corporate social responsibility strategies for sustainable development for small and medium enterprises in the village of bac ninh province, vietnam

CORPORATE SOCIAL RESPONSIBILITY: STRATEGIES FOR SUSTAINABLE DEVELOPMENT FOR SMALL AND MEDIUM ENTERPRISES IN THE VILLAGE OF BAC NINH PROVINCE, VIETNAM BY TRINH THI THANH HUYEN E0600084

CORPORATE SOCIAL RESPONSIBILITY: STRATEGIES FOR SUSTAINABLE DEVELOPMENT FOR SMALL AND MEDIUM ENTERPRISES IN THE VILLAGE OF BAC NINH PROVINCE, VIETNAM

BY

TRINH THI THANH HUYEN

E0600084

Graduation Project Submitted to the Department of Business Studies,

Help University College, in Partial Fulfillment of Requirements for

The Degree of Bachelor of Business (Accounting) Hons

DECLARATION

I hereby declare that the graduation project is based on my research and experiences except the acknowledged aquotations and citations And, this graduation project has not been used at previously or concurrently submitted for any other course/degree at

Help University College or other institutions The word count is 10,968 words

_

TRINH THI THANH HUYEN

Date: October 2011

CORPORATE SOCIAL RESPONSIBILITY: STRATEGIES FOR

SUSTAINABLE DEVELOPMENT FOR SMALL AND MEDIUM

ENTERPRISES IN THE VILLAGE OF BAC NINH PROVINCE, VIETNAM

Relate to fact of small and medium enterprises, cooperatives, manufacture owners in the village of BacNinh face to a lot of difficulties in the business because small-scale

How the growth of businesses like? How to develop product? How to competitive? The development of enterprises which had difficulties when it is more and more difficult to determine a direction for sustainable development, long-term benefit for the enterprise itself and managers

Besides, the challenges of the 21st century such as weather change, declining natural resources, and energy crises as well as business requirements of small and medium enterprises to change the basic way they operate It is no longer acceptable simply to maximize profits in the short term Instead, businesses must pay attention to the impact of economic, social and environmental aspects of their activities - known as sustainability or corporate social responsibility (CSR)

The purpose of this study is to discuss the role of CSR in helping small and medium enterprises in the villages of Bac Ninh - Vietnam to achieving competitive advantage Also research and synthesis, analysis, logic, strategy and business development for small and medium enterprises in villages in Bac Ninh province - Vietnam Simultaneously suggest directions and solutions to promote business development of special attention to products with different villages of products to create sustainable development for the enterprises

1.1 The definition of sustainable development

1.2 Some models of sustainable development

1.2.1 Three circles model of economic and social,

environment of intersection of Jacobs and Sadler (1990)

