having democratic orientation. The
Association of Asia-Pacific Nations assesses Vietnam as the country with the most stable
political situation in all fields and a suitable place for political activities. This political
environment facilitates the smooth and efficient operation of BIDV, and the bank can
constantly expand the market, diversify products and services, and compete equally in the
domestic market. In particular, in 2019, Vietnam successfully organized the US-Trieu
summit, a special international political event in Hanoi City. This event not only
demonstrates the sustainability and stability of the political system in Vietnam but also
gives the resources to this country to enhance its reputation in the international market and
attract foreign investment into domestic industrial companies, especially the bank industry.
Besides, Vietnam is a socialist-oriented state and can strongly enter the market economy, so
state-owned enterprises like BIDV play a decisive role in the economy, which allows the
bank to receive support from the Government and the State Bank.

The political regime of Vietnam is favorable for foreign investment. According to the Pestel
analysis of Vietnam (2020), Vietnam aims to be a friend with many countries in the world in
spite of the difference in political regimes. Besides, the country has participated in some
organizations, namely the United Nations, Association of Southeast Asian Nations, Non-
Aligned Movement, and so on. Especially, in 2007, Vietnam officially became a member of
the World Trade Organization (WTO), which exerts a profound influence on Vietnam by
attracting foreign investment (Pestel Vietnam, 2011). Moreover, with this success, the
banking industry in Vietnam stands a chance of the management capacity, the quality of
allocating capital, technology level, the quality of human resources, and improving
competing ability. As a result, BIDV has opportunities to access the international financial
market, easily mobilize capital and improve services and products. On the other hand,
Vietnam's policy of integrating the global market creates difficulties for BIDV to fiercely
compete with foreign banks in mostly banking fields, and risks will also increase when
companies and enterprises that are its customers lose.

Vietnam has offered many available tax incentives to encourage foreign investors to invest
in industries in the country. According to Grant Thornton (2020), tax incentives in Vietnam
include corporate income tax incentives, the exemption of land rental fees, and the import
duty exemption for fixed assets. With these special tax regimes, Vietnam creates favorable
conditions for industries in general and the banking sector in particular to receive foreign
investment. Therefore, banks, especially BIDV, can constantly develop banking products and
services, and at the same time expand business markets.

Concludes: Opportunities: Because of the peace and the stability of Vietnam’s political
system, BIDV has many opportunities to continue to grow sustainably for a long time in the
future. BIDV easily develops its market, customers, products and services in a fair
competing environment. More importantly, there will certainly be an increase in the
number of international investments into BIDV thanks to integration policies and tax
incentives of the Government.

2. ECONOMIC FACTORS:

2.1.GDP
https://www.gso.gov.vn/en/data-and-statistics/2021/01/viet-nam-economy-in-2020-the-
growth-of-a-year-with-full-of-bravery/

Nhan Dan magazine (2020) stated that the growth of Vietnam's economy is steady and
significantly improved, and there has been an expansion in the economy scale. According to
the Government (2020), the GDP growth rate of Vietnam in 2019 is 7.02%, exceeding the
goal set by the National Assembly, while this rate in 2020 sharply decreased and is
estimated 2.91%, the lowest rate during 2011-2020 period. However, because of the
adverse impacts of Covid-19 pandemic, this GBP growth is remarkable, which makes
Vietnam one of the countries with the highest growth rate worldwide (Government, 2020).
Accordingly, in terms of economy scale, Vietnam ranks 4th in South East Asia. Therefore,
the economy of Vietnam has been maintaining outstandingly. This is a favorable condition
for the banking system in Vietnam to continue to develop and expand its market. Thanks to
the GDP maintenance and growth, the quality of Vietnamese's lives is guaranteed, and their
needs for banking services are steadily maintained. Besides, business organizations,
especially small and medium-sized enterprises still operate effectively, which ensures that
BIDV still possess a strong supplier and customer base. Moreover, with great GDP growth in
the context of Covid-19 pandemic, Vietnam created a positive impression to foreign
countries, which is an opportunity for banks to attract more foreign investors.
https://vietrf.com/vi/tang-truong-gdp-nam-2020-cua-viet-nam-chi-dat-48-nhung-van-cao-
nhat-chau-a/

Average CPI growth rate in 2020 (%)

https://translate.google.com/translate?hl=en&sl=vi&tl=en&u=https%3A%2F
%2Fwww.gso.gov.vn%2Fdu-lieu-va-so-lieu-thong-ke%2F2021%2F01%2Fkiem-soat-thanh-
cong-lam-phat-nam-2020-dat-muc-tieu-quoc-hoi-de-ra-duoi-4%2F&prev=search

