Chuyên đề thực tập tốt nghiệp: A research of motorcycle oil market of toan hung company industry in vinh phuc province

Trang 1

NATIONAL ECONOMICS UNIVERSITYFACULTY OF FOREIGN LANGUAGESDEPARTMENT OF BUSINESS ENGLISH

A RESEARCH OF MOTORCYCLE OIL MARKET

OF TOAN HUNG COMPANY INDUSTRY IN VINH PHUC PROVINCE

Hanoi, April, 2023

Trang 2

NATIONAL ECONOMICS UNIVERSITYFACULTY OF FOREIGN LANGUAGESDEPARTMENT OF BUSINESS ENGLISH

A RESEARCH OF MOTORCYCLE OIL MARKET

OF TOAN HUNG COMPANY INDUSTRY IN VINH PHUC PROVINCE

Supervisor: Pham Thi Quynh Hoa, MA

Hanoi, April, 2023

Trang 3

Lê Thị Thùy Linh-11192846-Ng6n Ngữ Anh 61B

Firstly, I would like to thank my supervior, Ms Pham Thi Quynh Hoa, forsupporting me during the time I was completing my research paper She alwaystries to take the time to comment and help me improve the shortcomings in theresearch paper.

Secondly, I sincerely thanks to the Faculty of Foreign Languages, BusinessEnglish Department at NEU for providing me with crucial and sufficient basicknowledge and theory in both linguistics and business fields as preparation for mycareer orientation in general and the internship program in particular, which havemade a significant contribution to my project completion.

Thirdly, I would like to thank Toan Hung Industry Vietnam for giving methe opportunity to practice at your company During my internship at the company,colleagues and managers at the company helped me a lot in collecting data andcollecting responses for my survey.

Finally, I would like to thank my family and friends for their support duringmy study and work at NEU My family is my biggest support, contributing mainlyto my achievements Friends help me overcome my learning difficulties and giveme ideas for research.

Trang 4

EXECUTIVE SUMMARY

Vietnam's economy is on a strong growth momentum, industrial productionis increasing, and transportation is developing People's living standards areimproving, domestic demand is soaring along with political and economic stability,infrastructure and investment environment is increasingly improving are attractivefactors not only companies already present in the domestic market but also newforeign enterprises In which, Vietnam's lubricant market is growing strongly.

The above development factors ensure the demand of all market segmentsin the lubricant industry, of which the motorcycle lubricant industry is the fastestgrowing lubricant industry and also the high growth segment best The number ofregistered vehicles for motorbikes is 36 million units Thus, the average

consumption of motorbikes is 3-4 liters/year The total volume of lubricants isabout 264 million liters, of which motorcycles account for 34% The trend oflubricants in the next 5 years will grow at an average of 4-6 percent/year, while theworld average is only about 1.5-2%/year.

The study of the competitive situation in the motorcycle lubricant market inVietnam and the study of the lubricant market by Toan Hung Industry companyprovides useful lessons to apply in the author's work practice .

il

Trang 5

Trang 6

LIST OF TABLES

Table 1 Total sales of motorcycle lubricants in 2019 of THIV Table 2 Total sales of motorcycle lubricants in 2020 of THIV Table 3 Price in promotion

Trang 7

LIST OF FIGURES

Figure 1 Vietnam automotive engine oils market, volume share, by vehicle type,"02000 1Figure 2 Market concentration of Vietnam automotive engine OoIÌs 2

