34 a STUDY ON FACTORS AFFECTING BUSINESS ACTIVITIES AT GLOVIMEX COMPANY LIMITED

---Student: ĐỖ THỊ NGỌC Group: CQ55/51.05 GRADUATION THESIS TOPIC: “A STUDY ON FACTORS AFFECTING BUSINESS ACTIVITIES AT GLOVIMEX COMPANY LIMITED” Major : Faculty of foreign language Stud

-Student: ĐỖ THỊ NGỌC Group: CQ55/51.05

GRADUATION THESIS

TOPIC:

“A STUDY ON FACTORS AFFECTING BUSINESS ACTIVITIES AT

GLOVIMEX COMPANY LIMITED”

Major : Faculty of foreign language Student code : 17522202010154

Supervisor : M.A Bui Thi Tuyet Mai

I, Do Thi Ngoc, hereby declare that this thesis and the study presented in it are

my own and have been generated by me as a result of my own original research, nocopying on any prior work

Thesis: “The study on factors affecting business activities in Glovimexcompany limited”

Hanoi, May 2021Student

Đỗ Thị Ngọc

I would like to express my deep gratitude to all those who have given me thepossibility to complete this graduation thesis In preparing this graduation thesis, Ihave had generous help and advice from my teachers, my colleagues, my family and

my friends I would like to express my great thanks to all of them

To begin with, I would like to express my deepest gratitude to my supervisor,M.A Bui Thi Tuyet Mai, lecturer of Academy of Finance, for her guidance andinstructions It is whole-heartedly appreciated that your great advice for my studyproved monumental towards the success of the study

Besides, I wish to show my sincere thanks to all my teachers at Academy ofFinance, who have provided me with worthy lessons throughout 4 years of study.Moreover, I am indebted to the staffs of Glovimex Company Limited for theirvaluable supports during the internship I am extremely thankful and indebted tothem for sharing expertise, and sincere and valuable guidance and encouragementextended to me

Furthermore, I would like to send my loving thanks to my family whose greatlove and care in both spirit and health to encourage me to complete the thesis

Last but not least, I also place on record, my sense of gratitude to one and all,who directly or indirectly, have lent their hand in this thesis

LIST OF ABBRIVIATION

1. GDP: Gross Domestic Product

2. NTFPs: Non-Timber Forest Products

3. SBV: State Bank of Viet Nam

4. VND: Vietnam dong

5. USD: United States Dollar

LIST OF FIGURES AND TABLES

eFigure 2.1: Organization of management of Glovimex company 27

TABLE OF CONTENTS

1. Rationale of the study

Economic development is always the top target of all countries in theworld Especially, in the current process of economic integration, stabledevelopment is a crucial goal for each country in order to improve itscompetitiveness in the international market It can be seen that enterprises are notonly business entities, but also decisive factors for the development of the country.Production and business activities of enterprises are the factor driving the nationaleconomic growth And one of the most effective forms of business is the import-export activity Import-export business is an indispensable activity in thedevelopment process, which is an inevitable result of the trade liberalization.Therefore, any country that wants to be powerful must join this field In Vietnam, inrecent years, there are many small and medium enterprises participating in thisfield As a business operating in import-export business, GLOVIMEX companylimited has achieved certain successes in the economic market With the goal ofbecoming a big domestic enterprise, the Company has been doing its best to be able

to improve efficiency for the business But in reality, during my training time andexperiences I got from the internship, I find that there are still certain difficulties

and the less optimal business efficiency Therefore, I have chosen the topic "a study

on factors affecting business activities in Glovimex company limited" With the

hope that the factors mentioned in the thesis will help partly find the shortcomings,then offer timely solutions and improve the efficiency of business activities

2. Aim of the study

The aim of this study is to understand the current factors affecting businessactivities in Glovimex company limited and therefore, to suggest strategies andsolutions to improve and strengthen the efficiency of Exporting activities inGlovimex company

3. Research question of the study

The following question guide the study:

1 What factors affecting business activities in Glovimex Company Limited?

2 What strategies are being used by the company that have effective andviable exporting activities?

3 How to improve the efficiency of exporting activities in GlovimexCompany Limited?

4. Methods of the study

Based on knowledge at university, books and self-accumulation and to theseabove objectives, several methods of studying the thesis are used as follow:

- Figure collection: from websites of Glovimex company limited, books, internet andinternal information of the corporation

- Inductive, deductive and statistical method

- Figure comparison, data evaluation, judgment and conclusion

- Method of analyzing, summarizing, synthesizing materials and books from thetheoretical background

5. Scope of the study

The study is performed at Glovimex Company Limited, No 47 NguyenHong Street, Dong Da District, Hanoi city, Vietnam The study is based on dataprovided by the company from 2017 to 2020 The object of the study is businessactivities at Glovimex Company Limited

6. Organization of the study

Besides the Introduction, Conclusion and References, the thesis includes 3chapters:

Chapter1: Theoretical background of import – export activities; Generaloverview of bamboo rattan handicraft products export

Chapter 2: Factors affecting to business activities in the company: Themain part of the thesis which gives the general overview of business activities andthe factors affecting business activities in this corporation

Chapter 3: Some solutions to improve efficiency of business activities inGloximex company limited: This chapter gives the orientations for the futuredevelopment of Glovimex Company and provides some practical recommendationsand solutions to improve the efficiency of export activities of this company

