Business Environments Assignment Organizations in Their Environment

This report aims to find out the Vietnam business environment which affects the running business of BP p.l.c. Besides, this report also finds out the influence of stakeholder to the activities of BP p.l.c.

BTEC HND IN BUSINESS (FINANCE) ASSIGNMENT COVER SHEET

NAME OF STUDENT Trần Quyết Thắng - Joe

REGISTRATION NO F05-194

UNIT TITLE Unit 1: Business Environment

ASSIGNMENT TITLE Organizations in Their Environment

ASSIGNMENT NO 1 of 2

NAME OF ASSESSOR Jubred A Peñano

SUBMISSION DEADLINE February 25, 2013

I, _Trần Quyết Thắng - Joe _ hereby confirm that this assignment is my own work and not copied or plagiarized from any source I have referenced the sources from which information is obtained by me for this assignment

_ February 25, 2013_

Signature Date

FOR OFFICIAL USE

-Assignment Received By: Date:

First attempt

work

1.1

Describe the extent to which an organization meets the objectives of different stakeholders

1.2

Explain the responsibilities of an organization and strategies employed to meet them

2.1

Assess the impact of fiscal and monetary policy on business organizations and their activities

2.2

Evaluate the impact of competition policy and other regulatory mechanisms on the activities of a selected organization

2.3

Outcome Evidence for the

criteria

Decision

Internal Verification

First attempt

work

Re-Assignment

( ) Well-structured; Reference is done properly / should be done (if any)

Overall, you’ve

Areas for improvement:

ASSESSOR SIGNATURE DATE / /

NAME:

(Oral feedback was also provided)

STUDENT SIGNATURE DATE / /

BP p.l.c in Vietnam business Environment

Title Page

Prepared for: Professor Jubred A Peñano

Business Environment Organizations in Their Environment Banking Academy, Hanoi

Submitted on November 20, 2012

Prepared by: Trần Quyết Thắng (Joe)

Class: F05-B Registration No.: ITP- F05 - 194

BP p.l.c in Vietnam business Environment

Executive summary

This report aims to find out the Vietnam business environment which affects the running business of BP p.l.c Besides, this report also finds out the influence of stakeholder to the activities of BP p.l.c

The find shows three types of stakeholder and their objectives to BP p.l.c additionally, this report presents the position of each kind of stakeholder and its influence to BP p.l.c furthermore, and the ways which BP p.l.c meets stakeholders‟ objectives are indicated The Vietnam policies and laws are also introduced such as fiscal and monetary policy, welfare policy, competition policy…

It is clear that BP p.l.c has tried too much to meet the stakeholders‟ objectives but there are still some sections that BP p.l.c cannot get them done Therefore, BP p.l.c has to change the plans and strategies to make them suitable to Vietnam business environment so that BP p.l.c could grow well

Table of Contents

Evidence for the criteria ii

Title Page i

Executive summary ii

Introduction 1

1 Background 1

2 Aims 1

3 Scope 1

This research focuses on the Vietnam business environment in recently and the influence to the activities of BP p.l.c 1

Outcome 1.1: Identify the purposes of different types of organization 2

1.1.1 The BP Global 2

1.1.1.1 The legal structure of BP 2

1.1.1.2 The vision statement of BP p.l.c 2

1.1.1.3 The mission statement of BP p.l.c 2

1.1.1.4 The goals of BP p.l.c 2

1.1.1.5 The objectives of BP p.l.c 2

1.1.1.6 The values of BP p.l.c 3

1.1.2 The comments about the vision, mission, goals, objectives and values of BP p.l.c 3

1.1.2.1 The vision of BP p.l.c 3

1.1.2.2 The mission of BP p.l.c 3

1.1.2.3 The goals of BP p.l.c 4

1.1.2.4 The objective of BP p.l.c 4

1.1.3 BP Vietnam 4

Outcome 1.2: Describe the extent to which an organization meets the objectives of different stakeholders 5

1.2.1 The position of stakeholders 5

1.2.1.1 Key players 6

1.2.1.2 Keep satisfied 6

1.2.1.3 Keep informed 7

1.2.1.4 Minimal effect 7

1.2.2 Evaluation of extent to which BP p.l.c has satisfied their stakeholders 8

1.2.2.1 Internal stakeholder – Managers 8

1.2.2.2 Connected stakeholders – Shareholders 11

Outcome 1.3: Explain the responsibilities of an organization and strategies employed to meet them

