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Assignment 2

Introduction
My aim in writing this assignment is to figure out the subject of business environment. It is
necessary to notice factors in macroeconomics and microeconomics. The beginning of this
assignment is to present clearly impacts of the macro environment upon business activities in
PESPLE model. I choose TH True Milk to illustrate for this model. Next, I will determine the
internal strengths and weakness businesses by SWOT model. On the other hand, I also research
Porter's five forces model in a competitive market through ACECOOK company. The last is
government policy on trade policy, fiscal policy and monetary policy. I choose specified business
as PVEP to illustrate.
LO3 Use contemporary examples to demonstrate both the positive and negative
influence/impact the macro environment has on business operations
Task 4. Identify the positive and negative impacts of the macro environment has upon
business operations, supported by specific examples.
4.1 Introduction: PESTLE framework
An organization is necessary to have PESTLE model
which helps them to identify a panoramic view of the
business environment. PESTLE is abbreviated by factors
such as, political, economic, social (cultural), technology,
legal, and environment protection. Those factors have strong
influences in operations of organizations because
organizations must rely on their impacts to propose the best
suitable business strategies.

Firstly, we figure out political factor. When analyzing politics, we will


analyze about strengths of parties in a country. But, it just applies for
countries which have various parties. In particular, the political situation is
stable or not. Politics will be impacts of government on business operation
in country or region where organizations implement sells or investments.
Therefore, organizations must put politics in the forefront analysis to ensure safe operations of
organizations. Politics of countries or regions are initial signals which help managers of

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organizations identify the opportunities or threats for the business, because political policies are
created by the actual situation. When doing business on an administrative unit, businesses will
have to comply with policy of that area. For example, Islamic countries often have riots even
though terrorism, bombings, so it can make stagnation in production and business. Therefore,
Islamic countries should train a young generation strong enough to face the competition of
industries around the world. In short, politics is the first condition for deciding the economic
development of a country in general and the development of industries in particular.

Secondly, organizations need to notice economic environment. It includes


three factors such as, economic conditions, economic policies
and economic systems. Organizations should recognize and evaluate
economic conditions to determine how to produce and supply.
Organizations must identify the essence of the economy in currently and
the stage of development or the cycle of development in economy of
country. Moreover, organizations should notice lever of income (GDP per
capita). GDP is the market value of all final goods and services produced within a country in a
given period time. Organizations will recognize developing and recession economy and have
forecast GDP raise or fall in future to make suitable strategies. Next, distribution of income that is
a disparity between rich and poor among the classes in society such as Vietnam, Cambodia. On
inflation, this is an important factor in economic development because it makes many effects for
economy. Besides, some factors also are inside economic conditions such as, balance of payments,
saving and investment, rate of saving, growth rate of GDP. Next, we figure out economic policies.
Some policies of government are fiscal policy, monetary policy and trade policy which are
important three policies to regulate business. Besides, government also propose policies to be
impacts on economy. Economic growth and standard of living improvement are to promote the
development and resolution of social problems. For example, an increase in labor factor will help
provide works to fall unemployment rate. Next to, government wants to a full employment
economy. It means all people who are in working age must have job stability. Especially limit
natural unemployment rate. Besides, government has policies about price stability or no inflation.
It creates a stable investment environment and an effective allocation of social resources. On the
other hand, government encourage investment to develop economy such as, lower interest rates,
tax incentives, improved access to capital, encourage a higher savings ratio, help for small firms,

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improvements to the labor force. It is worth noting that policies of government can make
advantages for businesses, but it also make disadvantages for other businesses. Therefore, before
doing business, organizations must identify economic policy in that area regulations. Finally,
economic system includes three basic system such as, centrally planned economy, free market
economy and mixed economy. Centrally planned economy is an economic system in which all
decisions about production, distribution and consumption are focused on the government.
Production organizations, or trade in the economy are essentially dependent on the government.
This economic system will restrict development of working resource. Unlike centrally planned
economy, free market economy is businesses make decision for what goods need to be produced
without the intervention of the government. Mixed economy is an economy in which interaction
of both businesses and the government. They play an important role in addressing the underlying
economic problems of society together. For example, monetary of government create motivation
for business borrow money for investment expansion.

Thirdly, social factor is cultural values and specific social factors,


especially the characteristics of consumers in those areas. Social factors
will divide the community into customer groups of consumption habits.
For example, ethical, aesthetic, lifestyle and occupational attitudes.
Companies that produce the clothing of preference and size in Europe,
but sell in Asian countries, so they are unlikely to do so well. Next, when
mentioning to sociocultural, it will concentrate on culture and religion. For example, Islamic
countries do not allow the sell and buy pork. Besides, social concerns and priorities; level of
awareness and education also affect to organizations. For example, between mature and childish
people, high school and primary school students,.. They have different consumption habits.
Therefore, organizations must have deeply analysis to make suitable strategies with various social
factors.
The fourth is technology which a factor which attach great importance
in globalization progress. The world is still in the fourth technological
revolution, and a series of new technologies is born and integrated into
products and services. When analyzing technological factor,
organizations need to identify they operate in country which has the
development of technology or not. Moreover, technological

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achievements which are applied on business well or not. And, resource technology that they can
approach easily. The impact of technological development and spending on technological
development varies by industry. Communications, electronics, aviation, and pharmaceuticals are
always high-tech innovations, so spending on technology development is often higher than in
primary sector industries. It will help organizations can make a combination of solutions, methods,
processes, skills of suitable technology strategies. Some organizations can receive encourage and
sponsorship of government research and development technology. If businesses are aware of the
opportunities, they will have the advantage of operating in the process. For example, government
facilitate for approaching research from universities to apply in practice.