Inflation rate in Vietnam

https://khoahocdoisong.vn/ty-le-lam-phat-o-viet-nam-xuong-muc-thap-nhat-trong-4-thang-
qua-150842.html

2.2.Inflation rate

The inflation rate in Vietnam has significant fluctuations in the period 2019-2020. This figure
in 2019 is estimated at 2.24%, the lowest in the period. In the first 3 months of 2020, this
rate increases alarmingly with the highest level reaching 6.43%. However, by the end of the
year, inflation was successfully controlled at 2.98%. According to the General statistics office
(2020), the CPI, the average customer price index, in 2020 increased by 3.23% compared to
2019, reaching the target of the National Assembly of less than 4%. Thus, in general,
inflation in Vietnam is successfully controlled, ensuring the quality of life for people,
contributing to promoting the growth of businesses. Especially, with low inflation rate in the
country, BIDV stands a chance of fair competition with competitors in the domestic market
as well as the enhancement of commercial market share.

Concludes: Opportunities: Since GDP was maintained and improved outstandingly during
the Covid-19 pandemic, and the inflation rate was fiercely controlled, the quality of
Vietnamese’s lives is still guaranteed, and the financial situations of business organizations
are stable. This is a big advantage for BIDV to attract new customers who want to use
banking services and maintain a loyal customer base. Besides, the growing economy allows
the bank to expand the market and call for investments.

3. SOCIAL FACTORS

According to the United Nations (2019), the total population of Vietnam is 97 billion,
ranking 14th in the world. Besides, Vietnam has a golden population structure with an
average age of 31 and 69.3% of the population aged 15-64. This can be considered as one of
the most favorable conditions for BIDV to attract and build a potential individual customer
base, thus thriving the retail market. Moreover, according to statistics, by the end of 2019,
the national poverty rate was 3.75%, the average in 4 years decreased by 1.53% / year, and
the per capita income was constantly increasing (Phu Tho, 2020), which proves that the
poverty rate has decreased sharply, and the rich and middle class make up the majority of
the population. This is an advantage for the banking industry in general and BIDV in
particular because when the quality is improved, the need for card services, payment,
accumulation, insurance, production and business loans and so on are constantly increasing.
However, although the poverty rate is low and the income of the population improves, the
average income of Vietnamese workers is only about 242 USD / month, less than 1/7 of the
region and 1/8 of the world (ZingNews, 2019). In addition, the low social class living in rural
areas, especially in remote, economically disadvantaged areas that do not have the
conditions to access and use banking products and services.

Vietnamese always value effective financial management, and they want to use services
that are useful to their financial resources. Moreover, in the period when Vietnam is
experiencing a remarkable rise in economic development and improved human life, the
optimal solutions related to financial checks are of most concern to most people. This
lifestyle allows BIDV to have extensive contact with customers, enhance advertising and
application of financial products and services into the operation process. As a result, the
bank can increase revenue and attract more customers. According to the BIDV Annual
report (2019), the number of individual customers of BIDV in 2019 is about 10.4 million,
which shows the growth potential of BIDV's customer base. Another Vietnamese lifestyle
that facilitates the development of BIDV is that they are always very excited and sensitive to
digital banking services. This is a strong motivation for BIDV to constantly create and offer
services such as SMS Banking, Mobile Banking as well as many other distribution channels
(BIDV, 2019). On the contrary, because Vietnamese have a habit of using cash and do not
have a deep understanding of the banking system, the demand for banking services is still
limited and the banking environment, therefore, has many risks. According to the Financial
and Monetary market Review (2019), although the usage of payment services is
continuously increasing, the rate of cash reduction in payment is still very slow. Moreover,
customers' demand for product quality is becoming stricter, which causes BIDV to increase
investment in high-quality products, apply technology, marketing activities and capture the
world's banking development to meet the needs of its customers.

Concludes:

Opportunities: The large number of the population in which the rich and middle class are
dominant enables BIDV to contact more customers. This is a motivation for the bank to
constantly develop and provide customers with modern and high-quality banking products
and services.

Threats: BIDV has difficulties in having access to individuals living in rural areas or remote
and difficult ones. Most of these people are used to using cash, and they also don’t pay
much attention to banking services because of their low income, so expanding the customer
base on this group of people is still an obstacle for BIDV.

