Commercial Business

KINH DOANH THƯƠNG MẠI
(Commercial Business)
Mã học phần: TMKT
Số tín chỉ: 3 tín chỉ
Bộ môn Kinh tế và Kinh doanh thương mại

Viện Thương mại và Kinh tế quốc tế
Trường Đại học Kinh tế Quốc dân
Lecture 1
INTRODUCTION ON
COMMERCIAL BUSINESS
1. DEFINITION AND CHARACTERISTICS OF
COMMERCIAL BUSINESS
1.1. Definition
“Commercial business is an economic activity that invest
all resources into distribution and circulation to gain profit”
(Hoang Duc Than, 2018)
COMMERCIAL BUSINESS
1.1. Definition
- “Retailing is the set of business activities that adds value
to the products and services sold to consumers for their
personal or family use.” (Levy and Weitz, 2012: 6)
- Distributive trade is understood as a process that combine
of actions carried out by a certain entity and resulting in a
specific type of products.
COMMERCIAL BUSINESS
1.2. Necessary and sufficient conditions to establish and
develop commercial business
The division of social labour and the different ownership of means of
production found commodity economy. The division of labor improves
both the skill of the worker and the productive power of society, and thus
its "function" would simply be to produce and secure those economic,
artistic. (Adler, 1990)
- 4 stages of commodity economy:
Production => Distribution => Exchange (Circulation) => Consumption”
COMMERCIAL BUSINESS
1.3. Characteristics of Commercial business
- Resale: the activity of buying and selling associated with the
same subject.
“The resale includes a number of actions which might be
undertaken to make goods available for buying including
negotiating transactions between buyers and sellers or buying
goods from the manufacturer on own account, transporting,
storing, sorting, assembling, grading, packing, displaying a
selection of goods in convenient locations.”
COMMERCIAL BUSINESS
- Sale without transformation: commercial business enterprises
are service providers.
“Some processing of goods may be involved, but only incidental to
selling, including sorting, grading and assembling of goods, mixing
(blending) of goods (for example wine or sand), bottling (with or
without preceding bottle cleaning), packing, breaking bulk and
repacking for distribution in smaller lots, storage (whether or not
frozen or chilled), cleaning and drying of agricultural products, cutting
out of wood fiberboards or metal sheets as secondary activities.”
Three levels of Product
Source: Principle of Marketing (Kotler and Armstrong, 2017

COMMERCIAL BUSINESS
- The commercial business as an activity consists of (i) provision of
a service to customers by storing and displaying a selection of goods
in convenient locations and making them easily available for buying;
and (ii) provision of other services incidental to the sale of goods or
subordinated to the selling such as the delivery, after-sale repair and
installation services.
1. DEFINITION AND
CHARACTERISTICS OF COMMERCIAL
BUSINESS
1.4. Goals of Commercial
business
• Profit
• Position
• Safety
• Sustainable development
• Link manufacturers to consumers
COMMERCIAL BUSINESS
1.5. Role of Commercial business
- Distributors’ role in supply chain
Source: Retailing Management (Levy and Weitz, 2012)

COMMERCIAL BUSINESS
1.5. Role of Commercial business
- Distributors create value:
(1) Providing an assortment of products and services
(2) Breaking bulk
(3) Holding inventory
(4) Providing services
Source: Retailing Management (Levy and Weitz, 2012)

Key indicators, distributive trade, Vietnam, 2019
Main indicator Value
Number of enterprises (number) 248,492
Number of persons employed (number) 2,044,143
Per capital income per month (thousand Dong) 8,730
Capital of active enterprises (billion Dong) 5,511,526
Capital turnover ratio (number) 1.7
Leverage ratio 1.9
Source: Ministry of Planning and Investment (Vietnam), (2021)

2. COMMERCIAL BUSINESS IN MARKET ECONOMY
2.1. Characteristics of Market Economy

- “Invisible hand” theory: “By preferring the support of domestic to that of
foreign industry, he intends only his own security; and by directing that
industry in such a manner as its produce may be of the greatest value, he
intends only his own gain, and he is in this, as in many other cases, led by
an Invisible Hand to promote an end which was no part of his intention.”
(Adam Smith, 1776)
2.1. Characteristics of Market Economy

- Private property
- Markets and prices
- Role of self interest
- Freedom of enterprise and choice
- Competition
- Limited role for government
2.2 Principles in Commercial Business
2.3. Three main questions in Commercial business
• What - what will be produced?
• How - how should we distribute?
• For whom - who can afford them?

