Introduction

The company information

Full name

Kinh Do Corporation

Headquarters

No. 6/134, No 13 national highway, Hiep Binh Phuoc Ward, Thu

Duc Dist., HCMC; Ho Chi Minh

Status: Listed

Legal Form: Public Limited Company

Operational Status: Operational

ISIN CODE : VN000A0KDMF8

Financial Auditors: Auditing and Accounting Financial Consultancy

Service Company (AASC) - Ho Chi Minh City Branch (2009)

Incorporation Date: December 12, 2005

Tel: +84 (8) 382-70838

The company description

Kinh Do Corporation is a Vietnam-based company engaged in the food processing industry. The Company is involved in the manufacture, as

well as wholesale and retail trade of confectionery and non-alcoholic beverages, including cookies, layer cakes, cream cakes, wafers, crackers,

snacks, candies, moon cakes, drinking water, juice and ice cream. It is also involved in the trading of fabrics. In addition, the Company is

engaged in real estate operations with development projects of commercial structures.

The company analysis

According to the Individual - Audited financial statement for the third quarter of 2011, total net operating revenues increased with 107.31%, from

VND 756,351.23 millions to VND 1,567,992.19 millions. Operating result increased from VND 158,901.71 millions to VND 249,902.03

millions which means 57.27% change. The results of the period increased 56.42% reaching VND 220,987.56 millions at the end of the period

against VND 141,280.93 millions last year. Return on equity (Net income/Total equity) went from 4.91% to 5.58%, the Return On Asset (Net

income / Total Asset) went from 3.72% to 3.93% and the Net Profit Margin (Net Income/Net Sales) went from 18.68% to 14.09% when

compared to the same period of last year. The Debt to Equity Ratio (Total Liabilities/Equity) was 40.87% compared to 27.86% of last year.

Finally, the Current Ratio (Current Assets/Current Liabilities) went from 3.63 to 1.83 when compared to the previous year.

http://www.securities.com/Public/company-profile/VN/Kinh_Do_Corporation__C%C3%B4ng_ty_C%E1%BB%95_ph%E1%BA%A7n_Kinh_

%C4%90%C3%B4__en_2111263.html

The trade policy is common rules for imports from certain Non-EU Member countries. This regulation applies to products originating in the

Commonwealth of Independent States (CIS), Albania, China, Vietnam, North Korea and Mongolia. The most famous rule in trade policy is anti-

dumping.

Anti-dumping is defined as the act of a manufacturer in one country exporting a product to another country at a price which is either

below the price it charges in its home market or is below its costs of production. If any companies break the law, the European Commission is

responsible for checking out the price of the product in other countries which outside the European. For example, if KinhDo sell its products with

the price lower than fixed price, and the company can be sue by Anti-dumping. It has influence on the company’ reputation in the market.

However, the company can againt the law, it can use promotional campaign by reducing the price in a certain period.

Firstly, by using the common currency instead of Pounds, KinhDo Corporation can reduce the risk of exchange rate. Beside, the company can

save money in reducing the transaction cost. Moreover, the value of Pound now decreasing and lower than Euro, thus it is better for the company

when England use the common currency.

When Vietnam joins Association of Southeast Asian Nations (ASEAN) and the Trade Organization (WTO), Vietnam’s economy has integrated

into the world’ market. From that, KinhDo Corporation has some benefits when they export the products to foreign countries.

Firstly, it allows the company in transporting products, people and money with freedom. Moreover, it makes KinhDo’ distribution channels work

more effectively, thus it increase the purchasing.

Thirdly, it is nation laws on patents, trade marks and copyright. All member of WTO apply the policy. The law prohibit any one who copy

KinhDo’ products.

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Furthermore, since Vietnam has joined into the World Trade Organization (WTO) in 2007, this can bring more beneits for Vietnamese

companies, when they want to export or corporate with the member countries of WTO. However, Vietnam has also agreed to remove some trade

barriers for goods and services, it reduces the government income. With KinhDo, the company can easily export its products to WTO countries,

because the tariff of products is decreased in the members of WTO. Thus, the company can save money and has the advantage in the competition

about the price of products. Moreover, KinhDo’ products are protected by the laws of WTO, especially unfair competition or imitation in the

WTO cake market. For example, When joining the WTO, members are not raising taxes too much protection for the ceiling, as well as measures

to impose non-tariff protection. Thus, the circulation of goods between Vietnam and other WTO countries will become easier, because the

barriers about the transaction among these WTO countries can be reduced.

Consequently, economic integration also plays an important role in Vietnam’s economy: it helps Vietnamese companies which want to export the

products to international market or attract the foreign investors who want to invest on Vietnam market.

1. PESTEL analysis:

a. Political factors: Political environment includes the stability of government, tax policies, foreign trade regulation, and social welfare

policies. (1)

Stability of government

Having political stability in any country is very important. If the stability of government is not guaranteed well, it will affect economy of that

country seriously. However, if the stability of government is maintained well like in Vietnam, the government can focus on developing economy

by enforce laws which encourage economy to develop. Moreover, the business environment is very safe and open, thus it can attract more

investor. Through that we can understand the importance of government stability, because it not only affects just a company, it influences whole

economy.

Taxation policy

The Government can promulgate tax policies which influence companies too much. However, in different curriculums, they are changed to create

the best condition to develop economy. For example, in present economic crisis, many companies have to face with a lot of difficulties, so the

Government have some changes in tax policies to help firms overcome the crisis as well as maintain the economic growth. According to

Resolution No. 21/2008/Resolution-Congress 12 on August 11, 2008, Government has issued a series of solution to reduce the tax. Based on this

resolution, business income tax in quarter IV/2008 and in 2009 for small and medium enterprises is reduced 30%. In addition, the Government

also reduce 50% rate of VAT to group of 24 kinds of goods and services. In past session, the Government had decided to exempt all personal

income tax from January, 2009 to June, 2009 (for incomes got from business, from salary, wages; from capital investment, capital transfer, from

copyrights, from franchising). From July to the end of 2009, the Government keeps exempting personal income tax for incomes from capital

investment, income from transfer of capital an income from copyrights and franchising.

By doing this, the Government encourages the investment, help the companies have more money to invest as well as production more. Further, by

exempting the income tax from copyright and franchising help the transfer technology process occur more easily, there will be more technologies

are applying in production as well as service, promote production and business development.

