Vous êtes sur la page 1sur 44

Table of Contents

Introduction ............................................................................................................................................. 2
Major Findings ........................................................................................................................................ 3
Task 1. Explain how economic systems attempt to allocate resources effectively ............................. 3
1. The way economic systems attempt to effectively allocate firms resources: ....................... 3
2. Vietnam a socialist orientated country and its objective to transform from an
agriculture to a modern industrial country................................................................................... 6
Task 2. Assess the impact of fiscal and monetary policy on businesses organizations and their
activities .............................................................................................................................................. 7
1. Fiscal policy............................................................................................................................ 7
2. Monetary policy: .................................................................................................................. 10
Task 3. Evaluate the impact of competition policy and other regulatory mechanisms on the
activities of a selected organization .................................................................................................. 13
Task 4. Explain how market structures determine the pricing and output decisions of the business 18
1. The market structure that Truong Thanh Furniture Corporation competing in .............. 18
2. The pricing and output decisions determination under market structure......................... 20
Task 5. Illustrate the ways in which market forces shape organizational responses using a
range of examples ............................................................................................................................ 24
Task 6. Judge how the business and cultural environments shape the behavior of a selected
organization....................................................................................................................................... 29
Task 7. Discuss the significance if international trade to Vietnamese business organizations ......... 32
Task 8: Analyse the impacts of global factors on Vietnamese business organisation ...................... 37
1. Economic .............................................................................................................................. 37
2. Social impacts: ..................................................................................................................... 38
3. Environmental degradation ................................................................................................. 38
Task 9: Evaluate the impact of policies of the European Union on business organisation. .............. 40
1. EU Social Charter: ............................................................................................................... 40
2. Single European Market. ..................................................................................................... 40
Conclusion ............................................................................................................................................ 42
Reference .............................................................................................................................................. 43


Introduction
Truong Thanh Furniture Corporation (TTFC) is a Vietnamese business located in Tan Uyen
District, Binh Duong Province which is set up in 1993 and works on growing forests and
processing and exporting wooden products in Vietnam. Companys products consist of
indoor, outdoor, floorings and others which are mainly exported to markets such as US, EU,
Japan, Australia and local customer via their distribution through Vietnam with seven subsidy
companies and, more than 1,400 employees and total equity of US$34 million. From the
beginning, the company has already had clear mission that it will provide good quality
products with competitive prices, on time delivery, non - stop innovation and good services
for customers. In this report we are going to explain and evaluate domestic and foreign
factors which are related and impact to the business activities as well as discussing, analysing
in order to understand the nature of natural environment in which TTFC operated. Besides,
we are going to find out the behaviour of the company in its market environment and assess
the significant of the global factors that shape Vietnamese business activities.












Major Findings
Task 1. Explain how economic systems attempt to allocate resources
effectively
1. The way economic systems attempt to effectively allocate firms resources:
One of the most important elements as well as the factor that every enterprise has to care
about when running a business, is deciding whether it is doing the business under what kind
of market systems. In the current economy, there are three kinds of economic systems that are
basically analysed in the table below:
Types of
Economic
Systems
Definition Who owns
the
resources
Who
make
economic
decisions
The role government plays in
system
Free
market
economy
The decisions are carried
out based on the activity
structure of the market.
Supply, demand and the
payment ability are 3
important elements that
affect the business
decision making. The
government regulation
does not have any
influence in making
decisions.
The
government
and the
enterprises.
The
customers.
Make sure that the market
forces invisible hand can be
freely carried out through the
free price system.
Command
economy
The decisions are taken
under the control of
central planning
committees. The
government plays an
important role in
The central
committee
decides the
target level
as well as
the
The
workers
and the
consumers
at the
enterprise-
The state controls the running
of the economy by deciding
what, how and for whom to
produce goods.
controlling the goods
produced, the quantity of
them as well as the price
and who to deliver. The
members of society all
contribute to the products
and services of the nation.
composition
of output.
level.
Mixed
economy
This economic system has
the state and private
sector direct the economy
and the characteristics of
both market
economies and command
economies. Normally,
mixed economies are
known as market
economies with
strong monitoring, and
most of them feature a lot
of enterprises carried out
by government and
governmental provision
of public products.
The
government.

The
market
forces, the
public
owner and
the
welfare
sector.
The government protects the
public, supplies maintenance
of employment standards, a
standardized welfare system,
and maintenance of
competition.

Based on the real situation of Vietnam economy, in 1986, our country has carried out an
economic reform called The Renovation. The objective of it is to building a socialist-
oriented market economy. Since that time, Vietnam has followed the economic line to shift to
the mixed economy which uses both directive and indicative planning. Truong Thanh
Furniture Corporation, as a large domestic Company in Vietnam has followed the trend and
also supports the mixed economic system. This kind of economic system, however, has some
pros and cons, which are shown as below:
Advantages:
- The producers and the customers have the power to select what to produce as well
as what to consume but production and consumption among harmful products and
services can be prevented by the government.
- The social cost of business activities can be reduced by carrying out cost benefit
analysis as set up by the government.
- Monopolies may still exist but they are controlled under governments close
supervision.
- A mixed economy may have less income inequality rather than the same situation
of Market economy by the role of government.
Disadvantages:
- As the welfare of society is becoming an important part of the mixed economy
system, the usage of resources then also decreases.
- The mixed economy also suffers from the drawbacks of both the capitalism and
the socialism.
The role that the government plays is promoting economy sources to branches to prevent the
lack as well as the residual while producing goods. The economy sources are also limited and
the mission of the government is considering opportunity cost to use the resources
effectively. According to Kutuzov (2012), there are 3 main kinds of resources that a republic
socialist orientated country like Vietnam has to consider, including:
- Land and resources: There is a fact that Vietnam has been wasting more and more
resources and they are becoming exhausted. Same for the situation of land, which is
used for producing food and developing the industry. The cause of this situation is
that the controlling policy of our country is not strict and logical enough to solve
this problem. As a firm which provides products, TTFC need land but also
resources.
- Labor: Having the population of nearly about 86 million, Vietnam also has a huge
proportion of Labor force of 67%. However, there is a fact that the amount of high
level and skilled labor is very small. In a different way, the staffs that have
knowledge are not used effectively and the consequence is that they are unemployed
or working jobs they havent learnt. TTFC opens training classes to raise level of
employees to conformity with professional requirements.
- Capital: TTFCs capital is raised by foreign investment.
Overall, Vietnam is now changing its economic system by developing the technology and
figure out the most suitable methods to use these resources effectively.
2. Vietnam a socialist orientated country and its objective to transform from an
agriculture to a modern industrial country
According to Bao Moi official website, the main objective of 10th Party Central Committees
report, which was presented by Party General Secretary Nong Duc Manh, is to create the
fundamentals for Vietnam and become an industrial country in 2020. Having looked into the
advantages and the challenges brought about by the renewal process, the report appointed that
the entire Party and the citizens made efforts against difficulties to achieve the goals set by
the 10th Party Congress. Overall, becoming an industrial country can help Vietnam to easily
integrate with the economy of the world but transforming from agriculture to industrialization
can brings about many challenges for our country.
First of all, if Vietnam goes to industrialized, the economy of the country then develops. As a
result, the gap between rich and poor may become enlarge due to the increase in the amount
of rich people in businesses. Thus, according to Mr. Do, Vietnam must expand social security
system that covers all social classes of all regions of the country to reduce the gap between
the rich and the poor and reduce social disparity.
Secondly, the more industries are carried out, the more companies are opened. This can lead
to some environmental problems, which are air and water pollution, more trees are cut down
to supply the timber industry purpose. However, Vietnam now has created many regulations
to protect the environment such as banning wood exploiting.
Thirdly, individuals will have more power to affect the industry. Therefore, the state
investment must be improved efficiently as well as the State - owned economic sector.
Moreover, the state must attach the importance to investment from private sector and
establish policies and mechanisms that strongly promote investment of this kind of sector.




