Business and The Business Environment
Introduction: The report, an overview of the external and internal factors affecting the economy of the business. Based on external and internal factors that businesses must analyze, build a strategic path for the operation of the business.
1907–1944: Origins and expansion
The original AJI-NO-MOTO® (1909)
Oil painting of the Kawasaki factory from the 1910s
Ajinomoto Co., Inc. was created in 1908 as a accessory of Suzuki Pharmaceutical Co., Ltd., itself based in May 1907 by Saburosuke Suzuki II. Ajinomoto was created to allow Dr.Kikunae Ikeda, a Professor at Tokyo Imperial University, to trade monosodium glutamate seasoning made from wheat that he had invented. Ikeda created the seasoning after discovering that monosodium glutamate was the source of a flavour that he named “umami.” In April 1909, Ajinomoto presented Ikeda’s seasoning under the brand name “AJI-NO-MOTO” at a new product exhibition event in Tokyo, and began selling the product the next month. This gives us a better understanding of the processes within the company for me to complete this report.
Use contemporary examples to demonstrate both the positive and negative influence/impact the macro environment has on business operations.
Task 4. Identify the positive and negative impacts of the macro environment has upon business operations, supported by specific examples.
- Introduction: PESTLE framework
An enterprise based by many different factors, and it operates inside the limits of long-term enterprise’s advantage. The affiliate member of the enterprise tries their best to bring enterprise’s benefit including profits, property, the success of the business projects. In process, the development of effective, resonable development, goals of the strategical road in the enterprise. It depends on many factors of business environments such as political, economic, social, technological, legal, environment… and adapt company’s to circumstances or new surroundings in business environments. Business domain associated factors, a basic condition that it indirect effects activities of the enterprise. Those factors and basic conditions of business environment reciprocity together and company’s activities impact. On the other hand, the level and directions of impact about factors, basic conditions as different. In the same time and the same object, these advantage factors constitute opportunity but there are also factors constitute a disadvantage in the development of the enterprise – it takes form about risk, misfortune for the enterprise. That being so, the enterprise wants to improve about effective of the enterprise. The projects must collect and analyze information about the business environment, risk analysis, and forecast about as changeable as a weathercock of the business environment.
-There are 6 types of factors that have an effect on activities process of the enterprise in the business environment:
Political (P) : Political is the first factor that investor, the individual of the enterprise must care about it and statistical analysis so that they forecast about harmless level in domestic activities or foreign activities. The enterprise must follow with rigorous rules including hire employee policy, lend policy, prices, environmental sanitation… of domestic or foreign political. Ingredient such as political regulation, stable or political changes at a country and a territorial is the original signal to help the individual of the enterprise who know about excellent openings for a developing company or their company run the risk of being failed in business activities. As a result, they must case study of political so that the enterprise decides to long-term investment, short-term investment, business production on the market of national or international. Political factors are complex question in the business activities. The market economy want to fast-growing market, they must have the ability of the political situation of the geographical position of a country and they forecast about political happenings on a national scale, regional, the world so that they have many determine theirs company own destiny. Governmental policies of each country can make an chance or danger for the enterprise. Not a single person will desire to invest in a business or a project of a nation where have occur political dispute and military dispute. If you expend in these countries which have trouble about political dispute ( Iran, North Korea ), you will have occupational hazards in comparison with a country haven’t political dispute ( Singapore, US, Japan…).
Economic (E): The economical factor is one of the most essential factors in business activities, it depends on taking from and improve business environment. Anyhow, it exerts an power on the enterprise about fair competition or competes with other companies. This is a very essential factor and match the owners of the enterprise attention. Economical environment always bring opportunity and risk with many enterprise in different industries and it exerts an influence on a strategy of the enterprise. Therefore many factors of the macro environment but we can say the following factors have effective with business activities.
- The growth rate of the economic: High-growing economic and stable economic appoint precondition for business invest of the enterprise. Also, it will make the high-growing income of working classes and it brings power and service for the enterprise’s earnings. This is a great for the enterprise respond a timely decision about the needs of the customer and it makes about succeed a complete prosperity in the business activities of the enterprise. Additionally, the economic go degressive of a country so that cost of customers go down and make rivalry between companies.