Taxation policy also effect on profit or benefit that company can gain. For example, the import tax of raw material is high will increase the cost of

product. It not only affect on the manufacture (who produce that product) it also effect on the customer. In Kinh Do case, when the import tax of

raw material to produce food for cattle is high, the price of that product increase too, so that, the farmer who are rising cow, cannot afford to buy

them or buy them with a lot difficulties. This can lead to decrease the quality as well as the quantity of beef that the farmers supply for Kinh Do

That means the import tax of raw material to produce food for cattle influence Kinh Do indirectly. Naturally, before applying new tax rate or tax

policy, the government has to weigh the pros and cons, consider the benefit they can get from that. When the import tax rate of some goods (car,

milk, computer, etc.) is down, some organizations and customers can gain more benefit from that; however, it also create a lot of competition and

pressure to the firms which are producing those goods. In short, a government can have a lot of tax policies, and each tax policies and tax rate

change can affect the firm much in negative or positive way, in certain situations.

Foreign trade

In foreign trade, there are two elements: export and import. These two elements create trade balance that the government has to adjust carefully.

At present, the trade balance leans toward importation. In fact, in 2008, the value that importation is higher than exportation is 17.5 billion USD ~

20% GDP. This is a very high rate, so it creates a large amount of trade deficit. In addition, the government will lose huge amount of foreign

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currency when importing. Thus, the government will adjust foreign trade by tax policy. They can change tax rate in order to reduce importing,

and to encourage exportation in particular goods or encourage importation to reduce the price of particular goods in domestic market.

Vietnam also joined in WTO – world trade organization, Vietnam can receive a lot of benefits along with challenges. When Vietnam became the

members of WTO, Vietnam will have a lot of benefits as well as challenges. The most benefit that most companies in Vietnam get when being a

member of WTO is they can approach other WTO members’ market more easily, because the import tax is reduced significantly. Moreover, their

markets open with Vietnam people, without discrimination between their companies and Vietnam firms. However, Vietnam also has to open the

market, as well as reduce the tariff barrier based on the regulation of WTO. Thus, the enterprises in Vietnam have to face with many competitors

having strong potential capital as well as modern technologies. On other words, the competitive level in market will increase. It requires Vietnam

enterprise to have relevant strategies to cope with those competitors.

Social welfare policies

Social welfare policies are to help the people will have better life. For instance, jobless people can receive unemployment money to help them

overcome the difficult time. In addition, these policies also implemented to increase the community heath as well as the safety for community.

For example, the Government will have community health program like National Vaccination Program for babies.

b. Economic factors: include business cycles, GDP trends, interest rates, money supply, inflation, unemployment, disposable income.

Economy is also very important. It affects much on the company’s operation. Marketers need to consider the state of a trading

economy in the short and long-terms. This is especially true when planning for international marketing.

As can be seen, during the period of time from 2003 to 2008, the percentage of GDP growth in Vietnam increased significantly from 6 % in 2003

to 8.5% in 2008. This means in this period the economy of Vietnam developed a lot and the customers have more money for expending. This

brings a lot of advantages to companies including Kind Do. When customers have more money, they are more willing to buy so that the company

can earn more profit and enlarge their market. After the period of impressive economic   growth , Vietnam’s economy has met a lot of difficulties.

In 2009, the GDP growth of Vietnam decrease to only 6.2%, this leads to a decrease in consumer spending because the customers has less money

for purchasing.

The chart indicates the percentage of unemployed people from 2003 to 2009. As can be seen, in 2003, the unemployment rate was 25%.

However, in 2004 it decreases sharply to 6%. Over the period of time from 2005 to 2007, the unemployment rate is around 2 to 3 %. In contrast,

on 2008 it increases to 5%. High unemployment rate will make production less, resources are not used up. Moreover, the company will meet a lot

of difficulties in production. That is the decrease in output and inflation occurs. Besides, the unemployment rate also reduces the income of

people so that they will not be willing to pay for consumer spending and the company will have difficulties in sales.

The inflation rate of Vietnam from 2003 to 2008 is around 10%. In contrast, in 2009 the inflation rate increased sharply to 24.4%. This will lead

to the increase in price so that the sales of the company will increase.

c. Social and culture: are changes in social trends, which can impact on the demand for a firm’s products and the availability and

willingness of individuals to work. The change of society creates not only opportunities, also threats as well. Today, people’s awareness of

having good health is increasing. Companies that can recognize this trend will be the winner in the market. Kinh Do company ensures about their

products’ quality. In May 1st, 2001, BVQI has certified ISO 9002 for Kinh Do Company with the quality management. This makes Kinh Do have

the belief on the side of the customers about their products’ quality.

Kinh Do is a domestic company so they understand the psychology of Vietnamese people. In Vietnam, people do not buy cakes and other

confectioneries during Tet or Mid- autumn festival for their own consumption. In Vietnam tradition, Tet and Mid- autumn festival are a time for

people to think of relatives and friends, and a box of cakes may suit the mood. Many send boxes of cakes to business partners, clients, and even

teachers of their children, following an unspoken etiquette. Many Vietnamese companies consider send out Tet or Mid- autumn gifts to

counterparts and employees as one of the corporate policy.

On the other hand, the population of Vietnam has reduced significantly such as the natural rate of population decreases (from 1.86% in 1991 to

1.33% in 2005), the increase in the urban population (from 19.7% to 27% in 2005). This will create more opportunities to earn more profit

because of the enlargement of the market. Moreover, in recent years the rate of female employees has increased a lot has affected on the

workforce of the company. In the past women often stay at home and do housework so that there are some industries having the requirement for

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female workers is lack of the workforce. However, women nowadays are more active and they also have needs to go to work to earn money

themselves. It is very convenient for companies that need skillful employees such as textile or food companies including Kinh Do.

d. Technology:

Kinh Do should improve technology the company on producing and management. It should use the standard production and measurement system

to make sure the quality of product. In order to export the product into the international market, the company must make sure their products are

always quality.