CHAPTER 1: THEORETICAL BACKGROUND OF EXPORT

ACTIVITIES; GENERAL OVERVIEW OF BAMBOO RATTAN

HANDICRAFT PRODUCTS EXPORT

1.1 Overview of export activity

1.1.1 Definition of export activity

Export means the sale of goods or the provision of services to a foreigncountry on the basis of using currency as a means of payment

Export is the activity of selling goods to foreign countries which is notonly an act of individual sale but also an organized sales system both inside andoutside in order to make profit, promoting developing, transforming economicstructure, stabilizing and gradually improving people's living standards Export is aneasy business activity to have dramatic results Expanding exports is to increaseforeign currency revenues, facilitate imports and promote export-oriented economicsectors, and encourage economic sectors to expand their exports with the aim tocreate jobs and increase foreign currency revenue

The basis of export activities is the sale and exchange of goods, includingboth tangible and intangible domestic goods As production develops and theexchange of goods between developed countries, the international division of laborresulting from this activity will help extend beyond national borders, the domesticmarket with export processing zones in the country Export activities areindispensable activities of countries in the development process The difference innatural conditions, geographical location, human resources, and resources leads todifferences in advantages in different fields of countries to maximize advantagesand overcome limitations, take advantage of opportunities and limit challenges tocreate equity for factors in the production and consumption process countries mustexchange goods and services for each other However, exports do not only takeplace between countries that have advantages in one sector or another, but evenwhen countries do not have advantages in natural conditions, resources, and natural

resources These countries can still reap the significant benefits when participating

in export activities

1.1.2 The role of export activity

The export of goods is the activity in the distribution and circulation by anextensive process of re-production with the aim of linking production withconsumption by one country with another That activity takes place not onlybetween individuals, but also involves the participation of the entire economicsystem with the regulation of the state Goods export is the global trading activity.Commodity exports play a great role in the socio-economic development of eachcountry How a country's social production develops depends greatly on exportactivities Thanks to exporting, it is possible to increase foreign currency revenues,improve the balance of payments, increase budget revenues, stimulate technologicalinnovation, transform economic structure, create jobs and improve living standards

of citizen For countries with low economic level like our country, the potentialfactors are natural resources and labor, and the shortage factors such as capital,market and management capacity The export-oriented strategy which is essentiallythe economy's open solution to take advantage of foreign capital and technology,and combine them with the domestic potential of labor and natural resources tocreate strong growth for the economy, contributing to shortening the gap with richcountries In particular, export plays a role in the following subjects:

 Global economy:

As we all know, merchandise exports appear very early it is a cross-country(international) trade It is not an unilateral trading act but a whole system of tradingrelationships in the global trade organization And the goal is to consume goods inparticular for the whole country in general

Exporting is a key element of foreign trade and the first activity ofinternational trade Export plays a particularly important role in the economicdevelopment of each country as well as in the world

Commodity exports are in the circulation of goods It is one of the stages ofthe production expansion This is the link between production and consumptionfrom one country to another It can be said that the development of exports will beone of the main factors to boost production.

 each country's economy

Export is one of the factors creating momentum, promoting growth anddevelopment of each country According to most theories of economic growth anddevelopment, it has been confirmed and clearly stated that in order for economicgrowth and development, each country needs four conditions: human resources,natural resources, capital, technology and technology As most developingcountries (like Vietnam) who lack of capital and technology needed to engage inimport-export activities

a. Export creates capital for import, serving the industrialization and modernization

of the country

For all developing countries, the most appropriate step is to industrialize andmodernize the country to overcome poverty, backwardness and underdevelopment.However, the industrialization process requires a large amount of capital to importadvanced technology and equipment In fact, to have imported capital, countries canuse the main mobilized capital as follows:

+ Foreign investment, borrowing from aid sources

+ Revenue from service tourism activities, domestic foreign currencycollection

+ Revenue from export activities

The importance of foreign investment is undeniable, but mobilizing them isnot easy Borrowers have to suffer some unfavorable conditions and will have topay later if they use these funds Therefore, exporting is the most important source

of capital activity Export sets the stage for imports, which determines the size ofthe growth rate of import activities In some countries, one of the main causes ofunderdevelopment is a lack of capital potential

b. Export promotes economic restructuring, promotes production development

Under the impact of exports, the structure of production and consumption ofthe world has been changing dramatically Exports have shifted the economicstructure of countries from agriculture to industry and services

There are two views on the impact of exports on production and economicrestructuring

Firstly, only export products that are left over for domestic consumption Inthe case the economy is backward and underdeveloped, production is basically notenough for consumption, if only passively waiting for the excess of production, theexport will be limited to a small scale Therefore, manufacturing industries have noopportunities to develop

Second, based on the development of the world market to organize productionand export This viewpoint has a positive impact on economic restructuring topromote exports It is shown on:

+ Export creates a premise for industries with the same developmentopportunities This can be easily seen through for example, when developing thetextile and garment industry for export, other industries such as cotton, spinning,dyeing, will have conditions for development

+ Export facilitates the expansion of a country's ability to provide inputs forproduction and consumer markets It allows a country to consume all the goods inquantities that are greater than the limit of its production capacity, even those that itcannot produce

+ Export contributes to promote specialization and increase productionefficiency of each country It allows for production specialization to develop in bothwidth and depth In today's global modern economy, each product is researched andtested in the first country, manufactured in the second country, assembled in a thirdcountry, consumed in the fourth country and payments in the fifth country Thus,goods produced in each country and consumed in one country show the oppositeeffect of specialization on exports

Using currency as a means of payment is an important feature that contributes

to a country's foreign currency reserves Especially for developing countries thatcannot convert currencies, the foreign currency gained through exports plays animportant role in regulating the supply of foreign currencies, stabilizing production,thereby contributing to the increase economic growth and development

c. Export has a positive impact on solving jobs, and improving people's lives.

