The positive and negative impacts of external macro factors on ICT

Contents Introduction Major Finding Task1 The factors in the External Marco environment .4 The positive and negative impacts of external macro factors on ICT: 10 Task .13 Strategies .13 Value chain of ICT-ASP 13 The interrelation between external and internal factors .15 Suggestion of Improvement for ICT .17 Conclusion 18 References 19 Introduction After established nearly 19 years, the International Investment and Construction Corporation (ICT) has built the extremely breakthrough in the business’s construction in the industry of Vietnamese transport From the first start with applying the licenses, ICT Company has doing the business relative to raw material supplying for the traffic and construction, especially Asphalt had mentioned Moreover, ICT Company has supplied the liquid asphalt to the business market Since 2013, the stock of ICT Asphalt 01 has been opened as the largest liquid asphalt stockpile in Vietnam The achievements of ICT Asphalt 01 are supplying the materials for many important constructions for instance Ho Chi Minh Road, Ha Van tunnel Inaugurated in 2005, the Asphalt station 03 (based in My Tho and Tien Giang) had become the big liquid asphalt warehouse which supplying to the South market Lastly, the final piece of the whole ICT Company has been built: the ICT Asphalt 04 load vessel 1700 DWT, in order to complete the transportation process (Transportation-StorageLiquid asphalt) Major Finding Task1 The factors in the External Marco environment 1.1 PESTEL tool 1.1.1 Political and Legal:  Type of Government of Vietnam: The framework of Vietnam is One-party socialist republic The communist party as the leader has the responsibility of leading Vietnam, problem solving and making all decisions, and controls the state’s departments  According to Globalsecurity.org, “the key driver of politics in Vietnam is to position oneself in order to make money through a variety of means”  Corruption: With the high risk from the Vietnamese tax administration, the companies need to indicate that irregular payments and bribes are the common things when make the tax (GCR 2015-2016)  Freedom of press: Approval from the fact of political framework, there are many restrictions in the media All of the media forms are established but directly relative to the party, legal punishments can be carried out because they considered these actions can harass to the laws of Vietnam  Regulation: Almost of companies are faced with many obstacles or regulations due to the process of globalization According to the data taken from the survey of Vietnam Private Sector forum (VPSF) in 2017, there are 44% of business have missed the opportunities because the barriers of legal and the market restrictions In 2000, the Ministry had removed a majority of business conditions  Rule of law: These rules of law have the power that created an influenced system and managed by the executive and judicial powers  Social legislation: Since 2007, Vietnam has been joined the World Trade Organization (WTO) This action has been effect on many chances for the investment of foreign company and trading to happen 1.1.2 Economics:  Market structure: In the business of Asphalt, there are an oligopoly competition between many several large organizations such as Petrolimex, ICT, Minh Dat When doing the asphalt business, the ICT Company is known as the top of supplier in Vietnam; beside the first rank is the Petrolimex Company Moreover, they have a high position in the asphalt market that consider as the price marker In addition, there are many barriers for entering the market of asphalt because the highly differentiated product Despite the fact that, the profit that they can earned can satisfy the company With the inelastic demand of asphalt and the specific functions of asphalt, there is very hard to substitute so the cost is depended on the large organization which included ICT Company  Industry: The Five Forces’ Potter analysis  Threat of new entrants: -The high cost is taken when entry -Contribution exclusive knowledge because the performance of product -Need large scale of economic -The protections of technology (machine, factories )  Competitive rivalry: -Few powerful competitors -The loyalty of customers with one brand - The cost of switching is low  Supplier power: -The number of supplier is moderate -The products are similar  Buyer power: -The organizations are the mostly consumers -The sensitive price -The product is homogeneous  Threat of substitution: -Low cost of changing -The substitutions are rare  Country: -GDP: With the rocketed increasing, approval from the Ministry of Planning and investment, the rate of GDP in 2018 had raised to 6.7% that is recorded higher than 240 billion USD -Inflation rate: Approval from VEPR (2018), the inflation rate of Vietnam has increased to 4.13% in 2018 and higher than the average (0.13%) -Interest rate: The interest rate is 6.25% lower than the average (1.02%) by recording to the lasted Vietnam’s benchmark -Labor cost: Approval from The Ministry of Labor, Invalids