The positive and negative impacts of external macro factors on ICT

Moreover, ICT Company has supplied the liquid asphalt to the business market.. When doing the asphalt business, the ICT Company is known as the top 2 of supplier in Vietnam; beside... -E

Introduction 3

Major Finding 4

Task1 4

1 The factors in the External Marco environment 4

2 The positive and negative impacts of external macro factors on ICT: 10

Task 2 13

1 Strategies 13

2 Value chain of ICT-ASP 13

3 The interrelation between external and internal factors 15

4 Suggestion of Improvement for ICT 17

Conclusion 18

References 19

After established nearly 19 years, the International Investment and Construction Corporation (ICT) has built the extremely breakthrough in the business’s construction in the industry of Vietnamese transport From the first start with applying the licenses, ICT Company has doing the business relative to raw material supplying for the traffic and construction, especially Asphalt had mentioned Moreover, ICT Company has supplied the liquid asphalt to the business market Since 2013, the stock of ICT Asphalt 01 has been opened as the largest liquid asphalt stockpile in Vietnam The achievements of ICT Asphalt

01 are supplying the materials for many important constructions for instance Ho Chi Minh Road, Ha Van tunnel Inaugurated in 2005, the Asphalt station 03 (based in My Tho and Tien Giang) had become the big liquid asphalt warehouse which supplying to the South market Lastly, the final piece of the whole ICT Company has been built: the ICT Asphalt 04 load vessel 1700 DWT, in order to complete the transportation process (Transportation-Storage-Liquid asphalt)

Major Finding Task1

1 The factors in the External Marco environment

1.1 PESTEL tool

1.1.1 Political and Legal:

 Type of Government of Vietnam: The framework of Vietnam is One-party socialist republic The communist party as the leader has the responsibility of leading Vietnam, problem solving and making all decisions, and controls the state’s departments

 According to Globalsecurity.org, “the key driver of politics in Vietnam is to position oneself in order to make money through a variety of means”

 Corruption: With the high risk from the Vietnamese tax administration, the companies need to indicate that irregular payments and bribes are the common things when make the tax (GCR 2015-2016)

 Freedom of press: Approval from the fact of political framework, there are many restrictions in the media All of the media forms are established but directly relative to the party, legal punishments can be carried out because they considered these actions can harass to the laws of Vietnam

 Regulation: Almost of companies are faced with many obstacles or regulations due to the process of globalization According to the data taken from the survey of Vietnam Private Sector forum (VPSF) in 2017, there are 44% of business have missed the opportunities because the barriers of legal and the market restrictions In 2000, the Ministry had removed a majority of business conditions

 Rule of law: These rules of law have the power that created an influenced system and managed by the executive and judicial powers

 Social legislation: Since 2007, Vietnam has been joined the World Trade Organization (WTO) This action has been effect on many chances for the investment of foreign company and trading to happen

1.1.2 Economics:

 Market structure: In the business of Asphalt, there are an oligopoly competition between

many several large organizations such as Petrolimex, ICT, Minh Dat When doing the asphalt business, the ICT Company is known as the top 2 of supplier in Vietnam; beside

the first rank is the Petrolimex Company Moreover, they have a high position in the asphalt market that consider as the price marker In addition, there are many barriers for entering the market of asphalt because the highly differentiated product Despite the fact that, the profit that they can earned can satisfy the company With the inelastic demand of asphalt and the specific functions of asphalt, there is very hard to substitute so the cost is depended on the large organization which included ICT Company

 Industry: The Five Forces’ Potter analysis

 Threat of new entrants:

-The high cost is taken when entry

-Contribution exclusive knowledge because the performance of product

-Need large scale of economic

-The protections of technology (machine, factories )

 Competitive rivalry:

-Few powerful competitors

-The loyalty of customers with one brand

- The cost of switching is low

 Supplier power:

-The number of supplier is moderate

-The products are similar

 Buyer power:

-The organizations are the mostly consumers

-The sensitive price

-The product is homogeneous

 Threat of substitution:

-Low cost of changing

-The substitutions are rare

 Country:

-GDP: With the rocketed increasing, approval from the Ministry of Planning and investment, the rate of GDP in 2018 had raised to 6.7% that is recorded higher than 240 billion USD -Inflation rate: Approval from VEPR (2018), the inflation rate of Vietnam has increased to 4.13% in 2018 and higher than the average (0.13%)

-Interest rate: The interest rate is 6.25% lower than the average (1.02%) by recording to the lasted Vietnam’s benchmark

-Labor cost: Approval from The Ministry of Labor, Invalids and Social (2018), the monthly income is taken us 5.61 million This number is higher than last year nearly 4.13%

-Unemployment: In Vietnam, there are 106.5 thousand people are unemployed at the middle

of 2018 Especially, the young generation takes 34.93% of the total of the whole unemployment rate In general, the trend had to decrease and stop at the low rate: 2.2% -Exchange rate:

Figure 1: The exchange rate of Vietnam Dong/Singapore Dollar The figure 1 shows the rate of exchange of Vietnam Dong and the Singapore Dollar Generally, the cost of one SGD peaking up in April that equal to 17.440 VND and decreased

to nearly 16 thousand VND in the June In the last quarter of 2017, with the quite strong fluctuated pricing, the price is still approximately 17.000VND and has been predicted growing up

1.1.3 The social and cultural

In many workplaces, the value can be effect on the country’s culture Approval from the definition of Hofstede, the culture is “the collective programming of the mind distinguishing the members of on group or category of people from other” With spilt to five dimensions, the relation of social and economic can be considering:

Figure2: Five dimensions stick to three example countries

 Power distance index (PDI):

With the high GDP rate, Vietnamese people who have a lower power will be submissive and endure the controls of the higher people The difficulty of Vietnamese people based

on the PDI rate which relative to the lower power people who want to have a higher power in the scale

 Individualism (IDV):

By following the individualism, the relationship between their families is priority They will have the life which will be impacted by the actions of their family because the responsibility in rising and taking care of them to their family

 Uncertainty avoidance index (UAI):

By influence by small part of foreign cultural, the Vietnamese cultural indicated that the point of UAI is average People are living in Vietnam often worry about the un-know future which means that they avoid every uncertainty situations and action by the strict law and rules that keeping everything in balance

 Masculinity (MAS):

With having the masculinity point under the average, it’s clearly that the social is accepted the gender equality In the modern society, male and female are treated as the same quality, the female has an opportunity to do as everything male do

 Long term orientation (LTO):

The point of view in social is illustrated by LTO that have tend to fulfill long term present, past of future By following the Confucianism, Vietnamese people always saving their money and do for their family member

1.1.4 Technology

• Research and Development

As per information from Ministry of Science, Technology and Environment, money related to the investment for studying technology does not takes over 1% of yearly utilization budget The yearly average expense for researching of science or

technology officer from the state spending plan takes approximately US $ 1,000, which is low contrasted with the world average which is US $ 55,324 and the living cost for basic items in the Asian region.

• Desuetude rate

As the information which is indicated by Mr Vu Tien Loc, the leader of Vietnam CCI, the level of technology of Vietnamese corporation is as yet viewed as desuetude VCCI's review results in 10 fields of industry, consisting of 7 in the construct

industries, demonstrate that approximately 60% of corporations are utilizing

technology with the period of more than 6 years

• New products, materials and the process

In industrialist, progressive technology is applied day by day, making numerous high quality items, particularly in manufacturing technology including machine,

equipment,… so as to tackle materials and equipment issue

• Information Communication and Technology (ICT) changes

Vietnam's broadcast communications is presently one of the fastest developing

countries on all over the world Besides the wide territory network, varied

administrations, mobile systems and ultra-shortwave machines are likewise being advanced as well as foreign use.

