Group Assignment Report Introduction To International Business - Ibi101 Hoa Phat Group.pdf

IntroductionHoa Phat Group is a prominent Vietnamese conglomerate known for its leadership in the steel industry.. With a capacity of 8.5 million tons of crude steel per year, Hoa Phat i

Group Assignment Report Introduction to International Business - IBI101

Lecturer: Nguyễn Hoàng Linh Date Submitted: July 14, 2023

GROUP CHICKEN - IB1702

Table of Contents

I Introduction 3

II Business environment (PESTEL framework) 3

1 Political 3

2 Economic 3

3 Social 5

4 Technology 5

5 Environment 6

6 Legal 7

III Culture in Vietnam 8

1 Language 8

2 Social structure 9

3 Education 9

4 Political Philosophy 9

IV Singapore Market 10

1 External environment 10

2 Entry mode for export 13

3 Operational activities at the foreign division 14

Reference 17

I Introduction

Hoa Phat Group is a prominent Vietnamese conglomerate known for its leadership in the steel industry Established in 1992, the company has grown to become the largest steelmaker in Vietnam, producing a wide range of high-quality steel products With a strong focus on innovation and customer satisfaction, Hoa Phat Group has expanded its operations into diverse sectors, including real estate, agriculture, and renewable energy Through its commitment to sustainable development and a forward-looking approach, the company continues to contribute to Vietnam's economic growth and industrial advancement

II Business environment (PESTEL framework)

1 Political

Value Added Tax (VAT): Vietnam applies VAT rates to all types of steel products produced and consumed domestically The VAT rate for steel products is 10% and is calculated on the final product value and related costs

As of May 2023, Vietnam's steel output has increased by 43.7% over the same period last year At the same time, steel enterprises in Vietnam have exported to many markets around the world, including Europe, America and Asia However, domestic demand still accounts for

a larger proportion than export demand

Labor force: Vietnam is a place with an abundant labor force, however, if raising the standard

of products means improving the quality of the labor force, This is both an advantage and a disadvantage for manufacturing companies, especially the steel industry

The level of steel trading in Vietnam is at a high level and has potential for future growth However, businesses need to face stiff competition and always innovate products, improve production technology and provide solutions to optimize production processes to be able to meet the needs of customers market quickly and efficiently

2 Economic

- Growth:

In Vietnam, in 2022, in the context that the domestic economy recorded a bright spot with a growth rate of more than 8% Steel industry to gradually recover in 2023

Crude steel production nationwide will reach 23 million tons equivalent by 2022 Production

of finished steel products will be at 31 million tons, and sales about 27.5 million tons, all

down 5% over the same period last year Vietnam's iron and steel export market still mainly comes from Southeast Asia, more than 42%

Steel production is the core field that accounts for an important proportion of 90% of the Group's revenue and profit With a capacity of 8.5 million tons of crude steel per year, Hoa Phat is the largest steel producer in Southeast Asia

- Inflation

The inflation rate in Vietnam moved over the past 26 years between -1.7% and 23.1% For

2022, an inflation rate of 3.2% was calculated Inflation rate of 2023 is ~ 4.5%

- Interestrate

The rediscount interest rate will be revised down from 4.5%/year to 3.5%/year; overnight lending rates in interbank electronic payments and loans to cover capital shortfalls in clearing payments of the SBV for credit institutions will be decreased from 7%/year to 6%/year Particularly, the refunding interest rate will remain unchanged at 6%/year

- Employment

Vietnam's labour force represents 57% of the population over 98 million The country's main industries – manufacturing (16% of GDP), services (51%), and agriculture (14%) – employ a majority of the labour force, with Vietnam's unemployment rate in Q1 of 2021 being 2.19% Currently, Hoa Phat Group has 11 member companies with 25,424 employees, operating nationwide and 01 office in Singapore

- HHIncome

Vietnam Annual Household Income per Capita reached 2,178.776 USD in Dec 2021 Vietnam Annual Household Income per Capita data is updated yearly, from Dec 1994 to Dec

2021, with an averaged value of 813.323 USD The data reached an all-time high of 2,235.955 USD in Dec 2019 and lowest 183.956 USD in Dec 1994

Retail Sales of Vietnam grew 10.089 % YoY in Feb 2023

- More:

Domestic steel consumption in 2023 can be supported by public investment and transport projects However, rapid inflation and tightening global monetary policy reduced investment and consumption demand, weakening steel consumption

Steel exports will not increase in the first and second quarters and will be difficult to recover until mid-2023 in the face of pressure to raise interest rates and reduce global interest rates Hoa Phat will be affected, there must be a policy to prepare to overcome this period