3. COMMERCIAL BUSINESS THEORIES
3.1. Theories of Competition

According to Merriam-Webster dictionary
- Competition is definied as:
(a) The effort of two or more parties acting independently to
secure the business of a third party by offering the most
favourable terms
(b) Active demand by two or more organisms or kinds of
organisms for some environmental resource in short
supply
3.1. Theories of Competition

“Competitive advantage grows fundamentally out of the value a firm is
able to create for its buyers that exceeds the firm's cost of creating it.
Value is what buyers are willing to pay, and superior value stems from
offering lower prices than competitors for equivalent benefits or providing
unique benefits that more than offset a higher price. There are two basic
types of competitive advantage: cost leadership and differentiation.”
(Porter, 1985: 3)
3.2. Push – Pull strategy
3.2.1. Push strategy
- Push strategy: A promotion strategy that calls for using the
sales force and trade promotion to push the product through
channels. The producer promotes the product to channel
members who in turn promote it to final consumers.
3.2.2. Pull strategy
- Pull strategy: A promotion strategy that calls for spending a
lot on consumer advertising and promotion to induce final
consumers to buy the product, creating a demand vacuum that
“pulls” the product through the channel.
Source: Principle of Marketing (Kotler and Armstrong, 2017)

Lecture 2
EXTERNAL ENVIRONMENT
&
BUSINESS DEVELOPMENT
SERVICES
1. EXTERNAL ENVIRONMENT
- The environment creates both opportunities and threats for organisations
- Enviroments can be considered in term of a series of “layers”.
1.1. Macro-environment
PESTLE framework provides objective view on six macro criteria:
Politics
Economics
Social
Technology
Environment
Legal
*Note: Businesses are affected differently in each country and each market. While generalizations are
useful, the macroenvironment is in a way “unique” to each company
1.1.1. Politics
• Type of government and political stability
Political parties, rule of law, bureaucracy, corruption
• Existing legislations
Employment, environment, social, consumer protection
• Evolution of regulations and de-regulations
Taxation, legal requirements, etc.
• Trade policies
Tariffs, quotas, red-tape, etc.
1.1.2. Economics
• Economic situation (growth, potential)
• Period of the business cycle (boom, recession, recovery)
• Interest rates and inflation (purchasing power)
• Unemployment
• Consumer expenditure and disposable income
• Currency fluctuations and exchange rates
• Investment
1.1.3. Social
• Population size and rate of growth
• Demographic changes
• Distribution of income
• Social mobility
• Job market mobility and attitude to work
• Education and health levels
• Cultural factors:
Ø Language
Ø Religion
Ø Values and attitudes
1.1.4. Technology
• Maturity of technology
Ø Manufacturing maturity and capacity
• New patents and products
• Technology development
Ø Level of R&D on organisation’s rivals
Ø Replacement technology/solutions
Ø Speed of change and adoption of new technology
• Technology legislation
Ø Technology access, licencing, patents
Ø Intellectual property issues
1.1.5. Environment
• Sustainability and “green” issues
• Level and types of fuels and energy consumption
• Depletion of natural resources
• Pollution
1.1.6. Legal
• Employment regulations
• Competition law
• Health and safety regulations
• Product safety regulations
• Antitrust laws
• Patent infringements
1.2. Industry and sector analysis
Main function: analysing the competitiveness of the industry
Underpinning logic: economic power in the market place
Porter’s Five Forces framework:
1. Bargaining power of supplier
2. Bargaining power of buyer
3. Threat of new entry
4. Threat of substitution
5. Competitive rivalry
2. BUSINESS DEVELOPMENT SERVICES
2.1. Definition
Business development services are all non – financial services that
improve the performance of the enterprise, its access to markets, and
its ability to compete. The definition of “business development
services” includes a wide array of business services, both strategic
and operational. BDS are designed to serve individual businesses, as
opposed to the larger business community (CDASED, 2001)
2.1. Types of BDS
2.1.1. Classified by BDS Provider
- National or subnational government agencies, industry associations
- Private for-profit firms, private not-for-profit firms, NGOs, parastatals
- Individual
2.1.2. Classified by purpose
- Not for profit
- For profit
2.3. Four services characteristics
Lecture 3
COMMERCIAL BUSINESS
OPERATION
COMMERCIAL BUSINESS OPERATION
Types of retailers
Types of business organisations/Ownership