13

1.3.1 The social responsibilities 15

1.3.1.1 Helping the community around the projects of BP p.l.c 15

1.3.1.2 Investing for students 15

1.3.1.3 BP p.l.c works with the well-known organization 15

1.3.2 The environment responsibilities 15

1.3.2.1 Reducing the pollution 15

1.3.2.2 Improving the environment 16

1.3.2.3 Protect the resources 16

1.3.3 Ethics and business 16

1.3.3.1 Providing the good working conditions for employees 16

1.3.3.2 Providing support to help employees 17

1.3.3.3 Treating people fairly, with dignity and giving everyone equal opportunities 17

1.3.4 Management responsibilities 18

1.3.4.1 Having policies for retirement, redundancies… 18

1.3.4.2 Responsibilities for competitors 18

1.3.4.3 Providing the safe working condition for employees 18

1.3.5 Public relations and corporation image 18

1.3.5.1 The position of BP p.l.c in the world 18

1.3.5.2 A good company 18

1.3.5.3 Corporation image 18

Outcome 2.1: Explain how economic systems attempt to allocate and make effective use of resources available within the country 19

2.1.1 The definition of economic system 19

2.1.2 The types of economic systems 19

2.1.3 Vietnam economic system 19

2.1.4 The way Vietnam allocate and make effective use of resources within the country 20

2.1.5 The influence to BP p.l.c 20

2.1.6 The effects of Vietnam economic system to BP p.l.c 21

Outcome 2.2: Evaluate the impact of competition policy and other regulatory mechanisms on the activities of a selected organization 22

2.2.1 The definition of macroeconomic policy ( fiscal and monetary policy) Error! Bookmark not defined 2.2.2 The impact of fiscal and monetary policy on vietnam economic Error! Bookmark not defined 2.2.3 The situation of Vietnam fiscal and monetary policy 22

2.2.4 The effect of global economy 23

Outcome 2.3: Evaluate the impact of competition policy and other regulatory mechanisms on the activities of a selected organization 24

2.3.1 The Vietnam industry policy 24

2.3.2 The social welfare policy 24

2.3.3 The effect of the interest group and the pressure group 25

2.3.3.1 Interest group 25

2.3.3.2 Pressure group 25

Conclusion 26

Reference 27

Table 1: The stakeholder mapping of BP P.L.C 5

Table 2: The satisfactions of stakeholders 8

Table 3: The responsibilities of BP P.L.C 14

Figure 1: The salaries of BP P.L.C‟s managers 9

Figure 2: The share price of BP P.L.C 11

Figure 3: Green gas emission 16

Figure 4: The percentage of women in BP P.L.C 18

Figure 5: CPI growth rate of Vietnam 23

Figure 6: GDP growth rates in advanced countries Error! Bookmark not defined Figure 7: The unemployment rate in advanced countries Error! Bookmark not defined

Introduction

1 Background

BP p.l.c has been in Vietnam market for a long time It brings many good ideas for developing in Vietnam There are many factors which affect the development of BP p.l.c in Vietnam and the business environment in Vietnam also is different from others which BP p.l.c has projects However, Vietnam has been a member of WTO and it brings numerous of attractive and supportive policies for foreign companies including BP p.l.c Additionally, the global economy has huge influence to the policies of Vietnam

Outcome 1.1: Identify the purposes of different types of organization

1.1.1 The BP Global

1.1.1.1.The legal structure of BP

BP is a public limited company It means that BP can issue shares to the general public and have the limited liability Therefore, BP p.l.c has been owed by their shareholders Additionally, with the limited liability, it is very attractive for investors because they do not have to be provided further capital like their houses, cars, lands… to pay company debts

1.1.1.2.The vision statement of BP p.l.c

The vision of BP p.l.c is: “BP p.l.c wants to become a good company.”

