Business Environment Assignment 2

This report aims to find out the market structure of (Vietnam Association of Seafood Exporters and Producers) VASEP in local market and the international and how it influence to the making decision of VASEP about the price, volume, etc. besides, VASEP culture also affect its activities in the international market and the business environment of EU one of the biggest customer of VASEP. Bài assignment môn Môi trường kinh doanh (BE) về hoạt động của hiệp hội sản xuất và xuất khẩu thủy sản Việt Nam VASEP.

BTEC HND IN BUSINESS

(FINANCE)

ASSIGNMENT COVER SHEET

NAME OF STUDENT Trần Quyết Thắng - Joe

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, Trần Quyết Thắng - Joe 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.

01/08/2013 _

Signature Date

-FOR OFFICIAL USE

Assignment Received By: Date:

Unit Outcomes - BE A2

Outcome Evidence for

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

Outcome Evidence for

Assessor’s Decision

Internal Verification

First attempt workRe-

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 / /

Vietnam Association of Seafood Exporters and

Producers (VASEP)

Title page

Prepared for: Professor Jubred A Peñano

Business Environment Organizations in Their Environment Banking Academy, Hanoi

World count: 3,358 (not include the table) Submitted on January 8, 2012

Prepared by: Trần Quyết Thắng (Joe)

Class: F05-BRegistration No.: ITP- F05 - 194

Vietnam Association of Seafood Exporters and

Producers (VASEP)

Executive summary

This report aims to find out the market structure of VASEP in local market and theinternational and how it influence to the making decision of VASEP about the price, volume,etc besides, VASEP culture also affect its activities in the international market and thebusiness environment of EU - one of the biggest customer of VASEP

The find shows VASEP structure in local is oligopoly, and in the international market ismonopolistic competition Additionally, there are many policies about social, regional,contact law policies

It is clearly that VASEP has tried too much to have the suitable decisions for particularmarket and the right behavior that follow the laws, the regulations of the foreign marketsespecially EU

Table of Content

Title page i

Executive summary ii

Introduction 1

Outcome 3.1: Explain how market structures determine pricing and output decisions of businesses 1

3.1.1 Local 1

3.1.2 The international market 2

Outcome 3.2: Illustrate the way in which market forces shape organizational responses using a range of examples 4

The international market 4

Threat of new entrants: low 4

Threat of substitutes: high 4

Customer’s power: high 5

Suppliers’ power: low 5

Intensity of competition: high 6

Ways of competing 6

Marketing segmentation: 6

Marketing mix: 6

Competitive strategies: 7

Outcome 3.3: Judge how the business and cultural environments shape the behavior of a selected organization 7

Outcome 4.1: Discuss the significance of international trade to UK business organizations 8

Outcome 4.2: Analyse the impact of global factors on UK business organisations 10

4.2.1 The political factor 10

4.2.2 The economical 10

4.2.3 The social factors 10

4.2.4 The technological factors 10

4.2.5 The environmental factors 10

4.2.6 The legal factors 11

Outcome 4.3: Evaluate the impact of policies of the European Union on UK business organizations 11

4.3.1 Monetary system (EMS) 11

4.3.2 Common agricultural policy 11

4.3.3 The social welfare 12

4.3.4 Regional policy 12

Reference 13

Table 1: The market structure of VASEP 1

Table 2: The prices of VASEP and its competitors 1

Table 3: The competitors of VASEP in international market 2

Table 4: The shrimp price in Japan market of VASEP 3

Table 5: The average price of frozen pangasius fillet between VASEP's competitors 3

Table 6: The volume of pangasius fillet and tiger black shrimp in 2011 3

Table 7: The substitutes of seafood 4

Table 8: The marketing segment of VASEP 6

Table 9: The yield of pangasius fillet and tiger black shrimp in 2011 and 2012 9

Introduction

VASEP is one of the biggest seafood associations in Vietnam and its members include a lot ofhuge Vietnamese companies about producing and exporting seafood As the result, VASEPalways try to find the judicious ways to improve in the international market by following therequirement of other countries Besides, there are many benefits of international trade; it doesnot consist of the profit but also the market share and reputation of VASEP All of them makeVASEP become stronger and have strengthened position in the market

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

Local International a) Market Type Oligopoly Monopolistic competition b) Pricing High Competitive

c) Volume (Units) Average High

d) Product Variety Wide Wide

e) Customers Many Many

Table 1: The market structure of VASEP

3.1.1 Local

a) The competitors of VASEP are:

 Ca Mau Association of Seafood Exporters and Producers (CASEP) - 2007

 VINAFIS – 2000

 Directorate of fisheries - 1990

This shows that VASEP has an Oligopoly structure

b) The product price of VASEP is also affected by this competitor Therefore, VASEP set asuitable price to take advantage of competing and attract more customers with highmarket share

The table below shows the comparative prices of VASEP and its competitors:

CASEP VASEP VINAFISHPangasius fillet (1kg) 24,000 VND 41,000 VND 41,000 VNDPenaeus monodon (20 shrimps/1kg) 240,000 VND 230,000 VND 251,000 VNDCrab egg(1kg) 51,000 VND 50,000 VND 47,000 VND

Table 2: The prices of VASEP and its competitors

(VASEP, 2012; CASEP, 2012; VINAFISH, 2012) c) The local market always is the traditional market for VASEP so they do not need toprovide too many products but it is still enough to supply the Vietnam customers’demands It is about 479.000 tons in the end of 2011

d) There are some main products such as tiger black shrimp, pangasius fillet, tuna, tilapia,bivalves… so customers have many choices.

e) The main customers of VASEP are individual, the retailers and the organizations likeseafood restaurants, supermarkets…like Big C, METRO, and COOPMART or MinhLong Seafood Restaurant, Melia hotel, Hanoi Hotel, My Way, Sushi bar …

3.1.2 The international market

a) The products of VASEP and other associations in the world are differentiated so theassociations can raise the price without losing all of their customers Because of thedifferent farming condition of each country, the differentiated products sold in themonopolistic competition have some features that make customers prefer it to availablerelated seafood of other associations

This below shows the competitors of VASEP in international market:

Fresh & Frozen Seafood Association of the Philippines (FFSAP) 2000Indonesian Frozen Seafood Association (APSI) 2000Malaysian Frozen Food Processors Association (MFFPA)

Myanmar Fishery Products Processors & Exporters Association (MPEA) 2004Thai Frozen Food Association (TFFA)

Brunei Darussalam Aquaculture Producers Alliance Cooperative (BAPA)

Bangladesh Frozen Foods Exporters Association 1984Seafood Exporters Association of India (SEAI) 1953Seafood export Ecuador (INEPACA) 1949

Table 3: The competitors of VASEP in international market

b) VASEP has to provide the price have a little bit difference compare with other suppliersbecause it has several huge direct competitors such as Thailand, India, etc It means that ifVASEP sets high price, customers will chose alternative products Oppositely, with lowprice, VASEP cannot ensure about making profit

The shrimp price in Japan market

80.75 ¥/USD, the frozen shrimp, 07/07/2012 The price of Japanese companies, USD/block

Penaeus monodon HLSO (1.8kg/block)Origin Vietnam India IndonesiaSize

(quantity/pound)

Lowprice

Highprice

Lowprice

Highprice

Lowprice

Highprice

8-12 36.86 37.47 - - 36.86 37.4713-15 28.87 29.48 29.48 29.48 28.87 29.4816-20 22.73 23.34 20.88 21.50 24.57 25.1821-25 21.50 21.50 19.41 19.66 21.50 22.1126-30 - - 19.66 19.66 20.88 21.25

Table 4: The shrimp price in Japan market of VASEP

Pangasius fillet (ton) Tiger black shrimp (ton)

Table 6: The volume of pangasius fillet and tiger black shrimp in 2011

(Globefish, 2011)d) The main seafood exporting products are pangasius, shrimp, tuna, mollusks, bivalvemollusk, crustaceans, marine fish, cephalopod, fishmeal, and others

e) There are many customers of VASEP They are:

 Seafood Importers Association of Australasia Inc (SIAA)

 Scottish Seafood Association (SSA)

 Japan Fish Traders Association

In general, VASEP has the different activities in the different market to run businesseffectively Based on the particular market conditions, VASEP set the reasonable price andthe right output to satisfy specific customers

Outcome 3.2: Illustrate the way in which market forces shape organizational responses using a range of examples

The international market

Oppose to the Vietnam market, VASEP has many rivals in the world market Therefore, thecompetitive forces are very different

Threat of new entrants: low

Based on the competitors of VASEP there are several new entrant in producing and exportingseafood industry However they are very young and do not have less experience comparewith VASEP Besides, VASEP has stable suppliers to ensure the source of materials forproducing Additionally, there are many loyal customers of VASEP around the world so thesenew entrants will meet several troubles

Threat of substitutes: high

The development of other food industries:

 Fruits  Pulses

 Vegetables  Nuts and oil seeds

 Roots and tubers  Oils and fats

 Sugar and honey

Table 7: The substitutes of seafood

(Rstb.royalsocietypublishing, n.d.)There are many alternative choices for customers so it can bring a huge impact on theactivities of VASEP For example, if seafood price has any fluctuations, the customers wouldchoose other kinds of foods instead of purchasing seafood

Figure 1: Food and consumption trends and drives

(Rstb.royalsocietypublishing, n.d.)