With a modern factory, all products of Kinh Do are manufactured automatically that meets all strictest standards. In order to improve competitive

ability and prepared readily for expansion of domestic and overseas market. With a large scale, by investing the world most modern equipped,

great capacity production lines from Italia, Holland, Denmark, UK, it is ensured to produce high quality products which meet standards of food

hygiene safety, appropriate with the global supermarket systems and picky markets, meet regional and international demands under GMP, ISO

1400, HACCP… standards.

At the same time, on management, Kinh Do applied successfully ERP (SAP) – the most advanced software on enterprise's force resources

administration into the whole system of Kinh Do. This software shall bring the high efficiency in management, information process and makes

the best business decisions in the current situation

e. Environment:

As can be seen, in Vietnam we only have raining season and drying season. This affects directly on the business of the company. The facilities of

the company will be influence in bad weather, especially storm or flood. If there are problems with facilities of the manufacture, the production

cannot be occurred. Besides, the delivery is also affected by the weather. The delivery can be delayed or cancelled because of bad weather.

Moreover, through the delivery if the weather is bad, the products will be influent more or less.

f. Legal:

Law is one of the most important elements that the company have to care about before giving any decisions that related to the business of the

company. Here is some example about the law of Vietnam.

Kinh Do is in the food industry so that law about the safety of food is related directly to the company. According to  Resolution No.

12/2002/QH11 December 16, 2002 , this following acts will strictly prohibit in food industry :

- Rotten and smelly food that affect on the life and health of people is used in the production.

- Food contains toxic chemical.

- Food is pathogenic parasites, pathogenic microorganisms or microbial exceed the regulations.

- Food which is contaminated by packaging or be torn during transportation.

- Food products that that exceed the use duration.

g. SWOT Analysis

Strengths Weaknesses

Diversified and high quality product: company provides more

than 400 products samples with full of various categories,

specifications and price. The main lines of products are :

Crackers, sponge cake, industrial bread, Snack, Moon cake

serving for various objects of customers

The large selling and distribution system: a distribution system

of more than 200 distributors, nearly 40 Kinh Do Bakeries and

65000 points of sales.

The price of products increase caused by reasonable of input

costs and galloping inflation

The packaging of some product is not attractive as competitors.

The staff lacks responsibilities in work.

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Ability to receive and get transfer of technology: A powerful

team of technical staff who has ability make research and

development for products suiting market demands.

Ability to build the brand: with a well experienced team who

has worked for multi national groups so it shows the good

understanding of customers to offer suitable products shall be

one of important factors to help the rapid development of

company.

Management System: A modern management with new IT

systems, Company applied successfully ERP (SAP) – the most

advanced software on enterprise's force resources

administration into the whole system of Kinh Do.

Opportunities Threats

Products of Kinh Do serve for various objects of customers so

customers can easy immediately think about Kinh Do Products

when they have the demand on cakes such as: breakfast, snack,

dinner, etc. on gift on Tet and festivities given for relatives,

partners, friends, etc.

Base on the distribution system, target consumers can be

approached in introduction of products. Most of provinces,

districts and village will have the appearance of Kinh Do

products.

Ability to build the brand is one of advantages that can help

products of company to become more familiar to customer.

ERP (SAP) software shall bring the high efficiency in

management, information process and makes the best business

decisions in the current situation. This is the establishment of

pricing management system, establishment of the department

with function of making plans and market forecasts, helping

with timely forecasting and adjustment with the market.

Changes in national of local regulations on producing

confectionery.

Healthy and safety legislation.

There are some events causing bad impact to customers on the

issues of hygiene safety such as milk with melamine, Soya-

sauce with 3-MCPD, etc.

Any technological changes will require a big investment cost.

There are many competitors such as Bibica, Hai Ha, Hai Chau,

Orion and many foreign competitors from China, Malaysia,

Thailand, Demark, etc.

h. Porter's Five Forces:

This technique enables the company to better understand the industry context in which it operates.

a. Rivalry:

There are many competitors with Kinh Do in its industry. Local producers such as Bibica, Hai Ha, Hanco, etc. These competitors and many other

local producers also have been increasing outputs of high-grade cakes and candies to fill up the vacuum left behind by China-made products, as

well as items imported from Malaysia and Thailand, Denmark, Korea etc. that are more expensive.

Bibica, another strong player on the local market, is also pinning high hopes on the local market.

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Meanwhile, many other producers such as Hai Ha, Hanco are concentrating on the mid-price segment, targeting rural areas. Most of them hope

better sales in this untapped potential market because Tet and Mid- autumn festival offers the busiest season and the most profitable time of the

year for them.

b. Threats of new substitutes

There is little product is substitutes for confectionary such as jam, fast food, etc. Hence, Kinh Do should focus on the research to produce a broad

product line to satisfy the variety taste of customers.

c. Buyer Power:

There are many confectionery producers at present so customers have many choices for a confectionery product. The average growth rate of

Vietnam’s confectionery industry during five recent years is 15%. With the population of more than 84 million people, this is a greatly potential

and attractive market. If Kinh Do do not have the good relationship with customers then customers will be easy to change to other brands.

d. Supplier Power:

In the successful of Kinh Do, there is the importance of suppliers. They make sure the good material of production and keep the stable cost for

company. All of them give the advantage competitive for Kinh Do. Hence, Kinh Do must keep the close and good relationship with its suppliers

in order to promoting in researching and developing nutritional orientation products, research supplement of nutritive substances, support in

community healthy issue, minimize unhealthy materials and elements and get the competitive price.

e. Barriers to Entry / Threat of Entry:

There are many difficulties for a new company come into market because:

The number of established confectionery producers in a mature market

The market for imported cakes has narrowed down because there are not many new products and suppliers, while local makers have

made long strides forwards in this aspect

There is a difficulty when company choose the suitable suppliers and reasonable terms

It will take the big cost for marketing investment such as research, staffing, distribution channel, etc.

The ability to offer a broad product line like Kinh Do

The brand loyalty: customers is know and use Kinh Do during 15 years, they have the belief and interest in this brands so it is very

difficult to change to another brands.

i. Product Life Cycle

In the case of Kinh Do company, they are in the Maturity Stage because of these following reasons:

When the market of confectionery industry in Vietnam becomes saturated with variations of the basic product, and all

competitors are represented in terms of an alternative product.

