describe primary internal and external influences on business

Table content Introduction……………………………………………………………………………… Task 1: Describe primary internal and external influences on business………………… Internal factor…………………………………………………………………………… External factor…………………………………………………………………………….6 Task 2: Global political change………………………………………………………….10 i How political change influences policies and decision-making within Veesano…… 10 ii Evaluation of the effectiveness of organization’s or industry response………………11 iii, Demonstrate some areas for improvement in the response of organization or industry sector…………………………………………………………………………………….13 Conclusion……………………………………………………………………………….13 Reference……………………………………………………………………………… 14 Word account: 3,316 Introduction Veesano established in 2005 and joint stock company soon become one of leading firms in Vietnam specialized in manufacturing and distributing of wooden toys, educational and intelligent toys for children from age to 15 Veesano is the sole distributor of BENHO which popular over the world for wooden toys since 1973 Veesano has network with more than 100 sale points nationwide, mainly in Hanoi and Ho Chi Minh city, Vietnam Company products are perfectly designed from safe and nontoxic wooden materials to help children develop their talent skills such as their imagination, creativity in logical thinking and also team working spirit Task 1: Describe primary internal and external influences on business Internal factor: Mission: to be the most recognized brand for wooden education and intelligent toys for children in Vietnam Vision: to be the most trustful destination for parents and children Objective: to be the number one brand for wooden educational and intelligent toys which serving highest quality and best services for children in Vietnam Strategies: providing safe product, highest quality and services for customer Besides, company focuses on targeted customer and satisfies their need based on individually approach to customers (veesano.com/vietnamese) Veesano culture is building base on outside in inside country Following in steps of advanced foreign business culture become Veesano culture Company product represent the civilized nature and modern but suitable with Vietnamese culture Moreover, employees of the company are able to have knowledge specialized in his or her job and also communication with others, public relation, etc as well Veesano consider human resource the most essential asset determining company success and prosperity Company gathers a professional team who are well-trained and enthusiastic and partnered with a network of energetic associate staffs Company all looking forward to objective ‘creating a dream world for children’ (veesano.com) Company structure model Board of Director Board of Director CEO CEO HR & Administration Financial Dept Marketing Dept Commercial dept Design dept Service dept Production Dept Sale Dept Advisory dept R&D dept QA Dept Distribution Trang Nhi shop Than Dong club This model shows functional structure of Veesano Company The structure helps company to stay flexible and responsive to customers’ demands The ‘HR & Administration department’ is to plan and control employees, recruit and train the sources of the whole system It is responsible for planning and managing administrative support to serve the need of the office operations This section is also able to take responsibility for optimizing the success of Veesano business through the effective management and deployment of its people The ‘Financial department’ is responsible to all the finance of Veesano The main areas covered by the financial department include factors First one is book keeping procedure is responsible to keep record of the purchases and sales made by Veesano business as well as capital spending Second one is to create balance sheet and profit and loss account Financial statements need to be produced at given time intervals, for example at the end of each financial year Balance sheet shows the assets and liabilities of a business at the year end In addition, records of purchases and sales are totaled up to create a profit and loss account Third one is providing management information Managers require ongoing financial information to enable them to make better decisions For example, they will want information about how much it costs to produce a particular toy or service , Luu Van Quang, general director of Hanoi-based toy production firm Veesano, also said his company was enjoying an average yearly growth of 20% in 2009 (Nhip cau dau tu).in Vietnam toy market, 20% of scale are mainly in mid-range and highend toy Forth one is management of wages The wages section of the finance department will be responsible for calculating the wages and salaries of employees and organizing the collection of the income tax and national insurance for Veesano revenue Last one is raising of finance The finance department will also be responsible for the technical detail of how business raises finance e.g through loans, and the repayment of interest on that finance In addition it will supervise the payment of dividends to shareholders (The time 100) The ‘Marketing department’ is responsible to organize and control activities of its department follow company orientation It has to company PR, events and build up relationship with others to promote company image and products The ‘Production department’ is responsible to design, produce product The quality assurance (QA) in this part has responsibility not only to check the quality of the material input and material usage but also after producing as well In this section, the R&D plays