The fifth factor is legal which is the one of important elements of


economy. Organization must analyze legal of economy suitable or not in
economy currently because legal factor will decide a healthy or unhealthy
business environment. The first condition is to ensure a fair business environment for businesses
and to force businesses to be honest and responsible. Legislation will have policies that allows,
does not allow or require businesses to comply. If there is just a small change in the legal system
such as taxes, investment ... will affect the production and business of organizations. Next, it has
policies to ensure the rights of the consumer or not. For example, to encourage organizations and
individuals to apply and develop advanced technologies for the production of goods and provision
of services in a safe and quality for customers and to supervise the observance of law by
organizations and individuals. Besides, there are legal to protect foreign traders and encourage
them to invest to raise GDP. Moreover, government will have policies to protect domestic industry
such as, tariffs, quotas which will confine imports. Besides businesses and consumer protections,
government always notices to protect environment. Such as, punishment policies for
environmental pollutants and waste disposal are also a government regulation. For example, the
number of non-toxic waste regulations that businesses can discharge into the environment.
VEDAN is a specified example with violating the law when dumping industrial waste into rivers.
Therefore, survival of an organization depends on level of understanding policies of legal. It is
better if organizations figures out international law.

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Finally, environment is not only important for people but also
important to input factors of industries. Natural environment includes
geological and ecological factors. For example, natural resources serves
the mining industry, weather and climatic conditions affect to the
farming industry or the livestock industry. Especially, human beings are
severe degradation of natural conditions such as, increased
environmental pollution, the depletion and scarcity of resources and energy, the imbalance of the
ecological environment. These are large challenges for the industry in the future. Besides,
differences in geographical conditions is one of all developing restriction of businesses. For
example, mining industries are often located in close proximity to mineral resources and far from
the processing industry. Therefore, organizations need to have aware of the savings and effective
use of natural resources. The research and development of technologies must be promoted and
minimize the environmental pollution caused by the activities.
To sum up, when analyzing business environment, we need to concentrate on factors of PESTLE
model to have more insight. It helps us to raise successful ability and avoid mistake decision.
Moreover, it will be more useful if we have planned to do business in other country.

4.2 Evaluate the positive and negative impacts of the macro environment on business operations.

Macro environment is divided into 2 parts which are economic and non-economic. They will
create advantages or cause disadvantages as dominating activities in business process. Therefore,
organizations wants to achieve success, they need to understand clearly about positive and negative
impacts of the macro environment to control business operations.
Firstly, we will figure out impacts of economic environment. As mentioned above, economic
environment has three important factors such as, economic conditions, economic policies and
economic systems. Those economic factors have most strongly influence on business operations
are usually the state of development of the economy. If the national economy grows at a high rate,
it will increase output and commodity that have increased the business efficiency of organizations.
When the national economy is recession, it will negatively affect businesses. For example,
inflation, the level of unemployment also affects both production and consumption. When inflation
is high, it will negatively impact consumption, reduce demand, reduce consumption, and
discourage production and investment for organizations. Moreover, economic policies also have

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many impacts on businesses. It is remarkable that some policies of government can affect
positively to types or categories of business, but it can make negatively effects to other businesses.
Secondly, it mentions to impacts of non-economic environment. It includes factors such as,
demographic, technological, political, social and regulatory environment. Demographic
environment involves population and population characteristics. For example, some factors are
growth of population, age compositions, life expectancy, sex ratio etc. They will affect the demand
for various goods and services. When the characteristics of the population change, it will make
change in the structure of consumption and the demand for goods and services. Therefore,
businesses must also change their business strategies to adapt. Technology environment is more
and more developing, it makes operations becoming easily. Besides, this is a large challenge for
organizations if organizations are operated in area that has high development of technology.
Surely, those organizations will be approached and applied modern technology to make efficient
productions. In contrast, organizations do not master of technology or do not adapt well, they will
be pushed back and backward. Therefore, businesses must closely associate business development
with the development of science and technology. Next, political environment almost just take place
at countries which have two and more parties. For example, if relationship of parties are good, it
has not conflict to create economic environment well to facilitate development of organizations.
Unlike, if parties often have conflict, it may restrict the interrupt business operations. On the other
hand, social and cultural environment are necessary knowledge for organizations to make their
business suited to the cultural environment. Lifestyle, education, religion, beliefs of customers
have a profound influence on the structure of demand in the market. So, an organization wants to
sale product well, they need to know habit and behavior of customers. Social culture also directly
influences the formation of the cultural environment of the business such as, staff contact with
business partners as well as customers. Therefore, it will positively affect if organizations serve
customers well and vice versa. Finally, regulatory environment is the factor that affects the
business of each organization. The promulgation of the legal system is the first condition to ensure
a fair business environment, creating conditions for all organization to have the opportunity to
compete healthy and equal between producers and consumers. This has a positive impact on
businesses doing business right. The opposite will affect the business environment and the business
of the organization. Moreover, it also negatively affect the living environment, the life of
consumers. Investment policies, economic development policies, structural policies of the
government will create benefit or restrict the development of each sector, each economic region.

