COMPANY BACKGROUND
Vietinbank – Asia Insurance Company (IAI) is a venture company, it is newly established when the economy and insurance markets are opened and begun operations in the business environment. If Vietinbank – Asia Insurance Company want to develop for the long term in Vietnam market, the company should have a specific strategies.
ViettinBank was established in 1988 after being separated from the State Bank of Vietnam. This is a large commercial bank, it is important role of the banking sector in Vietnam and it has a network spanning the country with the third transaction, 141 branches and over 700 points per transaction offices.
To identify potential insurance market in Vietnam, the Asian insurance companies, Singapore, has established representative office in Viet Nam with two sets at the main office in Hanoi and HoChiMinh city in 1992. After more than 10 years, they researched the VietNam market, the Asian insuarance company has cooperated with Vietinbank, they established the venture insurance company, with the name in English is Vietinbank - Asia Insurance Company , the name of the transaction is Vietinsco.
In 2009, the Vietinbank - Asia Insurance Company operated as a model company that have 100% capital owned VietinBank and it achieved great development, quality activities. Insurance revenue grew 142%, while the average market growth estimated at 30%, the company has profit, while many insurance companies have operated for long years on the market but they are still loss. Investment activities also bring good results, about 70% profit before pre-tax of the company, the profit after tax growth rate estimated at 6.3 times, that is higher than 2008 .
MACRO-ENVIRONMENT
From the years 2003 to 2010, strategy development insurance market in Vietnamese is reviewed by the government; decree 10/13/2003 about administrative sanctions in the fields of insurance business, the decree about fire insurance is required for some risk careers that are being reviewed through. After adopted, insurance market, especially non-life insurance will have a significant step for development.
In 2008, Vietnam exported about 64.8 billion U.S. dollars. Because consumption of goods on the world markets is narrow, the prices of many commodities are decreased, so the export reached only $ 41.4 U.S billion of the first month in 2009, it is down 14.8% over the same period last year . But the last months in 2009, the situation has improved clearly.
In 2009, foreign direct investment was low due to the global economic crisis. Foreign direct investment reached 21.5 billion U.S. dollars, it is down 70% over the same period in 2008. In 2009, the capital of foreign direct investment was estimated at $ 10 billion, it is down 13% to 2008. In 2009, the economy had grew but it was still lower than the growth rate of 6.18% in 2008, but it has exceeded growth target 5% of the plan. In the situation of world, many economy can not growth but Vietnam's economy achieved positive growth rates that are relatively high. That is succession. Therefore, the development of market insurance is also stable.
In addition, the speed of credit card debt has high increase in commercial bank, it is still growth in Vietinbank. Nowadays, the part of market's credit card debt in VietinBank gets 22% market’s credit card debt on Viet Nam. This is a good opportunity for the distribution channel through the bank's insurance to the company.
The awareness use insurance services as security businesses that are not high in VietNam. While businesses in foreign, the purchasing insurance is one of the important tasks, it always be concerns and ensure when the company is just established. In Vietnam, businesses purchase an insurance when they are forced by bank for loan or law. When they buy insurance, they are not concerned about the conditions of coverage provisions. Therefore, when the compensation occurs , the costs are resolved difficultly.
To speed up in the competition market, the insurance companies must have a strategy and project that are development and application of information technology specifically. Along with reducing the time in the exchange and improve services, the businesses must have information technology systems clearly. The leaderships have to renew their thinking clearly and they have to invest technological basically.
Today, the insurance companies have used information technology in effective way. An advice for insurance companies in the technology must be selected as well as specific plans. The information technology systems are a process throughout all business activities.
One of the risk that non-life insurance companies accept, is risk disaster. According to prediction and influence, the disaster will affect every country in next year .This will cause an impact on non-life insurance companies, reinsurance professionals will tend to tighten the terms related to risks, the level of compensation which is related to the risk will increase
Law in Vietnam are gradually completed about legal framework for operations in the market: the law of insurance business have been implement from 04/01/2001, including investment law and business law ‘s validity effects from the date of 07/01/2006, they are regulated businesses that must purchase the rules of law. These are facilities to develop non- life insurance in the market. According to the release of the Vietnamese American Business Association, Vietnam will fully open the market insurance in 2006. This brings opportunity and challenge for Vietinbank - Asia Insurance Company. They will be equal with other businesses in the country. In the past years and currently, with mechanism of conservator ships businesses in the domestic, businesses non life insurance only covers the certain market segment, it relates to investments overseas. Otherwise, insurance markets will be open with many large businesses; insurance groups from American, So the market competition will be harder.
INDUSTRY ANALYSIS
- Power of customer:
The customers are important for insurance company and customers’ loyalty are very necessary. Vietinbank – Asia Insurance Company 's customers are the persons who borrow loan from the VietinBank, there are customers loyalty of VietBank. Therefore, for these customers, the abilities change service providers that is not high. Vietinbank – Asia Insurance Company has more priority. However, these insurance are often property insurance, the goods of import or export insurance or building insurance, there are not full package products for businesses. But, with another customers, Vietinbank – Asia Insurance Company weakness because of the hard competition of many insurance companies. Non life insurance is standard product, it have no differentiation than competitors. The customers have many information from insurance competitors so, they also compare to choose the best one.
- Power of Suppliers
Providers of non life insurance business mainly cover by reinsurance professionals, they provide the abilities of risk and share that risk with insurance company. In relationship to reinsurance professionals, Vietinbank – Asia Insurance Company is lower condition, because the reinsurance professionals have priority condition and they are active in considering the risk insurance with eligibility provision. When the loss situation occurs highly, the reinsurance professionals will get conditions provisions, Vietinbank – Asia Insurance Company company must follow and apply with their customers.