and Social (2018), the monthly income is taken us 5.61 million This number is higher than last year nearly 4.13% -Unemployment: In Vietnam, there are 106.5 thousand people are unemployed at the middle of 2018 Especially, the young generation takes 34.93% of the total of the whole unemployment rate In general, the trend had to decrease and stop at the low rate: 2.2% -Exchange rate: Figure 1: The exchange rate of Vietnam Dong/Singapore Dollar The figure shows the rate of exchange of Vietnam Dong and the Singapore Dollar Generally, the cost of one SGD peaking up in April that equal to 17.440 VND and decreased to nearly 16 thousand VND in the June In the last quarter of 2017, with the quite strong fluctuated pricing, the price is still approximately 17.000VND and has been predicted growing up 1.1.3 The social and cultural In many workplaces, the value can be effect on the country’s culture Approval from the definition of Hofstede, the culture is “the collective programming of the mind distinguishing the members of on group or category of people from other” With spilt to five dimensions, the relation of social and economic can be considering: Country Viet Nam Canada China  PDI IDV UAI MAS 73 22 31 42 40 91 46 62 80 20 30 66 Figure2: Five dimensions stick to three example countries LTO 83 29 118 Power distance index (PDI): With the high GDP rate, Vietnamese people who have a lower power will be submissive and endure the controls of the higher people The difficulty of Vietnamese people based on the PDI rate which relative to the lower power people who want to have a higher power in the scale  Individualism (IDV): By following the individualism, the relationship between their families is priority They will have the life which will be impacted by the actions of their family because the responsibility in rising and taking care of them to their family  Uncertainty avoidance index (UAI): By influence by small part of foreign cultural, the Vietnamese cultural indicated that the point of UAI is average People are living in Vietnam often worry about the un-know future which means that they avoid every uncertainty situations and action by the strict law and rules that keeping everything in balance  Masculinity (MAS): With having the masculinity point under the average, it’s clearly that the social is accepted the gender equality In the modern society, male and female are treated as the same quality, the female has an opportunity to as everything male  Long term orientation (LTO): The point of view in social is illustrated by LTO that have tend to fulfill long term present, past of future By following the Confucianism, Vietnamese people always saving their money and for their family member 1.1.4 Technology • Research and Development As per information from Ministry of Science, Technology and Environment, money related to the investment for studying technology does not takes over 1% of yearly utilization budget The yearly average expense for researching of science or technology officer from the state spending plan takes approximately US $ 1,000, which is low contrasted with the world average which is US $ 55,324 and the living cost for basic items in the Asian region • Desuetude rate As the information which is indicated by Mr Vu Tien Loc, the leader of Vietnam CCI, the level of technology of Vietnamese corporation is as yet viewed as desuetude VCCI's review results in 10 fields of industry, consisting of in the construct industries, demonstrate that approximately 60% of corporations are utilizing technology with the period of more than years • New products, materials and the process In industrialist, progressive technology is applied day by day, making numerous high quality items, particularly in manufacturing technology including machine, equipment,… so as to tackle materials and equipment issue • Information Communication and Technology (ICT) changes Vietnam's broadcast communications is presently one of the fastest developing countries on all over the world Besides the wide territory network, varied administrations, mobile systems and ultra-shortwave machines are likewise being advanced as well as foreign use 1.1.5 Environment Air quality in Vietnam is viewed as seriously debased in urban area and industrial zones This contamination causes an observable, regular accident of respiratory issues Dust in Vietnam can be seemed as the main contamination, typically to times higher than other national measures On the other hand, other contamination sources are all the factories around Vietnam Furthermore, the contamination also resulted from power plants and biomass fuel used basically to warm in family units As indicated by Doan Cong (2015), a asphalt blending factory of Minh Dat.Ltd has discharge emission straightforwardly which is influence the lives of family units living around the territory Presently, as per the manager interview, so as to take care of this issue, the asphalt of ICT had utilized reused materials to lessen the impact of cement and resins to the environment ICT’s asphalt to amplify asphalt and concrete life span, the