3. COMMERCIAL BUSINESS OPERATION
3.1. Types of retailers
Four elements of the retail mix are particularly useful for
classifying retailers:
- The type of merchandise and/or services offered,
- The variety and assortment of merchandise offered,
- The level of customer service,
- The price of the merchandise.
3.1.1. Food retailers
- Supermarkets
- Supercenters
- Warehouse club
- Convenience stores
3.1.2. General merchandise retailers
- Department stores
- Full-line discount stores
- Specialty stores
- Category specialists
- Home improvement centers
- Off-price retailers
- Extreme-value stores
3.2. Types of business organisation/ownership
3.2.1. Types of ownership
- Independent single-store establishments
- Corporate chains
- Franchises
3.2.2. Types of business organization
- Private enterprises
- Limited liability companies
- Joint stock companies
- Partnerships
Lecture 4
DISTRIBUTION CHANNEL
4.1. DISTRIBUTION CHANNEL
4.1.1. Definition
Marketing channel (distribution channel): A set of
interdependent organizations that help make a product or
service available for use or consumption by the consumer or
business user. (Kotler and Armstrong, 2017: 359)
4.1.2. Role of distribution channel
In making products and services available to consumers, channel

members add value by bridging the major time, place, and possession
gaps that separate goods and services from those who use them.
Members of the marketing channel perform many key functions.
Some help to complete transactions:
- Information. Gathering and distributing information about consumers,
producers, and other actors and forces in the marketing environment needed
for planning and aiding exchange.
- Promotion. Developing and spreading persuasive communications about an
offer. Contact. Finding and engaging customers and prospective buyers.
- Matching. Shaping offers to meet the buyer’s needs, including activities such
as manufacturing, grading, assembling, and packaging.
- Negotiation. Reaching an agreement on price and other terms so that
ownership or possession can be transferred.
Others help to fulfill the completed transactions:
- Physical distribution. Transporting and storing goods.
- Financing. Acquiring and using funds to cover the costs of
the channel work.
- Risk taking. Assuming the risks of carrying out the channel
work.
4.1.3. Distribution channel structure
- Channel level: A layer of intermediaries that performs some
work in bringing the product and its ownership closer to the
final buyer.
- Direct marketing channel: A marketing channel that has no
intermediary levels.
- Indirect marketing channel: A marketing channel containing
one or more intermediary levels.
4.1.3. Distribution channel structure
3 fundamental elements of distribution channel structure
- Channel width (channel coverage): The amount of channel
members at different levels
- Channel length: Number of levels (middlemen) in the
distribution channel.
- Characteristics of intermediaries
4.1.4. External determinants of channel decisions
- Customer characteristics
- Nature of product
- Nature of demand/location
- Competition
- Legal regulation/local business practices
4.1.5. Managing and controlling distribution channels
- Screening and selecting intermediaries
- Contracting (distributor agreements)
- Motivating
- Controlling
- Termination
4.2. COMMERCIAL AGENCY
4.1.1. Definition
Article 166.- Commercial agency (Law on Commerce, 2005)
Commercial agency means a commercial activity whereby the
principal and the agent agree that the agent, in its own name, sells or
purchases goods for the principal or provides services of the principal
to customers for remuneration.
4.1.1. Definition
Article 167.- Principals and agents
1. Principals are traders that deliver goods to agents for sale or
provide money to agents for purchase of goods, or traders that
authorize the provision of services to service-providing agents.
2. Agents are traders that receive goods to act as sale agents or
receive money to act as purchase agents or accepts the authorization
to provide services.
4.1.2. Forms of agency
Article 169.- Forms of agency
1. Off-take agency is a form of agency whereby the agent definitely sells or purchases a
specific quantity of goods or provides a full service for the principal.
2. Exclusive agency is a form of agency whereby a sole agent is authorized by the
principal to sell or purchase one or more goods items or to provide one or more types of
services within a given geographical area.