- Threat of New Entrants
The businesses that are invested overseas markets, have their own goals. They almost serve the businesses that have invested in overseas as VIA and UIC company almosts serves the investors from Japan, Samsung Vina Company serves the businesses from Korea,... Compared with principal businesses have other investments overseas, IAI has large goals in the market, beside that, the object businesses are investment from the countries in the ASEAN area, a object that other businesses Vietnamese have credit relationships with the VietinBank. So, the main competitors of IAI are the insurance companies that are strong at Vietnam country, that are only BaoMinh insurance company, a big competitor.
- Threat of substitute Products
There are too much products insurance that can exceed potential profit of Vietinbank – Asia Insurance Company because the highest cost are controlled. So, Vietinbank – Asia Insurance Company always research and checking back every products insurance that replace potentially
- Rivalry
The competition in the insurance are main by reducing costs, so Vietinbank – Asia Insurance Company will offer a minimum fee, guaranteed not bankrupt enterprises, and ensure customers' interests. In the future, Vietinbank – Asia Insurance Company will set up insurance reserve to guarantee benefits for the customers
IMPORTANCE TO CUSTOMERS IN WINNING ORDERS
The customers bring the profit for the company. Nowadays, there are too many companies for customers to choose in the modern life. So, a company want to be successful, they have to know the customer’s request clearly.
When the customers need to purchase the insurance, the quality is an important factor. If that insurance meets the needs of the customer, it will impress them well. In addition, brand image of the company will get attention from them.
The customers intend to choose the insurance company which have strong financial and reputation in the market than the unknown company. The customers are willing to pay more for the insurance when they feel the differences in quality or value.
Performance of competitor supply chains again
Nowsaday, the competition is harder in the market. The insurance companies always try to develop quality of product, service, price… In the target marke, the strong competitor of Vietinbank – Asia Insurance Company is BảoViệt company .The author will consider the important factors about them.
Base on this table, BaoViet company is really the strong competitor .through that, Vietinbank – Asia Insurance Company need to control the business strategy to improve company’s weakness
Vietinbank – Asia Insurance Company has a strong factor la the price is suitable, availability is clearly better than BaoViet company. Vietinbank – Asia Insurance Company has the advantage from the cooperation with the foreign companies so that the capital is stable and the quality of service is good. In addition, weakness of the company is that its brand doesn’t catch much attention from the customers. The product/service design isn’t diverse to serve customers.
Market Segmentation and Opportunities
Economic recovery, production activities and travel business are expected to bring the demand for insurance companies. According to the growth of insurance market in Vietnam increased about17% in 2010. Insurance companies will make a plan that insurance market will grow 10% in this year.
The companies have many opportunities from overseas, the domestic get the higher investment. Considering the financial investment, the macroeconomic factors are as well as stable conditions for the insurance market. Bond market is expected to be active by increasing interest rates. Stock market is positive sign. The insurance companies, which have with abundant capital, can get the investment opportunities such as the insurance.
EVALUATION OF IDENTIFIED ISSUES AND IMPACT ON BUSINESS STRATEGY
Based on business strategies are adopted, the VietinBank- Asia Insurance Company often make the business plans clearly. They usually evaluate the implementation of business strategy and analysis the goal that they set out. Beside that, the company will control the business strategies to suit the new situation base on them.
Otherwise, there are still many challenges for the insurance sector. Competition is difficult in share market, it is especially hard for the traditional insurance market, including life insurance, accident insurance, property insurance. This problem is really the challenge for the domestic insurance companies when they have to against the insurance companies which have the foreign financial resources.
From the analysis of external environments, there are many chances for VietinBank- Asia Insurance Company such as investment from foreign countries increases as well as in the home country, outstanding loans of the bank is high and stable. Besides, threats from the environment are the labor market shortages, sense of participating in insurance of Vietnamese businesses is not high and market for insurance, that is becoming competitive.
In addition, interest rates get higher, it makes the customers who purchase the insurance, want to cut the contract before maturity, withdraw money from the bank. This problem has happened in the 2006 and 2008. On the other hand, the field of insurance business is heavily dependent on external factors. Therefore, prevention and prediction are quite difficult.
Conclusion
In conclusion, through the analysis of the external environment as mentioned above, the company is in a fairy stable situation. In the future, there will have many difficultly challenge that require VietinBank- Asia Insurance Company need to improve it more. Beside that, the government should have more policies which support, construct and improve the system law in order to attract foreign investments into Vietnamese market. In addition, VietinBank- Asia Insurance Company needs to implement the policies which are stipulated by the government, as well as having recruitments and better training programs
REFERENCE
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Hayes, B.E. (1994), “Measuring Customer Satisfaction – Development and Use of Questionnaires” (5th Ed.)
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Ngan, T. (2010) Kinh te Viet Nam 2010 co nhieu suc bat (The economy of Vietnam in 2010 continues to grow) [online]. Available from: <> [Accessed 26 June 2010].
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Unknown 2009, Tồng cục thống kê ,tình hình kinh tế - xã hội năm 2009 (General Statistical Office of Vietnam - Economic and Social situation in 2009) [Online] Available from < [Accessed 15 June 2010]
Yen, K ( 2010) Thị trường bảo hiểm Việt Nam sẽ tăng trưởng mạnh (Insurance market in Vietnam will be growth) – [online]. Available from < > [Accessed 9 May 2010]
