BUSINESS ENVIRONMENT - ASSIGNMENT 1

Nguyễn Thị Kiều Anh - Snow - F05014

BTEC HND IN BUSINESS (FINANCE)
ASSIGNMENT COVER SHEET
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REGISTRATION NO.
UNIT TITLE
ASSIGNMENT TITLE
ASSIGNMENT NO
NAME OF ASSESSOR
SUBMISSION DEADLINE

Nguyễn Thị Kiều Anh - Snow - F05A
F05 - 014
Unit 1: BPP Learning Media Ltd
Organisations in their Environment
1 of 2
Jubred A. Peñano
November 20, 2012

I, ____Nguyễn Thị Kiều Anh________ hereby confirm that this assignment is my own work and not
copied or plagiarized from any source. I have referenced the sources from which information is
obtained by me for this assignment.

________________________________

_____25th February 2013_____

Signature

Date

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Assignment Received By:

Date

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Nguyễn Thị Kiều Anh - Snow - F05014
Unit Outcomes
Outcome

Evidence for
the criteria

Assessor’s
Decision

Feedback

First
attempt

Understand
the
organisational
purposes of

business
LO1

Understand
the nature of
the national
environment in
which
businesses
operates
LO2

Identify the
purposes of
different types
of organisation

ALREADY PASSED

1.1



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

ALREADY PASSED

1.2



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

ALREADY PASSED

1.3



Explain how
economic
systems attempt
to allocate
resources
effectively

ALREADY PASSED

2.1



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

ALREADY PASSED

2.2



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

2.3

Merit grades awarded

M1

M2

M3

Distinction grades awarded

D1

D2

D3

2

Rework

Internal
Verification


Nguyễn Thị Kiều Anh - Snow - F05014

Outcome

Evidence for

the criteria

Assessor’s
Decision

Feedback

First
attempt

Rework

Assignment
( ) Well-structured; Reference is done properly / should be done (if any)
Overall, you’ve
Areas for improvement:

ASSESSOR SIGNATURE

DATE

/

/

DATE

/

/

NAME:.........................................................................................

(Oral feedback was also provided)
STUDENT SIGNATURE
NAME :..............................................................................
FOR INTERNAL USE ONLY
VERIFIED
YES
NO
DATE
: ...........................................................................
VERIFIED BY : ...........................................................................
NAME
: ...........................................................................

3

Internal
Verification


Nguyễn Thị Kiều Anh - Snow - F05014

BUSINESS ENVIRONMENT AND THE CASE OF BP COMPANY

Prepared for:
Lecturer, Mr. Jubred A. Peñano
Business Environment
Banking Academy, Hanoi

BTEC HND in Business (Finance)

Prepared by:
Nguyễn Thị Kiều Anh – Snow - F05A
Registration No. ITPF05-014
No of words: 6898
Submission date: 25th February, 2013

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Nguyễn Thị Kiều Anh - Snow - F05014

TABLE OF CONTENTS

EXECUTIVE SUMMARY
This assignment contains basic knowledge of business environment as well as explanation
and assessment effects of business environment of Vietnam on BP Company. This
assignment is divided into six parts as follows:
•

Identify the purpose of different types of organization

•

Describe to extent to which BP meets the objectives of different stakeholders

•

Explain how economic systems attempt to allocate resources effectively

•

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

•

Evaluate the impact of competition policy and other regulatory mechanisms on the
activities of BP Company

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INTRODUCTION
Vietnam is an agriculture country, based on rice agriculture is primary. After 1986,
Vietnam’s economy changed from command economy to mixed economy. Nowadays, to be a
member of WTO (World Trade Organization), Vietnam must face many opportunities and
threads. Opportunities are to expand and develop market as well as challenges when changing
business environment. BP PLC is a multinational Company in term of oil and gas. In 1989,
BP appeared in Vietnam, through 23 years operate; the Company becomes the leader in
exploration and production of oil and gas and play an important role in economic growth.
This assignment focuses two aspects: organizational purposes of BP and the nature
of the national environment in which BP operates. The information in this assignment is
collected from many different resources such as book, websites on the internet and some
document which related to business environment and BP in Vietnam. However, because of
limitations about time, words, this assignment only gives general information. The researcher
hopes that those disadvantages will be improved in the future.