Task 2. Assess the impact of fiscal and monetary policy on businesses
organizations and their activities

1. Fiscal policy
According to businessdictionary.com, fiscal policies are the policies which influence the
economy by the taxation and public investment. The impact of this policy is to develop and
stabilize the economy of a country. Fiscal policy including two factors which make a great
influence on the business: taxation and government spending- subsidies. Apply to the case of
a big company in wood industry like Truong Thanh Company, the impact of taxation and
government spending will be discussed.
From the Business Environment Course Book, fiscal policy has a feature that the
government must plan what it wants to spend, and so how much it needs to raise in income or
by borrowing. Tax is a compulsory contribution to State revenue; gain from the profit of the
company. Besides, it is also an important part of the State income so the tax policy will make
a great influence in both the government and the business. There are some main tax law in
Vietnam such as: the corporate income tax, import tax, value added tax and all of these three
tax law influence the wood industry, particularly is the Truong Thanh Company. Particularly,
this company has to pay the following taxes:
- Corporate income tax: Truong Thanh must pay taxes on income from their production
and business activities, such as: production and processing of wood materials,
production of furniture. Besides, the company also must pay taxes on the conversion
of the right to use the property. According to their annual report in 2011, they have
the transfer the right to use land in BinhChuan-ThuanAn, Binh Duong for another
company. Based on the Section 10, Chapter 2 of the corporate income tax in Vietnam,
Truong Thanh will have to pay the tax with the tax rate from 32% to 50% based on
their projects. It is higher than the normal business because Truong Thanh
exploitation wood which is consider as the nature resources.

- VAT: Truong Thanh is a large company in the wood processing industry and furniture
production. So besides having a separate brand, they also received orders from
renowned companies. IKEA is a typical example. This is one of the major partners of
Truong Thanh Company in the foreign market. According to Article 8, Chapter 2 of
the VAT law in Vietnam, the company's commodity will be subject to a 10% tax rate.
Besides, according to the 2011 annual reports of the company, they also take interior
provides furniture for construction projects such as major hotels and resort. For this
reason, from Article 7 and Article 8 of Chapter 2 in the VAT law of Vietnam, this
service of the company will also subject to a 10% tax rate.

- Import, Export tax: With the timber industry, the Vietnamese government has also
issued a number of specific import and export tax laws to this kind of industry. There
are different tax rates for each type of wood products. Particularly, the products which
are made from natural wood to export will be subject to the tax rate from 5% to
10%.However, with products made from plantation timber, the export tariffs of these
products will be at the lowest level: 0%.Truong Thanh Company is producing and
exporting both of kind of products so they have to pay the tax with the tax rate has
been mentioned above.
Beside of these taxes which Truong Thanh Company has to pay, they also get
preference in the import of raw wood. The company in wood industry could import
raw wood from other countries with no need of any paper from the agency
management (except import from Cambodia- which require the necessary permits
from the Ministry of Trade from both Vietnam and Cambodia). And the tax rate for
import material is at 0%. This is an competitive advantages of the company from
Vietnam with other competitors from foreign countries on the market.
Government spending (or subsidies) is also an important part of the fiscal policies. By
provide the subsidies; the government could encourage companies to expand their business in
domestic market. Subsidies can be divided into three parts: direct cash subsidies from the
government to the companies, bank loans with preferential interest rates and reduced business
taxes in some first year of operation. Vietnamese Government does not seem to spend a lot of
incentives and subsidies to private companies. However, there are still a few subsidies for
companies, particularly with Truong Thanh Company.
- Direct cash subsidies from the government to the companies: According to the annual
report of 2011, Truong Thanh Company has received the subsidies from the
government which reached 50%- in the construction of nurseries, tissue culture, and
seed selection by DNA for woodland planting process raw materials for the wood
industry. This is a direct government subsidies for the company and it has helped
Truong Thanh has great advantages in the proactive sourcing of raw materials for
production and exports.

- Bank loans with preferential interest rates: Private companies in Vietnam are not
have the chance to receive the government subsidies easily such as the State
companies, especially in bank loans for invest and expand their business. However,
with the timber industry, there are a few banks have notice the potential in this
industry. An example is the Techcom Bank. Recognize the market potential from
wood processing and furniture manufacturing; Techcom Bank issued preferential
policies to customers in the wood processing industry: companies could borrow
working capital for the business such as imported raw materials with interest rates
reduced to 10% compared to normal rates. Besides that, Techcom Bank also gives
these companies loans worth up to 70% with 95% discount rate. However, to get this
big loan, these companies must meet certain conditions; for example, they must set
their whole production machinery as collateral for loans worth up to 70%.

- Reduced business taxes in some first year of operation: From the annual report of
Truong Thanh Company, they have received some subsidies: a 50% reduction of
corporate income tax for the additional income when export revenues of a year higher
than the year before; a 20% corporate income tax payable on the income earned from
export revenue which reached over 50% of total revenue and maintain stable export
market for quantity for three previous years in a row. It applies until the end of 2011
under the provisions of Decree No. 124/2008/ND-CP dated 11/12/2008 of the
Government detailing the implementation of the EIT Law. Also, some sub-companies
of Truong Thanh such as Wall JSC (Dalai 1) just have to pay corporate income tax
with the tax rate of 10% in 15 years.
When assessing the impact of fiscal policy to a business, we must consider about the
government spending and tax policies. If government spending is increased, there will be an
increase in the expenditure of the economy and also the national income will rise. More
specifically, if the government provides many benefits for businesses such as: direct
sponsorship money for production research and development activities, offering policies to
help business loans at preferential interest rates, reduction of corporate income tax, the
company will increase investment and business expansion. Also at the same time, the
national income will increase, creating a positive effect on economic growth. However, if
there are too many expenses, inflation and unemployment will rise. About the taxation, if the
government increases the tax, it will increase withdrawals from the economy and at the same
time, the expenditure and national income will fall down. Tax is a cost that every company
wants to cut down for maximize profits and avoid losses. If the government increases taxes,
businesses will limit their investment and development in order to minimize the risk of losing
money. This will cause a reduced in economic growth. However, this is one of the methods
which has been used to reduce the burden of inflation on the economy.

