Vietnam Economy

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Contents
I. Details. 2
A. Investigate the economic social and global environment in which associations operate. 2
1. Vietnamese economic system attempt to allocate and make effective use of resources 2
2. Discuss the impact of social welfare and industrial policy initiatives on organizations. 3
3. Evaluate the impact of macroeconomic policy measures and the influence of the global economy on international-based organization and stakeholders. 4
B. Investigate the behavior of association and the market environment 5
4. Explain how market structures impact on the fruit association. 5
5. Use examples to illustrate the relationship between employed between market forces and association. 7
6. Explain the behavior and competitive strategies employed by the organization association. 7
7. Discuss the importance of international trade, economic integration and global markets to the association. 8
8. Analyze the impact of two policies of the European Union in case of exporting fruit to UK market. 9
II. Conclusion. 10
III. References 11

I. Details.

A. Investigate the economic social and global environment in which associations operate.

1. Vietnamese economic system attempt to allocate and make effective use of resources

In advanced economies, there are many different ways to deal with the question of scarcity. Different countries use different approaches or types of economic systems. Vietnam is a country which uses the mixed economy. In

this type of economy there is a balance between market forces and state intervention. This kind of system influences the impact of attempting to allocate as well as make effective use of resources in Vietnam.

First of all, Vietnam is a poor country; its economy is based on the agriculture industry, so the most important resource is land. In Vietnam, land is used in two purposes, producing food and developing the industry. The area of agriculture land is about 800.000 ha in the Red river plain and about 2.500.000 ha in the Mekong plain. Nowadays, these are more and more narrowed by the policy of the state. The process of assimilating city and industry is the reason. As this result, Vietnam is facing to the real situation that it will be lack of food in the future and the rate of exportation of agriculture product in general and fruit in specific will be decreased.

The second important resource is labor. Vietnam is a country which has approximately 86 million of people. Moreover, there is about 66 % of population in the working age, from 15 to 59[1]. This percentage is two times more than the percentage of depending people. It is a big advantage for Vietnam, and the state corporate with the organizations to arrange worker to have a job in foreign country. Besides, there are many jobs in training that the government and companies must take care of to supply the demands of human resources in Vietnam.

Last but not least, there are some other resources which are not less important than two resources above such as wood, oil, fish, etc. About oil, Vietnamese economic system is very concerning in it. In fact, Vietnam also exploits and then exports simple oil with a low cost. Seeing this disadvantage, the government has just built up the Dung Quat Oil Filter Company to fix it. For others, Vietnamese economic system is changing the technology and finds the best way to use these resources effectively.

2. Discuss the impact of social welfare and industrial policy initiatives on organizations.

We have to understand the definition of social welfare policy. It is the policy that seeks to protect and directly improve people’s standard of living[2]. Social policy is used to apply to the policies that government uses for welfare and social protection and the ways in which welfare is developed in a society. In the first sense, social policy is particularly concerned with social services and the welfare state. In the second, broader sense, welfare is promoted, and the social economic conditions shape the development of welfare. In Vietnam, there are some impacts of social welfare such as pensions for old age people, welfare for sickness/disability, health, and environmental. These policies bind an organization with a labor and give the balance between two parties.

About industry policy, the government can give assistance to those industries with the highest growth potential; this is referred to as picking winners or indicative planning. The government may also seek to encourage or discourage new products. By placing restriction on foreign firms that wish to set up business in Vietnam or by putting import tariffs on the goods of overseas suppliers, the government is impeding the appearance of these goods in Vietnamese market. In addition, the government can subsidies directly or indirectly domestic firms that are already in the industry, or impose product standards requiring a particular level of safety. Not at all, the government can influence the degree and nature of competition within an industry. With the helps from government, there are many firms in Vietnam can sell a product which has the price lower than other same products many times. This action makes a competition and advantage when Vietnamese products go to a new market. Then, the policy that “Vietnamese use Vietnamese products” set a standard in buying and selling of a foreign company so much.

