Assignment 1

Introduction
Economic plays a very important role in the development of a country in today's society. It is a
source of motivation for companies and businesses to thrive, creating the competition and the
challenge. In addition, in this exercise, there are also presentations on business types,
organizational structure, productivity and profits of enterprises.
LO1. Explain the different types, size and scope of organizations
Task 1. Explain different types and purposes of organizations; public, private and
voluntary sectors and legal structures
1.1 What is an organization?
The origins of organizations can be traced back to ancient times, to different groups of
people created to carry out collaborative activities to achieve the desired goals. The industrial
revolution of the nineteenth century brought rapid economic growth and growth. There must
be new ways of doing business. In short, organization means the process of arranging and
arranging the work, delegating authority, and distributing the resources of the organization so
that they contribute actively and effectively to the common goal.

1.2 Profit organization, not-for-profit organization, non - government organization

- Profit and not for profit organization
Profit and non-profit organizations have some in common, both of which must have
revenue to carry out the activities of the organization, at their own expense to carry out
follow-up activities, requiring many people too actually Current tasks and all must be
managed to achieve the goals of the organization. In many ways, the management and
management of for-profit and non-profit organizations will be the same.
• Profit organization is a profitable organization through its own activities and
involves its own interests, operating in the private sector with the purpose of assisting the
organization itself. There are some examples of some organizations: FPT Corporation,
Vietnam Foreign Trade Joint Stock Bank, Vingroup Corporation,…
• Not-for-profit organization is an organization formed for a group of people
pursuing a non-profit purpose. A non-profit organization is an organization that does not
distribute its surplus funds to individuals or shareholders that use these funds to finance
its organizational goals. There are some examples of some organizations: United Nations

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 Children's Fund (UNICEF), Red Cross, World Wide Fund for Nature, Save the Children,
Family Health International,…

- Non-government organizations:
Non-government organizations are an organization that does not belong to any
government but must carry out many parts of government policy and spend a lot of
government money. These are not for profiting activities, Some are organized around
specific issues, such as human rights, the environment or health. There are some
examples of some organizations: The Asia Foundation, Asia Injury Prevention
Foundation, Global Village Foundation, Save the children, Worldwide Orphans
Foundation Vietnam,…

1.3 The range of legal structures associated with different forms of business
Table 1. Legal structures
Legal structures Characteristics Advantages Disadvantages An illustration
Sole traders A business The business Sole traders -Deja Brew – A
owner who owner has the often find it coffee shop in
takes full full control over difficult to Denton
responsibility the company, mobilize -Wright Hassall
with all of keeps all their financially for – A solicitor’s
his/her property. business profits business. There firm in
Private Businesses are are few ideas for Leamington Spa
companies are less bound by developing a -Planet of the
not allowed to the law as other company. They Grapes – A
issue any type types of have unlimited wine bar in
of securities. businesses. liability. This West London
Each individual means that if the
is only allowed business is
to establish a indebted, the
private business owner
companies. The is responsible.
owner of a In the worst

2
 private case, they will
enterprise must lose all
not concurrently property.
be the head of a
business
household or a
member of a
partnership
Private
companies are
not allowed to
contribute
capital to set up
companies or to
buy shares.

Partnerships Company There will be a Because of Ship Tech

owners must lot of many opinions Company
have at least 2 investment. If that will cause Warner Bros.
members. Do they have more internal McDonald's
business and more conflicts. Microsoft
together under partners,they If they are Apple Inc
one common will have more profitable they Google
name, share money to invest must be shared
management in business. As equally among
and profit. a result, partners. Each
In addition to businesses and partner is
the partnership companies that responsible for
members, the are well- their debts.
company could developed,
have additional profitable, will
capital be equally

3
 contributors. distributed to
Capital their partners.
contributing There will be
members are many comments
only responsible for the
for the debts of development of
the company the company.
within the Business
amount of responsibilities
capital will be divided
contributed to equally
the company. A Collaboration is
partnership has easy to shape,
legal status from develop and
the date of manage.
issuance of the
enterprise
registration
certificate.
A partnership is
not allowed to
issue any type
of securities.
Single-member One member Easily mobilize Single- member Saigon
limited liability limited liability capital in many limited liability Transportation
companies company is an forms of many companies are Engineering
enterprise forms except the strictly Corporation
owned by an form of stock regulated by the Samco
organization or issuance. They law. Hoang Dieu
an individual, have the support Capital Port
The owner of of bank loans. mobilization of HSBC-
the company Enterprises have the company is Hongkong and

4
 shall be liable the legal person limited due to Shanghai
for the debts and status, have no right to issue Banking
other property their own seal to shares Corporation
obligations of create prestige
the company Due to its legal
within the scope status, the
of the charter company's
capital of the members are
company. only responsible
They have legal for the activities
status from the of the company
date of issuance within the
of the enterprise amount of
registration capital
certificate. contributed to
One-member the company so
limited liability it is less risky
companies are for the capital
not allowed to contributors.
issue shares
Multi-member Members may Limited liability Members will Inconcept
limited liability be organizations company with be held Interior
companies or individuals, two or more accountable to Hai Phong
number of members, it is their company. Tobacco
members does easier to ensure This means the Company
not exceed 50 business members are Limited
and over 2 funding. There responsible and
members. The are many ideas the debt within
member is to contribute to the scope of
responsible for the development their capital
the debts and of the company. contribution
other property They will have when the

