485 assignment 2 passed Business and Business Environment

ASSIGNMENT 2 FRONT SHEET

Qualification

BTEC Level 4 HND Diploma in Business

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Unit 1: Business and Business Environment

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Introduction
Here is my report about five forces model and factors affecting Sam Holdings and how it affects the company.
Barriers to entry: Policy, law, culture, capital

Threat of substitute: devices using

rivalry industry

Frequency.

Supplier’s power

Buyer’s power: households, businesses, construction companies,
FDI enterprises.


Threats of substitution:
Devices using frequency have a huge advantage as its convenience. Principle of operation based on frequency
waves makes these devices easy to install and use without cables, high security. However, the poor sound
quality as well as the usage distance are limited, be replaced by cable products, making these devices only
useful in security areas.
Industry Rivalry:
Cadivi electric cable joint stock company with electric wire and cable products compete directly with wire and
cable array of Sam holdings. Established in 1975, compared to 1986, Cadivi has more experience in
manufacturing as well as building trust with customers, Cadivi products spread across all market needs from
civil to coming of companies, state. So far with modern lines, production capacity of the Company:
60,000 tons of copper / year.
40,000 tons of aluminum / year.
20,000 tons of PVC pellets / year (raw materials for producing electric cables - mainly for internal supply to
CADIVI. The price is also extremely competitive compared to the price with not much difference in price.
SACOM branded fiber and telecommunication cable products manufactured by leading European and American
technologies such as Swisscab, Nextrom (Switzerland) and Rosendalh (Austria), Outokumpu (Finland) have been
face throughout the territory of Vietnam and some countries in the region.

- Fiber optic capacity: 1.2 million km of fiber / year.

- Capacity of telecommunications copper cables: 1,500,000 km of double wires / year
Sun World - Sun Group's entertainment brand with the leading system of parks and entertainment complexes

in Vietnam: Sun World Ba Na Hills, Sun World Da Nang Wonders, Sun World Fansipan Legend, Sun World Ha
Long Complex and Sun World Hon Thom Nature Park. Meanwhile, SAM owns high-class resorts and golf courses
in Tuyen Lam Lake, Da Lat, Lam Dong: Swiss-Belresort Tuyen Lam, SAM Tuyen Lam Golf Club, but the scale is not
yet possible. comparable to Sun World. Meanwhile, SAM owns high-class resorts and golf courses in Tuyen Lam


Lake, Da Lat, Lam Dong: Swiss-Belresort Tuyen Lam, SAM Tuyen Lam Golf Club, but the scale is not yet possible
comparable to Sun World.
Buyer’s power: With relatively popular products, Sam Holdings is at high risk of losing customers to rival
companies, in order to attract and maintain its customers, SAM needs to improve service quality as well as
developing proprietary products to create competitive advantages with other companies.
 Power of supplier: SAM builds the company in a self-sufficient model and suppliers are the subsidiaries of the
company. Wire and cable are Sam wire and cable, real estate is Sam Land, agriculture is Sam Agritech.
Threat of entry: As a joint stock company, SAM must have legal status, fully comply with the 2014 corporate law
of the Vietnamese state. The capital of Sam Holdings must also be big and stable to develop as well as maintain
many of the company's industries as it is today.
Political factor
Vietnamese politics follows the socialist state, the one-party state. A new constitution was passed in November
2013, reaffirming the central role of the Communist Party of Vietnam in politics and society, outlining
government reorganization and strengthening market reform in the economy background. Although Vietnam is
a one-party state, following the Party's orthodox ideological policy has reduced its importance and priority to
aim economic development and national security.
Vietnam has always been considered a politically stable country after regaining its independence. Vietnam has
demonstrated the ability to organize high-level events with the assurance of public security and luxurious
infrastructure to meet the requirements of heads of state. Most recently, during the APEC 2017 senior week,
Vietnam has ensured "the highest level" security. Vietnam continues to be trusted to be chosen as the venue for
the North-American summit meeting on February 27-28.
The tenure of the heads of state is maintained stable for a term of 5 years, but President Tran Dai Quang was
unable to complete his term (2016-2021) because he passed away in 2018. His replacement is general secretary
Nguyen Phu Trong to complete the term (2016-2021).

It can be said that the Vietnamese government is completely stable and less volatile.
The Government submitted special economic zones to Van Don, Bac Van Phong and Phu Quoc at the 5th
session, the National Assembly XIV 2018, enterprises will be entitled to 10% tax rate for 30 years, 4 years tax


exemption and 50% tax reduction for the next 9 years from the time of taxable income. Particularly for income
from investment projects - real estate business will be applied preferential tax rate of 17%. (Zing, 2018)
After 10 years of joining the World Trade Organization (WTO) (2007-2017), export turnover in 2016 increased
3.5 times compared to the level of 50 billion USD achieved in 2006; Foreign investment (FDI) attraction also
doubled the time before WTO entry.

