Analyse risk management case for vinfast automotive manufacturing project belonging to vingroup company

Ho Chi Minh City University of Foreign Languages and Information Technology - HUFLIT Faculty of Business Administration - International Business REPORT MIDTERM EXAM Module: Risk Mana

Ho Chi Minh City University of Foreign Languages and Information Technology - HUFLIT

Faculty of Business Administration - International

Business

REPORT MIDTERM EXAM Module: Risk Management - Lessons 2-3 Tuesday

Class section: 231142402201 Lecturer: Nguyen Thi Huyen Tran

Project title:

ANALYSE RISK MANAGEMENT CASE FOR VINFAST AUTOMOTIVE MANUFACTURING

PROJECT BELONGING TO VINGROUP COMPANY

STUDENT TEAM IMPLEMENTS:

Student's full name ID Student Contribution

percentage

HCM CITY, 2023

CHAPTER 1: OVERVIEW OF RISK MANAGEMENT ACTIVITIES OF THE VINFAST CAR PRODUCTION PROJECT OF VINGROUP GROUP

1.1 Theoretical basis

1.1.1 The concept of risk in business

Business risk is a collection of unexpected and random factors that occur during the production and business process of an enterprise, negatively impacting the existence and development of the enterprise

1.1.2 Concept of risk management in business

1.1.2.1 Risk management concept in business

Risk management is the identification, evaluation and prioritization of risks, thereby using resources reasonably and _ economically to minimize supervision.Monitor and control probabilities The occurrence or impact of unfortunate events or to maximize the exploitation of opportunities The goal of risk management is to ensure that this uncertainty does not affect the achievement

of business objectives

1.1.2.2 The role of Risk Management in businesses

Risk management is an effective tool to help directors make the right decisions, thereby helping businesses achieve their business goals and strategies By understanding the factors that can lead to disadvantages, businesses will avoid unnecessary losses and have time to plan to prevent risks before they arise Besides, risk management is also an important factor to help businesses operate effectively.As the concept presented, risk management is carried out through the reasonable and economical use of enterprise resources This means that businesses must find ways to organize work and resource-related activities effectively, thereby minimizing unnecessary costs incurred

1.1.2.3 Risk management process in business

Depending on the type of risk and specific business strategy, each business will choose a different risk management process Normally, the risk management process will be organized in 6 steps:

- Step 1: Identify risks

- Step 2: Analyze risks

- Step 3: Evaluate risk priority

- Step 4: Handle risks

- Step 5: monitor risks

- Step 6: risk communication and consultation

1.2 Introducing Vingroup and the Vinfast car production project

1.2.1 Introducing Vingroup corporation

The Group's predecessor was Technocom Group, founded in 1993 in Ukraine

In the early 2000s, Technocom returned to Vietnam, focusing on investing in tourism and real estate with two initial strategic brands, Vinpear and Vincom By January 2012, Vincom Joint Stock Company and Vincom Joint Stock Company merged, officially operating under the Group model with the name Group Group - Joint Stock Company

VinGroup is one of Asia’s largest multi-industry private economic groups with a market capitalization of nearly 16 billion USD, Famous brands of VinGroup include Vinfast, Vinpear, Vinmart, Vinschool, Vincom, Vinhome

Three areas where VinGroup provides international quality:

- Technology - industry

- Trade in Services

- Social charity

1.2.2 Introducing the Vinfast car production project

VinFast is a subsidiary of Vingroup - the largest private enterprise in Vietnam VinFast is connected from a series of acronyms of the words: Vietnam - Style - Safety - Creativity - Pioneer with the meaning of honoring Vietnamese brand cars On September 2, 2017, Vingroup started construction on the VINFAST automobile production complex project in Dinh Vu - Cat Hai economic zone (Hai Phong) With European and American standard technology, and a team of world- leading experts, VINFAST opens a new future for the motor industry in Vietnam 1.2.3 Vinfast’s automobile production scale

The VinFast car production project is one of Vingroup’s major investment projects This group is committed to producing high quality cars and serving the needs of domestic and foreign customers

VinFast has invested in the most advanced technologies in the world to produce cars with outstanding safety and performance features, while also being very innovative in design and technology

VinFast’s project went into operation in September 2017 with an automobile factory of more than 335 hectares in Dinh Vu - Cat Hai economic zone, Hai Phong

According to the plan, VinFast will start producing and selling cars on the domestic market from 2019 and export to the international market from 2020

