Business environment Assignment 2

Nguyễn Thị Kiều Anh - Snow - F05014

BTEC HND IN BUSINESS (FINANCE)
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UNIT TITLE
ASSIGNMENT TITLE
ASSIGNMENT NO
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Nguyễn Thị Kiều Anh - Snow - F05A
F05 - 014
Business Environment (Unit 1)
Vietnam Association of Seafood Exporters and Producers
(VASEP)
2 of 2
Jubred A. Peñano
January 8, 2013

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.

________________________________

_______8th January 2013_____

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Unit Outcomes - BE A2
Outcome

Evidence for
the
criteria

Assessor’s
Decision

Feedback

First
attempt

Understand
the behavior
of

organizations
in their market
environment
LO3

Be able to
assess the
significance of
the global
factors that
shape national
business
activities
LO4

Explain how
market
structures
determine
pricing and
output decisions
of businesses

3.1

Illustrate the
way in which
market forces
shape
organizational

responses using
a range of
examples

3.2

Judge how the
business and
cultural
environments
shape the
behaviour of a
selected
organisation

3.3

Discuss the
significance of
international
trade to UK
business
organisations

4.1

Analyse the
impact of global
factors on UK
business

organisations

4.2

Evaluate the
impact of
policies of the
European Union
on UK business
organisations

4.3

Merit grades awarded

M1

M2

M3

Distinction grades awarded

D1

D2

D3

2

Rework

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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:

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DATE

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DATE

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

(Oral feedback was also provided)
STUDENT SIGNATURE
NAME :..............................................................................
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Nguyễn Thị Kiều Anh - Snow - F05014

BUSINESS ENVIRONMENT AND THE CASE OF VASEP

Prepared for:
Lecturer, Mr. Jubred A. Peñano
Unit 1: 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: 3500
Submission date: 8th January, 2013

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TABLE OF CONTENTS

EXECUTIVE SUMMARY
This assignment contains basic knowledge of business environment as well as helps

learner understand the behavior of organizations in their market environment and be able to
assess the significant of the global factors that shape national business environment through
specific company - VASEP (Vietnam Association of Seafood Exporters and Producers). It is
divided into six parts as follows:
•

Explain how market structures determine pricing and output decisions of businesses

•

Illustrate the way in which market forces shape organizational responses using a range
of examples

•

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

•

Discuss the significance of international trade to UK business organizations

•

Analyze the impact of global factors on UK business organizations

•

Analyze the impact of global factors on UK business organizations

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INTRODUCTION
Vietnam Association of Seafood Exporters and Producers (VASEP) is a nongovernmental organization. VASEP members include leading Vietnamese seafood producers
and exporters and companies providing service to the seafood sector (scenario, 2012). It is
established on June 12th 1998, during the operation time, this organization not only provide
seafood for domestic market but also foreign market like EU, US, Japan….VASEP products
get many successes in global competition market through their products’ quality and their
organization behavior as well. It has a strong position in Vietnam market and expanding more
into international market with right objectives. With these objectives, VASEP have a power to
overcome many troubles in international market such as law, prices and capital…
The information in this assignment is collected from many different resources such as
books, websites on the internet and some document which relevant to VASEP operations in
pricing and output decisions and policies, law which EU apply for importing seafood.
However, because of limitations about works, this assignment only gives general information.
The researcher hopes that those disadvantages will be improved in the future.

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CONTENTS
III. Understand the behavior of organizations in their market environment
3.1 Explain how market structures determine pricing and output decisions of businesses
Local

International

Market type

Oligopoly

Perfect competition

Pricing

Cheap

Cheap

Volume (units)

Small

Large

Product variety

Wide

Limited

Customers

Many

Specialized

Table 1: Summary table of VASEP market structure and its influence to pricing and output decisions

3.1a Local
a.

Oligopoly - There are many existing competitors

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b.

Cheap prices: Comparison of products price

As can be seen, the seafood VASEP prices are cheaper than its competitors (Minh
Phu Corp and NAVICO Corp is two companies which established near the time to
VASEP)
c.

