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Exploring
business activity (1)
Introduction:
In this assignment, I will introduce about two contrasting organizations. One is a private sector
organization and other is public sector organization. I will let more detailed about my two chosen
companies business activities and their different events around that affect to them.
My two chosen organizations:
Kinh Do Group. Petrovietnam Oil and Gas Group.
P1:
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Kinh Do Foodstuff was established in 1993 with five founders: Tran Kim Thanh, Tran Le
Nguyen, Vuong Buu Linh, Vuong Ngoc Xiem, Wang Chin Hua. The first product was Snack
which quickly became very popular at that time. After many
years, Kinh Do successfully introduced cake, candy, chocolate,
cookies, crackers, wafer rolls and other snacks. The
headquarters is located in 141 Nguyen Du St, District 1, Ho Chi
Minh City, Vietnam. In 2010, the North Kinh Do and KIDO
Company merged into Kinh Do Corporation. From the size only
70 staffs at the beginning, up to now, Kinh Do has total
employees of over 7,741 persons. Currently, total capital of
Kinh Do Corporation is 3,483.1 billion dong. Total revenue
reaches 3,471.5 billion dong, in which the revenue from
foodstuff accounts for 99.2%, total profit reaches 756.1 billion
dong.
Kinh Do Foodstuff is in the secondary sector. It manufactures
and sells products such as candy, bread, Custard cake, chocolate, cookies, etc on the market with
a suitable price and delicious taste.
Kinh Do Group is a public limited company which has its shares bought and sold on the Stock
Exchange. One clearly advantage of this type of ownership is that amounts of capital can be
raised very rapidly. However, since the company is public, the founders can lose a certain lack of
control because anyone can buy its shares without limits including the companys competitors,
so they can have a strong voice in the board of directors if theyve got a large of shares. In
general, this ownership is completely suitable for the organization because Kinh Do is a large
group and is expanding to become a multi-sector organization that means they need amounts of
large capital.
Since 2001, Kinh Do determined to step up export to other countries. After that, Kinh Do has
quickly become an international business until now. The companys products are sold in more
than 30 countries including China, Malaysia, Russia, Canada, Japan, USA, France and Germany.
With the development strategies, Kinh Do expects to become the best foodstuff organization in
Vietnam and plan to expand to become one of the leading food retail organizations in South
Asia.
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PetroVietnam or called Petrovietnam Oil and Gas Group (PVN) is one of the largest groups
in Vietnam. It was set up in 1977 and has developed rapidly then. Petrovietnam is responsible for
all oil and gas resources in the country. The headquarters is located in 18 Lang Ha St, Ba Dinh
District, Hanoi, Vietnam. Petrovietnam now covers all the operations from oil and gas
exploration, refinery, petrochemicals, storage, transportation and service in petroleum field.
Petrovietnam also imports and exports petroleum materials and carries out some of the
exploration activities in Malaysia,
Indonesia, Mongolia, Algeria.
Petrovietnam is a multi-sector
organization. PetroVietnam invests
and operates in other fields
including: real estate, power project,
finance, banking, insurance, hotel
and travel. It has a lot of
subsidiaries, affiliates and science
research institutions in Vietnam.
However, in this assignment, I will
only focus on the main subject
import and export oil and gas, which
means petrovietnam is a secondary
sector.
Petrovietnam is a public sector
organization which means PetroVietnam is completely owned by Vietnamese central
government. The advantage of being a state-owned organization is to get a special attention and
to receive capital from government easily. However, one obviously disadvantage is that the
public sector organization is very large, which can lead to inefficiencies because the government
cannot control all the operations of the organization and it doesnt know if t here is any
corruption. Overall, this type of ownership is suitable for the business because Petrovietnam is
responsible for all oil and gas in the country, if there is any private sector company owned
Petrovietnam, it may increase the price of electricity and fuel. This makes the growth of
community might be affected seriously.
Petrovietnam is a large national group. The government wants Petrovietnam to become one of
the strongest economic groups in Vietnam and the region and to lead the state sectors in the
process and development of economic.