3 Social

About population, Vietnam has a large population and is in a period of population growth Moreover, the uneven distribution of population by geographical area also affects Hoa Phat's activities This creates great demand for housing, infrastructure, and other consumer products Hoa Phat took advantage of this opportunity by expanding production and supplying construction materials such as steel and cement For example, high-rise buildings, new urban areas and industrial infrastructure in all 3 regions such as Empire City project, Sala town, Landmark 81 in the southern region Two largescale tourism entertainment -resort projects in Da Nang city, Cocobay Da Nang and Sunshine Complex - Soleil Da Nang About career view, Hoa Phat has created a favorable working environment for employees to develop and advance in their careers They provide training and development to enhance skills for employees, helping them improve their capacity and meet job requirements They regularly organize many training programs to improve skills and skills for employees In addition, Hoa Phat also creates flexible working modes and encourages creativity, helping employees balance work and personal life

About customer's style, Today's consumers seek products and services that are convenient, environmentally friendly and suitable for modern lifestyles Hoa Phat has done something like Hoa Phat has developed lightweight and durable high performance construction steel and stainless steel products These products meet customer requirements for convenience, environmental friendliness and modern design For example, Hoa Phat's stainless steel is widely used in the food and pharmaceutical industries, meeting the requirements of food hygiene and safety

4 Technology

Hoa Phat Group has applied many advanced technologies to improve production productivity, product quality and environmental protection Here are some of the technologies Hoa Phat has applied:

Automated production systems and robots in the production process

Automated analysis and control system in the iron and steel production process

Using advanced exhaust gas treatment technologies and other environmental protection measures such as: recycling wastewater, processing fly ash into powder, treating waste by biodegradation method

Hoa Phat invests and applies advanced waste treatment technologies, including recycling technology and converting waste into reusable materials, but also includes traditional waste treatment methods such as waste treatment sludge treatment, wastewater treatment Hoa Phat also focuses on optimizing energy use, using modern technological equipment and means to minimize the impact on the environment from production activities

5 Environment

- Climatechange

The manufacture of steel faces substantial challenges due to climate change Extreme weather and rising temperatures can degrade the quality of raw materials and interfere with logistics and transportation Hoa Phat Group should research low-carbon technology to lower greenhouse gas emissions and take into account the long-term effects of climate change on its operations, including the requirement for resilience planning

The manufacture of steel also greatly increases greenhouse gas emissions In order to lessen its reliance on fossil fuels and cut down on wasteful inflation, Hoa Phat Group can concentrate on using renewable energy sources, including solar or wind power

- Ethical

Hoa Phat Group works in the steel business, which is governed by a number of environmental standards Hoa Phat Group should make sure that all of its operations adhere to national and international environmental regulations and standards, particularly in regard to soil improvement, waste management, water use, and emission control

Social responsibility: Hoa Phat Group can show its moral commitment by taking part in community-building efforts, funding environmental protection programs, and enhancing the welfare of community workers

- Recyclinganddisposal

Hoa Phat Group seeks possibilities to use the concepts of the circular economy through the recycling and reuse of materials This can lessen trash production and the negative effects of its operations on the environment

Waste management: Using good waste management techniques, like waste segregation and treatment, can assist Hoa Phat Group in lowering environmental pollution and ensuring the safe disposal of hazardous items

- Sustainability

Supply Chain Sustainability: The Hoa Phat Group's overall sustainability can be improved by collaborating with suppliers who follow sustainable practices, such as ethical labor practices and responsible sourcing of raw materials

Product innovation may help Hoa Phat Group fulfill the rising need for sustainable construction materials This can be done by creating sustainable steel products and solutions that improve energy efficiency, durability, and environmental protection steadily

6 Legal

With the criterion “proactive to adapt”, Hoa Phat has always actively followed any legal document right from the first days when its draft was released for public opinion For example, 11 Laws and Codes were passed by the National Assembly and officially took effect from January 01, 2021 These are important laws that greatly impact the social life of Vietnam and the operating activities of Hoa Phat in particular

Decision No 145/2007/QD-TTG of the Prime Minister: Approving the development planning of Vietnam's steel industry for the period 2007-2015, with a vision to 2025 This is a great opportunity for the steel industry to develop stronger

Hoa Phat is particularly interested in: The Labor Code 2019, The Law on Securities 2019, The Law on Investment 2020, The Law on Enterprise 2020, The revised Law on Amendments to Construction law 2020 as well as their respective guiding documents Therefore, since the early days when the draft laws were widely commented on, Hoa Phat carefully looked into changes in legal regulations that may affect its activities to predict and anticipate, so as to make timely adjustment plans