The competitors have a lot of plans and strategy that affects to the share of Kinh Do in the market:

o Orion Food Vina Co. has launched new products besides its better-known Chocopie cake, including sponge

cake filled with fruits, snack and fried potato.

o Bibica has introduced 20 new kinds of product including Goodies, Nutri Bis Light and Hura Light which are

cholesterol-free and tasteless sweet.

j. Competitor Analysis

Bibica Corporation is one of the leading confectionery companies in Viet Nam. It has been considered to be “Manufacturer of Vietnamese

high quality products” for eleven years by local consumers.

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Bibica has a wide range of products: Biscuits, Cookies, Layer Cake, Moon Cake, Snack, Hard and Soft Candy, Jelly, Chocolate, Instant

Cereals, Glucose Syrup. Besides, there are also a lot of nutritional products, such as: Sugar free confectionery and Low GI Instant Cereals,

Sugar free Chocolate, Food for baby. 

They have been cooperated with Viet Nam Nutritional Institute to produce some nutrition products that are suitable for children or pregnant

woman. Especially, they currently are the first manufacturer in Viet Nam that offer sugar free or low GI confectionery and beverage that are

suitable for diabetics or diet people. All of these special products have been clinical tested by Viet Nam Nutritional Institute. 

The equipments of Bibica are always being modernized. Most of them are imported from well-known manufacturer in Europe to ensure that

our products are always delicious and able to meet all strictly requirements on food of other countries. Moreover, all of the materials for

producing are put under control of hygienic and safety standards. At the moment, our quality management system is in accordance with the

requirements of the quality standards Iso 9001:2000. In addition, the production and supply of Layer Cakes has been conformed with the

requirements of HACCP CODE : 2003. 

They have been exported our products to: The United State, Japan, Singapore, Philippines, Taiwan, South Africa, Cambodia… 

They currently have a very good market share in Viet Nam. However, it is clear that food and beverage market has become very

competitive recently. As a result of this, they are making efforts to find out new market with high potential and try to break into them in

order to meet their target turnover.

k. Value Chain Analysis

Inbound Logistics

The distribution system of Kinh Do covers all of 64 provinces of Vietnam with over 200 distributors and 75.000 retail outlets.

North Kinh Do Corporation  is considered as the leading confectionery company in the north market. The establishment of the

company is in the roadmap to reach 100% nationwide market coverage of Group.

Operations

Kinh Do has increasing outputs of high-grade cakes and candies this year to fill up the vacuum left behind by China-made products

and items imported from Malaysia and Thailand.

Kinh Do merged with North Kinh Do and Kido’s ice-cream

Kinh Do has joined the milk and nutritious food industry by forming a comprehensive strategic alliance with Nutifood

Korento cakes are produced by new technology, on modern production lines

Outbound Logistics

There are 120,000 retail outlets; 30,000 points of sales for ice cream and fresh milk; 100,000 points of sales for soft drinks.

There are 1,800 sale personnel in the nationwide

Marketing and Sales

In 2009, total revenue of confectionary products of Kinh Do Corporation reached VND 1,657 billion and the profit of VND 578

billion.

As part of the company’s media strategy to bond with consumers through association with traditional celebrations, Kinh Do launched

its “Kinh Do is where Tet is” program during the Lunar New Year of 2010.  Built around the all-new cookies with quality and

packages rivaling those of premium imports, Kinh Do’s Tet products carried meaningful wishes and were widely adopted as popular

gifts during Tet.  With over 30 million units sold, the company’s Tet business grew over 30%.

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The company’s cracker brand AFC, after repositioned in 2009 on nutrition platform, received 80% brand awareness, overtaking

competition to claim 55% market shares, against unfavorable market conditions.

Services

In March 2004, Kinh Do Sai Gon Bakery Joint Stock Corporation was established specialized in producing and distributing daily fresh

cakes, directly managed and developed Bakery-shops system.  At present, the Company has developed its network approximately 40

Kinh Do Bakeries. K-Do Bakery & Café Model was established and attracts a lot of consumers to visit and enjoy products daily.

Kinh Do also has online selling and free delivery

They also has Hotline to answer the questions of the customers 24/24

Technology development

The year of 1996  has important implications when Kinh Do  import of Danish Cookies production systems which costs $ 5 million.

 In 2000, Kinh Do invests on a production system for making Cracke and the birth of brand AFC is very successful. This system is

imported from Europe and costs more than 2 millions dollar.

In April, 2001, Kinh Do continues to invest on systems for producing Candies with the value of 2 millions dollar

Firm infrastructure

Products under the Kinh Do trademark are selling in all provinces through a diversified distribution system nationwide including 524

distributors, 31 Kinh Do Bakery shops and 200,000 retail outlets as well as franchised distribution systems with a growth rate of

30%/year.

The products of Kinh Do have been sold to 35 countries; particularly Kinh Do has conquered the most difficult customers such as

Japan, USA, France, Germany and Singapore, etc.

Human Resource Management

Apply the Employee Stock Ownership Plan (ESOP)

From the size of only 70 staffs at the initial establishment, up to now, Kinh Do has total staff of over 7,741 persons.

1. International and global politics

Definition

International business: international business may involve the transfer of goods or services across national boundaries, or the transfer of

investment to fund foreign operations. Besides, the international joint venture involves two or more partner from different countries. It offers the

business an opportunity to grow outwards from a congested domestic market.

Global politics: (Anthony Mcgrew2007) is the term which acknowledges that scales of political life has fundamental altered: politics understood

as that set of activities concerned primarily with the achievement of order and justice does not recognize territorial boundaries. To talk of global

politics is to recognize that politics has been recognized and that as consequence there is much more to the study of the world politics than

conflict and cooperates between the states, even if this remains crucial.

The factors effect on the company

Unit 2:

FDI: When a firm becomes international business, it needs to use Foreign Direct Investment (FDI). (economics.about.com) The FDI is

investment of foreign assets into domestic structures, equipment, and organizations. It does not include foreign investment into the stock markets.

The company has already export its product……for delivering. Import for new machine. The company attract FDI by 90% domestic market.

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Balance of trade: the difference between a country's imports and its exports. Balance of trade is the largest component of a country's balance of

payments. Debit items include imports, foreign aid, domestic spending abroad and domestic investments abroad. Credit items include exports,

foreign spending in the domestic economy and foreign investments in the domestic economy. Good for trade surplus (export more than import).