an important role of production process It is of special importance in the field of marketing where Veesano keeps an eagle eye on competitors (Chinese toys) and customers in order to keep pace with modern trends and analyze the needs, demands and desires of their customers The ‘Sale department’ of the company has job to manage the sale performance in their territory: approach, negotiate and sign contract or communicate with the customers Customer care is the responsibility of the local sales team They are sellers of Veesano and advisors of customers that help them to choose which toy is the best choice For example, the sale local teams can help customer to pick up the right toy and suitable for their children base on their ages Besides, their parent can be help in solving problem with their kids like how to deal when baby not stop crying, etc and babies’ nutrition Company distributes its products to Trang Nhi shop and Than dong club Customers can send their children to Than Dong club to have them develop skills and talents All the products of Veesano have raw material from natural wood with over 200 kinds of different toys which are designed base on educational need of kid from to Customer should have not worry about product material because Veesano’s material reaches international standard and Vietnam standard such as: ISO 9001:2000; ASTM, EN-71; ST; TCVN 6238:3-1997 ( http://catalog.e-city.vn/index.php? catalog=infor_shop&shop_id=622&sl=EN ) External factor: PESTEL Politic and legal contribute to the stability of operation and development of the company The politic has significant influence on the psychology of investor Being member of WTO (2007) is one potential chance for Vietnam market It will attract more foreign direct investment (FDI) Indeed, Vietnam toy market is potential because most toys of Vietname have 90% from China However, Chinese toy has not been consumed recently for its quality Currently, inland toy is having affection but poor design make product from inland has not show it position of hostess (tinmoi.vn) Due to overexploitation in the past years, Vietnam’s wood resources have become scarce The situation has been worsened with increasing illegal logging combined with land clearing for housing and agriculture This situation has forced government to implement a strict regulation on wood lumbering In 2000, the Vietnamese government issued a policy to limit the exploitation of natural forest, which has reduced the exploitation to only 150,000 cubic meters in 2004 (vietnamnews) This shows us the true situation of limited wooden resources in Vietnam The company will have lack of raw material in long-term to produce the wooden intellectual toys It becomes problem for Veesano that need to be solved by importing wood Environment issues such as earth’s climate is warmer, environment damages like depression of forest, etc affect people health will continue to increase in importance to Veesano’s strategy As we know, most of Veesano product is made from wood and with overexploitation in the past year make environment stay in people care is indispensable Therefore, the company wants to reduce product’s environmental impacts in three main areas: material usage, take back and recycling This brings direct economic benefit to consumer and long-term benefit to environment By taking back and recycling, Veesano can repair to avoid material usage in manufacturing and money spends for input (veesano.com) Social-cultural plays an important role because it determines the goods, service, standards that society values Vietnam has rate of children less than 14 years old take quarter of 86 billion people Recently, Vietnamese is afraid of reputation of Chinese toy because of the cheap and its harmful quality Chinese toy is losing position in Vietnam market Moreover, wooden toy becomes favorable nowadays, Vietnamese tend to make purchase of wooden toy but inland toy has poor kind and it is not satisfied customer need It is chance for investor to concern property in toy industry (tintuc.xalo.com.vn) Technology is an impact that scientific processes used in changing input such as resources, labor, and money to output: product and services With advanced technology, Veesano has products with high quality which are accepted by consumers Labor force is abundant and high lever will increase quality of Veesano’s employee Veesano has employees of 50 to 100 people They are all trained carefully due to company culture The other factor is economic High tax policy of product influences negatively on Veesano’s operation The price of product will increase due to material and product imported High income tax implies that the consumer will spend less money for purchasing Veesano’s product and company’s sales will decrease Most of the employees in Veesano are influenced directly by high tax of government Hence, Veesano has to adjust wage policy to ensure the benefit of the staff PORTER FIVE FORCES • Supplier Power: here we assess how easy it is for suppliers to drive up prices This is driven by the number of each key input (wood), the uniqueness of Veesano wooden intellectual toys, company strength and control over the cost of switching from one to another, and so on It is determined by the supplier volume, concentration, density and the presence of substitute inputs The fewer the supplier choices Veesano has, and the more Veesano needs suppliers’ help, the more powerful of Veesano’s suppliers are • Buyer Power: how easy it is for buyers to drive prices down, especially in satisfaction survey Again, this is driven by the number of buyers, the importance of each individual buyer to Veesano