Nguyen Duc Anh Summary Vinacafe Bien Hoa Company is one of the leading companies in Vietnam Coffee market

with total investment capital was 11 milions SD!VinacafeBH was a S"# $state owned enterprise% from 1&'( until )**+! Since then, -.V has incessantly developed /oth in sales, production scale and la/or force! -he core /usiness of the company involves in manufacturing and e0porting raw1material coffee1/ean, roasted1ground coffee and specially instant coffee $2 in 1% to appro0imately )* foreign countries3 markets! As /eing reported in the we/site of VinacafeBH, the turn1over of VinacafeBH Company increased +*4 per year from )**5!6n )*1*, the productivity of 6nstant coffee reached 2)** tons7year and it was e0pected to get twice in 1st 8uartter of )*12 /ecause of opeing new factory! -he company also has /uilt many factories and distri/uting networks with strategic regions in overall Vietnam! -he /usiness partners of Vinacafe come mainly from some developed countries such as .alaysia, Hong9ong, America, Australia, and # where the demand for coffee is high! Here are all a/out mission, vision, o/:ective, and core value of Vincafe! .ission; Vinacaf< Bien Hoa will produce and sell uni8ue, high 8uality /rands of /everage and food products that satisfy consumers at home and a/road! =e will do this /y understanding the needs of our consumers, customers and other stakeholders and /y operating within a clearly defined set of values! Corporate "/:ective; "ur corporate o/:ective is to deliver sustained and superior financial returns to our shareholders! =e will measure our achievement of this /y comparison with peer companies! Core Value; 6n working to achieve our o/:ective, we will add here to certain principles in the conduct of our /usiness! Specifically, we will; 1 Consistently seek to adopt international /est practice in all matters of corporate governance, including corporate social responsi/ility! 1 Conduct our financial affairs with prudence, always /eing aware that good risk management, asset preservation and li8uidity maintenance are essential for our success! 1 Develop and market products >and services? to meet our customer3s needs, /uilding our reputation for competitive pricing, consistent product 8uality, good customer service, and new product and service development! 1 .aintain solu/le coffee products as the principal component of our /usiness! 1 6nvest in people, developing the capa/ilities of our employees, promoting e0cellence, rewarding achievement and affording them the opportunity to share in our prosperity! 1 @espect food safety and environmental standards! Vinacafe $VCA% has /een incessantly provided high 8uality products and perfect customer services to /ring the highest satisfaction to customers as well as practically to contri/ute to the development of Vietnam coffee industry! -herefore,this report is made in order to assess the factors in /oth e0ternal and internal environment that could affect the performance of the company as well as taking analysis and evaluation the effect on decision making, the respond of the company and solutions for improvement due to the change in legal environment!

Company Information A, Internal point of View

1. Organizational Structure: -he internal factor which influences the /usiness most is organizational structure! Bohn $accessed )*1*% defined the organiCational structure is D the former system of task and reporting relationships that controls, coordinates, and motives employees so that they cooperate to achieve an organiCation3s goalsE! -herefore, the re8uirement to have a well1designed organiCational structure, which is suita/le and can help the organiCation in controlling the run of /usiness, is must and e0tremely important! Basically, there are + types of organiCational structure which are divisional structure, functional structure, product1/ased structure and matri0 structure! Due to the variety in /usiness conditions of organiCations as well as functions of each type of structure, different companies apply its own different structure! 6n this case, BienHoa organiCation operates its /usiness follow divisional structure! -he divisional structure, as Fupta $accessed )*1*% defined, is the structure where operating the work into different divisions and each division has it own set of functional units such as manufacturing, marketing! -he criteria to separate the /usiness into divisions can /ase on product, market or geographic issue! VCA has applied geographic /ased divisional structure since the siCe of /usiness of company is large and e0pands through many areas including oversea situation! .oreover, involving in organiCational structure, the impact of span of control needs to /e concerned! -he span of control normally refers to the num/er of su/ordinates that /e controlled under management3s authority! Fupta has said that the divisional structure appears to /e less in level of hierarchy of authority! Also talking a/out the span of control, .ullins $)**(% has pointed out that the wider the span of control, the less the level of authorities in the company is! 6n this meaning, the structure applied in VinacafeBH Company is the decentraliCation with wide span of control! -he decentraliCation structure means the management has empowered for su/1manager in order to, in this case, control and make decision to operate the /usiness of company within the area! -he fact is that the main management has empowered for managers of geographic divisions from HC. city to Hanoi and allows them to make decision and take responsi/ility for the running of their divisions! Summary, the geographic, decentraliCation structure and with a wide span of control help VinacafeBH in creating strengths for the competitiveness such as the fle0i/ility in response with changes in environment since decision can /e made as soon as the changes happen! .oreover, the reduction of e0penses as well as the improvement in productivity and motivation is reasona/le evidence for a good performance when applying this structure! However, the main weakness of this structure facing the company, via Fupta opinion, is the resources duplication! Since the /usiness is operated throughout many areas even oversea, the company must have invested a huge amount of money in order to /uild up a set of independent divisions as well as manage them to achieve the main o/:ectives of the company not only the division3s! 2.Materials: At the current time, there are two main kinds of coffee are 6nstant coffee $2 in 1% and roasted1 ground coffee in which 6nstant coffee is much more demanded /y foreign partners such as America,China,Bapan6talia, due to the special taste and 8uality of 6nstant coffee! -he core /usiness of the company involves in manufacturing, processing and e0porting 6nstant coffee! At the /eginning time, the main supplement of raw coffee material came from domestic individually coffee1farmers or small /usiness that supplies raw coffee material! However, since the siCe of /usiness e0pands into a larger siCe, the company strongly recogniCes that the supplication for raw coffee material was not fit either 8uantity or 8uality towards the higher demand of foreign parties! Since the material came from many sources, the control of 8uality for material was poor at that time! -herefore, the company /uilt up factories BienHoa 1 1&&2,, BienHoa ) in 1&&G and even national factory in Hao, where the weather is suita/le for the planning of coffee tree! -he company also has /uilt up a recycle system in factories to e0ploit the wastes of processing process such as coffee peel in order to make fertiliCer! After that, the fertiliCer will /e used in planning and caring coffee tree! Since the fertiliCer is a/solutely micro1organ fertiliCer, coffee farms are ensured performing good 8uality without either costs or harms for environment! As the result, at this time, the supplement of raw coffee /ean material for manufacturing reaches the demand not only in 8uantity /ut also in 8uality for the processing process! 6t can /e considered as a competitive strength for Vinacafe in term of material! However, at this moment, the economic crisis and its feature of high inflation rate leads farmers to the difficulty in caring plants! 6n this meaning, in order to encourage farmers to trade good 8ualified material and ensure for the sta/le supplement of material especially in the situation of economic crisis, the company has provided the policy that trading with farmer like market price, set the floor rate price in the case the price for coffee turns down! -he relation /etween the company and suppliers is good and follow the win1win model where /oth sides can make /enefit! Naturally, the coffee industry is monopolistic market! -here are a/out twenty /usinesses doing /usiness in the coffee industry in Vietnam! No individual /usiness in the industry can influence coffee industry in term of price! Since the /usiness involves in e0porting oversea, there are many suppliers come from different countries such as

BraCil, 6taly and so do customers! -he low /arriers to entry and e0it as well as the variety of suppliers cause the high level of competition within the industry! 6t is the chance for the company in term of e0panding /usiness overseasI however, the re8uirement of financial sources, technology and innovation is necessarily need to /e concerned! 3,Brand i agine:@elevant to the theory of competition market, Jaul $)**5% has pointed out that the only way to survive in a high competitive industry is to satisfy customers, /uild up the loyalty in customers3 mind! -herefore, the impact of brand image is mentioned /elow!According to Vineeth $accessed )*1*%, /rand image normally is Da unit set of associations in the minds of customers concerning what a /rand stand for and the implied promises the /rand makes! 6t normally means in order to gain a good /rand image, the success must go through customer loyalty! -he satisfaction and impression towards goods and services will encourage customers to repeat purchase and then /ecome loyalty! Naturally, as the result, the higher return is e0pected! 6n VinacafeBH Company, the /rand image towards foreign customers is e0tremely /etter than domestic customers! -he reason is that the /usiness of BienHoa Company focuses mainly on e0porting oversea! 6n fact, it is still a very good /rand image of VCA Company since 1**4 packages of e0porting instant coffee from Vinacafe are accepted all /y the foreign parties!6t is not only come from the 8uality packaged coffee delivered /y VCA /ut also from the relation /etween the company and foreign party! Since all the tasks from manufacturing to e0porting are controlled carefully following +C standard $standard of processing fresh coffee%, products from the company appear to /e e0tremely 8ualified and fit the taste of foreign customers! However, in domestic market, the /rand name of VCA needs to invest more toward to the siCe of the operation! -he market share in instant coffee market of VinacafeBH in )*1* increase significantly to +*4, mean while the competitors such as -rung Nguyen got )G4, and Nestle 2)4 $Viet/ao, accessed )*1* B, !"ternal #oint of View: 1, $inancial $actors: a,Inflation: inflation is a rise in the general level of prices of goods and services in an economy over a period of time! 6nflation affects /usiness as a whole! -he ma:or effect of inflation on firms is to discourage investment! High inflation /rings with it less predicta/le returns on capital purchased and the also the e0pectation that demand will fall in the future! -his discouragement of investment is one of the main reasons why the government wishes to limit inflation! How inflation will encourage investment and a help /usinesses develop a long term view! -here are other impacts on firms; 1 6ncreasing menu costs! 6f inflation is at a high level, firms will have to continuously re1price goods! -his re1 pricing /rings with it costs such as reprinting of /rochures, sales details etc! 1 6f inflation forces up the price of raw materials or components, the firm will /e forced to shop around for cheaper raw materials or components, again increasing costs to management! 6ncreased management time spent negotiating wage increases with employees! 6f inflation is high then there will /e more regular and continuing pressure for increase in wages! Negotiations with employees may /e almost permanent and there will /e an increased threat of industrial action! 1 -here is one ma:or advantage of inflation, and that is it will reduce the real cost of repaying loans! But this saving has to /e /alanced /y the high interest rates that go with high levels of inflation! Vietnam had high inflation rate! =orld Bank predicts the inflation rate of VN in )*11 will /e more than 1G4 1KSo, VinacafeBH will have many /enefits! Airstly,=hen Vietnam has a high inflation rate, the product instant1 coffee $2 in 1% will have a chance to increase the e0ported amount, this will /ring a lot of profit! Secondly, Vinacafe BH does not have to import any materials from outside, they /uy coffee1/ean from farmer,or have their own factory and land to supply /y themselves!So, VCA don3t have to suffer cost from imported materials, /ut they have to deal with increasing cost from materials! Besides, their la/our also want to raise their salary, in order to satisfy customer with sta/le 8uality and 8uantity to the market, they have to deal with this trou/le as well! As two sides of a coin, so, VCA will have to prepare their new plan in )*1) and in long1term to avoid inflation limitation and increase cost! b, Interest rate: An interest rate is the cost of /orrowing money or the return for investing money! -he /ase interest rate in the VN economy is set /y the State Bank of Vietnam! #ach month, the .onetary Jolicy Committee of the State Bank of VN to decide what the /ase rate should /e! During the inflation period of )*11, the /ase interest rate has growth sharply to as high as 1+4! -he /ase interest rate set /y the State Bank of VN affects other interest rates in the economy /ecause it is the rate at which /anks can themselves lend from the State Bank of VN!

