ASSIGNMENT 2 FRONT SHEET

Qualification BTEC Level 4 HND Diploma in Business

Unit number and title Unit 1: Business and Business Environment

Submission date 04/11/2020 DateReceived1stsubmission

Re-submissionDate DateReceived2ndsubmission

Student Name Trần Thị Kiều Trang Student ID GBS20076

Class 485 GBS0902_PPT Assessor name QuyNTH

Student declaration

I certify that the assignment submission is entirely my own work and I fully understand the consequences of plagiarism. I understand that
making a false declaration is a form of malpractice.

Student’s signature Kiều Trang

Grading grid

P4 P5 P6 M3 M4 D2
Summative Feedback:ResubmissionFeedback:

Grade: AssessorSignature: Date:

InternalVerifier’sComments:

Signature&Date:
First of all, I would like to thank the management's trust that gave me the opportunity to continue
reporting on the internal and external environments of the company that we are looking to invest in the
future - Vinagames.

This report will include 4 main parts including:

I. The positive and negative effects of macro-environment on VNG according to Porter's Five Forces
model and 6 elements (PESTLE) (at least 3 most important factors) of the macro environment.

II. VNG's internal analysis is selected to find out the strengths and weaknesses of this company.
III. Explain how strengths and weaknesses interact with external macro factors.

IV. Conclusion: summarize all the main points and analyze from the report.

I would like to begin presenting my report as follows:

I. The positive and negative effects of macro-environment on VNG according to

Porter's Five Forces model and 6 elements (PESTLE) (at least 3 most important
factors) of the macro environment.

1/ Porter's Five Forces model:

1.1 Analysis of current competitors

Competition between enterprises in an electronics industry often includes major contents such as industry
competition structure, industry structure status and exit barriers.

The industry's competitive structure is based on data and product distribution. Normally, no one of them
has a dominant position in the industry and neither does VNG. For the electronics industry, VNG has a
multitude of other competitors such as: FPT Online, Vietnam Esports, VTC Game, Soha Game, Sparx ...
 1. The chart comparing advertising revenue of FPT Online and VNG by year

The demand condition of an industry is a determining factor in the intensity of internal competition.
According to a research result, the number of people playing games in Vietnam is 32.8 million people,
accounting for about 35% of the population. The total cost of the game in Vietnam will amount to 365
million USD (or about 8,200 billion VND). This figure helps the domestic game market rise to the 28th
position in the list of regions with the largest revenue in the world. Because of such potential, many
Vietnamese game companies have been developing and growing stronger.

The exit barrier is economic, strategic, and emotional relationship that keeps businesses in place and may
be determined by cost factors. For VNG in particular and the booming electronic industry scene in
general, this factor is not considered too influential.

1.2 Analysis of potential competitors

Potential competitors are businesses that currently do not compete in the same industry, but are able to
compete if they choose and decide to join the industry. This is a threat to current businesses and the level
of competition will become more intense. Therefore, existing businesses in the same industry will create
barriers to entry, often it includes:

The absolute advantages of costs: technology, raw materials, human resources ... VNG currently owns a
separate SOFTWARE RESEARCH AND DEVELOPMENT CENTER located in Tan Thuan Export
Processing Zone, District 7, Ho Chi Minh City, Vietnam, completed: 2019.

VNG's financial revenue in 2019 increased sharply from 158 billion to 230 billion due to the abundant
cash. At the end of 2019, VNG holds more than 4,100 billion dong in cash and deposits of all kinds, an
increase of more than 1,500 billion dong compared to the beginning of the year.

In addition to the profit generated from business activities, VNG's cash volume soared in the past year
thanks to a revenue of 662 billion dong from selling treasury shares to Temasek and Zion (owner of
ZaloPay e-wallet), 464. VND billion from the offering of 40% shares to external partners.
 2. Corporate Governance Report the first 6 month of 2020 of VNG

1.3 Product differentiation:

Utilize economies of scale to reduce unit cost.