1.2.2 Carroll's 1979 conceptualization

1.2.3 Model of three target groups of economic, social

and environment of World Bank

1.2.4 The model of sustainable development in Vietnam

1.3 Small and medium enterprises

1.4 Villages, traditional villages

Chapter 2 LITERATURE REVIEW

2.1 Model three - level analysis, PEST model

3.3 The scope of research

Chapter 4 ANALYSIS AND DISCUSSION

4.1 Overview of small and medium enterprises in craft

villages in Bac Ninh

4.2 PEST model applied to analyze the business

environment of the handicraft industry of small and

medium enterprises in the village of Bac Ninh

4.2.1 Environmental politics and law

4.2.4.1 Society of the population and labor 4.2.4.2 Population quality

4.2.4.3 Cultural Environment

4.2.5 International Environment

4.3 The key issues related to the current situation and

development prospects of small and medium enterprises in

craft villages in Bac Ninh: Identify strengths, weaknesses

and determine opportunities and challenges; Position the

stand point of industry

4.3.2.1 Relations with investors and representatives of

customers, relationship with joint venture partners

4.3.2.2 Manufacturers Capability 4.3.2.3 Organization of production 4.3.2.3 Criterion on price

4.3.2.4 The ability to provide credit, capital 4.4 Apply the SWOT model to evaluate the general

position of small and medium enterprises in the villages in

4.5 Competitive strategy and strategic options

development of small and medium enterprises in the

villages in Bac Ninh

4.5.1 SO (strengths - opportunities)

4.5.2 ST (strengths - threats)

4.5.3 WO (Weakness - Opportunities)

4.5.4 WT (Weaknesses - Threats)

Chapter 5 RECOMMENDATIONS, SUGGESTIONS

5.1 Strategic Orientation for Sustainable Development of

small and medium enterprises in Bac Ninh

5.1.1 Vision

5.1.2 Mission (functions)

5.1.3 The strategic objectives in 2011 and 2020

5.1.4 The strategy function

5.1.4.1 Product development strategy to make a

difference, combining traditional elements with modern

elements, preserving the national identity

5.1.4.2 Strategy for raising capital for businesses

5.2 A number of measures to improve management

structure and resources of small and medium enterprises in the

villages in Bac Ninh

5.2.4 Solution development and combination of

economic, production and business organizations

5.2.5 Some measures to improve the layout using the staff

and management mechanisms

5.3 Recommendations to address existing problems

5.3.1 For businesses

5.3.2 For industry - State and local

5.4 Proposed measures to reduce environmental pollution

5.4.1 Worker training and awareness of people

5.4.2 Production planning area

5.4.3 Planning the village towards the development of

cultural tourism

5.4.4 Planning within the enterprise

5.4.5 The technology measures

5.4.6 Management Environmental of dirty water

5.4.7 Solid Waste Management

5.4.8 Management of air pollution

5.4.9 Solutions to environmental management

Three circles model of CSR

A hierarchy of CSR (adapted from Carroll, 1991) Three target groups of CSR

The model of CSR in Vietnam

Analysis of factors inside and outside

The medium and small villages in BacNinh province in

2008 Value of production of small and medium enterprises in the villages in BacNinh

Number of enterprises in the village Number of households - labor small industry production in

Chapter 1 INTRODUCTION

1 Definitions

1.1 The definition of sustainable development

Sustainable development is a new concept to define a development in all aspects of the current which is to ensure continued development in the distant future This concept is currently targeted towards countries in the world, each country will base

on specific economic, social, political, geographical, cultural own strategy to best suit that country The term “sustainable development” first appeared in 1980 in the publication World Conservation Strategy (published by the Association for Conservation of Nature and Natural Resources International – IUCN) with a single content.Simplified: "The development of mankind can not just focus on economic development but also to respect the essential needs of society and the impact on ecological environment."

This concept was popularized in 1987 by the Brundtland Report (also known as Our Common Futur Report) of the Commission on Environment and Development World

- WCED (Brundtland Commission now) This report clearly sustainable development

as "development that meet the current needs without compromising the damage to the ability to meet the needs of future generations ." In other words, sustainable

environmental protection and conservation To achieve this, all economic sectors - social, government, civil society to shake hands, make aim to reconcile three key areas: economy - society - environment

The concept of "sustainable development" is commonly known in Vietnam in the late 80's early 90's Although, appearing relatively late, but it soon be presented at several levels In recent years, aspects of sustainable development in production and business activities of enterprises were more concerned In five years, each year the newspaper group's language newspaper Saigon Economy News were awarded

"Business and Sustainable Development" for foreign enterprises in Ho Chi Minh and southeastern provinces

1.2 Some models of sustainable development

1.2.1 Three circles model of economic and social, environment of intersection of Jacobs and Sadler (1990)

Figure 1.1 - Three circles model of CSR

1.2.2 Carroll's 1979 conceptualization

Carroll's Pyramid is widely accepted and used in CSR literature and can be seen as a mainstream conceptualization of CSR In 1979, Carroll CSR Divided into four separate areas: Economic, legal, ethical, and discretionary Responsibility Each area

is presented as consecutive layer of pyramid in Figure 2.1 and briefly summarized below:

Figure 1.2 - A hierarchy of CSR (adapted from Carroll, 1991)

1.2.3 Model of three target groups of economic, social and environment of World

Bank

Figure 1.3 - Three target groups of CSR

1.2.4 The model of sustainable development in Vietnam:

Figure 1.4 - The model of CSR in Vietnam

The carrying out of construction and operation concept of "sustainable development"

in accordance with the actual country and the world scene is of paramount importance Models of sustainable development in Vietnam is formed on the basis of empirical research and, in accordance with the actual and desired by local managers