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To sum up, factors in the macro environment bring new opportunities as well as challenges for
organizations. It depends on way of reaction of each organization for factors to decide development
of this organization. Because organizations cannot control, change the elements of the macro
environment, they must find ways to adapt, survive and develop in that conditions.

Application
o The application of the PESTLE framework:

TH TRUE MILK Joint-stock company operates in the field of


milk production. TH Group was established with the financial
consultancy of North Asia Commercial Joint Stock Bank. TH
Group is gradually developing to become the leading
manufacturer in Vietnam providing clean and natural food
products. The success of TH group now certainly thanks to the
sustainable development strategies from the leaders. Besides
factors micro environment, macro environment also contribute
important role in success of organizations in general and TH group in particular. We will apply
the PESPLE framework to figure out clearly impacts of external environment for TH TRUE
MILK.
Firstly, we will research impacts of political factor to TH group. TH TRUE MLIK operates in
the territory of Vietnam which has stable politic. This is one of the favorable factors in doing
business because it makes safe in activities. This is a good condition for Vietnam to attain high
economic growth rate and equal growth. Besides, an stable politic also is to ensure the cooperation
of domestic and foreign of TH true milk. For example, a cooperative agreement on the
implementation of a project to invest in the construction of a dairy cow breeding complex and high
technology milk processing and greenhouse production of vegetables and fruits in Kaluga Province
(Russian Federation) in 2016. It shows belief cooperation with country has stable politic.
Secondly, a stable politic also helps to develop economy of Vietnam. Vietnam's rapid
economic growth has a positive impact on domestic purchasing power. TH True Milk always
receive great numbers in revenue.

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(Source: TH TRUE MILK., 2017)
Besides, Vietnam is facing the risk of inflation again. Prices of basic commodity recovery
combined with Article Valuation of education and health services has put pressure on domestic
inflation. Therefore, people may cut down on milk consumption. On policies, monetary policy in
2016 is flexible and tight. The State Bank of Vietnam still follows the target of stabilizing inflation
and is cautious with this goal. We can see economic environment brings opportunities which are
more and more widely milk market for TH true milk. But, it also brings challenges for them.

(Source: General Statistics Office)


Thirdly, the more economy develops, the more standard of living improves. Therefore, they will
have more demands in the foods. For example, in the reality of Vietnam, most of elite people and
a small part of normal people have habit of drinking milk in everyday. It is benefit for dairy
company in Vietnam in general and TH true milk in particular. The need to improve health and
beauty are more and more increasingly. Because being awareness of this issue, TH true milk

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company has diverse products which are commitment from 100% nature. This is strategies which
affect tastes and preferences of customers. The awareness of benefits from dairy products of people
who have high education also affect milk output in production. In short, social environment in
Vietnam also brings advantage for TH true milk.
The fourth is technological factors. In condition of undeveloped technology as Vietnam, TH
bought all the technology of dairy farming in Israel and the world's leading dairy processing. For
example, electronic chip (AfiTag) are tagged in food of cow. It is an electronic device capable of
collecting data related to the health and status of cow. Afimilk (Israel) automatic and computerized
milking center. This system allows automatic milk quality inspection. If quality assurance is not
guaranteed, then immediately the milk is eliminated.

(Source: THtruemilk., 2017)


The fifth is legal factors. Government always has the policies which protect domestic
organizations. For example, tariffs and quota policies for milk imported into Vietnam are high,
and there are plans to raise more in the future. It helps to ensure supply quantity of TH true milk.
Moreover, TH true milk will raise competitiveness for imported milk. Government policies in the
development of dairy industry are accelerated. TH company has the opportunity to expand even
more in the regional integration. Therefore, policies help TH closer to dominate the domestic
market and competitive strength with foreign dairy products. If not make optimal use of such
policies, TH company will be passed by opponents and lost market. The point are remarkable for
TH true milk that the regulation of the content of melamine in milk. Some other dairy companies
produce in excess of allowable limits of melamine, it also affects belief of customers. Consumers
will be wary of buying dairy products, this will increase the risk of decreasing sales. Therefore,
TH should be respectfully in the production and distribution and improve awareness of customers.
Finally, environmental factor is an important effect to business operation. Milk factory of TH
True Milk are located in central Vietnam. In particular, Nghe An province are affect by harsh

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climate which is often dry, drought. Especially, it is frequently affected by typhoons and floods in
recent years. These factors are unpredictable, so factory can be damaged when they take place
incidentally. Unlike, there are rich materials, large grass hill which are benefit for production. Such
as, the dairy farm is located next to the river, so it is very convenient for watering grass. Besides,
these is available materials, so TH company is minimized production costs.

