business ethics group assignment case study masan and ethical issues

MINISTRY OF EDUCATION AND TRAINING NATIONAL ECONOMICS UNIVERSITY BUSINESS ETHICS GROUP ASSIGNMENT Lecturer: Nguyen Bich Ngoc CASE STUDY: Masan and Ethical Issues Participants; | Nguyen

MINISTRY OF EDUCATION AND TRAINING NATIONAL ECONOMICS UNIVERSITY

BUSINESS ETHICS GROUP ASSIGNMENT Lecturer: Nguyen Bich Ngoc

CASE STUDY: Masan and Ethical Issues

Participants; | Nguyen Trang Thu - 11226049

Vu Ha Anh - 11220674 Nguyen Tra My - 11224388 Tran Minh Anh - 11220619 Duong Trung Kien - 11223146

Class: International Business Administration 64B

School of Advanced Education Programs (AEP)

MINISTRY OF EDUCATION AND TRAINING NATIONAL ECONOMICS UNIVERSITY

BUSINESS ETHICS GROUP ASSIGNMENT Lecturer: Nguyen Bich Ngoc

CASE STUDY: Masan and Ethical Issues

Participants; | Nguyen Trang Thu - 11226049

Vu Ha Anh - 11220674 Nguyen Tra My - 11224388 Tran Minh Anh - 11220619 Duong Trung Kien - 11223146

Class: International Business Administration 64B

School of Advanced Education Programs (AEP)

Abstract

Masan is a dynamic and highly diversified company that operates across various industries, including consumer goods, retail, and financial services

With its headquarters in Vietnam, Masan has established itself as a leading

player in the market, known for its innovative approaches and ethical business practices

Founded with a vision to create sustainable value for all stakeholders, Masan has continuously evolved and expanded its operations since its inception Masan's success can be attributed to its unwavering focus on delivering high- quality products and services that meet the evolving needs and preferences of consumers The company's portfolio comprises well-known brands that have become household names, such as Chinsu, Omachi, Wincommerce, and

Techcombank commanding a significant market presence

In addition to its pursuit of commercial success, Masan places a strong emphasis on corporate social responsibility The company recognizes the

importance of sustainable practices and actively engages in initiatives that

contribute to the well-being of communities and the environment Through

philanthropic endeavors and partnerships, Masan strives to make a positive

impact on society beyond its business operations

However, along the way, Masan has committed several ethical

misconducts about marketing and food safety These occurrences have led to skepticism and disapproval from the public, eroding customers’ trust in Masan

To tackle the scandals, Masan has been actively seeking solutions to mmimize the negative effects on its business and has achieved encouraging and favorable

outcomes

In this report, we delve into Masan's business ethics practices, explore the challenges faced by Masan due to its involvement in controversial misconduct, and examine the strategies implemented by the company to recover from the resulting damage to its reputation and scandals to regain trust and restore its standing in the eyes of consumers and the public

Table of Contents

A Introduction

I0 (‹‹+1BBB 3

PÄ Ly n a 4

B Analysis company’s business ethical issues 7

1 Ethics in Human Resource Management 0 0 0 0.0ccccccccecccccesteesesteeteeeens 7 1.1 Ethics mm recruitment, appoIintment, employmen( - - - - 7 1.2 Ethics mm Employee Àssessment_ - 2 2c Sex ccsce2 7 1.3 Ethics In protecting WOTKk€TS : c 2222211212112 xe 7

2 Ethics in Finance & ACCOUTINE 2 121212112 1252551181 8

3 Toxic COMPetHtION oo 8 3.1 The "instant noodle war" between Masan and Acecook Vietnam (2011)

HH 8 3.2 Masan and the fish sauce scandal (2016) - ¿5+ 2c c2 sec 9

A Food Safety a4 9 4.1 The síory unfolded - : c2 12112111112 221112111115 1257 E1 HH He 10 Z9 on 10

5 Marketing 0.00 =3 II 3.1 Nam Ngu fish sauce “For consumer health” ,purely extracted from 100% fresh tuna Is Chinsu fish sauce really premium-grade salmon fish E11 II 5.2 Tien Vua noodles: The packaging states “ No Transfat”, but further testing reveals Otherwise 2.0.0 c c1 c2 22112112111 111 n2 re 12 5.3 Other scandals nh a4 13 5.3.1 Tam Thai Tu soy sauce does NOT contamn 3-MŒCPD 13 5.3.2 Chinsu seasoning powder “without MSG” 14 3.3.3 Omachi potato noodles: Contains only 5% poftatoes 14