4. TECHNOLOGICAL FACTORS

The technology in Vietnam is growing dramatically (Pestle of Vietnam, n.d). According to

Xuan Anh (2020), the fourth industrial renovation in Vietnam is conducted on both the
production and operation processes of business organizations. The Pestel analysis of
Vietnam (2020) recorded that tech parks located at Da Nang and Saigon have provided a
large number of companies with factories and offices. Especially, the country ranks 8th in
the world for information technology services. According to Samuel (2019), Vietnam is
focusing on major segments, namely fintech, E-commerce, education technology, artificial
intelligence, and software outsourcing. These technological advances are a strong
motivation for BIDV to enhance its business effectively. Based on Vietnam's technology
development foundation, BIDV has successfully applied the technology system to the
business process and has achieved many remarkable achievements. According to BIDV's
Annual report (2019), BIDV provided customers with a wide range of advanced distribution
channels, such as Mobile Banking, Internet Banking, Facebook, Web Chat, and YouTube.
Moreover, many modern products, such as Samsung Pay, QR Pay, modern technology in
robots, and artificial intelligence in the business process were offered by BIDV and its
partners. Thanks to these technological advances, BIDV conducted the process of operating
and managing the business smoothly and comprehensively. Especially, the bank constantly
brings customers great experiences, which satisfies the trust of loyal customers and attracts
more new customers. However, because of the strong and widespread development of
information technology, BIDV faces fierce competition with domestic and international
banks. This requires more investment in this field to keep up with the market trend.

In general, technology transfer is feasible. Fulbright University Vietnam Nguyen Xuan Thanh
claimed, "The use of technologies and support for tech companies allow an economy to
leapfrog and achieve higher growth in a shorter period". In particular, BIDV deployed a lot
of activities in digital transformation and technology development. For example, BIDV has
signed a contract with KEB Hana Bank on the application of the most modern technologies
from its partners (BIDV Annual report, 2019), and BIDV has also built business relationships
with Fintech / Big Tech companies to enhance its customer base (BIDV, 2019). Besides, BIDV
and Ernst & Young Company officially signed a contract to build a BIDV digitalization
strategy for the period of 2019-2025, with a vision to 2030 (BIDV, 2019).

Concludes: Opportunities: The technological advances of Vietnam facilitate the

development of this sector of BIDV. On this basis, the management and operational process
at the bank are implemented effectively and comprehensively. Moreover, banking products
and services with high technology allows BIDV to reinforce the customer base and
competition advantages in the market.
5. ENVIRONMENTAL FACTORS:

In terms of environment, according to Vietnam (2015), climate change and natural disasters
exert extremely adverse effects on Vietnam. Accordingly, two most constant and dangerous
disaster risks Vietnam has suffered from are floods and storms. Recently, these risks have
occurred on a more regular basis, which leads to serious issues to economic development
and people's lives (Vietnam, 2015). In 2020, Vietnamese dealt with a number of frequent
and complex natural disasters, such as 14 storms, 120 floods, droughts and landslides,
causing death, injuries, the damage of houses and agriculture with 39.1 trillion VND of
property damage (Government, 2020). These environmental issues significantly affect the
operation and business efficiency of BIDV. Because of severe consequences of disasters,
BIDV has to follow the Government's policies to customers and citizens . In particular,
BIDV, with other credit organizations, is supposed to stick to circumstances, evaluate
outstanding debt balance, thereby having proper plans for restructuring the repayment
term, exempting or decreasing loan interests, etc. for several customers and enterprises
(Agribank, 2021). As a result, these supports cause BIDV to remarkably reduce its profits,
especially the profit from credit activities (Banking Review, 2020). Moreover, due to the
reduction of financial resources of most customers during disasters, the demand for
banking services decreases, and the bank has to pay more for capital mobilization. 
When Covid-19 epidemic occurred massively in Vietnam, the banking system in general and
BIDV in particular also had difficulties in many aspects, such as daily operational activities,
credit growth, the profit of the bank and bad debt. However, this pandemic also brings
some benefits to BIDV. First, this is an opportunity for the bank to evaluate the efficiency of
business operation and human resources, thereby proposing necessary solutions. Second,
BIDV is motivated to quickly implement the technology transformation and promote digital
services and products. This comes down to the fact that the epidemic prevents customers
and the bank from direct transaction, and the development of mobile banking and internet
banking is proper in this case. Thirdly, the reduction of credit growth enables BIDV to
reduce credit rates in the business, increase service activities and limit potential risks. 
Concludes: Threats: Natural disasters and the Covid-19 pandemic adversely affect BIDV’s
business activities. These dangers lead to the reduction in profits due to the Government’s
preferential policies for customers, the decrease in the demand of customers for banking
services because of low economic ability, which causes the increase in costs for capital
mobilization.
Opportunities: The business interruption caused by the pandemic enables BIDV to set more
effective plans for the staff and operation, strengthen digital transformation in products and
services, and limit possible risks because of lower personal credit activities.