Jerhaps the most straightforward impact of interest rates on Vinacafe is how rates influence /usiness /orrowing!VCA often need to take out short and medium loans to to make up for shortfalls in payroll or other e0penses, so higher interest rates make such shortfalls more costly, since the /usinesses will have to pay more interest /ack to lenders! VCA also fre8uently take out longer term de/t for improvements and infrastructure,for e0ample, /uilding new factory in Hong-hanh, Dong Nai province! -he higher the prevailing interest rates, the most costly taking on de/t and therefore the less likely /usinesses will /e a/le to commit the funds to such pro:ects! A second impact of interest rates on VCA is their a/ility to raise capital through stock the value of stock prices! =hen VCA company goes pu/lic, it sells shares of the company in the form of stock to raise capital! Su/se8uently, the implied value of the /usiness is tied to the share price of the stock, and share price is tied to demand for the companyLs stock! =hen interest rates are higher, the demand for investment tends to /e lower, so higher interest rates are generally detrimental for companyLs stocks, and their a/ility to raise money through a stock offering! -he reason higher interest rates are /ad for stocks is that higher interest rates make traditional saving more attractiveI if someone can earn a (4 guaranteed return /y saving at a /ank, they will /e less likely to risk money investing, than if they could only earn 1 or )4 in a savings account! c,Exchange rate: Exchange rate in foreign e0change market; fi0ed e0change rate$ e0; central /ank of Vietnam set a fi0ed rate M maintain their currencies each at a fi0ed e0change rate with the nited States dollar%/usiness get /enefit /ecause future and income cost do not affect /iCI M floating e0change rate$ follow the market%, governments no longer attempt to control their e0change rates or to impose controls upon access to foreign currencies or upon access to international financial markets and pegged e0change rate$ value is pegged to other currencies3 value;, if the currencies3 value of the countries /ased strong /etter for that country%! 6n Vietnam, foreign e0change system seems poorly /ecause state could not control the currency! 6t is not surprising that Vietnam has considered the SD a key nominal anchor! #@ affects to /iC working capital management, consider what currency receiva/lesM paya/le! Some of its most important trading partners, such as China, Hong 9ong, Singapore, -hailand and .alaysia,or some # countries have generally preferred a sta/le #@ relative to the SD! Hast 2 months of )*11,#@ of SD increase '!14!VinacafeBH mainly e0ported to others /y SD or #uro, they will get /enefit! #0change rate increase, their products3 value will rise rapidly and cost of good sold remain sta/le! So, Company get much /enefits! #0; SD rise 1,2**VND7usd 1 /o0 instant coffee $+(g% cost )5,*** VND $ e8ual to 1!) SD% Company receive nearly ),*** VND per /o0 -hey e0ported 2,)** tons of instant coffee they get 5,+** /ilions VND turn1over! d,Others Foreign direct investment F!I": Affect to /iC investment decision! 9ey criteria to national development! is a measure of foreign ownership of domestic productive assets such as factories, land and organiCations! -otal AD6 to -oyota Vietnam; '*4 of total capital from Fermany and 1*4 from Singapore! Vietnam is a developing contries attract more F!I# $igh F!I provide s%ills, information, expertise in technology, &ob opportunities for 'ietnam labour potential" improve productivity level produce totally ( models: vios, corolla, camry, innova, fortuner) hia%i# $elp Co avoid goveronmental pressure, cope *ith trade barriers export) import tax, CI+##": ,lobal financial system; 6nternational institutions; 6nternational .onetary fund, world /ank, world trade organiCation! I-F; -he 6nternational .onetary Aund $6.A% is an intergovernmental organiCation that oversees the glo/al financial system /y taking part in themacroeconomic policies of its esta/lished mem/ers, in particular those with an impact on e0change rate and the /alance of payments! -he 6.A works to improve the economies of its mem/er countries .orld ban%; =orld Bank o/:ectives touch lives for the /etter! =orld Bank development pro:ectsengage people to improve living standards while reducing poverty! ntil now, the =orld Bank contri/uted N12!5 /illion to Vietnam Fovernment3s pro:ect! Jrograms in Vietnam; development of infrastructure, ur/an countries, environmental improvement! 6t provides the /usiness /etter working environment, increase la/our capa/ility! /# 0riefly explain *hy and ho* money supply, inflation and exchange rates are important to your chosen finn and1or industry# Because money is used in virtually all economic transactions, it has a powerful effect on economic activity! An increase in the supply of money works /oth through lowering interest rates, which spurs investment, and through putting more money in the hands of consumers, making them feel wealthier, and thus stimulating spending! Business firms respond to increased sales /y ordering more raw materials and increasing production! -he spread of /usiness activity increases the demand for la/or and raises the demand for capital goods! Aor

Vietnam, producing and e0porting coffee is one of most important industry, /ecause this industry does not only creat many :o/s /ut also /ring a lot of money for government -herefore, it is a huge opportunity for VinacafeBH to produce more to e0port and motivate Vietnam3s farmer try to supply the coffee1/ean in order to satisfy the local market demand! 6f the money supply continues to e0pand, prices /egin to rise, especially if output growth reaches capacity limits! As the pu/lic /egins to e0pect inflation, lenders insist on higher interest rates to offset an e0pected decline in purchasing power over the life of their loans! A little inflation is actually a good thing, it will /e very helpful for e0porting, specially, Vietnam3s coffee industry!6n contrast, if inflation is high and prices are rising, then the purchasing power of money decreases! Jeople need more money to /uy goods and services than they did /efore!-hen, if there is high inflation rate,Vinacafe must consider /etween local market and international market!-hey should reduce the productivity of local and increase more amount of instant coffee to e0port when value VietnamDong is much lower than SD! #0change rates play a vital role in a countryLs level of trade, which is critical to most every free market economy in the world!Currently, 1 SD is e8ual to )2,*** VND, therefore, if this rate changes, this will affect all industry in Vietnam! =hen VietnamDong get higher value, it will reduce the profit of e0porting coffee! However, this is also an opportunity for Vinacafe to attract more local loyal customer, for e0ample, investing in packaging process to /uild product differentiation to competitors,this can increase sale revenue totally! "n the other hand, if value of VietnamDong is lower than SD, Vinacafe should increase /udget to recruit more la/ors in order to produce more to e0port! 2, #!S%!& ' ( $orces: !cono ic factors: #D#OC#H HNDMHNC $)**), p!1*&% defined that economic factors are information of the way the economy change and affect /usinesses! Due to the relevant information, the management will make suita/le decisions and set their economic environment! -he measures for the influences of economic factors on /usiness are economic growth rate, the rate of inflation, e0change rate, interest rate, and the /alance of payments! Vietnam is a developing country whose economy is considered as potential economy with G4 growth rate annually! Also /e affected /y the world economic crisis in )**G, the growth rate of Vietnam had a downward trend during the crisis! -he result was that the FDJ of Vietnam was decreased significantly from peak of G!(4 in )**' to 5!)4 in )**G $Viet/ao, accessed )*1*%! -he economic crisis also caused the inflation rate of Vietnam to stay at high rates, were a/out 1)4 and ))4 in the year )**' and )**G respectively! Specially, in )*11, 6nflation rate is 1&4 and it involves higher cost in manufacturing that will lead the price of coffee to /e upwards! Jermanently, it affects the /usiness of Vinacafe due to the reduction in demand when the company must increase the price of e0porting coffee! Besides, not only affect the /usiness of the company through price and demand, the high inflation rate also caused pro/lems for farmers in caring their coffee farms! -he 8uality and 8uantity of raw coffee material are affected! Aacing with this pro/lem, the management, as mentioned a/ove, has provided policies to encourage farmers supply high 8uality materials! VinacafeBH Company involves in the aspect of e0porting so that one more important sector that need to /e concerned is e0change rate! 6t will /e a serious pro/lem if having any change in e0change rate! Normally, the cash inflow of the company is foreign currency like #uro, SD! 6n the situation that the e0change rate for the kind of foreign currency, turn down une0pectedly, the company will suffer loss when trading with this currency! -herefore, the research a/out currency is very important! -he last aspect in the economic sector is interest rate! At this time, as mentioned a/ove, the coffee industry is now receiving a huge support from /aking industry, B6DV is one e0ample! -he policies a/out offer loans with low interest rate support much for the /usiness of the company! 6f the interest rate increases so that the performance of the company /ecomes worse and loss might incur! #olitical)legal factors: .ind-ools $accessed )*1*% concluded that political factors involves in some important aspects; Fovernment type and sta/ilityI Social and employment legislationI -a0 policy, tariff and trade controlsI #nvironment and customer protection legislation and @egulation and de1regulation! 6n the case of VinacafeBH Company, the core /usiness of the company is e0porting goods oversea or so call multination /usiness! Since the /usiness of the company involves in many countries, the political issues in different countries affect the /usiness in different way!Naturally, VCA is esta/lished, located and operated infrastructure for /usiness in Vietnam so that the Vietnam3s political issues and legislations will affect the /usiness most! Airstly, as mentioned /y .ind-ools