References 17

A Introduction

1 Masan Group

Masan Group is a leading conglomerate based in Vietnam that operates in diverse industries such as food and beverage, infrastructure development, and mining, among others The company was founded in 1996 and has grown to become one of Vietnam's biggest and most successful business groups Masan Group has a strong focus on sustainable development and innovative solutions, making a positive impact on the communities they serve The company has a presence in Vietnam and is constantly expanding its operations both locally and internationally

In Vietnam, Masan Group is often known through famous products and brands such

as the fish sauce brand "Nuoc Mam Chin Su", the instant noodle brand "Omachi", and the Winmart retail chain

Masan Group has achieved several outstanding achievements over the years, including:

1 Becoming one of the top 50 public companies in Vietnam by revenue and market capitalization

2 Establishing itself as a leading player in Vietnam's consumer goods industry through its subsidiary, Masan Consumer Holdings, which includes popular brands such as WinMart, WinMart+, and Masan MeatLife

3 Developing a unique business model focused on sustainable development, using advanced technology and tmnovations to reduce the environmental impact of its operations

4 Launching Masan MEATLife, a subsidiary leading the way in transforming Vietnam's meat industry through technology and sustainability

5 Building the largest tungsten mine in the world through Masan Resources, which has helped establish Vietnam as a significant player in the global tungsten market

2 Masan’s business

Masan is known as a consumer-focused business group with a few key business pillars that can synergistically provide Vietnamese consumers with a more convenient and rewarding experience as they address their daily basic needs and beyond According

to Kantar World Panel, 98% of Vietnamese households use at least one Masan Consumer product in 2020

CP Việt Nam

s Tiêu dùng Masan

Acecook Việt lan #46

Dabaco #2221 Kido Group =

Vĩnh Hoàn =

Đường Quảng Ngãi

° 15.000 30.000 45.000 60.000 75.000 90.000

MCH's revenue in 2020 compared to other consumer companies (unit: billion VND)

Viettel

Vinamilk

VNPT

Sabeco

Vinhomes

MobiFone

Tiéu dung Masan

Vietcombank

FPT

Vincom Retail

MCH is in the top 10 most valuable brands in Vietnam in Forbes 2020 (unit: million

USD) WinCommerce operates the largest nation-wide grocery modem trade retail platform

in Vietnam WIN serves big and essential daily use of Vietnamese people, ranging from grocery (WinMart+), financial services (Techcombank), healthcare (Dr Win), and F&B

(Phuc Long) to telecommunication services (WinTel) WinCommerce also owns WinEco

— the largest vegetable & fruit brand in Vietnam that is available exclusively at WinMart, WinMart+ and WIN locations

BRANDED FOOD & BEVERAGE

Masan Consumer Holdings is one of Vietnam’s largest local diversified FMCG companies The company manufactures and distributes a range of food and beverage products Masan Consumer Holdings has grown its product portfolio and domestic distribution channels to establish a leading position in Vietnam’s branded consumer food and beverage market Its key brands include Chin-su, Nam Neu, Tam Thai Tu, Omachi, Kokomi, Lovemi, Komi, Cao Boi, Ponnie, Vinacafé, Wake-Up, Compact, Vinh Hao, Quang Hanh, Vivant, Faith and Su Tu Trang According to Euromonitor, Masan Consumer has the largest market share in the fish sauce industry with 29.8%, the second largest in the instant noodles industry with 20.0% - just behind Acecook Vietnam (unlisted) and the third largest in the market energy drink market In addition, the company also leads in the segment of instant coffee (about 40% market share) with two main brands, Vinacafe and Wake up

BRANDED CHILLED MEAT BUSINESS

Masan MEATLife is also Vietnam’s one of largest fully integrated branded meat platforms with chilled meat products using European processing technology and standards

FINANCIAL SERVICES

Regarding financial services, Techcombank, which is under the control of Masan Group, is currently one of the largest jomt stock commercial banks in Vietnam in terms

of total operating income, assets, loans, deposits, customers, and distribution network It has built industry-leading franchises in retail deposits, SME, and retail lending through its consumer-centric ecosystem approach

Techcombank has developed a diversified range of financial products and services

to cater to the financial needs of Vietnam’s emerging consumer class and budding private enterprises Techcombank has a customer base of about 10.8 million by the end of 2022, equivalent to about 10% of the population using the service