company utilize a cycle of evaluation process, which has acquired a possible outcome in limiting working expenses and energy 1.2 Opportunities and Threats of the external macro factors  Opportunities With political systems, long-term advancement can be safeguarded and prioritized - According to the Decree 60/2015, permitting 100% foreign proprietorship for most division, numerous trades can be named achieve many advantages for the organizations and also the investors from foreign countries - Vietnam is in gentle inflation so financial aspects are greater productivity, creating more productions with less input for the companies - There are very little competitors which are in oligopoly market, bring an open door when the GDP is increase as a result the fact that the demand is rising - If a company lends cash from any bank, they have a chance to pay back fewer contrasted with before as a result the decline of the demand - Table has shown the low IDV rate implies Vietnamese workers have more duty to family; consequently they can work more productive - Table has shown that Average UAI rate implies workers will in general the unchanged job, consequently will lessen the support cost in Human Resources Management  Threats - The government’s making money procedure can influence the income of ICT, for example is taxes - The economic development can be delayed because of the corruption, so that judicial system is weak - The cost of SGD will in general increment, which will create disadvantage for ICT in importing the products from foreign country especially Singapore - Low unemployed rate, which lead to higher labor cost - Table has shown that High PDI rate implies the hole among dimensions of workers in organization will rise - Table has shown that that Low IDV rate can be a threat when workers take the influence from their family so seriously, it will influence the working process and the attitude of workers The positive and negative impacts of external macro factors on ICT: 2.1 Positive impacts Political and Legal: The type of the government guaranteed the security in long-term, ICT Company can build up the procedures and strategies for the eventual fate of the firm and completes with less hazard For WTO, Vietnam’s participation has opened many entryways for ICT in global trading face Economic: The GDP is increasing and pursued by rising of utilization; furthermore, the interest of asphalt items is inelastic which creates an opportunity for ICT in producing and selling asphalt market Moreover, Vietnam’s economic is growing quickly which means lots of companies and enterprises such as ICT can takes the support from the economic, for example are trade items or import material With low demand, ICT can use these advantages when they are lending cash from bank Social – Cultural: Social- cultural generally makes effect on the employees of ICT, decrease a few expense for workers and indirectly influence on the efficiency of the organization Technology: With an asphalt organization such as ICT, it almost is connected and affected with lots of programming Consequently, the technology’s improvement in Vietnam can help the organization to give lots of solutions for issues in the production 2.2 Negative impacts Political and Legal With ICT, Petrolimex can be seen as the biggest and the greatest competitors, who is establish as a government company with a numerous advantages such as taxes to the directions of the system This can be seen clearly as a hard arrangement with ICT, to contend with such a tremendous organization With political, the sort of government shows the way that almost everything is under control Undetected limitations can be detected by the pressure of the system to the 10 legal directions that must be maintain a distance from ICT must work in manners that must be tactical and correctly Economic For the most products which is sold by ICT, it is ensure with the high-quality that all the products are imported in Singapore, which means the exchange rate between SGD of Singapore and VND of Vietnam plays an important role in the impact with the ICT Notwithstanding, the general cost of SGD and VND changed very little so it won't become a hazard for ICT’s business The unemployment rate is low, which push the labor cost become more expensive For a big company such as ICT, they will need a great deal of workers to run the companies as well as all the factories, which takes a costly price Social – Cultural Vietnam’s social and cultural can create a lots impactions and disadvantages for ICT, for example, the hindrances for asphalt products awareness to organization, high open doors cost if ICT miss the skilled and experienced employees which created less efficiency in the working environment 11 Task Evaluating a firm's strengths and weaknesses is incredibly important This makes it easier for the company to seize opportunities and anticipate future difficulties Since then, the company's competitiveness will increase In order to assess the strengths and weaknesses of the internal apparatus of the company, this report will be based