3. General goods sale or purchase or service provision agency is a form of agency
whereby an agent organizes a network of sub-agents to sell or purchase goods, or
provide services for the principal.
The general agent represents the network of sub-agents. Sub-agents operate under the
management and in the name of the general agent.
4. Other forms of agency agreed upon by the parties.
4.1.3. Rights and obligations of principal/agent
Article 172.- Rights of principals
Unless otherwise agreed, principals shall have the following rights:
1. To fix prices of goods purchased or sold or charge rates of services provided to
customers under agency;
2. To fix agency prices;
3. To request agents to take security measures as provided for by law;
4. To request agents to make payments or deliver goods under agency contracts; 5. To
inspect and supervise the performance of contracts by agents;
Article 173.- Obligations of principals
Unless otherwise agreed, principals shall have the following obligations:
1. To guide, supply information to, and facilitate, agents to perform agency contracts;
2. To bear responsibility for quality of goods of goods sale or purchase agents, and
quality of services of service-providing agents;
3. To pay remuneration and other reasonable expenses to agents;
4. To return to agents their assets used as security (if any) upon the termination of
agency contracts;
5. To bear joint responsibility for law violation acts of agents if such law violation acts
are partly attributable to their faults.
Article 174.- Rights of agents
Unless otherwise agreed by the parties, agents shall have the following rights:
1. To enter into agency contracts with one or more principals, except for cases specified
in Clause 7, Article 175 of this Law;
2. To request principals to deliver goods or money under agency contracts; to take back
assets used as security (if any) upon the termination of agency contracts;
3. To request principals to guide, supply information and create other related conditions
for the performance of agency contracts;
4. To decide on goods sale prices or service charge rates for customers, for off-take
agents; 5. To enjoy remunerations and other lawful rights and interests brought about by
agency activities.
Article 175.- Obligations of agents
Unless otherwise agreed, agents shall have the following obligations:
1. To purchase or sell goods or provide services to customers at prices or charge rates fixed by principals;
2. To comply strictly with agreements on handover and receipt of money and goods with principals;
3. To take security measures for performance of civil obligations as provided for by law;
4. To pay to principals any proceeds of the sale of goods, for sale agents; to deliver purchased goods to
principals, for purchase agents; or to pay service charges to principals, for service-providing agents;
5. To preserve goods after the receipt thereof, for sale agents, or prior to the delivery thereof, for purchase
agents; to bear joint responsibility for quality of goods of purchase or sale agents or quality of services of
service-providing agents in cases where they are at fault;
6. To submit to inspection and supervision by principals, and to report to principals on their agency
activities;
7. Where it is specified by law that an agent shall be allowed to enter into an agency contract with a
principal for a certain type of goods or service, such provision of law must be complied with.
Lecture 5
COMMERCIAL BUSINESS
MODEL
5.1. E – BUSINESS
5.1.1. DEFINITION
Electronic business (e-business) can be defined as the use of the
internet to network and empower business processes, electronic
commerce, organizational communication and collaboration within
a company and with its customers, suppliers, and other
stakeholders. E-businesses utilise the internet, intranets, extranets
and other networks to support their commercial processes.
5.1. E – BUSINESS
5.1.1. DEFINITION
Electronic commerce (e-commerce) is the buying and selling,
marketing and servicing of products and services via computer
networks.
=> E-business includes the process of transacting with suppliers
and customers there is an overlap in activities with e-commerce.
5.1. E – BUSINESS
The relationship between e-business and e-commerce
5.1. E – BUSINESS
5.1.2. E – business markets
Framework for e-Business market
5.1. E – BUSINESS
- Business-to-business (B2B)
Some organisations specialise in business-to-business (B2B) activities by
providing e-business services across the supply chain or in parts of the
