Individual Assignment 1 Vietnam Airlines Is The National Airline Of The Socialist Republic Of Vietnam.pdf

Untitled IBSm301 Nothing International Business Supplied (IBSm301) 0 0 IBS301m – FALL 2021 INDIVIDUAL ASSIGNMENT 1 VIETNAM AIRLINE Instructor Mrs Cung Thi Anh Ngoc Student Tran Thu Hang HS150040 1 0 0[.]

IBSm301 - Nothing International Business Supplied (IBSm301)

IBS301m – FALL 2021

INDIVIDUAL ASSIGNMENT 1

VIETNAM AIRLINE

Instructor Mrs Cung Thi Anh Ngoc Student Tran Thu Hang HS150040

TABLE OF CONTENTS

VIETNAM AIRLINE 1

1 Introduce of the company 3

1.1 About the company: 3

1.2 The Corporation's fields, branches and business lines: 3

2 Environmental analysis ( PESTEL) 4

2.1 Political 4

2.2 Economic 5

2.3 Social 6

2.4 Tenological 7

2.4 Evironmental 7

2.5 Legal 8

3 Industry analysis 9

3.1 Intensity of Rivalry 9

3.2 Threat of entry 9

3.3 Bargaining Power of Suppliers 11

3.4 Bargaining Power of Buyers 11

3.5 Threat of Subtitutes 12

4 Recommendation 12

4.1 Improve service quality 12

4.2 Establish a competitive pricing strategy 13

4.3 Develop access opportunities and ability to attract customers 13

5 References 15

1. Introduce of the company

1.1 About the company:

 Vietnam airlines is the national airline of the Socialist Republic of Vietnam, a core component of the Vietnam Airlines Corporation The airline, under the management of a seven-person board appointed by the Prime Minister of Vietnam, has routes to Southeast Asia, East Asia, Europe and Oceania, with 46 destinations

in 19 countries Headquarters are located at the two largest airports in Vietnam: Noi Bai International Airport and Tan Son Nhat International Airport

 Vietnam Airlines is the largest shareholder with a shareholding rate of 69.93% Jetstar Pacific Airlines The airline holds a 49 percent stake in Cambodia Angkor Air, Cambodia's national airline, and 100 percent in VASCO, a small airline that specializes in flying in the southern region of Vietnam

 The airline is rated 3 stars, according to Skytrax standards On June 10, 2010, the airline officially joined the SkyTeam alliance, becoming the first Southeast Asian airline to join the alliance

 By the end of 2011, the corporation accounted for about 80% market share of domestic aviation market in Vietnam and about 40% market share of tourists flying

to and from Vietnam

1.2 The Corporation's fields, branches and business lines:

 Air transport of passengers, baggage, cargo, parcels, parcels and letters

 Maintenance of aircraft, engines, spare parts, aviation equipment and other technical equipment; manufacturing components, spare parts, aircraft supplies and other technical equipment; providing technical services and spare parts for domestic and foreign airlines

 Import and export of aircraft, engines, spare parts, aviation equipment (rent, lease, hire purchase and purchase and sale) and other items according to the State's regulations

 Providing technical services for ground trade; services at passenger and cargo terminals; Freight forwarding services; commercial services, duty-free sales at the airport terminals and in the provinces and cities; apron services at airports, aerodromes and other aviation services

 Agency services for airlines; manufacturers of aircraft, engines, equipment and spare parts; domestic and foreign transportation and tourism companies

 General aviation activities (flying topographic photography, geological survey, calibration flight of aviation navigation stations, repair and maintenance of high voltage power lines, oil and gas service, afforestation, environmental inspection, search and rescue, etc.) search and rescue, medical emergency, flying in service of political, economic, social, security and defense tasks )

 Producing, processing, exporting and importing food to serve on board aircraft, tools serving the air transport chain; export - import and supply of petroleum, aviation grease (including fuel, lubricating grease and special-use liquids) and other petroleum at airports, airfields and other locations

 Finance, finance leasing, banking

 Printing, construction, construction consultancy, labor import and export, and scientific and technological services

 Investment abroad:

+ Buy and sell businesses

+ Contributing capital, buying shares or transferring contributed capital, selling shares

in accordance with law;