5
 obligations of many establishment of
the enterprise relationships, the business. If
within the easy to mobilize they have
amount of capital multiple
capital members will be
contributed to difficult to
the enterprise distribute and
The company conflicting
has legal status internal affairs.
from the date of
issuance of
enterprise
registration
certificate.
Limited liability
companies with
two or more
members are not
allowed to issue
shares.
Joint-stock The charter Many members The Bank for
companies capital is contribute management Investment and
divided into capital, business and operation of Development of
equal portions together. joint stock Vietnam(BIDV)
called shares. They have legal companies is Asia
Shareholders status. To be complicated Commercial
may be financially because the Joint Stock
organizations liable for assets number of Bank(ACB)
orindividuals, at the rate of shareholders can Vietnam
minimum capital be very large, Maritime
number of contribution which can lead Commercial
shareholders is to conflicts in Joint Stock

6
03 and no the work Bank
maximum process.
number. The Establishment
shareholder is and
only responsible management of
for the debts and joint stock
other property companies is
obligations of more complex
the enterprise than that of
within the other types of
amount of companies
capital because they are
contributed to tightly bound by
the enterprise. the law,
Shareholders are especially in the
free to transfer financial and
their shares to accounting
others. Joint- regimes.
stock companies
shall have the
legal person
status as from
the date they are
granted the
enterprise
registration
certificates.
Joint-stock
companies may
issue shares of
various kinds to
raise capital.

7
Private limited Private limited The company Company -McLaren
liability liability can easily profits must be Technology
companies company is a mobilize, equally Group
limited liability increase finance distributed to -European
company with a and continue to shareholders. Metal Recycling
small private operate even Shareholders -Bowmer &
business. Each when have limited Kirkland
shareholder is shareholders are ability to -Iceland Ltd
responsible for changed. It transfer their -Wates
all of his shares. protects the shares or can
The number of privacy of the not sell their
shareholders information. shares to the
does not exceed Many general public
50 and the shareholders of over a stock
number of the company exchange
directors must will have many
be at least 2. comments so
The company work
can start the management
business after and business
registration operations
without become more
requesting any flexible.
certificates. The Corporate tax
shareholders are may be lower
limited in the than payments
sale shares of other types of
business
Public limited Public limited It is easy to To help protect - ABB company
liability liability mobilize capital, shareholder - Calmex
companies companies be able to issue interests, legal - Johnson
is a public stocks and sell requirements Controls

8
company under stocks to the and regulations - LOGO!
the laws of the public. Any for one-member -Mitsubishi
United individual can limited liability electric
Kingdom. It is a buy shares from companies are
limited liability the company. more stringent
company whose Share of limited than private
shares are freely liability limited
available for companies. Can companies. If
sale and for sale be transferred the company's
to the public more easily than shares are listed,
with a minimum private equity. the company
share capital of And there are also Will have
GBP 50,000 and many PLC to adhere to the
generally the companies are rules of the
word PLC multinational market. Costs
follows its companies, have set the highest
name. A PLC production cost for all
can be an facilities in forms of
unlisted many countries business
company or a around the organization
listed company world.
on the stock Companies can
market. A PLC use the power,
stock is tissue to occupy
available to the the market
public and can
be bought by
anyone, or
private, in the
initial public
offering or
through stock

9
 market
transactions.
Franchises A franchise is Franchising The terms of the - AFC
an agreement provides open franchise are Enterprises, Inc
between a seller front support for regulated by the - Lotteria
and another site selection, franchisor. Co.,Ltd
party to market design, training The franchisor - Jetstar
their product or and sponsorship. must conduct Airways PTY
service for a Franchises his or her Limited
certain period of provide business - Kinderland
time. For continuous according to the Educare
example, act as support in procedures and Services Pte Ltd
an agent for a advertising, restrictions - KFC
company's operations, specified by the Restaurants
products. management. If franchisor so Asia Pte.Ltd
a brand is well there may be -Fossil Asia
known It will be little room for Pacific Limited
easier to attract creativity. The - Starbucks
customers to franchisor is Coffee
create higher responsible for International,
sales. Thus, paying royalties Inc
franchisees have and advertising
a higher success fees and must
rate than share the
startups. profits.The
franchise rights
are affected by a
poor quality
brand.
Licensing A license is an There is no risk You must take - The Walt
unfair form of of the hiring primary Disney
agreement in tenant responsibility, Company