a/ove, the term of Fovernment type and sta/ility needs to /e concerned! Vietnam is developing country where there is only one party handle the authority! 6t indicates that there is no conflict /etween the interests of parties and therefore the sta/ility in Fovernment system is ensured! Secondly, /ecause of the characteristic of the /usiness focus on e0porting goods oversea so that the ta0 policy, issues of tariff and trade controls is especially important! "/viously, the high level of ta0 rate as well as hard tariff may cause a lot of pro/lems such as result in loss and une0pectedly increase costs for products! However, since Vietnam has :ust :oined =orld -rading "rganiCation $=-"% in )**', the tariff as well as trade policies are opener result in the lower ta0 rate! 6t appears to /e a good news for the company since the production cost will /e reduce and leads to higher competitiveness in term of price for BienHoa Company! Aurthermore, the Fovernment and also /anking industry such as B6DV /ank have provided many policies to support for the coffee industry! According to Agro6nfo $accessed )*1*%, the amount of money that B6DV invested on e0porting coffee industry from )**(1)**G was appro0imately '(* million SD and e0pected to /e higher in the future! -he lower interest rate given from B6DV /ank into e0porting coffee industry due to the Fovernment legislation num/er 2*7)**G7NP1CJ signed on Decem/er )**G a/out the methods to reduce economic recession, which point out the method of investing in e0port strategic products such as wood and coffee! At last, the environment and customer protection legislation influences the /usiness of BienHoa as well! 6n fact, VinacafeBH has com/ined recycling systems within factories! =ith these systems, all the wastes from processing coffee /ean will /e recycled and used as fertiliCe for planting coffee trees! 6t is not only the saving cost in planting coffee trees /ut also the methods to reduce environment pollution! Besides, the legislation in protecting customer is set through the standard in 8uality of product where in this case is processing coffee /eans! All the stages in processing coffee must reach the standard of safety food! At this point, it appears that VCA has respected and followed e0actly the legislation in protecting customer and environment! Social)culture factors: 2ocial normally refers to cultural aspects and includes the trend of society, career attitudes, ages and population growth rate! Social cultural factor influences the /usiness mostly through the trend or attitude of customers towards goods! Changes in social trends can impact on the demand for VCA3s products and the availa/ility and willingness of individuals to work!Vietnam is a densely1populated country!Currently, Vietnam population is appro0imately &* milions people! Additionally, more than +(4 of Vietnamese population is in the la/or age! -hey have a trend to live in 2 /ig cities of Vietnam such as Hanoi,Hochi.inh and DaNang! Besides,-he standard of living of Vietnamese people is improved along with the changing in lifestyle towards the western lifestyle! A sociological study recently showed that the num/er of Vietnamese consumers accept spending higher than income is used for e0pensive product and its 8uality! .ost customers still refer to when purchasing through the sources of information from newspapers, advertising and friends! -herefore, it is a /ig opportunity for VCA to invest in their products in order to get more market shares %ec*nological factors: -echnology refers to the means that support /usiness to achieve /etter performance! -echnology can reduce cost, creates more innovations and leads to the /enefit for /oth customers and sellers $"0ford niversity Jress, accessed )*1*%! Jermanently, this aspect concerns in the case of VCA through the capacity of communication and the use of technological issues in manufacturing! Vietnam although derived slowly in the past /ut now it is progressing very 8uickly and are positioned over many countries in the area! 6n )**&, the 6- level of Vietnam was up from rank 51 to rank (5 in the world! Besides, Vietnam ranked 1G in the world a/out the num/er of user internet! -his rank is /ased on the criteria; environment, readiness and the use of technology! Base on the data a/ove, we can see that Vietnam has very high speed of 6-! -he company should pay more attention a/out technological factors in order to get the success in Vietnam! New technologies create new products and new processes! -oday, there are many new technologies was applied on manufacturing instant coffee! -echnology can reduce costs, improve 8uality and lead to innovation! -hese developments can /enefit consumers as well as the organiCations providing the products! .oreover, the use of technology in manufacturing is also important! -he demand of customers in /oth terms of 8uantity and 8uality is increased over time forces the company to improve to fit the demand! -he capacity in manufacturing in factories depends mostly /y machines! At this point, if the company can not apply modern machine in manufacturing, naturally, producing will not fit the demand! -he result is that the /usiness can not compete with competitors and will lose customer, market share, and suffer loss! Nowadays, VCA has applied the

most modern machines in manufacturing coffee in its factories so that it can create large competitive power for the company towards competitors !n+iro ental factors: #nvironment normally refers to the natural factors such as climate and weather! -he change in environment can face the /usiness in trou/les for e0ample the hotter of the climate in the world cause the fireplace manufacturer the risk of surplus! 6n the case of VCA, the /usiness tights hardly with coffee trees which can only grow in temperate climate! -herefore, any change in climate will affect the 8uality and productivity of coffee /ean! As Viet/ao $accessed )*1*% commented, in )**', coffee farms in Son Ha were affected hardly and the productivity of coffee /ean was decreased 2*4 :ust /ecause rain was come earlier than focused! Beside, Vietnam is tropical country with high humidity! 6t appro0imately affects the 8uality of coffee materials in warehouse! ( $orces: +hreat of ne* entrants: -he threat of new entry is high when capital re8uirements to start the /usiness are low, few economies of scale are in place, low switching cost and product is not differentiated! -he industry with high /arriers is too e0pensive for new firms to enter! 6ndustries with low /arriers are cheap for new firms to enter!However, VinacafeBH is a very famous /rand in Vietnam only!But, VCA started to do /usiness in Vietnam since 1&)',thus, the new entrants will not /e easy to take over the VCA s market share! -he threat of new entrants, therefore, is weak! 0argaining po*er of customers; -he customers of VCA increased to uncounta/le num/er! -hey affected directly the profita/ility of company! -he product 8uality is important! =hen a person /uys a instant coffee /o0, he will spend arround )',*** VND for this product with the purpose of long time use with good 8uality! VCA succeed in satisfy customers /y providing high 8uality of products! 6t tastes good, accepta/le price /ut still protect enviroment! Hence, if some customers might tend to choose the other products with good 8uality and price such as -rungNguyen, or Nestle, 6t means that the /argaining power of customer is so strong! +he po*er of suppliers; -he power of suppliers is high when suppliers are concentrated and well organiCed and a few su/stitutes availa/le to supplies! =hile there are many /uyers and few dominant suppliers, the /argaining power of the suppliers is high! Coffee industry re8uires high technologies or latest technologies for the productions! 6n the fields of these technologies, the num/ers of suppliers are not unlimited! Suppliers can take advantage of this /y increasing prices and supply times! -hus, the /argaining power of suppliers is strong! +hreats of substitute products; -he /iggest su/stitute products of VCA in Vietnam are F' and NestCafe! Because of the difference /etween high and low income people, the company should focus on segmenting the market in the capital of Vietnam and /ig cities! Hanoi and Ho Chi .inh are /ig markets for increasing sales revenue! -hreats of su/stitute products are strong depending on customer tastes, for e0ample, some people prefer to drink instant tea like 6ce tea or ") ice tea than instant coffee of Vinacafe, or some people like F' coffee than VCA coff! -herefore, it is a /ig pro/lem for VCA to determine their loyalty customers as well as finding new market segmentation! Competitive rivalry; -ogether with VCA, there is also some coffee enterprises run their /usiness successful in Vietnam; Nestle, -rungNguyen Coffee, -Hai Hoa coffee! -he .edium1 priCe products includes -haiHoa and N#stle! -he income of Vietnamese is not high so they tended to choose the low or medium individual coffee /o0 -he competitive rivalry of VCA is e0tremely strong at the moment! According to the figure a/ove, -rungNFuyen and Nestle are now the /iggest competitors of Vinacafe! -heir sales are )* milions /o0 of coffee in the three 8uarter of )*11! -hQng 11&7)*11 Nestle G!' milions $ No of cars sold% T*!+ milions T1!+1 milions -Rng7giSm

-rungNguyen 1)!+ milions

$http;77www!vietnamplus!vn % II, Internatioanl business enviroment: ,lobalization: According to Held et al $1&&&% glo/alisation is Uthe widening, deepening and speeding up of worldwide interconnectedness in all aspects of contemporary social life, from the cultural to the criminal, the financial to the spiritualU! -he main indicators of glo/aliCation are trade and foreign direct investment $AD6%-he ma:or players in this e0pansion of international trade and in the even greater increase in AD6 are the multinational or transnational corporations $.NCs or -NCs%!! Vietnam coffee industry opened its first plant outside Vietnam to internationaliCe 1 in Soviet @ussia and #ast of #uro in 1&'G! Arom that point, Vinacafe realiCed this moment is a /ig opportunity, then they managed locally /oth production and design of its products to create a new /rand! 6n 1&G*s, Vinacafe was successful to invent a new /rand which called DVinacafe1instant CoffeeE, then they started to import first /o0 to #ast of #urope in 1&G2!After that, Viancafe could o/tain its distri/utors in Ainland, Netherlands, Belgium, Swiss, Freat Britain, Arance, 6taly, and Austria, .alaysia, -hailand, Bapan! -ain indicators of globalization; import and e0port activity in a country, import and e0port legislation, transportation costs7industry, infrastructure 1 especially from docking /ays or air freights, foreign currency e0change, foreign direct investment! )**+ is considered an outstanding point in VinacafeBH $VCA% with the operation of Vinacafe #0portCenter from Buly )**+! =ith this Center, VCA has demonstrated efforts to contri/ute to the domestic industry /y the e0pansion of e0port field to countries in the international market of VCA $ the ta/le /elow show the e0portation of VCA%

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$source; http;77www!vinacafe/ienhoa!com!vn7attachment7image7-ai4)*lieu4)*DHCD4)**+1)*11VAinal!pdf% +he main drivers of globalization are economic, political and technological! Economic factors include economies of scale and the access to cheaper inputs! #conomies of scale are when a larger scale of production results in lower unit costs! #conomies of scale divide into two categories such as #0ternal economies and internal economies! #0ternal economies 1 the cost per unit depends on the siCe of the industry, not the firm! 6nternal economies 1 the cost per unit depends on siCe of the individual firm! 6n case of VCA, they are e0ternal economies /ecause the coffee price is increasing currently, and they have to increase their selling price as well! VCA has lower input of la/our and material, la/our /ut always remain their good 8uality! But increasing in selling price is difficult for them to remain the 8uality, therefore VCA will seek to e0pand their markets in order to increase the scale of their sales, allowing increased production, lower costs and increased competitiveness! Jolitical factors include the role of the =orld -rade "rganiCation $=-"% in reducing tariff /arriers to trade! -he =-", and /efore it FA--, e0ists to reduce the /arriers to trade first in goods and more recently in services! -his reduction of tariff /arriers makes it much easier to trade a/road! .ost countries are now mem/ers of the =-" which means that they cannot discriminate against other mem/er states! -he collapse of communism in @ussia and #astern #urope, and opening1up of the Chinese economy have also contri/uted to trade li/eraliCation! Something which is likely to /e /eneficial to the coffee industry is the international standardiCation coffee 8uality regulations! Technological factors include improved and cheaper transportation and communications! Ships are larger and more efficient! -he world1wide we/ $===% makes glo/al communications almost instantaneous and allows for the rapid transfer of large amounts of data! -hese facilitate trade /ut also make possi/le integrated glo/al production! VCA is leading company in Vietnam coffee market! they have a lot of e0periences in doing /usiness