6. LEGAL FACTORS:

Any business organization, financial institution, and business conducting business activities
need the Government's control through legal documents on many aspects, such as
personnel, customers, health and safety, and so on. BIDV, one of the banks in the banking
system in Vietnam, must comply with the following laws:

Decree 88/2019 / ND-CP of the Government on administrative sanctions in the monetary

and banking sector

Decision 1627/2001 / QD-NHNN of the State Bank of Vietnam on regulations on lending by

credit institutions to customers

Decree 117/2018 / ND-CP of the Government on keeping confidential information of credit

institutions' customers

Resolution 02/2001 / NQ-CP of the Government on improving the business environment,

enhancing national competitiveness

These legal documents have a significant impact on the operation and existence of BIDV in
the domestic market. They ensure that BIDV competes in a healthy and fair business
environment, minimizes risks and deficits in the process of operation, ensures the rights of
customers, and fulfills all responsibilities to the Government and State Bank of Vietnam. For
example, according to the Vietnamese inspection agency (2018), based on Decision 1627,
BIDV has been flexible in issuing loan regulations and documents related to credit products.
Accordingly, BIDV has been successful in the bank's risk management capacity for credit
services as well as attracting customers' attention to banking services. Moreover, in
compliance with the provisions of the law on customer information security, BIDV has
implemented its security principles, such as not disclosing customer information if the law
does not allow or without the permission of customers, accessing customer information in
accordance with the law (BIDV, 2018). In addition, thanks to the sanctioning regulations,
BIDV has promptly detected and prevented illegal lending by some individuals within the
bank (Central Internal Affairs Committee, 2020).

Concludes: Opportunities: The legal documents in the banking industry imposed by the
Government and the State Bank of Vietnam direct the business of BIDV. Thanks to this, BIDV
can work in a great competition environment as well as prevent negative behaviors and
potential risks within the bank. Also, the laws force BIDV to complete its duties to
customers and society.

II. MICRO ENVIRONMENT

1. THREATS OF ENTRY
BIDV's market structure is monopolistic competition because in general, the bank
operates in the service sector, and the bank's products and services are still different
from those of competitors. Thus, the threats of the new entrants are pretty medium.
The biggest potential competitors of BIDV are foreign banks. With the accession of
Vietnam to the World Trade Organization in 2007, the foreign direct investment of
international businesses in the financial and banking sector in Vietnam has become
much easier (Financial Magazine, 2020). Specifically, since 2011, banks with 100%
foreign capital are allowed to establish in Vietnam. As a result, there is a significant
increase in the number of foreign banks, world financial groups and various financial
institutions presenting in the Vietnamese market or are planning to enter. For
example, according to the State Bank of Vietnam (2020), as of December 31, 2020,
the bank with 100% foreign capital in Vietnam such as ANZVL, HLBVN, HSBC, CIMB
Vietnam, MTV Woori Vietnam, MTV UOB Vietnam. These banks have advantages in
capital, technology, product quality as well as experience in international markets,
so they easily attract customers' attention (Vietstock, 2016). However, because BIDV
is one of the ten most famous commercial banks in Vietnam (Vietnamnews, 2020),
and this brand has reached new heights in both domestic and international markets
with the maintenance the leading position in total assets, retail banking services and
technological advancement (BIDV Annual report, 2019), the obstacles to entering
the banking industry of new entrants are also quite high. Besides, according to BIDV
Annual report (2019), this bank has 189 branches widely distributed throughout the
country, with the total number of individual customers in 2019 reached about 10.4
million, this created a heavy pressure on new entrants in building a solid business
foundation. More specifically, the fact that KEB Hana Bank became a foreign
strategic investor of BIDV in 2019 is a major obstacle for new entrants because since
this event, BIDV has been supported with sustainable financial capacity and
comprehensive improvement of technology, as well as the global brand
development (BIDV Annual report, 2019). Thus, the potential competition of BIDV is
at a medium level.
Concludes: Threats: Although BIDV has outstanding advantages in the domestic
market, and its brand name is also closer to customers compared to foreign banks,
the development potential of these international organizations is considerable. This
requires BIDV to strongly invest in technology, capital mobilization, products and
services to promote its competition advantage.
 2.THREATS OF INDUSTRY RIVALRY

COMPARISON TABLE OF LENDING SERVICES FOR HOUSING OF BIDV AND

VIETCOMBANK

Criteria Interest rate (%/year) Loan value Loan Loan characteristics

Preferential The repayment
interest rate interest period
One Two
Name rate after
year years
of banks the
incentive
BIDV 8 9 10.5 100% of the 20 years - The lending procedure is
value of the simple and convenient
house sale and - The staff is professional and
purchase enthusiastic
contract - Interests are calculated on
reducing balance
-Payment is implemented by
quarter, month, semi-year, or
year
-Payment of interest is
implemented monthly or
quarterly
Vietcombank 7.7 8.7 Increasi 70% of collateral 15 years -The loan procedure is fast and
(VCB) ng by 3- value convenient
5% - Customers can choose the
form of loan repayment
according to their financial
capacity
- Cash withdrawal and loan
repayment are controlled
 immediately