supply chain such as e-procurement, logistics, stock control, ordering,
payments and distribution. E-business also includes the organisation of
collaboration platforms that allows different organisations to share
information and knowledge for mutual benefit, i.e. the organisation of e-
marketplaces that bring organisations together for buying and selling
products and services or providing an online business support service.
5.1. E – BUSINESS
- Business-to-Consumer (B2C): e-shops, e-malls, e-auctions, buyer
aggregators, infomediaries, classifieds, portaling, manufacturer
model, subscription;
- Business-to-Business (B2B): e-auctions, infomediaries, e-
procurement, e-distribution, portaling, e-marketing, trading
communities, third-party marketplaces, collaboration platforms, value
chain integrators, value chain service providers, affiliates;
- Consumer-to-Consumer (C2C): e-auctions, virtual communities.
5.2. MULTI-LEVEL MARKETING (MLM)
5.2.1. Definition
Multilevel marketing (MLM) is also known by different names as
network marketing (NM), and network marketing direct selling
organisation (NM DS).
“Multilevel marketing (MLM) is a form of retail direct selling (i.e.,
face-to-face selling away from a fixed retail location) that by
definition has a multilevel compensation structure.”
5.2.1. DEFINITION
Direct selling, including MLM, is a particular retail channel of
distribution wherein salespeople or distributors are in business for
themselves and operating as independent contractors. These
distributors sell to consumers, including themselves, and as such
MLM is a form of consumer marketing.
5.2.2. MLM vs pyramid schemes
A pyramid scheme is a fraudulent operation by which promoters of
so- called “investment” or “trading” schemes enrich themselves in
a geometric progression through the payments made by recruits to
such schemes (World Federation of Direct Selling Associations,
2011b, p.1)
5.2.2. MLM vs pyramid schemes
- Individuals who have been recruited into an organisation are compensated primarily for
recruiting other individuals into the organisation rather than for making legitimate retail
sales of a product or service to so-called “end consumers”;
- Requirement to pay a substantial fee for joining the organisation, pressure on distributors
to buy large amounts of inventory (“inventory loading”);
- The absence of a policy regarding the buying back of unsold inventory, also known as buy-
back;
- Profit is made by geometric progression - by the progression of the network itself - and not
(or at least much less than) by the progression of sales to consumers outside the network,
or even sales representing internal consumption;
- Pyramid schemes are readily identified because of the lack of a tangible product Such as
certificates, training programs, magazine subscriptions, illusory discounts, or “miracle”
treatments
5.2.3. Regulation on MLM in Vietnam
According to Article 3, DECREE on management of business activities
under multi-level method (Decree No.: 40/2018/ND-CP)
“In this Decree, the following terms are construed as follows:
1. Multi-level business means a business activity run through a network of
participants at levels and branches, which allows participants to receive
commissions, bonuses and other economic benefits from their sale activities
and sale activities of other people in the network.
2. Multi-level sale enterprise means an enterprise which organizing its
business activities under multi-level method to sell goods.
3. Multi-level sale participant means a person who signs multi-level sale
agreement with multi-level sale enterprise.
4. Multi-level sale contract means an agreement in writing on participation in
multi-level sale network between individuals and multi-level sale enterprises.
5. Rules of operation means a set of rules of a multi-level sale enterprise
which governs behaviors of multi-level sale participants, processes and
procedures to perform multi-level sale activities.
6. Compensation plan means a plan used by multi-level sale enterprises to
calculate commissions, bonuses and other economic benefits received by
multi-level sale participants from the sale results of their own and of other
people in the network.
7. Multi-level sale position, multi-level sale code means the position and code
of a multi- level sale participant arranged in the network to calculate
commissions, bonuses and other economic benefits to be payable to such
multi-level sale participants.”