Bad for trade deficit. Effect on productivity, profits, also FDI. Company invest several business, thus more revenue.

International trade: can only exist if there are relatively few barriers to trade between the countries involved. Barrier : Protect local company and

employees; Push production (local product), protect new industry; Encourage export, prevent dumping; Promote political objectives (stopping

trade with countries with a poor human right record). There are 5 types of barriers: price-based (additional tariff to product), international price

fixing (organization of Petroleum Exporting countries), quality limit, financial limit (limit of flow currency), and foreign investment limit (limit

of total foreign bank). Good for domestic, bad for sell kinhdo outside. Kinhdo has merged North Kinhdo food with Kido corporation to KDC

corporation in 2010. The income increase 45%.

Tariffs: A duty levied on goods transported from one customs area to another either for protective or revenue purposes.  In other word, it is taxes

for goods, which are import to the country. High price of material, high price product, les demand. Optimize effectiveness of transport,

distributor, and sales (200 retailers). Applying new machine for reduce cost.

Non-tariff barriers: A form of restrictive trade where barriers to trade are set up and take a form other than a tariff. Nontariff barriers include

quotas, levies, embargoes, sanctions and other restrictions, and are frequently used by large and developed economies. Kinhdo is market leader,

protect from small company as antidumping, brand.

Regional groups: is a group with a small number of countries in a particular area. In Vietnam, the country has joined to Association of Southeast

Asia Nations (ASEAN). By being the member of this party, Vietnam must make some agreement: free trade areas, customer unions, common

markets, economic union, and political union. Expand market easily in asea…Kinhdo export 25 countries.

The WTO: this party is to reduce the tariff on international trade. Most of countries in the world have joined to the WTO. Vietnam has joined to

WTO since 2007. From that the big number of tariff, which has been reduced in order to stimulate investment from outside.

Balance of payment: BOP = Current Account (merchandise trade include sales of good to foreign export and purchase of import, services &

unrequited transfer (one-way transfer: charity) + Capital Account (FDI, portfolio invest share & bond) + Reserved (gold, IMF, Special Drawing

Rights); Influencing deficit BOP: devalue currency, borrow fund, fiscal policy. Less demand, investment,...

Exchange rate and exchange rate hedging:  Foreign exchange hedging is a method of reducing risk when trading currency and it has become

more and more popular over the past five years or so. Benefit for float exchange rate: control monetary policy and adjust in response to trade

imbalances. Protect from investment by foreign account…

Globalization: market, production, institution. New market: growing services market, financial market, deregulation of antitrust law, consumer

market. New actor: MNEs, WTO, NGOs, regional blocs, international policy New rules and norm: growth of free market, privatization,

democracy, human rights, environmental issues, multilateral agreements. Communication: internet, cell phone, fax, transport, computer-aided

design and manufacture. High competitive, more risk, more demand.

Political ideology: a set of integrated beliefs, theories and doctrines that helps to direct the actions of a society. Political ideology is almost

always intertwined with economic philosophy.

Unit 3:

Political systems : Democratic: right to freedom of expression, election of representatives for limited period, an independent court system,

bureaucratic and defense organization. Totalitarianism: one individual/party take complete control (Communist: government owns all property;

Theocratic totalitarianism: religious group full control; Secular totalitarianism: single powerful individual/group complete control). Boundaries

between systems may be blurred.

Economic systems: Market-driven economies: consumer is thought to exert overall power; Centrally-planned economies: gov. exert overall

power; Mixed economy. Impact on raw material and cost, electricity.

Governments and business assets: Nationalization: promote economic development, encourage product/service benefit country, provide

good/service to whole population regardless economic status, earn profit, increase gov. power, prevent co. closure. Privatization: increase

efficiency, satisfy political pressures, immediate fund for gov., reduce gov. loss, encourage R&D, reduce gov. size. Occurred during 1980s:

Privatization process dif.: lack of suitable industrial sites, increasing cost, administrative dif. wt. changes, poor telephone ntw, transport system,

slow payment, responsibilities of polluted properties, dif. business worth assessing; Used ‘shock therapy’: liberated prices, trade quickly, tighten

monetary policy, implement private quickly.

Politics, economics and business

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- Freedom of enterprise: right in each market to pursue own choice of business activity, cost of forming a LTD co., number of week to set up,

regulation in dif. countries (freedom of biz><interest of general population) i.e.: location, design, employment, condition of work, financial

incentives, taxation, pension scheme, environmental impact.

- Privacy of property: intellectual property rights, copyright & patent law. Vietnam lack of power to force…

- Monopoly and oligopoly: control by one or small n0 of biz., benefit from economy of scale, may not satisfy consumer’s interest, control supply

and little incentive to keep low price, improve quality and efficiency. Ex: Microsoft, SOEs, OPEC, car manufacturing, Unilever & P&G…

North-South & East-West relationships : 121 democracy countries but not all confer as freedom: collapse of communism of Soviet, greater access

of information not censorship, growth of the wealth and power of middle income.

Globalization and the world’s poor : Reasons for continued poverty: existence of totalitarianism, discourage economic growth policies, lack

property right, war, rapid population (internal) & large debt burden, trade barriers (external)

East-West divisions : Japan, Asian tigers (Hong Kong, South Korea, Taiwan, Malaysia, Philippines, Thailand) rapid growth reasons: high state

intervention, bureaucratic regulation, co. as family, formal & informal link of co., low level state welfare provision. -> crisis of financial

institution 1990s, 1997.

Global political institutions: UN (200 members) include General Assembly & Security Council (Cn, Fr, Ru, UK, US & 10 other 2-year-period-

members), G8 (Ca, Fr, Ge, Ita, Ja, Ru, UK, US). Matter concerns: macro eco policy, international trade, security prob., human rights. NGOs

(Greenpeace, WWF, Red Cross…), industry groups.

Political, business and international trade Attractiveness: long-term benefit (market size, consumer wealth, purchasing power), free market

economy, property rights, cost to smooth gov. permission. Political risk: new gov., political unrest.

Unit 7:

Legal system: Vietnam is belonged to civil law system. Civil law is based on systematic framework setting out the basic law for country. Vietnam

current law traditionally academic, it can be classified in the legal system socialist, but in fact many civil regulations, in respect of

proceedings, the court system to bring many of the characteristics of Civil Law.