for e0porting and operating on a glo/al scale, therefore, they will have /enefited considera/ly from improved transportation and communications! 0arriers to globalization; -he most commonly used /arriers to international trade are called tariffs! -ariffs are a kind of ta0 imposed on imported goods $and sometimes e0ported goods% /y the importing country! -he reasons a country impose ta0es if to protect a domestic sector of the economy from foreign competition and to create revenue for the government! Also non1 tariff /arrier$ Import tariffs raise the price of cheaper imported goods to protect domestic producers from foreign competition! -he Linfant industryL argument that are most fre8uently used for this kind of protectionism, holds that the young domestic industry needs to /e protected /efore they mature enough to /e a/le to compete in the ruthless international market! -here are also legal framework issues, political issues! -he foreign countryLs government might not want /usiness from others country entering into their country in order to protect their own domestic /usiness! -he tariff imposed might /e too high and will decrease the /usiness profita/ility which will also /ecome a disadvantage for a /usiness! Aor e0ample, .orocco government imposes a very high tariff of (*4 on imported roasted1ground coffees to protect the domestic coffee industry! However, .orocco is the /iggest customer of Vietnam3s coffee in general, and VCA still e0ports in glo/al network; -hailand, 6ndonesia, .alaysia, #gypt, 6taly and -aiwan! Bapan,etc; 6n )**', the average applied rate for all goods is 1!G percent! Specifically, 1*!1 percent for agricultural products, +!5 percent for fish and fish products, and 1!' percent for wood, pulp, paper and furniture! -hailand; )*4 for finished products and 14 for material, 6ndonesia$6mport duty, the rate varies according &1to the kind of goods imported with a range from * to 1'*4!, depending on materials$1*4%7 finished goods%I .alaysia $1*4 for multi sourcing parts%$wikipedia!org%! 3on +ariff 0arriers arise from different measures taken /y governments and authorities in the form of government laws, regulations, policies, conditions, restrictions or specific re8uirements, and private sector /usiness practices, or prohi/itions that protect the domestic industries from foreign competition! 6mport /ans, Feneral or product1specific 8uotas, Comple07discriminatory @ules of "rigin, Puality conditions imposed /y the importing country on the e0porting countries, employment law, import liscene!!#0; #gypt is a country that cannot produce their own coffee, therefore, the tariff is very low in here, in )**&, Vietnam e0ports )+& tons of coffee to #gypt with price a/out )+*,*** SD F!I; Consistent economic growth, de1regulation, li/eral investment rulse, and operational fle0i/ility are all the factors that help increase the inflow of Aoreign Direct 6nvestment or AD6! AD6 or Aoreign Direct 6nvestment is any form of investment that earns interest in enterprises which function outside of the domestic territory of the investor! AD6s re8uire a /usiness relationship /etween a parent company and its foreign su/sidiary! Aoreign direct /usiness relationships give rise to multinational corporations! Aor an investment to /e regarded as an AD6, the parent firm needs to have at least 1*4 of the ordinary shares of its foreign affiliates! -he investing firm may also 8ualify for an AD6 if it owns voting power in a /usiness enterprise operating in a foreign country!Aoreign direct investment $AD6% policies play a ma:or role in the economic growth of developing countries around the world! Attracting AD6 inflows with conductive policies has therefore /ecome a key /attleground in the emerging markets! "verall, the /asic entry choices into foreign markets can /e categoriCed into three strategies; e0porting, licensing, and AD6! As it is often the case, successful e0porting can provoke protectionist responses from host countries, there/y forcing firms to choose /etween licensing and AD6! -here are three reasons that may compel firms to prefer AD6 to licensing; $1% AD6 reduces dissemination risk i!e!, the risk associated with unauthoriCed diffusion of firm1specific know1howI $)% AD6 results in more direct and tighter managerial control over foreign operationsI and $2% AD6 promotes the transfer of tacit knowledge through Dlearning /y doing!E=hile gains to host countries i!e!, recipients of AD6 from foreign or international investments are many, in comparison to other foreign investments, the advantages of AD6 can take several other forms! Fiven the appropriate host1country policies and e0istence of relia/le and sufficient infrastructure, it is e0pected that AD6, at a micro level, contri/utes to the transfer of technology or even triggers technology spillovers!

As AD6 comes in many forms and therefore results in new varieties of capital inputs, it promotes a healthy competition in the domestic input market! -he host country could also /enefit from training and development of its workforce as AD6 helps human capital formation across different economic sectors! Clearly, all these in turn contri/ute to the economic growth of the host country! 6n addition to these economical /enefits, AD6 could also improve environmental and social conditions in the host country /y, inter alia, transferring DcleanerE technologies, there/y leading to more socially responsi/le corporate policies! At a macro level, AD6 contri/utes to international trade integration not least /ecause it results in a more competitive /usiness environment for multinational companies $.NCs%! .NCs compete glo/ally through investing their assets into domestic markets of different host countries! -ypes of AD6; -here are two main types of AD6; "ne is horiContal and the other is vertical! HoriContal AD6 arises when a firm duplicates its home country1/ased activities at the same value chain stage in a host country through AD6! Aor e0ample, Aord assem/les cars in the nited States! -hrough horiContal AD6, it does the same thing in different host countries such as the nited 9ingdom $ 9%, Arance, -aiwan, Saudi Ara/ia, and Australia! HoriContal AD6 therefore refers to producing the same products or offering the same services in a host country as firms do at home! =hile a horiContal pattern occurs when .NCs through AD6 produce the same product or service in different host countries, vertical AD6 takes place when a firm through AD6 moves upstream or downstream in different value chains i!e!, when firms perform value1adding activities stage /y stage in a vertical fashion in a host country! 6n other words, a vertical AD6 arises when a multinational firm fragments the production process internationally, there/y locating each stage of production in the country where it can /e done at the least cost! Aor e0ample, if Jeugeot $the Arench automaker% only assem/les cars and does not manufacture components in Arance, /ut in the 9, it can /e said that Jeugeot enters into components manufacturing through AD6! -his pattern is called Dupstream vertical AD6!E 6n a similar vein, if Volkswagen $the Ferman automaker% does not engage in car distri/ution in Fermany and, instead invests in car dealerships in Saudi Ara/ia $a downstream activity%, it can /e said that Volkswagen is engaged in Ddownstream vertical AD6!E =hile horiContal and vertical AD6 serve different purposes, the /ulk of AD6 seems to /e horiContal rather than vertical! As mentioned earlier, when a firm engages in horiContal AD6, it esta/lishes multi1plant operations that duplicate similar products and services in multiple countries! -his implies that a firm3s motive to adopt a horiContal pattern is mainly /ecause it facilitates market access as opposed to reducing production costs and su/se8uent market share e0pansion! However, with vertical AD6 firms engage in /oth AD6 and e0ports! nlike horiContal AD6 in that the two countries involved are of similar siCe, and the nature of their operations resem/les more of a pair of developed countries, in vertical AD6 patterns, the home country is usually much larger and the two countries involved in AD6 operations look like a developed home country and a developing host country! Jut simply, in horiContal AD6 patterns, the main o/:ective to /e met is how /est to serve the host market $a/road%, whereas in vertical AD6 models, the primary o/:ective of a firm is how /est to serve the domestic $home% market! Jolitical Jerspectives;Since AD6 re8uires the flow of capital across national /orders, it has always /een intertwined with politics! Viewed in this way, three different political perspectives to AD6 can /e identified; radical view, free market view, and pragmatic nationalism! -he radical view, which can /e traced /ack to .ar0ism, treats AD6 as a vehicle for e0ploitation of domestic resources, industries and people! -hose governments who hold a radical view are hostile to AD6 and therefore are in favor of nationaliCing foreign firm assets or putting into place mechanisms to discourage in/ound foreign firms3 operations! -he free market view, on the other hand, is more in favor of AD6 and promotes its rationale not least /ecause it ena/les countries to tap into their a/solute or comparative advantages /y specialiCing in the production of certain goods and services! According to the free market view, AD6 can /e regarded as a win1win situation for /oth home and host countries! =hile prior to and during the 1&G*s the radical1/ased view AD6 was more common in Africa, Asia, #astern #urope, and Hatin America, the free market1/ased AD6 is now more influential across the world and in particular in emerging economies such as BraCil, 6ndia, and China! Ainally, the third view, which reflects the current dominant perspective toward AD6 and is practised /y most countries around the world, is called pragmatic nationalism! Based on a pragmatic nationalism political view, AD6 is only approved when its /enefits outweigh its costs! Aor e0ample, this view holds that AD6 in the Chinese