Notably, in terms of the structure of export goods, the proportion of goods through processing is increasing,
while preliminary goods decrease significantly. Specifically, in 2005, the proportion of raw goods, new goods for
export processing accounted for about 51%, currently only 23%. This proves the trend of positive movement in
the structure of export goods, showing that the domestic production has changed more steadily. Vietnam has
signed 12 Free Trade Agreements, 4 Agreements are in negotiation and 1 Agreement is in reviewing.
(nguoilaodong, 2017)
12/11/2018 Vietnam is the seventh country through the CPTPP Agreement. CPTPP is considered a high quality
free trade agreement, with the deepest level of commitment ever. CPTPP member countries constitute a large
market with 500 million people, accounting for about 15% of GDP, 15% of total global trade.

Not only referring to traditional areas such as tariff reduction for goods, opening of service market, intellectual
property, technical barriers related to trade ... CPTPP also handles problems. New and non-traditional topics
such as labor, environment and shopping by the Government and State enterprises.
That bring Sam Holdings about tax incentives, institutional reforms to expand markets, improve production
quality, learn from other countries' experiences, attract investment, increase the ability to call for foreign capital
successfully, export development, a stepping stone to becoming multinational companies. However, Sam
holdings need to be flexible in order to be able to adapt to change in Vietnam, quickly take opportunities for
development, and the company also will face to great competitive pressure by the entry of foreign companies in
both products and brands.

Diplomatic relationship
For New Zealand, Vietnam has had a good relationship since the two countries established diplomatic
relationship in 1975. Recently, the Prime Minister's official visit from 11-14 March 2018 has upgraded this


relationship. This visit of Prime Minister Nguyen Xuan Phuc is important for both countries, contributing to
promoting strong cooperation in the fields of economy, trade and education. Also on this trip, the cooperation
agreement to develop avocado in Dak Nong province "was signed between the four parties, including the New
Zealand Government Intergovernmental Agency G2G, the Institute for Crop and Food Research, SAM Agritech
Company and Dak Nong province during Prime Minister Nguyen Xuan Phuc's official visit to New Zealand.
Economic factor
The average CPI in 2017 increased by 3.53% compared to 2016 and increased by 2.6% compared to December
2016. Thus, the target of inflation control, keeping the average CPI in 2017 below 4% was achieved in the
context of the price adjustment of most of goods managed by the State in 2017. (thoibaotaichinhvietnam, 2017)
The government's control of the rise of inflation has brought benefits to SAM as it restricts risks in long-term
investments, stabilizing the price structure, and low inflation will help to increase growth.
In the context of favorable general market, Sam holdings also achieved positive business results with net
revenue and consolidated pre-tax profit reached VND 2,220.9 billion and VND 143 billion, respectively 22% and
340% compared to 2016. (Sam Holdings, 2017)
Vietnam's economy has experienced impressive growth in 2017 with a growth rate of 6.81%, higher than the
set target of 6.7%, the highest increase since 2011. (Sam Holdings, 2018)
GDP increases which mean purchasing power increases that lead to the revenue of company will expand.
According to the General Statistics Office, by the second quarter of 2017, it is estimated that Vietnam has 53.4
million people in working age. In particular, the unemployment rate is estimated at 2.28%, equivalent to 1.1
million people (Cong, 2017). Employees that don’t have jobs will lead to lose income. Therefore, life of workers
and their families will be affected badly. But, if they have jobs, they will have enough economic potential to
buy the products from company and also let their children learn in good environment, which mean develop the
future of Vietnam’s labor. With the objective to become the leading company in 2020, SAM has no time and
don’t want to spend too much money in reeducating labor.
About fiscal, the tax S.A.M has paid in 2016 is 37.5% while the tax rate in 2017 is reduced to only 20.3%. This is a

good signal when SAM has earned more profit when taxes are reduced. (Sam Holdings, 2018)
Social factor- Lifestyle
The current Vietnamese society with the information technology industry is growing at a high rate, the rate of
mobile subscribers and internet use is growing exponentially. It is expected that by 2020, 100% of communes in
Vietnam will have broadband internet, the percentage of internet users will increase by over 60% of the


population ... These positive forecasts have made the outlook for sustainable growth for wire and cable industry
in Sam Holdings' investment in at least 5 years. (Sam Holdings, 2018)
Technology factor
Along with the development of the economy, the demand for safe food and health protection is being paid
more and more attention by Vietnamese consumers. Meeting the increasing demand of Vietnamese consumers
for safe agricultural products, the high-tech agro-forestry sector of SAM Holdings is the place to create clean
products for consumers thanks to scientific technology and social responsibility. (Sam Holdings, 2018)
SAM Agritech currently operates mainly in Dak Nong province - the pepper growing area of the country.
Households growing pepper in the province are applied advanced and advanced technologies to ensure
proactive and supply high quality raw materials for export processing plants. The most modern ASTA technology
application plant in Vietnam was also put into operation in early 2018 by SAM Agritech, contributing to the
growth of SAM Holdings in the following years (Sam Holdings, 2018).
CORE VALUE, MISSION, or VISION
Profit in 2018 prove that company keeps on track with this goal, SAM sets a target of 20% growth in revenue,
estimated at VND 2950 billion and 26% of profit before tax and VND 180 billion. SAM also approved a plan to
issue shares to increase charter capital from more than 2417 billion VND to 3500 billion VND, in two ways:
issuing capital increase (maximum of 41.75% of outstanding shares, price minimum VND 10,000 / share) and
dividend payment by stock (Sam Holdings, 2018)
Brand Name
Having 30 experience years, SAM has strong brand name in Vietnam market. However, the company can still
better exploit the brand value when expanding its operations as well as the North. Currently the company is still
operating mainly in South Vietnam.
Organizational Structure

