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Business Environment - Assignment 1

Table of Contents I. Introduction…………………………………………………………………………….. 2 II. Body……………………………………………………………………………… ……. 2 1. REE’s mission, values and objectives and the influence of stakeholders …….. 2 2. Achievement of stakeholder’s objectives….. …………. …………………….. …….. 5 3. REE Corporation’s responsibility and strategies employed to meet objectives of stakeholders………………………………………………………………… ….. 8 4. Explanation of how economic systems in your country (Viet Nam) attempt to allocate and make effective use of resources available within the country……………11 . The impact of social welfare and industrial policy initiatives on the organization and the wider community……………………………………………………. ……13 1. Social welfare……………………………………………………….. 13 2. Inductrial policy………………………………………………………33 5. The impact of macro economic policy measures and the influence of the global economy on the company and its stakeholders…………………….

. ………….. 14 1. The influence of the macro economic policy…………………………14 2. The influence of the global economy…………………………………16 III. Conclusion…………………………………………………………………….. …16 IV. References…………………………………………………………………. ……….. 17 I. INTRODUCTION: Established since? 1977, REE (Refrigeration? Electrical Engineering Corporation)? today is a? diversified? business? group? operating? in? the? fields of? mechanical? and? electrical? engineering? services? (M&E),? manufacturing,? assembling? and? sales? of? air-conditioner? systems,? real? estate? development? and? management,? and? financial? investments. ?The? Group? businesses? include? REE? M&E,? a? leading? mechanical? and? lectrical? engineering? contractor? in? Vietnam,? REE? Electric? Appliances? which? manufactures,? assembles,? and? markets air? conditioners? under? the Reetech? brand,? REE? Real? Estate,? a? management services company? for? lease office properties? of REE, and? REE? Land,? a real estate? developer.

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? REE? is also a strategic infrastructure? investor in? the? power? and? water? sectors? with? ownership? stakes? in? several? power? and? water? utilities.?? REE? is one of? the? first companies to list? ts shares on the Ho Chi? Minh? City’s Stock Exchange? with? a? market capitalization of? US$? 170? million as? of? 31/12/2010? and? a? wide? investor? base.

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(http://www. reecorp. com/upload/files/REE%20Annual%20Report%202010%20-%20Final_0. pdf ) II. BODY: 1. REE’s mission, values and objectives and the influence of stakeholders: |Mission statements |Values |Objectives | |Committed to quality. |Professional qualified and Increasing capital and continuing investments in the fiels of M | |Nurturing our business relationship |upgrade training in local and |& E Capital increase and continued investments in the areas of M| |Creating values for our shareholders |overseas. |& E, real estate, finance – banking. | |Recognizing the contribution of our |Creative performance ways make |(http://stocknews. vn/default. aspx? tabid=300&ID=18523&CateID=209 | |employees |customer saving money. ) | |Maintaining our integrity |(http://www. reecorp. com/? q=en/n|In? 2011, the Group will achieve strong? revenue and profit growth| |(http://www. reecorp. com/? q=en/node/189) |ode/197 ) |in the mechanical and electrical? engineering business and the | | | |business? of Reetech? products, maintain the office lease | | | |business? t a? high occupancy level, and optimize | | | |the? allocation? of? capital? raised? of? 810? billion dong from a | | | |convertible | | | |bond? issuance? in? 2010? in? infrastructure? investments? in | | | |electricity,? ater,? and? real estate? projects. | | | |(REE annual report 2010, page 69) | Stakeholders: While vision, mission, values and objectives set the direction for a company, stakeholders are the one that shapes and directly influences these features. According to Johnson, Scholes and Whittington (2006) define stakeholders as “individuals or groups who depend on the organization to fulfill their own goals and on whom, in turn, the organization depends”.

Consequently, REE Corporation impacts and are affected by different stakeholders. | |Influence of the stake holder | |Internal stakeholders   |This include managers and employees and are those that are situated within the | | |company and affect the ‘day-to-day’ running of the organization.