1.3 Small and medium enterprises

Small and medium enterprises are the enterprises with small scale in terms of capital, labor or revenue Small and medium enterprises can be divided into three categories based on size includes micro enterprises, small enterprises and medium enterprises According to the criteria of the World Bank Group, micro enterprises are enterprises with the number of workers under 10 people, small businesses are the number of employees from 10 to 50 people, while medium enterprises have from 50 to 300 labor

In Vietnam, It is not depend on business sector, businesses with registered capital below VND 10 billion or an average number of employees less than 300 people annually are considered small and medium enterprises (under Article 5 of Decree 90/2001/ND-CP)

Kind of small and medium enterprises among the large proportion of enterprises in Bac Ninh A number of small and medium businesses are not concentrated in small villages, traditional villages With a significant contribution to the growth of local economy, the business types in the village of Bac Ninh is the team unity called "the small and medium enterprises in the village of Bac Ninh" Types include: Company,

positive contribution to the growth of the provincial economy, generating revenue and solving the employment problem in local

1.4 Villages, traditional villages

The village is a cluster of residents in a village (the village) has one or several lines are removed from production agriculture to independent business, is the village non-agricultural sectors dominate the household, number of employees, and the income from farming

Traditional villages are villages appear long ago in history and still exist today, as the village has existed for hundreds of years, even thousands of years, is closely related

to factors traditional and popular experience has been accumulated over many generations back, the paper Phong Khe commune, Dong Ho folk paintings, pottery Luy Lau

CHAPTER 2 LITERATURE REVIEW

2.1 Model three - level analysis, PEST model

The side effects in three levels: international, national and local relevant

The content of impact analysis (analysis of Pets):

Impact Areas Content Influence to

Politics (P) - The political stability

- The political line

-Research and development

- Competitiveness

- Economic effective Social (S) - Trend of social development

- The social criteria

- Investment Environment

- Economic development direction

PEST model used to analyze the macro environment of business Firms must be analyzed to understand the opportunities and challenges that are of the external environment affect business Factors: Culture and society, politics, law, economics, technology is shown through modeling PEST

2.1.1 - Economic environment

Current situation and economic trends affecting the future success of business strategy, the key factors that businesses usually analyzed are: The growth of the economy, interest rates, exchange rate and inflation rate As the economy in periods

of high growth will create many opportunities for investment in production expansion of enterprises, whereas when the economy is in recession reduced to reduce the cost of consumables increases the forces of competition Usually, when the economy decline will become reason of war in the price of the manufacturing sectors, especially the adult industry Interest rate will determine the level of investment for enterprise products Monetary policy and exchange ratio can also create a good Olympics for business, but also as risk factors for the development of them Inflation and fight inflation problem is also an important factor to consider and analyze In fact, if high inflation is to control prices and wages may not master inflation, investment projects become more risky enterprises would lead to reduced investment enthusiasm, production development Thus inflation is a threat to the enterprise

The level of economic development is the size, speed economic development of countries and regions including: GDP, GNP, annual growth, this analysis helps businesses understand the development trend of the economy

2.1.2 - Environmental technology

The small and medium enterprises in the village of BacNinh has adapted to the new mechanism from back in 1986 with market mechanisms and policies, enterprises have invested heavily in advanced technology application, transfer new technology,

modern manufacturing processes to modernize traditional technologies, replacing outdated technology with craft of modern technology in order to improve productivity, increase business efficiency, more moved his business, replacing old products with new products Most enterprises in Vietnam – Chau Khe - Tu Son has moved from production to production wrought iron and steel, in Phong Khe outside firms to maintain production of traditional goods such as paper, writing paper Han Nom They have invested heavily in new technology, the production line paper, writing paper, duplex paper, packaging of all kinds

2.1.3 - Socio-cultural environment

The small and medium enterprises in the village of Bac Ninh has adapted the trend of the times, businesses have kept the characteristics of the traditional products, products with artistic traditions of each villages, it is the traditional symbol of the people of Vietnam, the village has products preferred by customers as competition Dai Bai, Dong Ho folk paintings, furniture Dong Ky