2. Monetary policy:
According to businessdictionary.com, monetary policy is an economic strategy which is
chosen by the government to decide the expansion or contraction in the countrys money-
supply. Monetary policy is usually applied through bank centres and it includes 3 key tools,
they are: buying or selling national debt, changing credit restriction, and changing interest
rate by changing reserve requirement. Monetary policy plays the dominant role in control of
the aggregate-demand and, by extension, of inflation in an economy. Also, monetary policy is
called as monetary regime or monetarism. The monetary policy can be made to act as a
subsidiary support to fiscal policy and demand management. Apply to the case of Truong
Thanh Company; we will discuss the effect of monetary policy on their business.
Different from fiscal policy which include both tax and expenditure, monetary policy mostly
focus on the interest rate. The interests always have big influences on business, especially is
on customers and suppliers. According to course book, Business Environment, the monetary
policy can control the inflation as well as manage the demand by using 3 methods:
a) A policy of low interest rate might stimulate bank lending, which would increase
demand of the economy. This could lead to increased inflation.
b) High interest rate might be the deterrent to borrowing and reduce the demand. This
leads to reduced inflation.
c) Strict credit controls can reduce the lending of the banks and then lead to reduce the
demand in the economy.
After studying the definition and the way that monetary policy affect business, then we will
apply to the case of Truong Thanh company, to find out how monetary policy control their
business. Base on the annual report of Truong Thanh Company in 2011, we have some
information below:
Financial expenses too high (9.74%) leads to the decline in net profit, and this comes
from the main reasons:
Bank loan interest rates from rising in the third quarter of the year (17-22%), and decreased
slightly in the fourth quarter (16-19%). Therefore, the average interest rate in 2011 higher
than in 2010
Inflation, CPI and labor costs have increased by more than 20%, while only negotiate
the average price increase is 2-3%
The aim of the company is not to invest to grow unless the interest rate of banks drop
to 12 - 13%
For the export market:
The interest rate bank in VN is too high, from 18 - 24% / year, while the rest of the worlds
most are less than 5% / year. This makes Vietnam's export business reduce price competition,
especially the "lost at home "for FDI Vietnam to open the timber processing plant. Keeping
dong against the U.S. dollar largely good for a number of interest groups, specialized in
import of $ (especially in Hanoi), leading to continuous deficit not reduced. While exports
contributed so much in GDP of the country, this does not courage to export.
In the short term duration of the global economic crisis, the order of each customer
decline, the average was 50%
Reduced government stimulus package, no or reduced preferential interest rates will
make export business in difficult, reduce competitive price in International Market
After reading these in formations, we could see the effects of interest rate (monetary policy)
on Truong Thanh company business, especially are on suppliers and customers.
Because of the high interest rate, Truong Thanh company meet the loss in net profit.
The interest expense was too high otherwise the sales and average price increase
insufficiently.
The high interest rate also leads to the decrease in the customer demand. The order of
the customer decline by a half.
The high interest rate makes it difficult to export. The high interest lead to the high in
price, and this is disadvantages to price competitiveness of Truong Thanh Company
to other competitors from China.
Also the high interest rate would lead to troubles in import. The interest rate is too
high would not encourage other companies to import in Vietnam. Meanwhile Truong
Thanh Company has to import wood from other countries (Vietnam government is not
allowed to cut the trees). This lead to difficulties in Truong Thanh business.
We have found out the effects of monetary policy on business, more detailed is the effects of
interest rate on Truong Thanh business. The interest rate is decided by the government, and
whether it is high or low, it will affect the business. Apply to the case of Truong Thanh
Company, the high interest rate lead to the drop in net profit. This also led to the decrease in
customer demand and supplier. But Vietnamese government does this for reducing inflation,
and to protect VND before USD. The monetary policy will be continuous in 2012, so Truong
Thanh Company should have suitable business strategy for the high in interest rate and crisis
in the future.

















Task 3. Evaluate the impact of competition policy and other regulatory
mechanisms on the activities of a selected organization
According to the article Competition Law and Policy in Vietnam from Singapore
Law Gazette, Issue November 2008 by Dang The Duc and Pham Tri Hung, we have the
definition and the details of competition policy in Vietnam as below:

In Vietnam, competitive behaviours must be within the framework of the law and must be
undertaken on the principle of honesty while not related to the national interests, the public
interests, or the lawful rights and interests of other businesses and consumers. According to
the Competition Law, there are two main categories of competitive behaviours that are
regulated: (a) practices in restraint of competition, including: agreements in restraint of
competition (collusion); abuse of dominant market or monopoly position; and economic
concentration; and (b) unfair competitive practices.

The Competition Law applies to all organizations and individuals conducting business,
including domestic private enterprises, SOEs, foreign-invested enterprises, overseas
enterprises operating in Vietnam (foreign branch offices and foreign contractors with an
office in Vietnam and/or directly supplying services in Vietnam) and industry associations
(comprising trade associations and professional associations).

A striking difference between Vietnam's legal regime and legal of the EU is that regulation of
agreements in restraint of competition in Vietnam appears to be limited to horizontal
agreements (i.e. agreements between competitors, often referred to as cartels), with vertical
arrangements being regulated solely under the provisions relating to abuse of dominant
market position.

According to the Competition Law, the following agreements in restraint of competition are
prohibited only when the participating parties have a combined market share of 30% or more
of the relevant market (Decree 116 provides more details on how to determine the relevant
market and market share):
1/ Price-fixing agreements (direct or indirect);
2/ Agreements to divide the market or sources of goods and services;
3/ Agreements to restrain or control the volume of production, purchase or sale of goods or
supply of services;
4/ Agreements to restrain technological investment; and
5/ Agreements to improve other enterprises' conditions before entering into a contract for the
purchase/sale of goods or services, or to force other enterprises to accept unrelated
obligations.
Exemptions are permitted for definite periods of time if a prohibited agreement satisfies
certain criteria aimed at reducing prime costs and benefiting consumers. Exemptions are
decided by the Minister of the MOIT upon recommendations from the Vietnam Competition
Administration Department (VCAD').
The following agreements in restraint of competition (boycotts and tender collusion) are
strictly prohibited under the Law, and no exemptions are available:
1/ Agreements which prevent, impede or do not allow other enterprises to participate in a
market or to develop business;
2/ Agreements which exclude from a market other enterprises not parties to the agreement;
and
3/ Collusive agreements that allow one or more parties to win a tender for supply of goods or
services.
The Law provides that an individual enterprise will be deemed to be in a dominant market
position if it has a market share of 30% or more in the relevant market or if it is capable of
substantially restraining competition. The following groups will be deemed to be in a
dominant market position if they act together in order to restrain competition:
1/ Two enterprises with a market share of 50% or more in the relevant market.
2/ Three enterprises with a market share of 65% or more in the relevant market.
3/ Four enterprises with a market share of 75% or more in the relevant market.
Market dominance itself is not prohibited but abuse of that position is unlawful and no
statutory exemption is available. Prohibited abuses of dominant market position comprise:
1/ Selling goods or providing services below total prime cost of the goods with the aim of
excluding competitors.
2/ Fixing an unreasonable selling/purchasing price or fixing a minimum reselling price for
goods/services, thereby causing loss to customers.
3/ Applying different commercial conditions to the same transactions aimed at creating
inequality in competition.
4/ Imposing on other enterprises conditions precedent prior to signing a contract for the
purchase/sale of goods or services.
5/ Forcing other enterprises to accept obligations which are directly unrelated to the subject
matter of the contract.
6/ Preventing market participation by new competitors.
An enterprise will be deemed to be in a monopoly position in the market if there are no other
enterprises competing in the goods and services in which that enterprise conducts business, ie
if it is a single seller. Strictly prohibited abuses of monopoly position include the abuses
listed above, imposing disadvantageous conditions on customers, and changing or unilateral
rescission of a contract without a legitimate reason.
Mergers, consolidations, acquisitions, joint ventures and other (undefined) forms of economic
concentration are regulated under the Competition Law. When the participating parties have a
combined market share of less than 30%, or if the economic concentration results in a small
or medium enterprise (SME'), there are no exemptions or notification requirements.
Participating parties to any economic concentration resulting in a combined market share of
30-50% must notify the VCAD. The VCAD must confirm in writing whether the proposed
economic concentration can proceed without exemption or whether it requires a prior
exemption. Any economic concentration resulting in a SME or falling under an exemption is
granted. Exemptions are available when one or more of the participating parties is at risk of
being dissolved or becoming insolvent, or when the economic concentration enhances export,
socio-economic development or technical progress.
In order to protect consumers and to ensure competitors can compete freely, the following
unfair competitive practices are prohibited:
1/ Misleading instructions;
2/ Infringing business/trade secrets;
3/ Coercion in business;
4/ Disruption of competitors' businesses;
5/ Defamation;
6/ Advertisement aimed at unfair competition;
7/ Promotion aimed at unfair competition;
8/ Discrimination by association; and
9/ Illegal multi-level selling (more commonly known as pyramid selling).
After studying about the competitive policy of Vietnam, we will look at the annual report of
Truong Thanh Company to find out the effects of this policy on the company business. There
are some main points:
Vietnam joined WTO promises stronger growth in foreign investment, and promote
export of goods on the international market as well as enjoying the conditions for
most favoured nation treatment of all members WTO, improved dispute settlement
mechanism trade, tariffs were cut reduction, to create conditions for Vietnamese
goods international market penetration. However, the in the integration process, the
business export wood product processing industry also face certain risks as the level
of competition is increasingly intense violently with many competitors from other
countries developing member economies, with the level higher engineering, has been
invested in wood processing plant in Vietnam large-scale.
In addition, more attention is competition for skilled labour by investors new arrivals
from abroad. However, the Company has recognized this many years ago should have
given the project to build the wood processing industry training centre for managers
and technical workers from the end of 2006, annual training centre complete create at
least 500 - 700 employees, not only for TTF that businesses sector. This contributes to
stable workforce management and workers training in the development of the
Company and the subsidiaries of the Company.
Vietnam has become a member of WTO. It means that Vietnam would open to international
market. This is a challenge as well as an opportunity for companies in domestic market. In
global market, there is wider market with more consumers, but also there are so many
competitors. The companies could be monopoly in domestic market but they still have to
compete in global market. When Vietnam, a developing country joins WTO, the government
has to publish the competitive policy, and companies in domestic market could have
difficulties in competition. To overcome these difficulties, the companies have to base on
their competitive advantages and understand their competitors. Also the government tries to
protect the domestic market as well as the companies, but this cannot exist for long term.
Before completely joined with international market, all companies in Vietnam have to
develop to compete in domestic market and further in international market.