Furthermore, they | | |are interested in the company’s continuation and growth, can influence the company | | |from the inside and will directly influence the quality of jobs done in the company. | | | | |Connected stakeholders |cover groups such as shareholders, suppliers and customers, and are parties which | | |invest or have dealings with the firm.

Moreover, they are usually connected to the | | |company on a contractual basis. They mostly influence the company through the | | |distribution of company resources such as capital, raw materials etc and profit and | | |production cost the company will generate. |External stakeholders |The third groups, , are those not directly linked to the organization but who can be| | |influenced or influence activities of the firm through various means. External | | |stakeholders include the Government, neighbours, pressure groups, local councils and| | |the surrounding community. | | |(http://www. rticlesbase. com/management-articles/stakeholders-and-how-they-affect-yo| | |ur-business-760088. html ) | A helpful method used to evaluate and analyze how influential stakeholders is stakeholder mapping. In the Power/Interest matrix below, stakeholders are categorized on a graph rating their level of interest against the power they possess to exercise those interests.

The stakeholders in this way are broadly divided into four groups; low interest-low power (A), high interest-low power (B), low interest-high power (C) and high interest- high power (D). [pic] (http://www. lmcuk. com/management-tool/stakeholder-mapping) According to Fig, for a customer orientated company such as REE Corporation, the customer is a strong force that the company’s management has to take into consideration. Customers are likely to put into group B since they share a strong interest in the quality of the company’s products and services.

The power of the customers is emphasized by the obvious fact that without customers, REE will lose its market and then will be no longer exist after a period of continuing losses. Therefore, whatever REE’s management is planning to do, they have to take into consideration the influence of stakeholders. They may regard one group of stakeholders higher than another, but after all, they can’t ignore any group. 2. Achievement of stakeholder’s objectives: Different stakeholder groups have different objectives in a organization. Stakeholders |Objectives | |Shareholders |-High profits | | |-High dividend | | |- Long term growth | | -Prospect of capital gain | | |-A say in the business | | |-Preferential treatment as customers | |Employees |-High salary | | |-Job security | | |-Good working conditions | | |-Fair treatment | | |-Fringe benefits | | |-Health and safety | | |-Promotion prospects | | |-Training opportunities | |Customers |-Low prices | | |-Value for money | | |-High quality products | | |- Good service | | |-Innovation | | |- Certain and regular supply | | |- Choice of goods i. e. variety | | |-Clear and accurate nformation | |Suppliers |-A long term relationship with the firm | | |- Large size and high value of contracts | | |- Frequent and regular orders | | |- Prompt payment | | |-Fair prices | |Creditors |-Prompt payment | | |-Payment of interest on outstanding debt | | |-Repayment at agreed date | | |- Credit worthiness of the organization | | |-Sufficient positive cash flow to meet obligations | |The |-Employment prospects | |community |- Safeguarding the environment | |- Acceptance of social responsibility | | |- Ethical behavior | |Government |- Compliance with laws and regulations | | |- Efficient use of resources | | |-Employment | | |- Contribution to the national economy | | |- Payment of taxes | As seen from the table, The community is a highly concern for the corporation, that is the company needs to bring a good image to it.

To be able to that, the enterprise will consider “Employment prospects”, “Safeguarding the environment”, “Acceptance of social responsibility”, and “Ethical behavior” as the vital objectives to follow. Customers always concern about the price, the quality and the value of goods that they purchase as well as service after sale. In order to satisfy this, REE had develop a modern management system and customers service system. The company should often opens several special events for clients such as “Gratitude Conference to customers”, “Customer Day”, etc. and special occasions, customers always receive gifts or discounted products for using REE’s products. Furthermore, REE had launch variety product lines to fit its customers’ interest. Last but not least, the manufacturer information is clearly printed in the product packets.

Employees: to maximize salaries and job security, the objective of REE is promote creative thinking, bring equal opportunities and promotion for everyone, income stability, conditions and friendly working environment for employees. Make sure the employee is regularly improving care professional. Moreover, REE needs to improve organizational system, human resource development by offering a good training course and improve their skill. 3. REE Corporation’s responsibility and strategies employed to meet objectives of stakeholders. Organization is part of human society, therefore it has many obligations towards the people or group of people and the environment in the society. |responsibilities |Strategies: | |The social |“The social responsibilities of an organization|The corporation make social commitment, for example, REE must | | |may be defined as the obligations that the |ensure that their business do not harm to ecological | | |organization has towards the people and the |environment. For example, the refrigerator does not have CFC. In| | |environment in which the company operate”. |addition, REE provides good quality product to meet customers’ | | |When doing business, organization has to take |need.