2.1.4 - Natural Environment

Bac Ninh has natural conditions, a favorable geographical position have created for the Bac Ninh region soon became an agricultural civilization long development, a unique cultural region, represents a unique Kinh Bac region (Northern of Vietnam) The businesses in the village have been promoting their intellectual inheritance of the essence of his father left, forming the well-known products such as ceramic Luy Lau,

Dong Ky furniture Besides, businesses know using the advantages of natural conditions for its development strategy produced a long-term business

2.1.5 - The political and legal environment

The main elements of government and politic influent to the operation of the business wider and deeper The enterprise must comply with tax regulations, lending, hiring, safety, pricing, advertising, plant location, environmental protection, joint venture or cooperation

Political stability, the consistency of policy stance is always a major attraction to investors, the legal system is built will be the perfect opportunity to stable business, such laws protect environment is that businesses must consider

With the stable political and laws environment at Vietnam, in Bac Ninh province has planned industrial zones 54 villages enabling manufacturing enterprises to focus, away from residential areas, the protection environment requires the attention of the State, and the associated responsibilities of business

2.1.6 - Global Environment

The Vietnam joined ASEAN, APEC, WTO and has officially become members of organizations that create more business opportunities, playing, enjoying most-favored nation, do not treat you particularly international trade, but the challenges of world competition more fierce

The small and medium enterprises in the village of Bac Ninh province has created a own play-ground by the export way But the difficulties and challenges of small and medium enterprises in craft villages in Bac Ninh is the product also offers the single, not uniform, international law is ignorant, weak command of foreign languages processing, the brand on the market do not have, resulting in the export business was going through the intermediate steps which leads to reduced productivity effectiveness

2.2 General analytical model inside and outside - SWOT

This model is analyzed both within and outside the enterprise (SWOT):

S = Strengths, W = Weaknesses, O = Opportunities, T = Threats

Considering these factors both inside and outside which play an important role because they help clarify the business environment as well as working on better visualize your desired future SWOT Analysis is the key to strategy development, to clarify the strength of the enterprise, the weaknesses of the business

The specific target for analysing of the inside and outside factorsin the enterprises from which we form strategic business development division

Figure 2.1 - Analysis of factors inside and outside

Matrix strength - weakness, opportunity - thread (SWOT)

Matrix strength - weakness, opportunity - threats is an important tool in combination

it can help managers develop four types of strategies:

+ Strategy strengths - opportunities (SO)

+ Strategic opportunities - weakness (WO)

+ Strategy strengths - threats (ST)

+ Strategic weaknesses - threats (WT)

The combination of important elements inside and outside is the most difficult task

of developing a SWOT matrix, it requires a good judge and will not have a mix is

The external factors

- Risks and oppotunities

The interal factors

- Current capacity (capital, raw materials)

- Current power

- Cost structure

- Product and investment portfolio

- Research and development

- The level of technical proficiency

Strategy

best The diagram above shows the strategy combined SO, ST, WO, WT are as follows:

2.2.1 SO strategy

SO Strategies use strategies within the enterprise to take advantage of external opportunities All managers are keen to organizations where their strengths can be used inside to take advantage of the trends and events of the external environment, typically the organization will pursue war WO strategies, ST to hold can be in the position where they can try to overcome to make them become strengths when businesses have to deal with the significant threat they will seek to avoid the threat it can focus on the opportunities

2.2.2 WO strategy

WO strategy to improve internal weaknesses by taking advantage of external opportunities Sometimes, great opportunities exist outside the enterprise but internal weaknesses prevent it from exploiting this opportunity

2.2.3 ST strategy

ST strategy is to use the strengths of the business to separate out or reduce the impact

or external threats This does not mean a business has always faced strong threats outside

2.2.4 WT strategy

WT strategy is strategy defensive approach used to reduce the weaknesses and avoid threats from the outside environment Some organizations cope with a multitude of

business enterprise so often struggle to survive, links, limit spending, declared bankrupt or subject to insolvency

CHAPTER 3 RESEARCH METHODOLOGY

3.1 Research objective

The research is designed and used models to analysis and synthesis

of theory, strategy and business development at the small and medium enterprises in the village of BacNinh province, Vietnam