- Interest rate and interest rate trends in the economy: Interest rate and interest rate course in the economy have exercise an influence on the general trend of the save, activity, investment so that it apply an influence on the enterprise. If interest rate increases, the enterprise’s demand for loans decreases. The organization wants to loan in order that the enterprise planning to extend about business activities, production activities. That being so, it brings adverse effect with the enterprise’s profits. When interest rate expand, it encourage customers to send their more money into the Bank and customer’s demand reduces. The bank’s lending interest rate: if the bank’s lending interest rate go up, the cost of the enterprise’s business activities go up. It makes the fight of the enterprise go lower when other the enterprise have potential about capital.
Exchange rate: This is a factor that impacts rapidly and deep with each country, each enterprise. The most particularly, the economic is open when the value of currency market has gone ahead in price.
` The exchange rate can make not only the golden opportunity but also risk for the enterprise’s development. It causing with improvement a policy in import and export. The Government normally use this tool then they correct relationships of import and export, it brings many long-term benefits for economic.
- Inflation: Inflation is also one important factor that we need to think from all sides and analyses. High or low inflation can apply an influence on invest rate of the economy. When inflation is too advanced, it makes many high risks about the investment of the enterprise, purchasing power also decreased, come to impasse in the economy. When a country has complex with high inflation, enterprises does not invest in any project of business activities. Most particularly, the investment in wide-open of the production activity and the investment in innovating technology of the enterprise because enterprises are afraid of business risks. Economic process can also be defined as a decrease in the purchasing power of the currency.
- The tax system and tax rate: Priority and limitation of the Government with industry group through tax law. The change of the tax system and tax rate can create chance or hazard for enterprises because it makes changes about cost level and income of enterprise.
→ Each economic factors are may be an chance or hazard for the enterprise. For example, in the time of financial condition, all people are obligatory to cut down spending so that production of enterprises and the business of luxury, expensive items will be a risk of not sell. In line, production of enterprises about essential items, cheap items, the essential items, this is an opportunity to increase sales.
Social (S): there are numerous definitions of social but common point of social is a system of values and standards in the life of people. Social has participated with many groups of people and they build together for better benefits of social. The worth form on social foundation, it brings forward background that social standards are formed and demonstrated. The worth of social view liberty of individual, justice, obligation of social, collective responsibility,… The belief also are reflected in the political system and economy of the social. The regular are rules from social, it obliges people about carrying their duties of social rules. The regular can divide up to two main ingredient: the national character and the national custom. The national character is formula in daily life including the problems about style of dress, behavior in society, … The enterprise need to study about social factors after they will realize opportunities and risks for the enterprise. When one or more factors happening, it can causing the development of the enterprise such as entertainment hobby, the standard of ethics, business community,… Social factors rarely slowly about change or progress, therefore, its very difficulty realize. For instance, there is a large amount of worker are women in recent years because laborer’s viewpoint has changed between men or women. In spite of, there is an enterprise that realizes about the change of labor. That being so, the enterprise can’t forecast about labor impact and put forward suitable strategy. In the social situation, the factors have important role such as customs, lifestyle, religion. These section are named barrier for business activities. The representation and the customs of customers have large influence with demand because even the case of goods with good quality but customer don’t like about products. They also necessary have to accept failure for the enterprise.
Technology (T): Technology is one of the dynamical factors that it implicates with opportunities and risks for enterprises.
The pressure level and threats from technology environment:
- The emergence of new technologies creates chance for the competitiveness of the secondary products and it threats the traditional products of industry.
- The increase of new technologies makes old technologies outdated and it creates economic force for enterprises. Enterprises must focus about technological creativity because technological creativity helps enterprises on the road of competition with other competitor in industry.
The group of technology effect have two basic factors: the competitiveness on the market and the ability consume about products of enterprises. Recent technology of business production contributes to change about quality of goods, services, increase productivity.
Besides these threats, technology creates opportunities for enterprises:
- Fresh technology can create status for cheaper productions but high-quality, make the products with better competitiveness.
- The arrival of new technology can form products with more features and creates new markets for products and services in the enterprise.
In addition to these aspects, the owner of enterprise should note some point when learn technology environment:
- The force from development of technology and the level of outlay for technology development is different through different industry. The media industry, electronics industry, aviation, pharmaceuticals always have rate of technological innovation higher than textile industry, forestry, agriculture because the level of spending of technology development is often higher. That being so, the individual of the sectors affected by fast technical change so that the process of evaluating about opportunities, threats become important problem of the control with external factors.
- Confident plane figure can get encouragement and sponsor from the Government for the research and development when it suits about the direction and priority of the government. If enterprises knows opportunities for Government- sponsored projects, the will have the advantage of operation process.