That is an effective using strategy as well as providing | | |notice of social responsibility as well as |work opportunity for the locals and people from the rural areas. | | |making profit to return its stakeholders. |REE also obey the law and policy given by government to avoid | | | |damaging the society. | |The environmental |While producing the products, the production |The manufacture must follow environment policies. There are a | | |process needs to be friendly with the |lot of environment elements that the company must consider, such| | |environment. |as land, water, air, etc that is limited.

In its business | | | |development process, REE is committed to the implementation of | | | |pro-active sustainable activities such as the environmental | | | |preservation with full consciousness of the importance of its | | | |corporate. REE to minimize the resources are used as much as | | | |possible. | |The business ethic |An enterprise has responsible for making the |Obey the law | | |code of ethics; these will lead the company to |Be fair | | |make the right decision for the society. Avoid harming others | | | |Prevent harm to others | | | |Respect the right of others | | | |Should not take unfair advantage of anyone through manipulation,| | | |concealment, abuse of privileged information, misrepresentation | | | |of facts or any other unfair-dealing practice. | | |Must not give or accept bribes, kickbacks, promises or | | | |preferential extensions of credit. | | | |Must approve or award orders, contracts and commitments based on| | | |objective business standards to avoid favoritism or perceived | | | |favoritism. | | | |Must not conspire or collude in any way with competitors. |The management |This has responsibilities to employees, | To employees: building recruitment policy and redundancy and | | |customers, suppliers, the local community and |retirement policies. | | |the general pubpic |To customers: providing a product of a quality that customers | | | |expect, and of dealing honestly and fairly with customers | | | |To suppliers: the organization should not delay payments to | | | |suppliers beyond the agreed credit period.

One more thing, all | | | |suppliers should be treated fairly. | | | |To the community: upholding the social and ethical values of the| | | |community and contributing towards the well-being of the | | | |community, eg sponsoring local events and charities, or | | | |providing facilities for the community to use.

Furthermore, | | | |responding constructively to complaints from local residents or | | | |politicians ( eg abou problems for local traffic caused by the | | | |organization’s delivery vehicles) | |Public relation and corporate|Bring the good image to customers mind | Open the events that help poor people in the whole country, | |image | |especially the place always get flooded like Hue. | | | |Support the financial sources for some charity center, for | | | |instance, S. O. S. | (BUSINESS ESSENTIAL, Business Environment, pg 60, 65-68) 4. Explanation of how economic systems in your country (Viet Nam) attempt to allocate and make effective use of resources available within the country. Vietnam is the mixed economy system, which is: “A “mixed” economy is a mix between socialism and capitalism.

It is a hodgepodge of freedoms and regulations, constantly changing because of the lack of principles involved. A mixed-economy is a sign of intellectual chaos. It is the attempt to gain the advantages of freedom without government having to give up its power. ” In fact, the company can control their production to make suitable to the change of the market. Besides, the government can control the company in some ways to protect the enterprise or to make more benefits for all of the members of society. Now, we will classify how mixed economy effective use of resources available within Vietnam. Vietnam is now in transition from a centrally -run to market economy.