Small volume
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As can be seen, the total volume which produces for domestic demand is small, and

less two times than that produce for exporting.

d.

Wide products
There are many kinds of seafood are consumed in Vietnam markets such as:
pangasius, shrimp, squid, octopus, crab and many kinds of fish: tuna, herring,
mackerel…

e.

Many customers
Customers is in over the country, however it focus more on two big cities in Vietnam
and especially the tourist resorts such as Vinh Ha Long, Cat Ba,…

3.1b International
a.

Perfect competition: This following table improves that market types of VASEP is
perfect competition.

b.

Cheap prices:

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c.

Large volume

Figure 1: Seafood export market by volume (thousand tons)

As can be seen above, the total of export volume in international market is large,
approximately 1,200 thousand tons in 2009. EU is the largest customer of VASEP
with more than 300 thousand ton in 2009, followed by Japan with about 200
thousand tons and USA with more than 100 thousand tons.
d.

Limited products

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Figure 2: Structure of seafood products exported to the EU

EU is one of the main import markets of Vietnam seafood. As can be seen above,
products are exported to EU market is:
•

Pangasius (Cá tra): 39.5%

•

Shrimp (Tôm): 31%

•

Squid, octopus (Mực, bạch tuột): 9.28%

•

Tuna (Cá ngừ): 5.97%

•

Bivalve Mollusk (Nhuyễn thể 2 mảnh vỏ): 3.87%

•

Other seafood only accounted for 10.38%.

Therefore, it is said that only pangasius and shrimp are two main export products of
seafood exports in Vietnam.
e.

Specialized customers

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Figure 3: The value of export seafood in the first six month 2012

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Summary

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3.2 Illustrate the way in which market forces shape organizational responses using a
range of examples
3.2a Porter’s Five Forces

Threats of subtitute products

Bargaining power of
suppliers

Competitiv
e

Bargaining power of
customers

Threats of new entrants

Figure 4: Porter’s Five Forces
a)

The threat of new entrants - High
Based on table 3 page 10 of outcome 3.1, the youngest competitor of VASEP is
FSC (UK) established in 2006. UK is one of many largest countries in the world.
UK market is considered as a potential market both export and import seafood
because they recognize the attractiveness of this sector in developing economy.
Therefore, UK government also creates many conditions about capital and
technology for new company such FSC enter into this industry. It can be said that
FSC has many competitive advantages since it was established.
In order to compete with new company of developed countries is also difficult to
VASEP of Vietnam. However, with cheap labor resources and rich seafood,
VASEP can reduce manufacturing costs and raw material costs. Thus, seafood
prices of VASEP is cheaper than many its competitors. It creates one competitive
advantages of VASEP in the international market.

b)

The threat of substitute products - High

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Figure 5: Food consumed in 2010 (Source: datavisualization.ch)

As can be seen in figure 5, there are many substitute products of seafood such as
pasta, chicken, soup, salad...They are foods which good for health and also very
delicious. Moreover, they also cheaper than seafood so it is evaluated that the
threat is high.
In order to seafood is always the first priority of customers, VASEP focus more on
the product’s quality and set up the right pricing strategy for kinds of seafood,
especially create a good relationship with others countries in the exchange of
trade.
c)

The bargaining power of customers - High
There are many buyers in perfect competition market. EU, US and Japan is the
main import markets of Vietnam seafood. Because they are main customers, the
bargaining power of customers is high.
It is obvious that customers always want buy products which have high quality
and reasonable prices. Therefore, VASEP need have specific strategies to have
products reach customer’s requirement.

d)

The bargaining power of suppliers - Low
There are many suppliers who can supply raw material, packaging material,
machines, transportation for delivery…for VASEP. Thus, VASEP can compare the
prices and quality of goods and services to choose the most suitable ones.