Figure 3 THIV’s Organization SŠfTUCfUT€ - St ng 4Figure 4 Income and employment theory - 5+ rersrreee 19Figure 5 sales and market share of Vietnamese lubricant in 2022 24Figure 6 Market share of lubricant companies in Vietnam (2022) 26Figure 7 Customers’ locations c:cccscccsssesessessseesseeeeeceeneeneecsseeseaeeesaeenseeeesees 27Figure 8 Monthly InCOTN€ - - óc 3 1139111831118 1118 11 11 1g rệt 28Figure 9 Types of Vehicles - - s91 ng HH nh 28Figure 10 Useage time Of Vehicles - - s6 c5 13211139 vnrriep 29Figure 11 Vehicle maintain Íf€QU€TICV - - c6 + +1 SvEEeeekereereereeee 29I1 09))09:†-1i14ìì1589t 1 T0 30Figure 13 What brand customers trust MOS . 5+5 5+ +++£+++++sex+ss2 30Figure 14 Customers’ awareness of Toan Hung OIÏ - - -++-s++<<>+s++s 31Figure 15 Experience of CUSẦOTT€TS - + 13 E3 9 vn ng ng ng 31Figure 16 Price of Toan Hung oil evaluafIOT - eeeeseceeeeeeeseeeeenaes 32Figure 17 Toan Hung 1Ì, 5 1 1931119119911 9 11H ng ng ng rưệt 33Figure 18 Toan Hung Oil Marketing - <5 + ScS* + seeeeeeereeeereeee 34Figure 19 What Toan Hung Oil should improve -. 555 +<<s++<e>++ss2 35

il

Trang 8

TABLE OF CONTENTS

ACKNOWLEDGBEEMENTT <5 <5 <5 0000008086 iEXECUTIVE SUMMA RRYY -.5- <5 HH 500068906 iiLIST OF ABBREVIATIONS .csssssssscsscsscsscsccssssesssesssssssssssssssesssssneesssneees iiiLIST OF TABLES - << 5< 5< < 5< 09 00 00005089088666 iTABLE OF CONTENTS cccscsssssscsscssssscsscessnssssssssnesscssesssscsscescsscsssnsssesseeees iiiINTRODUCTTIONN o 5-5 5< 5 ý HH HH 9.00 00 0000008900 1

1.BackỹTOUITI do << << 9 99 99 9 99 99.89.9994 0894.0996090909498909498909096 12.]ÑAfÏOInAÌ G5 < G5 Họ Họ GHI 0009 009009000001 80 23.Purposes/ Oj]©CẨÏVS 0 sọ cọ Họ cm HH 0 0000400000100 8886 24.Research Que©sSfÏOINS 0 5 5 5 999.99 9596699999599 96 6689995955969669995555696660 2S.S CO c0 0 ọ ọọ Lọ Họ Họ TT T0 0.0 0 T0 00.00.0000 0000604009090 36.Research methodology: o- 5 << << S4 9.9 9 004.0000400 094688906886 3CHAPTER 1: INTRODUCTION OF TOAN HUNG INDUSTRYCOMPANYY 0 cọ HỌC 0 0100000000000 09898890 41.1 A brief description of the C0IDAIIV Go <6 5< S5 995 89565695666956 41.1.1 General information 5c 3322183231133 EEEEEEEsreerreeerrse 41.1.2 Corporate DTOfiÏ€ - - 5 5 4 1n HH HH ng ng 41.2 Organizational SÍTUCẦUITC - <5 5 5< 5 5< HH in 0010 41.3 Business philosophy and quality policy <5 << 5 55<«sse< seesss 91.4 Business aCẦÏVÏÏ€S -.o <5 cọ ng 000 000009 0896000 10CHAPTER 2: THEORETICAL FRAMEWORK cccsSSSS=Se=see 152.1 Market’s Gefinition o 5 5-5 5< 5< 5 99 90.09000009 0900090 00008986.0 152.2 Factors influencing the imaTT ÍK€Í, 5-5 << 5 5< 5 9.9 956980569696 162.2.1 Factors influencing the Supply 555 +} Ssseeeersseeree 162.2.2 Factors influencing demand s5 + eeseeersrrree 172.3 Consuming products’ defÏnnÏ{ÏOIn do s5 55s s9 9.5558 558 182.4 Solutions for consumption of products Đeffer -s- -<s=5ss<<se 202.5 Maket of motocyle Oil o- <5 5< S5 9 9 9 9.9.0 0.0009.000 0004 96 222.6 Current market motorcycle oil in iefnnam - << «s5<< sses« se 23CHAPTER 3: FINDINGS AND DISCUSSION c co SSSSSĂS1Seesee 273.1 Current reality of Toan Hung Oil in Vinh Phuc market: 273.1.1 Personal information of respondeniS: - - «+ +- «+ ++se++eesseerss 27

ill

Trang 9

3.1.2 Brand aWaT€TSS Án TH TH HH HH ve 303.2 Evaluation customers’ satisfaction With factors e esse<ss< 31

3.2.1 Price of Toan Hung IÌ - 5 <1 E313 E*kESEekseeereekerereree 313.2.2 Toan Hung Oil PrO(ÌUCES - - - 5 + 12311893 E891 E911 9 key 323.2.3 Toan Hung Oil Marketing - . - c5 + ve 33CHAPTER 4: RECOMMENDA TIONS Go ng n5 37