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P2:
When a company is established, there will be some of external and internal factors that affect to
thebusinesss purpose and operation, all of them called stakeholders. In this task, I will introduce
some type of stakeholders of my two chosen corporations:
External stakeholders:
Customers Shareholders Suppliers Government Community
Internal stakeholders:
Owner Employees ( Staff )
What do stakeholders want from the business?
Kinh Do
Customers are one of the important things that make the existence of a company.Customers always want Kinh Do to introduce a variety of quality products that is flavor,
convenient and worth for them to pay.
Shareholders are a group of people who legally own one or more share of stock of acorporation. They want to see their revenue increasing rapidly and running smoothly.
Suppliers want Kinh Do to buy materials with a high price and to maintain the steadyorders. They also want to feel valued from the company that they supply.
Employees are the main labors in a company with different levels. They have to beprovided with good equipments and an encouraging work environment to make the best
effort for their work. They also need a high salary and want to work for a well-known
company with opportunity promotions as Kinh Do.
Governments want the business to become successful to pay tax for them and to createmore jobs.
Community needs more jobs from the business to reduce unemployment rate. It alsowants the companies to be responsible for their operation to local environment and social
life. Moreover, community also wants companies such as Kinh Do to contribute a part of
their profit to charity organizations in local.
Petrovietnam
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The owner of Petrovietnam is the government. It wants the business to smoothly run toget more investments from other partners all over the world. From that point, it can
reduce its investment costs and develop technology.
The government needs Petrovietnam to become successful and pay tax for it. In 2010,Petrovietnam became one of the top ten companies which pay most tax in Vietnam.
Employees want the organization provide them with good equipments and hightechnologies because their research on petroleum field may take more risks and they also
need accurate appraisals which only high technologies can do.
Community needs electricity and other fuels from Petrovietnam. It also needsemployments and helps for poor people from the organization.
P3:
Each business needs to have strategic aims and objectives for a long-term development Strategic
aim is a long term direction of the company and offered to all the stakeholders to have as much
as consensus as possible. Objective is a specific description of the targets. Strategic aims and
objectives depend on the type of business, so the company has to bal ance stakeholders benefits
to avoid the arguments between members of the board of directors.
A good set of objectives should be SMART, which stands for Specific, Measurable, Achievable,
Realistic and Time related.
The objective has to be specific so that everyone can understand and know what they aregoing to achieve easily.
Measurable means that you have to know if the objectives are obtainable and how farcompletion is. For example, you set objectives for your company next year, you cantonly say that my company will make more profits next year. You have to set how will
your company make more profits? andhow much profit will your company make? You
must have a clearly picture of what your company want.
Objectives need to be achievable and based on your experience. They also have to becapable of being reached.
The objective has to be realistic, which means within your businesss the capability ofresources, knowledge and time.
Time related means that when your objectives will be gained. You have to estimate aright period of time to avoid wasting your time too much and affecting your business
performance.
For a long-term development, each business should set the SMART objectives. Therefore, my
two chosen company also set these and I will mention in the following section.
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Kinh Do
Strategic aim:
Kinh Dos development strategy is to become a multi -sector organization in fields of: foodstuff,
retails, real estate, financial investment.
Objectives:
In foodstuff field, Kinh Do Group manufactures healthy, satisfying and convenientproducts to all the customers with a suitable price.
Kinh Do plans to cooperate and associate with other foreign partners to expand retails inVietnam that are involved in operation and management of chains of supermarket,
convenient stores, fast food stores, distribution and logistic center.
In real estate, Kinh Do Group will expand the projects including luxury apartments,service apartment, shopping centers, hotel, resorts.
In financial investment, Kinh Do Group carries out activities in other foodstuffs of thesame sector, in the banking field and financial investment in securities listed on the
market.
PetroVietnam
Strategic aim:
Petrovietnams highest aim is to look for more oil and gas reserves and become one of the
strongest economic groups in Vietnam.
Objectives:
To achieve the goal mentioned, Petrovietnams objectives are to:
Improve the scientific and technical advancements in order to support for exploiting,transportation and service better.