1.1.1.3.The mission statement of BP p.l.c

“BP is making choices – value over volume, strategic assets over non-core, and new opportunities over mature assets We aim to build an ever stronger portfolio, upstream and downstream, generating enough cash both to invest for the future and to reward those who invest in us We have made a strong start on our portfolio, we‟re building the cash generation and, with today‟s announcement, we have begun to provide those rewards.”

1.1.1.4.The goals of BP p.l.c

In 2012, BP expects to pass several milestones as it implements its 10-point plan In addition,

BP p.l.c wants to increase dividend to delight the shareholders, create the safety working condition for the employees and produce the fuel that does not harm or damage the environment…

1.1.1.5.The objectives of BP p.l.c

In 2013 and 2014, as investment continues, BP expects to see greater financial momentum Main developments are planned to include:

 Increasing exploration activity – up to 25 exploration wells per year

 A further nine major upstream projects - making 15 between 2012 and 2014

 Unit operating cash margins from new upstream projects in 2014 expected to be double the 2011 average (assuming a constant $100 per barrel oil price and excluding TNK-BP)

 Whiting refinery upgrade expected on-stream in second half of 2013

 Completion of $38 billion divestment program by the end of 2013

 High value, focused portfolio that plays to BP‟s strengths

 Around 50% more annual operating cash flow by 2014 compared with 2011

 BP expects to use around half of this extra cash for increased investment and around half for other purposes, including increased distributions to shareholders

 In energy: the company not only focuses on meeting demand for energy but also do this

in a way that is sustainable for the environment and addresses concerns over security of

supply as well

 In consumer goods and sector: creating products that helps to alleviate poverty and

bring the development to low-income communities

1.1.2.2.The mission of BP p.l.c

BP p.l.c plans to attract the stronger portfolio to expand the scale of company It wants to make more profit to finance for the future strategies and satisfy those who invest in BP p.l.c This also is the yardstick to evaluate the plans The mission statement is an announcement of

BP p.l.c to society in order to prove the abilities to supply products and services to customers

1.1.2.3.The goals of BP p.l.c

Like other companies, BP p.l.c also gives the specific goals to achieve the mission and respond the requirements of those who involve to company Moreover, goals are divided into short-term goals and long-term goals so that BP p.l.c can conduct the various plans to run business effectively These goals not only are understandable but also separate the demands for the different groups of stakeholder

1.1.2.4.The objective of BP p.l.c

The objectives are set out more specific the goals of BP p.l.c and the aims of objectives are to

be achieved and the desired end results Additionally, objectives could be used as standards for measuring the performance of the organization and departments The important factors that create efficient objectives are specificity, measurability, attainability, realistic and time-bounded If not meet these factors, objectives are not planed because it can cause wasting or excess resources

1.1.3 BP Vietnam

BP Vietnam is trying to become a good company like the vision of BP Global BP Vietnam has followed the Vietnamese laws Besides, BP p.l.c Vietnam has had many non-profit programs to help community since arriving in Vietnam in 1989

Oil is the important fuel for the life People cannot live without it because there are many useful machines that are run by petrol such as cars, motorbikes, and the equipment of factories Furthermore, oil is used to produce electricity BP p.l.c has a huge market and good position in Vietnam market Therefore, to attract the investors is not difficult for BP Vietnam and with strong portfolio BP can make more profit and satisfy stakeholder

One main reason for the development of BP Vietnam, there are several oil and gas fields which centralize in the South Vietnam Sea with numerous reserves Thus, Vietnam is a potential market for BP p.l.c Additionally, Vietnam joined WTO in 2007 so there are many goodwill policies for foreign company like BP p.l.c

BP p.l.c also applies its value to Vietnam so as to supply a safety condition for the employees and encourage them work hard There are various training programs to train Vietnam managers and employees These programs help managers have the right decisions and employees improve their skills to reduce the risk

In general, Vietnam has many resources and good conditions for the growth of BP p.l.c

Outcome 1.2: Describe the extent to which an organization meets the objectives of different stakeholders

Stakeholders are individuals or groups who have an interest in the operations and objectives

of the business All organization affect and are affected by different stakeholders Each stakeholder has the other needs about the performance of organizations Therefore, each kind

of stakeholder has various aspirations and influences There are three broad types of stakeholder in an organization including internal stakeholders, connected stakeholders and external stakeholders