Property rights, safety of product (trade description act, sale of good acts, consumer protection act) or worker (employment act, trade union,

employment right, minimum wages regislation). Right of individual or group protected by employment law, human right and data protection.

Vietnam has low power for this.

Unit12:

Market entry: product (franchising or mass production), timing (new mkt or exist mkt), speed (how quickly), costs, flexibility, risk, payback

period, long-term aims

2. Social and cultural differences within countries and /or between countries

Definition

Culture is collective programming of the mind which distinguish the members of one human group from another.

Society refer to group of people who share a common set of value (believe to be good right and desirable) and norm (social rules/ guide that

prescribe appropriate behavior in particular situation.

Factor effect on the company

FIRST APPROACH: Language: Flow of information, Effective ideas expression, Product name, Instruction, Signs/icons/images; Kinhdo is

domestic, thus easy to understand. Has two languages for export.

Religion: employment, working environment, relation wt. dif. managers, decision making, product context, marketing materials;

Christianity: individualism & free-market capitalism (Northern Europe, US)

Islam: free enterprises not profit from exploitation of others (Middle East)

Hinduism: focus on spiritual & moral (India)

Buddhism: ascetic (spiritual > material) (Central & South-East Asia, Korea, Japan, China)

Confucianism: ethical conduct & loyalty, reciprocal arrangements (Japan, Korea, China)

Values & Attitudes: risk (avoid or take), view people (good or bad), competition or collaboration, status (own power or organization aims). Effect

on competitive and organization structure…

Manners & Customs, Material elements: Economic infrastructure: road, communications, energy; Social infrastructure: heath, housing,

education; Financial infrastructure: banks, insurance, Aesthetics: Image in consumer’s mind, Education,

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Hofstede’s research: power distance (different in physical and intellectual abilities) individual /collectivism, uncertainty avoidance,

masculinity/femininity (much or little different male and female)

SECOND APPROACH: Changes in culture: Economic factors, Satellite television and films, Internet and Web, Cheaper and faster travel,

Flexible attitude of labor movement. Information transfer and delivering…

Changes in demography: Population (66% 15-60/25% less 15), Birth rate (1 mil/year), Death rate, Migration, Workforce: number, diversity (55%

and 2.8%). Vietnam has big number customer, growth rate high 1mil people/year, old people high, taste ò north and south…

Legislation and discrimination (disable people and gender):

Ethical issues:

Deontological theories: always take right action

Teleological theories = utilitarian model: greatest result for greatest number

Virtues approach: ethical approach from past

Justice approach: fair and non-discriminatory, most equitably

Rights-based approach = moral rights model: making decision on person’s rights

Code of ethics: Ethical standards of society (spend money to smooth, speedy decision; charging interest), Professional ethics of group of

managers and workers, Individual ethics: personal values and morals.

Social responsibility: Workers: laying off staff, adequate pension, training, job security, Local community: environmental impacts, charities,

Regional, national & international factors: factories, suppliers. Managers tend to take obstructive >< proactive. Require money for action…

3. The economics forces and effects of globalization

International Trade Theory: Absolute advantage: mercantilism maximize export produced most efficiently and minimize import; Comparative

advantage: promote export most efficiently and import relatively inefficiently though country could produce more efficiently than others.

New Trade Theory : Product life cycle: different stages has different impacts in variety of countries, regions based on economic environment;

New trade theory: suggest there are benefits to economies of scale (Paul Krugman)

Economic integration : Free trade areas: remove trade barriers, keep barrier for non-members; Custom Unions: remove trade barriers, common

policy for external trade; Common markets: free movement of good, labor, capital, same policy trade; Economic unions: free movement of

good, labor, capital, unified policy of monetary, fiscal, welfare; Political union: economic policy unified, single government.

Technological development (the sum of knowledge of means and methods of producing goods and services): new materials, biotechnology and

pharmaceutical, travel, communication, energy and waste disposal

Innovation types : product & process innovation

Benefits : minimizing development time, maximizing fit wt. customer needs, maximize product quality, maximize product efficiency.

Principles of product development : establish a stage-gate, cross-function teams, use concurrent engineering, involve customer and supplier.

IT within org.:

Influence of tech. to people work : specific design of each pattern of work (template), nature of social interaction (email), role position and nature

of reward (performance), impose time dimension of workers, distinguishing features of appearance

IT, org. and external environment: B2C, B2B, B2E (employee)

Benefit of e-commerce:

- Organization: expansion of marketplace, reduction of cost, reduction of supply chain inefficiency, group purchasing, speed of procurement

process.

- Customer: availability of services, faster searching choices, cheap prices, wider range products, interaction wt. other customers.

- Society: more shopping from home, overall price reduction, product availability, improvement public provision of services.

Limitations : security payment, lack physical browsing, legal issues of cross-border sales, narrow customer base in age and social class.

Key environmental issues : protect wildlife (agriculture, transport, building), global climate change CO2 CFCs (power generation, transport),

ozone depletion CFCs (aerosol use, refrigerator), Acid rain SO2 NO (burning fossil fuel), over-enrichment of rivers and lakes PO4 NO3

(fertilizer, sewage), Dispersed dangerous substance chemical (modern production process)

Gov. action on eco issues : legislations, economic instruments (increase fuel tax, waste tax, greenhouse gas tax for polluter pay, OECD,

sustainable development, scientific uncertainty (precautious), cross-cutting eco-environmental issues.

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Eco-environmentalism from economic viewpoint : amenity services, natural resources, waste products (closely linked, ISWE Index of Sustainable

economic welfare) GDP should include depreciation of physical capital, money spent to correct environmental damages, cost of pollution, decline

stock of natural resources.

Total economic value : use value (benefit of existing asset), option value (value to put in different purpose), existing value (value it has exist)

Gov. tools : legislations, environmental taxes, tradable permits (high emitted countries contribute to low emitted countries), the sufferer pays.

Stakeholder theory and corporate responsibility: shareholders, financial providers, customers, employees, wider community, government, other

org.

Companies can behave social obligation (think only important stakeholders, reactively), social responsibility (beyond legislation), social

responsiveness (proactively, encourage future change) => always think about opportunity cost.