Task 4. Explain how market structures determine the pricing and output
decisions of the business

1. The market structure that Truong Thanh Furniture Corporation competing in
There are many different kinds of market structures corresponding to different economies.
Thus, depending on these existing structures, different types of output and pricing decisions
will be carried out. Normally, these factors are associated with each other except for perfect
competition case. According to Business Environment Course Book, in perfect competition,
because of there are a lot of customers in the market, so that a single firm is so small that it
cannot influence the prices. Depending on the conditions to apply to the perfect competition,
we will finally decide which kind of market structures that TTFC belongs to. As mentioned
above, the number of buyers and sellers is very large and has no effect on the quantity
supplied and quantity demanded. Therefore, the barriers to entry or exit the market are not
exist and the price are fixed and set up rely on the quantity for sale and the amount of
products that consumers want to purchase. Moreover, the standardized goods make the
customers do not care so much on the things they buy from. Last but not least, the perfect
information of the products leads the buyers to know all about the prices of others in the
market. Thus, there are other four other kinds of market which have different characteristics
comparing to perfect competition, including:
- The monopoly market: A monopoly exists when a specific individual or enterprise is
the only one who supplies a product and service. Monopolies are indicated by a very
high level of supplier concentration of good and service and a lack of substitute
goods. To run the monopoly structure in a long term period, the barriers to entry must
be created. Some of the most popular barriers are a key resource without a close
substitute, government restrictions and a huge amount of Capital.
- The monopsony market: This market structure is set up in which only one buyer
purchases a specific kind of product. The buyer therefore can have the right to set
some special terms to the sellers.
- The oligopoly market: In this type of market, there is a small number of sellers and
their business decisions have been affected by each other. Thus, the lack of
competition between marketers can lead the customers to purchase higher - cost
products. These goods may be homogeneous or close substitutes. Like monopoly, if
oligopoly is protected by barriers to entry, it will exist for a long time and so that, the
condition to enter this kind of market is difficult.
- The duopoly market: As mentioned above, oligopoly is a market where there are a
few large suppliers. In the case of duopoly, there are only two firms which competing
to each other of a homogenous product or service.
- The monopolistic competition: Last but not least, this kind of market structure exists
when there are a lot of independent sellers which take part in the market. The
producers sell products which are differentiated to each other and not to be considered
as being perfect substitutes by the consumers. Furthermore, the condition to entry and
exit this market is free and easy, as the economies of scales are few.
(Business Environment Course Book, 2010, BPP Learning Media)
With the characteristics as listed above, it can be seen that the market structure that Truong
Thanh Furniture Corporation nowadays is carrying on is the monopolistic competition. From
our perspective, there are some evidences that demonstrate to this view, such as:
- The number of suppliers of wood and furniture industry in Vietnam is very large. As
regard to Vifores (2007), there are 216 timber processing enterprises in the Northeast,
135 enterprises in the Red River Delta. The number of wood enterprises in Southeast
is 1,493 and 166 enterprise are carrying out their businesses in Mekong River Delta.
- There are many differentiated products comparing to wood furniture, which are some
kinds of furniture coming from other materials such as plastic, metal, simili mattress.
As the economy is in crisis, consumption for furniture among Vietnamese is also
declined, leading the consumers to the trend of using cheaper types of furniture as
listed above (Annual Report of Truong Thanh Furniture Corporation, 2011)
- According to The realistic of wood processing industry in Vietnam, by 2007,
Vietnam has 2,526 timber processing enterprises, increasing by 2.8 times comparing
to the year 2000 and 7.7 times comparing to 1990. From our point of view, this proves
that the number of wood processing enterprise in our country is increasing more and
more, and the condition to enter this industry seems to be easy.


2. The pricing and output decisions determination under market structure

After deciding monopolistic competition as the market structure that TTFC is competing in,
the pricing and output decisions then will be affected by this kind of market. In details,
according to Scribd official website, the corporation under monopolistic competition
produces goods up to that limit in which its marginal cost is equal to marginal revenue
(MC=MR) and the MC curve cuts the MR curve which is shown in the graphs below. In
monopolistic competition, price and equilibrium position of TTFC is decided by the Firms
equilibrium and this is divided into two parts: Short run equilibriumand Long run
equilibriumas follows:

Short run equilibrium:
A short period is defined as the time period in which the output can only be risen by
changing the quantity of variable factors the fixed factors has no time to be changed.
o Chart 1: Super normal profit:

o Chart 2: Normal profit:


o Chart 3: Minimum Loss

- The corporation is in equilibrium at point E, where MR = MC at this time. At point E,
it means that the firms equilibrium output equals to OM. Then, the profit goes to
maximize level. Thus, the advice for the corporation is not to produce more than this
quantity.
- If AR > AC, TTFC will get Super Normal Profit. At that time, the price equilibrium
output equals to OP = AM and this amount is greater than the BM (Chart 1)
- When TTFC gets Normal Profit, the price of equilibrium output is still OP = AM and
this is also the average cost. In Chart 2, we can clearly see that because AR = AC (the
AR curve touches the AC curve at point A)
- When AR < AC, the firm will suffer Minimum Loss. The price of equilibrium output
OM in this case is OP1 = AM (Chart 3). The average cost now is OP. The total loss of
TTFC will be PBAP1. However, the Firm will continue to produce goods as the
Prevailing Price covers AVC.

Long run equilibrium:
o Chart 4:


In a Long period, the output can be increased by changing the quantity of both fixed and
variable factors. TTFC then will produce up to that limit in which MR equals to long run MC
and it can only gain normal profit. When it earns Super Normal Profit, new Firms will enter
this type of market. The result of it is that the Total Supply will rise, leading to the decline of
the Profit Margin. Besides, In the Long run, TTFC will not suffer Loss. If it incurs Loss, a
solution for it is to shut down the business. This leads to the other firms to quit, and the Total
Supply will decrease Short of Total Demand and it can cause their price to rise. Thus, these
firms will earn Normal Profit again.