10
 which a terminating or be bound by the - Iconix Brand
company allows changing the franchisor's Group
another lease without obligations and - IBML
company to the consent of regulations. (International
manufacture its the franchisor. Brand
products for a The franchisor Management&
specific has a direct Licensing)
payment (such contractual - Ford Motor
as a patent, relationship Company
copyright, trade with the owner. - The Hershey
name, know- The franchisor Company
how, design, retains control
and other of the facility
intellectual (for the
property to franchisee /
others.) licensee).
Joint ventures A venture is an Give the There is an - Siemens AG
enterprise company the imbalance in the and Nokia Corp
created by two opportunity to level of Joint Venture
or more parties, acquire new expertise, - Microsoft and
often capabilities and investment or GE Joint
characterized by expertise, access property Venture,
shared greater brought about Caradigm
ownership, resources. Share by different - AMEC
shared profit risk with a joint partners Samsung Oil &
and risk, and venture partner. entering the Gas, LLC.
shared Businesses can joint venture. - Chery Jaguar
governance. be flexible, Different Land Rover
Popular with companies can cultures and Automotive
international gradually management Company
companies - separate a styles lead to
there may be business from poor integration

11
 many legal the rest of the and cooperation.
forms and organization, There is often a
almost all forms and eventually, lack of
of joint venture sell it to another communication
can exist, from parent company. between
two companies partners.
joining together Unrealistic and
in the same ambiguous
domestic goals can be set.
market, to joint
ventures.
between the
private and the
public sector
between parties
involved in
different
countries

Task 2. Explain the size and scope of a range of different types of organizations

2.1 Small, medium enterprises (SMEs), and large enterprises.

- Definitions
• Small business: Small businesses are private companies, usually run by a single
trader (sole trader) or by several people (partnership) and annual revenue is less than a
typical business or a company.
• Medium enterprises (SMEs): Companies that are not subsidiaries, independently
employ fewer than certain employees. This number varies by country. Limited staff
numbers range from 50 to 250 employees.
• Large enterprises: Typically there are factories, offices and shops in more than
one city and more than one country. To be confirmed as large enterprises need to hit one

12
 of the two conditions after the required capital from approximately 50 to 100 billion
VND and 100 to 300 employees.
- Application

Number of enterprises engaged in production and business activities

by labor criteria in Vietnam
250000

200000

150000

100000

50000

0
2006 2007 2008 2009 2010 2011

micro businesses small businesses Medium-sized businesses Large businesses

(Resource: General Statistics Office)

According to the statistics table, most enterprises in Vietnam are small enterprises
and micro enterprises. The chart also shows that all businesses have a tendency to
increase. Specifically, within 6 years the number increased from 125092 to 324619.
However, the type of small business and micro enterprise still dominates and grows fast.
Because Vietnam is a country developing, there are not many conditions and
qualifications, but there is not much capital as well as the quality of labor is still quite
low. Mostly, Vietnam usually operates in the form of individual business or family so
there is not much capital. Also, the type of medium and large enterprises has not changed
much, although it increased more than 6 years ago.

Each business will have a different scale, different businesses will have different
business purposes, objectives and provide goods and services. The first thing, every
business since the establishment There are different business goals. The goal of the
business will be to start, execute and finish within a certain period of time. Often it is a
short-term purpose and a long-term purpose. Describe expected business results in a
shorter period of time than the long term. These businesses want to maximize profits in
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 each cycle. Long-term goals are associated with long periods of time. These are usually
goals such as maximizing profitability, growth potential, competitive position of the
business, job development, social responsibility, etc. Entrepreneurs want to become the
leading company in the country. There will be clear differences between large and small
businesses. A large business will have more advantages and advantages in all aspects,
They have a great source of capital and labor, and they also pay more attention to the
development of society and the community. Working with friends, they only focus on
profit more than less likely to develop more in other issues. Second, the goal is planning
to achieve goals and results. For example, large businesses will set goals for generating
profits, plans for large businesses to the general purpose of the world. Similarly, small
and medium enterprises also have specific goals to achieve their goals. The third is the
supply of goods and services. Every business in the market will have its own supply of
goods and services. Each of the different sectors will have different suppliers and
services. Each place will also be different. The supply of large businesses will be more
and more diverse than small businesses. In general, the goal and supply of goods and
services can help us understand the scale. of the business.

2.2 Primary sector, secondary sector, tertiary sector

• Primary sector is a primary industry and includes companies involved in the
exploitation and harvesting of natural products from the earth such as agriculture,
mining and forestry.
• Secondary sector: The secondary sector consists of processing, manufacturing
and construction companies using raw materials produced by the primary industry
• Tertiary sector is the distribution and service sectors, which are segments of the
economy that provide services to consumers such as schools and restaurants…

Industrial structures in Vietnam in recent years

14
(Resource: Viet Nam Statistical Yearbook 2015)

The structure of the industry in Vietnam is divided into three main sections: the
primary sector is industrial exploitation, the secondary is industrial production and
processing and the third sector is the service sector. Previously, the main area of
Vietnam was the primary area, not developed. The industry is very rudimentary and
simple such as cultivation, animal husbandry, handicraft production, hand-knitting, etc.,
and only marketed at the market. But as the country develops, Vietnam has made many
positive changes. These two pie charts are the result of the process of industrial structure
change in Vietnam in recent years. According to the statistics above, it shows the
changing trend of Vietnam's industrial structure to match the current situation in the
world. The industry of the primary sector is on the downward trend. And the other two
sectors are gradually rising. It shows that Vietnam has started to engage in
manufacturing and service sectors. However, the primary sector includes the mining and
material production sector, although it has a low ratio in structure, it is still the industry's
mainstay. The secondary sector occupies a large share of the industrial structure. This is
also an industrial group that creates many jobs for society. It contributes greatly to the
development of Vietnam's industrial structure. And finally, the tertiary sector, the
service sector is the highest. This is the result of active economic and social
development in Vietnam. Although the industrial structure is slowly developing, these
are promising steps for future development

Vision:
15
Set out the strategic intentions, indicating both what the company wants to become,
towards. There can be many forms. The time frame depends on the nature of the
organization and the environment but a vision typically will be set out over the next 3-5
years and be reviewed every year in line with actual results and changing circumstances.

