ASSIGNMENT 1 FRONT SHEET

Qualification BTEC Level 4 HND Diploma in Business

Unit number and title Unit 1: Business and Business Environment

Submission date 20/10/2021 Date Received 1st submission

Re-submission Date Date Received 2nd submission

Student Name Nguyễn Khánh Ly Student ID GBH210685

Class GBH1013 Assessor name Ngô Trần Thái Dương

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 Khánh Ly

Grading grid

P1 P2 P3 M1 M2 D1

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 Summative Feedback:  Resubmission Feedback:

Grade: Assessor Signature: Date:

Internal Verifier’s Comments:

Signature & Date:

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LIST OF ABBREVIATIONS:

VNM: Vietnam Dairy Products Joint Stock Company

BOD: Board of Directors

JSC: Joint Stock Company

CSR: Corporate Social Responsibility

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 1. Introduction.

As a business analyst, I would conduct deep research on Vietnam Dairy Products Joint Stock
Company (VNM). The study aims to dissect the types, sizes and scope, functions, and
organizational structures for the investment plan of the company. Vietnam Dairy Products Joint
Stock Company (VNM), which was established on August 20 th, 1976, is wholly warranted as the
largest dairy company in Vietnam. VNM belongs to the private sector and is a Joint Stock
Company, which is completely suitable to achieve the vision of the company. According to
Vietnam regulations, VNM is considered a large company with a specific vision, mission, and
objectives that meet the needs and interests of stakeholders. 

2. Types and Purposes.

2.1 Public sector:

Definition: According to FPT-Greenwich, the public sector as known as state-owned companies

are the companies that have at least 50% of equity or total shares under the jurisdiction of the
government and its agencies in which the government forms and runs various types of
organizations on behalf of its citizens and for their overall well-being (FPT-Greenwich
University , 2021).

Purposes:

First of all, the public sector’s main purpose is to bring benefits to ordinary citizens. For example,
Petrolimex, a state-owned company, besides supporting the Vaccine Fund, frontline forces, and
the underpriviledged, this company also reduces retail gasoline prices at Petrolimex’s stores in
23 provinces across the world to assist citizens during the difficult time with COVID19 (KinhTe-
PV, 2021). Moreover, the public sector also engages in creating more job opportunities for
citizens. According to (Chau-Polly, 2021), the Vietnam government agency; such as SNZ –
Sonadezi has created 3.78 million direct jobs by developing many industrial parks in this
country.

One example of a state-owned company is Vietnam Airlines Corporation – JSC (HVN). As stated
by data (CAFEF, 2021), the Committee for State Capital Management at Enterprises, State
Capital Investment and Trading Corporation, and Joint Stock Commercial Bank for Foreign
Trade of Vietnam (VCB) hold 55.1%, 31.08%, and 1,04% respectively which made 87.22% total

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shares of this company belongs to the government. Since this number is more than 50%,
therefore, HVN is considered as a state-owned company.

2.2 Voluntary sector:

Definition: According to Article 10 of the Enterprise Law 2014, an enterprise is considered as a

voluntary company needs to meet the following criteria: i) It is a registered company followed this
law, ii) The main objectives are to solve social and environmental issues and create benefit for
the community, iii) Spend at least 51% of the total annual profit to reinvest in the objectives that
are registered (LAWKEY, 2014).

Purposes:

The primary purpose of a voluntary organization is to create social impact rather than profit
(ReachVolunteering , 2021). UNICEF– a non-profit, non-governmental organization (NGO) is
one example of the voluntary sector. This organization works to protect children in every aspect
without earning money (Mingst, 2021).

Voluntary organizations also serve for the benefit of society, for example, an innovative not-for-
profit organization called KOTO which creates job opportunities for street children in Vietnam by
training them to work in restaurants (Kingsford-Smith, 2016).

One example of an organization in the voluntary sector is Solidarités Jeunesses Vietnam (SJ
Vietnam) – an international youth NGO whose mission is to bring together international and
Vietnamese volunteers to help the most disadvantaged communities in Vietnam (SJ Vietnam ,
2021). SJ Vietnam is an organization that meets all criteria of a voluntary company.

2.3 Private sector:

Definition: A company is considered a private sector organization when is owned, controlled,

and managed by private individuals or enterprises and the central goal is making money (The
Investopedia Team, 2020).

