Pestle Analysis Of Vietnam

Knowledge about PESTLE topic and expectations before the class

I understand that BE refers to external factors and that enterprises have to take into account to their strategic and operational planning processes for success. My business requires a good understanding of the BE elements that could create opportunities or threats to rural SMEs for the development of interventions to become improvements. I also know a good enabling BE will generate competitive benefits of a country and interest to foreign investors for economic growth. I understand how to use SWOT tool to stakeholders' analysis. My understanding about PESTLE factors is focused on Vietnam only, below are summaries of my knowledge before the class.

For politics, Vietnam is adopting a mixed economy and government still plays a huge role in planning and governing and many countries do not recognise the marketplace economy for Vietnam yet even its WTO' adhesion since January 2006. The approved official documents of the 11th National Party Congress plainly stipulate that Vietnam continues to apply the marketplace economy with socialist orientation, and their state Owned Enterprises (SOEs) still play the decisive roles of Vietnam' economy. This might break the enabling BE and create threats to private SMEs.

For economics, Vietnam maintains a stable and high economical growth (7% in average for the last decade). Local enterprises are facing up to challenges in usage of expensive credit and financial management due to high inflation (9-11%), high interest levels of saving (13-17%/year), and currency devaluation (three times this year 2010).

For social factor, Vietnam has a young population with 46% of population are in working age and around 1 million new entrants into labour market each year, but overall productivity remained extremely low and is only three-fifths the ASEAN average or around one-tenth the particular level in Singapore. Vietnam is the one country in Asia to enter Top 5 of this year's 2009 Happy Planet Index (HPI), announced by the New Economics Foundation (NFF) in July 2009. Vietnamese peoples are extremely optimistic to their future thanks to stable political regime, peace and economic growth.

For technological factor, power shortage is now very current with increasing demand; internet is widely accessible with reasonable price; counterfeit and imitation, especially in software products, are widespread in Vietnam.

For Legal factor, Vietnam has available Enterprise Law, Investment Law and other global and regional agreements (WTO, ASEAN, APEC), theoretically, all kind of enterprises (SOEs, private enterprises, joint ventures) have to experience the game with the same rules, but in practice, the implementation of Laws is a real challenge due to low quality of human resource in public areas service and corruption issues (116/178 ranked countries).

For Environmental factor, Vietnam has a long coastal border (2500km) and is recognized as one of the very most vulnerable countries due to natural disaster risks, climate change and sea level rise. Enterprises in Vietnam have to take seriously into account environmentally friendly factors with their business planning and operating processes. Vietnamese peoples do not tolerate easily to business practices that injury to environment. For example, the Vedan Vietnam Limited JSC, a wholly Taiwanese-invested firm must pay a "high cost" because of its pollution to Thi Vai River, the Coop Mart Supermarket System and retailers refused to market Vedan' products, promotional activities encourage the customers to say NO with Vedan and the business is facing to bankruptcy in 2007-2009.

My consultancy services support rural SMEs to access to opportunities also to plan threats. I also work with government authorities to boost BE for SME development, including

Entrepreneurship Education. This intervention are to improve the entrepreneurship knowledge and skills to the youths, to build up their entrepreneurship attitude and finally to prepare them working productively in enterprises.

Public-Private Policy Partnership and Dialogue (PPD). These forums are to reflect on the PCI ' results also to critically debate on BE' improvements, administrative reforms and BDS' supports in favour to SME development.

Making Market INCREASES RESULTS For the Poor. Such as business management training to business people in remote areas, the value chain analysis and upgrade in favour to poor producers, support for collaboration and coordination among poor producers for his or her greater bargaining power.

Recently, I have created my own enterprise named Initiatives and Informal Education Promotion Company, called as IIE Vietnam and I are the business Director, providing technical consultancy services to national and international organizations working in the region of local socio-economic development. My expectations from the class are about the comprehensive academic approaches and tools for PESTLE analysis. I would like to have the ability conduct stakeholders' analysis, the scenarios planning, taking into account of PESTLE issues in order to boost my business. I also want a broader understanding to global BE, especially the good enabling BE of EU countries, USA, Japan, the improving Maintain major BRIC emerging countries and the worst Maintain Africa, Cuba, Venezuela. I expect to be able to identify and clarify BE context in those economies.