Mission:

Identify the specific role that the organization plans to perform over a long period of
time, defining the company's business objectives, goals and approach to achieving those
goals.

Companies use Mission and Vision Statements to:

Typically, senior managers will write the company's overall Mission and Vision
Statements. Other managers at different levels may write statements for their particular
divisions or business units. The development process requires managers to:

Firstly, clearly identify the corporate culture, values, strategy and view of the future by
interviewing employees, suppliers and customers. Secondly, address the commitment
the firm has to its key stakeholders, including customers, employees, shareholders and
communities. Thirdly, ensure that the objectives are measurable, the approach is
actionable, and the vision is achievable. Communicate the message in clear, simple and
precise language. Finally, develop buy-in and support throughout the organization.
http://www.bain.com/publications/articles/management-tools-mission-and-vision-
statements.aspx

Objectives:

Objective gives the business a clear orientation for the future. Plans can then be made to
achieve these targets. This is also part of promoting more productive workforce. It also
allows businesses to measure progress toward its stated goal. Targets are the key factors

16
contributing to organizational success. For setting effective objectives can be found in
the mnemonic SMART.

https://www.tutor2u.net/business/reference/marketing-objectives

There are many goals that businesses can pursue beyond their own goals. One of them
will be quantitative and qualitative.
 Quantitative objectives are those whose achievement can be measured using
numerical or financial criteria.
 Qualitative objectives are more difficult to measure because they are not based
on a numerical indicator. This does not mean they are any less important than
quantitative objectives – types of objectives will vary from business to business.

Market share:

17
 Market share is the market share of the product that the business occupies. Market share
= total sales of the market. Market share represents the percentage of an industry or
market's total sales that is earned by a particular company over a specified time period.
Market share is calculated by taking the company's sales over the period and dividing it
by the total sales of the industry over the same period. This metric is used to give a
general idea of the size of a company in relation to its market and its competitors.

Growth rate:

The increase in size or sales observe within a given consumer group over a specified
time frame. When the management of a business is reviewing the success of a product, it
needs to deduct the overall market growth rate from the observed product sales growth.

https://www.euromoneycountryrisk.com/Wiki/United-States

Application:
Table 2. Scope of organizations

18
 Company A
(Primary sector)
Introductio Viet Nam Dairy Products
n Joint Stock Company was
established in 1976. In 2003, companies. Owned by
the company was
transformed into a
corporation by CEO Mai
Kieu Lien. Vinamilk is the
largest dairy company in
Vietnam. Market share of
the company is more than
50% in dairy sector in
Vietnam. Vinamilk's
products are available in 650 Group, operating in the
large supermarkets
nationwide. The company
has 13 manufacturing plants
to meet market demand.
Based on the UNDP 2007
Top 200 largest firms in
Vietnam report, it is also the
15th largest company in
Vietnam.In 2010, it is the
first company in Vietnam to
be included in the Forbes
Asia's 200 Best Under A
Billion list that highlights
200 top-performing small-
and mid-sized companies
with annual revenue under
US$1 billion.
Company B Company C
(Secondary sector) (Tertiary sector)
Hoa Sen Single- HSBC- Hongkong and
member limited liability Shanghai Banking
Corporation, Mr. Pham
CEO Hoang Duc Hong Hai, General
Hoang. Director of HSBC
The company was Vietnam.
established in 2006 HSBC is one of the
with the initial name of largest financial and
Hoa Sen Steel Sheet banking service
Joint Stock Company. organizations in the
This is the first world with branches in
subsidiary of Hoa Sen Europe, Asia Pacific,
the Americas, Middle
field of manufacturing East and Africa.
and trading cold rolled In 1970 HSBC opened
steel products its first office in
https://www.hoasengro Saigon. In August
up.vn/ 1995, TP. Ho Chi Minh
City is licensed to
operate and provide a
full range of banking
and financial services
http://www.hsbc.com.v
n/1/2/home
19
 https://www.vinamilk.com.v
n/vi
Type of Joint Stock Company Single-member limited Single-member limited
organizatio liability companies liability companies
n
Size Large business Large business Large business
Business The primary sector The secondary sector Tertiary sector
sector
Market In the dairy industry, Hoa Sen Group is still
share Vinamilk currently accounts the dominant market
for 55% of the market share leader in Vietnam with
of liquid milk, 85% of 33.1% market share.
market share of yoghurt, With steel pipe, Hoa
80% of condensed milk Sen Group occupies
market, 40% market share 20.3% market share.
of milk powder.

http://vietnambiz.vn/vinamil
k-dat-muc-tieu-doanh-thu-3-
ty-usd-nam-2017-8996.html