Task 5. Illustrate the ways in which market forces shape organizational
responses using a range of examples

Beside of some factors such as taxation policy or state spending- which have been listed
above, there are some other elements also affect to the market and the organization. One of
them is the five basic competitive forces of Michael Porter. For a short brief, this is a
framework for industry analysis and business strategy development and by using this
framework, the competitive intensity and the attractiveness of a market could be measure.
Five competitive forces are including:
+ The threat of new entrant.
+ The threat from substitute products.
+ The bargaining power of customer (or buyer power).
+The bargaining power of suppliers (or supplier power).
+ The rivalry amongst current competitors in the industry.
At this part of the report, these five forces will be analyses apply to the case of Truong Thanh
Company.
a. The threat of new entrant:
When apply this element to the case of Truong Thanh Company, we will mainly discuss on
what the new competitors need to notice if they want to enter the wood industry and how
Truong Thanh Company could against these new competitors. According to the Business
Environment Course Book, the strength from this element is mainly depending on two
factors: the strength of the barriers to entry and the likely response of existing competitors to
the new entrant. With barriers to entry, it could be categorized like below:
o Economy of scale:
It could be understand as: The more of an item you make the cheaper it becomes to produce
each item (Basic Economic Course Book, pg 258). According to the 2011 annual report of
Truong Thanh Company, they have the factory system and advance production technology
with an investment of nearly $ 25 million. In an average year, Truong Thanh exports 3.000
containers of wood a year. They always leading the timber industry and until 2007, they have
become the No. 1 company in exporting furniture. This is an advantage of Truong Thanh
Company because if any new entrants want to enter the market and compete with them, they
will have to overcome barriers which are the large investments to be able to compete in
production with Truong Thanh. Moreover, at the current economy situation, banks are
limiting the large loans, especially from companies that do not have reputation and just enter
a risky market like wood industry.



o Product differentiation:
Truong Thanh Company has created a good image in the market, especially with major
partners such as IKEA, Wal-Mart or other furniture trading business in the domestic market.
Their partners feel satisfied with the products, from the quality, design to the price.
Customers will not find any reasons to use product come from another brands. It is also an
advantage of Truong Thanh Company on the market. Any new entrant entering the market
will have to make the difference in their products to attract the customers.

o Investment requirements:
As has mentioned in the Economy of scale part, new entrants will need a large investment to
be able to compete with the company has been on the furniture market.

o Switching cost:
When partners or customers of Truong Thanh Company switch to use product from another
suppliers or new entrants, they will consider about the switching cost. The cost here is not
only the money, it also consider about the time and convenience when switch to another
supplier. For example, can the other suppliers provide good on time? Do their form of good
shipping convenience with the customers? If the switching costs are high, the customers and
partners will not choose other suppliers instead of Truong Thanh Company.
o Access to distribution channels:
With the case of new entrants in wood industry, they will meet some difficult to get some
retailers or supermarket organization to agree to store products from them. New entrant will
need to prove the quality of their products, the competitive advantages if these retailers sale
their products.
Furthermore, other cost advantages of existing suppliers will also influence the strength of
new entrants. Particularly, like the case of Truong Thanh Company, they have received a lot
of government subsidies such as: tax reduction, cash aid for technology research &
development because they had great achievements in the production and export of wood
products. This can be a major obstacle for any new entrants who want to enter the wood
industry.
b. The threat from substitute products:
Now the economy is in crisis, which lead to the consumption of furniture is also reduced.
Customers also want to reduce the living expense so they follow the trend to use cheap
furniture made by metals, plastics and simili mattresses. Truong Thanh Company may need
suitable policy to attract the customers in using wood furniture.
c. The bargaining power of customers:
Truong Thanh Company is operating in a market which has a lot of competitors, both in
domestic market and foreign market. In domestic market, they have strong competitors such
as the Hoang Anh Gia Lai furniture company and a lot of small and medium sizes of
business, not including some foreign company such as: Shing Mark, Latitute Tree, RK
Resource, Sancom Vietnam who also invest in Vietnam. In foreign market, they have to
compete with other furniture company come from China- which provide 1/3 overall amount
of export furniture from The Group of Developing Countries to the world market. For this
reason, the customers in both domestic market and foreign market could switch to use
products from others company, so the bargaining power of customers increase. The
customers are in stronger position. The only way to increase their bargaining power over the
customers is to create a strong brand image. And Truong Thanh Company has done that. In
their Mission Statement, they have mentioned that Truong Thanh Company will always make
the customers satisfy based on these factors: suitable price, delivery good on time with the
best quality, always improve and innovate to provide the best service. By following this
statement, they have received the European Trophy For Quality at October 2005,
International Trophy For Quality at November 2005 given by the Trade leaders Club. These
prizes will make a deep impression in customers mind. Also, the main focus of Truong
Thanh is to improve the quality of products so as the result, the customers may less likely
worried about the price.
d. The bargaining power of suppliers:
The wood industry is not just one or two company on the market and also at the same time,
the company like Truong Thanh still be threatening by the substitute products from the other
industry. However, Truong Thanh could set a higher price for their products. Currently, the
government is limiting the exploitation of wood resources in the country, making Truong
Thanh Company lost a large source of material. For this reason, to ensure the source of raw
material for the production process, rather than the use of wood, Truong Thanh had moved to
use domestic timber planting. However, Vietnam has no great clarity in the reforestation loan
because the interests for these loans are too high. For this reason, in the their 2011 annual
reports, it mentioned that they were associated with the OJI Paper Enterprise (have the
number 1 position in Japan and 6th worldwide) for additional capital to operate the planted
100,000 ha of forest project in Phu Yen, Dak lak and Dak Nong. Besides, Truong Thanh also
imports the source of wood from some area such as Africa, Brazil, Uruguay, Canada, etc.
They incur high costs for these activities; however, Truong Thanh can take the initiative in
the use of raw materials for production. This was made the conditions for Truong Thanh able
to set higher product prices.
e. Intensity of competition:
All companies when expanding their businesses are all under pressure of huge intense
competition. Truong Thanh is not an exception, especially when beside of doing business in
the local market, they are also facing the international market. Some of the challenges that
Truong Thanh could met can be listed right below.
Firstly, Truong Thanh will be challenge by the economic crisis. The customer want to cut
down their living expense so instead of using the furniture make from wood, they will choose
the product made from metal or plastic- which are cheaper. In the domestic market, demand
for housing and real estate is declining, as the result make the demand for furniture also
decline. This is an external factor which affects the business and Truong Thanh cannot have
solutions to solve it out.
Secondly, Truong Thanh may face with experienced competitors come from Sweden, Japan,
Australia when enter the European market. This is a particular market which require high
standard of quality. For example, the product export to this market must meet the standards of
FSC (Forestry Stewardship Council) C.o.C (Chain of Custody) or the FLEGT Agreements
from European Community. The company come from Europe may have more competitive
advantages than Truong Thanh, so it is important for them to study carefully about this
market.
Another threat in the Asia market is the companies come from China. They have provided
about 1/3 amount of furniture from the group of developing countries to the international
market. The have a surprisingly growth in export because of the rich and cheap source of raw
material. The interest of bank loans also lowers than in Vietnam and they also have higher
production performance. The labors from China are also cheaper and larger number than in
Vietnam. They also have advantages when they have received advance production
technology from Taiwan, Singapore, US and Europe. Truong Thanh will need to research and
develop new product to have differentiate products to compete with company come from
China. Also, they will need to prepare stable sources of raw material, go along with the
training programs to have more skillful labors.
In conclusion, Truong Thanh Company has achieved a lot of successful in timberland
industry. However, if they want to expand their business for the future, they need to evaluate
the market and prepare the suitable operations plan for the company based on these five basic
competitive forces which influence the industry.