Market mechanism and pressure group : increase eco-friendly standard, policies (BS British Standard, ISO International Organization for

Standardization, EMAS EU Eco-Management and Audit Scheme), pressure groups (Greenpeace, WWF, World Conservation Monitoring Centre)

Self-regulation (seen as smoke screen to avoid investigation)

Market Structure : Five Forces, Types:

- Perfect competition: large number of sellers and buyers, no dominator, goods are identical, everyone has knowledge of price and cost, perfect

mobility, freely switching, no barriers enter or exit. Individual has no power, same price, no advertising, normal profit.

- Monopoly: one seller, no substitutes, high barrier to entry. Individual has total power, some discrimination price, no advertising and very high

profit. However, monopoly in practice can create low price (economy of scales), greater choices, greater resource to innovate for higher profits.

- Oligopoly: small numbers dominate, high power, one price, high advertising, very high profit. Collusion in price is illegal.

- Monopolistic competition: one seller, wide range of goods. Low power, price different, high advertising, normal profit.

Structure (amount of competition, existence of potential competition, cost, demand and entry barriers) -> Conduct (pricing policy, advertising

amount, merger behavior, product differentiation) -> Performance (profitability, technology innovation)

Competition policy:

- First-half last century: measuring level of competition (figures), level of efficiency (economy of scales, lower price), change in concentration

(greater segmentation, development in IT, economy of scope, JIT).

- Mid-century, key industries need operate effectively by nationalization or falling industries need protect.

- Recent decades, if level of competition fall, privatize SOEs.

Legislation in competition : prevent companies agreeing price, monopoly investigation, M&A...

Competitive analysis : competitive advantage (efficiency: ROI, quality: design, conformance, reliability, responsiveness to customers, innovation),

balanced scorecard (if...then, finance, customer, internal business process, learning), competitor analysis (strategies, SWOT), deciding who to

avoid or attack (strong or weak, close or distant, well-behaved or disruptive), competitor position (cost leadership, differentiation, focus, middle

of the road)

Market entry: product (franchising or mass production), timing (new mkt or exist mkt), speed (how quickly), costs, flexibility, risk, payback

period, long-term aims. Kinhdo has joined venture and merge

Ethic and corporate social responsibility

Most important/ difficult ethic issue: food safety (candy broken before expiry), environment protect, the basic rights of workers

Ethics issue to “corporate social response”: environment (environmental sustainability programs, alternative energy/clean tech) and social welfare

(blessing for poor children, employee pension)

Definition of “corporate social response”: is about how companies manage the business processes to produce an overall positive impact on

society. CSR is a concept that frequently overlaps with similar approaches such as corporate sustainability, corporate sustainable development,

corporate responsibility, and corporate citizenship. So that not short term, but long term profit, less pressure/ increase image, employee

satisfaction, government intention (won awards for environmental protection, Pay 2 months of pension and allowance before Lunar New Year),

1500 gave gifts worth VND 110 million for orphans, disabled and studious students have difficulties in Binh chanh. 7000 gifts total 250 million

for disabled children in HCM)

Stakeholders: customers (profit and health), investors (25 countries), suppliers, employees (salaries and management team give strategy)

interest

Low High

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power Low Minimum effort Keep inform

high Keep satisfy Key player

Corruption (culture to culture): higher levels of exposure to corruption in daily life may promote a tolerance of corruption that is reflected in

norms of behavior.

Ethics standard: Euro high standard than Vietnam.

Ethics challenges: waste treatment, employee pension, salary increase.

Child labor infringes: change the law, large distributor thus manage human resource.

Child: Convention is an international legal instruments to protect children that everyone needs to perform. When a country signed and ratified the

Convention on the Rights of the Child, the government of that country must comply with international treaties to achieve some of the most

basic standards for children.

The right to be protected from economic exploitation (below 15 years olds)

The main external, internal, task and general environmental factors which would need to be considered by a potential outside investor: FDI,

shareholder, bank.

The Bribery Act: 2010 in Uk: replaces the fragmented and complex offences at common law and in the Prevention of Corruption Acts 1889-

1916;

creates two general offences covering the offering, promising or giving of an advantage, and requesting, agreeing to receive or

accepting of an advantage;

creates a discrete offence of bribery of a foreign public official;

creates a new offence of failure by a commercial organisation to prevent a bribe being paid for or on its behalf (it will be a defence if

the organisation has adequate procedures in place to prevent bribery).

Product safety law: Use of food ingredients which are past their expiry date, unknown origin, origin or not safe to manufacture, food processing.

Use of food additives, processing aids out of date food use, the list of those authorized to use or the list of permitted uses are beyond

the permitted limit; unknown chemical use origin, chemical banned from use in production, sales of food.

Import -Export of Vietnam: US$47.5 billion in 2007- import surplus 12 billions

structure-conduct performance : Attributes of the industry structure define the range of options and constraints a firm has to face. In highly

competitive industries, firms have a very limited motion space as they are only let with a very few options too many constraints when compared

to options. In such setting, both firm’s conduct and long term performance are determined by the industry structure making (in general) firms

only able to gain competitive (not competitive advantage).

On the other hand, in less competitive industries, firms have the liberty of large ranges of  conduct options and fewer constraints, enabling

capable firms to gain competitive advantages. However, even at this type of setting, the industry  structure can impact on firms critically such as

deciding how long a firm can maintain its competitive advantage.

CR3 is a measure showing a total market share held by 3 largest firms in an industry. CR5 would total a market share of 5 largest firms in an

industry

The concentrate is the total of market share owned by the largest m firm in the industry

CRm = S1 +S2.....+Sm (smaller than 40% is very competitive) 1 is monopoly.

HerfindahlHirschmann Index (HHI): provide more complete picture of industry concentration than does the concentration ratio. The HHI uses all

firms in the industry, and these market share are square in the calculation in the industry

CRm = S12 +S2

2.....+Sm2 (if zero is perfect competition) 1800 is high concentrate

Need to aware of relevant market: geographic of the market national market versus local market

law of one price : An economic rule which states that in an efficient market, a security must have a single price, no matter how that security is

created.