The research applied the theories and models to analyze and assess the actual situation of production and business of small and medium enterprises in craft villages in Bac Ninh province and strategydevelopment towards modernization From that identify the general point, impact the proposed solution is mainly to promote businessdevelopment, paying special attention to the villages of products (product differentiation)to create the sustainable development of small and medium enterprises in the province of BacNinh province

3.2 Research methodology

The research methodologies were used in this research such as:

- Qualitative research method survey, expert methods

+ Secondary data and primary

3.3 The scope of research

To systematize and clarify some theoretical issues of strategy and business development of small and medium enterprises in Bac Ninh trade villages during integration

The analysising of current and dynamics situations in production and business development of small and medium enterprises in the villages during the period from

CHAPTER 4 ANALYSIS AND DISCUSSION

4.1 Overview of small and medium enterprises in craft villages in Bac Ninh

Bac Ninh is a province in the northern plains in the northern key economic sectors, from BacNinh old born and appeared with preserving the unique variety of occupations associated with the names of villages, called communes, associated native tradition, survival and development for hundreds of years Entered a period of renewal and modernization investment in development zones and industrial clusters

of craft villages, rehabilitation and development of craft villages in Bac Ninh is the key to accelerating the growth of economic Assembly, in accordance with guidelines developed by the Party and economic authorities of Bac Ninh

To December, 2008, Bac Ninh province has built eight zones and industrial parks, 26 small and medium industrial clusters, industrial clusters of craft villages, of which 18 industrial zones have been put into business action Until now the province of Bac Ninh has 62 villages, 53 villages including industrial production and small industry are distributed throughout the province and most active in major economic sectors

Figure 4.1 - The medium and small villages in BacNinh province in 2008

(Source: BacNinh Department of Trade in 2008)

Businesses in the well-developed village 32% (20 villages) are the producers of products suitable to the market, there is increased investment in production capacity, this group includes producers of wooden handicraft products, steel, copper, paper, bamboo, woven

Businesses in the village produce moderately active, very difficult to develop: (26 villages) occupy 42% of the business including production and processing of products such as residential wood products, processed silk, rattan, bamboo processing of agricultural products from rice and maize

Businesses in the village poor production, it risks losing a job tomorrow: (16 villages) 26%: is the household production, cooperatives, whose products do not adapt to the market, with fierce competition of industrial products such as ceramic products, folk and processing of forest products (rattan, bamboo )

No Zones Number of

villages

Distributed by economic sector

IT Construction Trade Acquiculture

Businesses in the village of Da Hoi iron and steel production – Chau Khe Commune,

Tu Son town is a village tradition to date, the enterprise has produced more than 30 kinds of metals such as steel construction D6-D20, twisted steel, square steel Lanyards, wire mesh, nails with the output of 100,000 tons, the product generated

on the output value of 700 billion / year, there are 25 companies and 731 production and business households, the average income generated 10 million VND / person / year, the commune has 1,300 people, including 600 workers employed

The enterprises in the villages and fine art furniture for domestic consumption and export include village clusters Dong Quang, Huong Mac, Khe Phu, Tu Son town, the products mainly furniture , beds, paintings and statues, their products have been on both domestic and foreign markets in Europe, Asia, every year the village enterprises

in the industrial production value creation over 200 billion / year , products made for domestic purposes 35% and 65% for export, at Dong Quang ward has a population of 11,000 people including 6,000 employed workers, in addition to attracting more than 4,000 workers from outside So far in Dong Quang has 102 businesses and nearly 1,000 household and business furniture and fine art per capita income accounts for 8.4 million VND / person / year

Businesses in paper production villages Phong Khe – Bac Ninh city comes from the production of paper As early as 90 have turned to low-level paper: toilet paper, paper packaging, paper In recent years some companies have switched to production

of new products such as paper Duplex printing paper Now at PhongKhe has 125 production lines of industrial paper capacity of 300 tons / year to 2,000 tons / year Sales of small and medium enterprises in craft villages in Bac Ninh province was

No Zones Limited liability co Private

Figure 4.3 - Number of enterprises in the village

(Source: Department of Planning and Investment in 2008)