auto industry should only take the form of a :oint venture $BV%! By adopting such restrictive policies, the Chinese government helps the domestic auto industry learn from their foreign counterparts! 6n short, AD6 refers to direct investment in $1* percent or more of% /usiness operations in a foreign country! 6t has /enefits and costs for /oth the host $recipient% countries and home $source% countries! 6n respect to the /enefits of AD6 to host countries, AD6 helps improve a host country3s /alance of paymentsI it can create technology spilloversI it creates advanced management know1howI and it creates :o/s /oth directly and indirectly! However, loss of sovereignty, adverse effects on competition, and capital outflow are the primary costs of AD6 to host countries! Similarly, the /enefits of AD6 to home countries are; @epatriated earnings from profits from AD6I increased e0ports of components and services to host countriesI and learning via AD6 from operations a/road! 6n addition to all these pros and cons of AD6 and its cost1/enefit implications for /oth the host and home countries, certain issues need to /e taken into account /y a foreign firm /efore deciding to operate in cross1 /order markets! Aor e0ample, :ustification of AD6 in light of other foreign entry modes $e!g!, outsourcing and licensing%, paying enough attention to the fit /etween the location advantages with the firms strategic goals, and familiarity with the institutional constraints of the host countries are all key determinants of successful AD6 operations! Developed countries also seek to /ring in more AD6 and use various policies and incentives to attract overseas investors, particularly for capital1intensive industries and advanced technology!-he primary aim of these policies is to create a friendly /usiness environment where foreign investors feel comforta/le with the legal and financial framework of the country, and have the potential to reap profits from economically via/le /usinesses! -he prospect of new growth opportunities and increased profits encourage large capital inflows! ltimately this results in economic development of the nation! $Aolger $proctor and gam/le%I .a0well house $9raft food% %! 6n the first half of the 1&&*s Vietnam was the largest recipient of foreign direct investment $AD6% measured in relative terms in relation to FDJ! During the four years 1&&+ through 1&&', the inflows averaged over &4 of FDJ, and with that share Vietnam reached the top position among developing and transition countries $A6AS 1&&&%! Since 1&GG Vietnam has within the framework of its Doi .oi policy W the policy to li/eralise and open the economy and allow private sector development W slowly /ut continuously opened for foreign direct investments to play a vital role in the economy! AD6 inflows to Vietnam peaked in 1&&'! Arom /eing a DhotE location, the inflow soared and predictions are uncertain! At he same time su/stantial changes have /een made in the policy environment in Vietnam and e0ternally the Asian region has suffered from aftermath of its economic crisis! Among the policy changes an important one has /een the increased freedom of local private /usiness!-he 8uestion this paper raises is what the impact has /een of the internal and e0ternal changes on the flow and composition of the AD6 to VietnamX And further ask how the inflow of AD6s has affected the development of the private manufacturing sectorX -he paper first looks at the discussion of AD61Development relationships! -he following two sections present the policies and the changes that have taken place in the compositions of the inflows! Data on the macro and micro level impacts are presented and analysed followed /y a discussion of the policy issues and some of the perspectives the future development! -he AD6 increases really fast in Vietnam for each year, and it is a good signal that provides a lot of :o/s for many people as well as this proves that Vietnam has a attractive market!-he AD6 also helps Vietnam government in many pro:ects of improving infrastructure such as /uilding road, or contruction! Additionally, this also improves the agriculture of Vietnam in overall, specially, the coffee industry! By :oining =-", Vietnam has many foreign partners who are willing to invest their money in Vietnam coffee industry such as BraCil, 6taly, SA,etc! N#stle is one of most famous foregin company in coffee industry, they invest a lot of money in Vietnam, this /rings a lot of AD6 for governent through their head8uarters! -rungNguyen or VCA are very familiar with working with foreing companies to help them to have some training course and a lot of contract to do /usiness from Vietnam to their countries! However, Nestle has the /iggest factory of producing coffee, then, they /ecome a /ig competitors in local market! But the finacial crisis has a strong influence to AD6 of Vietnam, the foreign investors reduce the amount of their investment outside, therefore, this has some advantages and disadvantages toVietnam coffee industry! =hen AD6 reduces, it means that the inflow of forein currency to Vietnam reduces, then, Vietnam government has to manage well /anking system as well as monetary policy! Aurthermore, the cost of mo/iliCing capital from international market increases significantly, then, this is more difficult to attract forein investors come to Vietnam market! However, this is an opportunity

for VCA and -rungNguyen /ecause the finacial situation of Nestle cannot /e strong as in the past! Additionally, the FDJ in 1st 8uarter of )*1) has a trend to reduce to +4 compare with 54 in last year of )*11, then, it also make foreign investors are afraid of investing more Vietnam3s market! Hence, VCA must take this chance to get more market shares in /oth local and international! VCA has a long history of development in Vietnam, they knows very well local market such as people ha/it, interest, specially, customer mind! .oreover, a good financial system and operation is also a good weapon to help them to compete with Nestle at this time! -herefore, VCA has to keep their selling price sta/le in this time to get more customers who are very familiar with VCA /rand of instant coffee! Besides, marketing must /e improved /ecause VCA does not invest so much in marketing channel of Vietnam! So, promotion campaign must /e consider carefully! III, #olitical en+iro ent
'ietnam political system; Vietnam is one of the worldLs few remaining one1party communist states! Jolitical power lies with the Communist Jarty of Vietnam $CJV%! Administration and policy implementation is the responsi/ility of government ministries and e8uivalent agencies, although these organisations are now also playing a more significant role in policy development! 6n recent years, the National Assem/ly has /ecome increasingly active and influential in setting national priorities, with mem/ers prepared to criticiCe the Fovernment vigorously! -he /enefit of one1 party system is that Vietnam can keep economy sta/le, without caring the crisis of the glo/al economic crisis! #0ample, )**&, Vn keep lower inflation rate$ under1*4% or pu/lic de/t crisis in America at the moment might not affect to the country a lot /ecause all the /usiness activities are controlled /y government! However, VCA, for e0ample, might disagree with some decisions of the government of national assem/ly!Because if the inflation rate is too low, the e0port cannot get the targeted profit! .any people and /usiness also found it unfair /ecause they might make /enefits from these amounts! 'ietnam score in term of democracy: -he Democracy 6nde0 is an inde0 compiled /y the #conomist 6ntelligence nit that claims to measure the state of democracy in 15' countries! -he Vietnam3s democracy ranking is )!&+71* point, 1+*th 715* countries whilst -hailand; ('th, Bapan;))nd !6t means, Vietnamese had not much freedom as other countries! Vietnam also ranked &2th of ease to do /usiness, ' days to start doing /usiness! Aor e0ample, when VinacafeBh started doing the /usiness in Vietnam, they had to consider ) main periods; the starting point and the running time! As a rule, Company must see administrative staffs of the committee7 local official to get agreement and it was not an easy :o/! Sometimes company must use envelopes or some additional fees to start running /usiness! And during the time of running /usiness, they must work with these staffs for easily doing /usiness in e0porting materials to a/road or environmental processing system, etc! -he democracy is considered /y numerous specialists as an important determinant for the AD6! A democratic regime which allows to strengthen the rule of law and to facilitate the growth /y the stimulation of the private initiative is perceived as a factor who attract AD6! $ BoX O NF% 'ietnam economy system; -he economy of Vietnam is still developing after e0periencing su/se8uent e0ploitive economic measures and the devastating effect of the Vietnam =ar! =ith an annual FDJ /ased on purchasing power parity of SN)G*!) /illion, Vietnam remains a comparatively poor country! -he country has made a shift from a central control1 /ased economy to socialist1oriented mi0ed market economy! -he country is following mi0ed economy which is a developing planned1market economy! /oth the state and private sector direct the economy, reflecting characteristics of /oth market economies and planned economies! 6t means, price of goods and service can /e determined /y free price system or /y the country! By this way, VCA will get /oth advantages and disadvantages! 6n Vietnam, Fovernment play a role in petrol priceY VCA coffee price normally lower that international price )*,*** VND7/o0 compared to American or BraCil at the moment, therefore, manufacturing processing of VCA will not affect a lot a/out costs of running7la/our costs, material price also in local market and still get profit in international! However, gold price which is led /y the market, go up and down unpredicta/le, it affects to investment decision of VCA whether they should keep profit in the /ank or /uy goldX Intellectual property rights; Jrotecting intellectual property right is now really important to Vietnam! Jrotecting 6J@, however, is not something that countries do solely to meet their international o/ligations! #ffective 6J@ protection is a critical re8uirement for any country to develop technologically1advanced industries and promote creativity and innovation! Aor e0ample, developing countries have found that they cannot attract high18uality foreign investment if they do not have effective 6J@ protection! No ma:or company wants to develop manufacturing, research or development operations in a country in which the 6J@ involved in that operation can /e freely pirated without legal penalties! -he information technology sector, including software development and manufacture of such things as computer chips, can develop only in an environment in which 6J@ is protected from theft! Some thiefs copied the rights from software and sold it on internet or allowed to free download! Vietnam government could not control this pro/lem well! Advance technology is used /y VCA to increase engineering and the 8uality of the coffees which are the route to competitive advantage! However, in )**+, N#stle and VCA launched the product that have the same name such as Dcoffee 2 in 1E, only different in ingredients /ut it is easy to make customer misunderstanding a/out the product! Although there is no cases in the history which shown that

producing coffee technology is stolen, VCA must consider this due to their success in 8uality of products and the pro/lems of intellectual property rights in Vietnam!

,-%O ./ affect to countr0 6n )**', Vietnam successfully :oined the =-"! -his point of time highlighted an important event that create premise for the dramatically development of Vietnam economy! 6n fact, since Vietnam has :oined the =-", it /rings /oth opportunities and challenges towards Vietnam economy! -he opportunities can /e e0pressed as the motivation for the development of economy or chance to e0pand /usiness oversea due to lower tariffZ However, the competitiveness environment in the industry /ecomes harsher and can /e considered as the main challenge for Vietnamese /usiness! "/viously, =-" is an organiCation whose mem/ers must follow the rules and legislations given /y the organiCation, and Vietnam is not an e0ception! -herefore, it is necessary for Vietnamese /usiness to change to /e adopta/le and survived in international environment! At first, after :oining =-", the change in regulation directly influences the /usiness of any company including BienHoa Company! -here is trading legislation where its terms allow foreign companies operating /usiness in one country and can make /enefits as the same as domestic companies to ensure the fair competitive environment! Since the /usiness of VCA focus on e0porting instant coffee into foreign markets such as America, BraCil and 6taly, the tariff is reduced /etween mem/ers of =-"! Beside, the operation of factories in some areas in Hao, such as factory in Boloven, is the spring/oard to invade this market! However, a mem/er of =-" will apply this regulation for all other mem/ers so that the higher competitive environment is concerned! At this point, the /usiness of VCA must compete with some large /rands in e0porting coffee in the world such as /usinesses from BraCil and North1America regions! nder the impact of the regulation, in order to compete with other competitors, the key strategy involves in creating competitive advantages /y offering the 8uality and safety products at the competitive price need to /e integrated in the /usiness of VinacafeBH! 6n fact, the company has implied some strategic activities to prove the a/ove key strategy such as invest in /uilding factories that using the most modern technology in the world in manufacturing to improve capacity and productivity! As the result, coffee /ean manufactured can fit the demand for 8ualified products and therefore increase the capacity to compete with competitors! Beside, as C#" Nguyen Van An has argued, the company provides policies that support the coffee farmers in caring their farms during the economic crisis! -he relationship /etween suppliers and the company therefore is reasona/ly good $VietBao, accessed )*1*%! 6n addition, the /usiness of e0porting oversea leads to the need of having a professional international information system! "/viously, the information system must including some characteristics; transparency, accurate, easy to access, and following the international standard! @elevant to the fact that the we/site of VCA although has updated information carefully such as daily information a/out the coffee market, the we/site of VCA also used Vietnamese language and choose #nglish as the main foreign language! Since the partners of VCA are mainly foreign partners, there is not pro/lem /ecause partners would feel comforta/le and easy to access the information of the company! 6n )**', the Vietnam .inistry of Dairy has announced the application of the decision 1)'7)**' ND1CJ towards e0porting coffee due to the effort to reach the international standard and avoid low e0porting value in coffee industry! At this point, the decision set out the national 8uality standard of e0porting coffee $-CVN +1&2;)**(% and any Vietnamese /usiness involves in e0porting coffee must e0actly follow this standard! .oreover, the Fovernment also has meeting to discuss a/out the decision that if the company e0ports low 8ualified coffee /ean, the /usiness will /e ta0 in a higher rate $Asmed Business Jortal, accessed )*1*%! "verall, all the decisions affect the /usiness and force the company improving the 8uality of coffee /ean! -he impact of effectiveness$of company response% comes from the compare of figure /efore and after :oining =-"! Airstly, since Vietnam :oined =-" in )**', the free trade with low tariff is set so that the company is under the pressure of high competitive environment! -he competition strictly pressure not only in the foreign market /ut also in domestic market with the instant coffee product line! -o deal with the domestic competitiveness, on August )**&, the management of Vinacafe signed a decision investing 2* millions SD to open a series of coffee shops follow international standard under the cover of Coffee Smith Company $Puan, accessed )*1*%! -his dynamic is a good response of the company since it can improve positively the /rand image of Vinacafe in customers3 minds! Secondly, the company strongly recogniCed that after =-", 8uality is the key element within the e0porting coffee market! At this point, the company has set the standard in control the 8uality of coffee /ean material $+C standard%! Vinacafe also invest millions dollars in factories with modern recycle wastes system and policies towards coffee farmers in order to ensure 8ualified material sources and e0ported coffee /ean! 6t seems to /e an