We can see that the impact of social welfare and industrial policy initiatives on organizations much. It can make disadvantage as well as difficulty for a product of an organization to occur in Vietnamese market. However, If the government like and realize the potential of a product, it can be easily to get the market share and penetrate into the market.

3. Evaluate the impact of macroeconomic policy measures and the influence of the global economy on international-based organization and stakeholders.

A government economic policy is conducted with at least three aims in mind, economic growth, full employment, price stability. It can be very difficult to achieve a balance between these aims. The state uses various policy to try to achieve its aims, including fiscal policy and monetary policy.

The fiscal policy means the adjustment of public expenditure and taxation so as to affect aggregate demand. Fiscal policy involves taxation and other sources of income, government spending, borrowing whenever spending exceeds income, and repaying debt when income exceeds expenditure. Businesses are affected by a government’s fiscal or tax policy. The levels of taxation and the method through which they are collected illustrate the power of state to determine the operation environment and thus the strategy of firms at any given time. In Vietnam, there are 4 taxes, business rate, income rate, VAT, export and import tax. Vietnam’s tax is not too high compare with others similar country. In addition, fiscal policy is concerned with government spending and taxation, it can be used to reduce unemployment and provide jobs. Moreover, Vietnam apply the loosen money policy but still be controllable to attract investment and bring the interest rate near the rate before worldwide inflation. For the macroeconomic purpose, the impact of changes in fiscal policy is not always certain, and fiscal policy to pursue one aim such as lower inflation might for a while create barriers to the pursuit of other aims.

Monetary policy involves attempts to influence economic activity through interest rates, exchange rates, control of the money supply and controls over bank lending and credit. Monetary can be understood as a subsidiary support to fiscal policy and demand management. In some different situations, monetary policy might be given prominence over fiscal policy as the most effective approach by a government to achieve its main economic policy objectives.

Global economy has shown a conscious shift in economic activity from agriculture to service in both the developed and the developing world. The global economy has equipped the economy with the power to market goods and services across different countries in the globe. It can get the benefits of increasing economies of scale. With the opening up of the economy the industrial sector has developed with the attainment of cheap labor, capital and technology. Small companies also witness rapid growth owing to a wider customer base. Many opine that the global economy has promoted international peace and cooperation. The global economy has encouraged transportation on a wider scale for the free flow of goods and services across nations. This has, in turn, led to the emission of greenhouse gases. The global economy has also resulted in the loss of domestic jobs. The labor intensive industries of the developed countries find it profitable to shift to third world countries where wage rates are low. This leads to the displacement of labor in the developed countries. Further, it is difficult to formulate regulations and legislations that are undifferentiated across the globe.[3]

B. Investigate the behavior of association and the market environment

4. Explain how market structures impact on the fruit association.

To assess which kind of the market structures that this market belongs to, we have to rely on the conditions of perfect competitions. First of all, about the quantity of buyers and sellers, there are a lot of numbers of buyers and sellers in the market. Then, nobody is strong enough to influence the price, and then there are no barriers to entry or exit. At last, the standardized product and perfect information. Through these conditions, there are four main types of market structures.

The monopoly market exists when there is only one supplier of a product and service. To build up a monopoly structure and keep it in long term, it is necessary to set up barriers to entry. For example, the supplier holds the key resource ownership, government restrictions, patent or has a huge amount of Capital.

The monopsony market structure arises when there are only one buyer faces many sellers. As the only purchaser of a good or service, the buyer may dictate terms to its suppliers. For example, in labor markets, “buyers” are employers, “sellers” are individual workers, the “good” is time and effort and the “price” is the going wage of salary level.

There is an oligopoly when there are a few large suppliers, whose business decisions affect each other. The decisions of one firm influence, and are influenced by the decisions of other firms. Oligopoly market and industries have a high risk for collusion.

Last but not least, the duopoly is very similar to a monopoly but there are two companies own all or nearly all of the market for a given type of product or service.