For jobs, exports attract millions of workers through the production of goodsfor export On the other hand, export creates foreign currency to import consumergoods, meeting the increasingly diversified and plentiful requirements of the people

d Export is the basis to expand and promote the development of external economic relations

Both exports, external economic relations, and diplomacy have reciprocalinteractions and are interdependent each other Export activities are a solid premise

to build external economic relations in the future, thereby dragging each other todevelop such as international tourism, international insurance, international credit

On the contrary, the development of these industries has a negative impact onexports as the basis for export growth

It can be said that exports in particular and international trade in general willlead to changes in international trade, which will lead to changes in theconsumption of goods in the economy by two ways:

+ allows the volume of consumer goods to match the number of goodsproduced

+ leads to a beneficial change in accordance with production characteristicsHowever, depending on the specific conditions of each country, the impact ofexport to different countries is different

1.1.3 Main types of export

1.1.3.1 Direct export

Direct export is a situation in which a company sells its products directly tocustomers in another country without using another person or organization to makearrangements for them, or a product that is sold in this way

Accordingly, the buyer and the seller will directly sign a foreign trade contractwith each other Provided that this contract must comply with the laws of eachcountry, and the standards of the international sale and purchase chart at the sametime The seller can be the unit directly producing the goods or a trading companythat collects the domestic goods and then signs a foreign trade contract with theforeign country Direct export can be applied to all types of businesses, products andservices The advantage of this method is that businesses will be more active inexchange and purchase activities As a result, the brand will have the legitimacy,affirm the position of the business This contributes to the eventual development ofbusiness in the international market.

Besides, direct export poses high requirements for businesses such as:capital must be large enough; the staff is competent, capable and qualified toconduct export activities directly

Through direct negotiation and exchange with each other, the two partycan easily come to a common agreement, so that:

 Increase profits and revenue for businesses because minimizing costs for theintermediaries

 Facilitate promoting the independence of the business

 Be proactive in consuming goods and products produced by their own enterprises

However, there still exist some certain disadvantages such as:

 Implementation costs for the transaction are quite high, so the volume of exportedgoods must also be large to offset the costs

 · Risks are easy to happen Because if the staff is not qualified and experienced inhandling the work, the contract procedures will be able to make unfortunatemistakes

1.1.3.2 Entrusted export

Entrusted export is a form in which a third party (a company specializing

in import and export entrustment) is performed on behalf of a company to exportproducts (goods) for its company abroad (trading partner)

Specifically, the Commission based agent and the owner of the goods willsign an export trust contract with each other Then, the they will sign an export

contract, carry out delivery procedures, make payment with overseas buyers onbehalf of the exporter they will receive a corresponding commission This type ofexport is often used by small businesses that are just starting out The reason is thatthey do not have much experience in the export market at the moment, as well aslimited human resources, barriers to procedures and state regulations…

Consequently, we can easily see the benefits that it brings as follows:

 The third party is the person who understands clearly the market and legalprocedures, so the trade is accelerated faster

 the Commission based agent do not need to invest capital into the business but stillget a significant amount of revenue

Therefore, companies choosing this form to export goods will face someshortcomings as follows:

 The import and export unit may lose the link with the market due to having tosatisfy the policies and requirements of the intermediary

 Profits are not completely retained and must be shared with an intermediary…

1.1.3.3 Counter – trade

Countertrade is any commercial arrangement in which sellers or exportersare required to accept in partial or total settlement of their deliveries, a supply ofproducts from the importing country In essence, it is a nation’s (or firm’s) use of itspurchasing power as a leverage to force a private firm to purchase or market itsmarginally undesirable goods or exact other concessions in order to finance itsimports, obtain needed hard currency or technology Although the manner in whichthe transaction is structured may vary, the distinctive feature of such arrangements

is the mandatory performance element that is either required by the importer,importer’s government or made necessary by competitive considerations

 Clearing arrangements: Two governments agree to purchase a certain volume ofeach other’s goods and/or services over a certain period of time, usually a year.Each country sets up an account in one currency, for example, clearing dollar,pound, or local currency When a trade imbalance exists, settlement of accounts can

be in the form of hard–currency payments for the shortfall, transfer of goods,issuance of a credit against the following year’s clearing arrangement, or by switchtrading

 Buyback: In a buyback or compensation transaction, a private firm will sell orlicense technology or build a plant (with payment in hard currency) and agree topurchase, over a given number of years, a certain proportion of the output producedfrom the use of the technology or plant

 Counter-purchase: A firm sells goods and/or services to an importer, promising topurchase from the latter or other entities in the importing nation goods that areunrelated to the items sold

 Offsets: An offset is a transaction in which an exporter allows the purchaser,generally a foreign government, to “offset’’ the cost of purchasing its (theexporter’s) product Such arrangements are mainly used for defense-related sales,sales of commercial aircraft, or sales of other high-technology products The offsetscan take the form of sub-contractor production, joint production, technologytransfer or investments

1.1.4 Factors affecting import – export activity

It is necessary to consider factors affecting the business in general andthe export in particular these factors below often affect the results as well as thefuture export activities of the enterprise:

 Factors affecting in the domestic:

 Outside factors the business:

This is a group of influencing factors located within the country but not underthe control of the business These factors are:

• Strategies, socio-economic development, policies and laws related to exportactivities of the State

This is a factor not only affecting the export performance of enterprisesnow, but also in the future Therefore, enterprises must comply with and respond to

it at present, on the other hand, enterprises must have appropriate future exportplans

Today, Vietnam is implementing an export-oriented strategy This is astrategy that focuses on creating export products that are increasingly in line withthe needs of the world market on the basis of better exploitation of the needs of thenational market The State has specific development policies for each period inorder to encourage all individuals and economic organizations to participate inexport activities, including foreign trade enterprises

The encouragement of export activities is reflected in policies andmeasures related to creating sources of goods for export, creating a favorableenvironment for export, and providing financial support for enterprises participating

If the exchange rate is larger than the export foreign currency rate, theenterprise can carry out export activities Conversely, if the exchange rate is lessthan the export foreign currency rate, the enterprise should not export

In order to know the exchange rate, the enterprise must have the state'scurrent exchange rate management mechanism and monitor its fluctuations fromday to day

• Ability to produce export goods of each country: This ability ensures the source ofgoods for the business, which is reflected in the products that can be produced withthe volume, quality, specifications, designs whether they are suitable for foreign

market or not This determines the competitiveness of products when the business isoffered for sale in the international market.

When participating in export activities, enterprises will have greatconditions if a country has a developed scientific and technological level, capable ofcreating a variety of products with international standards and quality which aredesigned to ensures high aesthetics and affordable price On the contrary, the weakdomestic production capacity, with the monotonous and rudimentary products, willgreatly delay the competitiveness and export expansion of enterprises

Currently, in our country, the production capacity of export goods isstill low, the export products are simple, the quality has not met internationalstandards This is a difficulty for foreign trade businesses to engage in exportactivities

• The level of competitiveness of domestic exporters: Competition, on the one hand,has the effect of promoting the rise of businesses, on the other hand, it also crushesand "drowns" weak businesses The level of competition here denotes the number offirms exporting in the same industry or of the same interchangeable goods.Currently, the State has a policy of encouraging all enterprises, all economic sectors

to participate in export, leading to an explosion in the number of enterprisesparticipating in export activities, thus sometimes leading to unfair competition This

is a challenge for foreign trade businesses today

• The country's technical infrastructure development:

This is a factor in the export infrastructure It includes the development ofthe transportation system, the broadcast level of the communication system Thesefactors can enhance or limit the trading capacity of the enterprise, expand the exportmarket of the enterprise, and increase or limit the export transporting services of theenterprise

 Internal factors of a business:

This is an internal factor in the business Enterprises can control andadjust it in a positive direction for their export activities These factors are:

• Leadership and business administration capabilities of the board of directors:This is a very important factor, decisive to the success of the business of the

business Because the qualifications and ability of business management of thebusiness management board will help businesses get the right business strategies Italso helps to ensure that businesses can take advantage of international marketopportunities based on their inherent capabilities.

• Export business knowledge and capabilities of a team of sales staff inenterprises: Sales staff are those who directly perform the work of exporting goods.Therefore, their qualifications and capabilities in export activities will determinetheir performance These will determine the business performance of the entireenterprise

• The financial ability of the business: This is reflected in the firm's capital size.The size of the business capital has the ability to work continuously The company'sfinancial capacity also has many aspects It may be a corporate restriction.Sometimes it can help the company expand to other possibilities of the business.Because capital is the premise for all business activities of the business

• The business strategy of an enterprise has a significant impact on the businessperformance of the enterprise If the right business strategy makes the business losemoney, leading to bankruptcy and is still appropriate (in the right direction), it willdevelop well

• Factors of natural and geographical resources: Geographical location as well asnatural resources are what nature gives, through which countries exploit its potentialfor export

Natural resources are one of the important factors that serve as the basisfor the country to build industry and regional structures for export It contributes tothe type of goods and size of the country's exports

Geographical position acts as either a positive or negative factor for acountry's economic development as well as exports Favorable geographicalposition is a condition that allows a country to take advantage of the internationalassignment of labor, or promote the export of services such as tourism,transportation, banking, etc

 Factors from foreign markets:

These are factors outside of national control that directly or indirectlyaffect the export activities of enterprises The following factors can be mentioned:

• The economic development of the export market: This affects the needs andsolvency of export customers, and thus affects the export performance of thebusiness Factors reflecting the economic development of the export market aregross domestic product (GDP), income of the population, inflation, interest rates.

• Political situation and international cooperation: It manifests itself in the trend

of cooperation between countries This will lead to the formation of economic andpolitical blocs of a group of countries, thus affecting the situation of the exportmarket of enterprises

• The socio-cultural characteristics and changes of the export market: This has agreat influence on the needs of the customer, thus affecting the customer's buyingdecisions and affecting the export performance of the business

• The scientific and technological development level of the export market: Thiswill affect many aspects of the socio-economic life of that market, thus affecting theneeds and purchasing power of customers

• Trade policies of the countries with the export markets of the business: It maylimit or create favorable conditions for enterprises to export to that market Acountry with a free trade policy will make it easier for businesses to export to thatcountry and often bring high economic efficiency In contrast, a country with a stricttrade policy will create many difficulties for businesses when exporting to thismarket