4.1 IPTOITOẨÏOTAS d- 0555 5G 5% 9 99090.089.011 000015009009890 96 374.2 Changing packaging and DFÏẨÏTIE: œ <5 << 55s s9 905 996.8 374.3 Toan Hung Oil mark€ÏTIE o5 5< 5 59 6 54 9965 9 555 59886998/.8 38CONCLUUSIƠNN o << cụ CC 000000908900 40REEERENCES GỌI 0 0009008 050 41

1V

Trang 10

Classified by automotive end users, it could be said that there are three maintypes: Commercial vehicles, motorcycles, passenger vehicles.

Figure 1 Vietnam automotive engine oils market, volume share, by vehicletype, 2020

It can be seen from the chart that in 2020, motorcycles and commercialvehicles led the market for the end users in the automotive lubricant segment, 76%and 20% relatively Passenger Cars held a low share due to the lower motorizationrate in Vietnam and the high preference of motorcycles over cars as modes of

passenger transport.

During 2021-2026, the motorcycles segment is expected to register thehighest growth of about 4.89% in engine oil consumption, followed by the CVsegment (2.58%) The growth is likely to be driven by strong demand for mopedsand motorcycles in the country over the next five years.

THIV mainly focuses on research and production of motorcycle lubricants,the most dominant segment in the engine oil market This is both a potential marketand a competitive market.

Trang 11

Market Concentration

Consolidated- Market domination

Fragmented- Highly competitive market

Figure 2 Market concentration of Vietnam automotive engine oils

This market of Vietnam is standing at the consolidating level Therefore, inorder for THIV to become stronger and have a larger market share in theVietnamese market in general and the Vinh Phuc province market in particular,THIV needs to study carefully about the market to find the right directions for theirproduct market.

2 Rationale

THIV also has a sub-sector that is manufacturing and distributingmotorcycle oil product lines All of these product lines have been thoroughlyresearched and tested before being introduced to the market, and have existed inthe lubricant market for over 7 years However, contrary to what the companyexpected, the product did not resonate well, the market share in Vinh Phuc is stillvery small Therefore, “A research of motorcycle oil market of Toan Hung

Industry Company in Vinh Phuc Province” has chosen to fulfill this gap.3 Purposes/ Objectives

The study will analyze the market of motorcycle oil products in Vinh Phucprovince, find the factors influencing the market of motorbike oil products Based

on the above analysis, solutions have been drawn to help THIV increase its marketshare in the lubricant distribution market and its revenue.

4 Research Questions

The research is expected to answer the 3 following questions:

e What is the current situation of the oil market for motorcycles in Vinh Phuc?

e What are the factors influencing the market of motor oil products of THIV inVinh Phuc province?

Trang 12

e What should the company do to increase the market share in the motorcycle oilproducts in Vinh Phuc?

Primary data: The questionnaire survey is used to collect primary data inorder to dig further into the three research questions The poll included 90qualifying respondents who completed the questionnaire and multiple-choicequestions, all of whom are consumers of motorcycle oil of THIV

Secondary data: Secondary data for the study was gathered from books,journals,

magazines, and published studies on the topic of oil market on websites namelywebsosanh.com, news.oto-hui.com, maianduc.vn, eska.vn, tanphuhieu.com

7 Tentative report structure:

Chapter 1: introduction of Toan Hung industry Vietnam: overview about thehistory and activities of THIV

Chapter 2: theoretical framework: introduce about the market’s definition, andreview about the previous researches about the factors influencing market and how

to consume products more and more.