Customer’s power: high

Based on the customers in the customers who are named below, there are several customers

so if they do not purchase the VASEP’ products, VASEP can have loss and do not sell theseafood These bring the negative impacts on running business of VASEP For example, theseafood will be kept in the stocks for the long time and it can lease the toxic smell if the date

is not still valid

Suppliers’ power: low

Raw material:

 An Giang fishery association

 Aquaculture Stewardship Council

 Dong Thap seafood association

 Can Tho seafood association

 Dong Thap seafood association

(TalkVietnam, 2012)

There are many partners who supply raw materials for VASEP to produce As the result,VASEP can have a lot of choices to have the best materials to ensure the quality of seafood tomeet the demand of not only local market but also the international market Besides, VASEPcan receive the reasonable price and can make more profit

Intensity of competition: high

Now the markets are witnessing the intense competition about the quality of the products.There are many requirements in the international buyers about the quality For example,Japan established the policy about levels of antibiotics in seafood products especially shrimpsnamely tiger black shrimp

Ways of competing

The marketing philosophy: VASEP uses marketing concept to find out what the customersneed and want and after that it could bring the reasonable strategies to satisfy the customersand ensure the profit There are four main factors that make marketing become moreefficient They are: targeting market, the demand of customers, marketing mix and theprofitability

Marketing segmentation:

Existing products Existing markets  USA

 Japan

 EU

 China New markets  Russia

Core product: seafood like pangasius, shrimp, tuna…

Augmented product: delivery on time, warranty about the quality

Product class: frozen seafood

Product form: various like pangasius, shrimp, tuna, mollusks, bivalve mollusk,

crustaceans, marine fish, cephalopod, fishmeal, etc

 Place:

Make products always available at big markets like USA, EU, and Japan…

Building the warehouses or stocks near raw material and processing areas

 Promotion:

VASEP joined Seafex-Dubai-2012 – seafood exhibitions

Advertising through foreign business newspapers, magazines or through TV, radioSend direct mails to customers to introduce products

Sale forces go to customers

 Cost leadership strategy: make the producer costs lower by stabilizing the raw

material for producing

 Differentiation strategy: invest more to improve the farming technology to make Vietnam products have special taste

 Focus on customers like Japan, EU, USA

Overall, by applying the reasonable strategies and have a suitable marketing for particularmarkets, VASEP can increase the sale revenue and the market share in the internationalmarket to take advantages of competing with other associations

Outcome 3.3: Judge how the business and cultural environments shape the behavior of

a selected organization

Predatory pricing: yes

When VASEP exports the pangasius fillet into USA markets, most of its members had setlower price than the standard price in USA By doing this, VASEP could attract morecustomers quickly and took more advantages than other USA companies However, Vietnampangasius fillet had been sued in 2002 by Catfish Farmers of America because thisassociation considered that Vietnam products price less from $0.008 to $1/pound than similarUSA products (VASEP, 2002) Actually, Vietnam had loose this suit and pangasius fillet isstretched anti-dumping taxes This brought many negative impacts on Vietnam products.There are many reasons to explain for this activity of VASEP’s members One of them isthese members do not know and understand the laws of USA market so they also do notcomprehend obviously the importance of these requirements Furthermore, Vietnam isdevelopment country It means Vietnam companies though this price was reasonable anddecided to use it

Collusion: yes

There are many associations in ASEAN which produce and export seafood so there areseveral competitors of VASEP This is the reason for establishing the ASEAN SeafoodFederation (ASF) to bring the agreement between businesses to ensure they do not competewith each other in outside markets More than ever, ASF should play the key role incoordination its member efforts to overcome the increasingly blatant protectionism (Vietfish,2012) By joining this association, VASEP and other ASEAN seafood associations cansupport each other and cut down the competition between business to have good price andhigh market share in the international market

Carter: yes

One of roles of ASF is all member has agreed on prices of their products like pangasius filletfrom $2.9to $3.5 per 1 kg or $25 to $29 per 1 kg penaeus monodon By following thisagreement, all seafood associations in ASEAN including VASEP can make sure increaseprofit and reduce the competition between them There are many advantages for thedevelopment of VASEP in not only local market but also in international market Because ofthese cartels, VASEP could achieve the objective – earning 2.2 billion USD in 2012 (VASEP,2012) This is very good for running business of VASEP

In general, most of VASEP’s behaviors are very good excepting dumping However, dumping

is only the lack of understanding of Vietnam companies – VASEP’s members All thesebehaviors help VASEP exist in the difficult competitions of the international market

Outcome 4.1: Discuss the significance of international trade to UK business organizations

VASEP has become a UK business and this also brings many benefits to not only VASEP but also the development of Vietnam economy There are some reasons to explain the important

of international trade in the whole economy today

First of all, the international trade helps VASEP cut down the dependence on local market.

For example, Vietnam economy has fluctuated for the last few years with high inflation rate,interest rate…It makes the customers limit on expenditure so these have negative influence toVASEP However, by selling to the foreign buyers, VASEP can turn over the difficulty of theeffects of local market Moreover, there are numerous customers on the outside markets, ithelps VASEP actively produce Besides, the life cycle of seafood products is extended and theinternational trade also gives VASEP the opportunities to stabilize the seasonal marketfluctuations