The Kyoto Protocol is a protocol to the United Nations Framework Convention on Climate Change (UNFCCC or FCCC), aimed at

fighting global warming. The UNFCCC is an international environmental treaty with the goal of achieving the "stabilisation of greenhouse

gas concentrations in the atmosphere at a level that would prevent dangerous anthropogenic interference with the climate system.

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The Cancun conference on climate change (2010) the meeting produced the basis for the most comprehensive and far-reaching international

response to climate change the world had ever seen to reduce carbon emissions and build a system which made all countries accountable to each

other for those reductions.

Technical change

The government have different research project in develop more technology. The speed of changing in technology is very high. The more

discoveries in technology, the more benefit firm can get. Because when applying modern technology in product as well as in other stage of

business, the productivity also very high. Technology changes the business manner, through the new technology the companies can saving time,

cut down the cost, and bring to customer better service as well as better product. However, the technology is very high, it means company need

fewer people to control a machine and the automatic in factory or in other department reduce workers. It makes the unemployment rate increase

again. Further, when applying modern technology like that, the companies need high-educated employees to control or use that technology

fluently. Thus the requirement of company about quality of employees is increase.

The development of information technology and the Internet enable the company to offer more comfortable services. Customer can book their

table through e-mail, phone, or the bar’s website. Besides, Internet helps the bar to advertise widely with a low cost. The development of

technology allows the company to apply environmentally-friendly and economical techniques to its operations. For instance, 3G technology has

been just apply in Vietnam. This service includes wide-area wireless, voice telephones, video calls, and wireless data, all in a mobile

environment. 3G allows simultaneous use of speech and data services and higher data rates. This technology helps hundreds million mobile

phone users can approach with the Internet more frequently and more easily. Thus, it encourages the online advertisements to develop more,

because there are more people can also use the Internet through their cell phones. With those advertisements, the customers can contact with

company or buy goods through a click. It allows the company popularize company image to huge amount of customers as well as sell more

products through online purchasing.

The design of the packaging or the advertisement of kinh Do will affect greatly on the customer’s buying decisions. If the packaging or the

commercial advertisement is not invested well, it will negatively affect the product’s brand image, the entire advertising campaign and ultimately

the company’s sales and profits. It is because customers may consider the packaging or the advertisement as lack of creativity, emphasis and

appealing compared with that of the competitors. It can be said that the outside appearance of the product decides more than 50 percent of

customer’s buying decisions regardless of how good the “inside” is. The software as Photoshop technology will help the company done that.

Then, physical evidence can be related to the company’s facilities. Inside the company’s factory, there should be modern machineries and new,

updated technology so that Kinh Do can deliver the products with the best quality to the customers.

Record keeping through on computer is very important in making decision, because when make any decision, it is not simple that just think and

do. The decision has to be made by many aspects, views and based on the problem in past, the moment and the future to be done. Besides, Kinh

Do must also keep records to ensure that weekly working time and work limits (8hours/day) are complied with in business. Kinh Do can monitor

the hours of workers who appear to be close to the working time limit and make sure they don't work too many hours unless they have agreed to

work longer. It's up to Kinh Do to determine what records they need to keep for these purposes, but Kinh Do may be able to use existing records

maintained for other purposes, such as pay.

Microsoft Excel will be used to enumerate data and draw them on tables or graphs, which are easy to read and understand information. Besides,

Microsoft Word is a good method to perform report. Besides, the information will be classified and analyzed by statistical methods and using

computer software such Statistical Package for the Social Sciences (SPSS). Then, data will be shown by tables, charts.

Ever-increasing cost pressure calls for inexpensive automation solutions that can be implemented short-term.Kinh Do use a wide range of

materials, they can do justice to the varied requirements of the processing process (e.g. electrical conductivity). At the same time, thermoformed

packaging provides maximum protection for minimum wall thickness and/or minimum use of materials.

Kinh Do implemented a complete package of SAP ERP software, including financials, controlling, materials management, sales and distribution,

production planning with SAP ERP Human Capital Management, SAP NetWeaver Business Warehouse and SAP BusinessObjects for business

analysis. The food division alone is too big to control without a strategic approach to information management. Nguyen Xuan Luan, Corporate

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VP and Chief Information Officer, comments “We felt that SAP ERP software offered the best fit for Kinh Do, with examples of similar

businesses in the region achieving success based on SAP solutions. We also knew that SAP has a good implementation record in Vietnam, and

has a reputation for investing in training its partners to deliver excellent service.“While the vendors’ solutions were functionally equivalent in

many ways, SAP offered better integration across all its components.

It consists of those forces that affect the technology with which can create new products, new markets and new marketing opportunities. Because

of the trend of the safety product, the company has used the recycling systems, which is very popular all over the world. Besides, there are many

technology could help the company to access to the customers such as Advertising on TV or Internet. Moreover, the customers could give the

feedback through email or hotline by telephone.

Conclusion :

There have been the continued advances of technology in recent years. This has led to significant changes in society, especially the workplace.

Although most technological changes benefit people, those also have a number of disadvantages. This essay will look at the positive and negative

effects of these shifts concentrating on workers.

Technology is currently developing so fast and workers can profit from these improvements. Firstly, although strength and manual dexterity seem

to guarantee employment, technology is also likely to increase job opportunities. This is caused by the information revolution which requires

various skills such as verbal or mathematical skills. Secondly, because of the increasing worker skills via technological changes, most employers

are attempting to enhance the organization and stimulate workers in order to improve productivity. With the aim of that, work practices are

reformed like worker teams, worker involvement in purchase decisions. As a result, changes in workplace are appears to increase efficiency.

Even though technological changes provide workers with a number of benefits, it also has several disadvantages. First of all, employers are

demanding higher and newer skills. For this reason, workers require many different skills such as organizational, interpersonal and fundamental

skills. As a consequence, it is difficult to find a job if workers lack technical skills. Secondly, there is an elaborate relationship between

technology and job contents. Manual operation requires skill not only in literacy but also the experience in manual dexterity. However, the

computer-programmed machine operation demands very contrasting skills like programming or computer literacy. Moreover, it seems that

machine-shop has required less workers’ skill, thus, some jobs have been de-skilled.

In conclusion, technological changes can supply benefits to workers by creating many employment and improving productivity. However, those

changes also reduce job opportunities and de-skill occupation. Thus, every worker has to update their skill steadily to satisfy the social needs.

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