According to Topbank (2020), the interest rate Vietcombank provides to customers in

housing loans is quite attractive compared to BIDV during the same preferential period,
with a difference of nearly 0.3%. Another strong point of VCB is that customers have many
opportunities to choose forms of loan repayment in the first period based on real income
(VCB, 2019), which helps to reduce financial pressure and create favorable conditions for
customers to use loans efficiently. Moreover, VCB launched 7 preferential interest rate
packages with the longest preferential period of up to 120 months (Topbank, 2020), while
BIDV only provided 2 preferential packages for a period of 12-24 months. Therefore,
customers can maintain the stability of their personal finances and do not worry about
interest rate fluctuations.

According to Topbank (2020), BIDV is one of the banks that provides customers with the
most preferential interest rates in housing loans. Accordingly, compared with VCB, the
interest rate of BIDV is 0.3% higher, but the high value of the loan and the long repayment
period are outstanding advantages of this bank. In addition, BIDV has launched a series of
other incentives for customers to borrow housing loans at the bank. According to BIDV
(2021), BIDV supports individual customers with a short-term loan package with extremely
preferential interest rates: 5% / year for 6-month loans and 5.5% / year for loans from 6-12
months. Thanks to that, a large number of individual customers have approached and
supported this preferential capital, which helps BIDV to win the hearts of customers and,
thus, continues to strengthen its customer base. Furthermore, the BIDV brand name was
honored “The Best Retail Banking” in 2019 (BIDV Annual report, 2019), providing customers
with the best personal credit services, including housing loans. This is the strength and
motivation to promote the potential development of BIDV, which is difficult for VCB to
overcome. Therefore, the level of current competition of BIDV is quite low.

Concludes: Opportunities: The strength of BIDV in preferential policies and incentives

regarding housing loan services helps the bank to attract more customers, promote its
brand equity over VCB’s and other competitors’. In addition, it is possible for BIDV to
develop other personal credit activities, not only housing loan one, and to be dominant in
the market share.

3.THREATS OF SUBSTITUTION

The threats of substitute products for banks in Vietnam in general and BIDV in particular are
the products and services from Fintech, a financial technology company. This company does
not have an operational orientation or an organizational structure like a bank, but it focuses
on the application of high technology in researching the needs and behaviors of customers,
thereby providing customers with the best experience through a variety of financial services
at a much cheaper cost than traditional banks. Substitute products from Fintech span many
areas such as payments, funding, wealth management investment, and so on (ISB, n.d).
According to the State Bank of Vietnam (2020), there is a significant increase in the number
of Fintech companies in Vietnam between 2016 and 2020. Accordingly, the number of
Fintech companies in Vietnam in 2019 is more than 150, most of which are operating in the
payment sector. As a result, traditional banks are facing the threat of substitution from
Fintech companies and can be left behind without modern technology development
strategies.

To solve this problem, BIDV has actively implemented hi-tech development projects to
synchronize the management process, provide a comprehensive experience for customers
and catch up with market trends. Specifically, the bank has launched a digital banking
development strategy for the period 2020-2025 (BIDV Annual report, 2019). To promote
this strategy, the bank also built the first digital banking center in Vietnam (BIDV Annual
report, 2019). Especially, for Fintech companies, the Deputy General Director of BIDV Tran
Phuong affirmed the bank's goodwill in cooperation for mutual development. He also
appreciated Fintech's strengths in providing customers with outstanding benefits in terms
of experience, cost, and safety. In fact, BIDV has successfully connected with and popular
Fintech brands, such as Zalo, Airpay, Viettel, Moca, Webpay, Truemoney, and so on (Anh
Duc, 2018). With these strategies, the threat of substitution to BIDV is low.
Concludes: Opportunities: Indeed, without the proper strategy of cooperation with Fintech
companies, the threats of substitute products and services from these companies would be
a big problem for BIDV. However, in fact, due to connection to Fintech, BIDV has a great
opportunity to apply modern technology and innovative ideas into its financial activities.
Thus, BIDV not only avoids the threat of substitution, but also can provide customers with
lower-cost services and increase the competition strength.

