My Preliminary Thought on the setting up of Vietnam JV Presentation to the Management of ABC Sdn. Bhd. 20 May 2012
Jun 20, 2015
My Preliminary Thought
on the setting up of Vietnam JV
Presentation to the Management of
ABC Sdn. Bhd. 20 May 2012
Proposed Entry Planning Approach
Product Assessment Sourcing strategy
Develop or
Outsource
recommendation • Assessment of Strategic
importance
• Assessment of Company
capabilities
• Investment requirements
• Make vs. Outsource
functional role
• Medium term and long
term strategies
Suitable Site
Identification • Industry clusters
• Supplier clusters
• Government incentives
Entry Strategy
Entry Strategy • Summary Business
case
• Sourcing strategy
Distribution channels • Analyse prevalent network and
channel structures
• Recommend channel structure
• Evaluate requirement of own
structure v/s alliance options
Distribution
strategy
To-be-cost
modeling
Diagnostic (4 - 6 weeks)
Service Assessment
Market
Attractiveness • Market size and
growth
• Price bands and
trends
• Margins of existing
players
• Industry outlook
Regulatory
environment • Government policies
• Legal and licensing
requirements
• Subsidies and
incentives
Ability to compete • Industry structure
• Key players and their
product and market mix
• Regulatory environment
• Industry Critical
Success Factors
Service
Suitability • Buyer value
analysis
• Profile competing
service
• Analyse suitability
for local mkt
• Adapt for local mkt
Detailed Evaluation and Planning ( 7 – 12 weeks)
Execution
• Detailed business case
• Implementation plan
• Application for other licenses
Financials • Investment estimates
• Funding options (potential subsidies
and incentives)
• Profitability and Cash flow projections
Marketing • Brand positioning
• Value proposition
• Advertising strategy
g
Service Delivery Strategy
Distribution structure • Network design
• Channel selection
• Infrastructure requirements
Capability Requirements
Support process
& Infrastructure • Office infrastructure
• Payroll, IT, Accounts,
channel management
and Supply Chain
process design
• In-sourcing /
outsourcing
Human
Resources • Organization &
competency model
• Recruitment needs
Selection of
Partners • Selection of Alliance
partners
• Project management
& engineering
• Turnkey contractors
for infrastructure
Implementation
Planning
Service Delivery Strategy
Outsourcing • Service provider
identification
• Service provider
qualification and selection
• Job work v/s purchase
recommendation
• Contracting and service
levels
Provision of
Services • Capacity Planning
• Greenfield project v/s
acquisition
recommendation
• Capital cost estimates
Tier I and II
Service
Provider • Identification
• Qualification
• Selection
Proposed Entry Planning Approach
Proposed Planning Process
1) 1st Meeting: Agreement on planning process
2) 1st Field Trip to compile information for the following activities:
i. Services Assessment
ii. Sourcing strategy
iii. Distribution strategy
iv. Entry Strategy
3) 2nd Meeting:
i. Report on the findings of the 1st field trips
ii. Perform situation analysis
• Mission
• Opportunities and threats
• Strengths and Weaknesses
• Critical issues for the future
iii. Form team to complete the plan
iv. Summarize situation analysis (between meetings)
Proposed Planning Process
5) 2nd Field Trip to compile information for the following activities:
i. Services Delivery Strategy
ii. Capability Requirements
iii. Implementation Planning
6) 3rd Meeting:
i. Report on the findings of the 2nd field trips
ii. Develop scenarios for the future (scenario approach)
• Develop scenarios (sketch of vision of success)
• Note areas of agreement and choices
ii. Summarize scenarios and choices (between meetings)
iii. Gather information to test feasibility of scenarios (between
meetings)
Proposed Planning Process
7) 4th Meeting:
i. Evaluate scenarios (e.g fit with missions, fit with needs)
ii. Evaluate financial feasibility
iii. Select the best scenario
iv. Develop first draft of business plan. Include sections on mission,
services, staffing, finances, facilities, and implementation (between
meetings)
8) 5th Meeting:
i. Review first draft of business plan. Note suggested improvements
ii. Revise first draft of business plan (between meetings)
9) 6th Meeting:
i. Review and approve final draft of business plan
ii. Implement plan and review progress every quarter
iii. Update plan every 6 months
Proposed Organisation Chart
Management
Board
CEO
Advisory
Investment
Committee
Public
Relations
Human
Resources
Finance,
Admin,
Legal
Risk
Management
Information
Technology
- Stage 1 - Stage 1 and will be
separated in Stage 2 - Stage 2
Equity
Market &
Derivatives
Stockbroking
Services Research
Wealth
Management
Asset
Management
Legal
Services
Implementation Stages
Stage 1 K
ey F
oc
us A
reas
Creating management
capacity from top to
bottom
Creating profitable
business model
Installing information
systems and processes
Managing risk
Managing and protecting
capital
Creating the Brand
Finance &
Operations
& Admin
Information
Technology
Equity
Market &
Derivatives
Stockbroking
Services
Research Set
Up
Stage 2 K
ey F
oc
us A
reas
Creating additional
service lines
Enhancing the revenue &
cost models
Enhancing operation
efficiency
Improving information
systems and processes
Enhancing return on
capital
Improving the Brand
Admin
Legal
Services
Advisory
Risk
Management
Public
Relations
Set
Up
Asset
Management
Wealth
Management
External Challenges
By the end of 2006, there were 18 fund management companies and 55
securities companies competing based on brand name and reputation, service
quality, value added services, and fees. This is a sign of overcrowded.