effective response of the company which resulted that 1**4 e0ported Ara/ica coffee reached the international standard and /e accepted /y foreign parties! -he ne0t important point is relevant to the change in re8uirement of information systems and communication channels! Normally, information of the company is very important with its stakeholders such as customers, suppliers, employees and especially shareholders! Jartners of Vinacafe mostly come from a/road so that they need the information in at least trading language like #nglish! -he internal information such as financial report, annual report had /een updated fre8uently! A$%A affect to V1 and respond of Vincafe 6n Banuary 1&&), AS#AN mem/er states decided to li/eraliCe trade within the region! -hey decided to e0tensively remove /arriers /y creating the AS#AN Aree -rade Area $AA-A%! 6ts main mechanism was the Common #ffective Jreferential -ariff $C#J-%, which covered all manufactured and agricultural products! -he mem/er nations decided to reduce tariffs within a period of 1( years /eginning Banuary 1, 1&&2! Ainal effective tariffs were agreed to /e within the Cero and five percent range! nder the C#J-, a product would /e eligi/le for concessional tariff if it has a +* percent AS#AN content! 6n Septem/er 1&&+, AS#AN mem/er states agreed to accelerate the implementation schedule of the C#J- plan and shortened the time frame from 1( to 1* years such that /y Banuary )**5 all C#J- products would have a tariff of Cero to five percent! AA-ALs main o/:ective is to create an integrated market within AS#AN in order to increase the regionLs competitive edge as compared to the rest of the developing world! Already glo/al auto ma:ors have set up production facilities in the region and started e0porting vehicles to #urope, Australia, and other parts of Asia! Currently, ma:or plans are underway to e0pand production capacities in anticipation of a rise in demand! 6n Vietnam, there are some /ig companies that have /uilt the factory in recent years such as Vincafe, Nestle $Nestcafe%, -rungNguyen, -haiHoa! Besides that, VietnamLs coffee industry also cooperate with foreign company to /uild factory in Vietnam such as .a0well House of 9raf Aood, or Aolger of Jroctor and Fam/le which wants to come to do /usiness in coffee industry of Vietnam! -hus, the transition to a free trade regime will result in higher economies of scale in the AS#AN automotive industry! Higher economies of scale will naturally mean lower unit production costs! -his will translate into lower retail prices and a /igger market! According to industry estimates, AA-A could translate into price cuts of a/out )* to (* percent on vehicles in several AS#AN countries! Competitive producers can then e0port their products throughout the region at very low import duties and pass on cost savings to consumers! -herefore, consumers will /e a/le to e0ercise a wider and /etter product choice at competitive prices 4E,A4 252+E- 67 AFFEC+ Hegal System; Vietnamese legal system currently includes the Constitution and laws that are passed /y the National Assem/ly $parliament%I ordinances that are adopted /y the Standing Committee of the National Assem/ly $where laws have not /een in e0istence%I degrees that are enacted /y the Fovernment, ela/orating laws7ordinances or governent activities where laws7ordinances are still a/sentI and circulars that are issued /y ministries, guiding the implementation of decrees! Vietnam is working hard to /uild its legal system with as many detailed laws as necessary and possi/le, and minimiCe the issuance of ordinances and degrees I', Competitive environment:
!ifferences bet*een mar%et) industry ; A UmarketU is a mechanism for /uyers and sellers to e0change goods and services,while an UindustryU is a collection of companies that compete with one another! An industry might /e segmented /y type of supplier or type of distri/ution $or some other distinguishing characteristic%!However, each segment would have uni8ue production and distri/ution re8uirements! .arket segments might descri/e different types of customers! #ach of these segments could have uni8ue LneedsL or might /e attracted to varying advertising methods! 6n addition, your competitors might effectively compete with you in some segments, /ut not others! 6n /everage industry, we can classify into different kinds of drink; tea, gas drink, :uice, yogurt and the coffee -hese sectors compete to each other to get higher market share within the industry! 2tructure8 conduct8 performance; Structure conduct performance theory is a model used to link elements of market structure to /usiness conduct and performance in industrial economics! 6t influence on how company conduct itself! 6n terms of market structure, which include; amount of competition, e0istence of potential competition, costs, demand and /arrier to entry! Vinacafe is the leading coffee Company in Vietnam3s market so, in Vietnam, their direct competitors :ust account for under 2 companies; -rungNguyen, Nestle, and -haiHoa -hose competitors rivalry is Strong /ecause its revenue no much different compare to -rungNguyen, and N#stle which are the )nd and 2rd leading automo/ile Co in Vietnam! 0arrier to entry; weak /ecause cost is high$ more than 1** million usd to invest and /uild factory%I Vietnamese demand for coffee is high, /ecause the life1style is changing and coffee takes an important part as tea in Vietnam curretnyl! Specially, average income increase $2'!( millions per year in average in Hanoi capitalI ho chi minh city; (( millions per year $highest%Y potential market in HC. and HaNoi !

In terms of conduct factor; pricing policy, amount of advertising, merger behavior, product differentiation. Pricing policy; accepta/le price for low or middle and high income people, highest selling price is instant coffee which apppro0imately 2*,*** VND $1 of top + sales in Vietnam )*1*%I advertising; at present , promotion activities for Vinacafe which received free transportation cost $ if /uy more than ( /o0es%, get an opportunity to have + Camry )!+ version )*11 $if /uy more than )* /o0es and receive a lucky ticker with num/ers%Y get customer satisfaction! Differentiation; VCA used /oth cost leadership strategy and product differentiation strategy; more products friendly with environment, more milk, and different taste from same /rands $ for e0ample, Vinacafe has a special instant /rand which contans 2 types, suita/le for someone get high cholesterol in /lood, or lower as well%! -ogether with the efforts of /usiness, Vinacafe Bien Hoa$VCA% always applies and implements standards of environmental protection /etter which made a modern environmental management system is suita/le with activities! Besides under the direction of Vinafood coorporation, VCA will not stop researching, investment and application of new technologies which are friendly with environment in production divisionI raising the awareness of environmental protection as well as encouraging 9aiCen activities for all staffs! 9erformance factors; profita/ility; 15,21* tons coffee sale in )*1* with newly update products, such as Vinacafe, Vina1dance coffee,etc! -hey used safety technology on all Vinacafe products with different ingredients and recipes! Oligopoly; An oligopoly is a market dominated /y a few large suppliers! -he degree of market concentration is very high $i!e! a large 4 of the market is taken up /y the leading firms%! Airms within an oligopoly produce /randed products $advertising and marketing is an important feature of competition within such markets% and there are also /arriers to entry!Another important characteristic of an oligopoly is interdependence /etween firms! -his means that each firm must take into account the likely reactions of other firms in the market when making pricing and investment decisions!-he coffee industry in Vietnam is an oligopoly /ecause only few firms $Vinacafe, -rungNguyen, Nestle, -haiHoa% account appro0imately &*4 of VN market! -ypically have /arriers to entry which deter newcomers from starting up /usinesses; keeping the market small! 6n the case of a new coffee company, costs are a large /arrier! =ho e0actly has the money to throw around on a factory, national advertising, la/or pool with /enefits, repair structures and mechanical warranties etc!Sometimes divide up segments of the market! 6n the coffee industry, there are different kinds of coffees! -here are of course instant coffee,ground1roasted coffee, chon1coffee, milk1coffee, 2 in 1 coffee, /lack coffee, etc! Sometimes companies in an oligopoly will cooperate and only take a portion of a market! -onopolistic competition; $ company has few power, many /uyerM seller, no dominate, price fi0ed /ut sellers are a/le to set price, profit :ust high in short termI few /arrier, imperfect competition, long run; /reak even% VCA is following oligopoly strategy which few firms dominate the market with high income! -he coffee industry is difficult to enter with low capital, advanced technology and la/our!6n term of VCA main competitors$-rungNguyen,NestleZ% Customers was limited to small range to choose coffee products! -hese competitors had their own strategies to dominate the market, for e0ample -rungNguyen$ design and marketing%, N#stle $promotion activities and differentiation strategy% =ealth and 6ncome of people; -he gap /etween the world3s richest and poorest countries is now increasingly /y nearly 1( times of FDJ from 1&5* to 1&&(! @ichest countries; S, China, Bapan, 6ndia, Fermany, @ussia, BraCil, 9! Joverty remains e0tensive throughout the world, particularly in south Asia and Africa 9oorest countries; Burundi, Congo, Hi/eria, [im/a/we!! -he im/alance /etween the north and the south affects to international trade! However, VCA sell coffee which is a kind of product generally used for all income class people! =hen the gap /etween richest and poorest is too high, their income could /e lost /ecause the poor can not affort to pay /ut the rich one3s demand is not high! VCA mainly imported machines and technology from Bapan! their FDJ or income7 person is 5*,5** SD7year =hilst income7person of Vietnam 1)** SD7person! Costs of materials from Bapan high leads to total cost of production high! -herefore, VCA must consider some countries to e0port /ecause drinking coffee /ecome a part of their live, for e0ample, they drink coffee every morning, afternoon, or night! -hen, the demand for coffees are always high, specially, some countries like Bapan, #gypt and 6ndia which cannot produce coffee /y themselves! 'ietnam pro competition la* and anti8 monopoly la* ; apply for all organiCation$ service, manufacturing, trading% are working within the country! A firm is considered as monopoly if there is no other other firms competed with in the market! -his Haw provides for competition1restricting acts, unfair competition acts, order and procedures for settling competition cases, measures to handle violations of ompetition legislation! nfair competition acts mean competition acts performed /y enterprises in the process of doing /usiness, which run counter to common standards of /usiness ethics and cause damage or can cause damage to the StateLs interests, legitimate rights and interests of other enterprises or consumers! (! An enterpriseLs market share of a certain kind of goods or service means the percentage /etween sale turnover of this enterprise and aggregate turnover of all enterprises dealing in such kind of goods or service on the relevant market or the percentage /etween purchase turnover of this enterprise and aggregate purchase turnover of all enterprises dealing in such kind of goods or service on the relevant market on a monthly, 8uarterly or yearly /asis! Com/ined market share means aggregate market share on the relevant market of enterprises participating in the competition restriction agreement or economic concentration! :ight to business competition ; 1! #nterprises en:oy freedom to competition within the legal framework! -he State protects the lawful right to /usiness competition! )! Competition must /e implemented on the principles of honesty, non1infringement upon the interests of the State, pu/lic interests, legitimate rights and interests of enterprises, consumers and compliance with the provisions of this Haw! ', 2ocial8culture 8 $ofstede; research Cultural factors affect business; Cultural factors affect directly to the /usiness! n every culture there are /asic standards for social interaction such as personal space distance, eye contact, amount of /ody language displayed in pu/lic,

