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ASSIGNMENT 2 FRONT SHEET

Qualification BTEC Level 4 HND Diploma in Business

Unit number and title Unit 1: Business and Business Environment

Submission date 22/10/2022 Date Received 1st submission

Re-submission Date Date Received 2nd submission

Student Name Lê Thị Hồng Tâm Student ID GBD210626

Class GBD1009 Assessor name Nguyễn Xuân Nguyên

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

Grading grid

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

Grade: Assessor Signature: Date:

Internal Verifier’s Comments:

Signature & Date:

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The content of my report:

I. Introduction:

II. Macro environment has negative and positive impact on business operations

PESTLE:

Political:
Political: Political stability can only be firmly built on the foundation of people's trust in the Party's leadership;
the management and administration of the State. But it is thanks to the consensus of the people of "millions of
people as one", under the leadership of the Party, the Vietnamese people have made remarkable feats of the
times. The national tradition and the people's faith in the leadership of the Party are the invincible strength for
the Vietnamese people to move forward. It also creates a streak of the most politically stable men in the region.
Specifically, recently, when answering the press on the occasion of the 5th Asian Development Forum held in
Hanoi, Asian Development Bank (ADB) President Takehiko Nakao highly appreciated the main stability.
governance and macroeconomic stability in Vietnam.
- On domestic and foreign policy:
+ Foreign policy:
Regarding foreign affairs, Vietnam's diplomatic strategy will be more comprehensive and macroscopic, actively
building a new overall diplomatic framework; diplomatic measures will be more proactive and pay more
attention to promoting an active role in international organizations such as the United Nations and ASEAN, in
order to increase influence; Vietnam's diplomacy will focus more on relations of interest, maintaining and
promoting bilateral and multilateral relations through building common interests.
+ Domestic policy:
 Focus on flexibly and effectively implementing the goals of both prevention and control of the COVID-
19 epidemic, while recovering and developing socio-economic.
 Promote the construction and development of a synchronous and modern strategic infrastructure
system, especially in rural areas, energy, digital infrastructure, agricultural and rural infrastructure,
adaptation to climate change, etc. ..
 Promote the development of regional linkages, economic zones and urban development, urban
economy, speed up the progress of making and approving master plans.
Economic:

CPI:

1. Inflation:
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Stimulate consumption, borrow, invest, reduce unemployment in society.

Vietnam continues to be in the group of countries with low inflation rate with the average of 9 months of 2022
at 2.73%. Low inflation rate is a favorable condition for the corporation to stimulate consumption of customers
and at the same time help the corporation invest in more projects.

At the same time, inflation also directly affects the production costs of steel enterprises when 60-70% of raw
materials depend on imports.

(Lạm phát cao nhất 40 năm bủa vây người Mỹ, 2022)

Inflation in the US and Europe eroded the purchasing power of consumers. Along with that, China's "Zero Covid"
policy caused steel demand in Hoa Phat's main export markets to shrink. Domestic steel demand also decreased
due to the general trend, especially hot rolled coil (HRC).

2. GDP 2021:
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(vneconomy.vn, 2021)

3. Unemployment rate:
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4. Interest rate:

On September 22, 2022, the Fed decided to increase interest rates by 0.75% and after 5 times of adjusting
interest rates, bringing the federal funds rate to 3-3.25%/year. When the Fed forecast that interest rates would
continue to rise and remain above 4% per year after 2023 to curb inflation, the USD index rose to a record high
compared to recent years.

Decision No. 1606/QD-NHNN dated September 22, 2022 on refinancing interest rate, rediscounting interest
rate, overnight lending rate in interbank electronic payment and lending to cover capital shortfall in clearing by
the State Bank of credit institutions and foreign bank branches (collectively referred to as credit institutions).
Accordingly, increasing the refinancing interest rate from 4.0%/year to 5.0%/year; discount rate from 2.5%/year
to 3.5%/year; interest rates for overnight loans in interbank electronic payments and loans to cover capital
shortfalls in clearing payments of the SBV for credit institutions increased from 5.0%/year to 6.0%/year.

When deposit interest rates are low, it will give businesses in the steel industry the opportunity to mobilize
more capital for investment and business development.