Legal (L): the legal factor has much more influence with business operations of the enterprise. The enterprise obey with the rules of government including the policy of employee recruitment, the policy of business tax, the price of products,… At the same time, the activities of Government also create many opportunities or risks for the enterprise. For instance, a number of programs from Government including the remission policy of tax, the tax of products competition from import that create opportunities of the enterprise not only development but also survival on the market. In contrast, the change of the tax in an industry that bring many risks of profits in the enterprise. Business organization activities of enterprise are accepted by the condition of social but the condition of social didn’t allowed because the enterprise break many regulation of legal factor. Authorities will intervene with business activities if the enterprise happy chance principles of legal factor including law system and social policy. For instance, the society all the time care about environment pollution or the save of energy in the policy of Government. The society demand with stern rules about food safety for customers.
Environment (E): Natural premiss including geographical location, climate, natural landscape, land, mineral resources… We can express that natural conditions all the time have an important factor in the lives of people (especially, factors of ecological environment). Additionally, it is also an signal very important of economic industries such as agriculture, industry, tourism, transportation. Therefore, the natural conditions becomes an essential element in order to form competitiveness of products, services in business activities.
Rather, we are observer of natural conditions that has been serious downgraded in recent years. Particularly, the pollution of the environment is increasing, the rapid exhaustion and scarcity of the earth’s natural resource. The value that people pay for range of environment is considerable.
The possessor of the enterprises needs penetrating intelligence with threats and opportunities of three trends in the environment:
- Deficit of materials
- Gain energy costs
- The level of environmental pollution change
→ Environment factors can charge advantages and disadvantage in development of enterprise. The best geographical location will market expansion, product introduction. Rich and uniform about natural resources helps enterprises raise the sense of initiative in supply materials for business process, respond for market demand, creating conditions for enterprise’s production.
- Pepsi corporation established in 1898, headquarter in Influence city, The state of New York, U.S. 1965, Pepsi corporation and Frito-Lay corporation unified together after they form Pepsi-Co corporation. The expression “Pepsi-Co” is abbreviated to “pep”. Pepsi-Co corporation is one of the companies that produces the largest foods and drinks in the world. In 2016 September, the corporation’s Pepsi-Co income was 61,8 billion dollars. Pepsi-Co has a distribution system and sales network in over 200 countries. Pepsi has more then 166.000 thousands employees around the world. The basic business activities including snacks (Frito-Lay), drinks (Pepsi), drinks for sport players (Gatorade), foodstuffs (Quaker) and fruit juice (Tropicana). Apart from that, the company also owns many the brands of drinks such as Mirinda, 7 UP, Mountain Dew or Mineral water (Aquafina).
- Political, economical, social, technological, legal factors, and environment. There are six factors that has straightforward connection with the economic structure in the enterprise. These factors are external factors of enterprise and industry and they are influenced as an objective factor. The enterprise founded on those factors to solve difficulty for the policy, business operations.
- Political: Not only the improvement of the economy but also the legal system of Vietnam was more improved, Pepsi-Co corporation must confront with barriers and principle very stringent. It make over the leaders of Pepsi-Co corporation with big challenges and difficulties in business operations. As a result, Pepsi-Co must focus on analyzing about barriers and difficulties that the enterprise is encountering complications in political factor. In future, they try to solve for many problems but it must be suited with political and standard for the enterprise’s development. The enterprise of Vietnam happened with comfort and smooth for Pepsi-Co corporation in recent years, because of the political of Vietnam has peaceful co-existence in comparison with any other country all over the world.
- Economic: The world’s economic has reinstate the economy trends and the Asian region was forecast about the region of economic growth the fastest than other regions in the future. As reported by the bank of Asia, the economic of Asia grow about 6,3% / years (GDP). Asia, Vietnam always obtain adequate results and impression achievements of business activities. Vietnam is one of the countries with the quickest economic growth in East Asia Pacific before economic crisis of the worldwide and Vietnam always hold up its position behind the crisis. The economic growth contribute to ameliorate the lives of people, the gain of spending and it makes Vietnam become potential market, attractive market for entrepreneurs.
- Social: Vietnam is a province with more then 50 nationalities, each nationality has difference about national character, taste, basic needs. Social always has estate division about rich people and poor people, each estate has the different demand of products or services. That being so, Pepsi-Co corporation always development orientation for their products according to the demand of customer.