Maintain and consolidate distribution channels including hot Vietnamese games, together with Zalopay
application. According to data from the State Bank Payment Department, ZaloPay is one of the wallets in
the group with the dominant market share in the number of open wallets, balance, and transaction volume.
In the second quarter of 2019, ZaloPay is one of 5 wallets accounting for 95% of the total market
transaction value.

1.4 Customer analysis

VNG's target customers are young people who love technology and especially games.

Therefore, this is seen as a threat to compete when they force VNG to continuously innovate its strategies
in accordance with the digital 4.0 technology context, improve quality and service.

In cases where there are more than one video game service provider, they have the right to choose the
provider of better game titles, better graphics, and so on. Therefore, suppliers must compete with each
other.

1.5 Alternative products:

A substitute is another product that can satisfy the same consumer's needs. Today, VNG products compete
with different company's products through the creation of new, added, perceived value rather than its
inherent usefulness and Buying, customers also spend money to buy those values.

Customers are no longer too unfamiliar with online game products, including games on computers and
phones, but in the future when 3D virtual technology develops, it will be difficult to avoid the risk of
products. The other will become outdated, so this is a far-reaching threat but still needs to be considered.

2/ PESTLE (3 most important factors) of the macro environment.

The PESTEL model is a type of analysis that considers six key business factors. The six categories are:
Political (Politics)

Economic

Sociocultural (Social Culture)

Technological (Technology)

Environmental

Legal

2.1 Political (Political):

The way of political organization in Vietnam is arranged vertically with the Communist Party holding the
first position, so companies that have been operating in the electronics industry in Vietnam must comply
with the law. and the constitution of the current state of the Socialist Republic of Vietnam. Under the
influence of politics, online games in general are receiving a lot of prejudices because of game addiction,
living in the virtual world, the state has made moves to curb the development of this industry by Limiting
playing hours, taxing consumption for games originating from abroad is 10%...

In addition, legal documents in Vietnam are still limited in terms of expertise, foreign languages, lack of
clear management frameworks, ... thus, intangible to create barriers for businesses to take place. vibrant
turn of the global electronics industry.

2.2 Social culture:

With the young population structure (under 35 years old) accounting for a large proportion of 58.2%, the
trend of using entertainment services will increase. This is an opportunity for VNG to expand the business
of online games in Vietnam to meet the market demand. However, online games still exist quite a lot of its
downsides (spending time, money, failing education, unusual activities, ...). So, this is still a relatively
sensitive industry. The media is also one of the major obstacles affecting online gaming-related activities.
2.3 Technology:

Technology is a decisive factor in the electronics industry in particular and the digital industry in general.
Newly created games must keep up with technology and be adapted to the real world situation. Well-
developed information technology will become a powerful resource (in addition to human factors) to
promote the company's growth. The cooperation with major partners from foreign countries such as the
US, Japan, Korea and China will be a great opportunity for technology companies like VNG to learn and
develop.

The development in Internet infrastructure, bandwidth speed will be one of the prerequisites for quality of
service, in addition, hardware devices with faster and smoother processing speeds will be preferred.
preferred. Graphics in 2D and 3D games are also increasingly eye-catching, attracting more people to care
about and try online games.

II. VNG's internal analysis is selected to find out the strengths and weaknesses of this
company.

1/ The weakness:

For VNG, factors such as Brand Name, Financial Strength; Market resources; Technology base or
Research and Development are all their strengths. If we have to choose the weakness factor in the overall
power of VNG, it is probably the mission and vision

VNG has set a mission of "developing the internet to change Vietnamese lives”. If considering games,
social networks and e-commerce as three big waves of the Internet ocean, VNG is the unit that welcomes
the top of those waves.
VNG's vision is shaped with a focus on three major areas in the internet sector, including content,
community, and commerce, with different priorities and focus at each stage of market development. The
reason for this strategy is that all major internet companies want to integrate many services / products for
their customers (and do not want customers to leave themselves to another place).