The country’s constitution recognizes a socialist oriented multi sector economy operating under booth the market mechanism management by the state. Foreign and domestic private sectors are among the economic sectors constitutionally recognized in Vietnam. There are currently state-owned enterprise, state-private joint-stock companies, foreign invested enterprise, domestic private firm, cooperatives and household business operating in the country. A level playing field is being created to encourage all economic sectors to expand and develop. Therefore, there are few good sources which are cited as the good conditions for the organization such as: natural resources, human resources, financial resources and technology resources. (http://www. vietnam-ustrade. org/index. php? =news&do=detail&id=29&lang=english ) * Natural resources: Vietnam has natural material plentiful and rich minerals, agriculture, forestry and fishery such as Coal, crude oil, zinc, copper, silver, gold, manganese, iron. Agriculture, forestry, and fisheries (20. 58% of GDP, 2010): Principal products–rice, coffee, cashews, maize, pepper (spice), sweet potato, pork, peanut, cotton, plus extensive aquaculture of both fish and shellfish species. Cultivated land-12. 2 million hectares. Land use–21% arable; 28% forest and woodland; 51% other. It is advantage for economy of Vietnam. Vietnam has used this advantage as well as attracts foreign organization to invest in the country. The government has been doing many things to protect natural material while using it to improve economic. Human resources: human resources are always the most important factor to decide the strength of the whole country. As of 1/4/2009, Vietnam’s population: 85,789,573 people, second most populous country 13 in the world and 3rd in the region. The young generation accounted 55% national population so that Vietnam has a major advantage of labor resources. * Financial resources: Vietnam is developing country, so most of capital is from investment’s foreign organization and loan from the World Bank. After Vietnam joined in WTO, many foreign companies invested their money in Viet Nam. On the other hand, Vietnam is invested from Official Development Assistance (ODA capital), Foreign Direct Investment (FDI).

Project no 1 has US$130 million in total capital , of which $120million comes from ordinary capital resources (ORRC) and $10 million is from the Asian Development Fund(ADF). The loan airs to assist Vietnam as the country reform a number of state-owned enterprises and their affiliated companies to improve their efficient and governance. http://www. state. gov/r/pa/ei/bgn/4130. htm * Technology resources: Vietnam has good resources but skill and experience of them still below the standards. Vietnam is in a trouble of labor surplus in quantity and quality essential. Therefore, the country has to improve machines system, services, numbers and quality.

The government has to utilize technology form other developed countries. 5. The impact of social welfare and industrial policy initiatives on the organization and the wider community 1. Social welfare Social welfare policies set out by the Vietnamese government are to protect and directly improve citizens’ living standard. As a socialist orientation country, the Vietnamese government made the minimum standard of living for all of its citizens a primary task. From 2011 to 2020, the government will try to address the issues in three main areas: labour markets, social insurance and poverty reduction. According to Decree No. 70/2011/ND-CP and Decree No. 8/2009/ND-CP the government increased the minimum wage to 1,400,000 VND to 2,000,000 VND will push up the labour cost for the company. Also, Vietnamese Labour Law 1994, last edited in 2007 stated that employees must have the right to be provided health insurance in the company. REE will have to increase its labour costs in providing its employees with protection from not only diseases and accidents but also other things such as get pregnant etc. On the other hand, according to the Vice Minister for Labour, War Invalids and Social Affairs (MOLISA) Nguyen Thanh Hoa, the government will try to put into practice the policies including providing of unemployment benefits to the unemployed.

This is good sign for REE as it will not have to worry about straining its budget to buy insurance which also covers the risk of losing jobs for their employees. Therefore, the employees and the trade union of REE will be able to feel more secured about the workers’ source of income if they are to be unemployed. 2. Inductrial policy A country wish growth and economic development will require the appropriate economic policies in each stage of development. Among those policies, industrial policy is the most important policy for large industrial contribution to GDP and is the driving force for agricultural development as well as services. Because Viet Nam is developing country, industrial policy is the most important policy is the core of the industrialization strategy. http://thuvientructuyen. n/chi-tiet-tai-lieu/chinh-sach-cong-nghiep-cua-viet-nam-trong-chien-luoc-phat-trien-kinh-te-hien-nay/7114. ebook%E2%80%9D). Industrial Policy (IP) is a plan of a nation, “denotes a nation’s declared official, total strategic effort to influence sectorial development and, thus, national industry portfolio. ” These interventionist measures comprise “policies that stimulate specific activities and promote structural change”. In Vietnam, a lot of electronics corporations have sought investment opportunities and are willing to cooperate with Vietnamese enterprises. Recently, Intel Corp, the world€™s largest computer chip manufacturer, has invested in a chip assembling and testing plant in Vietnam with a total capital of over US$1 billion.