1.1.5 Environment

Air quality in Vietnam is viewed as seriously debased in urban area and industrial zones This contamination causes an observable, regular accident of respiratory issues Dust in Vietnam can be seemed as the main contamination, typically 1 to 5 times higher than other national measures On the other hand, other contamination sources are all the factories around Vietnam Furthermore, the contamination also resulted from power plants and biomass fuel used basically to warm in family units

As indicated by Doan Cong (2015), a asphalt blending factory of Minh Dat.Ltd has discharge emission straightforwardly which is influence the lives of family units living around the territory Presently, as per the manager interview, so as to take care of this issue, the asphalt of ICT had utilized reused materials to lessen the impact of cement and resins to the environment ICT’s asphalt to amplify asphalt and concrete life span, the company utilize a cycle of evaluation process, which has acquired a possible outcome in limiting working expenses and energy.

1.2 Opportunities and Threats of the external macro factors

 Opportunities

With political systems, long-term advancement can be safeguarded and prioritized

- According to the Decree 60/2015, permitting 100% foreign proprietorship for most division, numerous trades can be named achieve many advantages for the

organizations and also the investors from foreign countries

- Vietnam is in gentle inflation so financial aspects are greater productivity, creating more productions with less input for the companies.

- There are very little competitors which are in oligopoly market, bring an open door when the GDP is increase as a result the fact that the demand is rising

- If a company lends cash from any bank, they have a chance to pay back fewer contrasted with before as a result the decline of the demand

- Table 2 has shown the low IDV rate implies Vietnamese workers have more duty to family; consequently they can work more productive

- Table 2 has shown that Average UAI rate implies workers will in general do the unchanged job, consequently will lessen the support cost in Human Resources

Management.

 Threats

- The government’s making money procedure can influence the income of ICT, for example is taxes

- The economic development can be delayed because of the corruption, so that judicial system is weak

- The cost of 1 SGD will in general increment, which will create disadvantage for ICT in importing the products from foreign country especially Singapore

- Low unemployed rate, which lead to higher labor cost

- Table 2 has shown that High PDI rate implies the hole among dimensions of workers in organization will rise

- Table 2 has shown that that Low IDV rate can be a threat when workers take the influence from their family so seriously, it will influence the working process and the attitude of workers.

2 The positive and negative impacts of external macro factors on ICT:

2.1 Positive impacts

Political and Legal:

The type of the government guaranteed the security in long-term, ICT Company can build up the procedures and strategies for the eventual fate of the firm and completes with less hazard For WTO, Vietnam’s participation has opened many entryways for ICT in global trading face.

Economic:

The GDP is increasing and pursued by rising of utilization; furthermore, the interest of asphalt items is inelastic which creates an opportunity for ICT in producing and

selling asphalt market Moreover, Vietnam’s economic is growing quickly which means lots of companies and enterprises such as ICT can takes the support from the economic, for example are trade items or import material With low demand, ICT can use these advantages when they are lending cash from bank.

Social – Cultural:

Social- cultural generally makes effect on the employees of ICT, decrease a few

expense for workers and indirectly influence on the efficiency of the organization Technology:

With an asphalt organization such as ICT, it almost is connected and affected with lots

of programming Consequently, the technology’s improvement in Vietnam can help the organization to give lots of solutions for issues in the production.

2.2 Negative impacts

Political and Legal

With ICT, Petrolimex can be seen as the biggest and the greatest competitors, who is establish as a government company with a numerous advantages such as taxes to the directions of the system This can be seen clearly as a hard arrangement with ICT, to contend with such a tremendous organization

With political, the sort of government shows the way that almost everything is under control Undetected limitations can be detected by the pressure of the system to the

legal directions that must be maintain a distance from ICT must work in manners that must be tactical and correctly

Economic

For the most products which is sold by ICT, it is ensure with the high-quality that all the products are imported in Singapore, which means the exchange rate between SGD

of Singapore and VND of Vietnam plays an important role in the impact with the ICT Notwithstanding, the general cost of SGD and VND changed very little so it won't become a hazard for ICT’s business.

The unemployment rate is low, which push the labor cost become more expensive For

a big company such as ICT, they will need a great deal of workers to run the

companies as well as all the factories, which takes a costly price

Social – Cultural

Vietnam’s social and cultural can create a lots impactions and disadvantages for ICT, for example, the hindrances for asphalt products awareness to organization, high open doors cost if ICT miss the skilled and experienced employees which created less efficiency in the working environment