VinFast has launched two car models, VinFast Lux A2.0 and VinFast Lux SA2.0, before officially being sold on the market These two car models are designed

in Germany, manufactured using advanced technology around the world and are highly appreciated for their quality and market share in the Vietnamese market in general and the world market in particular

1.3 Risk management activities of Vingroup and the Vinfast car project

1.3.1 Group risk management model

To complete the set goals and strategies in an uninterrupted production process, Vinfast Group has built a risk management model with three layers of defense

- The first layer of defense includes: General Director, departments and divisions at the Group and P&Ls -> Has first and direct responsibility for risk management

- The second layer of defense includes: Board of Directors and risk management department -> Responsible for developing risk management policies and processes

- The third layer of defense, including: Internal audit at the central apparatus and risk management department at P&L -> Responsible for marking the effectiveness of risk management activities

1.3.2 Risk management process of Vingroup corporation

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- Step 1: Identify risks -> Based on the goal to determine the level of risk that can affect the goal

- Step 2: Risk analysis -> Determine frequency of occurrence, quantitative and qualitative impact level

- Step 3: Evaluate risk priorities -> Rank and evaluate risk priorities based on many aspects

- Step 4: Handling risks -> Determine plans to minimize the negative impacts of risks

- Step 5: Risk monitoring -> Continuous review to ensure the appropriateness of the risk management program

- Step 6: Risk communication and consultation -> Organize communication and training to raise employees’ awareness of risks

1.3.3 Vinfast’s car production risk management activities

1.3.3.1 Risk identification: including project risk, competitive risk, brand risk, customer risk, human resource risk, financial risk and other risks (technical risk/risk industry and market)

1.3.3.2 Risk analysis:

The group would like to provide a table comparing the level and frequency of the above risks

risks

If this happens, the company will face Low frequency, due to lower product prices, reduced capital project overview, positive turnover, and reduced investment results can still be obtained

Huge impact on revenue, easy to be High frequency because Competition | eliminated from the market Vinfast has to compete with

reputable brands in the market

Brand risks

High

If this happens, Vinfast's long-term

development will be affected They will

not be able to retain customers and not

affirm their position

Low Low frequency because Vinfast benefits greatly from Vingroup’s brand

High Customers do not receive the product as The frequency is not high Low

Customer | expected, facing low revenue because Vinfast is doing

strategy about Vietnamese brand products

Human This risk can reduce output, but it can be | The frequency is low resource compensated by investing in the cost of because Vietnam's human

abundant

Financial | If this happens, all of the company’s The frequency of

risks product and business plans will be occurrence is not high

financial potential is quite strong

Low

Other risks | [fan incident occurs while using the vehicle, it will affect Vinfast’s reputation because before bringing the

tested nearly 300 prototype cars in Vietnam and Europe

1.3.3.3 Risk assessment and prioritization:

a Risk groups that occur with high frequency:

Project risks

Risks within the enterprise Financial risks

Customer risks

Competitive risks

b Risk groups occurs with great loss:

Financial risks

Risks within the enterprise Human resource risks

Customer risks

Competitive risks

1.3.3.4, Financing, handling and monitoring risks: Vinfast applies the risk management model throughout the group to ensure connectivity and consistency Vinfast's risk activities are considered similar to other activities Group risk management

1.3.3.5 Risk communication and consultation: The Group continuously updates the risk management process for the entire system, regularly organizes seminars, training and communication about new risks for the entire Board of Directors as well as staff: employees, to ensure that the human resources team has full information, cultivates knowledge about the group’s risk management, and raises awareness and responsibility for their work

CHAPTER 2: CASE STUDY ANALYSIS: VINFAST RESPONSE TO BAD CUSTOMER FEEDBACK POSTED THROUGH GOGO TV CHANNEL

2.1 Summary of the case between Vinfast and GoGo TV

In a video on March 21, 2021, Tran Van Hoang (owner of Youtube channel GoGo TV) posted expressing his opinion about the Vinfast Lux A2.0 On May 6, the representative of Vinfast car company decided to submit a complaint to the authorities citing violation of intellectual property rights related to Vinfast electric cars, Vinfast accuses the channel of making defamatory statements and using false information to damage the company’s reputation The lawsuit requires this channel

to compensate for damages and remove videos deemed misleading about Vinfast products GoGo TV has protected its content and cooperated with authorities to resolve the dispute There is currently no official information about the lawsuit 2.2 Analyze Vinfast's risk management steps in the incident with GoGo TV