Chapter 3: finding and discussions: analyzes the collected data, major findings,and recommendations.

Chapter 4: recommendations: proposes some viable solutions for THIV company.

Trang 13

CHAPTER 1: INTRODUCTION OF TOAN HUNG

1.2 Organizational structure

Trang 14

e Product Research

The most crucial step and bringing the greatest added value to the auto partsmanufacturing industry is the idea of the function of each type of component,accessory, and key design highly accurate to match and compatible with theproducts it supports Thanks to the combination of the above spare parts andcomponents, the new product becomes complete and brings efficiency and valueto society.

THIV is fully autonomous from the most basic stages such as surveying themarket demand for spare parts and spare parts for cars and motorbikes, therebyanalyzing the market to capture trends, potentials as well as the competition of thisindustry After collecting enough information and having accurate analysis andjudgments about the market for manufacturing components and spare parts forautomobiles and motorcycles, the company proceeded to more complicated stagesthan researching, and developing new product ideas and development.

Besides, in order to approach and bring products to the market, THIValways tries to find new customers and expand the product consumption market.

e Business management and general administration

THIV is solely responsible for the administrative management andmaintenance of administrative tasks and maintenance of daily administrative tasksat the office THIV has a management department to handle administrativeprocedures and issues related to legal, human resources, etc Specifically, each

department will be responsible for the work related to their expertise.

THIV is responsible for its human resources function (for example, itsrecruitment function, labor policy and other human resources functions) Morespecifically, when there is a recruitment need, the department manager determinesthe need to recruit personnel When approved by the Deputy General Director, themanagement department will conduct recruitment.

Each candidate after being interviewed for the first time by the DeputyGeneral Director, department head and in charge of human resources, after theinterview is completed, if the candidate meets the requirements, he will beinterviewed for the second time, the results will be determined recorded in theInterview Table leaders consider all the candidates who have been interviewed andwill select the best candidate If there is more than one qualified person, the HRmanager will notify the qualified candidates.

If no candidate is selected through the interview, the recruitment will beannounced again After being selected, candidates will sign a one-month

Trang 15

probationary contract for direct work and two months for indirect work.Employees will base on the company’s regulations to continue signing laborcontracts or not signing labor contracts.

The management department is also responsible for the legal affairs of thecompany Typically, the department will resolve THIV's legal issues without theneed for third-party consulting assistance Some of the legal issues that themanagement department has to do include adjusting the value of investmentcertificates, applying for work permits for foreign employees.

In 2021, THIV has 3 foreign workers These personnel hold importantpositions in the company, such as: Deputy General Director and productionmanager The decision to appoint management personnel requires the approval ofMr Wu, Chung-jang.

The severance rate of 2021 at the company is assessed at an average level,about 11%, mainly related to the company's salary and bonus regime.

The company organizes 2 types of training, including orientation trainingand professional training Specifically, orientation training is organized for newemployees, in order to disseminate company policies and regulations onoccupational safety and sanitation.

Regarding professional training, the departments themselves make up thecontent and training plans for their personnel In addition, the company outsourcessome training services, for example, occupational safety training.

Regarding financial matters, THIV's Finance Department is responsible forthe company's financial and accounting matters, ensuring compliance withVietnam's regulations on accounting and taxation THIV performs the accountingprocess and normally complies with the laws of Vietnam, including bookkeeping,accounting, and other necessary accounting work Monthly, the accountingdepartment prepares corporate governance reports and sends them to the parentcompany for review and management

Suppliers that meet the above criteria will be selected by THIV to becomeraw material suppliers Every year, the company is still looking for new suppliers

Trang 16

to diversify the source of raw materials, increase choice and improve pricecompetitiveness.

After the customer agrees with the quotation from the company, thecustomer will send an estimated order for pre-production of samples The centralplanning department receives orders, transfers them to the purchasing departmentand the technical design department, the production department to plan to buy rawmaterials, produce samples on time for orders Samples after production will bedelivered to customers for quality checking.

If the sample meets the standards, the customer will send the official orderto the planning center department The planning center department will transfergoods to each relevant department to deploy and develop product production plans.The next month's production plan will be gathered and made at the end of theprevious month to ensure delivery to the customer according to the schedule

specified in the contract.