The stock market size is small with daily trading volume of only approx. USD100 million and average brokerage fee is about 0.3%.
In terms of brokerage and transaction market share, 5 biggest companies including SSI, BVSC, VCBS, BSC and ACBS account for 70% of stock brokerage, 80% of bond transaction and 65% of customers’ accounts.
In terms of corporate advisory service, SSI, BVSC, VCBS and BSC overcome other companies in attracting big corporations.
By the end of 2006, the number of trading accounts stood at over 100,000 accounts, of which, 1,700 accounts were foreign investors. The foreign investors hold 25% to 30% of the total number of listed shares, in which there were some international securities investment firms like JP Morgan, Merrill Lynch, Citigroup, BNP-Paribas Singapore, and Credit Suisse Hong Kong.
External Challenges
With the crowded situation in the financial industry, there will a stiff competition among the employers to compete against each other to attract the best talent.
The fee for order entry error correction is expensive (VND500,000 for every correction).
Local investors understanding about financial products and services are limited.
Share prices have become less attractive after the sharp increases in September 2007. Supposed that the EPS growth rate would be 30% in 2007 and 20% in 2008, the PE index would be 23 for the next 12 months. This is a sign of overvaluation.
Strict restriction imposed on share financing and the total lending exposure of each bank is to be kept below 3% of total outstanding loans.
Under the personal income tax bill, a 25% capital gain tax and 5% tax on dividends will be imposed on securities investors.
External Challenges
SSI, the market leader, to provide better services, will invest in a new online trading system from IBM, Cisco, FreeWill and international software giant Oracle, worth US$1.3 million.
Inflation rate increased sharply to 9.3% in October 2007, thus raising the concern among investors that the Government would tighten monetary policies.
70% of all lending activities belong to the four main state-owned commercial banks: BIDV, Vietcombank, Incombank and VBARD. Foreign banks and joint ventures accounted for about 14% of lending activities. Restrictions on raising deposits in VND prevent a level playing field and, accordingly, the market share expansion has been slow.
In 2006, 41 of 64 H5N1 (“bird flu”) deaths reported in Vietnam, 25 of 64 provinces affected in Vietnam.
External Challenges
The market is concentrated and not competitive. SOEs
occupy monopoly positions in key industries like electricity,
aviation and telecommunications with a market share of at
least 80%. Other heavily-regulated industries tend to have
some foreign and private-sector participation but are
dominated by a state-owned oligopoly where several large
firms have a market share of 10-40% each. These
industries include cement, sugar, minerals, banking and
petroleum, in which prices tend to be high and most firms
are neither efficient nor competitive.
Other Challenges
Compiling a detail list of Vietnamese companies with potential to become future
IPO candidates that are currently serving Build-Operate-Transfer (BOT) projects
or foreign companies located in Industrial Zones (IZ), Export Processing Zones
(EPZ) and High Technology Zones (HTZ).
Form alliances with private equity firms from Europe, US and Japan to co-invest in
Pre IPO opportunities in Vietnam.
Form alliances with other stockbroking firms and fund management houses based
in ASEAN countries to attract foreign investors and to strengthen our firm
distribution networks.
Winning advisory mandates from state-owned enterprises (SOEs) with the
potential to become future IPO candidates.
Under the law, the total number of foreign employee is restricted to the lower of
3% of the total number of employees or 50 individuals.
Trade unions are a powerful political and economic force in Vietnam and strikes
are very common.
THANK YOU