Technical: technical becomes a factor that determine enterprise’s faith. The successful or failure of the business planning always has been contributed to the productions of enterprise by technical factor. In present time, technical factor is a fast-growing factor and creative application in business activities. The technology request of the drinks industry focuses on production process, make use of improved tools about packing for products, Pepsi-Co corporation will do their best to reduce water quantity and energy used to productions as well as recycling.
- Environmental: The environmental factor that influence the business operation of Pepsi-Co corporation including pollution environment, are short of materials resource,… The first, pollution environment all the time are one of important factor in the business process. A definite quantity of emissions and waste material of the enterprise because the enterprise eliminates in environment from the business process of the enterprise. It is hot cognitive content with the people in present. As a result, the enterprise must put forward many policies about an environment protection and they create many products with criterion including products from nature, environmental friendliness. The second, the little materials resource brings many difficulties for the business process of the enterprise. Materials resource decrease and become exhausted because of the human developing of resources more and more.
- Evaluate the positive and negative impacts of the macro environment on business operations.
- Positive: The political factor in our country is more and more distributed for economic sectors. As a result, it brings many benefits to the industry. The trend of integration is acceleratory, enabling the industry to develop abroad.
- Negative: Politics of many countries is not stable, some countries still have frequent war (Iraq, Pakistan, …). That being so, Pepsi’s capitalist have to analyze in particular and clearly if they want to develop their market share in politically unstable countries.
- Posititive: The economy in Vietnam has all the time been stable over the years. In the last years, the fast-growing male economy has contributed to the development of the beverage industry.
- Negative: The world-wide economy is constantly facing fast inflation. Inflationary factors causing the market share of Pepsi products in the market.
- Positive: The property of cultural values: Pepsi has become close to consumers not only in Vietnam but also in the world. Citizen use drinks (pepsi) on the job, meeting friends, discussing work, talking with relatives or friends and watching movies. Pepsi impact people’s lives because it creates a sense of well-being, comfort in work and life.
- Negative: In the drinkable industry, pepsi has to compete with many alternative products. In element, consumer tastes play an important role in the development of the beverage industry. Today, there are many types of drinkable available on the market for consumers to choose and use. Therefore, the risk is sizeable for the pepsi manufacturers.
4.2 How the organization goes through the transformation process and overcome resistance to change in response to the changing market environment.
The globalizing economy tends to freedom, group action, and development, including economic globalization powerful impact on all aspects of the economy and world society. Globalization carry many asset such as the growth rate of foreign trade increased investment value, network operations associated financing, creating favorable conditions for developing production and raise living standards. In spite of, the worldwide environment has many disadvantages as well as the inequality in wealth is high, it can lead to the bankruptcy of the Company destructive cultural traditions, cradle and natural resource decrease, which the cause of the financial crisis and economic part and the world. Facing the reward and effort in world trade, to capture trends and economic development, enterprises must boost the development of production, be strengthening international cooperation, utilise the maximum in terms of art on the art manufacturing processes and personnel. In the trend of economic process, in addition to change and application of technical factors in the economy, fostering and exchange of skilled people are essential. Cultural human resources to ensure their knowledge and their skills, in order to not become outdated. Collateral issues that enterprises should have discriminatory policies for employees, insurance, aid around and create a dynamic environment, with the ability to develop and attract human resources. Businesses must comply with the regulations on economic organizations. Loyalty and adherence to business ethics, not processing, production and use of assumed and pirated goods, poor quality, affecting the health of consumers. Apart from that, the enterprise must be responsible for the operating environment.
LO4 Determine the internal strengths and weaknesses of specific businesses and explain their interrelationship with external macro factors
Task 5 Conduct internal and external analysis of specific organizations in order to identify strengths and weaknesses.
5.1 Applying SWOT analysis to evaluate internal environment
(A case study of Ajinomoto company)
- Introduction: Ajinomoto corporation has 139 subsidiary organization, 30 member companies and 100 factories production in 22 countries and regions around the world. Ajinomoto corporation was based in 1991. Ajinomoto company of Vietnam has foreign invested capital (100%) with 9 millions dollar (USA) from Ajinomoto corporation (Japan). The company increased and improved about productivity, good quality for business operations. The company’s activities in three area of operations including food products, pharmaceutical products and areas related to health with 1.900 products. Head office of the corporation with international name is Ajnomoto Co.,Inc in Japan. In Vietnam, the company’s head office in Ho Chi Minh city and Ha Noi. In spite of, the company has 5 distribution center including Hai Duong, Da Nang, Khanh Hoa, Dong Nai and Can Tho with 53 branches all over the country. The staff of Ajinomoto Vietnam has about 2.830 people.