on two factors: strategies and actions of ICT-ASP Company Strategies Firstly, based on the legal form and scale, ICT can be recognized as a corporation Until now, ICT has 320 employees, from there; the size of ICT can be defined as medium size Otherwise, the revenue of the ICT-ASP Company in 2017 was 90 billion VND – 120 billion VND Secondly, about the mission, core values and vision of ICT, the company said that the mission of ICT is to develop the society and community, to strictly comply with state law, to supply high- quality asphalt products and services to the development of infrastructure and transport in Vietnam About the vision, ICT want to become the largest supplier in “asphalt” segment in Vietnam For ICT, there are core values: International and domestic policy, the business and product, the human elements and the last is benefit The next are the goal and the objectives of ICT The objective of ICT-ASP is to increase the amount of “asphalt” output through years which is appraised by the SMART tool About the aim of ICT, more explicitly in ICT- ASP, is to create for customers a habit of using the highquality asphalt product And the last one is the profitable from the stakeholders of the company such as staffs, consumers, shareholders and suppliers From all of the information provided above, it can be concluded that the content of this strategy is to make the products and services of the company become more attractive and different than its competitors Value chain of ICT-ASP a Process of production - Inbound logistics: 12 This segment includes the process of transporting materials from foreign suppliers such as Singapore, Thailand and Taiwan (ict.com.vn) This process aims to control product quality during the production and processing of construction materials as well as several other products From there, errors can be minimized in production as well as defective products The sustainable development is accurately measured by the guarantee system b Infrastructure and the condition to provide high-quality asphalt ICT has made a modern and spacious substructure with large trucks, operators, factories, all synchronous equipment systems such as laboratories - kilns - pumping stations, weighing stations, gas compression stations,… In particular, ICT has completed and applied a careful monitoring system The process of importing asphalt from foreign suppliers and exporting asphalt to customers is strictly managed ICT invests heavily in the production process The company selected modernization and automation technology, studied step by step to process technology and techniques Since then, the company can produce high quality products in the best conditions c Human Resources Department The criteria of ICT are: “Human is the valuable asset of ICT” and “put human origin in everyday decisions, strategies, projects and action plans”, from that it is clearly to see individuals in the organization are important as well as the HR department The structure of ICT Company is the evidences; all the activities are managed by the director, in other word ICT company care about the HR department seriously Besides, the operator takes the most responsible work, the function of this position is operating machinery system and it require they have to have deep knowledge about health and safety also prevent fire and explosion d Technology Department According to Mr Nguyen Xuan Trong (2018) - the laboratory manager of ICT, a progression of advanced and modern testing devices such as plastic aging simulator (can be used in 5- 10 years) BBR (negative temperature measurement), sterilization furnace, variable temperature (high temperature determination), RTFO machine (simulating asphalt process at BTN and 13 compaction plant in construction ), polymer testing machine in order to find out the highest quality for its plastic (under many types of conditions), designed for dissimilar types of road In addition, IT invests in testing equipment for all asphalt technical standards by PG classification method (BTN SUPERPAVE method) d Research & Development After doing a market research is the time when the Research and Development Department shows out what are the newest technologies and important skills that ICT needs to learn and improve, thereby exploiting to create a better products and services for new plans Unfortunately, IT does not have enough human resources in order to implement Research & Development Strengths and Weaknesses of ICT-ASP Strengths  Build customer’s trust and satisfaction by commiting to provide high quality of asphalts  Improve infrustructure with advanced technology for more efficiency in the performance of the company  Focus on diversity, in term of employees, working environments, as well as development strategies, in the business => which helps boost the firm’s productivity and avoid unexpecting threats (John A., 2018) Weaknesses  The quantity of asphalt in ICT-ASP depends on foreign suppliers like Shell (Singarpore) or Simosa (Taiwan)  Marketing has not been invested due to time and money consuming The interrelation between