(Source: THtruemilk., 2017)


To sum up, suitable strategies help TH true milk positively deal with impacts of factors of macro
environment. Surely, TH true milk will overcome large challenges to have higher positions in the
milk field.
4.3 How the organization goes through the transformation process and overcome resistance
to change in response to the changing market environment.
Nowadays, global is facing risk of fluctuations in the economy. The higher the
internationalization trend becomes, the more global economic problems emerge. These are major
challenges for countries in the world in general and Vietnam in particular. Therefore, domestic
and international business first requires the managements and organizations to pay attention and
the law firmly. On the basis of a firm understanding of the legal system of each country and the
agreements between countries, that will be the foundation to allow the organizations to make the
right decisions in choosing the country, business area. Organizations operates in the international
business environment, it requires to have certain knowledge of the economy. The knowledge of
economics will help traders determine the impact of a country's economic policies on its business.
For example, economy of Vietnam also receive positively and negatively fluctuations in the
economy of the world. An organization in Vietnam as TH True Milk also needs to have strategies
to adapt to the transformation of Vietnams economy. The first strategy of TH True milk was to
change the awareness of customers. Although product of TH true milk was born after the products
had dominated the dairy market. But nowadays, TH True milk is accounting for 50% market share
because their strategy is to create products that are different from what already. The second strategy
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is development of resource. When established, TH company must hire both professionals and
farmers to operate technology in the initial start-up to adapt international standards of quality.
After 4 years of training human resources in Vietnam, the company really believes in technology
transfer. In order to improve the technical level of the employees, the company always changes
the best machines and computer systems. The three strategies is to hit on consumer psychology in
marketing strategies. Businesses in different periods needs to have suitable strategies to go
through, survive in a difficult period and obstacles in the market
LO4 Determine the internal strengths and weaknesses of specific businesses and explain their
interrelationship with external macro factors
Task 5 Conduct internal and external analysis of specific organizations in order to identify
strengths and weaknesses.
5.1 Applying SWOT analysis to evaluate internal environment

***A case study of ACECOOK company


o Introduction (business activities/ main products/ vision/ mission/ objectives)
ACECOOK is a noodle produce business in Japan and is established in 1993 and officially put
into operation in 1995, in Vietnam. After many years of operation, ACECOOK Vietnam Joint
Stock Company has grown to become a leading food products company. ACECOOK operates in
the field of producing high quality noodles and fast food products. Because ACECOOK is a
leading food products company in Vietnam, it has large vision, mission and objectives. Their
vision is To become a leading manufacturer of foodstuffs in Vietnam whose management ability
is commensurate with globalization. To bring new culinary consumption concepts to local and
foreign consumers through supplying high quality products. (ACECOOK Vietnam.,2017). Their
mission is Satisfy consumers demands. Bring happy life and sub stainable growth to employees.
Attain a strong position and supports in over the world. (ACECOOK Vietnam.,2017). On
objectives in 2017, the company also planned for exporting boost. Our goal is to raise export

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revenue ratio from 8% to 20% in upcoming years. Besides, the sector of cup noodles and instant
food from rice, instant vermicelli has seen very good growth rate; therefore, the company shall
continue to invest in development and expansion of this potential sector in the future. (ACECOOK
Vietnam.,2017).

(Source: (ACECOOK Vietnam.,2017)


Table 1: SWOT analysis

Organizational Human Company Physical capital Financial


structure resources image resources

Strengths ACECOOK are ACECOOK ACE is large After 14 year From the
operating in has abundant company, so development in moment of
decentralized resources. company noodle fields in establishment
organizations. The image is Vietnam, is joint-
In particular, it company has deserve ACECOOK has venture
is divided by brought attention. built 7 factory to organization.
areas. Each stable and ACECOOK serve for Now,
area has a potential jobs brand is production to meet business
factory and its for workers well- known quantity supplied changed to
departments. in Vietnam. in many for market. ACE's joint-stock

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Besides, It includes parts of the working offices are company. It
ACECOOK professional world, so often modified and can be
also organize workforce this has expanded. issuance of
based on the and Dynamic contributed Moreover, shares to
product such departmental to the ACECOOK is raise capital.
as, each area resources. company's business of Japan, Besides,
has noodle Young and image. so it inherited ACECOOK
factory and dynamic Therefore, modern facilities can get help
spice factory. staff, well- ACECOOK and machines. from the
Each equipped always has Therefore, it parent
Department staff in terms action for ensures quality of company in
keeps specified of environment products and save Japan.
mission in knowledge, periodically. efforts of labor. Moreover,
business expertise. In ACECOOK Such as automatic shareholders
operation. addition, also note to machines, steamer, of company
Namely, specialist awareness of frying pan, boxing will
ACECOOK has positions will customers. machine. Besides, contribute
7 agencies and have longer So, company it makes more capital to
11 factories in training often carries preeminence than large
all country. periods of out competitive investment
This division more than propaganda rivalry. Such as X- projects of
allows business three years, and care ray machine to the company
entry market in five years or activities for ensure food safety. in the needs.
areas which are seven years. customers to
faster than ACECOOK create good
other also supports images.
businesses. the training Beside,
Depend on of fresh charitable
customer graduates, so activities has
demands in it has a been
areas are to strong appeal happening
for young exalted.