In more detail, if the private individuals or organizations hold more than 50% of the total shares,
the company belongs to the Private Sector (FPT-Greenwich University , 2021).

Vietnam Technological and Commercial Joint Stock Bank (TCB) is one example of a private
company whose biggest shareholder is MaSan Group Joint Stock Company with 15% of shares.

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Purpose: According to Grzegorzek, the most typical business objectives for private-sector
companies are: Survival, Growth, Profit satisficing and maximization, Increasing market share,
Maximizing shareholder value, and Corporate Social Responsibility (CSR) (Grzegorzek, 2021).

For example, Vietnam Dairy Products Joint Stock Company (VNM) is a private company that
main objective is money-seeking.

Source: cited from VNM’s annual report 2020 (Vinamilk, 2020)

2.4 Legal Structure:

All of these forms of business are belong to Private Sector.

1. Sole Trader/Sole Proprietorship

- Sole Trader has just 1 individual owner and he or she will be entitled to all profits and
liable for all the debts of the organization (Unlimited liability). The sole proprietorship
has no legal entity/personality, the owner will be responsible for all the transactions
and activities that the company is involved in (Andreou, 2020)
- Sole Trader is the lowest form of business registration. To register under this form, the
company is not allowed to have more than 10 employees in the location and cannot
open the second base.

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 For example, the small coffee shop operated by my uncle.

2. Partnership
- The term partnership is based on this kind of business involved equal to and more
than 2 owners (partners). The partnership is the relation that the partner needs to
satisfy 1 of 2 factors: capital contribution or having specialized degree/knowledge. A
partnership’s members have unlimited liability, which means they are jointly and
severally liable for the firm’s debts and obligations. There are 2 types of partners:
Unlimited partners (at least 2) and Limited partners (Bussiness Jargons Team , 2021).
Different from Sole Trader, a Partnership company has the Legal Entity.
The Partnerships are usually law, auditing, consulting, and architecture firms. ABC
Auditing – Consultancy Partnership Company is one example (Civillawinfor, 2008).

3. Limited liability company

- The owners of limited liability companies are called members – members can be the
individual owners or other companies. One limited liability company can have from 1
to 50 members, the company has its own Legal Entity Status while the liability of
members is limited (FPT-Greenwich University , 2021).
Example: Amway Vietnam Co., Ltd.

4. Joint Stock Company

- A Joint Stock Company is a business owned by its investors called Shareholders (can
have 3 to infinity shareholders). Similar to Limited liability company, Joint Stock
Company has Legal Entity Status while the liability of shareholders is limited (FPT-
Greenwich University , 2021).
Example: FLC Group JSC.

3. The Size and Scope.

The chosen company: Vietnam Dairy Products Joint Stock Company (VNM)

3.1 Size of VNM:

According to Vinamilk’s annual report (Vinamilk, 2020).

The Total Capital: VND48,432 billion (Vinamilk, 2020)

The Total Revenue: VND59,723 billion (Vinamilk, 2020)

The Total number of employees: 9,361 employees were working for VNM in 2020.

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According to Decree 39/2018/ND-CP, a company in Agriculture, Forestry and Fishery, Industry
and Construction field is considered a large company when the total employees is more than
200 persons, the total revenue is more than VND200 billion , and the total capital is more than
VND100 billion (FPT-Greenwich University , 2021). As stated by the mentioned data, VNM is
classified as a large company according to Vietnam regulations.

3.2 Scope of VNM:

Definition of stakeholders: people that have their own goals and objectives, be affected by
the organization’s decisions, and also make important decisions that affect the organization
(Hendricks, 2020).

Internal Stakeholders: person or group with a direct connection to the project’s sponsoring
company, for example, employees, management, shareholders, etc. (MasterClass-staff,
2021)

The board of directors of VNM includes 9 people, the chairwoman is Mrs. Le Thi Bang Tam,
she has been an independent BOD member from April 2013 and then the Chairwoman from
July 2015 until now (Vinamilk, 2020).

CEO/Executive BOD member of VNM, Mrs. Mai Kieu Lien is holding around 6,4 million
shares, 0.31% of the total shares (CAFEF, 2021).

Mr. Le Thanh Liem, Chief Accountancy/Executive BOD member of VNM is holding 493.381
shares, 0.02% of the total shares (CAFEF, 2021).