- Vision of Ajinomoto Vietnam: the enterprise want to become one of the enterprise filled with key factors such as an amazing company, a increased industry, a strong development company with “a secluded specific characteristics” in area of operations about food products and heath. The company want to pioneer research into production of spice, adapt with the cultures around the world and build the business conditions for the creation new markets.
- Mission of Ajinomoto Vietnam: the enterprise is involved not only the development of Vietnam but also bring happiness, heath for people in Vietnam through the culture of eating and drinking, food resources development. The enterprise is dedicated to improve maximum the value of society through business activities by the solve about social problems and the improvement about the global environment.
- With vision and mission of Ajinomoto, the enterprise all the time incessantly do their best with research and development business activities. They desire is to bring a diversified culinary with many products, spice. They create many products with the best quality, safety, suitability every the taste of Vietnamese. Apart from that, they are always contribute to the development of a diversified culinary in Vietnam through they play a consultative role and introduction of new aromatic flavors for Vietnamese. The spices that bring the delicious meal and happiness for all the family. As a result, they also identified an important business principle called ASV (operation and creation on common values of Ajinomoto) in order to create values that they contributes to not only society through business activities of the enterprise but also solving the problems of society such as environmental care and sustainable development. They need to maintain to hight level and development about food products, improve about nutritional of products, the healthy life of citizens.
- SWOT analysis:
|Organizational structure||Human resources||Company image||Physical capital||Financial|
|strengths||The Organizational structure of the enterprise was formed by an online model with departments. Departments have purpose and common task about qualifications of the enterprise. It assist enterprise that complete all business operations, productions process. Managing director who is the high ability of enterprise. They have purpose about solve strategical road of business activities. The Assistant director who must complete their mission about management of production process including choose materials, finished products. The enterprise impulse the development of specializing production, technical skill for employees. Administrators create to increase the efficiency of operations through a combination of a coworker in the enterprise. The division of enterprise distribution power and the work very clear. It helps increase the productivity of the enterprise.||Ajinomoto Corporation has abundant human resources with 2.430 employees. The employees of Ajinomoto Corporation has laborious, intelligent, creative in work. The superior of employees incessantly improves through every day. The employees of Ajinomoto Corporation has a high level of education and the ability to communicate with English. The employees have knowledge about working in the group and stand with high pressure from the job.|
|Ajinomoto corporation is construction image of a product that is known all over the world. The customers always support for products of the enterprise because they have carefully prepared for business strategy. They very active about technical innovation, research development|
of production process. They create many new products, increase customer’s choice. They receive many comments of customer about a company that have production process: clean, food safety, biology friendliness.
|Ajinomoto Corporation has many strengths in the material capital because of the evolution of the business in recent years. It brings a lot of profit to the company from the business. To date, the company has 136 subsidiaries, 20 member companies, and 110 domestic or foreign plants. Ajinomoto Group receives capital (100%) support from foreign investors of Ajinomoto Group (Japan).||Ajinomoto Corporation has many the policies for boost of products such as the policy of products, the price policy of products, the distribution policy of products,…Ajinomoto corporation has many financial resources from business activities.|
The fiscal resources of the company are attributed to the process of producing and selling products because the market share of the company’s products always accounts for the market share in the domestic market.
|Weaknesses||The leaders of enterprise only centered on the work every day so that organization structure reduces connectivity and exchange between departments. As a result, it makes the clash of work between department about arranging according to the priority of production process. The enterprise has much trouble with the combination between departments. When the enterprise hasn’t connected between employees in different departments, the enterprise has trouble with business organization. The individual rank first of the enterprise who has trouble about spending more time to coordinate activities of all members in different departments.||The Ajinomoto organization is dependent on the material capital of the parent company for processes such as factory building, market development, business expansion.|
|opportunities||Departments that work closely together that create high productivity in the business process. The smooth combination of the departments of the company has helped the company build its image not only in Vietnam but also in the world.|| |
The employees of Ajinomoto Corporation are working reported to office hours from Monday to Friday. They have two days off (Saturday and Sunday). The employees work in the dynamic surroundings. The employees receive high salary system, executive compensation, gifts, employer’s susceptibility insurance, training. Students are studying in universities. They are recruited for professional training by Ajinomoto company.