 Other fields, branches and professions as prescribed by law

 Scope of business: domestic and foreign

2 Environmental analysis ( PESTEL)

2.1 Political

The stability of the political system is one of the factors that greatly affect the economic development of a country as well as the business strategy of enterprises when enterprises decide to invest in expanding the market, especially in the direction

of developing the route network of air transport enterprises For example, the security situation in Iraq, in Lebanon, Thailand recently, airlines often cancel flight routes to these areas for security reasons and unstable political system, due to aviation business

in these areas often have a high level of risk

Vietnam Airlines is among the companies under the management of the Government, this is an advantage due to the support of capital, business protection, and financial policies, especially in difficult times due to the influence of the government terrorist activities, wars and epidemics and fuel prices, etc., currently hold the monopoly

position of exploitation in Vietnam However, the domestic legal system has gradually been adjusted, improved, more transparent and in line with the integration trend (ASEAN, APEC, WTO, ), especially international aviation law In Vietnam, this will limit the protection of the State for Vietnam Airlines, but it is also an opportunity for Vietnam Airlines to reassert its position against competitors in the market of air transportation Air freight Vietnam is considered a safe destination in the region, this

is also a signal that the number of tourists and investors will come to visit and explore the investment market, the prospect of investment volume will increase in the coming years and the amount of goods traded on the markets will also increase

2.2 Economic

Vietnam Airlines' freight business is not immune to fluctuations in the economy, such

as factors such as GDP growth rate, inflation rate, level of control and reform corruption, the scarcity of fuel sources, the government's implementation of AFTA commitments and commitments when joining the WTO, etc will directly affect the source of goods exchanged and traded on the market, which means it will affect impact on the cargo volume of Vietnam Airlines

Vietnam is the 46th largest economy in the world Its nominal GDP in 2018 was worth

$245 and is expected to reach $265 billion by the end of 2020 (Trading Economics, 2020) The country has made a lot of progress in poverty eradication and lifted 45 million people out of it between 2002 and 2018 (The World Bank Group, 2020) Its economic outlook for the next few years is positive and robust It is interesting to note that Vietnam has come out as one of the largest beneficiaries of the trade dispute between China and the USA However, it should also be noted that Vietnam has been struggling with high price increases for years

Obviously, when the social economy develops, the amount of domestic and foreign investment increases will increase the amount of goods traded on the market, which means the demand for transportation will increase With the above signals about Vietnam's economic prospects, it will certainly increase the volume of goods traded through airports, which will contribute to Vietnam Airlines achieving a high growth rate in the coming years

2.3 Social

Each country and territory has its own unique cultural values and social factors, and these factors are the characteristics of consumers in those regions Cultural values are the values that make up a society, which can foster the existence and development of that society Therefore, common cultural elements are protected on a very large scale and closely, especially spiritual cultures In addition to culture, social characteristics also make businesses interested in market research, social factors will divide the community into customer groups, each group has its own characteristics, psychology, income different input:

+ Average life expectancy, health status, nutrition, eating

+ Average income, income distribution

+ Lifestyle, education, aesthetic views, life psychology

+ Living conditions

Along with the development speed of the economy, culture also has changes in line with the modern rhythm of life People are saving more and more time, with increasing income, aviation is the right choice of many people

In the past few years, Vietnam has been rated as a safe destination, the leading tourist attraction in the world, which has made the number of tourists to Vietnam increasing, especially the number of visitors from Europe , North America , Japan , Korea The development of the tourism industry leads to an increase in revenue of the aviation industry thanks to the increase in tourists Not only foreign tourists, Vietnamese people are increasingly interested in traveling, including middle-income people, which also significantly increases the number of passengers in the air transport industry

Another mentality of the Vietnamese people that exists is that flying shows class Vietnamese people have long considered flying as one of the ways to express and assert themselves, which creates favorable conditions for airlines to tap into the subconscious needs of consumers

2.4 Tenological

The peculiarity of the air transport industry is the speed of application of new and advanced technologies because this is a special type of business that requires high operational safety, if negligence leads to an accident the consequences are dire and almost impossible to recover the damaged property Vietnam Airlines fleet is always upgraded according to new aviation technology, mainly using technology of famous aircraft manufacturers such as AIRBUS, BOEING, etc., combined with structural and fuselage improvements flight, engines, control systems to improve operational efficiency and range of the aircraft The development of science and technology has created new generations of aircraft with specifications that better meet the requirements of civil aviation transport such as longer range, stronger engine propulsion, Larger aircraft capacity, lower noise, more fuel economy, That is the generation of Boeing 777, Boeing 767, Airbus A320, A321 aircraft that Vietnam Airlines is exploiting This is one of the important factors determining the quality, economic efficiency as well as competitive advantages of air transport products