Many big companies also did the same way as Intel. After a year joining the WTO, Vietnam had been a world€™s largest manufacturer of printers and electronic chips. The remaining issue is to capture opportunities. To avoid the failure path, the Vietnamese electronics industry needs a clear development strategy from the improvement of human resources to R&D activities to enhance the competitiveness of electronics products. Besides, companies in Vietnam in general and REE Corp in particular should be encouraged to shift from manufacturing civil electronics products to producing specialised items, from assembling products to manufacturing parts and software products.

Local firms need to have more conditions to turn out products of higher high-tech content. The final work is planning. To avoid ineffectively unfocused investment, Vietnam needs to work out electronics development zones where electronics companies will locate their factories. (http://vietnambusiness. asia/vietnam-electronics-industry-stuck-with-assembly/ ) 6. The impact of macro economic policy measures and the influence of the global economy on the company and its stakeholders 1. The influence of the macro economic policy There are two main sets of macro-economic policy that the Vietnamese government enforces in order to influence level of economic activities within a country: fiscal and monetary policy.

And it is obvious that these two types of policy will definitely have an impact on the electronics manufacture industry in general and REE Corporation in particular. The government used Fiscal policy to directly influence the level of economic activities in a country with two main tools: Taxation (T) and Government spending/expenditure (G). Due to the recent global economic crisis, in 2009, Vietnamese government is still trying to recover its economy by increasing State budget and reducing tax at the same time as part of the stimulus package. However, on October 2009, the government has decided to end this stimulus package tax cuts and exemption programs except for the interest rate subsidy of 2% for medium and long term loads which will end at the end of 2010.

They plan to increase their spending on social welfare programs and other socioeconomic issues. This growing budget deficit potentially can cause inflation in the country, leading to higher prices for REE products and services . Furthermore, “ In order to benefit from the tax payment deferral, labor-intensive enterprises are required to employ at least 300 workers, not counting workers with contracts of three months or less. The right to delay payment for 2011 corporate income taxes for one year takes effect from the due date this year. Accordingly, corporate income tax in the first quarter of 2011 shall be settled before April 30, 2012; tax in the second quarter of 2011 shall be leared before July 30, 2012; tax in the third quarter of 2011 shall be paid before October 30, 2012; and tax in the fourth quarter of 2011 shall be settled before March 31, 2013. This decision takes effect on November 30, 2011” (http://www. vietnam-briefing. com/news/corporate-income-tax-delayed-year-laborintensive-enterprises. html/ ). This tax rate helps REE to increase profits, higher dividends to satisfy shareholders and staffs can also receive high salary.. This support from government will helped REE to be able to invest more in its manufacturing activities . Monetary policy is “one of the tools that a national Government uses to influence its economy.

Using its monetary authority to control the supply and availablity of money, a government attempts to influence the overall level of economic activity in line with its political objectives. Usually this goal is “macroeconomic stability” – low unemployment, low inflation, economic growth, and a balance of external payments” (http://www. finpipe. com/monpol. htm ). Loans come from banks is very important for finance issues of almost every companies including REE Corporation. The high interest rate will decrease in GDP. Vietnamese government adjusts interest rate at 8% which will help our economy to prevent inflation (http://mediaviet. vn/en/ServiceDetail. aspx? Category=4&SubCategory=40&Id=142 ). In addition, exchange rate is an advantage for REE.

Moreover, according to economics’ status, the banks will decide whether they increase or decrease the supply of money to the enterprise. 2. The influence of the global economy Vietnam has joined to ASEAN (28/7/1995), ASEM (2/3/1996), APEC (14/11/1998), United Nation (20/9/1977), ACCT (1979), and WTO (11/1/2007). 2011 is the first year implementing the country’s 5 -year plan from 2011-2015 (http://www. iso. org/iso/iso_action_plan_developingcountries-2011-2015. pdf ) and implementing the resolution annual party congress. with the recovery of the global and Vietnam economy, sound policies of the government, the state bank of Vietnam, relevant ministries, the trust support of customers,

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