Business environment Assignment 2

BTEC HND IN BUSINESS FINANCE ASSIGNMENT COVER SHEET NAME OF STUDENT Nguyễn Thị Kiều Anh - Snow - F05A UNIT TITLE Business Environment Unit 1 ASSIGNMENT TITLE Vietnam Association of Sea

BTEC HND IN BUSINESS (FINANCE)

ASSIGNMENT COVER SHEET

NAME OF STUDENT Nguyễn Thị Kiều Anh - Snow - F05A

UNIT TITLE Business Environment (Unit 1)

ASSIGNMENT TITLE Vietnam Association of Seafood Exporters and

Producers (VASEP)

NAME OF ASSESSOR Jubred A Peñano

SUBMISSION DEADLINE January 8, 2013

I, _Nguyễn Thị Kiều Anh hereby confirm that this assignment is my own work and not copied

or plagiarized from any source I have referenced the sources from which information is obtained by

me for this assignment.

_8th January 2013 _ Signature Date

-FOR OFFICIAL USE

Assignment Received By: Date:

Unit Outcomes - BE A2

Assessor’s Decision

Internal Verification

First attempt workRe-

of businesses

3.1

Illustrate the way in which market forces shape organizational responses using

a range of examples

3.2

Judge how the business and cultural environments shape the behaviour of a selected organisation

4.1

Analyse the impact of global factors on UK business organisations

4.2

Evaluate the impact of policies of the European Union

on UK business organisations

4.3

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Outcome Evidence for

Assessor’s Decision

Internal Verification

First attempt

work

Re-Assignment

( ) Well-structured; Reference is done properly / should be done (if any)

Overall, you’ve

Areas for improvement:

ASSESSOR SIGNATURE DATE / /

NAME:

(Oral feedback was also provided)

STUDENT SIGNATURE DATE / /

BUSINESS ENVIRONMENT AND THE CASE OF VASEP

Prepared for:

Lecturer, Mr Jubred A PeñanoUnit 1: Business EnvironmentBanking Academy, HanoiBTEC HND in Business (Finance)

Prepared by:

Nguyễn Thị Kiều Anh – Snow - F05ARegistration No ITPF05-014

No of words: 3500Submission date: 8th January, 2013

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TABLE OF CONTENTS

EXECUTIVE SUMMARY 6

INTRODUCTION 7

CONTENTS 8

III Understand the behavior of organizations in their market environment 8

3.1 Explain how market structures determine pricing and output decisions of businesses.8 3.2 Illustrate the way in which market forces shape organizational responses using a range of examples 13

3.3 Judge how the business and cultural environments shape the behavior of a selected organization 16

IV Be able to assess the significance of the global factors that shape national business activities 18

4.1 Discuss the significance of international trade to UK business organizations 18

4.2 Analyze the impact of global factors on UK business organizations 20

4.3 Evaluate the impact of policies of the European Union on UK business organizations 21

CONCLUSION 23

REFERENCES 24

EXECUTIVE SUMMARY

This assignment contains basic knowledge of business environment as well as helpslearner understand the behavior of organizations in their market environment and be able toassess the significant of the global factors that shape national business environment throughspecific company - VASEP (Vietnam Association of Seafood Exporters and Producers) It isdivided into six parts as follows:

 Explain how market structures determine pricing and output decisions of businesses

 Illustrate the way in which market forces shape organizational responses using a range

of examples

 Judge how the business and cultural environments shape the behavior of a selectedorganization

 Discuss the significance of international trade to UK business organizations

 Analyze the impact of global factors on UK business organizations

 Analyze the impact of global factors on UK business organizations

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Vietnam Association of Seafood Exporters and Producers (VASEP) is a governmental organization VASEP members include leading Vietnamese seafood producersand exporters and companies providing service to the seafood sector [ CITATION sce12 \l 1033 ]

non-It is established on June 12th 1998, during the operation time, this organization not onlyprovide seafood for domestic market but also foreign market like EU, US, Japan….VASEPproducts get many successes in global competition market through their products’ quality andtheir organization behavior as well It has a strong position in Vietnam market and expandingmore into international market with right objectives With these objectives, VASEP have apower to overcome many troubles in international market such as law, prices and capital…The information in this assignment is collected from many different resources such asbooks, websites on the internet and some document which relevant to VASEP operations inpricing and output decisions and policies, law which EU apply for importing seafood.However, because of limitations about works, this assignment only gives general information.The researcher hopes that those disadvantages will be improved in the future

III Understand the behavior of organizations in their market environment

3.1 Explain how market structures determine pricing and output decisions of businesses

Table 1: Summary table of VASEP market structure and its influence to pricing and output decisions

3.1a Local

a Oligopoly - There are many existing competitors

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b Cheap prices: Comparison of products price