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However, VASEP tend to collaborate with suppliers who have good long-term
relationship such as Dong A corp, Key Line Co, HBATECO… (VASEP, n.d.)
e)

Competitive rivalry - High
Thailand is strong competitor of Vietnam in exporting shrimp to the US and some
other market (InfoTV, n.d.). Therefore, VASEP should have right pricing strategies
to maintain competitive advantages. Besides, create VASEP products distinguish
to its competitor ones with innovative products.

3.2b Market segmentation
VASEP divided international market into two segments relate to buyer behavior:
heavy buyers, and medium buyers. VASEP focus more on heavy buyers such as
EU, US and Japan...because they bring more profits for enterprises.
By segmenting market, VASEP can focus more on potential customers and spent
more time on finding out customers’ requirement about quality, food safety…For
example, from 2011, when exporting seafood into UK, all type of shrimp must be
checked chloramphenicol, nitrofuran to ensure that they do not contain on food
(Viettrade, 2012). Thus, VASEP can prepare suitable strategies to avoid risks and
maintain trust in customers’ mind.

3.2c Marketing mix
•

Product: VASEP only export some main products such as shrimp, pangasius,
octopus...(Figure 2, outcome 3.1). In order to remain existing customers and
attract new customers, besides core product, VASEP should focus more on
actual and augmented product such as packaging and after-sales service. For
example, VASEP can use transparent packaging to help customers to assess
products when can see the total product inside.

•

Price: Price always is the first priority of customers. In fact, firms want to
buy product which reasonable prices. However, they will not buy low quality
product at any prices. Therefore, VASEP need suitable strategies about prices
to ensure both product quality and reasonable prices for customers.

•

Place: VASEP seafood is exported mainly to EU, USA and Japan by trains,
airports…Therefore, it is necessary when VASEP’s warehousing nearly to
that place to reduce transport costs.

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•

Promotion: In order to attract customer for the first sight, VASEP need focus

more on advertising on media, TV, newspapers, or internet…Sales promotion
also should applied such as discount for closed customers.

3.3d Competitive strategy
In order to exist in intensely competitive environment, VASEP needs to sustain
competitive advantages by adopting cost leadership strategy on the competitive
strategy. The cost leadership strategy meaning VASEP has lower cost than its
competitors. It is key to VASEP attract numerous customers, increase sales and
market share in international market.
Summary
In short, by analyzing markets to understand both opportunities and threats, it helps
VASEP prepare the best ways response them to reach company’s objective and bring
more benefits as well.
3.3 Judge how the business and cultural environments shape the behavior of a selected
organization
3.3a Forms of anti-competitive behavior
•

Collusion - No
It takes place in oligopolistic market, in which firms have agreement about price
fixing, limit output and share their markets to increase profit illegally. VASEP is
perfect competition in international market, so it does not have collusive
behavior.

•

Cartels - No
A cartel is a formal agreement among firms in an oligopolistic industry (BPP,
2010). As said above, VASEP doesn’t belong to this market so VASEP also
doesn’t cartel behavior.

•

Price fixing cartel - No
In international market, VASEP want to build beautiful image and try to become
strong brand so VASEP always comply obligation from partners to penetrate
deeply their market. Specifically, the government USA may set prices when
exporting seafood to eliminate price fluctuations. Accordingly, VASEP base on

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floor prices to give right prices  VASEP doesn’t do price fixing cartel which
effect negative to VASEP image to make profits illegal.
•

Vertical restraint - No
Vertical restraint involves terms, conditions or arrangements imposed upon or
offered to downstream distributors by upstream suppliers (Assaf, n.d.). With
ethics in enterprises, VASEP doesn’t do vertical restraint behavior. However, in
fact it can be said that VASEP really doesn’t enough capability to enter into an
exclusive deal with any market in international market.

•

Insider dealing - No
In order to expand market share and build belief in international market, VASEP
doesn’t do insider dealing behavior. With VASEP, all information relevant to
business operation is secure.

