485 assignment 2 passed Business and Business Environment

ASSIGNMENT 2 BTEC Level 4 HND Diploma in Business Unit number and title Unit 1 Business and Business Environment This paper is only for reference purposes only and may differ from the briefs of new articles.

ASSIGNMENT 2 FRONT SHEET

Qualification BTEC Level 4 HND Diploma in Business

Unit number and title Unit 1: Business and Business Environment

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Introduction

Here is my report about five forces model and factors affecting Sam Holdings and how it affects the company

Barriers to entry: Policy, law, culture, capital

Threat of substitute: devices using rivalry industry

Frequency

Supplier’s power Buyer’s power: households, businesses, construction companies,

FDI enterprises

Threats of substitution:

Devices using frequency have a huge advantage as its convenience Principle of operation based on frequency

waves makes these devices easy to install and use without cables, high security However, the poor sound

quality as well as the usage distance are limited, be replaced by cable products, making these devices only

useful in security areas.

Industry Rivalry:

Cadivi electric cable joint stock company with electric wire and cable products compete directly with wire and

cable array of Sam holdings Established in 1975, compared to 1986, Cadivi has more experience in

manufacturing as well as building trust with customers, Cadivi products spread across all market needs from civil to coming of companies, state So far with modern lines, production capacity of the Company:

60,000 tons of copper / year

40,000 tons of aluminum / year

20,000 tons of PVC pellets / year (raw materials for producing electric cables - mainly for internal supply to CADIVI The price is also extremely competitive compared to the price with not much difference in price

SACOM branded fiber and telecommunication cable products manufactured by leading European and American

technologies such as Swisscab, Nextrom (Switzerland) and Rosendalh (Austria), Outokumpu (Finland) have been face throughout the territory of Vietnam and some countries in the region

- Fiber optic capacity: 1.2 million km of fiber / year

- Capacity of telecommunications copper cables: 1,500,000 km of double wires / year

Sun World - Sun Group's entertainment brand with the leading system of parks and entertainment complexes

in Vietnam: Sun World Ba Na Hills, Sun World Da Nang Wonders, Sun World Fansipan Legend, Sun World Ha

Long Complex and Sun World Hon Thom Nature Park Meanwhile, SAM owns high-class resorts and golf courses

in Tuyen Lam Lake, Da Lat, Lam Dong: Swiss-Belresort Tuyen Lam, SAM Tuyen Lam Golf Club, but the scale is not yet possible comparable to Sun World Meanwhile, SAM owns high-class resorts and golf courses in Tuyen Lam

Lake, Da Lat, Lam Dong: Swiss-Belresort Tuyen Lam, SAM Tuyen Lam Golf Club, but the scale is not yet possible comparable to Sun World

Buyer’s power: With relatively popular products, Sam Holdings is at high risk of losing customers to rival

companies, in order to attract and maintain its customers, SAM needs to improve service quality as well as developing proprietary products to create competitive advantages with other companies

Power of supplier: SAM builds the company in a self-sufficient model and suppliers are the subsidiaries of the company Wire and cable are Sam wire and cable, real estate is Sam Land, agriculture is Sam Agritech

Threat of entry: As a joint stock company, SAM must have legal status, fully comply with the 2014 corporate law

of the Vietnamese state The capital of Sam Holdings must also be big and stable to develop as well as maintain many of the company's industries as it is today

Political factor

Vietnamese politics follows the socialist state, the one-party state A new constitution was passed in November

2013, reaffirming the central role of the Communist Party of Vietnam in politics and society, outlining

government reorganization and strengthening market reform in the economy background Although Vietnam is

a one-party state, following the Party's orthodox ideological policy has reduced its importance and priority to aim economic development and national security

Vietnam has always been considered a politically stable country after regaining its independence Vietnam has demonstrated the ability to organize high-level events with the assurance of public security and luxurious infrastructure to meet the requirements of heads of state Most recently, during the APEC 2017 senior week, Vietnam has ensured "the highest level" security Vietnam continues to be trusted to be chosen as the venue for the North-American summit meeting on February 27-28

The tenure of the heads of state is maintained stable for a term of 5 years, but President Tran Dai Quang was unable to complete his term (2016-2021) because he passed away in 2018 His replacement is general secretary Nguyen Phu Trong to complete the term (2016-2021)

It can be said that the Vietnamese government is completely stable and less volatile

The Government submitted special economic zones to Van Don, Bac Van Phong and Phu Quoc at the 5th

session, the National Assembly XIV 2018, enterprises will be entitled to 10% tax rate for 30 years, 4 years tax

exemption and 50% tax reduction for the next 9 years from the time of taxable income Particularly for income from investment projects - real estate business will be applied preferential tax rate of 17% (Zing, 2018)