manufacturing, the cost to them of switching from company toys to those of someone else, and so on If Veesano deal with few, powerful buyers, they are often able to dictate terms to company in this forces, price sensitivity may control the power • Competitive Rivalry: what important here is the number and capability of China toys producers This rivalry defends on the market share (5%), fixed costs expectation, Vietnamese brand identity and sometimes the lack of differentiation It suppliers and buyers not get a good deal from Veesano; they will go to some elsewhere (e.g Etic) On the other hand, if no-one else can what company does, then company can often have tremendous strength • Threat of substitution: this is affected by the ability of consumers to find a different way of doing what Veesano does This threat is based on the buyer propensity to substitute, relative price of substitute is viable, and then this weakens company power • Threat of new entry: power is also affected by the ability of people to enter Vietnamese market If it costs little in time or money to enter Vietnam’s toys market and compete effectively, if there are few economies of scales in place, or if we have little protection for company key technologies, then new competitors can quickly enter Vietnam market and weaken Veesano position It means that there will not be only Chinese producers, but also have Thailand, Singapore and Malaysia, etc for competing It company has strong and durable barriers to entry, and then company can preserve a favorable and take fair advantage of it Besides the Five Forces Analysis, I also carry out the competition analysis by the four levels of competition, which includes the product from competition, product category competition, generic competition and budget competition • Product from competitor: narrowest from includes wooden toys of the same wooden toys type which carry the educational characteristic (Etic) • Product class/category competitor: wooden toys with similar features that provides the same basic function • Generic competitor: wooden toys that fulfill same basic need • Budget competitor: wooden toys that compete for the same discretionary budget dollars According to the four level of competition, it is easy to identify that if Veesano can apply the first two levels of toy from competitor and product category competitor, company can get the benefit in taking advantages to compete with China procedure and other Vietnamese producers that have occurred Additionally, the case supports that there are some company in Vietnam produce the same types of wooden toys like Veesano such as Duc Thanh wooden toys, Gamma join-stock Company, Etic Task 2: Global political change i How political change influences policies and decision-making within Veesano Vietnam is the developing market and has it own potential when joining WTO The market will have various demands and various customer targeted, which help Veesano to have more potential business options Vietnam birth rate will be the factor of opportunities for Veesano to decide the levels of products According to the information of Vietnam News, we have the number below (Index Mundi, 2008) year 2003 2004 2005 2006 2007 2008 Birth rate 19.58 17.07 17.07 16.86 16.63 16.47 rank Percent change Date of information 113 2003 est 128 -12.82% 2004 est 129 0.00% 2005 est 131 -1.23% 2006 est 128 -1.36% 2007 est 130 -0.96% 2008 est In this table, we can see that the rate of birth is decreasing significantly It means that Vietnam’s birth rate continuing its downward trend This could be because of the different incomes of different families However, this rate of 16.67 births/1,000 population (2008 est.) is still at the high rate Education is one of the main cases that give company opportunity for intellectual toys Each family will have more children, so higher demands of educational toys are preferred and required Therefore, the company can increase the level of production of wooden intellectual toys to satisfy the quantity of Vietnamese demands This leads to the increase of sales revenue and net profit for company Currently, Vietnamese toy market is sourced China Most of them are made of plastic, wood, metal, etc, with very low and uncontrollable standard This makes customer to rethink about the wooden toys that are going to be produced We ought to consider whether the toys apply all the educational criteria and healthy standard or not These are the tendency of Vietnamese market in general and Vietnamese wooden toys’ market in particular However, Veesano toy have various kinds and reach international standard, sources of company just count on some individual, and company products are mostly 10 imported Hence, building up a strong position in Vietnam market is still long way to go when lacking of investment Before Vietnam joined WTO, Company problem was lack of investment Hence company position can not be asserted in Vietnam toy market In addition, being a member of WTO is a chance for Veesano There will be a lot of foreign investment in Vietnam market According to the FDI review in 2005, Vietnam attracted foreign direct investment (FDI) of 5.8 billion USD in 2005, a record high for the past eight years Of the total figure, almost four billion USD comes from 771 newly licensed FDI project and the rest from additional investment injected into existing projects (vietpartners,2005) Besides, Vietnam’s effort to mains its socio-political stability and step up and professionalize investment promotion activates also play a crucial role in increasing the FDI flow Indeed, Managing directors all agree to evaluate the economic grow in Vietnam at first