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CONTENTS
I. UNDERSTAND THE ORGANIZATIONAL PURPOSES OF BUSINESS
1.1 Identify the purposes of different types of organization
1.1a Vision, mission, values, goals, and objectives of BP
Each organization and Company want to exist in competitive market for a long time,
moreover become market leader, they must build a meaning strategic plan. To do this,
every organization need exactly identify vision, mission, goals and objectives for
operating their business. BP (British Petroleum) - a public limited Company (PLC)
set right vision statements, mission statements, values, goals and objectives. As the
result it becomes the leading Petroleum in Vietnam.
a)

Vision

According to www.sbinfocanada.about.com, a vision statement is sometimes called a
picture of the Company in the future but it’s so much more than that. The vision
statement is inspirations, the framework for all strategic planning. It answers the
question, "Where do we want to go?"
BP’s vision statement is: “BP wants to be recognized as a great Company competitively successful and a force for progress. We have a fundamental belief that we
can make a difference in the world”
b)

Mission

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Mission describes the organization’s basic function in society, in terms of the products
and services it procedures for its clients (BPP Learning Media Ltd, 2010, p.26).
According to www.sbinfocanada.about.com, a mission statement is a brief description
of a Company's fundamental purpose. It answers the question, "Why do we exist?”. The
mission statement articulates the Company’s purpose both for those in the organization
and for the public.
BP’s mission statement is: “To help the world meet its growing need for heat, light
and mobility by producing energy that is affordable, secure and doesn't damage the
environment. BP is progressive, responsive, innovative and performance driven”

Values

c)

Values of a Company are “the goals or aims of the organization will have an ideology
based on beliefs, values and attitudes. This ideology is a means of control through
shared beliefs, and determines the culture of the organisation, providing a set of
principles that govern the overall conduct of the organisation’s operations, code of
behaviour, the management of people, and its dealings with other organisations” (BPP
Learning Media Ltd, 2010, p.26)
BP has 5 main values, namely: safety, respect, excellence, courage, and our team.
•

Safety: “care about the safe management of the environment, are committed to
safely delivering energy to the world”

•

Respect: “respect the world in which we operate, begins with compliance with
laws and regulations, hold ourselves to the highest ethical standards and behave in
the ways that earn the trust of others, respect each other and those we work with,
care about the consequence of our decisions, large and small, on those around us”

•

Excellence: “committed excellence through the systematic and disciplined
management of our operations, follow the rules and standards we set for our
Company, commit quality outcomes, have a thirst to learn, and to improve”

•

Courage: “achieving the best outcomes requires the courage to face difficulty, to
space difficulty to speak up and stand by what we believe; always strive to do the
right thing; explore new ways of thinking and are unafraid to ask for help; are
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Nguyễn Thị Kiều Anh - Snow - F05014
honest with ourselves, and actively seek feedback from others; aim for an
enduring legacy, despite the short term priorities of our world”
•

Our team: “Whatever the strength of the individual, we will accomplish more
together; put the team ahead of our personal success and commit to building its
capability; trust each other to deliver on our respective obligations” (BP, n.d.)
Goals

d)

BP’s goals focus on 4 main points:
•

Products
- Creating the freedom to move, to be warm, to be cool, to see and enjoy a better
quality of life

•

Services
- Provide excellent customer service

•

Social
- To produce energy in a way that doesn’t damage the environment
- Increase the Company’s role in relations to social responsibility

•

Profit
- To promote and help the Company achieve its business objectives
- Promote a profitable and sustainable business activity that meets the customer
needs
- Increase the Company’s market share (BP, n.d.)

e)

Objectives

Objectives set out more specifically the goals of the organization, the aims to be
achieved and the desired end results (BPP Learning Media Ltd, p.26, 2010).
BP’s Objectives: The main objective which BP wants to achieve is related to finance
“15% - 24% of sales growth in a period of 5 years from 2010 to 2015” (BP, n.d.)
1.1b Assess about vision, mission, values, goals, and objectives of BP
a)

Vision

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BP’s vision statement focuses on clarifying the future direction of the Company, future
market position which has an important role in giving business strategies.
b)

Mission

BP’s mission statement pointed out the usefulness of the product “need for heat, light
and mobility”. Nowadays, environmental issues attract the attention of the whole
society. Therefore, with the purpose: “produce energy that is affordable, secure, and
doesn’t damage the environment”, it improve that BP understands what customers need
and want, especially reflect the social responsibility of the business. Moreover, BP’s
mission statement contains 4 important values: “progressive, responsive, innovative,
and performance”. This help the customers understand the ways BP operate both
internal environment and external environment of the Company.

c)

Values

These values help BP:
•

“Have the best competitive corporate, operating and financial performance”

•

“Engage the creative talents of the employees, and develop and apply leading,
cost - effective technology”

•

“Carry on its business in an environmentally” (BP, n.d.)