After 10 years of joining the World Trade Organization (WTO) (2007-2017), export turnover in 2016 increased 3.5 times compared to the level of 50 billion USD achieved in 2006; Foreign investment (FDI) attraction also doubled the time before WTO entry

Notably, in terms of the structure of export goods, the proportion of goods through processing is increasing, while preliminary goods decrease significantly Specifically, in 2005, the proportion of raw goods, new goods for export processing accounted for about 51%, currently only 23% This proves the trend of positive movement in the structure of export goods, showing that the domestic production has changed more steadily Vietnam has signed 12 Free Trade Agreements, 4 Agreements are in negotiation and 1 Agreement is in reviewing

(nguoilaodong, 2017)

12/11/2018 Vietnam is the seventh country through the CPTPP Agreement CPTPP is considered a high quality free trade agreement, with the deepest level of commitment ever CPTPP member countries constitute a large market with 500 million people, accounting for about 15% of GDP, 15% of total global trade

Not only referring to traditional areas such as tariff reduction for goods, opening of service market, intellectual property, technical barriers related to trade CPTPP also handles problems New and non-traditional topics such as labor, environment and shopping by the Government and State enterprises

That bring Sam Holdings about tax incentives, institutional reforms to expand markets, improve production quality, learn from other countries' experiences, attract investment, increase the ability to call for foreign capital successfully, export development, a stepping stone to becoming multinational companies However, Sam holdings need to be flexible in order to be able to adapt to change in Vietnam, quickly take opportunities for development, and the company also will face to great competitive pressure by the entry of foreign companies in both products and brands

Diplomatic relationship

For New Zealand, Vietnam has had a good relationship since the two countries established diplomatic

relationship in 1975 Recently, the Prime Minister's official visit from 11-14 March 2018 has upgraded this

relationship This visit of Prime Minister Nguyen Xuan Phuc is important for both countries, contributing to promoting strong cooperation in the fields of economy, trade and education Also on this trip, the cooperation agreement to develop avocado in Dak Nong province "was signed between the four parties, including the New Zealand Government Intergovernmental Agency G2G, the Institute for Crop and Food Research, SAM Agritech Company and Dak Nong province during Prime Minister Nguyen Xuan Phuc's official visit to New Zealand

Economic factor

The average CPI in 2017 increased by 3.53% compared to 2016 and increased by 2.6% compared to December

2016 Thus, the target of inflation control, keeping the average CPI in 2017 below 4% was achieved in the context of the price adjustment of most of goods managed by the State in 2017 (thoibaotaichinhvietnam, 2017) The government's control of the rise of inflation has brought benefits to SAM as it restricts risks in long-term investments, stabilizing the price structure, and low inflation will help to increase growth

In the context of favorable general market, Sam holdings also achieved positive business results with net

revenue and consolidated pre-tax profit reached VND 2,220.9 billion and VND 143 billion, respectively 22% and

340% compared to 2016 (Sam Holdings, 2017)

Vietnam's economy has experienced impressive growth in 2017 with a growth rate of 6.81%, higher than the set target of 6.7%, the highest increase since 2011 (Sam Holdings, 2018)

GDP increases which mean purchasing power increases that lead to the revenue of company will expand

According to the General Statistics Office, by the second quarter of 2017, it is estimated that Vietnam has 53.4

million people in working age In particular, the unemployment rate is estimated at 2.28%, equivalent to 1.1 million people (Cong, 2017) Employees that don’t have jobs will lead to lose income Therefore, life of workers and their families will be affected badly But, if they have jobs, they will have enough economic potential to

buy the products from company and also let their children learn in good environment, which mean develop the future of Vietnam’s labor With the objective to become the leading company in 2020, SAM has no time and don’t want to spend too much money in reeducating labor

About fiscal, the tax S.A.M has paid in 2016 is 37.5% while the tax rate in 2017 is reduced to only 20.3% This is a

good signal when SAM has earned more profit when taxes are reduced (Sam Holdings, 2018)

Social factor- Lifestyle

The current Vietnamese society with the information technology industry is growing at a high rate, the rate of mobile subscribers and internet use is growing exponentially It is expected that by 2020, 100% of communes in Vietnam will have broadband internet, the percentage of internet users will increase by over 60% of the

population These positive forecasts have made the outlook for sustainable growth for wire and cable industry

in Sam Holdings' investment in at least 5 years (Sam Holdings, 2018)

Technology factor

Along with the development of the economy, the demand for safe food and health protection is being paid more and more attention by Vietnamese consumers Meeting the increasing demand of Vietnamese consumers for safe agricultural products, the high-tech agro-forestry sector of SAM Holdings is the place to create clean products for consumers thanks to scientific technology and social responsibility (Sam Holdings, 2018)

