Understand the behavior of organizations in their market environment

Table of Contents
Introduction.................................................................................................................2
Task 3. Understand the behavior of organizations in their market environment............2
3.1 Explain how market structures determine the pricing and output decision of
businesses................................................................................................................2
3.2 Illustrate the way in which market forces shape organizational responses using a
range of examples....................................................................................................3
3.3 Judge how the business and cultural environment shape the behavior of a
selected organization................................................................................................3
Task 4. Be able to assess the significance of the global factors that shape national
business activities........................................................................................................4
4.1 Discuss the significance of international trade to a Vietnamese business
organization.............................................................................................................4
4.2 Analyze the impact of global factors on a Vietnamese business organization......5
Growth of world economy...........................................................................................5
Global demographic patterns......................................................................................6
Distribution of world GDP............................................................................................6
International institutions TPP, WTO.............................................................................6
Economic relations between nations..........................................................................7
Global human resource-nature and quality of skills, mobility of labor.......................7
Global technology and quality standards....................................................................9
4.3 Evaluate the impact of agreement on Vietnam business organization.................9
Conclusion..................................................................................................................10
Reference...................................................................................................................10

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Introduction
Tourism has long become the industry plays an important role in the economy.
Especially, Vietnam tourism is developing incredibly and considerably over the years.

One of the largest travel companies of Vietnam have to mention that the Saigontourist.
To get the position of today, Saigontourist has described several methods and strategies
for the company, particularly in the period of integration and innovation in Vietnam.
Task 3. Understand the behavior of organizations in their market environment.
3.1 Explain how market structures determine the pricing and output decision of
businesses.
There are 4 main market structures: Perfect competition; monopolistic competition;
oligopoly; monopoly and each has its own pros and cons.
 Perfect competition is a market structure has a massive number of small
independent firms relate to each other. In this market, type of product is
equalizing. Enterprises are very easy to get in or out of the market and deal
with no barriers in marketplace. The price need to be equal in this market, if
the price is not balance between sellers, the one with highest price will be
damaged. There is no market power in these firms and has no long-run
economic profit.
 Monopolistic competition is a market structure consisting of a large number
of relatively small companies, with ties to enter the market or withdraw
freely. Type of product is differentiating. It is possible to have non-price
competition in this market structure. The market power of monopolistic
competition firms is between low and high in marketplace. Long-run
economic profit is not include in this structure
 Oligopoly is a market structure consisting of a small number of relatively large
companies, with significant barriers to entry for other companies. Types of
products are variety, standardized or differentiated. However, it is difficult to
get in or out of this structure because it is relate to other problems. Price
competition is difficult in this marketplace and usually base on Game Theory.
The effect of this structure’ market power is the middle between low and
high. Long-run economic profit is possible and subject to mutual
interdependence.
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

Monopoly is a market structure has only one firm at a time. Type of product
is unique and there are not any entrances for other companies to get in or no
exit for firm to get out. Price competition is not necessary for this structure.
Market power of firm in monopoly is very high and effect directly to the
economic. Long-run economic profit is high and subject to regulation.

Profit Maximization: Profit maximization help business executives foresee the scale of
profits, which they will create, thereby helping enterprises plan to restructure business
operations tasks and find solutions chalk fight done. The profit maximization is one point
or one important factor in analyzing the breakeven point of the business, developing the
financial situation of enterprises.
3.2 Illustrate the way in which market forces shape organizational responses using a
range of examples.
Michael Porter provided a theory for analysis. He modeled the business sector and it
would have to bear the impact of five competitive forces. Those are:
 Threat of new entrants.
 Threat of substitute products.
 Determinants of supplier power.
 Determinants of buyer power.
 Rivalry among existing firms.
This analysis is considered useful tools and effective way to find the profits. More
important, this model offers competitive strategy for organization to maintain or
increase profitability.
3.3 Judge how the business and cultural environment shape the behavior of a selected
organization.
PESTEL is a tool to analyze and monitor the external environment impact on the

organization. PESTEL stands for:
P - Political
E - Economic
S - Social
T - Technological
E - Environmental
L - Legal
Political: This is the policy of the government intervention in the economy, such as
government policies, political stability policy or foreign markets, tax policy, foreign trade
policy, labor laws, etc. These policies have a strong influence on businesses,
organizations must be able to respond to current law and expect in the future, and to
adjust their marketing policy.