In general, setting values for the Company play an important role in business’s success.
d)

Goals

All goals that BP set also orient customers and society so thanks to this BP are able to
achieve vision statement as soon as possible.
e)

Objectives

All objectives of an organization is evaluated by SMART technique

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Figure 1: SMART technique

With specific purposes which are able to do in a specific time, BP’s objective meets all
the standards of “SMART”.
S – Specific: 15% - 24% of sales growth in a period of 5 years
M – Measurable: 15% - 24% of sales
A – Attainable: the world’s population is higher and higher, thousands of people are
added per day, the demand will increase so obviously, product will be sold at a big
number
R – Realistic: the sales in UK, New Zealand many countries have increased 15% in
2012
T – Time bound: from 2010 to 2015
In conclusion, with specific vision, mission statement the organization will build
customer’s belief, create the differences from the other competitors and reach their
goals and objectives as soon as possible.

1.2 Describe the extent to which an organization meets the objectives of different
stakeholders
1.2.1 Identify the stakeholders
Stakeholder can be defined in many ways and different kinds of entities can be
stakeholders, such as persons, groups inside as well as outside the organization
(Boonstra, 2006, p.40)
There are three broad types of stakeholder in an organization:

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•

Internal stakeholders (employees, management)

•

Connected stakeholders (shareholders, customers, suppliers, financers)

•

External stakeholders (the community, government, pressure groups)

Every stakeholder also has influence on the organization. In order to identify the
influence of stakeholder, the researcher use stakeholder mapping.

Figure 1.3 Stakeholder mapping (BPP Learning Media Ltd, 2010, p41)
•

Key player: High power, high interest, and “strategy must be acceptable to them,
at least”

•

Keep satisfied: High influence, low interest, and “stakeholders in keep satisfied
segment must be treated with care. While often passive, they are capable of
being key player”

•

Keep informed: High interest, low power, and “stakeholder in this segment do
not have great ability to influence strategy, but their views can be important in
influencing more powerful stakeholders”

•

Minimal effort: Low interest, low influence, and “is expended on this segment”
(BPP Learning Media Ltd, 2010, p.41)

The influence of stakeholder on BP will be described in the following table:

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STAKEHOLDER MAPPING
Types

INTERNAL
STAKEHOLDE
R
CONNECTED
STAKEHOLDE
R

EXTERNAL

STAKEHOLDE
R

Stakehold
ers

Manageme
nt

Key
Players

Keep
Satisfie
d

Keep
Informed

Minimal
Effect

Table 1: The
influence of
stakeholders
•

Int
er
nal

X

Employees

X

Customers

X

Sharehold
ers

X

Central
Governme
nt

X

Local
Authoritie
s

X

stakeholder
a)

Management - Key Players: Management is key factor in developing strategy
and controlling all activities of the business. The failure and the success of the
Company depend on their decisions so they have high power. For example, BP’s
management sets up a plan and offers their employees to do it. Management will
interest mainly in plan’s success which will evaluate management’s ability in
making decisions.

b)

Employees - Keep informed: Employees carry on their duty through
management’s decisions so they have lower power and they only interest mainly
in performing to complete given objectives.

•

Connected stakeholder
a)

Customers - Key players: They are who decide whether use BP’s products and
services or not. In the market, there are many organizations which provide this
products and services as BP Company such as Interpetrol, Petrolimex...Therefore,
BP has to focus more on customer’s needs and wants to satisfy them.

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Nguyễn Thị Kiều Anh - Snow - F05014
b)

Shareholders - Key players: Shareholder is also play a main role in the
Company. They are people who make a decision whether invest in the Company
or not. The more invest they do, the more effect they have on the Company.

•

External stakeholder
a)

Central government - Keep satisfied: Central government has low interest but
high influence on the Company. For example, they set up laws and regulations
such as income tax which the Company must comply. They only concern about
the problem whether the Company operate legally or not, other activities relate to
internal Company, they do not have right to join.

b)

Local authorities - Keep informed: Local authorities concern about how the
Company can help the community, for example BP will create jobs for their
citizen, so the unemployment rate decreasing and the standard of living will
increase. Up to now, BP creates jobs for 80,000 people in 100 countries in over
the world.