3.3b VASEP’s behavior
a)

Objectives
VASEP was established to support Vietnam seafood industry. Rather than the
objects of maximizing profits, it aims to coordinate and link the activities of
members of corporation, help each other in improving productivity, quality,
production efficiency, creating materials, expanding markets in both local and
international market, enhancing the competitiveness of Vietnam seafood
products, representing and protecting legal benefits of its members, in order to
contribute positively to develop economy of Vietnam seafood (VASEP, n.d.)

b)

Investment
By powerful economic resources, VASEP make use of capital to invest for many
projects. Specifically, VASEP invest 3 billion VND into project “Processing and
preserving marine products” in Khanh Hoa, Binh Dinh, Ca Mau,…and invest
80,000 billion VND in buying modern technology from USA (VASEP, n.d.)

c)

Risk
VASEP must face many potential risks, especially exporting seafood. Natural
disasters (storms, flood…) and epidemic diseases make VASEP do not enough
capability to export enough volume of output which signed in contract with
partner. Besides, it is difficult for VASEP to keep fresh products in the long time

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when delivering to international market. Therefore, VASEP uses risk transfer in
risk management strategy to pass the risk to a third party through insurance.
Summary
In general, VASEP has good behavior when doesn’t follow anti-competitive behavior despite
of facing intensely competitors. Besides, they set objectives which bring benefits for member
of corporation and invest many projects to develop VASEP and Vietnam economy as well.
VASEP find out their risks when exporting in international market to give the best solution
for ensuring benefit of both two parts.
IV. Be able to assess the significance of the global factors that shape national business
activities
4.1 Discuss the significance of international trade to UK business organizations
4.1a The reason for international trade to UK of VASEP
a)

New market segment
Overseas market such as EU, USA, UK, Japan…represent new market segment to
VASEP. If VASEP only operate in domestic market, firms will not get more sales,
more profit because demand of Vietnamese in seafood is low, and moreover it is
obvious that international market is larger than domestic market. Therefore, VASEP
expand operation into international market  the more overseas customers are, the
more sales increase.

b)

Market saturation
Because of the existence of many competitors in local market, seafood VASEP prices
may decrease due to having more suppliers  not good for VASEP not get

maximize profit. As a result, exporting help VASEP prevent from this situation and
find new opportunities in international market.

c)

Economies of scale
Economies of scale are the cost advantages that an enterprise obtains due to
expansion. It leads to reduction in unit costs as the scale of operations increase
(Ranjan, 2012). It means when entering into international market, VASEP will
increase volume of output, increase sales so the firm can decrease costs of output to
attract more customers both domestic and international market.

4.1b Comparative advantage
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The population of Vietnam is 89 million people, is ranked 14 th among the world’s most
populous countries. Labour force aged 15 and older in 2011 was 51.39 million, up
1.97% compared with 2010. Labour force of working age was 46.48 million, increase
0.12% (Tong Cuc Thong Ke, 2012). It creates cheap labour resources so VASEP have
made use of this advantage to expand market, increase sales and maintain competitive
advantages in international market.

As can be seen, export volume is fluctuated significantly in two years. VASEP focus on
developing both pangasius and shrimp. In 2011, the volume of pangasius increased
189,270 tons, and that of shrimp increased 50,833 tons. However, the volume of
pangasius is more than nearly 4 times compared with that of shrimp so pangasius has
more advantages compared with shrimp in international market. Therefore, in order to
increase sales and get more profits, VASEP should only focus on exporting pangasius

instead of exporting both pangasius and shrimp.
Summary
International trade plays an important in development of VASEP. It is considered as new
market segment which create many opportunities for VASEP to maximize profits. Being
aware of its benefits, VASEP build projects to approach international market.