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Economic: These are the elements of the market economy such as economic growth,
interest rates, exchange rates, inflation, the income of consumers and businesses. It
could the macroeconomic and microeconomic.
Macroeconomic: Businesses have to deal with government policies such as government
control of interest rates, tax policy and government spending.
Microeconomic: this is factor about the way people use their income, it also affects the
organization B2C.
Social: This is the element of social culture, it relates to people, attitudes, and beliefs. it
includes population growth, age, health conscious, attitude, etc. Based on these factors
the business will know the best way of marketing.
Technological: This is the factor change in technology, modern machinery to keep up
with the world. It directly impacts of business activities in production methods, delivery
method and new ways of communicating with the target market
Environmental: Environment, it has become important because of the growing scarcity

of raw materials, pollution indicators, and the indicators of emissions must be prescribed
by the government. Nowadays, Consumers require product must have clear origins and
sustainability.
Legal: This is a legal issue that businesses must follow as health and safety, equality for
workers. The advertising standards, consumer rights, antitrust issues and product safety
will help businesses know what they must do to comply with the law.
Task 4. Be able to assess the significance of the global factors that shape national
business activities.
4.1 Discuss the significance of international trade to a Vietnamese business
organization.
International trade is a form of exchange of goods and services between countries for
the purpose of economic growth for both and creates a relationship between two
countries. To maintain the development of international trade and long-term effective,
the countries should increase interconnect economic to make the relationship of mutual
dependence and grow together
 Advantage: Create condition for the countries involved in the international
division of labor, economic development and enrichment for the country. Some
benefits are increasing the variety of product to customers; the market is
extended, and the business will produce with large-scale, so the cost of product
will decrease; the enterprise can learn from other countries, enhance new ideas;
create conditions to keep up with new technologies and spread to the country.
 Disadvantage: the activities must take place in a new and unfamiliar
environment, so the difficulties cannot avoid. Some difficulties are establishing
an overseas company with initial costs and high risks, high transport costs, tariff
barriers, and many competitors.

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A country engage in international trade will occur two cases are exports and imports.

Two factors will depend on the domestic price (Pd) and the world price (Pw).
 Export: It happens when Pw> Pd, the manufacturer's supply surplus after
domestic supply.
 Import: It occurs when Pd> Pw, the supply does not meet the domestic demand.
A measure of the interests of consumers is called consumer surplus (CS), is the sum of
the difference between the price that consumers are willing to pay and the price they
actually pay.
Producer surplus (PS) is the sum of the difference between the price that producers
receive and the price they are willing to sell.
Formula: Total surplus = CS + PS.
Each country will have their own policies and rules, so a company engage in commercial
activities will face trade barriers that they need to know as tariff, import quotas, etc. to
perform properly
 Tariff: this is a tax on import. When importing a product, beside the world prices,
consumers have to pay a tax to the government. The government prescribes the
percentage of tax.
It leads to the price that buyer and seller must pay in domestic = Pw + T (tax)
 Import quota: these are factors that have the same effect as tariffs. It lays down
limitations on the amount of imports, affecting domestic prices. It can make a
local business into a monopoly, resulting in reduced welfare of buyer - increases
welfare of seller. Quota does not bring revenue to the government, so it will
cause negative in obtaining quota between enterprises.
4.2 Analyze the impact of global factors on a Vietnamese business organization.
Growth of world economy
Currently, until the middle of 2016, the world economic situation tends to decline over
last year, the global GDP growth at only 2.4%, down from 2.9% at the end of the year.
Although the economic situation is unstable, the tourism industry still experience
significant growth. According to the World Tourism Organization (UNWTO) the number
of international visitors last until mid-2016 has reached nearly 1 billion people, rose
more than 4% over the previous year. In which the Asia-Pacific, Americas largest increase

is 4-5%, followed by Europe with an increase of 3.5-4.5%, Africa and the Middle East are
2-5%. Specially, in Viet Nam, with 6.6% contribution to GDP, Viet Nam tourism ranks
40/184 countries in scale direct contribution to GDP.
For example, in festival 30/4 and 1/5, Vietnam had more than 5000 visitors, and three
cities with the largest number visitors are: Ha Noi welcomed 227,640 passengers.
International visitors reached 42,640 (increase 14% over the same period in 2015).