4.THE POWER OF BUYERS

The power of buyers: The power of buyers using banking services and products at BIDV is
high. This stems from the psychological characteristics, tastes as well as financial ability of
these customers. Firstly, BIDV's customers are mostly individual customers, of which 50%
are aged 35 and below (BIDV, 2020). This group of customers often places high demands on
banking services, and they are really sensitive to transaction costs rather than service
quality, so they are not willing to pay higher fees for expensive services even though these
services are of superior quality. Secondly, the banking market in Vietnam has quite a high-
interest rate and a large difference in interest rates compared to many foreign markets
(Financial Magazine, 2019). As a result, customers are not really loyal to the bank's services
and products if there is a fluctuation in the bank's interest rates and fees. Next, when
foreign banks enter Vietnam, Vietnamese customers tend to use international services. In
particular, according to Vietstock (2016), high-income customers give priority to services
and products provided by foreign banks. Accordingly, not only individual customers, but
several FDI enterprises gradually turn to transactions with these organizations. So, even
though BIDV has a pretty solid customer platform, these people are likely to switch from
BIDV to rival banks.

Concludes: Threats: The sensitiveness to banking interest rates of customers as well as their
interest in foreign banks exerts an adverse effect on BIDV ability of maintaining the
customer base, which might cause the bank to lose revenue and shrink the market.
 5.THE POWER OF SUPPLIERS:

III. INTERNAL FACTORS

1.Strengths

1.1.Brand name

According to the evaluation of independent brand strategy and valuation consulting firm
Brand Finance and Mibrand brand consulting company in Vietnam, BIDV's brand strength
index (BSI) leads in 50 the most valuable brands in Vietnam. Accordingly, the bank was
honored as one of the ten most valuable brands in Vietnam for 2 consecutive years (BIDV,
2019). Based on the BSI index, the BIDV brand from 5th place in 2018 to 1st place in 2019 in
Vietnam with an improvement rate of 22%. With remarkable achievements in areas of
expertise such as information technology, retail banking development, capital, and currency
trading, the BIDV brand has reached new heights, affirming its leading position and
sustainability in the domestic banking system. According to the BIDV Annual report (2019),
the prestigious awards and excellent positions of the BIDV brand include Top 400 largest
banks in the world, Top 2000 largest public companies in the world for the fifth consecutive
year, "Best retail bank in Viet Nam "for the fifth consecutive year. Especially, according to
BIDV (2019), Asian Banking and Finance (Singapore) magazine honored BIDV with the
awards "SME Bank of the year" and "Corporate Client Initiative of the year". Another
strength of the BIDV brand is that KEB Hana Bank officially became its foreign strategic
investor (BIDV Annual report, 2019), which laid a sustainable foundation for the bank to
deeply enter the international market. With its strength in the brand name, BIDV has been
expanding its business market nationwide and internationally with 189 domestic branches
and 1 branch in Myanmar. In addition, BIDV owns a sustainable customer base, which urges
the bank to constantly innovate and improve the quality of banking products and services to
meet the diverse needs of customers.

1.2.Human resources
According to the BIDV Annual report (2019), building, improving, and enhancing human
resources on both quantity and quality are considered one of the most crucial targets in
completing business strategies and objectives of the bank. With the comprehensive
recruitment policies, BIDV has attracted and employed a high-quality labor workforce
nationwide. BIDV Annual report (2019) shows that bachelor's degree of the staff is 69.1%,
22.4% is master's degree, while associate degree accounts for 2.4% with 2.1% of high-school
diploma. Thus, the majority of human resources in the bank are professional and well-
trained in their fields, which allows the organization to propose and implement effective
business strategies, providing customers with diverse and high-quality banking services, as
well as bringing brands closer to customers, especially individual customers through retail
banking activities. Another advantage of BIDV's workforce is that employees under 40 years
old make up the majority of the bank (BIDV Annual report, 2019). In other words, BIDV
owns a dynamic, creative and enthusiastic workforce. Therefore, they will contribute
positively to the success and growth potential of the bank in the future. Not only that,
according to the BIDV Annual report (2019), employees at BIDV were provided with
professional training courses at the bank to constantly improve capacity, professional
knowledge, and soft skills, thereby meeting the strict requirements of the working
environment in the banking sector.

1.3.Financial strength

BIDV is one of the leading banks in Vietnam with a sustainable and growing financial
capacity. According to the BIDV Annual report (2019), the total assets of BIDV in 2019
reached 1,489,957 VND billion, increasing by 13.5% compared to 2018. Besides, the charter
capital of the bank in 2019 is 40,220 VND billion, while this figure in 2018 just reached
34,187 VND billion. Hence, although the Covid-19 pandemic caused a global economic crisis
in 2019, BIDV continues to maintain its position as the leading bank in the Vietnamese
banking system in terms of total assets and charter capital. This proves that BIDV has a huge
strength in financial capacity, which promotes the bank's great development potential in
the future. Another event marking the financial sustainability of BIDV is that this bank has
become a strategic partner of KEB Hana Bank, a member of one of the largest financial
groups in Asia (BIDV Annual report, 2019). According to Deputy Governor of the State Bank
of Vietnam Mrs. Nguyen Thi Hong, because KEB Hana Bank invested a huge amount of
financial sources in BIDV, it is optimistic and confident that the economy of Vietnam, the
financial ability of the banking sector including BIDV can develop potentially and stably.