Vision Vinamilk constantly Hoa Sen Group is HSBC wants to become

improve themselves, explore constantly climbing to a top quality, efficient
and develop new products, new heights, becoming and prestigious bank in
invest in technology the leading economic Vietnam, becoming a
machinery and equipment to group in Vietnam and sustainable and
prepare for strong growth in Asean region in the profitable bank. Open,
the market. Vinamilk field of manufacturing honest and

20
 constantly improve and
integrate.
Vinamilk wants to become a
symbol of Vietnam's leading
belief in nutrition and health
products for human life.
Mission Vinamilk is committed to
providing the community
with top-quality nutrition
and quality through respect,
love and high responsibility
to human and social life.
Always companion and
sharing with the community, diversify products to
all for the common good of
society. Rising to the top of
Southeast Asia in the dairy
market.
Objectives Vinamilk has set itself a
goal to be more and more
developed, aiming to
become a global brand.
Vinamilk set long-term
and distribution of transparent,take on the
building materials challenge, learn from
mistakes, listen, treat
everyone fairly.
Providing products with HSBC always
Hoa Sen brand name accompanies, shares
with the best quality, and provides the best
international quality financial and banking
and reasonable price, services for customers,
suitable with customers. creating trust in
Create, develop and customers. Besides, it
is committed to
satisfy the demand of bringing the best value
consumers are on a to shareholders. On the
high. At the same time, staff side, HSBC will
contributing to change always create
the appearance of professional working
national architecture environment, friendly,
and community career development
development opportunities and
benefits worthy for
everyone. And finally,
to become a pioneer
bank in development
activities community.
Hoa Sen Group has set HSBC has clear goals
up a strategy to step by and strategies to grow,
step achieve the goal of grow, and transform its
"3 No.1", that is: ambitions into
consumption output of reality.The bank has a
21
 development strategy to
become one of the 50 largest of 1 billion USD and
dairy companies in the
world by 2017 with sales of
$ 3 billion. In order to
achieve that, Vinamilk has
set its growth strategy for
the next five years.
Specifically, revenue growth tonnes and net sales of
is at an average annual
growth rate of about 8%.
2.3 Market forces and economic operations
 Supply:
1 million tons, revenue long-term strategy to
accomplish its goals.
profit after tax of 1 Develop international
trillion VND in 2013- networks to assist
2014. But in the fiscal clients grow from small
year 2016-2017, Hoa to large multinational
Sen Group set targets enterprises. Invest in
for sales of 1,575,000 asset management and
retail in the domestic
23,000 billion dong market.
(over $ 1 billion) and Increasing connectivity
after tax profit of 1,650 and the flow of global
billion dong and Hoa trade, finance, etc. are
Sen Group is gradually key factors for GDP
realizing its $ 1.5 growth. The economic
billion revenue target in balance is shifting to
2018. In 2017, Hoa Sen Asian and Middle East
Group set a revenue economies, GDP
target of 29%, profit up growth will be tripled
10%. During the next by 2050. The middle
two years, Hoa Sen class is expected to
Group aims to increase grow from one-third to
its total to 300 retail two-thirds of the
and wholesale world's population by
branches, reaching a 2030, while the
production target of 2 population over the age
million tons per year. of 60 is projected to
double by 2050.
22
 http://farhanafatimahbusiness.blogspot.com/2013/01/demand-and-supply.html

Supply is a basic economic concept that describes the total amount of a particular
commodity or service available to the consumer. The amount of supply of any
commodity is the amount that the seller is willing and able to sell. Under the law
of supply, if other factors do not affect or change, the quantity of the product or
service will increase as the price of the product or service increases.

There are many factors that affect the supply: Input Prices, Technology, Number
of sellers , Expectations.

 Demand:
23
 http://farhanafatimahbusiness.blogspot.com/2013/01/demand-and-supply.html

Demand is an economic principle that describes the wishes of consumers and

the willingness to pay for a particular product or service.The required quantity
of any commodity is the amount that the buyer is willing to buy and can buy.
As required by law, if it is not changed or affected, as the price and quantity of
products and services increase, the demand for products and services decreases
and vice versa.
The demand curve shows how price affects quantity demanded, other things
being equal: number of buyers, income, prices of related goods (substitutes,
complements) , tastes, expectations.
1. Number of buyers:
If buyers increase the quantity demanded at each price, the demand curve shifts
right, which is called an increase in demand. If buyers decrease the quantity
demanded at each price, the demand curve shifts left, which is called a
decrease in demand.

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2. Income:
Normal good – good for which increase in income leads to increase in
demand. Inferior good – good for which increase in income leads to
decrease in demand.

3. Prices of related goods:

25
  Substitutes – two goods that can be used in place of one another;
an increase in price of one good leads to an increase in the demand
for the other good.
 Complements – two goods that are used together; an increase in
the price of one good leads to a decrease in the demand for the
other good.

https://esmeconblog.wordpress.com/meme/
4. Tastes:
If your preferences shift toward a good, it will lead to an increase in the
demand for that good.