1.2.2 Evaluate the extent to which BP Company achieves the objectives of three
stakeholders
Types

Stakeholder
s

Internal
stakeholder

Employees

s
Connected
stakeholder
s
External

Customers
Local

Objectives

Achieved

High salaries
Job security




Bonus/reward



High quality
Good price




Good customer services



Local employment



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Nguyễn Thị Kiều Anh - Snow - F05014

stakeholder
s

Environmental
authorities

protection
Legal requirement




Table 2: Evaluation of extent to which BP has satisfy its stakeholders
•

Internal Stakeholder - Employees
a)

Job security (Achieved): BP’s strategy and sustainability they said: “We
strive to be safety leader in our industry, a world - class operator, a good
corporate citizen and a great employer. We are working to enhance safety and
risk management, earn back trust and grow value.” (BP, n.d.). This proves
they set job security is first priority in business operation.

b)

Bonus/ Reward (Achieved): BP recognize that “to attract and retain the best
people”, they must “offer competitive reward packages and link pay to
performance, with our top performers receiving industry - leading bonus rates”
and “the greatest aspect of working at BP is the opportunity we offer our
people to learn, grow and contribute” (BP, n.d.)

•

Connected stakeholder - Customers
a)

High quality (Achieved): Customers are a necessary factor of the success of
BP Company. The first concern of customers is always about quality products.
Therefore, knowing this thing BP focus more on improving technology to
raise product’s quality, moreover they committed to customer “measure and

record product quality by the degree of conformance to predetermined NGL
product specifications and standards as set by the Gas Processors Association
(GPA)” (BP, n.d.)

b)

Customer services (Achieved): BP use “a variety of methods to communicate
with and listen to customers, including interviews, surveys, feedback tools and
marketing programme”, for example BP “conduct an annual brand health
programme, in which participants answer questions that help us assess the
degree to which customers recognize brand and use products, as well as their
perceptions of reputation” (BP, n.d.). This thing helps BP understanding
customer’s demand to provide customers good services to satisfy them. Abro
said: “the customers are happy with great service and high quality fuels.” (BP,
2010). It proves that BP is really successful in keeping its customers.

•

External stakeholder - Local authorities
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a)

Local employment (Achieved): BP arrived in Vietnam in 1989. It contributes
significantly

in

developing

Vietnam

economy,

especially

reducing

unemployment rate. Nowadays, BP creates jobs more than 4500 people in
Vietnam. BP said: “Our main centers of employment are at Ho Chi Minh City,
Hanoi and Ba Ria Vung Tau Province. A growing number of people are
working across our business assets in Vietnam, including BP Exploration
Operating Company, Castrol BP Petco, Nam Con Son Pipeline, and Phu My 3
Power Plant” (BP, n.d.)
b)

Environment protection (Achieved): BP Company really have the
responsibility for environmental protection. British Petroleum “is committed
to finding fuel sources that reduce green house gases and reduces the carbon
footprint. They hope to accomplish as they research and refine alternative fuel
sources such as fossil fuels, solar power, solar power, wind power, hydrogen,
and natural gas.” (BP, n.d.)

In short, BP always has high responsibility in running in the business. The firm has achieved
all the objectives of three stakeholders: employees, customers, and local authorities.

1.3 Explain the responsibilities of an organization and strategies employed to meet them
Organizations are part of human society, like people, are subject to rules that govern

their conduct towards others. Some of these rules are law and enforced by legal sanction.
Other rules fall into the realm of ethics or morality and are law and are enforced only by
the strength of society’s approval or disapproval (BPP Learning Media Ltd, BPP
Learning Media Ltd 2010, p.47). This table below will describe in detail about BP’s
responsibilities and strategies employed to meet them.
Types

Specific Responsibilities of BP

Strategies employed to meet them

Contribute to the life of local Create

Social

many

jobs

for

authorities

unemployment

Care more about the community

Create social campaigns such as
charity, promotion funds

responsibilities
Satisfy social demand

Produce innovative products with
more benefit, good services

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Commitment
improvement

to
in

continual •
environment

Reduce atmospheric emissions,
wastes generates

performance and achievement of •
goals “no damage to the

Develop appropriate techniques

environment”

substances.