1.4.Technology base

The Board of Directors at BIDV always focuses on applying technological solutions and
facilitating digital banking development (BIDV Annual report, 2019). For example, the Digital
Banking Development Strategy has been implemented for the period 2020-2025 with the
objective of applying technological advances in all operational processes, management
systems, products, and services. A success that makes a major turning point in this strategy
of the bank is that in 2019, the digital banking center was established with an excellent
team of leaders, a young and energetic workforce, and experts in the field of banking
service development (BIDV, 201. As a result, a wide variety of advanced distribution
channels, such as Mobile Banking, Internet Banking, Facebook, Web Chat, and so on were
developed. Besides, BIDV applied robotic technology to operate the check payment. Also,
other novel services, namely ATM withdrawals on mobile phones, artificial intelligence, and
Samsungpay were implemented. The next strength in the technology platform at BIDV is
that the bank has cooperated with Fintech companies possessing applications of technology
into financial services. As a result, BIDV allows customers to interact with a wide range of
payment services, such as Wepay, Airpay, Momo, Viettel, and so on (Anh Duc, 2018). These
technological strengths allow BIDV to constantly improve the efficiency of business
processes, providing customers with new and comprehensive experiences, thereby
enhancing competition advantages in the market.

1.5.Core values

One of the strengths that makes BIDV's outstanding growth and achievements is that the
bank has identified, built, and preserved clear and correct core values. With four core values
including innovations, Customer orientation, Quality and Trustworthiness, and Social
Responsibilities (BIDV, 2020), BIDV has been conducting the business process in the right
direction, fully implementing its customer responsibilities. goods, society, and the state.

In the work environment and culture of BIDV, Innovations and Customer orientation are
always appreciated. According to BIDV (2020), many banking products and services
satisfying various requirements have been provided to customers and markets from
different periods. More importantly, recently, many scientific research development
activities have been carried out in order to renovate the operating process as well as the
creation of modern technology products. Innovative activities aimed at customers to
constantly improve work efficiency in the organization, and improve BIDV's competitiveness
in expanding markets (BIDV, 2020).

Quality and Trustworthiness acts as a bridge between customers and the BIDV brand.
Thanks to this value, BIDV always aims to provide customers with a comprehensive
experience with high-quality banking products, financial services applying modern
technology. Next, the value of Social Responsibilities is a guideline for BIDV to complete
social and community projects. According to the BIDV Annual report (2019), BIDV
successfully implemented priority policies for customers, supporting activities for the poor,
flood victims with a total budget of 300 billion VND. Thus, BIDV has been building and
strengthening customer trust, bringing the brand closer to the community and society.

2.Weaknesses

One weakness of BIDV is that the bank has a functional organizational structure. First,
because the Chief executive has control and operation of the entire business system, it
prevents the department from adapting and being flexible with changing markets and
customers' diverse needs. For example, at the present, the Retail Banking department the
Digital Banking one is developing exponentially (BIDV Annual report, 2019). Through direct
access to a large number of customers, these two departments always have creative
projects and strategies. However, their plans cannot be implemented immediately but they
must be approved by the management board, which can lead to work delays. In addition,
many other departments also need the control and direction of seniors, so heavy pressure
and work burden are inevitable for managers. The most difficult problem regarding the
functional structure of BIDV is that the bank has difficulty in diversification. According to the
BIDV Annual report (2019), BIDV is determined to create a wide variety of banking products
and services, enhance the customer base and develop its domestic and foreign market.
Therefore, this kind of organizational structure does not allow managers to run each
department extensively, even causing senior executives to ignore strategic problems that
may occur in a single market area or certain customer segment. Furthermore, the expansion
of the market and customer base becomes more difficult when departments lack
cooperation because they only pay attention to their professional duties.

III. THE INTERRELATION BETWEEN INTERNAL FACTORS AND EXTERNAL MACRO FACTORS

1.Business decision

The BIDV Annual report (2019) shows that the Board of Directors at BIDV proposed the
Digital Banking Strategy for the period 2020-2025 and the vision to 2030. In particular, to
facilitate the effectiveness of this strategic project, BIDV made an extremely crucial decision
that marked an important turning point in the technology development of the bank: a
digital banking center was built in March 2019 with the objective of accelerating a
comprehensive digitization process on all aspects of the bank (BIDV Annual report, 2019).
This decision is made in relation to the internal factors and the factors of the macro
environment.