As can be seen, the seafood VASEP prices are cheaper than its competitors (MinhPhu Corp and NAVICO Corp is two companies which established near the time toVASEP)

c Small volume

As can be seen, the total volume which produces for domestic demand is small, andless two times than that produce for exporting

d Wide products

There are many kinds of seafood are consumed in Vietnam markets such as:pangasius, shrimp, squid, octopus, crab and many kinds of fish: tuna, herring,mackerel…

c Large volume

Figure 1: Seafood export market by volume (thousand tons)

As can be seen above, the total of export volume in international market is large,approximately 1,200 thousand tons in 2009 EU is the largest customer of VASEPwith more than 300 thousand ton in 2009, followed by Japan with about 200thousand tons and USA with more than 100 thousand tons

d Limited products

Figure 2: Structure of seafood products exported to the EU

EU is one of the main import markets of Vietnam seafood As can be seen above,products are exported to EU market is:

 Pangasius (Cá tra): 39.5%

 Shrimp (Tôm): 31%

Nguyễn Thị Kiều Anh - Snow - F05014

 Squid, octopus (Mực, bạch tuột): 9.28%

 Tuna (Cá ngừ): 5.97%

 Bivalve Mollusk (Nhuyễn thể 2 mảnh vỏ): 3.87%

 Other seafood only accounted for 10.38%

Therefore, it is said that only pangasius and shrimp are two main export products of

seafood exports in Vietnam

Nguyễn Thị Kiều Anh - Snow - F05014

3.2 Illustrate the way in which market forces shape organizational responses using a

range of examples

3.2a Porter’s Five Forces

Figure 4: Porter’s Five Forces

a) The threat of new entrants - High

Based on table 3 page 10 of outcome 3.1, the youngest competitor of VASEP is

FSC (UK) established in 2006 UK is one of many largest countries in the world

UK market is considered as a potential market both export and import seafood

because they recognize the attractiveness of this sector in developing economy

Therefore, UK government also creates many conditions about capital and

technology for new company such FSC enter into this industry It can be said that

FSC has many competitive advantages since it was established

In order to compete with new company of developed countries is also difficult to

VASEP of Vietnam However, with cheap labor resources and rich seafood,

VASEP can reduce manufacturing costs and raw material costs Thus, seafood

prices of VASEP is cheaper than many its competitors It creates one competitiveadvantages of VASEP in the international market.

b) The threat of substitute products - High

Figure 5: Food consumed in 2010 (Source: datavisualization.ch)

As can be seen in figure 5, there are many substitute products of seafood such aspasta, chicken, soup, salad They are foods which good for health and also verydelicious Moreover, they also cheaper than seafood so it is evaluated that thethreat is high

In order to seafood is always the first priority of customers, VASEP focus more

on the product’s quality and set up the right pricing strategy for kinds of seafood,especially create a good relationship with others countries in the exchange oftrade

c) The bargaining power of customers - High

There are many buyers in perfect competition market EU, US and Japan is the

main import markets of Vietnam seafood Because they are main customers, thebargaining power of customers is high

It is obvious that customers always want buy products which have high qualityand reasonable prices Therefore, VASEP need have specific strategies to haveproducts reach customer’s requirement

d) The bargaining power of suppliers - Low

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There are many suppliers who can supply raw material, packaging material,machines, transportation for delivery…for VASEP Thus, VASEP can comparethe prices and quality of goods and services to choose the most suitable ones.However, VASEP tend to collaborate with suppliers who have good long-termrelationship such as Dong A corp, Key Line Co, HBATECO…[ CITATION VASnd \l

1033 ]

e) Competitive rivalry - High

Thailand is strong competitor of Vietnam in exporting shrimp to the US and someother market [ CITATION Infnd \l 1033 ] Therefore, VASEP should have rightpricing strategies to maintain competitive advantages Besides, create VASEPproducts distinguish to its competitor ones with innovative products

3.2b Market segmentation

VASEP divided international market into two segments relate to buyer behavior:heavy buyers, and medium buyers VASEP focus more on heavy buyers such as

EU, US and Japan because they bring more profits for enterprises

By segmenting market, VASEP can focus more on potential customers and spentmore time on finding out customers’ requirement about quality, food safety…Forexample, from 2011, when exporting seafood into UK, all type of shrimp must bechecked chloramphenicol, nitrofuran to ensure that they do not contain on food

[ CITATION Vie12 \l 1033 ] Thus, VASEP can prepare suitable strategies to avoidrisks and maintain trust in customers’ mind

3.2c Marketing mix

 Product: VASEP only export some main products such as shrimp, pangasius,

octopus (Figure 2, outcome 3.1) In order to remain existing customers andattract new customers, besides core product, VASEP should focus more onactual and augmented product such as packaging and after-sales service Forexample, VASEP can use transparent packaging to help customers to assessproducts when can see the total product inside