Environmental Reducing
responsibilities footprints

for

environmental Build

disposing

projects

of

dangerous

help

reducing

environmental pollution such as
Nam Con Son Gas project.

Decreasing the dependency on Use of raw materials and natural
energy

sources

unfamiliar

which

with

are resources
planet

environment.

Ethics and

Obey the law

Comply tax policy

Do not lie

Report annual finance with true
figure

business

Do not cheat in producing Always create products with high
product such as

quality

Improving standard of living, High salary, give reward/bonus
spiritual life for employees of

employees
Management
responsibilities

Improving skills for employees

Training and promotion

Respect employees

•

Treating employees right

•

Allowed to make their own
decisions and speak out their
ideas

Public

Build the image of the Company Products with high quality, good

relations &

in the mind of the community

Corporate

Make the brand names to have Increase

image

been observed

services
and

invest

more

on

advertising products both on TV
and Internet
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Build long- term relationship Develop strategies orient public’s
with community

benefits

Table 3: Responsibilities of BP and strategies to meet them

1.3.1 Social responsibilities

The social responsibilities of an organization may be defined as the obligations that the
organization has towards the people and the environment in which the Company
operate (BPP Learning Media Ltd, 2010, p.46). In Vietnam, BP takes social
responsibilities seriously. For example, they care more about local authorities’ living
standard such as create jobs for them. Up to now, BP all over the world is more 92000
people and in Vietnam are more than 4500 people.
1.3.2 Environmental responsibilities
BP has a global policy of “no accidents, no harm to people, and no damage to the
environment (BP, n.d.). BP in Vietnam invests more in environmental protection, for
example, BP in Vietnam is focusing on the Nam Con Son Gas Project (NCSGP). “The
NCSP incorporates a 371 km - long pipeline which transports gas and condensate from
the Lan Tay gas production platform in Block 6.1, 370 km offshore south eastern
Vietnam, to an onshore gas processing terminal and a 28km - long onshore pipeline to
customers” (Do, 2003)

Picture 1: Schematic of Nam Con Son Gas Project

“Through NCSP’s Dinh Co Terminal and in vehicles, BP is generating CO2, and other
gases such as methane and carbon monoxide. Any leaks or accidental release of the gas

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many also result in release of these gases. These so - called ‘Greenhouse Gases’
(GHGs) are the main contributors to global warming” (Do, 2003)
1.3.3 Ethics and business
All Company operate in Vietnam must comply with government obligations. Therefore,
BP does not exception. The Company provides annual report with true figures; true
profits for government rely on taxing firm. BP always pays income tax regularly and in

time.
1.3.4 Management responsibilities
Another responsibility of BP is management responsibilities. BP recognize important
role of human resources. Therefore, to keep the extraordinarily talented staff, BP
Company always has main motivation strategy, for example, employees are allowed to
make their own decisions and speak out their ideas. As well as there are training course
so that each person has the opportunity to promote their maximum ability.
1.3.5 Public relations & Corporate image
Building the good image of the Company in the mind of the community is very
important and long - term. To do this, BP have campaigns, for example, create products
with high quality, good services and invest more on the advertisement both television
and internet.
Every Company want to exist in the competitive environment, they need have right
strategies in many aspects of business operation. One of an important thing is
Company’s responsibilities and builds strategies employed to stakeholders. As analyzed
above, it can be said that BP is a Company which operated with high responsibility and
builds strategies to meet stakeholder wisely and reasonable. All also orient the
community and society.

II. UNDERSTAND THE NATURE OF THE NATIONAL ENVIRONMENT IN
WHICH BUSINESS OPERATES
2.1 Explain how economic systems attempt to allocate resources effectively
2.1.1 Definition of economic systems

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According to Business Dictionary (2009), economic system is the “organized way in
which a state or nation allocates its resources and apportions goods and services in the

national community”.
2.1.2 Types of economic systems
There are three types of economic system, namely: free market economy, the planned
(command) economy, and the mixed economy.
•

Free market economy: “sometimes called capitalism. In this type of economy
most decisions are taken through the operation of the market mechanism.
Supply and demand and the ability to pay influence decision - making. There is
very little government intervention in business decision making” (BPP
Learning Media Ltd, 2010, p.138)