2.Business decision results from internal factors

The idea of building a digital banking center results from the strengths of the BIDV brand
name. BIDV is known as one of the four largest banks in Vietnam, and the bank always
maintains a leading position in the development of technology and the application of digital
transformation in business processes (Nguyen, 2019). In addition, BIDV is the No. 1 brand in
Vietnam in terms of brand strength index BSI (BIDV, 2019), and it is also honored with a
huge number of prestigious awards including information technology (BIDV Annual report,
2019). These strengths place an extremely high requirement for the bank to continue to
create breakthrough developments and innovations, which allows BIDV to sustainably
maintain its position in the market. With the establishment of the digital banking center,
BIDV is considered to be a pioneer bank in promoting the application of information
technology into the bank, and this event is a force for BIDV to grow further and be a leading
bank in Vietnam's banking system (Nguyen Kim Anh, 2019). Moreover, because the BIDV
brand has expanded both domestic and international markets, and the number of bank
customers is very large, investment in technology development and digital transformation is
an inevitable requirement. Therefore, the digital banking center is built to simplify
operations and provide modern services to meet the diverse needs of customers.

On the other hand, the establishment of a digital banking center is an optimal solution to
overcome the shortcomings of BIDV's organizational structure. In fact, the functional
structure is preventing managers from effectively grasping and controlling the entire
business operation of divisions and employees, while they are facing daily small issues and
unable to come up with active strategic plans. Moreover, there is no coordination between
departments due to functional specialization, which leads to a difficult problem when BIDV
is in the process of diversifying customer platforms as well as products and services.
However, the digital banking center is defined to promote automatic counter operations
through digital banking channels instead of manual operations (BIDV, 2020). Thus, the
introduction of a digital banking center with a unique automation feature reduces the
pressure and burden of seniors and promotes comprehensive and efficient control of the
operations of the departments. This is well suited for diversification in terms of customers
and products. As a result, BIDV's weaknesses related to the organizational structure have
been effectively overcome.

3.Business decision results from external macro factors

BIDV's business decision to launch a digital banking center actually stems from macro-
environment factors. Among them, the most powerful factor influencing this decision is the
social one. As mentioned in the previous report, the population size in Vietnam is
considered to be large in the world at about 97 million, and the average age is 31 (the
United Nations, 2019). Moreover, the quality of life of Vietnamese people is changing in a
positive direction as the poverty rate has plummeted to 3.75% in 2019 (Phu Tho, 2020), and
the majority of the population today is in the middle and rich class. As a result, customers'
demand for financial products and services as well as personal credit activities is increasing
significantly. More importantly, when banks in the Vietnam market are in fierce
competition, customers have more options, and their requirements are also stricter.
Another disadvantage for BIDV is that customers are always interested in modern, novel,
and high-tech services. This can be explained by the fact that high-income individuals in
Vietnam tend to move to foreign banks that have been and are entering the country
(Vietstock, 2016). This social situation forces BIDV to have stronger development strategies.
Therefore, the digital banking center was built to provide customers with many benefits
such as enhancing customers' experiences, improving operational ability and service quality,
developing convenient products and services, security safety, and reducing costs (BIDV,
2020). As a result, by the end of 2019, BIDV has conducted nearly 140 million transactions
on digital banking services, 1.7% more than in 2018 and 7 times more than 2016; besides,
the number of individual accounts is over 5 million, increasing by 29% of the online
transaction rate from 2015 (BIDV, 2020).

CONCLUSION
In conclusion, this report offers a deeper insight into all internal and external factors that
exert profound influences on the operational processes and business activities of BIDV.
Through useful tools, such as PESTEL analysis, Five forces model and SWOT model, there is
no question that the macro and micro environment in Vietnamese market always directly
and deeply affect BIDV on most aspects, namely brand name, technological advances,
customer base, the quality of products and services, the efficiency and sustainability of the
business, and other competition advantages. More importantly, there is an obvious
interrelation between external factors and strengths as well as weaknesses within the bank
in the orientation for BIDV's important business decisions. Therefore, in order for BIDV to
maintain its leading position in the banking system in Vietnam to officially receive the
financial investment from Wells Fargo, BIDV needs to follow all above factors to set proper
strategies.

REFERENCES LIST

https://www.bidv.com.vn/vn/ca-nhan/san-pham-dich-vu/vay-ca-nhan/vay-nhu-cau-nha-o

https://topbank.vn/tu-van/lai-suat-vay-mua-nha-vietcombank

https://topbank.vn/tu-van/lai-suat-vay-mua-nha-bidv

https://portal.vietcombank.com.vn/Personal/Loan/CVMBDS/Pages/Cho-vay-mua-nha-
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