rate and want to invest in this country By catching up Vietnamese tendency and using WTO advantage, Luu Van Quang, CEO of Veesano proposes to corporate with BENHO to open up an exported manufacturing for wooden toy in Vietnam Besides, Company also opens its network to Quang Ninh, Ha Tay, Vinh Phuc, Hochiminh city (veesano.com.news) ii Evaluation of the effectiveness of organization’s or industry response Veesano manufacturer intellectual toys company has to face the threats of limited resources, competitors and in Vietnam Due to overexploitation in the past years, Vietnam’s wood resources have become scarce The situation has been worsened with increasing illegal logging combined with land clearing for housing and agriculture This situation has forced the government to implement strict regulations on wood lumbering In 2000, the Vietnamese government issued a policy to limit the exploitation of natural forest, which has reduced the exploitation to only 150,000 cubic meters in 2004 This shows us the true situation of limited wooden resources in Vietnam The company will have lack of raw material in long-term to produce the wooden intellectual toys It becomes the problem for the firm 11 that needs to be solved by importing wood Therefore, the cost for material will be higher and lead to Veesano’s product Additionally, the biggest issue that threatens our company is Chinese products of toy They support that there was about 90% toys in Vietnam come from China manufacturer and domestic toys take only about 5% of the market share Vietnamese producers have been trying to put out ‘made-in-Vietnam’ products, but their products prove to be uncompetitive with Chinese ones in terms of price and design China producers easily catch the needs and the demands of Vietnamese children and parents with the toys for cheap price and colorful models However, some kinds of China toys not apply the criteria of safe and health for their children As a result, Vietnamese customers are now ignored Chinese toy because the scandal of harmful quality This can be the good point for Vietnamese producers in some ways but inland toy is cheap with primitive material and unattractive color and poor kinds not meet the need of little customers Following the newly-published United Nations Development Programme, UNDP, Human Development Index provides a snap shot of how the quality of life has improved in Viet Nam It shows that the proportion of school-aged children attending school increased to more than 97 per cent between 2003 and 2004 (Vietnam News, 2005) Vietnam achieved its target of high gross domestic product growth for 2005 as the economy grew 8.4% ''It is a relative high economic growth rate in the years since 1996 when the country scored growth of 9.3 percent,'' Le Manh Hung, general director of the office, said Vietnam's GDP reached 837.86 trillion dong ($53 billion), bringing per capita income to $636 per year (Bnet Business Network, 2008) With the high standard of life, the income of each family will also rise There have lots of people go abroad and bring back for their children expensive toy even it worth of millions dong By using disadvantage of big-competitor, Chinese toy and inland toy and wood problem, just a little expensive but not too expensive toy are not a big deal Moreover, Veesano opens up an exported manufacturing for wooden toy in Vietnam help Company save money of taxation for imported In fact, the new exported manufacture makes company growth rate from 25 percent to 30 percent each year (tin 247.com) In addition, open exported manufacturing and agents all over country are effective strategies 12 iii, Demonstrate some areas for improvement in the response of organization or industry sector The information above explains every aspect Veesano has to face in Vietnam market such as competitors, limited sources and customer buyer tendency In addition, by using disadvantages of competitor, Chinese toy and inland toy, providing customer best quality and product which meet customer demand when Vietnam toy market needed is advantage of Veesano Company It is very politic and clear-sighted of Veesano Moreover, by opening the exported manufacturing and agents over country are the effective strategies to bring company profit and well-known brand name Hence, there has not any area for Veesano need to be improved Conclusion In conclusion, this is the report of Veesano Company which assesses the impact of internal and external factor Then, the report assess how political change influence on company policies It evaluates the effective of company policies and improves areas in organization response Reference: 13 [Internet], assessed April 2010, [Internet], assessed April, 2010, [Internet], assessed April 2010, [Internet], assessed April, 2010, [Internet], assessed April 2010, [Internet], assessed April 2010, Vietnam News, 2005, Vietnam behind 2005 fertility target, [internet], assessed April 2010 Index Mundi, 2008, Vietnam Birth rate, [Internet], assessed April, 2010 [Internet], assessed April 2010, 14 ... imagination, creativity in logical thinking and also team working spirit Task 1: Describe primary internal and external influences on business Internal factor: Mission: to be the most recognized brand... education and intelligent toys for children in Vietnam Vision: to be the most trustful destination for parents and children Objective: to be the number one brand for wooden educational and intelligent... First one is book keeping procedure is responsible to keep record of the purchases and sales made by Veesano business as well as capital spending Second one is to create balance sheet and profit and