external and internal factors SWOT Analysis STRENGTHS (S) WEAKNESSES (W) 14 - Have high quality of resources - Not independence of quantity of asphalt from abroad => gain of asphalt - Marketing has been poorly trust and loyalty from customers - Improve infrustructure in order invested due to time and money to increase effectiveness in the consuming performance of the company - Focus on diversity to boost the firm’s productivity and avoid OPPORTUNITIES (O) unexpecting threats S–O W–O - Demand for asphalt in building As the demand for asphalt in Beside highway is increasing gradually constructing - Sustainable long-term cooperation increasing, agreements between ICT and well- requirements known asphalt brands environmental issues, ICT is in foreign suppliers so that the highway along of many development is opportunities ahead, ICT still has with the to face with some problems ICT quality and has to import asphalts from the right time to develop and business is more likely to count compete with other firms in the on the outside Hence, marketing field, as long as build customer’s is not taken as serious so there trust As a result, ICT can are not many customers that are improve the performance of the aware of ICT business by investing in infrustructure and diversity within the company THREATS (T) S–T W–T - Low rate of unemployment, which In order to develop sustainably, Dependence leads to the increase of labor cost ICT has to face with unavoidable suppliers, - Increase tax => company’s profit threats First is low rate of increase in tax makes it more is affected unemployment It means that challenging there will need more time and on along for foreign with the ICT-ASP to manage its budget but still money and effort than before to maintain the stable income hire the qualified candidates for the job, especially when they want to focus on diversity among employees In other words, profit 15 of company is affected, moreover, by the upward change of tax Suggestion of Improvement for ICT First, ICT has made a commitment that they always import high quallity of asphalt from well-known producer such as Shell (Singarpore) so that they are proudly to have customers’ trust and satisfaction Moreover, therer are no bad feeddbacks about poor asphalt products or error in the highway construction process These evidences show that ICT has done a great job and are very responsible for the benefit of customers ICT should keep up with their strengths and make some improvements like researching for more good suppliers to increase quantity Besides, they can open their market to oversea to reach more potential customers and make more profit (Ta Huong Giang, 2018) Second, in the era of low unemployment rate, it seems to be a good sign for the society as the whole, but it creates challenge for big employers such as ICT to have a sufficient amount of qualified labor The resolution for this problem is to improve working environment with better compensation or recruit headhunters to help find the right people for the job These activities will cost the company a lot of money, however, the result is much more satisfying (Brannon Professionals, 2017) Last but not least, ICT has made effort to improve infrastructure for the company The importance of this activity is undeniable, however, ICT has to take it into consideration in order to make sure that they are applying improvement to the right place, or else it would be a complete loss as it can be made use of After applying new infrastructure, ICT has to train its employees to be able to work with and provide fixing when needed 16 Conclusion Through our research and analysis of ICT Corporation, we have gained ourselves better understandings of how a typical company operates in general and how such company like ICT deals with internal and external factors to achieve the second place in becoming a top leading asphalt supplier in Vietnam These research not only helps us to complete tasks and assignments at school, but it also plays as the very first foundation to reach further in our future career 17 References Table Interest rate ( source: https://tradingeconomics.com/vietnam/interest-rate ) Table Hofstede Geert ( source: https://geerthofstede.com ) Anh Minh, 2018, vn.sputniknews, Tang truong GDP va muc lam phat cua VN nam 2018 https://vn.sputniknews.com/business/201807115800582-tang-truong-GDP-va-muc-lam-phat-cua-vietnam-nam-2018/ [Accessed on December 3rd 2018] Cam Tu, 2018, saga, Chien luoc khac biet hoa 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and the attitude of workers The positive and negative impacts of external macro factors on ICT: 2.1 Positive impacts Political and Legal: The type of the government... size Otherwise, the revenue of the ICT- ASP Company in 2017 was 90 billion VND – 120 billion VND Secondly, about the mission, core values and vision of ICT, the company said that the mission of ICT. .. than other national measures On the other hand, other contamination sources are all the factories around Vietnam Furthermore, the contamination also resulted from power plants and biomass fuel