About the legal related to international,

The EU-Vietnam Free Trade Agreement (EVFTA) and the Regional Comprehensive Economic Partnership (RCEP) which have become effective since November 2020, and CPTPP (Comprehensive and Progressive Agreement for Trans-Pacific Partnership)which

was recently issued have boosted the steel export market Hoa Phat prepared carefully to receive opportunities as well as to meet committed technical standards; understood the legal framework of the market and technical barriers to be more proactive in exporting and to avoid trade remedy lawsuits In fact, exports of construction steel in 2022 increased and expanded to new markets

In addition, under the management of Hoa Phat Group, more than 700 employees working at Hoa Phat Steel Mill and Steel Rolling Factory have been trained on policies and laws on labor safety and hygiene Moreover, regulations on the use of labor protection, development

of regulations on management and inspection of occupational safety, etc…

III Culture in Vietnam

1 Language

Language is intrinsic to the expression of culture As a means of communicating values, beliefs and customs, it has an important social function and fosters feelings of group identity and solidarity It is the means by which culture and its traditions and shared values may be conveyed and preserved

The Vietnamese language is the official language in Vietnam This is the mother tongue of about 85% of the Vietnamese population along with more than 4 million overseas Vietnamese Like many other languages in Asia, Vietnamese is a tonal language

Vietnamese is strongly influenced by the Chinese because more than 60% of Vietnamese words are borrowed from Chinese In addition, Vietnamese also borrowed Latin and Greek in English

It now uses a Latin alphabet, or chữQuốcngữ,that is based on the French alphabet It was created by European Jesuit missionaries so that the Bible and other Catholic books could be quickly translated into Vietnamese

Before Vietnamese used the Latin alphabet, government documents were written using classical Chinese, but everyday Vietnamese was written with a writing system based on Chinese characters, called chữNôm Few people knowchữNômtoday

2 Social structure

Social structure refers to the pattern of social relationships in a society Such structure regulates the interactions among members of the society, providing guidelines within the cultural norms for achieving the goals defined by cultural values

Vietnam is a socialist republic with a one-party system led by the Communist Party of Vietnam (CPV)

The yellow star centred on the red field symbolises one of five classes of society -entrepreneurs, farmers, workers, intellectuals and soldiers representing each point of the star The flag may also be flown with the flag of the Communist Party of Vietnam

3 Education

Vietnamese culture was influenced in some nations, especially by Chinese culture Most schools have slogan “Tien hoc le, hau hoc van” which was an elemental lesson for all students

- Respectforteachers

The aim of education in Vietnam is to educate people to become good citizens in both knowledge and morality Teachers are regarded with high esteem and seen as role models Students are expected to show deference and obedience to their teachers because the education system is teacher-centred

- Study-focusedculture

Vietnamese society has a culture of learning, considering education as the first responsibility

of students It is generally believed that studying diligently and working hard can lead to success and a better life Therefore, Vietnamese students often face academic pressure and have high expectations from their families

- Traditionalteachingmethods

Traditional teaching methods in Vietnam often focus on learning stereotypes, memorizing and obeying orders But nowadays, many people find that more interactive and student-centered teaching methods that promote critical thinking and creativity are a more practical approach

4 Political Philosophy

The main philosophy in Vietnam is Marxism-Leninism and is influenced by Ho Chi Minh's ideology In addition, it has Vietnamese nationalism and a history of fighting for

independence and the goal of achieving a classless society It emphasizes the principles of collectivism, social equality and the pursuit of the common good

The Communist Party of Vietnam (CPV) is the ruling party, playing a central role in shaping and implementing the country's political philosophy The CPV follows the principles of socialism, collectivism and class struggle, in order to achieve a classless society and promote social equality

However, Vietnam has experienced significant economic reforms since the late 1980s with the introduction of the Doi Moi (Doi Moi) policy These reforms opened the country to market-oriented economic activities, encouraged foreign investment and allowed private enterprise This change reflects a departure from the previous emphasis on political philosophy in Vietnam

IV Singapore Market

1 External environment

a Politics

The Singapore government aims to maintain social cohesion and stability by seeking consensus among different stakeholders

Singapore's political system has been dominated by the ruling People's Action Party (PAP) since 1959 The legal and electoral framework developed by the PAP allows for several political pluralism But it also has some limitations such as inhibiting the development of opposition parties and restricting freedom of speech, assembly and association

Singapore has strict regulations on political activities Freedom of speech and assembly are restricted, and political campaigning and public demonstrations are also restricted The government argues that these measures are necessary to maintain social order and stability For example, all newspapers, radio stations and television channels in the country are owned

by companies connected with the government

b Economy

Singapore follows a free-market economic model with limited government intervention It promotes open trade, foreign investment and entrepreneurship Singapore has actively pursued economic diversification such as encouraging the development of industries such as biotechnology, clean energy, digital services In 2021, Singapore's GDP is $397 billion In addition, Singapore has always had a high employment rate thanks to a flexible, adaptable