Vietnamese fruit market totally has five conditions in a perfect competition. There are lots of buyers and sellers in this market. The price of fruit is only go up in some big events of country generally, and then it goes down in normal day. Nobody except the state can decide the price of fruit. About the barriers, it is very easy to make a new kind of fruit exists in Vietnam. When buying fruit, the information is not provided in full to the buyers. As this result, the fruit market in Vietnam has the monopolistic structure. The fruit association has power to decide the kind of fruit can be exist in the market.

5. Use examples to illustrate the relationship between employed between market forces and association.

The relationship between market forces and association is quite close. It is the inverse relationship like demand and supply. Factors will influences the demand such as price of substitutes, price of complementary products, level of income, advertising, social factors, and so on. In general, the higher the price is, the lower the demand. People may change from this company to other companies, so the demand for that service will fall. Besides, if income of user rises, they may change their attitude towards using private car instead of using public transport. Hence, the demand will go down. Others, we must pay attention to the threat from substitute product. It can affect the safe and ability in competition of the fruit association. For example, Chinese fruit is loosened very much in Vietnamese market but it still exists. This fruit is cheap and has a large quantity in Vietnam; it can change the demand of customers to the fruit that is covered by Vietnamese fruit association. Moreover, customer’s perception and actions also affect the supply and demand. Nowadays, customers require high quality services which are comfortable and safe. If the services of the company are uncomfortable and dangerous, the customers may reject them, so the demand for those will fall.

6. Explain the behavior and competitive strategies employed by the organization association. Competitive advantage is anything that gives one organization an edge over its rivals in the products it sells or the services it offers. Much of the competitive advantage that an organization might hope to achieve is provided by the nature/quality/price of its products[4]. The type of competitive strategy that a firm adopts depends on the competitive strategies adopted by rivals and has implications for product design and quality, pricing and advertising. We can divide the strategies into three types, a cost leadership strategy, a differentiation strategy and a focus strategy. A cost leadership strategy seeks to archive the position of lowest cost producer in the industry while a differentiation strategy is based on the assumption that competitive advantage can be gained through particular characteristics of a firm’s products or brands. The most important strategy that we must focus on is a focus strategy, especially cost focus strategy. It involves selecting a segment of the market and specializing in a product for that segment. The firm, by specializing in a limited number of products, or by concentrating on a small geographical area, can keep costs to a minimum. In position of fruit association, the segment of the market can be selected as the people in some areas that lack of fruit or have a high life standard with high income, so the demand of healthy food is very necessary. Further, the organization must take care of the forms of anti-competitive behavior. They can make the bad effect to the fruit market in Vietnam. The main types of anti-competitive behavior include collusion, cartels, price fixing, predatory or destroyer pricing, vertical restraints, insider dealing or trading. It is very difficult to solve and deal with these problems.

C. Explore the significance of international trade and the European dimension 7. Discuss the importance of international trade, economic integration and global markets to the association. It’s necessary for Vietnam fruit association to understand the importance of international trade, economic integration and global markets to the association. First of all, the buying and selling of goods and services across national borders is known as international trade. It means that the association can extend its influence not only in domestic market but also in the foreign market. In addition, the organization can reduce the dependant on domestic customer, simultaneously get more profit with the foreign money. On the other hand, trading in international scale create new challenges for the organization. The rules and business law of global should be applied and the organization has to compete with new rivals in develop country who have more competitive advantage. In global market, traditional trading is always existed. Even though many consumers prefer to buy less expensive goods, some international trade is fostered by a specialized industry that has developed due to national talent and/or tradition. Swiss watches, for example, will never be price-competitive with mass produced watches from Asia. Regardless, there is a strong market among certain consumer groups for the quality, endurance and even “snob appeal” that owning a Rolex, Patek-Philippe or Audemars Piguet offers. German cutlery, English bone China, Scottish wool, fine French silks such as Hermes and other such products always find their way onto the international trade scene because consumers in many parts of the world are willing to foster the importation of these goods to satisfy their concept that certain countries are the best at making certain goods.[5] Finally, the economic integration is also important to Vietnam fruit association. The economic integration has four steps: Building Free Trade Area, Building Common Unions, Building Common Market and Building Economic Union. Vietnam is on the first step of economic integration, Building Free Trade Area. It will be easier to enter some countries’ markets. Take advance of this, Vietnam fruit association can have some potential market to export their fruit in.