negotiating style,!! 6n Vietnam, 6 would like to consider some main criteria of culture; language, religion, values and attitude, manners and customs, educational level and attitudes! 4anguage; language plays an important role in a strong culture! -he way language is spoken affects directly to the partners! #veryone likely to e0press themselves openly if they can speak in their own language! However, VCA, /oth officers and workers are mainly from foreign countries and Vietnamese! -o officers and managers, they used #nglish as the main language to e0press ideas and use interpreters when necessary! -o officers, there must /e interpreters! #ach language includes its own features and people from different country might not understand clearly! :eligion; Apart from language, religion in two countries is not totally different! 6n Vietnam, G*Y&*4 of Vietnamese follow Buddhism religionI the others followed Christianity, 6slam, Confucianism and the like! -here are some main differences /etween Shinto and Buddhism! #0, people follow /uddihism must eat vegetarian meals at least 2 times7month; 1st day or 1+th, 1(th day of the month! -hey also had to incense their ancestors in these days to get luckiness! 6n the company, Vinacafe, for e0ample, it is recommended to have an altar in each department or in the main 8uarter /ecause Vietnamese /elieved that keeping an altar means that their /usiness will run smoothly and develop rapidly also! 6n Shinto religion, there are a/outG million gods! Jeople seek support from Shinto /y praying at a home altar or /y visiting shrines! A whole range of talismans are availa/le at shrines for traffic safety, good health, success in /usiness, safe child/irth, good e0am performance and more! A large num/er of wedding ceremonies are held in Shinto style! Death, however, is considered a source of impurity, and is left to Buddhism to deal with! Conse8uently, there are virtually no Shinto cemeteries, and most funerals are held in Buddhist style! -he different in religion in Vinacafe Corporation leads to differences in ha/its, /ehaviors and characteristic! -herefore, Co must issue religion policies within company to avoid conflict! ! Educational level and attitude; =ith a country with over G& million people and with more than 5*4 under the age of 2( $Source; Feneral Department of Statistics of Vietnam, )*11%, Vietnam3s education needs for this young population are huge! Despite attention /y the government only a/out 1!5 million $a/out )4% actually are now at higher education institutions! #ach year appro0imately 1!) million students graduate from secondary education /ut the enrollment to higher education is only around 2** thousand $Source; Department of Higher #ducation,."#-%! Since the com/ination of the .inistry of #ducation and the .inistry of Higher #ducation into the .inistry of #ducation and -raining $."#-% in 1&&*, ."#- has had responsi/ility for all education and training at the national level! nder Vietnamese government decree 2))**G1ND1CJ, ."#- is divided into 1& separate departments and several related units, of which the most important are the following 1 units responsi/le for primary and secondary education, higher education, teacher education, adult education and the finance and planning department! 'ietnam corruption; Vietnam is in a phase of transition from a centrally planned economy to a Lmarket economy with socialist orientationL! VietnamLs efforts to attract foreign investment have led the ruling party to seek to improve the /usiness climate for foreign investors! -his involves attempts to com/at corruption which is rampant throughout the country and permeates the activities of the many state companies that still dominate the economyLs strategic sectors! \et, corruption is still cited as one of the most pro/lematic factors for doing /usiness in the country! Jositive developments in relation to corruption and investment; ] Corruption has moved up on the political agenda in Vietnam, and the legal framework for cur/ing corruption is now well1developed! ] Although the /urden of licences and permits on private companies is still considera/le, Vietnam has a/olished almost )** LunnecessaryL permits for operating a company! ] Companies indicate that special relationships with provincial authorities have declined in importance and fewer companies feel that friends are important for negotiating with government! @isks of corruption; ] Jrivate providers should /e particularly aware of continuing corruption related to pu/lic procurement and contracting procedures! ] Several sources indicate that land management constitutes the most corrupt sector in Vietnam! Jolicies and laws on land are incoherent and have many loopholes, while supervision and enforcement of the law within land administration is fairly la0 and paves the way for corruption! ] Despite there /eing laws offering some protection for whistle/lowers, some o/servers argue that the lack of possi/ility to report corruption anonymously, coupled with the lack of faith in the system, is preventing many citiCens and state officials from reporting corruption! ] #ven though Vietnam has one of the most comprehensive Anti1Corruption Haws in Asia, lack of independent anti1 corruption agencies and implementation still pose a ma:or weakness in reducing corruption!

$ofstede<s research on cultural differences ; Nowadays, glo/aliCation has a strong influence to evereyone and development of technology /rings people from different countries or cultures a chance to works or to know each other! Aor those who work in international /usiness, it is sometimes amaCing how different people in other cultures /ehave! #veryone tends to have a human instinct that Ldeep insideL all people are the same 1 /ut they are not! -herefore, if a company go into another country and make decisions /ased on how it operate in its own home country 1 it is o/vious a very /ad decisions!However, Feert HofstedeLs research gives a look insights into other cultures so that Company can /e more effective when interacting with people in other countries! 6f

understood and applied properly, this information should reduce the level of frustration, an0iety, and concern! But most important, Feert Hofstede will give company the edge of understandingL which translates to more successful results! #0ample; "ne e0ample of cultural differences in /usiness is /etween the .iddle #astern countries and the =estern countries, or the differences /etween North and South of Vietnam! However, the research divided into + categories such as Power distance, Individualism/Collectivism, ncertainty avoidance and !asculinity/"emininity, long#term or short#term orientation.. Aundamental issue involved in Uindividualism versus collectivismU dimension is the relation /etween an individual and his7her fellow individuals! At one end of the scale there are societies in which the ties /etween individuals are very loose and every/ody is suppose to look after his7her own selfinterest and may/e the interest of his7her immediate family! At the other end of scale there are societies in which the ties /etween individuals are tigh! 6n Vietnam, the individualism is really low, the group3s well /eing is usually prioritiCed over individual3s right! 6t means that it is a /ig advantage for any companies do /usiness in Vietnam! Because it is a prove that everyone will have more responsi/ility for their :o/s and others , together with respected as well! -herefore, Vinacafe is a /ig organiCation in Vietnam coffee industry, working in teams and perform well team mem/er roles is very important! Airstly, it is very useful for Vinacafe to understand this point of view to improve their reward system! 6n stead of providing high incentive for employees, VCA managers should think in different way! Aor e0ample, normally, VCA will give 1* milions VND for the /est employees of the month, they can transfer the priCe into a reward for a group! 6t means that the money reward will /e /igger, and everyone will have their own incentive e8ually! "r in another word, they can delegate the o/:ective for different teams such as design team $ specialiCed in designing coffee /o0%, enginee team $ maintain machinery system% or sale team, and each team will have their /ig reward only when they finished the task! nderstanding and applying this is a powerful tool for Vinacafe to improve their operation and team sprit of their company! -he fundamental issue involved in the second dimension, U power distanceU, is how society deals with the fact that people are une8ual in physical and intellectual capacities which can grow over time into ine8ualities in power and wealth! 6n organiCations, the level of power distance is related to the degree of centraliCation of authority! However, Vietnam is a country with high power distance, therefore, there are /ig advantages and disadavantages as well! -he /iggest advantage is the power of managers, it is o/viously autocratic! -he lower level mangement must follow decision of higher without any 8uestion, all decisions are made /y head directors! However, this is also the /iggest disadvantage for Vinacafe! Airst, they always have to offer :o/ for professional foreigners to come to give advice for company! .ay/e some of them come from lower power distance country such as 9, S or Canada, they are professional in their :o/s /ut the different culture will make them feel disempowerment! -hey have to work and give advice according to what the managers really want to hear! -hen, if Vincafe wants to have partners from outside, they must understand the different of Vietnam culture compare to foreginer! Specially, when VCA send a manager to travel a/road to perform their role, the manager can meet some pro/lems such as confusing in their role, or unclear orientation /ecause employees or managers are free to perform their duty meanwhile VCA managers always follow the decision of directors a/out what they e0actly have to do! Hence, it is very important and useful for VCA to consider to co1operate with foreign company outside of Vietnam! 6n term of uncertainty avoidance, Vietnam is a country with high uncertainty avoidance! -he same to power distance, understanding the adavantages and disadvantages of this dimension are really necessary for Vinacafe! 6n a low uncertainty avoidance country, employees are motivated to work individual in order to show their ideas, their performance or their role in company! As a result, the risk is o/viously really high! .eanwhile, Vietnam get high power distance, and then, the managers cannot let employees to do what they want in their :o/s! #veryone must follow the decision of higher position in company, then, employees should focus on :o/ security! 6f they did anything wrong, the manager must take responsi/ility for this, and they must pay the compensation, or pension! Hence, it affects in overall organiCation! -he +th term .asculinity or Aemininity only aims to show the role of male or female in society, specially, in /usiness! Vietnam is a country with high masculinity, they prefer to the male in any positions which re8uired high knowledge, high responsi/ility, a hard work, a concentration :o/, specially, some :o/s need to work overtime in a long period of time! 6n Vietnam society, the women must do good their duty in family, for e0ample, take care of grandparents, parents , the children! -herefore, they cannot have enough time to cover all these works! -hat is reason why man is always prioritiCed in many chances of promotion! -he managers do not want the employee who wants to take1off a long1time to do procreation! Additionally, they still have to pay these employees, and during time of having /a/y, the women is easy to get accident, it is a /ig trou/le for managers!-hen, if Vincafe directors want to offer some higher positions, they always need to promote a woman as well! Because when su/ordinates look at the hierachy structure, there does not have any woman, they call this