4.2 Analyze the impact of global factors on UK business organizations
4.2a Political
According to an article “Import regulations and process of seafood in the UK market”,
Notice No. 370 of Ministry of Health, Labour and Welfare “Standards for foods and
food additives”, from 2011, when exporting seafood into UK, all type of shrimp must
be checked chloramphenicol, nitrofuran to ensure that they do not contain on food

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(Viettrade, 2012). This policy of UK make all countries want to export seafood into UK,
they must focus more on products’ quality, and VASEP is no exception. If seafood
contains undesirable substances above, VASEP besides loss the profits, firms also
decrease the trust of UK with products’ quality of Vietnam. Moreover, VASEP also face
high tax rate (35%) when exporting seafood into UK (Trang, 2012), it make VASEP
decrease revenue and sales as well.
4.2b Economic
According to article “England’s economic activity”, UK, a leading trading power and
financial center, is one of the quintets of trillion dollars economics of Western Europe.
UK is one of the strongest in Europe; moreover inflation, interest rates remain low
(wiki, n.d.). Therefore, UK is market with large demand where creates many
opportunities for VASEP to develop and increase sales in UK.
4.2c Social

According to article “UK consumer behavior”, it is very difficult to change their habits
in work and life as well, especially when selecting food. Almost all people in UK
preferred eating pangasius than other seafood. Vietnam is place where has largest
pangasius resources. Thus, understanding behavior, tastes and lifestyles of partners
plays an important role in helping VASEP increase sales, get more profits and build
strong position in UK market in exporting pangasius.
4.2d Technology
Commission Regulation (EC) No 772/2004 of 27 April 2004 is about the application of
information technology in all the operation of businesses (export.gov, n.d.).
Accordingly, UK government encourages organizations; firms apply modern
technology in producing to contribute to develop country. It can be said that nowadays
UK is the most progressive country in science and technology in over the world.
Therefore, when cooperate to them, VASEP face many risks, for example, UK uses
modern technology to check the products’ quality before import goods. This makes
VASEP focus more on products’ quality to avoid the worst situations happen.
4.2e Environmental protection
UK government enforces Commission Regulation (EC) No 800/2008 of 6 August 2008
about environmental protection law (export.gov, n.d.). Accordingly, UK government
collects taxes for environmental protection with plastic bags for packaging and
exporting of raw materials. Plastic bags which is taxed is thin plastic packaging is made
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of HDPE, LDPE or LLDPE, except plastic bags meet the criteria about environmental
protection or has certificate of friendly plastic bags with environment under the
provisions of the Natural Resources and Environment. This is another challenge for
VASEP when exporting into UK. It requires VASEP effort more to reach these criteria.
4.2f Legal factors
In an article “legal environment of UK” (OUP, n.d.), it shows many significant legal

changes that affected firms’ behavior. For example, the introduction of new law relevant
to cooperate and develop economy with partners such as certificate of friendly plastic
bags with environment, certificate for inspecting product’s quality… Despite of its
complexity, VASEP still need apply all this law to be allowed operating in UK market.
Summary
In general, global factors of UK have effect significantly on operation of VASEP in Vietnam.
There are many factors which make VASEP face difficult, however, besides still has factors
create opportunities for VASEP developing and building strong position in UK market.
Understanding global factors helps VASEP recognizes opportunities to continue exploring,
and threats to overcome those shortcomings.
4.3 Evaluate the impact of policies of the European Union on UK business organizations
4.3a Monetary policy
Council Regulation (EC) No 3603/93 of 13 December 1993 relates to the European
monetary system (EMS) (europedia, n.d.). Accordingly, members of EMS make sure
that the value of currencies did not change much in relation to each other. VASEP is
exported to EU market, so it is influences by EMS. Thanks to above policy, VND can
be kept stably when Euro exchange. €1 is about 23,000VND (Agribank, 2011). In this
way, VASEP can be more confident in exporting into UK market without worrying
about exchange rate changes could turn a profit into a loss. It helps VASEP save time in
making decisions and evaluating the differences in cots, prices of products at different
times of differences regions. Moreover, the policy also helps VASEP exchange of
money currency more simply for ensuring the rights of VASEP
4.3b Agricultural policy
Council Regulation (EC) No 1290/2005 of 21 June 2005 on the financing of the
common agricultural policy. This policy related to rural development programmes for
the period 2000 to 2006 financed by the European Agricultural Guidance (EAG) and
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