• The level of international competition: Expressed in the pressure fromenterprises and international companies to enterprises when participating in acertain export market The greater this pressure, the more difficult it is forbusinesses to enter, maintain and expand their export markets The influence of theworld socio-economic situation: In the condition that each country relies on itsadvantages as well as the world consumption market to organize production andexport, the connectivity and dependence between countries is increasing Because

of this, each fluctuation of the socio-economic situation in foreign countries hascertain effects on domestic economic activities The field of export activity is a field

of direct relations with foreign actors, influenced and influenced by foreign factors,

so it is even more delicate Any change in export policy, inflation, unemployment or

economic recession growth of other countries will affect the export performance

of exporting enterprises in our country

1.2 Overview of bamboo and rattan handicraft products export

Bamboo and rattan industry in Vietnam is considered as one of theindustries with great development potential

Currently, there are more than 1,000 bamboo and rattan crafting villagesnationwide, accounting for 24% of the total number of craft villages in the country

In which, the Northern and Central regions focus on bamboo, rattan, leaf and sedgeproducts, and the Southwestern region concentrates a lot of water hyacinth products.The famous bamboo and rattan crafting villages are: Phu Vinh bamboo and rattancraft village; Tang Tien bamboo and rattan crafting village; Bamboo and rattan craftvillage in Ninh So; Thach Cau bamboo and rattan crafting village; Ngoc Dongbamboo and rattan village; Bao La bamboo and rattan craft village in Quang Phu -Quang Dien - Thua Thien Hue …

Nowadays, bamboo and rattan products, and other handicraft products areconsumed both domestically and export; but enterprises pay more attention toexport

The domestic market has had a rapid growth in the past 6-10 years, morethan 15%, mainly serving the home furniture industry, hotels and resorts Inaddition, international tourists are also interested in businesses

The potential for consumption in the domestic market for rattan andbamboo products is huge, but in fact the market share of this products in thedomestic market is still modest The reason is partly due to the fact that enterprises

in the industry mainly focus on producing products for export In addition, thedistribution system in the domestic market is limited, unprofessional, and has notmet the value chain

 Specifically when talking about Exports:

Among products exported from rattan, bamboo other handicraft products

of Vietnam, accounting for the highest proportion are plaiting products (products

made of plastic ), accounting for 25, 5% of total export turnover in the first 11months of 2018, reaching 57.50 million USD, up 44.1% over the same period in

2017 Next is hyacinth weaving products, with export turnover in the first 11months In 2018 reached 50.68 million USD, up 14.8% over the same period in

2017 Export of sedge products reached 48.63 million USD, up 28.6% over thesame period in 2017 Export of rattan products reached 23.55 million USD, down7.9% over the same period in 2017

The EU and the US are the two main export markets for Vietnameserattan, bamboo, sedge and other handicraft products Particularly, exports to thesemarkets accounted for nearly 70% of the country's total export turnover ofhandicraft products

In the first 11 months of 2018, the export of rattan and bamboo handicraftproducts to these two markets increased In which, exports to the US marketincreased sharply, reaching 61 million USD, up 26.7% over the same period in2017; raising the proportion of exports to this market from 24.7% in the first 11months of 2017 to 27.1% in the same period in 2017 Knit hyacinth is the productmost exported to the US market in the first 11 months of 2018 , reaching 23.42million USD, up 38.3% over the same period in 2017 Next are products made ofplastic wire, sedge and bamboo

Export of rattan, bamboo, sedge and other plaiting products to the EUmarket in the first 11 months of 2018 reached 94.62 million USD, up 6.2% over thesame period in 2017 Among the markets in the EU, Germany, France, UK,Netherlands, Spain are the largest import markets for Vietnamese rattan, bamboo,rush and other plaiting products The sedge is the most exported product to the EU

in the first eleven months of 2018, reaching $ 27.22 million, up 32.9% over thesame period in 2017 Next is the plastic wire products; Knitting bamboo andknitting water hyacinth

In addition to the two main markets mentioned above, rattan, bamboo,rush and other plaiting products are also exported to Japan, Australia, Korea, China,Canada

 Difficulties of Vietnam rattan and bamboo industry

Although the export of bamboo and rattan products of Vietnam hasachieved positive results over the past time, the export sector of Vietnamese rattanand bamboo still faces many difficulties Vietnam is increasingly integrating moredeeply into the international economy Vietnamese enterprises in general andbamboo and rattan enterprises in particular are facing great challenges becauseVietnamese enterprises are not have enough experiences in many aspects and thefacilities for production of enterprises are still limited In fact, bamboo and rattanproducts are handicrafts that need to be preserved well while the facilities of manyenterprises are still poor The material quality of overseas bamboo and rattanproducers is very good Because of the limited capital, the bamboo and rattanenterprises cannot afford to build specialized facilities for their production.Moreover, due to the lack of production space, the factory is still utilizing, not yet aproduction system Production facilities all have difficulty in production premises,material gathering yards, and product delivery shops …

In addition, the trade promotion of our country's bamboo and rattanenterprises is also facing many difficulties The vital thing of enterprises in theforeign bamboo and rattan market is that product designs must be constantly newand attractive, but in general, our innovation and design have not met the demand.Currently, most of our enterprises are producing according to foreign models, theenterprises that are standing in the field of bamboo and rattan are mainlyoutsourcing for foreign corporations to export according to their designs should beunder price pressure; That is not to mention the enterprises and craft villages thatmainly export goods through domestic intermediaries Therefore, profits frombamboo and rattan production of enterprises are not high and the income ofemployees is still low

The lack of initiative in raw materials is also a problem In the past, it wasrelatively easy to source raw materials However, in the past few years, this hasbecome more difficult because the forest areas providing raw materials in Dong