The company's main customer is Honda Vietnam, at the end of each yearHonda Vietnam will send the plan of the future to the company for the companyto estimate production materials In addition, every month, Honda Vietnam willalso send orders for next month to the company.

e Production execution

THIV's activities are mainly manufacturing spare parts for motorcycles andcars, machinery, electromechanical and electronic devices To ensure satisfactoryproduct quality, THIV always has strict quality management standards before,during and after the production process, from input materials to finished products.The company has 2 workshops to carry out production and storage Besides,the quality control department is also located at the factory to facilitate checkingthe quality of raw materials, products,

Trang 17

The company consists of 3 main product groups, the specific productionprocess of each group is described for management and workers to understand and

e Purchase of raw materials

The company's input materials are purchased from domestic suppliers orimported from foreign suppliers, always ensuring strict compliance withregulations on product quality The inspection of input volume and quality is

carried out by the quality control department, after checking that the materials meetthe quality requirements, the volume of materials will be warehoused If the rawmaterials do not meet the quality or quantity as the contract, the company willnegotiate to exchange or return the goods to the supplier.

e Production

During the production process, the QC department will regularly monitorand check the quality of finished products after each production stage, in order todetect defective and damaged products to make timely decisions such as puttingthem in repair If the word cannot be corrected, the product will be reported as awaste product Strict control at each stage of production will help the companyavoid product quality risks and minimize defective products.

e Finished product quality check

When products are finished by workers, after being manufactured, they arecontinuous to be quality checked by specialized machines and equipment to ensurethat the finished products meet the quality criteria and designs according to eachorder Finished products that meet the quality requirements will be transferred tothe warehouse of finished products.

e Marketing

Marketing activities include advertising, promotions, order processing,customer account management, and public relations.

e Sales, product distribution and after-sales service

Sales involves pricing a company's products, entering into contracts withcustomers, processing orders, distributing, and providing after-sales services.

Trang 18

THIV is solely responsible for finding customer partners through anyaffiliate or 3rd party The sales department will directly search and communicatewith customers through the company's data list If the contract is signed, it will betransferred to the departments related to the production of the order and finallyshipped to the customer.

THIV's customers are mainly Honda Vietnam, however, THIV alsoexpands the market to other domestic companies Pricing policy and credit policyapplicable to customers are decided by the company's Board of Directors.Specifically, the price of products sold is figured out based on the market price.

THIV hires a third party to perform the shipping function with export ordersand domestic orders with large weights.

Regarding after-sales service, when receiving a customer's complaint aboutthe return of goods, the company will recall the product, repair or replace it with anew product to meet the customer's requirements or reduce the contract value of

In case of a big labor dispute, the company prioritizes the employee's viewpoint.An executive will be chosen to establish an agreement with the employees in orderto create a healthy work environment and a long-term enterprise.

Supplier relations: Credibility is the company's essential value for businessoperations Suppliers are key business partners since the company intends to builda win-win scenario and grow with them The Company adheres to the higheststandards of corporate ethics in the fight against corruption and fraud.

Trang 19

If any wrongdoing in the supply chain is discovered, please notify the Company'sauditor immediately Unless otherwise specified by law, the information yousupply will be kept secret, and all required precautions to safeguard your privacywill be taken.

The company supplies rubber tires and springs mainly to companiesmanufacturing and assembling motorcycles such as Honda, Suzuki or Piaggio Onaverage, each month exports about 10,000-12,000 goods for each of the above products.

The company mainly manufactures and distributes the following components:Rubber part: Almost all parts and parts are made of rubber: Oil seal,Rubber-bush, Manifold, Chain Guide, Packing, O-ring, Seat Assy.

Image 1 Oil-seal

10

Trang 20

Image 3 Manifold

LAI ASSY(DOUBLE | pertns, 77200397000 | Mttps: cor/prod.cts/eostr =ssi=co.bie_ 7720039 7000)

Spring: mainly used for motorcycles, has a shock absorber effect and hasthe effect of absorbing the impact force, the auxiliary spring will eliminate theoscillation generated by the main spring.