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Haiphong welcomed more than 598,000 visitors (increase 28,27% over the same period
in 2015). In which, over 5,300 visitors had come from other countries (increase 11,79%
over the same period in 2015).
Khanh Hoa province welcomed 599,208 passengers (increase 14,89% over the same
period in 2015), guests staying reached 118,952 (up 9,93% over the same period). In
which, international arrivals have reached 19,498 (increase 30,08% over the same period
2015). The impression is just Saigontourist had more than 2000 visitors, based on that,
we can see Saigontourist is a big and famous company in tourism and Viet Nam tourism
industry is growing every year, keeping up the step of the world tourism, while the
general economy tends to decrease, the tourism industry is still increasing. Because, the
developing countries on tourism, they meet all necessary conditions for tourists as
agricultural, industrial, transportation and the development of science – technical.
According to statistics it occupies 10% of global GDP. It shows that the tourism industry
is very important with the development of the global economy.
Global demographic patterns
Another factor also affects the tourism industry is the population. The increase in
population help the tourism industry will pick up the new arrivals every year, as well as
to the variety of types of tourists. The result show that Asia is still the most populous
continent in the world with more than 3 billion people. It creates very good conditions
for the countries of the region and particular in Viet Nam.

Distribution of world GDP
Although the economic situation is unstable, some large countries such as China is still
growing very well with GDP quarter 2/2016 of the country rose by 6.7% over the same
period last year. Especially in industry, transportation and the problem of environmental
pollution improved very well. Lead to meet the conditions for development tourism as
food, transport, the environment, and other utilities. The number of Viet Nam tourist
travel to China reached more than four thousand people till middle of 2016 and
Saigontourist had more than a thousand visitors
International institutions TPP, WTO.
 TPP (Trans-Pacific Partnership Agreement)
TPP is not only increased trade but also help investment tourism activities have more
conditions to develop. International visitors have the opportunity to facilitate
procedures, faster and cheaper transporter by commitments temporary entry of
business visitors under TPP
TPP helps improve working conditions, improve the quality of human resources,
including tourism workers. Competition in the TPP creates competitive pressures, which
forced workers to raise foreign language proficiency, skill, the spirit associated with
specific labor groups and various social benefits. Trend of intra-labor movement has a
chance to search for new jobs, has increased pressure for tourism workers. Therefore,

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developing labor market institutions, quality is and will increasingly become demanding
urgent and effective tool to support and develop human resources Vietnam
The important thing is 5/12 of the TPP member countries are on the list of ecologically
diverse countries leading tighten the requirements on hygiene and environmental and
combat wildlife trafficking, ... by that habitat and infrastructure, natural tourism will be
improved as the implementation of commitments in the TPP. This promotes sustainable
tourism and responsible.

 WTO (World Trade Organization)
In fact, Vietnam joined the WTO has caused great attention of the international
community, revitalizing the international tourism market by the image of a safe
destination, attractive and open. More and more foreigners come to Vietnam to know
more and do business with Vietnam. Data from the Vietnam National Administration of
Tourism show that international arrivals to Vietnam in recent years continued to grow. If
in 2000, Vietnam has attracted about 2.12 million international passengers, then by
2006, this figure had reached nearly 3.6 million. It is expected that by 2010, international
visitors to Vietnam will reach 6 million passengers, increasing income from the current 2
billion to 4-5 billion dollars.
At the WTO, due to the characteristics of different tourism markets with commodity
markets should travel with high independence in global competition, not being
dependent on the US market as well as unaffected by the agreement on tariffs and
international trade as normal goods. Forecasts, in the coming years, the Asia - Pacific
region will be the influx of tourists attracted the most with an average growth rate of 78%. It is a condition for Vietnam to promote and attract tourists.
Economic relations between nations
The second big chance for Vietnam travel is we can take advantage of the integration
with the international economy is attracting increasing foreign investment in tourism
infrastructure development, improves customer service domestic and foreign, especially
the MICE. Vietnam is considered a rising star in the region, with an annual economic
growth to the highest level in Asia, after China.
For small and medium-sized enterprises, as well as other industries, integration is
accompanied by a purge of weak business competitiveness and professional; minimize
the situation "worm ointment "as in recent years. But for now has affirmed and brand
names, this is the best opportunity for them to improve their position.
Global human resource-nature and quality of skills, mobility of labor.
Humans are an important resource for country. Therefore, some countries have methods
to develop the human resources as well as attract talented people from around the
world. Method plays an important role in the development of human resources is the
development of education and training. One of the key countries appreciate enhance