•

Planned (command) economy: “sometimes referred to as state controlled. In
this type of economy decisions are taken collectively, usually by central
planning committed. The government controls what is produced , how much is
produced, the price and who the goods are available” (BPP Learning Media
Ltd, 2010, p.138)

•

The mixed economy: “In this type of economy there is a balance between
market forces and state intervention. It combines elements of both private
enterprise, where individuals have the freedom to set up in business in their
own right and personally reap the rewards of their enterprise and intervention,
in varying guises, by the state” (BPP Learning Media Ltd, 2010, p.138)

2.1.3 Vietnam’s economic system
Base on the classified features of economy system, the economy of Vietnam is a mixed

economy system. Before 1945, Vietnam was a country that focuses primarily on
agricultural. Economy was self - sufficient, all also based on available resources such
as forest, sea, and off shore oil. Therefore, Vietnam economy was stagnant, as a
consequence of this; Vietnam was evaluated to be one of the poor countries in the
world. Until 1986, Vietnam economy shifted from command economy to mixed
economy through the reform period “Doi Moi”. From that, the number of the private
enterprises increases quickly under the control of government. Furthermore, Vietnam
has joined World Trade Organization (WTO), which creates more opportunities to
enlarge the market and promote the economy.
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2.1.4 How economic systems attempt to allocate resources effectively
“All societies have available quantities of productive resources or what economists call
factors of production. These factors are classified into three main groups: labor, land
and natural resources, and capital” (BPP Learning Media Ltd, 2010, p.133).
a)

Labor

Labor includes all types of physical and mental power of human being. It ranges from
the raw material power to the highly specific services (BPP Learning Media Ltd, 2010,
p.131)
Vietnam’s population is ranked at 13th in population with 87 million people while
48.23 million people are in working age (2011 est.), three - fourth of which is in rural
areas. Vietnam’s labor force accounted for 49% in population. It is really a high rate.
It means that Vietnam has an abundant work force which creates a good condition to
develop economy. However, in fact, the quality of Vietnam’s human resources is not
equal in qualifications and skills. According to Dong, “only 32% of Vietnamese labor

force is trained with 14.4% having undergone short training courses. A report on the
labor market released by the ministry shows that Vietnam is severely lacking in highly
skilled labor and service workers in the fields of finance, banking, tourism and
salesmanship”. Labor Minister Nguyen Thi Hang said: “We will possibly have to
export manual workers and import skilled labor. That means we lose in own potential
market”.

Figure 2: Changes in Employment structure, 1980 - 2010

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To solve this problem, government had given some objectives such as development of
labor supply, development of labor demand, acceleration of market transactions,
reform of salaries and wages, and completion of labor market institution. Recently,
“the Prime Minister endorsed the National Program on Jobs up till 2010, which will
allocate VND6 trillion for vocational training for the next 4 years” with hope that it
will “improve the labor quality in Vietnam in the future” and “provide job
opportunities for 50 million workers, create new jobs for 2 million a year, and pull
down the unemployment rate in urban areas under 5%”
b)

Land and natural resources

“Each country are differently endowed with land of varying quality for farming and
other uses and also with natural resources like oil, coal” (BPP Learning Media Ltd,
2010, p.133). Vietnam is a country has plentiful natural resources.
Land resource of Vietnam is divided into three groups:
•

Agriculture land (25.1 million ha),

•

Non - agricultural land (3.4 million ha)

•

Unused land (4.6 million ha) (GSOV, 2009)

The number of agriculture land decreases day by day due to process of
industrialization and modernization of the country. It is wasting of land resources when
Vietnam converts agricultural land to non - agricultural land with the purpose such as
building a golf course which does not bring economic effects while famer need
agricultural land to produce. Vietnam is wasting not only land resource but also forest
resource. In 1943, Vietnam has 14.3 million ha of forests, and in 1990, there was only
9.18 million ha. The period 1980 - 1995, the average annual loss was 110 thousand ha.
Today, in some areas, forests continue to be destroyed by the conversion of land use,
illegal exploiting, and cultivation and forest fires. Therefore, government need care
more about this problem to find out methods such as prohibiting deforestation, and
using land resources inefficiently to preserve these precious resources.
c)

Capital

“Capital means the economy’s stock of physical assets such as machinery and plant
installed in manufacturing forms, the premises and offices of all types of business and
also the social infrastructure of roads and sewers commonly provided by government”
(BPP Learning Media Ltd, 2010, p.133)

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Nguyễn Thị Kiều Anh - Snow - F05014
The capital resource in Vietnam consists of two types: foreign direct investments
(FDI) and official development aids (ODA).