11

Trang 21

Besides the strength of manufacturing motorcycle components and spareparts, THIV also produces lubricants for motorcycles THIV has been in the marketfor 5 years, since December, 2018 THIV launched 3 product lines, Smooth andSpeedy products for manual transmission motorcycle, Legend products for

12

Trang 22

automatic transmission motorcycle Toan Hung oil's Smooth products are synthetic lubricant products, while Toan Hung Oil's Speedy products are fullysynthetic lubricant products Synthetic lubricants have much superior performancecompared to semi-synthetic lubricants: Withstands the best friction available today,and withstands the highest temperatures available today Therefore, the fullysynthetic oil product line has a much higher price than the semi-synthetic oil line.Smooth lubricant products have the listed price at the distribution points of 75,000VND As for Speedy lubricants, the price is more than double, 150,000 VND.

semi-In 2019, total sales of motorcycle lubricants were about 1000 bottles Theseline products were distributed mainly on 3 motorcycle repair points so that thesales of these products was quite low.

Total sales of motorcycle lubricants in 2019 (unit: bottle)

Jan Feb Mar Apr May Jun July Aug Sep Oct Nov Dec Total

4 3 7 5 10 20 20 27 30 32 40 44 50 324

ầ 5 10 13 10 14 18 30 37 37 41 50 63 388

1 13 13 13 15 19 25 27 32 35 37 39 281

Total 993

Table 1 Total sales of motorcycle lubricants in 2019 of THIV

However, after THIV expanded its market by increasing marketing tomotorbike repair points in Vinh Phuc province and free oil change points at gasstations, the sales of 3 products Smooth, Speedy and Legend products areincreasing rapidly Even in 2020, sales increased 10 times compared to 2019.Despite experiencing 3 months of the Covid epidemic, sales in early 2020fluctuated a lot, however, from the second quarter of 2020 onwards, sales graduallystabilized.

Total sales of motorcycle lubricants in 2020 (unit: bottle)

Jan Feb Mar Apr May Jun July Aug Sep Oct Nov Dec Total

4 120 140 100 108 113 143 156 286 265 301 309 316 3797

ầ | 94 134 98 110 124 132 150 254 273 272 270 282 3321

ầ 140 150 134 121 143 150 174 167 187 246 250 271 3813Total 10931

Table 2 Total sales of motorcycle lubricants in 2020 of THIV

In 2022, thanks to actively expanding product marketing to lubricant salespoints, THIV's sales volume was 3.5 times higher than THIV's in 2020.

13

Trang 23

Above is all the information about THIV and the recent business situationof THIV The author will combine this information with the following chapters toclarify this research topic.

14

Trang 24

CHAPTER 2: THEORETICAL FRAMEWORK

The background knowledge covered in this chapter includes previous researchesabout definitions of market, factors influencing market, definitions of consumption,and some product strategies to consume goods better.

2.1 Market’s definition

A market is a location where goods are purchased and sold at retail orwholesale prices A marketplace is therefore characterized as a site including arange of various-sized stores, booths, and even hawkers offering a variety of

commodities And indeed, in Economics, the term "Market" refers to a market fora commodity or commodities rather than a physical location It refers to a situationin which buyers and sellers interact directly or indirectly in order to sell and acquireitems.

Furthermore, for a market to exist, buyers and sellers do not need to meetin person at a specific location They can communicate via any means, such asphone or telex As a result, the term "Market" is used in economics in both a

general and specialized sense It does not only refer to a specific location.

It refers to the entire demand and supply operation It also refers to thecircumstances and commercial relationships that facilitate transactions betweenbuyers and sellers As a result, a market refers to any arrangement in which goods

are sold and purchased.

Consider the following three examples from well-known agriculturaleconomists In 1957, Cochrane stated: At this point in economic thought, thenotion of a market may be articulated as follows: A market is some sphere or regionin which (a) the forces of demand and supply are at work, (b) price is determinedor modified, (c) ownership of some quantity of an item or service is transferred,and (d) certain physical and institutional arrangements may exist.