Nai, Binh Thuan… people have cut down for cultivation The increasing purchaseprice of raw materials, high transportation costs, lack of initiative in the supply ofraw materials have a great impact on the price, selling price and competitiveness The ability to access the market is still weak We are used to the motto toproduce fast, good, cheap, but how to sell fast and lot is still a new problem Thedomestic market system is not stable, many people do not know to whom to selltheir products, goods are backlog, slowly circulating In rural areas, people havelittle opportunity to access new products Introducing products at international fairs

is expensive, businesses have little experience in exploring foreign markets and stillface many difficulties in mastering international conventions, understanding Marketdemand, approaching to foreign partners, experiences creating a binding mechanismfor partners to pay for payments on time Domestic enterprises have not yet beenattached to a strong block in their relationship with foreign partners, allrelationships are separate, so they do not have great strength in competition

CHAPTER 2: FACTORS AFFECTING TO BUSINESS ACTIVITIES IN THE

COMPANY

2.1 General overview of business activities in Glovimex company

2.1.1 General information about company

 Contact address:

 Company name: Glovimex Company Limited

 International transaction name: GLOVIMEX Company Limited

 Type: Limited Liability

 Address: No 18/67 Chua Lang Street, Dong Da District, Hanoi

 Company size: 11-50 employees

 Key products: Handicraft Products made of Bamboo, Rattan, Jute, Seagrass, WaterHyacinth such as: Lamp Shade, Basket, Tray

Other products: Handicraft products, Encaustic Cement Tiles, Eco-friendlyUtensils

a Function and Mission

 Function:

• As a major company in the field of exporting bamboo and rattan products,Glovimex Co., Ltd has been asserting its position with domestic and internationalcustomers –

• Company mainly exports products made from bamboo and rattan such as bambooand rattan products, rattan chairs, bamboo and rattan decorations and mainlyexported to Japan, the US, some EU countries

• Through export activities, the company has the opportunity to enter and accessworld markets If it is successful, this will be the basis for businesses to expandtheir markets and production capabilities

• Export combined with import in the context of a multi-sector commodity economywill contribute to promoting joint ventures between domestic and foreignenterprises voluntarily, expanding business relationships, exploiting and usingeffectively existing resources and solving jobs for employees

• High income generates foreign currency to import raw materials to serve theproduction of goods and meet the market demand

• Acutely absorbing business strategies, grasping consumer tastes to draw effectivebusiness tactics, expanding scale, promoting sales, reducing costs, and gettingmaximum profit, ensuring the company to keep stable market share in theincreasingly fierce competition conditions

• Increasing investment, purchasing modernized technology machines and productionlines, consolidating, and training highly skilled staff to meet the development needs

of business in the new conditions

 Mission:

• Making Glovimex company to become one of the biggest names in the bamboo andrattan manufacturing and exporting industry in Vietnam.

• Mobilizing and using capital according to the requirements of the owners,complying with the current regime and ensuring profitable business

• Making long-term and short-term production and business plans in accordance withthe company's goals and missions and suitable to the market

• Fully complying with commitments in the signed contracts with customers, partnersand suppliers

• Expanding cooperative and joint venture relationships, and developing markets,fair competition, fulfilling tax obligations to the State and improving the livingstandards of workers

• Maintaining and developing brand in the domestic and international market as well

b Formation and development

Glovimex Co., Ltd was officially established in 2015 The first two yearswere a relatively difficult period for employees in the company because they were avery young company in domestic and international markets Facing the currentsituation of economic development and international integration, the company'sleaders clearly define the current goals, exporting is identified as the focus ofbusiness activities of enterprises Besides, focusing on promoting production tocreate a stable source of goods for export and supply to the domestic market to notonly maintain and develop foreign markets but also actively expand the domesticmarket to create stability and durability in business Thanks to that, in the recentyears, the company's export turnover has always increased from 20% to 30%, Thecompany's export market continues to maintain over 45 countries and regionsaround the world, still keeping the traditional customers and brand prestige andconstantly improving as well as affirming their position in domestic andinternational markets

After more than 6 years since its establishment, with the efforts of themanagers and staffs, it was quickly transformed from a small-scale company into abig one and got numerous of remarkable achievement, including the long-termrelationships with more than 200 customers in Asia, Europe, America

 The feature of Bamboo and Rattan products

Rattan and bamboo are important products in the group of NTFPs in ourcountry and play an important role in the export structure of handicrafts in recentyears Vietnamese rattan and bamboo products are quite diverse with many modelsand category such as products from bags, baskets, trays, lamps and many otherhousehold products The feature of this item is that it can create many diverse andattractive sizes and designs We can create many patterns from classical to modern,from complex to simple, even patterns can be reduced to all patterns to bring theclosest Bamboo and rattan products are produced with 2 main uses: householdproducts commonly used in daily life (production tools and living tools) andhandicraft products However, they are very rich in categories, especially handicraftproducts Types of products (often called product codes) are distinguished in greatdetail with the differences in pattern lines, colors or combinations of materials.Especially in recent years, the bamboo and rattan industry has added a handicraftproduct using water hyacinth in the Mekong Delta and it is considered as a newinnovation in the condition that natural resources of rattan and bamboo areexhausted The bamboo and rattan industry is also integrating with the internationaleconomy with the emergence of non-traditional products such as flooring, pressedfurniture, assemblies, etc With these non-traditional products, businesses aregrowing and the daily industry system is increasingly rich and complete