Social:

1. Demography:
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(Con số sự kiện, 2019)

Vietnam's population with a labor structure of more than 15 years in 2021 accounts for about 69.3% of the
country's population, showing that Vietnam has an extremely abundant labor source. that creates opportunities
for enterprises in the steel manufacturing industry to attract human resources to develop strong businesses.

However, the workforce with a high school diploma only accounts for 39.1%, creating a challenge for businesses
in recruiting and training human resources.

2. Social class

From the social class structure in Vietnam, the market research and development experts of Hoa Phat Group
will have more apartments to determine the market's supply and demand for the company's products. that
create strategies to attract potential customers.
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Technology:

The world has now turned to encourage the development of clean energy, using renewable raw materials with
advanced technology, and since then, the trend of shifting the steel industry from ore, coking coal... to
developing countries. has very modern steel making technology and environmental treatment. In other words,
there have been changes in perception when it is no longer optimizing technology to make steel from ore,
smelting with coke.

Example: Construction steel

Hoa Phat applies blast furnace and blast furnace technology in producing steel from ore with technological lines
imported from Germany and the Netherlands, which are clean of impurities, and can produce high quality steel
grades specializing in super construction. , ensuring the strictest export standards of European countries, the
US, Japan…

As a result, Hoa Phat Steel Pipe products have superior quality, not only occupying the No. 1 market share
position in the country for many consecutive years, but also meeting export standards to many demanding
markets such as Australia, North America, and Latin America. , India… From the beginning of 2020, Hoa Phat
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Steel Pipe is a pioneer in manufacturing and supplying to the market large steel pipes with sizes such as round
pipes ⱷ273 and ⱷ 325mm, square pipes of 200x200, 250x250 mm, rectangular tube 200x300. The production
line of this product line is invested in the most methodical and modern way in Vietnam today with a value of
over 4 million USD, equipped with a system of pressure testing equipment, dredging pipe ends, dredging the
welding seam. helps provide the market with outstanding quality products, manufactured according to ASTM
A53 and ASTM A500 standards to ensure good bearing capacity and high aesthetics.

Thanks to closed circulation technology from ores and modern equipment lines of G7 countries, Hoa Phat
construction steel is always appreciated for its quality. The impurities in the steel are thoroughly cleaned and
there are almost no harmful elements left.

Legal:

- Shorten the notice period of business suspension:

If before, the notice of business suspension must be made at least 15 days in advance from the date of business
suspension. From January 1, 2021, businesses that want to be temporarily suspended from business only have
to notify at least 03 days in advance.

- Supplement the number of documents to be kept by the business:

Pursuant to the provisions of Article 11 of the Enterprise Law 2020, in addition to keeping documents such as
minutes of meetings of the Members' Council, the General Meeting of Shareholders, the Board of Directors;
decisions of enterprises, enterprises need to keep more votes, minutes of vote counting of the company.

- Abolish the procedure for reporting changes in information of business managers.

According to the new provisions of the Enterprise Law 2020, a company that changes information of a member
of the Board of Directors, a member of the Supervisory Board/KSV, or the Director/General Director does not
need to carry out the notification procedure to the Business Registration Office anymore.

Environment:

- In order to produce green and clean production, enterprises need to spend a large amount of money to invest
in the treatment of waste generated in the production process. In recent years, especially during difficult
economic times, many businesses have not paid much attention to environmental protection. Therefore, the
environmental pollution of enterprises is taking place more and more seriously.

 First, if businesses want to continue to increase output, they must have stable inputs. Many industries
rely on high-quality resources, loss of resources will increase production costs.

 Second, the initial reach and consumer choice. The environmental practices of industries and
businesses are increasingly becoming a changing consumer demand today. International consumers
emphasize the conservation of natural resources, the preservation of product durability and the
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satisfaction of social needs. Meanwhile, local consumers are increasingly demanding businesses to be
environmentally responsible.

Apply SWOT model by concluding Opportunities or Threats resulted from Macro environment (6 PESTLE factors)
(Áp dụng mô hình SWOT bằng cách kết luận đó là cơ hội hay thách thức cho công ty từ 6 yếu tố PESTLE ) (M4.1

SWOT O- Opportunity T- Threat

1. Has growth potential due to 1. Raw material prices in European

diversified activities in many fields. and American countries tend to

2. Exporting steel to foreign increase.

markets by using high technology 2. Big competitive market.
has achieved high-quality finished 3. Rising gasoline prices make
products. transportation costs rise (conflict in
3. The increase in construction Russia and Ukraine is tense).
demand makes the demand for 4. Interest rates on foreign currency
steel products increase loans tend to increase lmf for a
deep decrease in profit

Strength Strategy S-O Strategy S-T

1. Low cost product, quality

product.