SAM Agritech currently operates mainly in Dak Nong province - the pepper growing area of the country

Households growing pepper in the province are applied advanced and advanced technologies to ensure

proactive and supply high quality raw materials for export processing plants The most modern ASTA technology application plant in Vietnam was also put into operation in early 2018 by SAM Agritech, contributing to the growth of SAM Holdings in the following years (Sam Holdings, 2018)

CORE VALUE, MISSION, or VISION

Profit in 2018 prove that company keeps on track with this goal, SAM sets a target of 20% growth in revenue, estimated at VND 2950 billion and 26% of profit before tax and VND 180 billion SAM also approved a plan to issue shares to increase charter capital from more than 2417 billion VND to 3500 billion VND, in two ways: issuing capital increase (maximum of 41.75% of outstanding shares, price minimum VND 10,000 / share) and dividend payment by stock (Sam Holdings, 2018)

Brand Name

Having 30 experience years, SAM has strong brand name in Vietnam market However, the company can still better exploit the brand value when expanding its operations as well as the North Currently the company is still operating mainly in South Vietnam

Organizational Structure

To become largest multidisciplinary investment company in Vietnam in 2020, choosing divisional structure is the right thing, which include holding model, SAM can easily to add more divisions to diversify products, divest products that causing losses to the company to maximize the earned revenue so it can achieve the annual growth of 20-30%

Human resources

The total labor of S.A.M in 2017 is 657 people 4 members of the board of directors, 1 general director, 1 deputy general director, 3 members of the control board and 1 chief accountant

About classification, most of workers achieve university/college level that accounting for 48,71% which mean

321 employees, next is unskilled labor with 169 workers (25,64%), The number of technical, intermediate qualification respectively 70, 86 labors, above university accounts for small part with only 13 persons (1,97%) (Sam Holdings, 2018)

To become a Vietnamese leading conglomorate in 2020, Sam needs more highly educated employees to be more creative for the company as well as recruiting other employees to expand the size of the company

Marketing

Joining Shark Tank Vietnam, the regular appearance of more than 03 months on the national television channel

is an opportunity to promote SAM Holdings' brand and image to numerous investors, partners, customers and social co (Sam Holdings, 2018)

Business Decision

Sam has caught up with the trend of the future when

applying high technology (4.0) to agriculture since

2016, the factory is completed in 2018 Sam has built

the largest pepper factory in the Central Highlands

with the initial investment of 31 VND billion with a

capacity of 9000 tons / year That we can produce

fresh vegetable sources and provide to whole

Vietnam’s market (Vietnam still has to imported

vegetables of unknown origin, quality from China,

that really harmful to the health of Vietnamese SAM

Holdings expects to create clean products for

consumers thanks to scientific technology and social

responsibility as well as sustainable development

orientation of enterprises

In addition, focus on building and developing large

The factory applies high technologies to production,

which the disadvantage requires a high level of workers' labor to be able to operate machinery, but our surface technical level is still low, need to go new long-term training to achieve the required level, lack

of human resources In addition to favorable conditions, pepper production and trading need large capital, which requires high management capacity, depends heavily on the world market SAM

Agritech's Board of Management should also need to pay attention to limiting the proportion of

inventories, avoid speculation and unreasonably hoarding to limit the risks of price fluctuations

The model of applying high technology to agriculture

is still new in Vietnam, Sam may be inexperienced,

farms like Mai Khoi, Quang Son and Nam Nung

with the aim of bringing safe agricultural products,

which are strictly managed and ensured the

standards Internationally based on the application of

the most modern science and technology,

environmentally friendly, utilizing large material

areas in Dak Nong The company invested capital in

Sam agritech with 16,000,000,000 VND to own 48%

of the company Sam Agritech aims to produce and

process 3,500 tons of pepper, of which direct export

is about 1,750 tons Revenue from processing and

export activities: VND 370 billion, net profit of VND

2.3 billion

Moreover, the government also has some

investment incentives to the high-tech agriculture

like the decree takes effect from October 15, 2018:

incentive policies enterprises investing in agriculture

and rural areas; policies to support agricultural

cooperatives; policy of linking production with

product consumption; credit policy for agricultural

and rural development; policy to encourage the

development of high-tech agricultural applications

and clean agriculture Policies to support trade

promotion and branding; support

environment-friendly facilities; other relevant policies

the company also cooperates internationally with

New Zealand, highly dependent on the diplomatic relationship of the two countries.

The high quality of vegetable farming makes the production cost increase so the selling price of these products is also higher than the market price, making

the company lose its price advantage compared to other rivalry industries.