human resources including the US. To develop human resources, the US focuses on
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creative and practical of students instead of heavily theoretical. American students can
say is capable of critical and opened thinking than students of other countries. In
addition, Americans also supports jobs for newly graduated students and scholarships or
funding to attract talent from other countries. That is why today the United States is a
country with many of the world's leading scientists. In Asia, Japan is a country poor in
capital resources, so the workforce is considered extremely important. Difference from
US, the Japanese education is considered quite heavy for students, especially the
electronic industry. Students have to clear both the theory and practical skills. This is
easy to understand because the electronics industry is the core industry in Japan.
However, the human resource after graduating in Japan was extremely qualified and
skilled. In Singapore, the leaders of the nation believe that human resources are well
trained, so the economic will develop strongly. The education system focused on
developing the capacity and skills of each individual. In addition, the Singapore
government also attracts international students by supporting tuition, exemption of
visas and creating a modern academic environment of international standard. Most
countries in the world have been equipped with human resources skills and good
knowledge. This is probably the hard process for Vietnam in the integration process. Be
a country with abundant human resources but low literacy levels. This makes Vietnam
human resources become weak and rent at labor cheaper than other countries.
Moreover, the government does not have any methods to keep the talent stay or create
a developed environment appropriately. They will look to other countries to work. This is
a reason why Vietnam is brain drain of labor.
Human resource is an important factor in tourism. However, because of low qualified
workers in terms of language, experience and knowledge, and these factors are the
essential characteristic of this industry. So, Saigontourist often opens training courses
and coaching staff of professional qualifications, the language of communication,

especially English. Each year, Saigontourist sponsor 45 employees to study in countries
such as USA, France, Australia, Belgium, Germany, etc. In addition, Saigontourist also
giving employees in the company travels to many different countries around the world
to improve the experience for employees. This led the organization to spend a
considerable cost to invest in the company's workforce. The opening to the world of
Vietnam has made a number foreign tourists as well as the labor of other countries in
the world for this business. This helps enterprises can increase revenue and open more
trips to other lands. Not only in the country, Saigontourist has more than 400 employees
distributed in different countries such as America, China, Malaysia, Japan, Korea,
Singapore, Europe, etc. Creating conditions for enterprises to open foreign tours.
However, the massive immigration of foreign workers, especially China, has created
some disadvantages for the tourism industry in general and the organization in
particular. The Chinese tour guide impersonated a member of the organization and had
been distorting Vietnam history was a typical example. Therefore, the government
needs more laws to severely punish and eliminate this situation.

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Global technology and quality standards
Technological factor is also one of the characteristics of the tourism industry. The travel
agency must provide clear information about tourist destination; contact to the hotels
and restaurants in tourist places. That is all thanks to information technology. The
application of information technology tourism has become popular around the world.
One of them is the Inter-Organizational System (abbreviated as IOS) allowing travel
companies may exchange information cross-border with the subsidiaries; agents or
customers who are members of the organization.
Saigontourist is one of the leading travel companies in the application of information
technology on management and marketing system in Vietnam. Customers can book a
tour directly on the website of Saigontourist where trips are designed to provide

information and reasonable pricing. Thanks to the positioning system, Saigontourist also
be easily linked to the system of domestic and international hotels. However, to improve
service quality, Saigontourist should have information storage system of customers to
identify whom and where using the service regularly to devise appropriate marketing
measures. Moreover, all hotels from 2 stars or more of Saigontourist will reach
international standards already set.
4.3 Evaluate the impact of agreement on Vietnam business organization.
International economic integration, expand exchanges trade relationships with countries
and organizations around the world has created opportunities as well as challenges for
the economy of Vietnam. We cannot deny that joining organizations of the world have
helped push some important industries in Vietnam. The growth rate also increased
significantly. Currently, Vietnam is a member of several organizations such as WTO, TPP,
etc.
WTO is also known as the World Trade Organization. This organization was established in
1995 with the goal of maintaining a business card and global trade freedom,
convenience and explicit between the member countries in the world. Currently, there
are about 162 organizations members. Vietnam is a 150th member participated in 2007.
Joining WTO helps domestic businesses can access the markets widely with low tax
rates. The enterprises can improve and develop of products and services by learning
from other members. In addition, the organization also creates a fairly competitive
environment that Vietnam has the opportunity to develop in the international market.
However, Vietnam businesses have to accept the fierce competition from international
rivals. In addition, the investment and the rapid development of domestic and foreign
enterprises can lead to damage to the environment and natural resources in the country.
To remove the taxes and barriers for goods and services as well as tightening of
economic relations between countries, Trans-Pacific Partnership Agreement (or TPP) was
founded in 2005 include 12 members. After TPP, taxation reaching 0% will contribute to
increase the revenue and profitability for Vietnam enterprises. Moreover, joining TPP,
domestic enterprises will have the opportunity to attract foreign investment to improve
technology in the country. However, beside these advantages, Vietnam still copes with

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many challenges. The tax reduction is also an opportunity for foreign companies to
import goods cheaply and quality, this will make up the pressure on internal businesses.
Conclusion
The global factor is both the opportunity and the challenge for businesses of Vietnam in
general and Saigontourist in particular. To maintain its position as well as quality of
service, this enterprise should be innovations and trends world caught up to offer
services to please tourists.
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