2. Diverse industries and has a

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large consumer market.

3. Has a lot of experience in

market analysis (nearly 30
years of establishment).

4. Applying high technology of

G7 countries in the world to
steel production

Weakness Strategy W-O Strategy WT

1. Leading to more
supply than demand,
causing many risks for
Hoa Phat Group.
2. The cost of raw
materials increased
sharply.
3. Loan interest rates
soar

4. Big competitive market

III. Strengths and weakness of organization

Show at least 4 strengths and weakness of your chosen company. The evidences demonstrate the strengths and
weaknesses must be given properly (chỉ ra ít nhận 4 điểm mạnh và điểm yếu của doanh nghiệp mình chọn. Phải
có bằng chứng cụ thể để chưng minh điểm mạnh và điểm yếu) (m4)
1. Strengths:
- Not only dominating the domestic iron and steel consumption market share, Hoa Phat also expands the export
of construction steel to other countries around the world such as Malaysia, Australia, Canada, the US, etc. In
particular, high-quality coiled steel products. used for drawing wire with steel grades SAE1006, SAE1008, ... are
being well received by foreign markets.
-Quality products: Modern production lines, various types of steel, high durability over time
- Market strengths: reasonable prices, large consumer markets, product diversity.
- In terms of capital, the common point of enterprises in the steel industry is that they all need a huge amount
of capital to invest in factories. Most of this capital has to be borrowed, so the average debt-to-equity ratio of
steel companies on the floor is now about 2.7 times. Meanwhile, Hoa Phat's debt is only 0.8 times equity. This is
a huge advantage for Hoa Phat in maintaining profits.
2. Weakness:
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- The production capacity is too large, leading to more supply than demand, causing many risks for Hoa Phat
Group.
According to Lao Động article, as of June 30, 2022, HPG's inventory increased sharply by 37% compared to the
beginning of the year to more than VND 58,316 billion, causing this business to double the provision for
inventory. At the time of 30.06. ever since. In comparison, HPG's inventory has accounted for about half.
- Despite great success, Hoa Phat Group is also facing the challenges of the 4.0 technology revolution.
Information Technology (IT) system has been invested but has not been synchronized and has not optimized the
operation process with the scale of the largest steel factory in Vietnam.
- Accused of causing environmental pollution:

Figure 2:
- High foreign currency debt items: There is a huge risk if interest rates on foreign currency loans increase
sharply, such as a deep reduction in profits.

IV. Interrelate between internal and external factor

- Explain how strengths and weaknesses interrelate with external macro factors. Choose at least 1
Business decision for explanation. This business decision- making results from which Strengths
and Weaknesses (identified in P5)?
 At least, 1 strength and 1 weakness are used for the explanation of the business decision

Business decision:
On May 24, 2022 in Hanoi, the Annual General Meeting of Shareholders of Hoa Phat Group Joint Stock Company
(HPG) took place in 2022. The meeting approved the annual business plan of 160,000 billion VND in revenue. ,
25,000-30,000 billion dong profit after tax and many other important contents. According to Chairman of the
Board of Directors Tran Dinh Long, this year's plan has many challenges, but Hoa Phat will not stop moving
forward, reaching out to the region.
Explanation of business decision:

 Although Hoa Phat's consolidated revenue reached VND 37,714 billion, an increase of VND 2,274 billion,
equivalent to an increase of 6% compared to the second quarter of 2021 (VND 35,440 billion), profit after
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tax was only VND 4,023 billion, down VND 5,722 billion (VND 5,722 billion). 59%) compared to the same
period last year.
- Strength: Largest consumar market.
- Weakness: The cost of raw materials increased sharply.
Although it has a huge advantage in terms of a large consumer market, because of the high transportation costs
after the conflict between Russia and Ukraine, and the cost of raw materials is also extremely high, namely coal.
The price of HCC coal continuously peaked in the first 6 months of 2022, reaching 670 USD, up 96% compared to
December 2021, which is the main reason leading to the sharp increase in Hoa Phat's production cost.
V. Conclusion (P4)

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