5. Expectations:
Expectations about future income or prices will affect the demand for a good
today.
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  Market equilibrium:

When the supply and demand curves intersect, the market is in equilibrium. This
is where the quantity demanded and quantity supplied are equal. The
corresponding price is the equilibrium price or market-clearing price, the quantity
is the equilibrium quantity.
- Equilibrium price (market clearing price) – price that balances the quantity
demanded and the quantity supplied.
- Equilibrium quantity – quantity supplied equals the quantity demanded at the
equilibrium price.
o If the price is above the equilibrium price, the quantity supplied exceeds the
quantity demanded and there is a surplus, or an excess supply of the good.
• Surplus causes the price to fall until it reaches equilibrium
o If the price is below the equilibrium price, the quantity demanded exceeds the
quantity supplied and there is a shortage, or an excess demand for the good.
• Shortage causes the price to rise until it reaches equilibrium

27
https://mrski-apecon-
2008.wikispaces.com/%2AStep+4.+The+Market+Forces+of+Supply+and+Dema
nd+-Sarah
 Elasticity of demand: is the number of the changes in the number of demand.
 Cross-price elasticity of demand: is a measure of how the demand for one
good is affected by changes in the prices of other goods
If cross price elasticity > 0, then the two goods are substitutes
If cross price elasticity < 0, then the two goods are complements

(Source: The Business Environment Book)

 Price elasticity of demand: The variation in demand in response to a variation
in price is called the price elasticity of demand

(Source: The Business Environment Book)

 Income elasticity of demand:
Income elasticity of demand is a measure of the responsiveness of quantity
demanded to changes in income.

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 Normal good (IED>0): Quantity demanded of the product changes in the same
direction as changes the income.
Inferior good (IED<0): Quantity demanded of the product changes in the
opposite direction as does the income.

(Source: The Business Environment Book)

The scarcity of resources is the inability to produce goods and services to meet the people.
Because human desires and needs are always unlimited, resources are always limited. There are
four main factors that make up the resource: physical capital (K) , human capital (H),  natural
resources (N), technological knowledge. So how to meet demand while resources are scarce.
Firstly, physical capital (K) refers to a factor of production (or input into the process of
production), such as machinery, buildings, or computers. The scarcity of physical capital is the
tools and machines that are in error Human capital (H) refers to the collective value of the
organization's intellectual capital (competencies, knowledge, and skills). The scarcity of human
resources is demonstrated by, for example, skills and levels of employment that may not be high,
low levels of knowledge acquisition, and the ability to work with machinery not enough. Natural
resources (N) are those things found in nature that can help a business make a product. For
example, oil, coal, hydrogen and water are natural resources industry uses to create energy to
power machines and heat and cool buildings. Other materials, such as wood and ores, are used to
make finished products. Foods are also considered natural resources. There are many valuable
and rare resources that can not be replaced or created by others. That is the scarcity of natural
resources. Technological knowledge is the technology required to understand and understand the
principles, experiences, methods, processes. In addition, it is necessary to apply this knowledge
in practice to create high productivity. However, the efficiency of the application of technology
is not high, it is the scarcity of technological knowledge. The production function is a graph or
equation showing the relation between output and inputs:
Y = A F(K,L,N,H)
Organizations need to recognize and find solutions to the problem of scarcity.
Organizations should have a stable resource and appropriate distribution of resources. Need to
use resources effectively and properly, avoid wasting resources or damage. In particular,
29
organizations must pay attention to the increasing diversity of consumers. The organization
should have a consistent production structure as to how many products and production time to
supply to the market. The organization should seek and train qualified workers to achieve high
productivity as desired.

2.4 Stakeholders and responsibilities to meet different stakeholders interests and

expectations divided into three groups:
Table 3. Responsibilities of stakeholders:
Vinamilk Dairy Products Joint Stock Company
Vinamilk was established on August 20, 1976, based on the takeover of three dairy plants left
by the old regime. Thong Nhat Milk Factory, Truong Tho Milk Factory, Dielac Milk Powder
Factory.
Evaluations

Internal Employees are an indispensable part for a company to go into operation and
stakeholder grow. Every person who goes to work has a desire for their own. The first
s wish of an employee is certainly salary. Vinamilk is one of the leading
Employees companies in the dairy industry. So when they become employees of the

Managers company they expect a stable and worthwhile salary. And Vinamilk is also a
big corporation so when they come to work at the company they also want to
Owners
get a salary increase by year, period and promoted in the work. In addition,
the bonus system is also a concern for the worker. Employees also aspire to
have a good working environment, creativity, infrastructure, and
development machinery to give them the opportunity to work better and more
effectively. Good working environment also creates good relationships
between employees and employees and employers, helping each other to
develop the company. And finally, the treatment of health. Safety of your
health is one of their expectations. They need insurance and insurance
coverage, and spousal care when needed. Just like employees, managers also
have similar desires. The only difference is that they want to have a higher

30
 salary that is suitable for the position and labor they have spent on the
company. And when they finish big projects for Vinamilk, they also hope to
receive the bonus from their superiors. Although they do not work in
production units like other workers, they are also expecting health-related
treatment. In addition to the wishes of employees, the employer also has the
desire. If employees and managers expect salary, the employer expects the
company to make a profit and earn more revenue each year. Besides,
Vinamilk also expects to develop, expand and become stronger and become a
big company in the world market.