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produce resources. In Company
suitability. order to also built
create brand on
believes for media.
its staff, Company
ACECOOK usually wins
Vietnam has the "high
acquired quality
accident Vietnamese
insurance for products".
thousands of
employees.
Weaknesses Although Because Some The charter capital No
ACECOOK has requirement counterfeit are so much. information
benefits in of goods Company must
many structures ACECOOK imitate the spend so much for
in a company highly, it brand of the cost of
as mentioned must train ACECOOK. technology.
above, it also new Then, Some Especially, X-Ray
causes employees in customers machines are
disadvantages. long time. and bought with more
Such as, there Work in a competitors than 200 billion
is no close large rely on it to VN.
cooperation business be
between environment, negatively
branches to high salary, impact the
create unity in but company
the enterprise. employees image. For
The division of are under example,
branches by the high Hao Hao
region creates pressure. So, noodles are
the it makes fired and bad

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disadvantage of spend much smell when
geographic money. burning.
distance. Some
departments
of the
company
require
employees to
know
Japanese. So,
this is a
limitation to
people with
high
qualifications
but do not
know
Japanese
Opportunities Impacts ACECOOK If the The level of Business can
positively from is a good developing science and mobilize
domestic and environment. business technology in the external
international So, it can become, the world is more and capital when
business trends, make better image more growing. they really
ACECOOK attractive becomes. Especially, parent need.
will have a resource. Image of company is Japan Moreover,
change for the Especially, ACECOOK where there is high ACECOOK
most suitable resource has is more and technology. can create
structure high degree more ACECOOK attraction to
organization. and increasingly Vietnam will have select objects
experience. in awareness a chance to receive to cooperate
of model technology to increase
customers. revolutions. the size of

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physical
resources.
Threatens In the future, if The unfair Image of If business not Uncertain
company do not competition company regularly check on financial
have suitable of bad will reduce the physical factors management
strategies when competitors if company of the business, so of an
there is an in the do not have some minor errors individual, it
economic industry. timely of the machinery can affect the
transformation That is the responds for can interrupt the company's
process in penetration the sabotage production process. revenue.
domestic or of from It even affects the
international, it destructive external supply of the
will be a threat people who environment. business.
to lag behind come from
and even other
lagging out of businesses.
the market. Staff may
reveal the
secret of the
business for
their
purposes.

(Source: author)
5.2 Introduction: Porters five forces model
- Competitive forces in an industry

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Porters five forces model is perfect competition model for industry. The model helps
businesses identify competitive ability and competitive strategies to maintain and increase
profitability in business. This model is necessary for businesses because it helps them to
understand the forces in business environment around that can affect their profitability. It depends
on the strengths of five forces: Intra-market rivalry, potential entrants, substitute markets,
customers and suppliers. In particular, intra-market rivalry is businesses which operate on the same
the field. If the field has more and more businesses joining, power of each business will falls
because customer may use products from other businesses. In contrast, if only a few businesses
has operation in the field, their power will be huge. Some necessary factors need to notice such as,
number of competitors, difference in quality, price change, customer loyalty. On supplier, they
affect to business by quantities of materials or price of material which businesses buy. If businesses
have many suppliers, they will have less impact because businesses has alternative choice. In
contrast, if businesses have few suppliers, they will have more impacts to businesses. Some factors
are necessary to notice in supplier force such as, number of suppliers, the size of the supplier,
ability to find replacement products replacement cost. Customers are factors which are directly
impacts to the cost of products. It depends on the cost of the customers willing payments for
products or services. Therefore, businesses need to notice customers number, loyalty of customers,
price sensitivity of customers. Threat of substitute is products or services which have the same
usability. If specified product or service has many products or services which has the same
usability, its power will be reduced and vice versa. Hence, businesses are necessary to notice to
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price of substitute products. Lastly, threat of new entry is competitors which may appear in the
future. If it has strengths, it will able to dominate the market because these businesses have a
certain reputation on the other fields. Hence, the available businesses need to notice product
protection, technology protection, barriers of entry, advance awareness of their products.

*** A case study of ACECOOK company


- The application of the Porters five forces model to evaluate competitive market.
Noodle market is being seen as necessity in Vietnam as well as in the world. ACECOOK is one
of those businesses that has a strong position in the noodle market in Vietnam. It is accounting for
50% market share and the most diverse products. It shows that ACECOOK are keeping perfect
strategies and competitions. In competitive environment, ACECOOK also refer to Porters five
forces model.
Firstly, it mentions to potential entrants. Potential entrants are businesses which have not
appeared in this industry yet. But future, it can expand and entry in the field of noodle and affect
to available businesses. In particular, UNILEVER group may be competitor of ACECOOK in the
future. UNILEVER are operating in the field of products for family. Some famous brand are
believing by customers such as, KNORR seasonings, KNORR porridge, LIPTON tea, they are
products close with the noodle. Therefore, it is no exceptions that UNILEVER will entry noodle
industry.