Ajinomoto held product distribution model, the staff in the same team with the opportunity to exchange and training and professional skills appropriate for the job. Besides, there are also opportunities to study abroad to apply to reality.
Laboratory building standards to ensure workplace standards. From there, engineers can prove the maximum capacity and efficient productivity.
Search for new human resources:
Ajinomoto glad to welcome new students to graduate and absolutely no experience. Because in view of Ajinomoto, Is very easy step to paint a beautiful pure white paper painting. Those who do not have work experience, Ajinomoto offer oportunity of exchange skills personnel and will be trained in the company.
Ajinomoto corporation has production of food products including spices, cooking oil, drinks, medicine,… the company has many competitors in the production of spices including Maggi, Vedan, Nestle… Japanese are very restrictive and don’t use MSG in cooking. They just process food from nature materials. Domestic production is mainly used for export. Therefore, the enterprise has disadvantage of market share in domestic.
Timely request of technology to the production model, Ajinomoto had the chance to increase productivity, product return, reduced profitability and higher personnel, with high economic efficiency
5.2 Introduction: “Porter’s five forces model”.
- In Japan: Ajinomoto corporation is structure image for the products and they take reward of an opportunity about trust of customers. Ajinomoto corporation continuously cooperate between a new direction in research and technological conception. They appoint many new products so that the customers has the choice between the type of products in the organization. Ajinomoto corporation has a sound basis high technical and knowledge about quality control of markets. Ajinomoto want most of times to preserve about company image. At the same time, products consumer only make up 1,5% the number of production in Japan. Ajinomoto corporation primary produce for export because a number of clients are in South East Asia.
- In Vietnam: Ajinomoto corporation has an superior piece of research about culinary culture of Vietnamese. They continuously try their best with induction and they want to raise of good quality, high demand of customers. In production procedure of spice, Ajinomoto have many competitors including Vedan, Masan, Maggi… Ajinomoto corporation aim at the target on the choice of products. They continuously invest more capital for equipment, advanced technology of Japan. Apart from that, they also are building and applying into control system about food safety. As a result, Ajinomoto corporation always supply products with high quality on the market. They confirm their foothold in the market. Clients easily look to Ajinomoto because all the employees of Ajinomoto corporation super polite, enthusiasm, thoughtful with customers.
- In Japan: Ajinomoto corporations specialize in production of food products consider spices, cooking oil, drinks, and different services. The company has numerous problems from competition on the markets (Maggi, Nestle,…). The domestic market, Ajinomoto corporation always take the advantage in the movement for production. For example, product of Ajinomoto corporation about MSG power of the market with high market share (2016). The company has the advanced sales from medical products and always grow through every years ( more than 80% on the market). In agreement with the number of Ajinomoto corporation, products of LIVACT ( It helps therapeutic method of cirrhosis) has a turnover of 15.8 billion JPY in 2016 (increase 98%). Like this, Ajinomoto corporation has knowledge about sensitivity analysis of the market share, they rely on their ability in order that create full turnover of the enterprise.
- In Vietnam: In the market of Vietnam, the company has main rival from Vedan. Vedan break into the market of Vietnam with the advanced market share than Ajinomoto corporation. Vedan exploited to the lead in the market of Vietnam. Ajinomoto corporation create superior policy about invest much time and energy in waste assortment research program.
- New competitors:
- In Japan: Japanese very are strictly and don’t use MSG in cooking. They just process organic food. Domestic production is mainly used for export. That being so, the enterprise has disadvantage of market share in domestic.
- In Vietnam: Vietnam has high market, as a result, competition don’t have the ambition movement between enterprise. They selected target market with customers, enterprises compete with other enterprise about market share. They care about two large factors such as build brand name and struggle for market share. They always want to increase for products and build marketing, strategical road in long time. Ajinomoto corporation clear define about quality goods, a medium-goods and come onto the market with different price. The prosperity of enterprise depend on not only price level but also taste for clients. Especially, products of Maggi, Krorr, Chinsu bring many challenging for Ajinomoto corporation.
- Threat of substitutes:
- In Japan: Not only rival but also secondary products didn’t put an essential place on the market of Japan. Japanese’s request about products of spice are very low.
- in Vietnam: today, MSC is products of spice that has not indispensable of every meal in the life of Vietnamese. Vietnamese all the time use MSC in cooking as well as restaurant. Secondary products (super MSC) has many factors about create flavor for food, little harmful for food and it influence on central nervous system for stimulation appetite. On the other hand, super MSC has uses as well as MSC, they are spice. Apart from that, customers meet with difficulties about they can’t tell them between MSC and super MSC. Super MSC create strong flavor for foods more than MSC and super MSC can’t impact on profit of MSC.