Production and business models of enterprises in the village is rich and diverse addition to the production and business units operating under corporate law, cooperatives are mostly active in household production model individual companies,

to the present time, in the village has 15,759 households with 36,515 employees

STT ZONES No of individual units HR

Figure 4.4 - Number of households - labor small industry production in 2008

(Source: Department of Trade in 2008) After 10 years of re-establishment of small and medium enterprises in the village of Bac Ninh province to grow, is the place known, the industrial products Bac Ninh village preferred by customers, the market consumption has been spread around as the U.S., EU, Japan, Korea, Thailand

Model management structure, operating small and medium enterprises in the village

of Bac Ninh today: On the product structure and industrial structure: the diversification of production most consumer goods and exports, such as the type of paper, steel, brick, wood handicraft, wood appliances, processing forest products, embroidery, rattan, giang, weaving, pottery, textiles

This demonstrates that the handicraft villages in Bac Ninh province has great ability and industry to produce many different products

On the organization of production and management organization: The Company is organized primarily in the form: Cooperative hand, business owners, Ltd., a shareholding company, the organization generally lack scientific management, the management model in family, spontaneous, instinctive, not any depth to the affected

Since the Enterprise Law was born, the enterprise has been equipped and trained so many businesses have developed, removing the management model family instinct The enterprise has developed the organizational structure, management model and operating companies under the Enterprise Law

For labor of small and medium enterprises in Bac Ninh primarily the number of employees under 100 people, only 32 companies have between 100 - 200 people, 10 companies have between 200 – 300 people

The workers are not trained, which is transmitted from person to person, as of May 9 / 2008 Bac Ninh has 47,236 employees (According to 2008 DPI)

Businesses wage regime is implemented in accordance with salary payment as the workload is generally income of workers is increased

The apparatus management firms typically compact, reasonable layout, operating on the basis of the functions, powers clearly promote efficiency Director authorized to assign tasks to specific jobs deputy director of the inspection, control and adjust accordingly

These enterprises are mainly small producers, economic thinking also take the form manually

Production activities of small retail businesses are often scattered, each component of the laborers are employed, self-training by training and communication transmission lines for the other person, to imitate nature The technical workers, workers operate has been selected by the school and receive training through the training program

The hard work hard and unite to overcome difficulties inquisitive to complete the work

4.2 PEST model applied to analyze the business environment of the handicraft industry of small and medium enterprises in the village of Bac Ninh

4.2.1 Environmental politics and law

The relationship between the business sector: The trade unions through the system to understand the institutional sector, the sector policies, the State

b) The political environment

Expression of political stability and business environment production, Bac Ninh province has worked out many programs and policies consistent with the characteristics of the locality, creating more opportunities for small and medium enterprises in the village development, such as Resolution 02, 04 of the Committee

of Bac Ninh province on the development of village clusters

However, some policies are not specified with investors, democratic openness and transparency between the investors and contractors, the mechanism is not consistent with changes in market prices

After more than 10 years of trying and build, in Bac Ninh province has become a comprehensive development, economic growth with a high rate, an average of 13.4%

of GDP in 1997-2005 years, in 2008 increased 14 , 7% more than 1.5 times the national average, ranking second in the northern key economic sectors Economic structure shift quickly in a positive way Share in GDP of industries - XD increased from 23.8% in 1997 to 53.7% in 2008, state budget revenue reached 2450 billion, up 23.7% annual average, local budget revenues and expenditures the target is close to balance, people's income is increased, per capita GDP $ 978.2

Labor structure has a positive shift over the 1996-2000 period in the labor sector is 8.2% industry – construction; 2001-2005 is 12.9%

Economic Planning stage the 2006 - 2010: in 2010 GDP growth rate reached 15-16% per year, in which industry – construction increased 19-20% (only 20% industry growth), up 17 service -18%, agriculture, forestry and fishery increased by 4-5% By

2010 the proportion of industry – construction is 55%, services 31% Agriculture and forestry is 14% of GDP

GDP per capita in 2010 reached $ 1,300, social capital at about 39-40% of GDP, budget revenue reached 3200 billion, up 25% on average, the percentages of GDP budget with 15% in in 2010