(Source: Unilever.,2017)
Secondly, Although ACE COOK has variety products, it is also facing threat of substitute
products. The first thing to mention is the porridge which is a preferred product of almost people.

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Beside self-cooked porridge, there is porridge packed of businesses such as, REEVA, VIFOOD,..
That is products which are preferred by children and older. Next, PHO is traditional food which
is preferred by almost people. Especially, it has great appeal for foreign visitors. And some
products are same kind such as, vermicelli, crab noodle... We can find easily it anywhere on the
roads. Moreover, some substitute products to noodle for breakfast such as, sticky, bread.
Furthermore, some foods are affected by foreign such as, pasta, soup,.. But general speaking, the
product of ACECOOK in particular and the whole industry in general are more affordable than
some of all above. Therefore, it is suitable for people who living in developing country as Vietnam.
We can see some substitute products of noodle through image below.

(Source: author)
Thirdly, customers are certainly important force because it decides survival of business.
Therefore, the business always face power of customers and ACECOOK has no exception. Market
share of ACECOOK is 50%, so it demonstrates that ACECOOK has a powerful customer systems.
It concludes wholesalers, retailers and distributors. Therefore, it is also under large pressure from
customers. The first is prices which are the bargain of customers. It will involve to competitors.
When another business debut a product which are cheaper and the same quality. It hits customers
popularly. Certainly, they will choose this new product. Therefore, price psychology of customers

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are necessary to care. The second are impacts from badness. Fake goods, smuggled goods enter
the market with the packaging of ACECOOK. It makes customers who has misunderstand about
them. Consequently, customers may change other brands. Therefore, customer care and propagate
the program of ACECOOK are more and more increasingly to create belief of customers. The
larger the scale are, the more pressure are. So, ACECOOK has never stopped to raise awareness
of customer issues.
Moreover, suppliers also has large effect to ACECOOK. Previously, ACECOOK gotten
difficult to find input material when business was being established. Meanwhile, ACECOOK must
import material from Japan with high prices. Now, these problems also improve, but sometimes
ACECOOK also face pressure from supplier because they will require increasingly prices. The
largest pressure from supplier is quality. If the cost is to exploit material raises, but suppliers cannot
raise prices for businesses. A problem which are lower quality, will happen. It is one of threat to
quality products of ACECOOK. Therefore, finding good and reputable suppliers are necessary
issue. Some suppliers are suppling materials for ACECOOK such as, Saigon Trapaco, Trung Nam
joint-stock company, Binh An wheat flour company,
Lastly, that is intra-market rivalry. As noted above, noodle market are stronger and stronger, so
there are a lot of businesses competing with each other in this field. Although ACE COOK are
keeping strong position on market, it also has threat of competitive rivalry. In particular, MASAN
is one of large competitors which is ranked second in the noodle industrial Vietnam. Masan has
spectacular attack and successful with the advertisement "hit the fear" of consumers. The most
famous product of MASAN is OMACHI with promotional slogans such as "potato noodles, not
afraid of heat". That is a smart strategy that is a potential threat of ACE COOK. Moreover, VIFON
is the oldest noodle business in Vietnam is also large competitor. As well as ACECOOK, VIFON
also has the strength to produce a variety of products ... VIFON selected the media slogan is "do
not use the color composite". It also focuses on consumer psychology.. That is some threat of
ACECOOK from competitive rivalry in noodle industry.

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(Source: author)
To sum up, according to 5 forces above show that ACECOOK is a large business, so the threats
of it are not small. But, ACECOOK always has smart and suitable strategies to survive in long
time.
Task 6 Explain how strengths and weaknesses interrelate with external macro factors
6.1 Introduction: Government policies
+ Trade policy (Tariff/ Quota/ Exchange rate)
+ Fiscal policy (Tax/ Government spending)
+ Monetary policy (Interest rate/ Money supply)
Macroeconomics include all factors of national economic. It has directly or indirectly affect to
businesses. Therein, along with other factors, government policies are a key tool which has roles
in business regulation. The government policies may affect the competitiveness and profitability
of businesses. There are 3 mainly factors in government policies such as, trade policy, fiscal policy
and monetary policy.
Firstly, it mentions to Fiscal policy. Fiscal policy is the way the government which affects to
economy by taxes collection from the people and uses it to spend for the activities of the state.
There are many types of taxation, but direct and indirect taxation are common types. In particular,
direct taxation earns tax money from taxable income. Taxes will be different because of depending
on the level or scale of the person or business taxes. Moreover, indirect tax is a tax which is added
to the price of goods and services. For instantly, indirect taxes usually depends on enterprise to tax
the consumers such as, value-added tax (VAT), hydrocarbon tax, tobacco tax, alcohol tax, import
duties. Besides, there are other sources. Such as, national or social insurance, rental of land or
property, and to be divided from joint stock companies. Next to, government will use sources to
invest in the activities which make country become better. It is called government spending.