- Bargaining Power of Suppliers:
- In Japan: materials origin of Ajinomoto corporation can easy buy from everywhere. Materials origin has low price and profuse good from supplier. Ajinomoto corporation reduced many disadvantage because supplier bring long-term benefit for the company. Excluding, Ajinomoto corporation buy materials origin from local of every country, the enterprise also urge the development of agriculture of local. For instance, the development of cultivation about agricultural plants because agricultural industry has receive many assistance of Ajinomoto corporation. Ajonomoto corporation purchase materials origin from agriculture industry so that Ajinomoto corporation has stabilised in business activities. It helps gain productivity of agricultural industry.
- In Vietnam: Ajinomoto corporation use a number of material origin from agriculture industry including manioc and sugarcane. It go to production activities and material source of Ajinomoto corporation generally was supplied by farms and peasantry in domestic. In the property development, Ajinomoto corporation applied of project, they want to not only support for peasantry but also provide many the nutritive for agriculture plants, vegetables, other crop plants…. As a result, they create the quality of products at the same time develop for new products in Vietnam through test project for production process. They encourage class about fertilizer (ami-ami) was produced by waste of production process and peasantry always use it in the development of agricultural industry. Ajinomoto corporation invent a clever policy so they absolutely create many advantage with supplier about they cut back on mutualist, they create good relationship with supplier as well as their trust for consumption many products from waste of production process in Ajinomoto corporation.
→ we can recognize many advantage or disadvantage of macro environment in Ajinomoto corporation but it can’t say all factors of macro environment because it has not apply for special cases or disturbance in the enterprise. On the other hand, we can see about macro environment of Japan and Vietnam at the same industry. Japan and Vietnam are two market about production of spice products but both has many different feature in production process. As a result, leaders of Vietnam and Japan must evaluate about strategical road of business operations.
Task 6 Explain how strengths and weaknesses interrelate with external macro factors
- Introduction: Government policies:
- Trade policy (Tariff/ Quota/ Exchange rate): International trade policy is the appropriate point of view, value, and measures of a country. It is used to adjust the international trade of that country for a certain period of time, in order to achieve its economic, political and social objectives.
- Economic closure: This is the policy of a country to deal with foreign goods and to use domestic resources to create the domestic economy. The economic approach policy has many features such as demoralizing investment from foreign capital to create the domestic economy, producing goods for domestic use and not investing in exports.
→ Advantages: The policy of protecting the domestic production procedure from the competition of foreign products. All resources of the country are used in the development process.
→ Disadvantages: slow and growing countries are constrained by economic closure. They have difficulty in exploit advanced science and technology from advanced countries. That being so, they have difficulty in exploding the productivity of the business process. The countries that implement the policy of closing the economy. They will not centering on exporting goods to foreign markets. On the other hand, they not only won’t make profits for the business but also won’t contribute to the development of the country.
- Economic opening policy: A country’s policy the development of domestic economic through external resources. In this policy, states advocate grow relations with other countries. Evolution of export process to attract capital and advanced technology from developed countries.
→ Advantage: Countries that promote the export process will gain a lot of foreign currency and it contributes to the development of the country’s economy.
→ disadvantage: The domestic economy is dependent on the worldwide economy.
The trade scale records changes in a country’s exports and imports over a given period of time (quarter or year) and the difference (NX = exports – imports) between them. When the difference is much more than 0, the trade balance has a surplus. Proposition, when the difference is less than 0, the trade balance has a deficit. When the difference is 0, the trade balance is in equilibrium.
The main tools of worldwide trade policy
Tariffs: Import or export taxes or import / export taxes or tariffs are common names for two types of taxes in the field of worldwide trade. That is the import tax and export tax. Import tariffs are taxes levied on imported goods, and export taxes are taxes service on exports.
– Direct tax: fixed tax rate on the amount of imports and exports
– Comparative tax: deducted as a part of the worth of import and export goods
– assorted taxes
– Year-round taxes
Trade quotas: A quota or quantity restriction is a country’s regulation about the advanced quantity of an item or group of goods. they allowed to export or import from a market over a given period of time through licensing.
→ the tax creates financial gain for the government. Quotas create income for foreign manufacturers of imported goods.