According to Article 4 - Objectives of multi-level business, DECREE on
management of business activities under multi-level method (Decree No.:
40/2018/ND-CP)
1. Multi-level business is only applied to goods. All business activities under
multi-level method of objectives which are not goods are prohibited, except
otherwise regulated by other regulations.
2. Goods which are not allowed to sell under multi-level method:
a) Medicines, medical equipment, all types of veterinary drugs (including
aquatic veterinary drugs); plant protection drugs; chemicals, insecticide and
disinfectant products which are restricted and prohibited to use in the domestic
home sector and in the health sector and all types of hazardous chemicals;
b) Digital information goods.
Article 5 - Prohibited acts in business activities under multi-level method:
1. Multi-level sale enterprises are prohibited from conducting the following activities:
a) Requesting other people to deposit or submit a certain amount of money in order to
sign multi-level sale contract;
b) Requesting other people to buy a certain quantity of goods in order to sign multi-
level sale contract;
c) Allowing multi-level sale participants to receive money or other economic benefits
from the act of introducing other people to participate in multi-level sale activities, but
not from purchase and sale of goods of such introduced people;
d) Refusing without a legitimate reason to pay commission, bonuses and other
economic benefits that multi-level sale participants are entitled to receive;
dd) Providing misleading information about compensation plan, benefits from
participation in multi-level sale networks;
e) Providing misleading or confusing information about the function and use of goods
or operations of multi-level sale enterprise, through nominated speakers, trainers at
conferences, seminars and training courses or through documents of the enterprise;
g) Maintaining more than one multi-level sale contract, multi-level sale position, multi-
level sale code or other similar forms with one multi-level sale participant;
h) Conducting promotion based on using network consisting of levels and branches in
which the participants of promotion have more than a position, code number or other
equivalent forms;
i) Organizing commercial intermediary activities in accordance with regulations of law
on commerce which serve the maintenance, expansion and development of multi-level
sale networks;
k) Receiving or accepting the application or any other form of documents of multi-level
sale participants, in which multi-level sale participants declare that they waive a part or
all of their rights under the provisions of this Decree or allow the enterprise not to
perform its obligations towards multi-level sale participants in accordance with
regulations of this Decree;
l) Trading via multi-level method with respect to the subjects are not allowed regulated
at Article 4 of this Decree;
m) Failing to use the system of management of multi-level sale participants which was
already registered with multi-level sale registration authority to manage multi-level sale
participants;
n) Trading or transferring networks of multi-level sale participants to other enterprises,
except for the acquisition, consolidation or merger of enterprises.
2. Multi-level sale participants are prohibited from conducting the following activities:
a) The acts mentioned at point a clause 1 of this Article;
b) Providing misleading or confusing information about the benefits of participation in multi-level
sale networks, the function and use of goods and the operations of multi-level sale enterprise;
c) Organizing conferences, seminars and training courses regarding multi-level business without a
written delegation issued by multi-level sale enterprise;
d) Inducing, enticing, corrupting multi-level sale participants of other multi-level sale enterprises to
join the network of multi-level sale enterprise in which they are participating;
dd) Using positions, authorization, social and career positions to encourage, require, induce, entice
other people to participate in multi-level sale networks or to purchase goods traded via multi-level
business;
e) Performing multi-level sale activities in provinces where multi-level sale enterprise has not been
granted the confirmation for the registration of its multi-level sale operations in such localities.
3. Organizations and individuals are prohibited to carry out multi-level business,
organizing conferences, seminars, training, introduction of business activity in form of