However, a big ambition will come with huge challenges. This mission is probably too big for a business.
To achieve this goal, VNG needs to become a leader in online games in Viet Nam. They need to make
efforts to invest and develop the uniqueness of the product, creating a superior competitive advantage over
competitors' products. At the same time, VNG's products not only meet the needs of domestic customers,
but also need to focus on research and development, and promotion of Vietnamese games for export to
foreign countries.

2/ The strength:

Human resources is one of the biggest strengths of VNG (in addition to technology). VNG is the best
workplace in the industry Internet, e-commerce with spacious facilities, ideal working conditions, the best
treatment. Specifically:

>> Benefits are not just wages: At VNG, members' abilities and contributions are recognized not only by
the monthly salary, if they work well, they can receive bonuses from projects, products, year-end bonuses,
stocks.

>> A special working environment: Starting from being friends to start a career, VNG always tries to
maintain a friendly and open working environment. VNG people are always ready to share, join hands to
solve all problems.
>> Not just a profession: VNG is the place to build a career. VNG opens up many advancement directions
at VNG, and at the same time designs career development programs for each journey.

>> Family welfare: In addition to benefits for each member, VNG also continuously expands family care
policies.

>> Learning opportunities: VNG attaches great importance to learning and creates conditions for people to
practice at anytime, anywhere. Each colleague is a teacher. VNG offers a wide range of training courses
for members of career groups from Engineering, Marketing, Business Development and Business Support.
VNG people are also regularly dispatched for fieldwork abroad.

>> And more: Free library and gym for all staff to study and work out daily.
III. Explain how strengths and weaknesses interact with external macro factors.

1/ One actual business decision of VNG:

Thuan Thien Kiem is a game in the genre of online multiplayer online role-playing game (MMORPG) and
is the first pure Vietnamese game released by VNG itself (previously all imported games). Technology is
one of VNG's strengths, so it is not surprising that they are the first unit in Vietnam capable of developing
a pure Vietnamese game.

1.1 Product strategy (Product)

Products in Thuan Thien Kiem are divided into two categories with different characteristics and
properties: manufacturing services and items. In particular, the manufacturing service is a very rare type
that appears in today's games on the online game market in Vietnam. According to cultural and social
factors, this is a game that is suitable for fine customs and traditions, making about Vietnamese history
and is extremely worthy to be welcomed and recognized.

1.2 Price strategy

Thuan Thien Kiem has 2 mechanisms for players to choose: play paid games and play games without
charge. Players can reach the desired levels in proportion to the amount they spend. This does not detract
from the interactive in-game experience, but opens up more pricing options when the player decides how
much money he needs to spend. With the gloomy economic situation affected by the recent Covid-19
epidemic, online games are not too affected because the form of online play keeps players at home and
does not require contact with strangers. Not surprisingly, famous online games are still on the rise despite
the pandemic.
1.3 Distribution Strategy (Place)

Thuan Thien Kiem is an online role-playing game on the computer, so it is not difficult for players to
access and know information about this game. With a foundation of the brand name that has been
measured in quality shoes as VNG, Thuan Thien Kiem is really convenient to reach players. VNG has
taken advantage of online games to use its own website, vinagame.com.vn, to be the main distribution
channel for this game.

1.4 Marketing and communication strategy (Promotion)

3.An advertisement was posted on the fanpage Thuan Thien Kiem about the time of the open beta
To gain market share and attract customers, instead of just posting articles on fanpage in the traditional
way, VNG takes advantage of all information channels such as game forums such as diendan.zing.vn,
gamevn.com…; Chat channels such as ZingChat, Yahoo Messenger, Skype ... even met face-to-face
through offline sessions, press conferences and launching games to promote. More specifically, many
gamers recently actively approached VNG's product PR to hope their name was blown up in the
newspapers. They also do not hesitate to point out good game tips, how to set the standard, ... of
themselves to learn.

>> Although not too prominent in the middle of a huge role-playing game market from abroad, VNG has
achieved 2 important goals after the launch of Thuan Thien Kiem:

+ First, they have affirmed their long-term development strategy of becoming a game developer, not just
an indirect foreign game publisher. As VNG's mission and strategic vision outlined above, VNG needs to
develop pure Vietnamese games developed by itself in order to achieve its ambitions.