- b) Fiscal policy (Tax/ Government spending): Fiscal policy can be interpreted as government interventions on the tax system and government spending to achieve the finish of the macro economy such as economic growth, employment generation Or stabilize prices and inflation. Therefore, the implementation of fiscal policy will be carried out by the government and will involve changes in tax policy or government spending.
To implement fiscal policy, the government will demand the usage of its tools. Fiscal policy tools include tax tools, spending tools, and funding tools for budget deficits. There are various types of taxes such as corporate income tax, personal income tax, value added tax, excise tax, real estate tax, etc., but it can be divided into two categories taxes: direct taxes and indirect taxes. A direct tax is a direct tax levied on a person’s property or income, while indirect taxes are taxes on the value of goods or services through the industry and intake of the economy. Likewise, government spending policies are multifaceted, but they can also be roughly separated into two main parts: regular expenditures (such as salaries for civil servants, Health, science, and technology, national security and defense) and development investment (such as socioeconomic ).
Tax policy (T) mostly (not only taxes but also other non-taxable and non-taxable revenues, and we believe grant as a negative tax) and government spending (G) (Spending procurement of goods and services of government).
Thus, we see three states of the budget balance (T – G):
If T> G => we call a budget excess
If T <G => we call a budget insufficiency
If T = G => we call the budget scale
In the case of budget surplus (T> G), we see the government having a optimistic saving. This savings can be used to pay off public debt (due to accumulated deficits in previous fiscal years) or to lend domestic or foreign economy. Reversed, if the budget shortfall then the government will have to borrow to finance the deficit. There is a structure to finance budget deficits, such as the issuance of government bonds/bonds (ie, domestic or foreign borrowing), the sale of national assets (for example, Raw or sold shares in state-owned enterprises) or even print money. Naturally, the government will have to weigh these options because each such option has the economic benefits and costs associated with it. For instance, the loan will have to pay interest, even foreign loans (foreign currency loans) will also bear the risk of exchange rate fluctuations. Likewise, if political entity asset sales could deplete the resources of future generations, or print money, it could exacerbate inflationary pressures and macro instability. In element to the issue of channel selection, the use of such funding is also a challenge. There is a rule of funding deficit that the government should not borrow to spend but to use for development investment. They call it the golden rule. The significance here is that borrowing to spend will not create the source of funding for future repayment, affecting the safety of public debt. Or else, borrowing is only utilised to finance investment projects that are capable of recovering capital, or at least also generating production capacity for the economy.
- c) Monetary policy (Interest rate/ Money supply)
Monetary policy: Monetary policy is a macroeconomic policy highly-developed and enforced by the central bank, through its instruments and measures, to achieve the objectives of stabilizing the value of money, creating jobs, economic growth.
Monetary policy is characterized in 2 basic directions: the policy of monetary expansion and the policy of monetary tightening:
- The policy of monetary expansion: Monetary expansion policies (increasing money supply, lowering interest rates) => boosting the production of the enterprise, reducing the unemployment rate for workers but high inflation rate.
- The policy of monetary tightening: Monetary tightening policy (reduce money supply, raise interest rates) => reduce production and business, gain unemployment rate for laborers but lower inflation rate.
The position of monetary policy: In the system of macroeconomic of the state, monetary policy is one of the most essential policies because it directly affects many areas. Collateral, it is closely linked with other economic policies such as fiscal policy and external economic policy.
The objective of monetary policy:
– change the worth of money: the world bank can affect the rise or fall of the domestic currency. The worth of money in a stable position depends on 2 factors: internal purchasing power and external purchasing power. Therefore, monetary policy is always intent to stabilize the value of the currency and it does not mean that the rate of inflation is zero. Therefore, the country wants to have a reducing rate of inflation, they have to accept the ascending rate of unemployment in the country.
– Increasing employment: the material policy about adjustment or expansion affects both the use of human resources and the size of the business thus affecting the unemployment rate of the economy. A country that desire to have a low unemployment rate, they have to accept the advanced rate of inflation.
– Economic growth: Economic growth has all the time been the finish of governments in shaping the economic policy of the macro environment. Governments must make certain that the cycle between the economy and the value of money is important. The target is achieved only when the government satisfies the two above.
Conclusion: I was studied in Classroom and home and I learned a lot to build for the business process of the business. This course, help me understand the factors that affect the business and force businesses to come up with solutions to solve. Upon completion, the company will benefit greatly from business operations as well as policies from the government.