2.1.2 Organization of management in Glovimex Company

Figure 2.1: Organization of management of Glovimex company

The above diagram describes the current organization structure ofGlovimex At the highest position is Board of Director Following is theDepartments, each of them has one Representative or one team leader who performsprofessional work; plans and coordinates work with the Board of Director; proposesreward and punishment

 Board of director:

• General Director, Mr Tran Le Hai, is the head of the company, directly manages thecapital contribution, represents the company in accordance with the Law andmanages all activities of the company

• Secretary of director who assists for General director

 Management departments:

• Financial accounting department manages, inspects, guides and implements theaccounting regime In addition, statistics and manages of financial revenues andexpenditures, asset in accordance with the company's financial regulations Meetsfinancial needs for all production and business activities of the company as planned;preserving and developing the company's capital

• Sale department is in charge of bringing in revenue for the company.

Take general responsibility for the business situation of the Company, plan,develop market by month, quarter, year, set sales goals, build promotions, salespolicies, check professional control of the sales team under his authority

Sales staff: Search for customers, build and manage customer data by location,take care of potential customers, report daily and weekly with direct supervisors

• Administration and HR department is responsible for the administrative sector such

as managing paper documents, incoming documents, drafting administrativedocuments, managing stamps and performing regular administrative operations

Responsible for human resources: Recruiting, doing contracts, managingrecords, receiving records or quitting jobs; timekeeping; insurance

• Import-Export department establishes and implements plans of receiving andexporting goods to meet production's and customer's requirements

- Implement and monitor the opening of declarations to receive goods on time

- Prepare and deploy customs reports as required by the customs law

- Propose to the direct superior about each creative idea to improve the workquality of the department

- Import-Export staff:

- Perform, negotiate, and sign contracts with customers and suppliers

- Complete import and export procedures and documents

- Manage and track orders

2.2 Factors affecting business activities in Glovimex Limited company

2.2.1 Internal factors

2.2.1.1 Marketing strategy

Marketing strategy is an indispensable part of business operations of alltypes of businesses But specifically, in order to target foreign markets, to satisfy theneeds and desires of foreign customers, businesses need to build a good exportmarketing strategy for themselves The marketing process of a business usuallyconsists of 5 basic steps: analyzing marketing opportunities, researching andselecting target markets, designing marketing strategies, planning marketingprograms, organizing and testing marketing strategies But in the scope of this topic,the article only goes into depth researching the issue of export marketing programs

of Glovimex Co Ltd

a. Based marketing program planning

 The needs and wants of the customers

Nowadays, when most companies plan their business programs towardscustomers, it is very important to learn about the needs and wants of their targetcustomers to satisfy those needs

A natural need is a sense of lack of something that human beings feel.Discovering and evoking customers' need helps the company create unique andsuitable products, thereby improving its competitiveness in the market

 Convenience: In addition to meeting the needs and desires of customers at areasonable cost, businesses need to create convenience for customers when buyingthrough a product distribution system

 Information: In the condition that businesses all focus their resources on marketingwith advertising programs, promotions, make customers doubt about theauthenticity of the source of that information Therefore, in order to win thecompetition and gain the trust of customers, the company needs to regularly provideinformation about products, businesses as well as promotions to customers andensure completeness and the accuracy of such information

b. The marketing strategies of the Glovimex limited company

 Product strategy:

− International product policy:

• Direct expansion policy: is the introduction of an enterprise's products to a foreignmarket without any changes, particularly the EU market In essence, this is a policybased on the point of view of standardization of products However, the companyhas not been successful in expanding its market through this policy Becausebamboo and rattan products are highly competitive in the international market,besides products made with other natural materials in particular, there is fiercecompetition with countries that have traditionally produced handicraft products such

as India, China and some other Southeast Asian countries such as Thailand and thePhilippines

• Product adaptation policy: is to change products to satisfy the needs and tastes offoreign markets The company has done very well in this strategy when regularly

updating market trends, diversifying product models depending on each marketsegment However, due to the limited financial potential and considerable expense,this policy has not really brought about high efficiency.

− Quality management: Product quality control in foreign markets requires thatbusinesses comply with product technical standards Product technicalstandardization has a great influence on an enterprise's ability to penetrate overseasmarkets GLOVIMEX Company has strictly followed the technical procedures toensure the best quality of exported goods to consumers The company has built ateam to check product quality carefully before delivery to partners and distributors.With the motto of bringing the best and most complete quality to consumers,satisfying the most demanding customers, Glovimex has been doing very well inthe process of product quality control before delivery

 Pricing strategy:

The price of a product or service is an amount of money that a buyer mustpay the seller for the right to own or use that product or service Determining aninternational price policy is one of the most important activities that businesses payspecial attention to if they want to thrive in the international market In essence, it is

a component of international marketing policy that implements the most directgrowth in sales and profits Every mistake in this area quickly affects the results.This is because price has a special place in the reproduction process The principle

of determining prices is that consumers should feel that they have received a valuecommensurate with their money At the same time the business must make a profiteither short term or long term depending on the overall goals of the business

− Factors affecting product price decisions in foreign markets: In order to determinethe price structure, it is necessary to first consider the basic factors that affect theprice of products in the domestic market out These are the factors:

• Product cost: is the basis for determining the product's floor price, including: Allcosts associated with the release of a product, from strategic planning costs toproduct release

The cost to bring products to different foreign markets through export,investment, contract-style cooperation

All costs for bringing the product to consumers (distribution and productpromotion).