Figure 3: Top 20 foreign investors in Vietnam (Source: General statistic office of Vietnam)

As can be seen, there are many investors distribute to Vietnam, with Taiwan, Korea,
Singapore, Japan, Malaysia leading the way in terms of FDI from 1990 - 2010.
However, Vietnam, “in the first six months of 2011, witnesses a sharp decrease of
foreign direct investment (FDI) flow into the country, as only 452 new FDI projects,
worth 4.76 billion U.S. dollars, were granted licenses, down 24.6 percent in value
over the same period last year. Besides, 123 FDI existing projects expanded a total
capital of 1.62 billion U.S. dollars, down 35.5 percent year-on-years” (Hui, 2012).
There are many causes lead to decrease FDI, for example, due to be effected by global
economic crisis and the ways that Vietnam controls ODA capital is really ineffective.

Figure 4: Allocating ODA capital in 2011 (Source:tradingeconomics.com)

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In the pie chart; it is easy to realize that there are many ODA was used for
transportation (32%). Increasing transportation can bring many benefits for the
community; however Vietnam government does not any strategy to reduce tailpipe
emissions, as a consequence of this Vietnam is always in a state of environmental
pollution. While ODA used for environment only accounted for 4%, this proves that

Vietnam only interested in economic development - immediate benefit, that they
ignored the long-term benefits of environmental protection. Contrast when the whole
world is interested in this issue. These make investors’ belief with Vietnam decrease
significantly.
Capital is leading factor to develop economy. ODA and FDI provide funds for
economic development as well as help the country to develop infrastructure, absorb
the latest technological achievements in production, further creating jobs for the
people. In general, they have positive impact on the economy. Therefore, government
should concern and invest more about the problem how to use capital resources
effectively. Base on it, in order to attract foreign investors to increase ODA and FDI.

2.1.5 Assess the effectiveness of the use of resources of BP Company
The effective of the use of the resource of BP Company in Vietnam is expressed
clearly in using labor. Appearing in Vietnam, BP Company brings not only
employment for local authorities but also help Vietnamese to understand how to use
labor effectively through strategies of BP. This is expressed in the following policies:
•

Using human resources with level of work, and expertise requirements,
requirements of jobs, careers, and fields, avoid lowering the job’s requirements
to appropriate to the people. This is the first thing that BP focus when using
Vietnam labor.

•

BP also has clear policy on the use of human resources, for example
remuneration policy to make sure to employees feel safer when contributing to
the Company, encourage both metal and physical to human resources.
Accordingly, they comply seriously.

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•

With highly qualified staff, BP create favorable conditions for them to develop
promote their maximum ability, for instance, BP support finance for them to
participate in professional training.

In short, with using human resources effectively, it helps BP make more profit and moreover
become the market leader in term of petroleum in Vietnam.
2.1.6 How the economic system of Vietnam effects on BP Company
The economic system of Vietnam affects significantly on the operation of BP Company.
Every Company which operate in Vietnam also comply government obligation.
Interventions of Vietnam government to BP Company are in limitation of provision or
prohibition, subsidies or tax treatment. For example, BP must pay 25% for income tax.
Therefore, every month, every year, BP must report their annual finance as a tool to
government control organizational operation.
As a result of a mixed economy, international and regional integration and external
economy have achieved considerable results:
•

Vietnam has joined the ASEAN, fulfilling her commitments on AFTA;

•

In 1990, bilateral trade agreements were signed with many countries;

•

The Vietnam-EU Trade Agreement was signed in 1995;

•

In 1998, Vietnam was one of the initiators and first members of APEC;

•

In 2001, the Vietnam-US Trade Agreement made;

•

By 2005, Vietnam established commercial relations with 221 countries and
territories;

•

In November 2006, Vietnam became a full member of WTO;

•

Export and import have increased rapidly in scope and rate. The total export
turnover reached US$ 25 billion in 2005 against US$ 1 billion per year before
1986;

•

In the period 2000-2005, import increased by 19% annually; excess of imports
over exports is now US$ 4 billion per year (Vietnameconomics, n.d.)

Along with the integration and development of economy, Vietnam has favorable
conditions for promoting investment and expanding market. More than ever, this is a
chance for BP to develop production. Moreover, it creates an environment of intense
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