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(Source: Campbell, D. & Craig, T., 2005)
The image above shows government expenditure in US. According to it, government always
focuses on the various fields to comprehensive country development. Especially, government
investment in the field of social security investments holds an important position. It shows that is
the security of the people in above all things. Besides, the spending for health, education, and
infrastructure.. also is equally attention. The two main activities of the government are revenue
and expenditure. It will have cases that happen in the fact. If taxation is more than expenditure, the
state budget will be surplus. In contrast, if taxation is less than expenditure, the state budget will
be deficit. If taxation is equal to expenditure, state budget will be balance.
Secondly, monetary policy is a change of circulation of money which is created by Federal
Reserve System (Fed), central bank, currency board. Some actions of monetary such as, modifying
the interest rate, buying or selling government bonds, and changing the amount of money banks
are required to keep in the vault Government proposes monetary policy to affect monetary

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variables by two basic way such as, interest rate and money supply to regulate the economy. The
interest rate is a certain percentage and it is derived from a loan between the parties.

Operation and effect of interest rate are shown by the


image on the right. It shows interest rate do not make effect
to money supply curve, because it is controlled by central
bank. Besides interest rate will affect to money demand
curve. It shows that money demand curve is downward
sloping. It means if interest rate falls, money demand will
raise. For example, businesses have trends borrow for
investment. If interest rate rises, a fall in consumption and
deferring investment will happen. In other aspect as between banks and depositors. When interest
rate of banks raise, people tend to deposit money into banks to earn interest. It makes reduce money
circulation in the market. They are applied when government wants to raise or reduce the amount
of circulation money.
Moreover, government will control money supply by four tools. The first is Open-Market
Operations (OMOs) where the government opens for the purchase or the sale of government
bonds. Moreover, this is the most important and popular tool. When needs of raising money supply,
government (or central bank) will buy government bonds. Conversely, if government want to
decease money supply, government (or central bank) will sell government bonds. The second is
Reserve Requirements (rr) which are regulations of central banks for commercial banks.
Commercial banks must adhere to requirement about cash and loans. When needs of raising money
supply, banks must make more loans. In contrast, when needs of reducing money supply, banks
must make fewer loans. The third is Discount rate. This is the interest rate which the central
bank regulates loans of commercial banks because commercial bank can borrow reserves when
they are low on reserves. When needs of raising money supply, government can reduce discount
rate. Therefore, central banks encourage other banks to borrow more reserves. Then, banks can
make more loans and money supply will raise. And, when needs of reduce money supply, the
process works in reverse. The last is interest rate on reserves which has just created in recently
years. It is used for affecting the amount of reserves that banks hold and the money supply. When
needs of increasing the money supply, banks must reduce interest rates on deposits and vice versa.

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Lastly, trade policy which is standards, goals, rules and regulations that pertain to trade relations
between countries. It includes the actions such as, trade, quotas, import and export. It involves in
close and open economies. A closed economy is dependent and does not have imports, exports.
Conversely, an open economy is called international trade which have interaction with other
countries in the world. Moreover, trade policy also involves in balance of trade. If imports are
more than exports, it will happens trade deficit. If exports are more than imports, it will happen
trade surplus. And, if exports and imports are equal, trade will be balanced. Trade policy depends
on the world price (Pw), which is dominant price in the world. If domestic price are less than the
world price, exports will expand under free trade because other counties tend to buy affordable
goods. In contrast, if domestic price are more than the world price, countries will tend to import
goods because of not having comparative advantages. International trade will affect to small
countries which are a taker price because of not having effects on the world price. Next to, trade
policy has welfare effects of trade such as, direction of trade, consumer surplus, producer surplus
and total surplus. All of them will change based on the world price.
Lastly, trade policy which is standards, goals, rules and regulations that pertain to trade relations
between countries. It includes the actions such as tariff, quota, exchange rate. It involves in close
and open economies. A closed economy is dependent and does not have imports, exports.
Conversely, an open economy is called international trade which have interact with other countries
in the world. Moreover, trade policy also involves in balance of trade. If imports are more than
exports, it will happens trade deficit. If exports are more than imports, it will happens trade surplus.
And, if exports and imports are equal, trade will be balanced. Trade policy depends on the world
price (Pw), which is dominant price in the world. If domestic price are less than the world price,
exports will expand under free trade because other counties tend to buy affordable goods. In
contrast, if domestic price are more than the world price, countries will tend to import goods
because of not having comparative advantages. International trade will affect to small countries
which are a taker price because of not having effects on the world price. Next to, trade policy has
welfare effects of trade such as, direction of trade, consumer surplus, producer surplus and total
surplus. All of them will change based on the world price. There are three tools which government
uses to regulate the economy. The first is tariff which the limit on the quantity of an imported
good. Imported tariff is to contribute to the development and protection of production of domestic
and to contribute to the revenue of government. There are many ways to tax imported goods. Trade
policy usually uses two basic ways such as, either calculation depend on the quantity of imported