The dispute between Vinfast and GoGo TV is a typical lesson in risk management for businesses in particular and businesses intending to enter the automobile

manufacturing industry in general To better understand this lesson, the team would like to analyze the process of handling this incident through 6 steps of risk management of Vingroup

2.2.1 Step 1: Identifying risks

In fact, this step is often performed in combination with many measures According

to Vingroup’s annual report in 2020, the group has applied measures according to ISO 31000 standards such as establishing and inspecting the site

Through consumers’ reactions and comments on videos on GoGo TV channel, Vinfast has noticed mixed opinions about its car products That could cause consumers to boycott, reducing sales of Lux cars in particular and other Vinfast products in general

Therefore, we can judge that the video on GoGo TV brings brand, economic and technical risks In particular, brand or economic risks will be directly identified by the Risk Management Board of the Vinfast project, while technical risks are determined by the technical team of the stores and showrooms that Mr Hoang once came to check

It can be seen that Vinfast Group's risk identification was determined very quickly However, to determine whether the risk identification work is truly effective, it is necessary to look more closely at the risk analysis and assessment part

2.2.2 Step 2: Analyzing risks

Vinfast needs to answer two questions: What risks do the above incident cause to the corporation? Does it have any dangers?

Regarding the loss, after receiving the information that Mr Tran Van Hoang reported, the company has collected all information related to Mr Hoang s vehicle inspection and repair history at stores in the Vinfast system However, the departments at the workshop can only confirm technical-related losses

Numeric | Information Vinfast information | Evaluation alorder | provided by GoGo is authentic

TV

1 Tire pressure sensor - Confirmed there was | - There was an

an error and error and it was successfully resolved | corrected

it at that time - The content

- On April 29, rechecked but found

no errors

Wipers and turn

signals don’t work

well

Confirmed there was

an error and it was successfully processed

at that time

provided by GoGo

TV is true

Wireless charging in

the car

Cruise control

(Cruise adjustment

system)

On April 29, checked again but no errors were detected at the time of checking

It is not possible to draw conclusions about the content GoGo TV offers because the error may only appear at

a few times

Car door is broken There is an error,

customers have to come three times on April 5-16, 2021 to have it completely resolved

The content GoGo

TV provides: true

The brake pedal

sounds due to natural There is an error, but

conditions (rain, sun, etc.)

- The content provided by GoGo

TV is not incorrect due to unknown reasons

- This cannot be considered a technical error from Vinfast

The electronic board

reports an error

requiring an engine

check

Vinfast did not mention it in the interview

Vinfast needs to confirm again on this issue

Do not close the fuel

tank cap

On April 29, checked again but no errors were detected at the time of checking

It is not possible to draw conclusions about the content GoGo TV offers because the error may only appear at

a few times

The sound of the wind

penetrates into the

car, the car is noisy - It is not possible to

clearly determine whether there is wind noise entering the car The two sides have

not yet been able to conclude the content presented

- Rattling sound by GoGo TV caused by soft drink

cans hitting the rear trunk wall

Is the loss information provided to assess technical risks really serious? The above losses include both technical errors and user errors or natural impacts Once

a technical error appears, it proves that Vinfast’s brand risk will be affected This makes the customer experience of the brand’s automobile products no longer the same as before, while Vinfast is a safe car brand And when confidence is lost, Vinfast’s sales will decline, leading to failure to achieve the set goals for the year Regarding dangers, the risks of false information not only cause technical, economic and brand losses but can also cause losses to the supply chain, jobs for personnel According to lawyer Nguyen Huynh Phuong Thao, Deputy Director of Hung Vuong Real Estate Law Company: " behind every business are not only thousands or tens of thousands of workers but also a supply chain with many related businesses, Public companies also have a community of investors When an enterprise suffers damage, all related links also suffer damage." This is something that few people think about, a virtual environment but the effect is real, it can even

be extremely serious

2.2.3 Step 3: Assessing risks

Magnitude

©

Technical risks

© Economic risks

It can be said that Vinfast evaluates brand risks as the risks that need the most priority Because the losses will not only lead to a loss of brand reputation but also reflect that Vinfast’s technical lines have not been completed and sales will decline

2.2.4 Step 4: Handling risks

After analyzing the risks the company may face from GoGo TV's video, Vinfast determined that it needed to handle the matter quickly and take tough action