External Stakeholders: person or organization without a direct connection to the project’s

sponsoring company but cares about or is affected by its outcome in some way, for example,
customers, suppliers, creditors, etc. (MasterClass-staff, 2021)

According to Vinamilk’s annual report (Vinamilk, 2020).

On 31/12/2020, VNM had total short-term borrowings of around VND7.295 billion and the
biggest creditor is Sumitomo Mitsui Banking Corporation, Ho Chi Minh City Branch
(approximately VND2.140 billion) (Vinamilk, 2020).

On 31/12/2020, VNM had total long-term borrowings of around 188.130 billion VND and the
biggest creditor is HSBC Bank in the USA (approximately 117.351 billion VND) (Vinamilk,
2020).

Economic Objectives of VNM:

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 For 2021’s plan, VNM sets a target to generate VND62.160 billion in sales and VND11.240
billion in profit after tax, representing a 4.1% increase in revenue and a stable profit
compared to the same period last year (SOCIOECONOMIC, 2021).

Social Objectives of VNM:

In 2021, VNM will donate 1.7 million glasses of milk to underprivileged children across the
country, ensuring the nutritional well-being of children through the Vietnam Tall Tall Milk
Fund program and continue to maintain and expand the School Milk Program nationwide
(SOCIOECONOMIC, 2021).

How the vision, mission, and objectives of VNM meet the needs and interests of the
stakeholders:

Vision of VNM: To become a world-class brand in the food and beverage industry with
nutritional and health products that are trusted by everyone (Vinamilk, 2020).

Mission of VNM: To deliver valuable nutrition to the community with our respect, love, and
responsibility (Vinamilk, 2020).

The vision and mission of VNM have met the needs and interests of the stakeholders:

For the shareholders and investors, Vinamilk is a leading dairy company in Vietnam as well as a
model company for professionalism, information transparency, and maintaining trust maintaining
with shareholders. In 2020, VNM has exceeded both the revenue and profit targets compared to
the set-out plan (grow 5.9% and 6.5% in revenue and profit after tax compared to the same
period in 2019, respectively) (Vinamilk, 2020).

VNM also ensures the interests of other stakeholders towards sustainable and responsible
development (Vinamilk, 2020).

4. How the Legal Structure, the Size and Scope are aligned with achieving the specific
objectives of VNM.

The main objective of VNM is to develop a world-class food and beverage brand with
nutritional and wellness goods that are universally trusted (Vinamilk, 2020). To achieve this
specific mission, the legal structure, size, and scope of the company have a vital role to play.

Legal Structure: As mentioned, VNM is a private joint stock company, this is a benefit for the
company to achieve a world-class brand. Firstly, being a joint stock company, its capital is
divided into shares that are freely transferable and can be bought both by the classes and the
masses. As there is no restriction to the maximum number of members, expand the scope of
business is easy by issuing new shares and debentures. Moreover, the formation and working of

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the company are the compulsory publication which create confidence in public and easy to
approach the consumers as well as attract foreign investment. (C, 2021).

Source: Cited from VNM’s annual report 2020 (Vinamilk, 2020). 3 out of the 4 largest
shareholders of Vinamilk are foreign investment companies.

The Size: According to Vinamilk’s annual report (Vinamilk, 2020)

In 2020, the market capitalization was VND229.443 billion, the total number of employees was
9.361. This is evidence to prove that Vinamilk is a company with a large scale that is aligned
with achieving its specific objective.

Source: cited from VNM’s annual report 2020 (Vinamilk, 2020). Highlights of VNM in 2020.

The scope: About the stakeholders, specifically, employees of the company.

In terms of recruitment, employment, training, wage payment, remuneration, bonus, promotion,

and social insurance, Vinamilk is committed to adopting gender equality principles.

In Vinamilk Factories, an ISO 45001 – the occupational health and safety management system
is being implemented, which controls occupational safety hazards, reduces workplace injury and
illness risks, and ensures employee health.

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 5. Organizational Functions.