multi- level of their own or of other organizations, individuals without obtaining multi-
level sale registration certificates, except otherwise regulated by the laws.
4. Individuals are prohibited to participate in activities of organizations and individuals
who carrying out multi-level business without obtaining multi-level sale registration
certificates, except otherwise required by the laws.
5.3. Chain retailers
5.3.1. Definition
A chain retailer operates multiple outlets (store units) under common ownership; it
usually engages in some level of centralized (or coordinated) purchasing and
decision making.
5.3.2. Competitive advantages and disadvantages of chain
Competitive advantages:
- Many chains have bargaining power due to their purchase volume.
- Chains achieve cost efficiencies when they buy directly from manufacturers and in large
volume, ship and store goods, and attend trade shows sponsored by suppliers to learn
about new offerings.
- Efficiency is gained by sharing warehouse facilities, purchasing standardized store
fixtures, and so on. Chains use computers in ordering merchandise, taking inventory,
forecasting, ringing up sales, and bookkeeping.
- Chains can take advantage of a variety of marketing strategies.
- Most chains have defined management philosophies, with detailed strategies and clear
employee responsibilities.
- Many chains expend considerable time on long-run planning and assign specific staff to
planning on a permanent basis. Opportunities and threats are carefully monitored.
- Reduce risk and domino effect
5.3.2. Competitive advantages and disadvantages of chain
Disadvantages:
- Flexibility may be limited. It may be difficult to adapt to local diverse markets.
- Investments are higher due to multiple leases and fixtures. There is higher
investment in inventory due to the number of store branches that must be
stocked.
- Managerial control is complex
- Personnel in large chains often have limited independence because there are
several management layers and unionized employees.
Lecture 6
FRANCHISE
M&A
6.1. FRANCHISE
6.1.1. Definition
Franchising involves a contractual arrangement between a franchisor (a
manufacturer, wholesaler, or service sponsor) and a retail franchisee, which allows
the franchisee to conduct business under an established name and according to a
given pattern of business. The franchisee typically pays an initial fee and a monthly
percentage of gross sales in exchange for the exclusive rights to sell goods and
services in an area
6.1. FRANCHISE
6.1.1. Definition
Article 284.- Commercial franchise (Law on Commerce, 2005)
Commercial franchise means a commercial activity whereby franchisors permit and
require franchisees to undertake by themselves to purchase or sell goods or
provide services on the following conditions:
1. The purchase or sale of goods or provision of services shall be conducted in
accordance with methods of business organization prescribed by franchisors and
associated with the franchisors’ trademarks, trade names, business knows-how,
business slogans, business logos and advertisements.
2. Franchisors shall be entitled to supervise and assist franchisees in conducting
their business activities.
6.1. FRANCHISE
6.1.1. Definition
Scope of franchise:
- Product/trademark franchising
- Business format franchising
6.1. FRANCHISE
6.1.2. Right and obligation of franchisor/franchisee
Article 286.- Rights of franchisors
Unless otherwise agreed, franchisors shall have the following rights:
1. To receive franchise sums.
2. To organize advertising for the commercial franchise system and the commercial
franchise network.
3. To conduct periodical or extraordinary inspections of activities of franchisees in
order to ensure the uniformity of the commercial franchise system and the stability
of quality of goods and services.
6.1. FRANCHISE
Article 287.- Obligations of franchisors
Unless otherwise agreed, franchisors shall have the following obligations:
1. To supply documents guiding the commercial franchise system to franchisees;
2. To provide initial training and regular technical assistance to franchisees for
managing the latter’s activities in accordance with the commercial franchise system;
3. To design and arrange places of sale of goods or provision of services at the
expenses of franchisees;
4. To guarantee the intellectual property rights over objects stated in franchise
contracts; 5. To equally treat all franchisees in the commercial franchise system.