1.2.1 The position of stakeholders

Stakeholders have very different degrees of power to control decisions that have effects on policies and institutions, and they have different degrees of „potential‟ to contribute or

„importance‟, to achieving a particular objective (Course book) Stakeholder mapping will illustrate the specific positions of each stakeholder

Table 1: The stakeholder mapping of BP P.L.C

Stakeholder mapping

Key players

Keep satisfied

Keep informed

Minimal effect

1.2.1.1.Key players

a Shareholders

Shareholders affect directly the activities of BP p.l.c they not only invest their money but also have the right vote for the important decisions of company For example, an ordinary resolution is passed by the shareholders if a simple majority of the shareholders present at the meeting vote in favor of the proposal Moreover, a shareholder can require a general meeting

to be called rather than simply have all decisions made through written resolutions Therefore, BP p.l.c has to building the reasonable plans to make them satisfied and inject more money for activities of BP p.l.c Besides, if BP p.l.c could develop and make more profit, the shareholders would receive more dividends

b Customers

Customers have the important roles in the development of organizations and BP p.l.c is no exception In addition, one of purpose of business is to create customers so customers will determine the growth of business Customers consume the BP‟s products and services so BP p.l.c needs to have the strategy marketing to find out what they need and satisfy them

1.2.1.2.Keep satisfied

a Managers

Managers are stakeholders who have a high influence on the BP p.l.c‟s projects and a high interest in the success or failure of these projects Furthermore, managers are people who will affect others For example, in the plans managers make decisions and the staffs follow If managers have the right choices, the companies could have more profit Besides, managers are people who have to understand the workers to motivate and encourage them get job done Managers directly discover what the strengths of each employee and suggest the work that suit to them If employees work efficiently, the productivity and output will increase This is the success for BP p.l.c

b Community, government, local authorities

BP p.l.c has to find out whatever the local communities need to provide and rely on it BP can give services, products and other goods Furthermore, the community cares about the influence of BP p.l.c to environment so it has to have projects and strategies to protect environment Additionally, BP p.l.c has to comply with the laws which government builds to ensure that company not harm or damage the environment, customers‟ safety and the stable price of goods or services BP p.l.c may be received penalties or fees if it

does not act ethically or properly if company does not act ethically and properly respond

to consumer issues in the business environment

1.2.1.3.Keep informed

a Employee

Employees are a key part of every company and play an important role They do not have much power to make decisions about what BP p.l.c do, what BP p.l.c invest where BP p.l.c expands… but they intimately work to produce goods or services BP employees usually work far from the family For instance, Vietnam employees have to work at drillings on the sea Thus, BP p.l.c brings many benefits for employees to help them feel comfortable

b Suppliers

Suppliers play a vital role in BP p.l.c‟s micro environment The growth and the vision of

an organization depend on the value that suppliers can bring Therefore, suppliers have more interest from BP p.l.c but they cannot give the opinions or views about the plans, the development strategies of BP p.l.c

1.2.1.4.Minimal effect

Each stakeholder has a specific role in the development of organization and BP p.l.c‟s stakeholders are no exception The influence of various groups of stakeholder is very different Consequently, no one has minimal effect

1.2.2 Evaluation of extent to which BP p.l.c has satisfied their stakeholders

The satisfactions which stakeholders receive can be presented in this below table

Table 2: The satisfactions of stakeholders

Not harm to

1.2.2.1.Internal stakeholder – Managers

a High salaries

Managers are so intimately connected with BP p.l.c, their objectives are likely to have a

policies to treat them and make them more innovative to have good decisions These right ways that managers choose could help BP p.l.c produce efficiently

BP p.l.c‟s wages are calculated to fascinate and retain the highest quality employees to help BP p.l.c keep their success as a business and to encourage employees to continually develop their skills and enhance their contribution BP p.l.c ensures that managers could earn the reasonable salaries Besides, BP p.l.c has the bonus for individuals or groups performance It motivates managers to work hard to obtain goals of company It means

BP p.l.c could get more profit than expect This table below shows the salaries of BP p.l.c‟s managers

(Source: http://www.glassdoor.com/Salary/BP-Salaries-E9011.htm)

Figure 1: The salaries of BP P.L.C’s managers