 Price: Price always is the first priority of customers In fact, firms want to

buy product which reasonable prices However, they will not buy low qualityproduct at any prices Therefore, VASEP need suitable strategies about prices

to ensure both product quality and reasonable prices for customers

 Place: VASEP seafood is exported mainly to EU, USA and Japan by trains,

airports…Therefore, it is necessary when VASEP’s warehousing nearly to

that place to reduce transport costs

 Promotion: In order to attract customer for the first sight, VASEP need

focus more on advertising on media, TV, newspapers, or internet…Salespromotion also should applied such as discount for closed customers

3.3d Competitive strategy

In order to exist in intensely competitive environment, VASEP needs to sustain

competitive advantages by adopting cost leadership strategy on the competitive

strategy The cost leadership strategy meaning VASEP has lower cost than itscompetitors It is key to VASEP attract numerous customers, increase sales andmarket share in international market

Summary

In short, by analyzing markets to understand both opportunities and threats, it helpsVASEP prepare the best ways response them to reach company’s objective and bringmore benefits as well

3.3 Judge how the business and cultural environments shape the behavior of a selected organization

3.3a Forms of anti-competitive behavior

 Collusion - No

It takes place in oligopolistic market, in which firms have agreement about pricefixing, limit output and share their markets to increase profit illegally VASEP isperfect competition in international market, so it does not have collusivebehavior

 Cartels - No

A cartel is a formal agreement among firms in an oligopolisticindustry[ CITATION BPPnd \l 1033 ] As said above, VASEP doesn’t belong to thismarket so VASEP also doesn’t cartel behavior

 Price fixing cartel - No

In international market, VASEP want to build beautiful image and try to becomestrong brand so VASEP always comply obligation from partners to penetrate

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deeply their market Specifically, the government USA may set prices whenexporting seafood to eliminate price fluctuations Accordingly, VASEP base onfloor prices to give right prices  VASEP doesn’t do price fixing cartel whicheffect negative to VASEP image to make profits illegal.

 Vertical restraint - No

Vertical restraint involves terms, conditions or arrangements imposed upon oroffered to downstream distributors by upstream suppliers (Assaf, n.d.) Withethics in enterprises, VASEP doesn’t do vertical restraint behavior However, infact it can be said that VASEP really doesn’t enough capability to enter into anexclusive deal with any market in international market

 Insider dealing - No

In order to expand market share and build belief in international market, VASEPdoesn’t do insider dealing behavior With VASEP, all information relevant tobusiness operation is secure

3.3b VASEP’s behavior

a) Objectives

VASEP was established to support Vietnam seafood industry Rather than theobjects of maximizing profits, it aims to coordinate and link the activities ofmembers of corporation, help each other in improving productivity, quality,production efficiency, creating materials, expanding markets in both local andinternational market, enhancing the competitiveness of Vietnam seafoodproducts, representing and protecting legal benefits of its members, in order tocontribute positively to develop economy of Vietnam seafood [ CITATION VASnd \

l 1033 ]

b) Investment

By powerful economic resources, VASEP make use of capital to invest for manyprojects Specifically, VASEP invest 3 billion VND into project “Processing andpreserving marine products” in Khanh Hoa, Binh Dinh, Ca Mau,…and invest80,000 billion VND in buying modern technology from USA [ CITATION VASnd \l

1033 ]

c) Risk

VASEP must face many potential risks, especially exporting seafood Naturaldisasters (storms, flood…) and epidemic diseases make VASEP do not enoughcapability to export enough volume of output which signed in contract withpartner Besides, it is difficult for VASEP to keep fresh products in the long time

when delivering to international market Therefore, VASEP uses risk transfer in

risk management strategy to pass the risk to a third party through insurance

Summary

In general, VASEP has good behavior when doesn’t follow anti-competitive behavior despite

of facing intensely competitors Besides, they set objectives which bring benefits for member

of corporation and invest many projects to develop VASEP and Vietnam economy as well.VASEP find out their risks when exporting in international market to give the best solutionfor ensuring benefit of both two parts

IV Be able to assess the significance of the global factors that shape national business activities

4.1 Discuss the significance of international trade to UK business organizations

4.1a The reason for international trade to UK of VASEP

a) New market segment

Overseas market such as EU, USA, UK, Japan…represent new market segment toVASEP If VASEP only operate in domestic market, firms will not get more sales,more profit because demand of Vietnamese in seafood is low, and moreover it isobvious that international market is larger than domestic market Therefore, VASEPexpand operation into international market  the more overseas customers are, themore sales increase

b) Market saturation

Because of the existence of many competitors in local market, seafood VASEP pricesmay decrease due to having more suppliers  not good for VASEP not getmaximize profit As a result, exporting help VASEP prevent from this situation andfind new opportunities in international market

c) Economies of scale

Economies of scale are the cost advantages that an enterprise obtains due toexpansion It leads to reduction in unit costs as the scale of operations increase

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