Exploit oil and gas reserves effectively to save the resources for a long-term utilization. Plan to build three other petroleum processing plants so that they can expand the
organizations production, develop the oil and gas processing efficiently and increase the
products for domestic services.
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There are some mentioned stakeholders above that affect to the businesses objectives such as:
customers, suppliers, owner, government, etc In this section, I will express what they affect to
the objectives of each organization.
Kinh Do Group.
Customer: A companys establishment is based on the customers needs, so all theproducts of the company have to meet the customers demand to make more profits.
Shareholders are a group of people who legally own one or more share of stock of acorporation, so they have to think how to run their business better and better and avoid all
the risk that may make their business sell below cost.
Suppliers are the important partners who can help a company achieve their purposes. Abusiness has to make sure that their suppliers have good qualities and certified source of
materials to manufacture safety products to the customers. If there are few suppliers on
the market, the price of raw materials will increase. This leads to Kinh Do will increase
the production costs and the number of consumers therefore will be affected.
Government keeps an important position in managing all the business. If the governmentmakes tax higher, the price of products will increase; as a result, the number of customers
will be reduced and Kinh Do might sell below cost.
Employees: with good workers, a company can carry out its activities better and moreprofessional because the workers are people who directly deal with the customers and
they do business under the managers direction.
Community: thanks to the Kinh Do operation, the unemployment rate in the city mayreduce. However, the company might be a reason for the environment pollution if they
are not careful to deal their wastes.
Petrovietnam.
Employees are very important to the operation of the company. The organization alwaysneeds experienced staff to carry out research and exploitation processes efficiently.
Community: The demand of using fuel and electricity always rising higher, soPetrovietnam has to increase production to meet that demand. On the other hand,
Petrovietnam also has to pay attention to environmental problems in the oil and gas
shipping and exploration.
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P4:
The purpose of an organizational structure chart is to give you an obvious picture of the relevant
sections, span of control and the levels of hierarchy.
Span of control is the human resource management term that refers to a number of people who
are responsible for a section in an organization.
Levels of hierarchy relate to the number of levels in an organization.
Both ofmy two chosen companies organizational structures are based on the functions of the
departments and there are some the same departments between them such as: marketing,production, finance accounting and HR management. I drew an organisation chart for both
businesses and its following below:
Kinh Do Groups organizational structure:
GROUP CHAIRMAN
GROUP PRESIDENT/CEO
GROUP COO
SALESMARKETING R&D LOGISTIC PRODUCTION FINANCE
ACCOUNTING
HR
ADMIN
IT
2 ASSISTANTS 15 STAFFS
Span of control
Levels of
hierarchy
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Petrovietnam Oil and Gas Groups organizational structure:
The following section describes about the key functional activities of my chosen companies:
Kinh Do Group and Petrovietnam (PVN)
Board of Directors
Executive Management Board
Board of Internal Controllers
Information Technology and
Science Division
HR Development Finance accounting
Marketing
Production
Planning Division
Inspection Division
Research and Development
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Departments
name
Definition Function Kinh
Do
PVN
Finance They keep all the
records of financialactivities and manage
activities that relate tofinance.
They take responsibility for
reporting to the owners all of theprocesses and expenditures of the
company. They analyze currentfigures and make predictions in
the future. Then, they will supplyinformation that helps managers
make decisions.
Moreover, they take charge ofcalculating the wages and
salaries for employees and
paying for income tax.
Yes Yes
Human
resourcemanagement
HRM is the
management of anorganizations staffs.
They cover some type of work
including: Making policies in an
organization that force
people to follow.
Recruitment, training,staffing and keeping
employee records for the
company.
Paying wages,supervising health andsafety requirements.
Yes Yes
Research and
Development
This department
investigates new
products and processesand then seeks to
develop them into the
finish article.
They include investment or sale
of research, new technology tools
for the survival and developmentof the business. In addition, they
explore more information about
their products, processes,
services to meet the customersdemands and improve their
market better. Therefore, they
keep an important position in
increasing competition for thecompany.
Yes Yes
Production This department is to
make raw materials
into finished goodwell.
