BBE A2 Assignment PDF

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Table of Contents 1. Executive summary................................................................................................................. 2. Introduction............................................................................................................................. 3. 2. C...

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Table of Contents 1.

Executive summary..................................................................................................................1

2.

Introduction..............................................................................................................................1

3.

2.1.

Company background.......................................................................................................1

2.2.

Research Apporoach.........................................................................................................1

Major findings..........................................................................................................................2 3.1.

Macro environmental factors that are negative and positive affect ICT asphalt...............2

3.1.1.

Political......................................................................................................................2

3.1.2.

Economics..................................................................................................................2

3.1.3.

Socio-cultural.............................................................................................................5

3.1.4.

Technology.................................................................................................................5

3.1.5.

Environment..............................................................................................................5

3.1.6.

Legal..........................................................................................................................6

3.2.

The strengths and weaknesses of the company and how it relates to external the macro

elements.......................................................................................................................................7 3.2.1.

Value chain.................................................................................................................7

3.2.2.

SWOT Analysis.........................................................................................................9

4.

Conclusion..............................................................................................................................12

5.

Reference list..........................................................................................................................13

List of abbreviation ICT: International Investment Construction and Trading Joint stock Company

1. Executive summary In this report, we provided an insight into the external factors that influence to International Investment Construction and Trading Joint stock Company. The possible opportunities and threats that come from political, legal, economic, socio-cultural, technological and environmental factors were analyzed in the report. We also used the Value Chain analysis to look deeper into the internal factors of the company. Then, we pointed out the strength and weakness of the firm. Last but not least, the interrelationship between internal and external factors were also reported.

2. Introduction 2.1. Company background ICT – International Investment Construction and Trade Cooperation, which is a private joint stock company, has been established since 1999. This enterprise runs in various fileds: asphalt business, estate, besides, they also own two hydropower factories: Chiem Hoa in Tuyen Quang province and Vinh Ha in Lao Cai province, both of them are to the North of Vietnam. The field that the leaders of ICT pay much attention to is alphalt business. Up to now, ICT has been the second biggest enterprise in producing and selling asphalt, the first postion belongs to Petrolimex – a company belongs to governement. During development process, ICT have been getting many achievements. In 2014, among 500 most enormous private companies, ICT has rated in the 272th in accordance with the VNR500, which managed by Vietnam Report Company and reported every year by Vietnamnet newspaper. Besides, ICT has accomplished a great consolidation in the rank of VNR500 in 2015 with the place of 186th of top 500 biggest private companies in Vietnam.

2.2. Research Apporoach In this assignment, our group will recognize the advantages and disadvantages of the macro environment’s impacts has upon trade management. Moreover, we also find out the interior powers and limitations of ICT as well as evaluating their internal relationship with external macro features. We utilize PESTEL and SWOT. PESTEL and SWOT are analytical tools that

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help determine the most important external and internal elements which should be paid attention so as to achieve success in an initiative or project (Mullerbeck, 2015).

3. Major findings 3.1. Macro environmental factors that are negative and positive affect ICT asphalt. PESTEL incluses political, economic, social, technological, environmental and legal. According to Mullerbeck (2015), PESTEL focuses on defining trends and therefore, it is very useful for proactive thinking and anticipating change, instead of being overtaken by it. 3.1.1. Political According to Pham Ngoc Quang (2010), the Communist Party of Vietnam is the only ruling party in Vietnam. Therefore, politics in Vietnam is a stable form in the world. This is a useful factor for the development of the market in Vietnam in general and the asphalt market in particular. Moreover, this is also an opportunity for foreign companies to enter the market in Vietnam. Therefore, this has created conditions for the development of the asphalt market. ICT companies import asphalt from foreign companies and then sell them to local companies. Political stability is an opportunity for ICT companies to reduce the risk of doing business with other countries. It also helped the company stabilize its import and export of asphalt. Vietnam aims to keep a stable relationship and continue to increase cooperation and benefit sharing with its neighbors, regions and key partners, and to harmonize relations with major countries. (VOV - ĐAI TIENG NOI VIET NAM, 2018). Vietnam has a good relationship with other countries that created favorable conditions for developing the asphalt market. However, it also poses a challenge for ICT companies. This has created the company's rivals from other countries based in Vietnam such as Colas, Shell and Caltex. They have good management, highly qualified staff, clear business strategy, large capital and tools. This is a challenge the company faces in order to be able to grow. 3.1.2. Economics Market structure 2

First of all, there are more than 30 companies in asphalt trading market. Among eight companies leading the asphalt market in Vietnam, Petrolimex holds the biggest market shares (Le Hai, 2018) and according to website of the company, ICT ranked at second position in the market. It can be considered that the structure of asphalt trading market in Vietnam is an oligopoly with few big companies leading the market. As one of the biggest companies in the field, ICT obviously faces the competition among top enterprises. Besides, it is not easy to enter an oligopoly, which can be an opportunity for ICT to consolidate its position. Market forces 