6.1. FRANCHISE
Article 288.- Rights of franchisees
Unless otherwise agreed, franchisees shall have the following rights:
1. To request franchisors to provide fully technical assistance related to the
commercial franchise system;
2. To request franchisors to equally treat all franchisees in the commercial franchise
system.
6.1. FRANCHISE
Article 289.- Obligations of franchisees
Unless otherwise agreed, franchisees shall have the following obligations:
1. To pay franchise sums and other amounts under commercial franchise contracts;
2. To invest adequate material facilities, financial sources and human resources to take over business
rights and know-how transferred by franchisors;
3. To submit to the control, supervision and instruction by franchisors; to comply with all
requirements set forth by franchisors on designing and arrangement of places of sale of goods or
provision of services;
4. To keep secret the franchised business know-how even after the expiration or termination of
commercial franchise contracts;
5. To stop using trademarks, trade names, business slogans, logos and other intellectual property
rights (if any) or systems of franchisors upon the expiration or termination of commercial franchise
contracts;
6. To manage their activities in accordance with the commercial franchise system;
7. Not to sub-franchise without permissions of franchisors.
6.1. FRANCHISE
6.1.3. Advantages and disadvantages of Franchise
Advantages:
- Personal ownership
- They acquire well-known names and goods/service lines.
- Management and marketing assistance.
- Standard operating procedures and management skills may be taught to
them.
- Cooperative marketing efforts (such as regional or national advertising)
are facilitated.
- They obtain exclusive selling rights for specified geographical territories.
- Their purchases may be less costly per unit due to the volume of the
overall franchise.
6.1. FRANCHISE
6.1.3. Advantages and disadvantages of Franchise
Disadvantages:
- Large start-up costs.
- Shared profit. Royalties are often a percentage of gross sales, regardless
of franchisee profits.
- Management regulation. They may be locked into contracts requiring
purchases from franchisors or certain vendors
- Restrictions on selling
- Oversaturation could occur if too many franchisees are in one geographic
area.
- In some industries, franchise agreements are of short duration.
6.2. M&A
6.1.1. Definition
- Merger: The result of two firms forming one company.
- Acquisition: One company’s purchase of the property and obligations of
another company.
6.2. M&A
6.1.2. Types of M&A
- Vertical M&A: The joining of two companies involved in different stages
of related businesses.
- Horizontal merger: The joining of two firms in the same industry.
- Conglomerate merger: The joining of firms in completely unrelated
industries.
6.2. M&A
6.1.3. Motives for M&A
Strategic motives for M&A:
- Extension
- Consolidation
- Capabilities
Financial motives for M&A:
- Financial efficiency
- Tax efficiency
- Asset stripping or unbundling
Managerial motives for M&A:
- Personal ambition
- Bandwagon effects.
6.2. M&A
6.1.4. M&A process
(1) Target choice in M&A
There are two main criteria to apply: strategic fit and organisational fit
(2) Negotiation in M&A
(3) Integration in M&A
(4) Result

Commercial Business

Uploaded by

Document Information

Original Description:

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Commercial Business

Uploaded by

Copyright:

Available Formats

KINH DOANH THƯƠNG MẠI

Bộ môn Kinh tế và Kinh doanh thương mại

Source: Principle of Marketing (Kotler and Armstrong, 2017

Source: Retailing Management (Levy and Weitz, 2012)

Source: Retailing Management (Levy and Weitz, 2012)

Main indicator Value

Number of enterprises (number) 248,492

Number of persons employed (number) 2,044,143

Per capital income per month (thousand Dong) 8,730

Capital of active enterprises (billion Dong) 5,511,526

Capital turnover ratio (number) 1.7

Leverage ratio 1.9

Source: Ministry of Planning and Investment (Vietnam), (2021)

2.1. Characteristics of Market Economy

2.1. Characteristics of Market Economy

• What - what will be produced?

• How - how should we distribute?

• For whom - who can afford them?

3.1. Theories of Competition

3.1. Theories of Competition

Source: Principle of Marketing (Kotler and Armstrong, 2017)

Types of business organisations/Ownership

In making products and services available to consumers, channel

You might also like