Key learned ideas out of this session

Organisational Form and Purpose. There are different types of organisations; each one of these organisations has its relative vision, mandates, values, advantages, disadvantages and stakeholders. When coming up with strategic decisions about the organization's direction and scope, managers need to examine the organizational purpose, vision and stakeholders' expectation for future years. Managers have to be sure that commercial organisations should be high accountable to the owners first, then that conflicts and various expectations from organizational stakeholders are properly responded. I am able to use the power/interest approach and tool for stakeholders' mapping and analysis of my very own company.

Understanding the Managerial Environment. Managers will need to evaluate the current context and trends of BE for organisational strategic planning and operating, it offers the analysis of local, regional political stability, government' commitment to business, main monetary indexes, labour force, technological development and availability, legal documents and lastly environmental issues affecting business. Using the results of BE analysis, managers are able to identify main opportunities and threats of these company. I am in a position to interpret the PESTLE framework for identifying, evaluating the impacts of key external environmental factors and developing 2011 scenarios to my very own business.

The Economy and the Role of Government. The Circular Flow of Income describes the businesses of your economy; the consumers provide resources to businesses for income, organizations produce goods and services to consumers for margin, income and margin are used to pay living and operating costs, taxes for government spending, investments for productive capacity, technological development and savings. Government plays the role of policy maker and referee, ensuring the achievement of monetary and social goals of any society, including high rate of decent employment, stable economical growth, low rate of inflation, trade surplus. Government use fiscal policy (taxes and public spending) and monetary policy (money supply and interest levels) as major tools of macro-economic management. Fiscal policy is an instrument for managing demand, if government wants to boost the demand, it may reduce taxes and/or increase spending, if it wants to lessen the demand, it'll do the contrary. Government has lot challenges in achieving simultaneously all the financial goals, an increase in demand may create high inflation. Government also use monetary policy for macro-economic management, an increase in rates of interest will increase saving, reduce consumption and reduce investment spending, and therefore reduce inflation. The rates of interest affect exchange rates and banks/investors will spent their energy and efforts just to trade the money rather than the production.

The European Environment. The explanation of reduction in trade barriers and mobility restrictions is designed for costumers' rights protection, competitive and technological enhancement. The main benefits for countries in joining EU include usage of a largest and fairly competitive market, with safe and predictive BE, well established infrastructure, social protection, education, research and development. The primary challenges for EU enlargement includes different educational, technological, cultural, infrastructural and competitive level between countries, politics, human rights issues, especially the legacy of the Soviet economy. United Kingdom, Switzerland are considering their EMU member due to negative factors such as financial cycle, sovereignty issues, unique values, transition and employment costs.

Understanding the Global Environment. Globalisation is an inevitable trend of the World thanks to the introduction of ITC and education, to which countries and companies have to duel for success. The key globalisation' drivers include politics, economics, market, costs and competition. Globalisation is bringing both opportunities and challenges to peoples. For competitive advantages in the global market, countries have to increase their political and social connections between peoples and states; firms desire a good assessment of global costs. Globalisation allows businesses not and then profit of better production factors, but also to get market share and/or to access to growing market. Managers need to have strategic decisions on whether outsourcings, offshorings or insourcings for cost' advantages. Government' policy makers have to guarantee the reasonable inequalities between rich and poor, the control of dominance and monopoly of biggest global firms, cultural degradation, global dependence and global crime.

Emerging Countries in Three Continents. JAPAN MITI with selective industrial policies, the keiretsu with alliance of businesses with banks, manufacturers, suppliers, distributors and with the Japanese government, the kaizen with continuous improvement or change for success, the kanban with scheduling system, have created the monetary and technical success of Japan in 1980s. The reforms with special economic zones, the gradual opening of economy, the calls and government supports to FDI have transformed China from a backward agricultural economy to the word's major manufacturing centre in 1990s, but the political regime and human right abuse in China is not appreciated by the international communities, and the planet is facing up to social and environment costs with rapid expansion due to poor governance of social and environmental responsibilities. The replacement of interventionist financial policy by the liberal monetary reforms alongside the good investment in high-tech education and research have made India turn into a modern economy, the rapid economic growth in a complex cultural legacy and Hindu caste system is also creating lot of social issues in India, including poverty, illiteracy, HIV/AIDS. The ASEAN with its regional cooperation, cultural diversify, high level of general and scientific education, high saving and investment ratios, young and dynamic population, rapid growth of technology, openness with interventionist professional policies, is creating a higher interest of international investors and politicians (10 Primer Ministers of ASEAN, plus Australia, China, India, Japan, New Zealand, S-Korea and Foreign Ministers of USA, Russia, and UN General Sectary participated in 2010 2010 Hanoi East Asia Summit, 500 big local and international companies jointed the 2010 Hanoi ASEAN-BiZ Summit Conference). Despite having rich natural resources, but the dependence on agricultural production and exports, the negative impacts of slavery, colonisation and socialism, the predominance of authoritarian regimes, poor access to education, public services, sanitation, water, poor governance with corruption, inefficient politicians, ineffective international development assistance and loans, uncontrollable internal rules, conflicts, diseases have gone most African countries susceptible to the globe markets.