+ Second, at the time of Thuan Thien Kiem's release, VNG also affirmed its leading position as the first
unit to launch a pure Vietnamese game.

2/ SWOT ANALYSIS OF VNG COMPANY:

2.1 Strength:

- Is a technology star in Vietnam according to The Economist magazine of the US with a valuation up to 1
billion USD.

- A pioneer company in the field of online games.

- Build an image with the same brand name not only with games but also famous electronic applications
(Zing, 123mua.vn, Zalopay, ...)

- Won many honorable awards

2.2 Weakness:

- The elements of violence in the game have not been completely resolved.
- Encountered a number of incidents related to music piracy, illegal hacking software.

- Slow to catch up with trends and consumer tastes, there are still many shortcomings in copyright and
security.

2.3 Opportunity:

- 6 Southeast Asian countries including Vietnam, with about 550 million people with 176 million Internet
users and 108 million gamers, are one of the regions with the highest growth rates in the game industry in
the world => Demand is very high and is a potential market for VNG to open

-Develop new game lines and applications based on available technology and experience

- Increase security and combine applications for customers to have a better experience.

2.4 Challenge:

- More and more competitors (for example, VED, FPT Online ...)

- Online games are constantly renewed, accompanied by technology requirements and player experience
also increases.

- Limiting errors in security risks, copyrights, ...

- Need more brand breakthroughs, changes to keep up with the times.

IV. Conclusion: summarize all the main points and analyze from the report.

>> In summary, VNG is a large potential company, with strong points that we - BIDV Bank can aim at for
investment and development. As in the previous report to convince the company to invest in VNG, I hope
this report has given a deeper look at macro factors, the strengths and weaknesses of the strategy as well
as the VNG's view so that management can review and consider our future cooperation. I would like to
sincerely thank the management of BIDV Bank.
References:
1/ Mindtools n.d., Porter's Five Forces Understanding Competitive Forces to Maximize Profitability, viewed 02
November 2020, from https://www.mindtools.com/pages/article/newTMC_08.htm

2/ Callum Mcadam n.d., Porters Five Forces in the Digital Age, viewed 02 November 2020, from
https://www.callummcadam.com/blog/porters-five-forces-in-the-digital-age/

3/ Báo pháp luật n.d., “Kỳ lân” VNG - Niềm cảm hứng cho doanh nghiệp khởi nghiệp, viewed 10 October 2020,
from https://baophapluat.vn/doanh-nhan/ky-lan-vng-niem-cam-hung-cho-doanhnghiep-khoi-nghiep-471290.html

4/ Truong Luong n.d., Trong khi nhiều startup khát vốn, công ty mẹ của Zalo, ZaloPay đang có hơn 4.000 tỷ đồng
gửi ngân hàng, viewed 02 November 2020, from https://cafef.vn/trong-khi-nhieu-startup-khat-von-cong-ty-me-
cua-zalo-zalopay-dang-co-hon-4000-ty-dong-gui-ngan-hang-20200204234723683.chn

5/ Quandat n.d., TRUNG TÂM NGHIÊN CỨU PHÁT TRIỂN VÀ SẢN XUẤT PHẦN MỀM VINAGAME, viewed 02
November 2020, from https://quandat.com.vn/du-an/trung-tam-nghien-cuu-phat-trien-va-san-xuat-phan-mem-
vinagame-163.html

6/ Tomorrow Marketers n.d., bức tranh toàn cảnh của thị trường game việt nam, viewed 02 November 2020, from
https://blog.tomorrowmarketers.org/buc-tranh-toan-canh-thi-truong-game-mobile-viet-nam/

7/ mordorintelligence n.d., GAMING MARKET - GROWTH, TRENDS, FORECASTS (2020 - 2025), viewed 02
November 2020, from https://www.mordorintelligence.com/industry-reports/global-games-market