HIGH-TECH MATERIALS

Masan High-Tech Materials is one of the largest private sector mineral resource and chemical processing companies in Vietnam, currently operating the world-class Nui Phao polymetallic project in Northern Vietnam Nui Phao is the largest tungsten mine in the world and the industry’s first new tungsten project to be commissioned in over a decade.4 Masan High-Tech Materials is also a globally significant producer of fluorspar and bismuth Masan High-Tech Materials’ objective is to show the world that a Vietnamese company can lead the transformation of the global tungsten market and is strategically exploring opportunities and discussions to become a further integrated downstream tungsten business on a global scale This will enable MHT to deliver a consistent and strong financial profile across commodity cycles

B Analysis company’s business ethical issues

1, Ethics in Human Resource Management

1.1 Ethics in recruitment, appointment, employment

Seeing human resources as a competitive force, Masan has placed an emphasis on human quality, starting with Attraction - Recruitment - Training and Employee Development

Increasing awareness of the core values, principles of behaviour and work skills of employees since their first day at Masan In addition, Masan also trains staff according to job needs and specific career development plans for employees holding key managerial positions and “acute” areas

There is a policy of commitment to transparency in all business activities — production, displaying quality integrity — transparency for all employees, in a friendly, efficient and transparent working environment

1.2 Ethics in Employee Assessment

Masan decoding talent through 4C:

- Creative solution

- Clear thinking

- Conclusive actions

- Change for results

Masan issues share according to the employee selection program in order to retain key, heartfelt, competent and experienced employees

1.3 Ethics in protecting workers

Masan always cared about the lives of workers through the means of production and

treatment

The company limits overtime work, guaranteeing sufficient monthly rest days according to regulations

Employees are paid full social insurance, and health care in addition to monthly surcharges, daily support, food allowance, rent

2 Ethics in Finance & Accounting

The reports on Masan’s accounting and financial activities are reasonably explicit Masan currently owns major shares in Vietnam Technological and Commercial Joint Stock Bank, commonly referred to as Techcombank, Vinacafe, Vinh Hao Mineral Water,

Cam Con Co

Masan’s annual profits are continuously increasing However, Masan did not pay dividends to shareholders for four consecutive years Retaining this profit is intended to support acquisition strategies and merging other companies to gain scale and market share Since then, shares have risen 50 per cent since early 2011, reaching the second- most high price on the market today This non-distribution was approved by shareholders who did not receive dividends but benefited from stock exchange stock price increases and the company's strong growth through investments and mergers Generally speaking, Masan's accounting and finance are relatively good

3 Toxic competition

3.1 The "instant noodle war" between Masan and Acecook Vietnam (2011)

In 2011, Masan released their Tien Vua instant noodles and advised customers through their advertising that noodles with a dark yellow color were harmful due to the use of reused oil In a marketing campaign, Masan continued to promote their Tien Vua beef and cabbage noodles by presenting an experiment that proved any noodles turning dark yellow after being boiled contained harmful coloring agents Thus, customers who watched Masan’s advertising will receive the message that any dark-colored noodles are toxic, and only light-colored noodles are good for consumption

As a result, Acecook Vietnam, the company producing noodles with a dark yellow fiber, officially filed a complaint with the Competition Management Agency about Masan's advertising clip for their Tien Vua beef and cabbage noodles, which

misinformed customers about the quality of the product Acecook demanded that Masan cease their advertising campaign Although Masan spent a considerable amount on advertising, it was evident that the truth had been exposed, and they were unable to surpass their competitors in the market

3.2 Masan and the fish sauce scandal (2016)

On October 17, 2016, the Vietnam Standards and Consumer Protection Association (Vinastas) announced the results of a survey that showed 101 out of 150 samples (accounting for 67.33%) did not meet the regulations of the Vietnamese standards for allowed levels of Arsenic in fish sauce products

This information, after being published in the newspaper, received a strong reaction from scientists, experts, and traditional fish sauce manufacturers Most of them affirmed that fish sauce, made from fish, naturally contains organic Arsenic which is not so toxic

as inorganic Arsenic Providing information without specifying that it is organic Arsenic

is a hasty and irresponsible act This disclosure damaged the public's view and degraded their trust in Vinastas

On the other hand, Masan immediately presented an advertisement about two completely safe brands which do not contain Arsenic In some printed newspapers published on October 20, the ads of two brands, Chin-Su salmon flavor fish sauce and Nam Ngu fish sauce, stated: “We always believe that fish sauce must be delicious, but safety is a top priority” This action is a response to the public's concern about who funded Vinastas to conduct this controversial survey

Therefore, instead of receiving support from the community, Masan confronted not only traditional associations with hundreds of enterprises but also the longstanding culinary culture of Vietnam This incident caused a huge loss for the Masan Group as it lost nearly VND 2,800 billion in the stock market in just a few days

4 Food Safety