Market Structures and Industry Analysis. Monopolists are able to control both production and purchase rights. In a high competitive market, specialism and location allow operators control over price. In the oligopoly' market, competition of non-price methods such as advertising and sales promotion is suitable. But the greater competition makes companies more efficient and the buyer has a greater choice of good and services, policy makers have to create rules for fair competitiveness and anti-monopolistic competition. I am in a position to interpret the Porter's Five Forces (current competitors, new entrants, buyer's power, substitutes, and supplier's power) to market and competitive analysis of my business. The results will be used to defining and positioning my business, like the development and implementation of key success factors.

Delivering Customer Value and Managing Marketing Performance. Firms need a proper targeting strategy due to different needs of customers. Customer' segmentation allows firms to critically analyse characteristics of customer' groups for the provision of relevant services and goods. Appropriate promotions with segmentation' approach help firms not only to save costs, but also to provide desirable products and enjoyable prices. A good understanding of existing and potential markets through assessing current and potential market attractiveness, evaluating company and competitors' current and potential strengths and weaknesses in serving a specific market, allow firm to adopt competitive advantages. Company' brands are designed from knowledge, esteem, relevance and differentiation. I am using the gained knowledge from these sessions to develop my business strategy with demand-driven and non-price competitive approaches such as owner' branding, expertise enhancing, attitude bettering for differentiation and success.

Making sense of Uncertainty. In a well balanced BE, forecasting works well to build up company' future directions, but peoples are surviving in a fast changing environment numerous unpredictable events; scenarios building is good tool to control uncertainty. Scenarios building should be credible and includes PEST analysis. Companies need to create several scenario with both optimistic and pessimistic context to predetermine a list of trends and key success factors.

Difficult concepts and Improvement plan

Scenarios building, Brands building are two most challenging concepts beside me, my improvement plan includes

Further reading: Due to time constraints for both learning and working activities, annual review and planning processes, I haven't enough time to do extra reading of suggested documents from the class; I planned time for further reading after Lunar New Year.

More exchanges with colleagues, friends and experts: Informal discussions, exchanges through emails, chats with them will permit me to gain more knowledge.

Participation in short and intensive workshops: The VCCI is organising short and intensive workshops on scenarios and brands building to aid the entrepreneurs of SMEs, I will sign up for my participation to knowledge improvement.

Learning from doing my works. I am the dog owner cum director of my small enterprise; I am building scenarios and brands to my company and will study from both success and failure.

Extra reading and key learning points.

I have visited the http://www. forbes. com and read the summary of the special report named "Best countries for Business - 2009", published at http://vneconomy. vn and have drawn the next key learning points

Vietnam dropped from number 113 to 118 in '09 2009 list of "Best Countries for Business. Due to its weak export' capacity, high trade deficit, weak protection of foreign investors.

Denmark was ranked as the best place to do business. Thanks to its high per capita (36. 000 USD/year), surplus trade (+2, 9%), good ratio of public debt/GDP (41, 6%).

The US saw the largest fall in 2009 2009 ranking, falling to #9 9 from the next position in 2008. Due to long-term issues such as lack of investment in infrastructure, increase of costs in health insurance and retirement, high trade deficit.

Venezuela is the worst country. Because of its robbery (nationalisation) of foreign firms.

The top 10 10 of weakest countries of 2009 business environment are in Africa. Because of poor governance, abuse of human rights and democracy, poor investment in education, pubic services, basic human needs and imperviousness of international values.


Reference' sources:

Much above information is summarised from the follow sources

Harrison A. , Business Environment in a global context, Oxford University Press, 2010, NY, USA

University of Gloucestershire Business School, Global Organizational Environment handouts

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