Connected When becoming a shareholder of a company they would like to see the
stakeholder development of the company to make sure that they get rich and it will
s increase year after year. Vinamilk is a big corporation with a busy schedule
Share so it is very likely that shareholders are confident in them. A business that
holders wants to grow up is a business that listens to the opinions and desires of its

Customers customers. Vinamilk has accomplished that. They know what their customers
want and need. The company's customers are of different ages and have
Suppliers
different desires. Vinamilk has launched a lot of products, suitable for all
Financers
ages, preferences of customers. Beside it is reasonable price and good quality
safe for the health of the users, it is the desire of the customer. Any supplier
would like to have a long-term partnership at the company. They also want to
receive payment on time and a price appropriate for the product. With a big
company like Vinamilk, suppliers can trust their timeliness. And finally
financially, Vinamilk is an important and essential part.

External With the growth of the company certainly bring many expectations for the
stakeholder government and the country. The government expects the company's output
s to be contributed to the state budget, fulfilling the full payment of taxes to the
Government state. Vinamilk is among the top 10 taxpayers in Vietnam.

Community Although ranked at 8 th in the top 10 leading companies in paying corporate

income tax in 2012, Vinamilk is the most capital-using enterprise, with one

31
dong of Vinamilk's capital generating 0.7 dong of profit. Total revenue
reached VND 46,965 billion, gaining 105% of the plan. Profit: 11,238 billion
VND, reaching 112% of the plan. Market capitalization: VND 182,303
billion.
Vinamilk's community is also very focused. Vinamilk contributes VND 20
billion to the school milk program, the scholarship fund "Vinamilk -
Nurturing talented young Vietnamese", Fund "1 million trees for Vietnam"

32
 http://vietnamnet.vn/vn/doi-song/3-dau-an-vi-cong-dong-cua-vinamilk-
349820.html
http://cand.com.vn/doanh-nghiep/Vinamilk-doanh-nghiep-tien-phong-vi-
cong-dong-377351/

(Source: author)

33
 We often use ethical standards to judge people. To evaluate a company we also
evaluate the business ethics of that company. Any business that comes into operation also
expects a common goal of generating profitable growth. However, it is a difficult problem
that not every business or company can do. Whether a business is considered ethical
depends on the employer. So the virtue of a business is the same as the morality of a human
being, a way of life, behavior, communication, handling situations. A business with good
business ethics will be a business has a good future, high growth path. The ethics of an
organization are divided into several types of objects such as ethics for customers, society,
suppliers, competitors, ... In addition, judging by honesty, sense of responsibility, ethics,
and trust.
First, in business must always keep credibility. Credits must be expressed not only in
the trademark, but more importantly in the corporate brand of the product. To implement
this principle is to ensure the sustainable development of enterprises in business. The
second is honesty in business. Businesses must keep a balance between profit and morality.
Do not for profit but to lose the virtue, lose the trust of customers. Because today there are
many counterfeits and inferior products to hit the market that harm consumers. Third,
business must comply with the law, must also conform to the regulations, must fully pay
taxes to the state in time. Creating an environment of fair competition among businesses,
should not be sold at too high prices while cheaper input prices, and no illegal business
practices. Businesses must respect the customer and take the customer's desires as the goal
of development. In addition, for the supplier too strictly comply with the terms of the
contract, pay on time and do not force suppliers. And finally, to be accountable to the
society, the benefits of the business go hand in hand with the interests of the society, the
goal of promoting social development. Each business must regularly do social work,
charity. Because this is also the way to promote and strengthen the brand of the business, is
to demonstrate business ethics of business people to the community in accordance with the
Vietnamese tradition.

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 http://www.istockphoto.com/vector/business-ethics-chart-with-keywords-and-icons-
sketch-gm625167224-110022221
Building relationships with the public and the image of the company is an
indispensable thing of every business. The main role of public relations is to help
businesses communicate messages to their customers and their important public groups.
When it comes to delivering these messages, it makes it easier for the product to enter the
consumer's perception, or more specifically, to make it easier for consumers to relate to
each other when confronted with a brand. It also creates a reputation for the company, as
well as create more trust of customers with the company. In the context of the current
market, diverse goods and services, consumers have difficulty in distinguishing and
evaluating products. Every business is trying to create a style, an image, an impression, a
reputation for its own product to bring its own image products, easy to get into the
customer's perception, in other words , put the brand into the customer's mind. Public
35
 relations activities not only bring fame to the company but also help the company to save
the cost of advertising.