8. Analyze the impact of two policies of the European Union in case of exporting fruit to UK market. The European Union has set up requirement for each specific product to be imported from each specific developing country. It is very important for Vietnam Fruit Association to know that because want to exporting fruit to UK market, their products must need the requirement of the EU. There are two requirement of the EU in case of exporting fruit to UK: - Labeling for food stuff: The law of countries in European Union attach special important to the Copyright protection. Hence, they require every product imported to EU has label to ensure that it is the property of an existing company and to avoid any copyright violation. Many Vietnamese enterprises failed to import good to foreign countries just because of copy right problem. Now, Vietnam is facing to a big problem, it is the copyright infringements. It makes investors who want to invest in Vietnam always worry about the competition of this product, moreover, people in the countries which have the software or other technique products from Vietnam feels apprehend. Get experience from that story, Vietnam fruit association has to consider their products’ labeling carefully before export to UK market - Health control of foodstuffs of non-animal origin: The EU has specific health care standard for every farming product consumed in the market. For imported fruit, they set high requirement of health standard. Vietnam agriculture products such as rice, vegetable are many times refused because of the protection chemical. Vietnam fruit association has to ensure that their fruit meet their standard before exporting. Moreover, the EU also require imported product are non-animal origin to protect the environment and against animal smuggling. However, Vietnam fruit association doesn’t have to care about that because they are exporting fruit.

II. Conclusion. In total, we must understand the reality of Vietnamese economic and how it affects to Vietnamese fruit association. After that, we discussed the impact of social welfare and industry initiatives as well as the impact of macroeconomic policy of Vietnamese government. Next, through the definition and the real state of Vietnamese market structure, the competitive strategies, we orientated the way to invest for the fruit association. After all, with applying the laws of EU, we just warn and talk about the chances as the challenges of the organization when it penetrates into EU market.

III. References
88% of Vietnamese softwares break the rules of copyright. (n.d.). Retrieved from http://thugian.com.vn/news/119/2DBF54

Area of Vietnamese land. (n.d.). Retrieved January 4, 2010, from http://vietbao.vn/Xa-hoi/Dien-tich-dat-canh-tac-cua-VN-vao-loai-thap-nhat-the-gioi/65093271/157/

(2009). Competitive strategies. In Business Environment (p. 257). BTEC Programe.

(2009). Fiscal Policy and Monetary policy. In Business environment (p. 151). BTEC Programe.

global economy. (n.d.). Retrieved january 4, 2010, from http://www.economywatch.com/world_economy/world-economic-indicators/global-economy/

Population in working age. (n.d.). Retrieved January 4, 2010, from http://baodautu.vn/portal/public/vir/parameterizedviewer/repository/collaboration/sites%20content/live/vir/web%20contents/topic/economy/society/66%20d%C3%A2n%20s%E1%BB%91%20Vi%E1%BB%87t%20Nam%20trong%20%C4%91%E1%BB%99%20tu%E1%BB%95i%2015-59

(2009). Social welfare policy. In Business environment (p. 158). BTEC Programe.

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[1] From Vietnam Population Association.
[2] Business Environment : BTEC Program
[3] http://www.economywatch.com/world_economy/world-economic-indicators/global-economy/
[4] Business environment (P256) : BTEC Programe
[5] http://www.moneyinstructor.com/doc/internationaltrade.asp

References: (2009). Competitive strategies. In Business Environment (p. 257). BTEC Programe. (2009). Fiscal Policy and Monetary policy. In Business environment (p. 151). BTEC Programe. global economy. (n.d.). Retrieved january 4, 2010, from http://www.economywatch.com/world_economy/world-economic-indicators/global-economy/ Population in working age (2009). Social welfare policy. In Business environment (p. 158). BTEC Programe.