Threat of new entrants

The product that ICT trades is asphalt for road construction. Asphalt when heated becomes soft and fluid and hardens when cooled (The Asphalt Paving Industry A Global Perspective, 2011). Therefore, it is costly and involves technical systems to store and transport bitumen. Specialize tanks would be required for the storage and tank trucks are compulsory for the transportation system. To operate the whole system, a team of engineers and experts should be formed up to ensure the quality of asphalt. If a company then wants to do business with asphalt, it will need a huge amount of money to invest in the infrastructure and hiring employees. It is considered to be difficult for a company to start up a business of trading asphalt. However, the fact that Vietnam has just signed the CPTPP agreement (Moit.gov.vn, 2018) can strengthen the competiveness in local asphalt market. The import tax will reduce according to the agreement (thuvienphapluat.vn, 2018), therefore, it would be the chance for more foreign companies to enter Vietnamese market. Consequently, the market would become more competitive in terms of price and quality. 

Power of buyers

The customers of ICT are the owners of huge projects related to road infrastructure. They are state own enterprise or private construction companies. ICT receives the orders from customers before purchasing from producers. The amount of money needed to be pay for each purchase is huge so it is obvious that paying in credit is required for the customers. It is a risk to ICT that the project owners cannot pay and it becomes bad debt. If the customer cancel the order before it is delivered, then ICT might suffer from surplus purchasing. 3

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Power of suppliers

ICT buys asphalt from SHELL Singapore and ExxonMobil (website of ICT company) for the best quality of product. Since there is not many bitumen producers in South East Asia, the suppliers have a quite strong power on ICT due to the shortage. They can choose the deal that has the nicest price and ignore the rest. 

Threat of substitutes

Most of the roads in Vietnam are still covered with asphalt. Therefore, the substitute for bitumen is nearly nothing. In the near future, asphalt might still remain the unique position in road construction. However, there might another material that will alternate the main role of asphalt in the long term 

Competitive rivalry

Since the product that ICT trades is unique, there are few companies existing in the same field. It is estimated that there are more than thirty companies doing business in asphalt trading (Yellowpages.vnn.vn, n.d.). Moreover, ICT has been considered as the second largest (website of the company) company in Vietnamese asphalt market, it also gained such a long-last truth from the customers. ICT chose to trade the high-quality asphalt instead of being cheap, therefore, the company has the strength of differentiation. However, Petrolimex – a state own enterprise holds huge benefits due to the support from the government. In general, ICT does not have many competitors but the current ones are quite strong to compete. National and global issues According to the World Bank (2017), the GDP growth of Vietnam would reduce a little bit but still maintain the high level at more than 6% in the next two years. Vietnam is also a developing country, therefore, the demand of infrastructure improvement is big. With the positive forecast of GDP growth, it seems that the country would keep developing in the near future. This is an opportunity for ICT to consolidate its position in domestic market. With the participation in globalization process, it would give the chance to ICT to expand trade to more countries in the world. Nevertheless, it also challenges the ability of the company to survive in such a competitive environment.

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3.1.3. Socio-cultural According to Hofstede Insights (n.d.) the power distance and individualism indicators shows that the power distance in Vietnam is high and the society is collectivistic. As a result, people accept the hierarchical order and support the relationship in society. Of course, it is also true with the authorities. It leads to a possible fact that people need relationship to get things smoothly. If ICT wants to be the supplier for a project, the company then should build up well connection with authorities instead of showing good performance. Unfortunately, this can lead to corruption and unexpected cost. Vietnam scores 20 at individualism indicator and 57 at long term orientation indicator (Hofstede Insights, n.d.). Therefore, Vietnamese society is considered to be pragmatic and people are not afraid of new changes. It allows partners of the company the changeable way of behave and try new challenges. It means that if there is anything that should be changed, people will gradually accept it instead of refusing. One day there might be another material or another method to build the road, asphalt might lose its unique position and affect the business of ICT. 3.1.4. Technology Nowadays, technology has been developing rapidly, advanced information technology and specialized tools are strongly influencing the business operation of ICT. Applying advanced machine and equipment for commerce activities helps ICT save an enormous manufacturing and labour cost as well as executing the work time and the cost spends on materials, therefore, effect and competition of ICT are also increased. Technology which influence strongly commerce activities must be considered are Internet and information technology. ICT has a large business area all around Vietnam, with a lot of branches and stocks are distributed into various regions, Internet becomes a tool which connect all members of company fastly and conveniently with saving cost. Company can deploy some selling and buying programs on the Internet, this thing permits ICT to carry out convey market process and create good conditions for choosing and buying goods at the addresses of customers. 3.1.5. Environment Asphalt business is considered as an important industry to attend to develop infrastructure of Vietnam. Vietnam has an area of 331.688 square kilometers, consists of about 327.480 square kilometers of land and 4200 square kilometers of inland waterway. Terrain consists of a lot of 5