2.4 Evironmental

Vietnam is one of the most beautiful countries in Asia It houses 8 UNESCO heritage sites and received around 18 million international tourists in 2019 Tourism has been

an important actor to transform Vietnam’s agrarian economy to a service one However, it is worth noting that the fear of corona virus (COVID-19) has been a threat

to the tourism industry and public health

Rapid economic development has led to unsustainable exploitation of natural assets that may impact on future potential for growth Vietnam is badly affected by air pollution Similarly, water pollution is a big problem and has significant impact on human health Vietnam is highly exposed to natural disasters such as volcanic eruptions, floods, droughts, earthquakes, floods, and typhoons

The geographical position of Vietnam is also quite favorable for the development of the aviation industry, with its position on the edge of Southeast Asia, in the middle of the international air route connecting from east to west, from north to south for the construction of a route network between the US and Australia with short flights in Southeast Asia and inland of Vietnam

With the characteristics on the route network of Vietnam Airlines built according to the model of "shaft - spokes" with high operating frequency, good transit service in Hanoi and Ho Chi Minh City, creating a competitive advantage with other airlines international freight flows to/from Indochina, Southeast Asia; gradually turning Vietnam into a regional air transshipment hub, competing directly with major hubs such as Hong Kong, Bangkok, and Singapore Vietnam Airlines actively cooperates in bilateral trade with international airlines, expands flight routes, overcomes subjective limitations, and gradually selects partners to join a global alliance in line with the trend The general development of the world and the actual capacity of Vietnam Airlines, if well applied the position of Vietnam's natural factors will contribute to a significant increase in the airline's cargo output in these markets However, Vietnam Airlines has not fully exploited this advantage

2.5 Legal

Although there are incomplete and overlapping laws, Vietnam has introduced many regulations on air transport The introduction of the Civil Aviation Law of Vietnam has created a basis for airlines to conduct their business activities Vietnam has begun to open the civil air transport industry to the private sector, but with strict terms and conditions, the establishment procedure is still complicated At the same time limit the participation of foreign investors , when it is stipulated that foreign investors only contribute 49 % of the shares in the joint venture airlines 2007 is an important year in the history of Vietnam's aviation industry with the passage of a law allowing the establishment of private airlines and foreign investors in the Vietnamese aviation market, opening the event This is the presence of one of the largest airlines in the world - Qantas ( Australia )

Vietnam also began to negotiate and sign with a number of countries on the opening of the airspace, as with the United States countries in the Mekong sub-region , creating opportunities for the aviation industry to develop abroad

Another strict regulation of legislation related to the aviation industry is the emission protocol This is a fairly strict regulation on reducing emissions of aircraft In the world today, there are struggles to reduce emissions from air transport, putting airlines

in passive conditions, forcing airlines to take measures to reduce emissions into the atmosphere

3 Industry analysis

3.1 Intensity of Rivalry

In recent years, Vietnam's air transport market

has really exploded as private and state-owned

airlines vie for market share in a price war

Vietnam Airlines is highly competitive among

domestic airlines such as VietJetAir, JetStarAir,

Bamboo Airways… In the future, low-cost airline

services will continue to expand and the level of

competition will increase

Along with competition in the domestic market, Vietnam Airlines also has to compete with airlines from countries inside and outside the region Fares for flights from Europe to Vietnam have dropped significantly If in the past, these routes Vietnam Airlines competed mainly with French and German airlines, now, when German airlines have to give way to airlines from the Middle East, Vietnam Airlines is forced

to compete compete with very strong opponents, difficult to balance

3.2 Threat of entry

We can divide new entry competitors of Vietnam Airlines into two main groups: small and medium airlines in the region, and major airlines in the world

 Small and medium airlines:

+ These are mainly newly established domestic airlines or small regional airlines that have just opened routes in Vietnam, this group of airlines often take advantage of the following advantages to compete:

+ Small and medium scale, compact management system leads to low cost

+ Advanced technical technology to help reduce costs (take advantage of the Internet for ticketing, use new generation aircraft more flexibly) For example, AirMekong