To become largest multidisciplinary investment company in Vietnam in 2020, choosing divisional structure is the
right thing, which include holding model, SAM can easily to add more divisions to diversify products, divest
products that causing losses to the company to maximize the earned revenue so it can achieve the annual
growth of 20-30%.
Human resources


The total labor of S.A.M in 2017 is 657 people. 4 members of the board of directors, 1 general director, 1 deputy
general director, 3 members of the control board and 1 chief accountant.
About classification, most of workers achieve university/college level that accounting for 48,71% which mean
321 employees, next is unskilled labor with 169 workers (25,64%), The number of technical, intermediate
qualification respectively 70, 86 labors, above university accounts for small part with only 13 persons (1,97%).
(Sam Holdings, 2018)
To become a Vietnamese leading conglomorate in 2020, Sam needs more highly educated employees to be
more creative for the company as well as recruiting other employees to expand the size of the company
Marketing
Joining Shark Tank Vietnam, the regular appearance of more than 03 months on the national television channel
is an opportunity to promote SAM Holdings' brand and image to numerous investors, partners, customers and
social co (Sam Holdings, 2018).
Business Decision
Strength

Weakness

Sam has caught up with the trend of the future when

The factory applies high technologies to production,

applying high technology (4.0) to agriculture since

which the disadvantage requires a high level of

2016, the factory is completed in 2018. Sam has built

workers' labor to be able to operate machinery, but

the largest pepper factory in the Central Highlands

our surface technical level is still low, need to go new

with the initial investment of 31 VND billion with a

long-term training to achieve the required level, lack

capacity of 9000 tons / year. That we can produce

of human resources. In addition to favorable

fresh vegetable sources and provide to whole

conditions, pepper production and trading need large

Vietnam’s market (Vietnam still has to imported

capital, which requires high management capacity,

vegetables of unknown origin, quality from China,

depends heavily on the world market. SAM

that really harmful to the health of Vietnamese. SAM

Agritech's Board of Management should also need to

Holdings expects to create clean products for

pay attention to limiting the proportion of

consumers thanks to scientific technology and social

inventories, avoid speculation and unreasonably

responsibility as well as sustainable development

hoarding to limit the risks of price fluctuations.

orientation of enterprises.

The model of applying high technology to agriculture

In addition, focus on building and developing large

is still new in Vietnam, Sam may be inexperienced,


farms like Mai Khoi, Quang Son and Nam Nung ...

the company also cooperates internationally with

with the aim of bringing safe agricultural products,

New Zealand, highly dependent on the diplomatic

which are strictly managed and ensured the

relationship of the two countries.

standards. Internationally based on the application of

The high quality of vegetable farming makes the

the most modern science and technology,

production cost increase so the selling price of these

environmentally friendly, utilizing large material

products is also higher than the market price, making

areas in Dak Nong. The company invested capital in

the company lose its price advantage compared to

Sam agritech with 16,000,000,000 VND to own 48%

other rivalry industries.

of the company. Sam Agritech aims to produce and
process 3,500 tons of pepper, of which direct export
is about 1,750 tons. Revenue from processing and

export activities: VND 370 billion, net profit of VND
2.3 billion.
Moreover, the government also has some
investment incentives to the high-tech agriculture
like the decree takes effect from October 15, 2018:
incentive policies enterprises investing in agriculture
and rural areas; policies to support agricultural
cooperatives; policy of linking production with
product consumption; credit policy for agricultural
and rural development; policy to encourage the
development of high-tech agricultural applications
and clean agriculture. Policies to support trade
promotion and branding; support environmentfriendly facilities; other relevant policies.


References

Cong, H., 2017. Zing. [Online]
Available at: />[Accessed 22 February 2019].
nguoilaodong, 2017. Nguoilaodong. [Online]
Available at: />[Accessed 19 February 2019].
Sam Holdings, 2018. annual report 2018, s.l.: Sam Holdings.
thoibaotaichinhvietnam, 2017. thoibaotaichinhvn. [Online]
Available at: />[Accessed 20 February 2019].
Zing, 2018. ZIng. [Online]
Available at: />[Accessed 19 February 2019].