According to Bressler and King (pp 74-75), a location or setting in whichproducers and consumers communicate with one another, supply and demandconditions operate, and title to goods is transferred The movement of goods inspace or time is usually, but not always, involved.

As Chapmen, Outlines of Political Economy (1911) has said — “The termmarket refers not necessarily to a place but always to commodity or commodities

and the buyers and sellers of the same who are in direct competition with eachother.”

15

Trang 25

According to Frederick Benham — “We must therefore, define a market asany area over which buyers and sellers are 1n such close touch with one anothereither directly or through dealers that the prices obtainable in one part of the marketaffect the prices in other parts.”

From the above definitions, some facts may be noted The existence of acommodity should not be absent, for example, the market for gold or silver, cotton,wheat, and rice, among other commodities As a result, there will be as manymarkets as commodities, and if a commodity has multiple types or variations, eachtype or variation will have its own market Next, market is the place where buyersand seller keep in touch with another as well as where perfect competition amongthem always exist.

2.2 Factors influencing the market

Any market consists of at least three elements: supply, demand and price.Thus, all factors affecting the above three factors affect the market.

2.2.1 Factors influencing the supply

The amount of a product available in the market for sale at a specific priceat a certain point in time is referred to as supply in economics As contrast todemand, supply refers to a seller's readiness to offer a certain amount of a productat a specific price and time.

A variety of factors known as supply determinants can have an impact onsupply In general, the supply of a commodity is determined by its price andmanufacturing cost Simply put, supply is a function of price and manufacturing cost.(a) Price: In 2010, Roger E A Farmer, a Bristish-American economist, “How theeconomiy works” stated that this primary factor has a significant impact on thesupply of a product In contrast to demand, there is a direct relationship between aproduct's price and its supply When the price of a product rises, so does the supplyof that product, and vice versa The variation in supply of a product is defined asthe change in supply in relation to the change in price Future price speculation canalso have an impact on a product's supply If the price of a product is about to risein the future, the supply of the product in the current market will decrease due tothe profit expected by a seller in the future However, a future decrease in the priceof a product would increase the supply of that product in the current market.

(b) Cost of production: The supply of a product would drop as the cost ofmanufacture increased, and vice versa The availability of a product and the costof manufacturing are inversely connected When the cost of manufacturing

16

Trang 26

exceeds the market price of a product, for example, a seller will provide less of iton the market.

(c) Technology: “Refers to one of the important determinants of supply A betterand advanced technology increases the production of a product, which results inthe increase in the supply of the product For example, the production of fertilizersand good quality seeds increases the production of crops This further increasesthe supply of food grains in the market.” (Nitisha, 2020, Factors that Influence theSupply of a Product)

(d) Government’s policies: According to Frederick Benham (1961), governmentinitiatives such as fiscal policy and industrial policy have a stronger influence onthe supply of a commodity For example, a rise in excise duty taxes might reducethe availability of a commodity Conversely, if the tax rate is low, the supply of aproduct will grow.

2.2.2 Factors influencing demand

The demand for a good depends on several factors, such as price of the good,perceived quality, advertising, income, confidence of consumers and changes in

taste and fashion.

(a) Price of products: according to Experimental Economics Center (2006), Theprice of a product has an inverse (negative) relationship with the amount of thatproduct that consumers are willing and able to buy Consumers prefer to buy moreof a low-cost product and less of a high-cost product The Law of Demand refersto the inverse relationship between price and the amount consumers are willingand able to buy.

(b) The customer’s Income: The impact of income on the amount of a product thatconsumers are willing and able to buy varies depending on the type of good Mostgoods have a positive (direct) relationship between a consumer's income and theamount of the good that they are willing and able to purchase In other words, asincome rises, so does demand for these goods; as income falls, so does demand forthe product These are referred to as normal goods.

(c) The price of related goods: The effect that this has on the amount that one iswilling and able to buy, as with income, depends on the type of good Considertwo goods that are frequently consumed together When two goods are substitutes,the price of one good and the demand for the other good have a positiverelationship (Experimental Economics Center, 2006)

(d) The tastes and preferences of consumers: Roger E A Farmer, a American economist, “How the economiy works” in 2010 claimed that this is a

Bristish-17