Costs after sales: customer care, warranty

For each different foreign market conditions, the levels of thefactors that make up the costs are also different and usually companies must add tothe cost of covering risks for each particular market

• Market demand: is the basis for determining the ceiling price when selling products.The demand for a product will change inversely with price and proportional toincome The basic factors of market demand that can affect prices are:

Purchasing power of customers: Marketing department of the company hasvery detailed researches on the number of potential customers, per capita incomeand average product consumption per person for each potential market, from which

to offer the right price for each market segment

The cultural and social environments of different markets also have a greatinfluence on demand and thus on acceptable prices in that market

 Distribution strategy:

An important part of an export marketing strategy is distribution.Distribution solves the issue of how goods and services are presented to consumers.Distribution decisions are often complex and have direct effects on all other areas ofmarketing

When choosing distribution channels, marketing managers often base onproduct characteristics, market characteristics and enterprises' ability to choosechannels There are two ways to bring the company's products to foreignconsumers: direct distribution and intermediary distribution

Glovimex has applied the form of intermediary distribution This is a form

of distribution in which goods from the company through marketing intermediaries,through distribution channels of foreign importers The company directly buildssales website, promotes brand image, closes contracts with partners and plansproduct distribution strategy This form of distribution has brought about a quitepositive effect for businesses, because the advantage it brings is low cost However,there is still a drawback that is the ability to directly contact the end consumer

 Promotion strategy:

The nature of promotional activities is to spread product and businessinformation to customers to persuade them to buy The five-component (tool)composite promotion coordination structure is advertising, propaganda,commercial, personal sales and direct marketing Solution on advertising:advertising is generally understood as the use of media to convey information about

a business's products to potential customers When advertising in foreign markets,the company has carefully studied the environmental factors of advertising, selectedadvertising means as well as designed advertising content in accordance with thecharacteristics of each market school The forms of advertising often used byexporting enterprises:

+ Introduce about businesses on TV, radio, newspapers, internet

based on sales but the numbers are very small The export promotion planningand implementation of enterprises in the exploiting markets is not really clear andeffective

In recent years, the company has started to invest in trade promotionactivities, but the cost for this activity is limited to 2% of sales in that market Thecompany's international trade promotion activities only focus on importers,information to end consumers has not been disseminated:

 Advertisement:

Advertising goals are aimed at generating attention and buying selections

of customers The company's customers are advertised through the main platform

of sending sales samples, letters of advertising, catalogs, newspapers and magazines

to customer Sending samples to the company's representatives in the EU and EUcompanies in Vietnam in order to introduce their products to large buyingorganizations, and provide other necessary information to transact with customers Moreover, e-commerce is becoming more and more important in internationaltransactions Both buyers and sellers find it convenient and cost effective to make

transactions by the internet The company also uses the form of product advertisingthrough websites in Vietnam and around the world, websites of trade promotionorganizations WWW.Vietrade.gov.vn Advertising through the internet helps topromote more widely the image of the company's products not only to importers,trade organizations but also to end-consumer, customers This form saves a lot ofmoney compared to other forms and bring high efficiency, because the EU is a verydeveloped market for electronics.

 Selling directly to customers

The company sends sales orders directly to customers, introduces productsvia web, fax The direct meeting and working with customers is only done mainly

at the exhibition fairs, looking for new partners and customers At internationalfairs, the company has made the most of the opportunity to meet, exchange directlywith customers, actively offer and look for new products At the company'sshowrooms, communication activities to stimulate sales are also focused onpromoting sales quality and staffs are trained the basic knowledge

 Promotion

The company often sends gifts to familiar customers and importers topromote and maintain good relationships with customers Besides, GlovimexCompany also sends some unique and new products to potential customers in order

to find more new customers and potential new markets For lots of large quantity,the company discounted prices to promote buying behavior of corporate customers

2.2.1.2 Human resource management

The existence and development of an enterprise depends greatly on theexploitation and efficient use of resources: capital, facilities, scientific and technicaladvances, employees These factors have a close relationship and interact with eachother Many factors such as: machinery, equipment, material possessions,technology can be purchased, learned, or copied, but humans cannot Therefore, itcan be affirmed that human resource management plays an essential role in theexistence and development of an enterprise

Human resource management contributes to solving the socio-economicaspects of the labor problem It is a common problem of the society that alleconomic activities, in general, have the same goal: how to make employees enjoythe results they make Human resource management is associated with everyorganization, any organization should have a human resources department Humanresource management is an important element of the management function Humanresource management plays an important role in all departments Any level ofmanagement has staff under its authority, so there must be human resourcemanagement Human resource management creates a cultural atmosphere for abusiness This is also one of the decisive factors to the success or failure of anenterprise.

 The importance of human resource management in the enterprise:

One of the first roles of human resource management is to help build,orient and monitor the human resource apparatus to work in accordance with thestrategic objectives outlined by the organization In addition, effective humanresource management also affects the working environment of employees, helping

to increase labor productivity, increase revenue and profit for businesses

The importance of human resource management will be evident throughthe following goals:

• Cultural tracking, assessment and development of corporate cultureenvironment

• Managing talent as a whole

• Responsible for recruiting a high quality workforce

• Salary proposition based on market assessment

• Proposed employee benefit programs

• Organize and ensure programs work in the workplace

In fact, Glovimex has been developing a human resource managementstrategy according to a certain process The company is always proactive and active

in recruitment strategies and staff training before and during the working process