Task 6. Judge how the business and cultural environments shape the
behavior of a selected organization

According to Truong Thanh company annual report, we can judge the effect of Business
environment and cultural environment to company behavior. Firstly, we look at the business
environment:
The effects of business environment are shown by 4 main factors:
a / Economic
For the export market:
+ The interest rate banks in VN too high, from 18 - 24% / year, while the rest of the world is
less than 5% / year. This makes Vietnam's export business reduce price competition,
especially the "lost at home "for FDI Vietnam to open the timber processing plant
+ Keeping dong against the U.S. dollar largely good for a number of interest groups,
specialized in import of $ (especially in Hanoi), leading to continuous deficit not reduced.
While exports contributed so much in GDP of the country, this does not click like to export.
For the domestic market:
+ There are a number of policies detrimental to Real production in recent years, should be
accompanied by domestic interior very poor.
+ When the tough economy, consumption furniture is also reduced, and users to follow cheap
used furniture trends is metals, plastics and mattresses simili.
b / The law
Difficulties in common:
+ The minimum wage applies to Binh Duong area is equal to the Ho Chi Minh City and
Hanoi as inappropriate. Pots Ocean is an area of wood processing companies so much, that
application of this decrease competitive timber industry of the province for other provinces
+ The unemployment of 60% is too high for workers in Vietnam. This is very easy to make
workers demotivated, because unemployment is also at least 1.2 million subsidy and then go
out do not sign the contract work but the revenues may be more. State needs new roadmap
towards that level, when Unemployment is an insult of the labor.
+ Provisions, Labor laws:
Environment is not consistent with implementation capacity of state-owned enterprises
States, especially in the crisis period economy. State should set up according to the schedule
from low to high to help businesses, but that sure most of them would break the law would
only facilitate negative to develop, but not sure about the purpose of the rules.
For the export market:
Arising more and more technical barriers from importing countries, such as the provisions on
original source of wood (U.S. Lacey Act, the Agreement FLEGT Europe, FSC-COC Europe),
the regulations on toxins, safety of the product, the packaging ... make more charge of the
business increased significantly, or very difficult to implement for many business career.
However, with the TTF, we had good preparation by doing the market research. Therefore, it
only influence on costs. And this is a competitive advantage over with the companies in the
same industry.
c / Materials
In recent years, businesses Woodworking $ switched to wood domestic varieties from many,
particularly rubber wood, Acacia, Melaleuca ... therefore, was more active than before.
However, to meet the needs Vietnam's wood processing industry, they have grown faster and
more forest. But the difficulties are the plantation sector, the need long-term capital. But in
the U.S, it is not a great striking in the plantation loans (because common interest expense is
too high, than tree growth over the years). Because, although Truong Thanh has a project to
plant 100,000 hectares of forest production in Phu Yen, Dak Lak and Dak Nong, it still have
difficulties in financial, which lead to an agreement with the Oji Paper Enterprise (have the
number 1 position in Japan and have the 6 position in the international marker) to have more
capital planting.
After studying the report, inside the effect of business environment, there are also the culture
environment aspects. It is reflecting through the customer behaviors when there are crisis, the
customer orders and demand reduce. In conclusion, business environment has huge effect on
Truong Thanh business in the aspect of: economic, the law, materials. The business and
culture environment has affected TTF as follow:
- In the short term duration of the global economic crisis, the order of each decline, the
average was 50%;
- There are many alternative products such as song, rattan, bamboo, metal, plastic, etc.
- Human resources trained subjects the wood processing industry in Vietnam which not
meeting the development needs of industry in the next two years.
- Reduced government stimulus package, namely no or reduced preferential interest rates will
support export business difficult, reduce strong price competition in International business.
- Interest expense was too high, although there were declined slightly. This reduces the
competitiveness of Vietnamese enterprises. This is the lead to "lost at home".
- Keeping the dong against the U.S. dollar largely good for a number of interest groups,
specialized in import of $ (especially in Hanoi), leading to continuous deficit not reduced.
While exports contributed so much in GDP of the country, this does not encourage the
export.
- The minimum wage applies to Binh Duong area is equal to the Ho Chi Minh City and Hanoi
as inappropriate. Pots Ocean is an area of wood processing companies so much, that
application of this decrease competitive timber industry of the province for other provinces.
- The unemployment of 60% is too high for workers in Vietnam. This is easily for workers
demotivated.
- Regulations, Labor laws, Environment ... is not consistent with implementation capacity of
state-owned enterprises, especially in the crisis period.
- Cost of electricity and gas on the rise again, when the output is not strong enough to raise
prices corresponding
- U.S. to strengthen anti-dumping tax price for China. This led to the company in China will
pour into Vietnam to build processing plants, accidentally making domestic companies lost
more labors by the FDI lower interest expense and are capable of the transfer price.
Task 7. Discuss the significance if international trade to Vietnamese
business organizations

The international trade of TTF is based on 2 main factors: internal and external. We will
study both of them:
Firstly is the internal factor, we have integration and opportunities represent for this internal
factor:
Integration
Vietnam officially joined the organization International Trade (WTO) in November in
2006. According to the tariff reduction schedule commitments starting from 01/01/2007,
Vietnam will cut reduce import more than 1,800 tariff lines. This will directly affect the
competitive picture of the economy in general, as well as enterprises in Vietnam in particular.
In general, Vietnam's accession WTO promises stronger growth foreign investment, and
promote export of goods on the international market as well as enjoying the conditions for
most favored nation treatment of all members WTO, improved dispute settlement mechanism
trade, tariffs were cut reduction, to create conditions for Vietnamese goods international
market penetration. However, the in the integration process, the business export wood
product processing industry also face certain risks as the level of competition is increasingly
intense violently with many competitors from other countries developing member economies,
with the level higher engineering, has been invested in wood processing plant in Vietnam
large scale.
On the other hand, the investigation of a number of market research, the level of
consumption used furniture in Vietnam, the average is 11 U.S. $ / person / year and growing
at about 15% / year. This is too low compared with the more U.S. $ 100 / person / year in
Europe and the U.S., should not attract major brands of furniture imported from abroad.
However, it is expected the next three years, the market local development will be enough to
attract the import export furniture to meet the needs of consumers some high-income
component. So as a result, Vietnamese businesses should also fold withdrawal construction
and commercial distribution systems performance in order to maintain market share in the
country.
In addition, skilled labor from foreign company is also a factor which needed to be notice.
However, the company were aware of this many years ago should have given construction
project Center wood processing industry training for staff management and technical workers
from the end of the year 2006, annual training center complete create at least 500 - 700
employees not the TTF that the enterprise and sector. This contributed to the steady force of
managers and workers during the development of the profession companies as well as
subsidiaries of the Company. And in March 2011, the company also implementation of
training courses for 21 students from South Africa by the South African governments
recommendations. After 5 months of learning about the techniques wood, design, read
product Inter- Exterior; processing using machines modern wood; impregnation technique,
drying, drying dry wood; management skills, ... 21 outstanding young students have
completed program, certified traveled to the country to become staff management, staff
training service projects important projects in South Africa. With courses Truong Thanh
increasingly confirmed the importance of cooperation, international human resource training.
Opportunities:
After Vietnam signed the BTA with the U.S., and joined the WTO, the U.S. market is
becoming a great opportunity for exporting wood Vietnam's interior;
- Wood furniture export turnover of Vietnam is still under 3% of total world demand.
Therefore, the market potential is very large.
- More and more buyers for wholesale supermarket / retail famous such as Carrefour, Metro,
Tesco, OBI, Costco, Wal-mart, Target, IKEA ... order online with manufacturers in Vietnam.
- Trend of importers, wholesalers ... wants to buy directly from the manufacturer strong
brand, not through the intermediate company as many years ago. Therefore, manufacturers
have the opportunity to sell directly for the better.
- Many major international furniture fair large-scale economic organizations in Vietnam and
neighboring countries for the manufacturer easy-going exhibition, less costly exhibitions in
the U.S., Germany, France, Australia, etc.
- Vietnamese government paid more attention in the trade promotion for industry Vietnam's
wood, creating many more liberal legal frameworks for the business sector. Government
Vietnam has issued Development Strategy Forestry from 2006 to 2020, especially in contact
the privatization planting, ensure viable local source of wood after a few years.
- GTZ coordinate with Truong Thanh to establish the Center Wood working and training
from technical to management prepared with 20% of the TTF and 80% from the other
sectors. So, in the near future, not the more mature staff - employees are trained, but also
reduced at high risk online won skilled manpower in the industry.
- Many businesses have dissolved due to crisis global economic crisis, this will be the great
opportunity for businesses still remain and to develop to be stronger;
The Integration and Opportunities of TTF are only the internal factors (micro inside the
company) but the international trade also base on the external factors (macro outside of the
company), it is the Balance of Payment of Vietnam (BoP).
Billion USD