situation is discimination! As a result, if the partners know a/out this, this will affect directly to their reputation in coffee industry! -he final term is called long#term or short#term orientation . Aor over a thousand years, Vietnam was a colony of China! -his e0plains why the Vietnamese culture was strongly influenced /y Confucian philosophical /eliefs $UVietnamese traditional family,U )**&%! According to Feert Hofstede3s findings $Hofstede, )**&%, Asian countries score 8uite high on short1term orientation! -hen, manager of Vinacafe coorporation can take a look at this to get good concept understanding and applying this dimension! Airstly, they need to incentive their employees to show their own ideas and comments a/out Vinacafe operation as well as structure! Because the /est understanding a/out productive operation comes from workers, and lower su/ordinate! Secondly, Vinacafe should announce to all their employees a/out how to treat to others, specially, no discrimination, for e0ample, some Vietnamese people don3t like the /lack people! So, this will /ring the conflict /etween :o/s, it is a pro/lem for managers! -herefore, managers should make rule a/out /ehavior to afffirm their uni8ue company culture, everyone must respect others! E80usiness and ho* it affect to company1industry E8business; #/usiness is a term used to descri/e /usinesses run on the 6nternet, or utiliCing 6nternet technologies to improve the productivity or profita/ility of a /usiness! # 1/usiness and e1commerce are terms that are sometimes used interchangea/ly, and sometimes theyLre used to differentiate one vendorLs product from another! But the terms are different, and that difference matters to todayLs companies! 6n /oth cases, the e stands for Uelectronic networksU and descri/es the application of electronic network technology 1 including 6nternet and electronic data interchange $#D6% 1 to improve and change /usiness processes! E8commerce covers outward1facing processes that touch customers, suppliers and e0ternal partners, including sales, marketing, order taking, delivery, customer service, purchasing of raw materials and supplies for production and procurement of indirect operating1e0pense items, such as office supplies! 6t involves new /usiness models and the potential to gain new revenue or lose some e0isting revenue to new competitors! 6tLs am/itious /ut relatively easy to implement /ecause it involves only three types of integration; vertical integration of front1end =e/ site applications to e0isting transaction systemsI cross1/usiness integration of a company with =e/ sites of customers, suppliers or intermediaries such as =e/1/ased marketplacesI and integration of technology with modestly redesigned processes for order handling, purchasing or customer service! E8business includes e1commerce /ut also covers internal processes such as production, inventory management, product development, risk management, finance, knowledge management and human resources! #1/usiness strategy is more comple0, more focused on internal processes, and aimed at cost savings and improvements in efficiency, productivity and cost savings! An e1/usiness strategy is also more difficult to e0ecute, with four directions of integration; vertically, /etween =e/ front1 and /ack1end systemsI laterally, /etween a company and its customers, /usiness partners, suppliers or intermediariesI horiContally, among e1commerce, enterprise resource planning $#@J%, customer relationship management $C@.%, knowledge management and supply1chain management systemsI and downward through the enterprise, for integration of new technologies with radically redesigned /usiness processes! But e1/usiness has a higher payoff in the form of more efficient processes, lower costs and potentially greater profits! 6n details, Company can develop a more cost1effective Communication and .arketing Strategy include advertising! sing e1/usiness re8uire the company to create a vital we/ site which /ecomes the focal point of their communications and marketing strategy! Aor e0ample, in the we/site of AC 9$french connection united kingdom%, a fashion company, e1/ is the tool for company to communicate with their customers in order to meet the customersL re8uirement and satisfy them! Besides that, in the past, they only can advertise their products in some e0pensive media types like television, magaCine, set up the /ig /ouches in the road,etc! Now, /y using #1/, they can save the cost of marketing and reach the wide range of customers! After sales training e0penses can also /e reduced /y utiliCing online seminars, training videos and tutorials! -he company can reach New .arkets =orld =ide /ecause internet offers e0citing ways of reaching new market! Aor e0ample, with the e1/usiness, .ango can e0pand their /usisness to others countries /ecasue they can use the method of promoting their products online that allow them to precisely target the customers whether they are in town or on the other side of the world! -he company can reach Hocal Customers and Jrospects more effectively! Nowaday, more and more people /ecome comforta/le with using the internet instead of traditional advertising sources like classified ads or yellow pages, having an aggressive we/ presence makes /etter /usiness sense even for local companies like S1Hope Bakery, which selling cakes, candy and chocolate products in some province of Vietnam! -his may also offer a spring/oard to developing new markets further afield!-hey also can streamline the "rdering Jrocess /y taking orders online 1 6mplementing an online ordering system

allows company to eliminate manual paper work or telephone order taking! 6t also offers the possi/ility of integrating your sales order system with order fulfillment and delivery so customers can /e up to speed on the progress of their orders at all times! Company can cut Communications and -elephone Costs 1 in recent years, the cost of using distance telephone had /een coming down repidly /ut it even eliminate the cost /y using e1 /usiness with the tool like email, forum or we/site! -he concept of e1/usiness has also /enefited the customersI they can now avail facilities like e1shopping and can purchase goods )+]2(5 hours! -his has enhanced the comfort level of many customers who do not have time to go to market and purchase goods! After the introduction of e1shopping, the volume of revenue has also increased manifold in certain companies and they reported healthy growth in their profit margin! As per many A.CF companies the platform offered /y e1/usiness provides them with /roader access to international customers and the companies gets a chance to enhance their customer /ase at nominal e0penditure! #1commerce and e1/usiness /oth address these processes, as well as a technology infrastructure of data/ases, application servers, security tools, systems management and legacy systems! And /oth involve the creation of new value chains /etween a company and its customers and suppliers, as well as within the company itself! All companies should have an e1commerce strategy! $Fovernments should have an e1pu/lic service strategy!% #lectronic networks in general and the 6nternet in particular are too important for firms to ignore if they want to interact with customers, suppliers or distri/ution partners! But some companies need to move /eyond e1 commerce and form e1/usiness strategies 1 especially large companies that already have links B)B; UB)BU is contemporary shorthand for a longtime sales practice called /usiness1to1/usiness! B)B transactions primarily target companies and other wholesale /uyers, while transactions targeting individuals are called B)C, or /usiness1to1customer! .any organiCations have /oth B)B and B)C components, /ut itLs not unusual for a company to specialiCe in B)B services or sales! 6n fact, the vast ma:ority of products and services sold are considered to /e B)B in nature! "ne ma:or reason for the popularity of B)B sales and services is sheer volume! An individual customer may visit a clothing manufacturerLs we/site catalog and order two pairs of shoes or a sweater! -he /uyer for a national chain of clothing stores, however, may order (,*** pairs of shoes and ),*** sweaters! =ithout a B)B component, the manufacturer would have lost out on a very lucrative sale! -his is why many companies provide B)B options alongside the B)C offerings at their we/sites and other outlets! Impact on 'inacafe Being an industry leader today is in no way a security /lanket to confirm tomorrowLs success, in this case, Vincafe is leader of coffee industry in Vietnam! 6n order to maintain competitive advantage and emerge as an industry leader, esta/lishing all informations /ut still keep the secrets is very important! Not only in leveraging 6- to its limit /ut also to change the way employees and administration think and work to a whole new level! Arom )**), Vinacafe Sales and .arketing Department had use e1/usiness and make the revolutioniCe the automotive replacement parts market /y ! -he we/site vinacafe/ienhoa!com is availa/le to provide production process, dealers, wholesaler and retailers with an on1line marketplace to find, price, order and facilitate automotive parts purchase! 6n fact, for some items in our huge inventory of discount Vincafe parts, youLll see price reductions of up to 5*4 /ecause they can save the cost of store rental, employee salaries, local /usiness ta0es, utilities and more as well as the cost of storing inventory! e1/usiness will /enefit /uyers /y helping them locate, price, order and fulfill parts needs faster than ever /efore and at a lower cost! -hat, in turn, will help dealers, installers and :o//ers /etter satisfy their customers and encourage repeat /usiness! -his is the first system that will link together producer and services providers in a single on1line marketplace ! 6nitial services will include catalog hosting, technical content, demand planning, purchasing, online transactions and invoicing, supplier colla/oration, procurement planning! An agency will provide a lot of information for customer who wants to /uy Vinacafe products or he or she is thinking of /ecoming a wholesaler or retailer, /ut isnLt sure e0actly where and how their 8uestion can /e answered, then, e1/usiness is the answer for this solution of Vincafe! -he data/ase that includes all kind of products, all relia/le places and we/site that customer can click on to see the information they need such as price, places, the discount percentage, how to /e a partner of Vincafe! specially provide a computer image of how productsLll look on the e0act make, technical specification and how product tastes! -he second e1/ type of we/site is vincafe!com!vn which support the retail store, such as /y providing resources and information or /y promoting the products that sell via the retail store! -his we/site is not designed for the actual sale of Vincafe3s products, since few people are likely to make such a ma:or purchase over internet! However, this site is designed to provide resources and information that potential customers are looking for! By

providing this information, the we/site supports the sale revenue model, while the actual purchase is made via the retail store! However, to run a e1/usiness had cost a lot for redefining product lines in order to sell online! pgrading computer systems, training personnel, and updating we/sites re8uires su/stantial resources! .oreover, #lectronic Data .anagement and #nterprise @esource Jlanning necessary for ensuring optimal internal /usiness processes may /e looked upon as one of the disadvantages of e1/usiness for Vincafe Corporation! :espond of 'inacafe to E8business "ne tool that is critical to e1/usiness is that of a company3s we/site! 6t allows a company to showcase its products digitally to the market! -he information that availa/le in the we/site needs to /e correct to improve market transparency! Besides, all information a/out technology, the production process, or ingredients, recipe a/out product can /e researched /y competitors! Arom that point, the competitor can analysis the strength and weakness of Vinacafe as well as their products!-herefore, it is very important for Vincafe to consider which information can /e uploaded, which are not! Vincafe corporation and suppliers, wholesalers and logistics partners will /enefit from e0panded market reach, /oot revenue, reduced in8uiry processing costs, real1time demand information and reduced inventory1carrying costs! Aurthermore with the information networking availa/le, Vincafe are a/le to consolidate information on supplier performance and cuts inventory re8uirement! Additionally, it can /e a competitive weapon of Vincafe if they prepare all financial indicators, company history, update magaCine, newspaper in #nglish! Arom then, the foreigners feel this more relia/le and easy for them to read or research a/out this company! -his /rings opportunity to co1operate with foreign companies which will increase the AD6 inflow for Vietnam, then, this /usiness will receip a lot of /enefits from government decision! Besides that, e1/usiness allows significant cumulative savings in procurement costs, /oth /y making it easier to find the cheapest supplier and through efficiency gains! -he transaction costs of placing an order online is much less than a phone and fa0 ordering system, and there are likely to /e fewer errors in orders and invoicing! .oreover, they can 6mprove planning certainty