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goods in the prescribed amount of money or calculation is on a percentage (%) for the total value
of goods. This is one of those ways to restrict trade. The second tool is quota which is another way
to restrict trade. It is the regulations of government on the quantitative of a certain imported goods
in a certain time. In quota, the government does not right to tax. Because quotas make restrict
domestic prices of goods, foreign suppliers and their importers will have large profits. Government
applies the import management by quotas for the protection of domestic production, the efficient
use of foreign currency funds and the fulfillment of commitments with foreign countries. The last
is exchange rate which is the price of a currency is calculated in the currency of the other country.
For example, the exchange rate between USD and VND, people in Vietnam has to pay about
22.000 VND for $1 in US. Every business in trade needs to forecast change of exchange rate to
management of working capital to ensure a safe, effective and growing businesses. On the other
hand, import of goods may be restricts when a limit to the amount of a currency that can be bought.
To sum up, this is factors and tools of them which government use to regulate organizations.
Organizations should identify to comply and it will be better if organizations know how to develop
business based on these policies.
6.2 Evaluate the impacts of government policies on organizations and business to make
decisions.
o General evaluations on business in economy
In the field of business, businesses not only under pressure from customers, shareholders,
labors,.. but also are influenced by government. Government always proposes policies in the
attempt to decease problems of economic recession. Policies of government depend on operations
of business organizations in market economies. Hence, businesses must change operation way
after government change policies or add new policies. In particular, the first is to mention impacts
of fiscal policy of government. Government will use this policy by taxation and spending to
achieve goals such as, economic growth, job creation, price stability. On taxation, organizations
must declare and pay tax for the government at appointed time. It will tax on revenue of sales,
service supplier of organizations. Moreover, government will affect to businesses by Fiscal policy
expanded and tightened. For example, when government expand fiscal policy, it means
government raise spending. Hence, government also contribute the increase of total demand for
goods and services. Hence, organizations and businesses also expand business and more supply to
the market. The second is impacts of monetary policy of government. Almost government refer to
tightening monetary policy to curb inflation and macroeconomic stability. But, tightening

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monetary policy also causes difficulties for organizations. Such as, there is a number of barriers to
business when accessing to bank loans. For example, high interest rate when government want to
fall money demand. Hence, if organization must pay with high interest rate, efficient of business
operations will fall. Even though, If the organizations cannot afford anymore, debts for banks will
increase rapidly. Therefore, organizations must choose suitable business plan which are the most
necessary in difficulty from banks. Especially is high interest rate, organizations need investment
capital with the most efficient and avoid rampant investment.

The barriers of organizations in accessing


capital from banks
50 46.2
45
39.9
40
35
28.5
30
25
20
15
9.6
10 7.3
5
0
No need for a Complex High interest No capital Additional
loan procedure rate symmetry charges apply

(Source: General Statistic Office)


Lastly, trade policy of government link between production and consumption, and it creates a
chance to domestic organizations collaborate with foreign organizations. Impacts of trade policy
of government usually involves in organizations which have large size. Especially, organizations
operate on imports and exports. Through trade the organizations can increase its production
efficiency. For domestic organizations, when import tariffs are applied, surplus of producers (or
organizations) will raise because their products are sell with higher price. Government also
receives revenue from import tariffs. Besides, organizations will tend to invest in innovating
production technology to increase their competitiveness in domestic and foreign markets.
However, if the government tax too high in long time, businesses will try to evade taxes. On quotas,
it will predict quantity of imported goods. On the other hand, exchange rate is the leading concern
of organizations. They always desire to maintain permanently exchange rate because it will make
reduce risk when their products, services to the world market.

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o Choosing a specific company to illustrate the explanations.
PETROVIETNAM EXPLORATION PRODUCTION CORPORATON (PVEP) operates in
the large field as oil exploited, so it also has strong impacts of government policies. On fiscal
policy, PVEP always has impressive tax contribution for budget state. In particular, PVEP is
one of organizations which are in top tax contribution for the state in recently years. It also
shows that government depends heavily on large organizations. The remarkable achievements
in production operation and business activities and strong promotion of social responsibility,
so PVEP has contributed significantly in the implementation of Government's macroeconomic
measures to maintain the increase economy. On monetary policy, PVEP has close cooperation
with commercial banks. VIETCOMBANK and PVEP have commitment to maintain
comprehensive, long-term cooperation. PVEP always has recommendations about interest rate
problem. In particular, that is adjusted interest rates to match the financial balance of PVEP.
Besides, renewal of loans take initiative in arranging capital for investment projects. On trade
policy, PVEP has made efforts to expand its investment in overseas exploration projects with
the Government's policy. Statistic of tariffs, quotas,.. of PVEP are limited.

Conclusion
According to this assignment, we will see importance of macro and micro environment.
Organizations must rely on PESTLE to have suitable strategies and know how to respond timely
to economic events. Besides, organizations should identify factors of SWOT and Porter's five
forces to propose alternative strategies. Finally, organizations must make decision based on
policies of government.

References
Books
1. Campbell, D. & craig, T., 1988. Organisations and the business environment, 2nd edn.
London.
2. Worthington, l. & Britton, C., 2006. The business environment, 5 th edn. United
Kingdom.

Websites

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1. General Statistics Office. 2010 [Online]
Available at: https://www.gso.gov.vn/ . Accessed : Oct 22, 2017.

2. Acecook ,(2017). Acecook Joint stock company.


Available at: http://acecookvietnam.vn/. Accessed : Oct 22,2017.

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