2010 2009 2008 2007
A. CURRENT ACCOUNT -3,511 -7,440 -10,787 -7,092
1. Trade balance -5,147 -8,306 -12,782 -10,438
Exports (FOB) 72,192 57,096 62,685 48,561
Imports (FOB) 77,339 65,402 75,467 58,999
Imports (CIF) 84,000 69,949 80,713 62,765
2. Non factor services (Net) -2,461 -1,129 -915 -894
Receipts 7,460 5,766 7,041 6,030
Payments 9,921 6,895 7,956 6,924
3. Transfers 8,661 6,527 7,311 6,430
Private transfers (Net) 8,342 6,018 6,804 6,180
Official transfers (Net) 319 509 507 250
4. Investment Income (net) -4,564 -4,532 -4,401 -2,190
Receipts 456 752 1,357 1,166
Payments 5,020 5,284 5,758 3,356
B. FINANCIAL AND CAPITAL
ACCOUNT
5,542 11,452 12,341 17,730
5. Foreign Direct Investment 7,100 6,900 9,279 6,516
FDI in Vietnam 8,000 7,600 9,579 6,700
Equity 7,101 6,369 8,960

Loan 899 1,231 619

Vietnams FDI abroad 900 700 300 184
6. Medium and long term loans 2,751 4,473 992 2,269
Disbursements 4,671 6,140 2,441 3,640
Scheduled Amortization 1,920 1,667 1,449 1,371
(Actual payments) 1,920 1,667 1,449 1,371
7. Short term loans 1,043 256 1,971 79
Disbursements 8,386 5,588 11,414 1,404
Scheduled Amortization 7,343 5,332 9,443 1,325
(Actual payments) 7,343 5,332 9,443 1,325
8. Portfolio 2,370 128 -578 6,243
9. Money and deposits -7,722 -305 677 2,623
C. ERRORS AND OMISSIONS 3,796 -12,178 -1,081 -439
D. OVERALL BALANCE -1,765 -8,166 473 10,199
E. FINANCING 1,765 8,166 -473 -10,199
10. Change in NFA (-;incr) -1,765 8,166 -473 -10,199
Change in Nir (-;cr) 1,803 8,204 -434 -10,180
Use of IMF cred (38) -38 -39 -19
Purchases - 0 0 0
Repurchases 38 38 39 19
11. Change in arrears and
rescheduling
0 0 0 0
Change in arrears 0 0 0 0
Rescheduling 0 0 0 0

In the BoP table, we will focus mostly on the import and export in the trade balance. As we
could see that they are increasing over the years. The trade balances, the FDI and loan
increase. Vietnam borrowed lots of money, and with the development of the economic, they
are not suitable. With the global crisis, Vietnamese market is in troubles. The government has
change tax and interest rate, reduce the customer demand as well as focus on reduce inflation.
The government also tries to keep the VND non convertible to protect domestic market from
competitors. However, this can lead to the reducing in exporting.
In conclusion, the international trade is difficult to day. When the economic is in crisis, the
government tries to reduce the inflation and protect domestic market by keep the currency
non-convertible. Also there are difficulties because of the differences in culture, social,
economic, technology and policies and so on. So if TTF want to compete in international
market, they have to base on their advantages, firstly to overcome the crisis in domestic
market using absolute advantages, then get used to the international market and competitors
using competitive advantages. Both of these advantages have been mentioned above in other
tasks.










Task 8: Analyse the impacts of global factors on Vietnamese business
organisation
Globalisation trends emerged in the year 1870 to 1913 and have still continued until
now and have more and more effects in almost aspects of social life. According to Hodgetts,
Luthans and Doh (2006), globalisation is the process of social, political, economic, culture,
and technological integration among countries around the world. Globalisation brings a lot
of benefits and good changes for the country but also has some drawbacks and limitation.
Vietnam also did not stand out this trend and already succeed in negotiating to join
the World Trade Organisation (WTO) in November 7
th
, 2006. Since then, almost of
Vietnamese business organisation including TTFC started to be affected by global impacts in
three main aspects of life: economic, social impacts and environment degradation.
1. Economic
First of all, one of the biggest benefits is that Vietnamese business organisations have
more changes to acquit success in economic, science and technology of mankind. Thanks to
the transaction and a lot of ways to exchange innovated technology, people can add more
values to their products and increase the quality of output. As a result, they set up certificates
in which organisations can follow and prove the quality of products. To be more specific in
wood industry, TTFC already achieved certification of International Organisation for
Standardization (ISO 9001:2008) in 2009. As regard to Vietnam Certificate Central official
website, ISO is a worldwide certification and is used in developed countries which have
markets and ability markets of TTFC such as Singapore, Canada, Spain, the UK, Spain, etc.
These things lead to the improvements in standard of living. Besides, these things result in
the increasing of competitors. Open trade means that the government will have to facilitate
for foreign companies and foreign products enter to Vietnamese market. In other way of
thinking, the more competitors we have, the more perfect market we are. Customers have
more changes to use high quality products which come from all over the world with
competitive price. In case of TTFC, importing material activities of company might be easier.
In contrast, lots of competitor means that the level of competitive will be higher for
domestic companies. In fact, the brain drain issues have already existed in Vietnam. This
shows that Vietnamese organisations are losing in employees sources which are important as
other economics sources. With the old opinion that Vietnam is a market with cheap labour,
and with lots of employees it would have the volume of outputs higher; it might be a loser
when it completes with foreign companies. The training and course for skill staffs have to be
put in the top of the most necessary things because cheap labour will not exist anymore.
Vietnamese business organisations should move to specialisation. In addition, weak
competitive ability would make domestic organisation lose their market inside the country.
TTFC is one of capital organisation in training staffs. It already gives scholarship for
employees and MBA courses for people who take it successfully with a good result every
year. Follow the official website of TTFC (October 7
th
, 2012), the training course of skilled
staff and managers in 2011-2012 would be successful with 74 people. As a result, the
company will be able to develop efficiently.
2. Social impacts:
There is a myriad of social impacts that Vietnamese business organisation might be affected.
For example: increasing awareness of foreign culture; homogenisation of cultures,
urbanisation and increasing the gap between the rick and the poor. These things bring both of
advantages and disadvantages for culture and human. However, in this report we want to
mainly mention about the way globalisation impact to social which determine result in wood
industry and related to TTFC. Specifically, the increasing of population is an issue when
there are more and more foreigners who come from Laos, Cambodia, China, Africa, the US
and European want to come to a young potential market as Vietnam to work. The advantage
is the increasing of the competitive for domestic employees. They already know that they
would have to compete with skill people who come from developed countries; they might be
motived by themselves and develop to skill staff. Besides, the company will have more
change to hire and work with good people who may bring specialised skill and technology
and the relationship with other countries. Based on these things, this may help the company if
it wants to expand to international market. Increasing awareness of foreign culture also lead
to increasing knowledge and developing multiculturalism, however the disadvantage is the
disagreement culture and languages and the non-selective collection in perception which can
be the reason of bias in perception or misunderstanding and conflict between employees.
Besides, if the company wants to hire foreign staffs, the labour contract is different if hiring a
Vietnamese guy.