hills (40%), mountains and forests (40%), meanwhile, the covered land only takes possession of 20 percent. The North includes midland and The Red River Delta, The Middle is coastal lowlying land area with a great number of highlands and The South is The Mekong Delta. Traffic system is mainly overland that consists of a great number of highways, provincal roads, etc. For the time being, there has been existing a huge number of small and low quality roads, they are not built base on standards. Generally, road system of Vietnam still exists many limitations and not get the requirements of residents. Moreover, The North often happens devolution, meanwhile, The Middle area also happens natural disaters such as: flood, earthquake and The South regularly takes place tide, these things all influence the producing process as well as the quality of asphalt. 3.1.6. Legal From 2014, supervisors of foreign businesses in Vietnam have begun to enact laws with the aim to make enterprise under pressure. ICT is one of the companies which have to send compulsory reports annually to the Department of Taxation (Ho Chi Minh City Tax Department, 2014). Basing on Johnson and friends in 2013, the most important factor is legal which is a combining element among regulations and laws in term of different major. In Vietnam, the legal system will be governed by civil law. Regarding to the international and national relationship, each enterprise must apply different rules for company in the same region. 

According to import-export tax law, company has to pay tax in 30 days since the day that company receives the product. For ICT, importing liquid asphalts cost very high tax. So ICT must handle carefully between the tax and the fee to maintain company.



According to Vietnamese law, investors must have enough power to execute project. They are not allowed to join another project which are currently behind schedule deploy. ICT is working on many major. However, because of this law, ICT just only can invest money on liquid asphalt while other major is not deployed otherwise, ICT have to have enough power and ability to launch many projects in the same time which will cost a huge of money.



Base on Lam in 2013, every asphalt company has to sell high quality items. This has positive impact on that ICT is characterized by selling high quality liquid asphalts that is 6

one of advantages of ICT compared to the others company. However, Because of requirement of government, other companies will improve their product so ICT have to face with more competitors with the same quality goods like them.

3.2. The strengths and weaknesses of the company and how it relates to external the macro elements 3.2.1. Value chain In 1985, Michael Porter created Value chain. Value chains analyze activities inside and around a company, and link them to an analysis of the company's competitive strength (Recklies, 2001). Value chain incluses two parts: support activities (indirectly) and primary activities (directly).

Primary activities: 

Inbound logistics

The company imports high quality goods from foreign companies such as Shell and ExxonMobil. ICT who is the first private enterprise invest in shipbuilding specialized to transport liquid plastic and the ship conforms to the international standards of Bureau Veritas (BV) of France (Baomoi.com, 2009). Therefore, they will control the quality of the product. However, they will lose shipping costs and have to have more employees to do this job. 

Operation

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ICT - ASP has three warehouses, one production plant, one laboratory and asphalt transport system. Moreover, at present, asphalt market share of ICT accounts for 20-30%. According to guest speaker, in 2017, the revenue of the asphalt company was between 90 and 120 billion. 

Service:

The purpose of ICT is help customer buy good products as well as creating habit for them in using high quality asphalt in order to achieve their objective. 

Marketing

Open press conference -

Build the brand and name of company.

-

Assert the quality of product

Join in social organization. -

Spread out their reputation.

-

Show their responsibility to society so ICT will have more love from their customer

Cooperate with big asphalt brand such as shell, create event to share experiences among businesses and student -

Have the chance to co-operation with the other big brands and advance the human resources.

All in all, although marketing can help ICT a firm brand, the characteristic of ICT is so unique so ICT does not have many ideas about run a campaign to create reputation of their brand. 

Sales

Salesman has to find the big project which needs the enormous number of liquid -

Introduce company items to other people in the same major

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Increasing profit for company

Salesman has to work directly with their customer and commit the progress. -

Increase the trust of customer

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Solve the problem immediate 8

After selling product, ICT always ensure the quality of their item and they will fix the street without any doubt if the street goes wrong. -

Taking responsibility is one of the smart ways of ICT to have the truth of their customer.

Support activities 

Infrastructure

The departments in the company are divided by function and have strong connection to each other. Since the business of ICT is asphalt trading, departments related to sales and finance work together to ensure the process of purchasing and delivering. To make sure the asphalt is on the right track of the transportation process, they keep track on every tank truck that comes in and out the asphalt terminal as well as travels on the way. This interrelationship makes ensure the right and sequent process and as a result, avoid the fraud in the company....