5.1 The organization chart:

Source: (Vinamilk , 2021)

Vinamilk’s organizational structure is an example of a functional organization. The functional

structure reflects a degree of functional specialization, with individuals occupying roles in
departments (FPT-Greenwich University , 2021). It can be seen from Vinamilk’s organization
chart that this company has 10 departments conducting different functions and each department
has an executive director who is responsible for managing the activities within the department:
Finance, HR, Dairy Development, Marketing, R&D, Production, Sales, Supply Chain, Strategic
Planning, and IT.

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 5.2 The functions of Departments:

In Vinamilk’s Marketing Department, the employees would respond in building the category
development strategy, annual marketing plan, as well as designing and executing the assigned
marketing plans/programs in accordance with the brand’s objectives and goals. 

On the other hand, the function of the sales department includes: responding in achieving the
sales goals of turnover, coverage, and market share; ensuring that the distributor implements as
the signed Agreement between Vinamilk and Distributor; Client services and other tasks that are
relevant to sell products and use sales equipment. 

The different department has the different functions and targets, however, all of them are
working to carry out the main objective of the company: To become a world-class brand in the
food and beverage industry with nutritional and health products that are trusted by everyone
(Vinamilk, 2020). The marketing department serves as the face of the company, it is promoting
the products and mission of Vinamilk, reaching out to prospects, customers, investors, as well as
creating an overarching image that represents the organization in a positive light (The Hartford,
2021). While the sales department gaining profits to develop the organization.

6. The interrelationships between organizational functions and structure.

6.1 The departments link together to achieve the set objectives of VNM:

On the basic purposes of sales and marketing departments, marketing is responsible for
developing strategy, while sales are responsible for implementing strategy (Funk, 2019). When
marketing and sales are coordinated, organizations retain 36 percent more customers and have
a 38 percent higher percentage of sales wins (Lencz, 2018).

In 2019, Vinamilk hold nearly 50% of the dairy market, being the leading dairy and cheese
product brand in Vietnam (Nguyen, 2021). Both the marketing and sales departments play a vital
role in this success. The marketing department develop strong dairy products with a lot of
thought and effort; reaches out to these potential customers, which are women, and build brand
awareness through campaigns and promotions (drive consumer awareness with digital) while
the sales team addresses the specific needs of the customers, building the close relationship
with consumers to turn a lead into a profit.

6.2 How the changes of the functions make an impact on the organizational
structure:

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 The organization chart of VNM in 2006 (Vinamilk, 2006).

Compared the Vinamilk’s organization chart in 2021 and 2006, the most obvious difference is
that in 2006, VNM had only 9 departments while there are 10 departments in total in 2021. In
general, it can be seen that in 2006, the departments had different names compared to 2021,
however, the functions were similar, except the IT department that the organization chart in 2006
did not have. This change can be explained by the development of information technology
today. The IT department was born the meet the company’s needs for modern equipment as
well as digital marketing.

7. Complexities of different organizations and structures.

To achieve the vision to become a world-class brand in the food and beverage industry,
Vinamilk has much international business, namely foreign investment, foreign borrowing, and
overseas subsidiaries and associates.

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 Source: (Vinamilk, 2020)

Being a joint stock company, the legal structure of Vinamilk plays an integral role in helping
the organization grow globally and conduct international business.

Source: Cited from VNM’s annual report 2020 (Vinamilk, 2020). 3 out of the 4 largest
shareholders of Vinamilk are foreign investment companies.

The company’s second-largest shareholder is F&N Dairy Investments Pte. Ltd – a company
owned by 100% capital of Fraser & Naeve Limited Company, led by Mr. Lee Meng Tat and
Michael Chye Hin Fah. These two men are also members of the Board of Directors of VNM (To-
Diep, 2020).

Moreover, since Vinamilk is a large enterprise, its products today have been exported to more
than 40 countries worldwide, which include South East Asian, the Middle East, Africa, and other
countries (Vinamilk, 2021). In April 2020, Vinamilk exported its first batch of Ong Tho condensed
milk to China and in early 2021, the company continue exported 10 containers of seed milk and
is expected to ship five more containers of sweetened condensed milk products to this
developed country in the near future (Vinamilk , 2021).

8. Conclusion.

VNM is a large private joint stock company with a specific vision, mission, and objectives. The
company has sustainable development, being the leading dairy and cheese product brand in
Vietnam. The current economic climate of Vinamilk illustrates that the organization chart

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(functional organization), as well as the development strategy, are aligned with achieving the
main objective of the company.

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