3. Environmental degradation
The most dangerous thing with the Earth at the moment might be the global warming
issue. Follow National Law University, Vietnam has more than 3.260 kilometres adjacent to
the sea. Besides, the altitude of ground is approximately with the sea level. It is the reason
why Vietnam is one of countries be affected seriously because of global warming in the
world. Especially almost provinces in Vietnam are affected seriously by the natural disasters
include floods, storm, etc. These disasters usually made the transportation are obstructive so
that the growing plans or import activities and export activities might be delayed and be
damaged for the long term and short term business activities. Moreover, follow the scientist
from science environment program of BBC; the speed of climate changing is faster than the
previously forecast. In other way of thinking, the time we have to research and find out
solution to make these issues have lighter effects will be shorter; the risk will be higher
especially with an industry which have to depend a lots in the weather like wood industry. In
addition, to avoid deforestation and decreasing in biodiversity, Vietnam government already
has policies so that furniture companies cannot be able to exploit the domestic wood and have
to import wood material instead; its mean the cost for TTFC might be higher.
Globalisation has lots of impact to every site of Vietnamese business organisations. It brings
lots of changes, opportunities and challenges. Standing in front of these things, organisations
have to find out suitable plans to develop as well as solution to improve weakness.



Task 9: Evaluate the impact of policies of the European Union on business
organisation.
TTFC is having the main market to export is EU; the two policies potentially influences the
company are the EU Social Charter and Single European Market.
1. EU Social Charter:
According to the Council of Europe official website, the European social charter is a
council of Europe treaty which guarantees social and economics human rights. It was adopted
in 1961 and revised in 1996. About the employees in the EU of TTFC; because of business
activities in this area, TTFC has to hire lots of local employees and must follow the rule about
their worker. All of the staffs have their individual labour contract in which they must be
informed of Health and Safety risks (worker consultation, informing employees, training
obligation and psychological factors in 1989) and have responsibility to Health and Safety
risks. Besides, the working time is also mentioned; the employees must have at least 11 hours
rest in 24 hours, 20 - minute rest in meal after 6 hours working and so on. The paid for
vacation leave 20 days minimum required. In contrast, Vietnamese workers just have 12 days
to be paid for their vacation during the year. These policies and enacts are much stricter than
a Vietnamese labour contract and the employees have more benefits and are protected very
well. As a result, TTFC will have to treat with its employees in the right way and the
company could have less retaining profits when it follows the rules. However, these policies
still bring benefit for the company because workers have right to be free movement. Working
in a large market, TTFC distributions and staff might have to move a lots, so that when the
company wants exchanging and moving between countries inside the EU, this activities will
be easier and save a significant budgets and time for transaction and transportation.
2. Single European Market.
According to Euro found (June 12
th
, 2007), the Single European Market Programme
was proposed in 1992 have the objectives are the serious implications for employment and
industry relation in the EU. Following these programme, EU is the worlds largest free trade
area. When TTFC enter to this market, there is no any barrier to trade within bloc which is
result in the opportunity to expanding activities of company will be open and have more
advantages. Moreover, there is free movement of goods, people and money; there is no any
customs or border checks, less delay and quicker transportation as well as less
documentation. Based on these policies, the time and the fee for transportation and
exchanging will be saved. This is a good condition to help TTFC develop distribution and
improve customer service quicker and better than other marker.




Conclusion
In conclusion, through this report, we have analysed and evaluated the allocation of resources of
economic systems as well as the influence of fiscal and monetary policy on businesses organisations.
Moreover, we discussed the impact of competition policy and other mechanisms on the business
activities of selected organization. In addition, the market structures are determined and its
impacts on pricing and output decisions of the enterprise have been clearly shown. The way
in which market forces shape organizational is also illustrated through some examples.
Finally, we focus on international trade and globalizational impact on Vietnam business.

Reference
bbc.co.uk. (2010). Science environment. Available: http://www.bbc.co.uk/news/science-
environment-14576664. Last accessed 20th Oct 2012.
businessdictionary.com. (2010). fiscal policy. Available:
http://www.businessdictionary.com/definition/fiscal-policy.html. Last accessed 20th Oct
2012.
chinhphu.vn. (2008). LUT THU GI TR GIA TNG . Available:
http://www.chinhphu.vn/portal/page/portal/chinhphu/hethongvanban?class_id=1&mode=deta
il&document_id=70797. Last accessed 20th Oct 2012.
chinhphu.vn. (2008). LUT THU XUT KHU, THU NHP KHU.Available:
http://vanban.chinhphu.vn/portal/page/portal/chinhphu/hethongvanban?class_id=1&_page=1
&mode=detail&document_id=93625. Last accessed 20th Oct 2012.
chogo.vn. (2010). Ni cng, ngoi kch cho ngnh g Vit Nam.Available:
http://www.news.chogo.vn/tin-tuc/go-viet/401-noi-cong-ngoai-kich-cho-nghanh-go.html.
Last accessed 20th Oct 2012.
eurofound.europa.eu. (2010). Single European Market. Available:
http://www.eurofound.europa.eu/areas/industrialrelations/dictionary/definitions/singleeurope
anmarket.htm. Last accessed 20th Oct 2012.
http://hoanggianamviet.com. (2010). Tng quan v ngnh cng nghip g. Available:
http://hoanggianamviet.com/tin-tuc-san-go-cao-cap/tong-quan-ve-nganh-cong-nghiep-go-
32.aspx. Last accessed 20th Oct 2012.
http://www.coe.int. (2010). The European Social Charter. Available:
http://www.coe.int/T/DGHL/Monitoring/SocialCharter/. Last accessed 20th Oct 2012.
indochinecounsel.com. (2010). Competition Law and Policy in Vietnam.Available:
http://www.indochinecounsel.com/index.php?asin=detail&id=95&idcate=27&idsub=29. Last
accessed 20th Oct 2012.
quacert.gov.vn. (2010). 10 li ch chnh m cc tiu chun ISO c th mang li cho cc
doanh nghip va v nh. Available: http://www.quacert.gov.vn/news/vi/150/6/10-loi-ich-
chinh-ma-cac-tieu-chuan-iso-co-the-mang-lai-cho-cac-doanh-nghiep-vua-va-nho.aspx. Last
accessed 20th Oct 2012.
Techcombank. (2010). Khach hang doanh nghiep. Available:
https://www.techcombank.com.vn/Desktop.aspx/Gioi_thieu/Lich_su/Lich_su/. Last accessed
20th Oct 2012.
truognthanh.com. (2010). L TT NGHIP KHA O TO CN B NGUN. Available:
http://truongthanh.com/vn1/index.php?option=com_content&task=view&id=244&Itemid=1.
Last accessed 20th Oct 2012.
vietlawnetwork.com. (2010). Cooperation Income Tax law. Available:
http://www.vietlawnetwork.com/luat-thue-thu-nhap-doanh-nghiep/chuong-i-nhung-quy-dinh-
chung.nd5-dt.128.026.html. Last accessed 20th Oct 2012.
dineshbakshi.com. (2010). Mixed economies. Available: http://www.dineshbakshi.com/as-a-
level-economics/basic-economic-ideas/117-revision-notes/1348-mixed-economies. Last
accessed 20th Oct 2012.
worldbank.org. (2008). Resources. Available:
http://siteresources.worldbank.org/INTVIETNAM/Resources/Nam.pdf. Last accessed 20th
Oct 2012.
en.baomoi.com. (2010). Vietnam-to-become-modern-industrial-country. Available:
http://en.baomoi.com/Home/society/cpv.org.vn/Vietnam-to-become-modern-industrial-
country/101925.epi. Last accessed 20th Oct 2012.