LO2. Demonstrate the interrelationship of the various functions within an organization

and how they link to organizational structure
Task 3. Explain the relationship between different organizational functions and how they
link to organizational objectives and structure

3.1 Organizational structures

Organizational Structure is a system of rules, parts, functions, tasks, powers and
responsibilities. A company's organizational structure is closely linked to each other for the
purpose. The organizational structure also determines how the flow of information from level
to level in the company. The organizational structure determines how the work is done,
which department and function it is, who is responsible for managing any work and who
reports, and most importantly who is responsible. the result of the work. Therefore, the
organizational structure must always exist to help the company stable. Organizational
structure is divided into two categories: centralized organizations and decentralized
organizations.
Firstly, centralized organization can be understood as a hierarchical decision-making
structure where all decisions and processes are strictly dealt with at the highest level or
executive level. The most powerful person decides and manages all the activities of the
organization from the work process to the violation of the subordinate. Subordinate staff
under the management, direction of the upper level. Policies are put in place to ensure the
rest of the company follows the direction of the executives. Focusing has some outstanding
advantages, one of which is fast pace. Because most power, decision and responsibility are
focused with a few key leaders. With few participants in the workshop arguments, less
contradictions and decisions about strategy, the actions of centralized organizations often
react faster. Once the decisions are made, top managers send the directive to the lower levels.
To perform as instructed. Work will be faster. But whatever has its downside, besides the
benefits will surely have its disadvantages. Also because employees often do the work
assigned by their superiors, they have no right to make decisions, they can not express their

36
 views and opinions, thus limiting their opportunities for development of the company. In
addition, it would be a little difficult for subordinates, when they want to implement a plan or
something to wait for a higher opinion will take time and may be problematic. In addition to
the superiors they will be quite reluctant to resolve, decide many issues and work.
Secondly, on the opposite end of the organizational spectrum you will find a company
that is operated based on a decentralized organization . It is a company active in making
decision-making and flexible processes. In simple terms, executives or business owners
assign tasks to management and employees. The organizational structure is divided from
high to low. Just like centralized organization, decentralized organizations also have the
benefits and disadvantages but it is the opposite. The first advantage is definitely less power
for the upper. The upper can assign work to the lower positions according to each department
has different functions. Therefore, the lower positions have the opportunity to show their
talents, creativity and opinions. With many comments, the company will have many
opportunities to develop, besides avoiding takes time in the work. But besides the advantages
there are also disadvantages of this organizational structure. The first is the capacity of the
staff. Staff will actively solve the problem but if they do not have the qualifications and
knowledge will cause greater problems. The second is that the organization's operating costs
are very high. Another potential disadvantage of decentralization is that the organization may
become fragmented. Units that once worked well together in your centralized structure may
lose their sense of team spirit and cooperation.
In short, a business needs to have an organizational structure.

Application:
Vinamilk organizational structure

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https://www.vinamilk.com.vn/vi
38
 Through the organization chart you can see that Vinamilk Dairy Product Joint
Stock Company is a company operating under the decentralization mechanism. The
highest general meeting of shareholders, followed by the board will direct
development orientation for the company and they decide important issues in the
operation of the company such as the charter, rules of the company. Next is the
position of general manager, who will distribute, divide the work to subordinates.
Vinamilk Joint Stock Company has specific responsibility for each member and
department in the company. Each stakeholder will perform the right job as well as his
or her responsibilities at work. The organizational chart helps the company to operate
in the most effective way, helping the departments work closely together to create a
strong Vinamilk Joint Stock Company.

3.2 The various functions within an organization

- The role of marketing, finance and human resource management within an organizational
context and the interrelationships.

Marketing:
Marketing plays an important role in establishing the relationship between the customer
and the supplier of the product to the market. First, identify the needs of consumers
through some market research, learn about The needs and desires of the customer for
better advice and direction. That makes it possible to become more confident when
choosing to use new products on the market. Due to the market research department
Marketing can design different services to meet the needs of each type of customer, each
age and interests of the customer. Marketing will have different marketing when the
customer is children or adults. The second one is about costume. Price, promotion and
distribution markets are also important issue for marketing. A product that has the right
price will be able to attract the purchase needs of customers very high, and there are also
promotional strategies to help buyers recognize the benefits of choosing to use the
product. In addition, packaging design of the product is also very determined. Depending
on the age, there will be different packaging designs. For example, children will be

39
 colorful products with cartoon characters, but older people will be the product with a
single package simple and gentle, elegant. And finally, create a marketing information
system, communicate with customers and introduce products to customers through
brochures or advertising in the media.

Finance:
The role of the finance department contributes an important part of operating the
company. The financial department is responsible for managing the cash flow of the
organization and ensures there are sufficient funds to meet the day's payments. This area
also encompasses the credit and collections policies for the company’s customers, to
ensure the organization is paid on time, and that there is a payment policy for the
company’s suppliers.

Human resource management:

The role of human resources is indispensable in the company. Employees help the
company find talent to contribute to company development, employee training and career
development. Human resources are the job and personnel evaluation department, Degree
is the work of every employee. Human resources are where the relationship between the
employee and the company is established.

Human resource management, finance and marketing are three very important
components in the formation and development of each organization. All three have
different functions, perform different tasks but have different Relationships are very close
together and always support each other. For example, when a company launches a project
to implement, the importance of the three is the same. They need human resources to
implement and implement projects that require a project to work. capital and finance.
Finally, marketing is needed to make people aware of the project

Conclusion

40
 Businesses will have many different sizes, structures, management as well as different
goals and objectives. That is the characteristics of the business environment. All of them are for
profit and the development of the business.
References
1. Campbell, D. and Craig, T. (1988) ‘ Organisation and business environment’ 2nd edn.
2. Law on enterprise (2014).
3. Worthington and Britton, C. (1994) ‘ The business environment’ 5th edn.

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