They carry out the production
chain including processing,
packing, storing which isoperating well to manufacture
high quality goods
Yes Yes
Marketing Marketing is a process They carry out research on Yes Yes
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which communicates
and delivers the value
to the customers and
keeps the relationshipwith customers.
market about:
What are customersneeds?
Who are interested intheir products most ?
What price is suitable.?Sales This department
determines how to sell
the companysproduct.
They are in charge of the process
of getting customers to buy what
the company produce, so theyhas to create more and more
orders for products and services.
Yes No
Information
technology
services
IT service include:
Supportingother business
functions
Providingspecialist ITsupport
Managingcomputerfunctions.
IT specialists play an importantrole in operation of the company.
They create and maintain the
computer systems. They train
staffs to use applications andaccess to databases. Moreover,
they can protect the companysinformation secretly by
technology.
Yes Yes
Logistic Logistic is in charge ofmanaging processrelated to supply chain
including suppliers,
manufacturers and
retailers.
Logistic makes sure that theprocess of supply chain from rawmaterials into finished goods and
deliver to the customers running
smoothly.
Yes No
Planning
Division
Planning Division
supports and drives the
development of thecompany
They are responsible for
planning business strategies,
promoting and developingproject processes.
No Yes
Inspection
Division
This department isresponsible for
inspecting about
technologies, qualities,
methods andapplications.
They inspect, develop and giveadvice about quality of goods to
satisfy the customers.
Furthermore, they also inspect
about finance and accounting toavoid the embezzlement in an
organization.
No Yes
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There are some interdependenciesbetween other departments in the companys operation and
they have to work together to achieve the businesss aim. Foran instance, when doing a project
for the company, it is necessary to have a team consisting of:
Research and development specialists explore how to improve their products better. Production specialists put forward ideas about how the products can be made. Financial specialists analyze what profits as well as losses which the company might get. Marketing specialist who identify if the customers desire their products and how to
introduce them impressively.
Information technology service has to make sure that all their computer technologiesrunning smoothly so that everyone in the project can access to team databases.
Each departments have to work and discuss together efficiently to make sure that the
organizations project is running steadily to save time as well as investment costs.
Influencing factors:
Size is one of factors that affects to the organizational structure of the company. Thelarger the organization is, the more complex its structure becomes. For example, a
company with a large number of employees has to need more supervisors to manage
these individuals.
Business environment is also play an important factor in a company. The companyenvironment consists of all those factors which lie outside the company.
Static and dynamic environments. For an instance, in Kinh Do group, salesmay have peaked and maintained steadily a period of time. Therefore, they
feel little need to restructure. In the other hand, in dynamic environments,
Petrovietnam has to change their structure to be more suitable and flexible.
Strategic plans. The kind of organizational structure also depends on business plan. Forexample. Kinh Do which expects to develop globally will expand structures that allow to
adapt with the culture of each countries.
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Supply chain for a typical product:
The chart following below is the supply chain of my chosen companyKinh Do Group.
Raw materialsfrom suppliers
Manufacturing
facilities
Distribution
Sales
department
Supermarket
Customer
Grocery store
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The Business
Political
Factors
Economical
Factors
Social
Factors
Technological
Factors
P5: There are some changes in the external business environment which may have an impact on
businesses are often considered under the headings of Political, Economic, Social and
Technological. This is called a PEST analysis.
PEST analysis helps you identify the external factors that might be a chance or challenge for your
organization.
Political factors: there are many laws enforced by the government to affect to the business
activities including export and import, production, hiring labor such as:
Tax law. Employment law. Environmental regulations.
For both of my chosen organizations, Employment law doesnt allow the companies hiring
children under age of working. Therefore, the companies have to hire adults and pay higher
salary for them. In addition, the total working hours must not exceed 48 hours per week, if the
working hour is exceed, the company have to pay extra hours wages for workers.
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Economical factors are always changing day by day and they affect to the companys decisions
in development strategies. Economical factors include:
State of the economy Inflation rate Interest rate
Both of my companies always deal with states of the economy. For example, if the economic
state is unstable, Kinh Do faces many risks such as: the price of raw materials rising causes the
cost of production and the price of goods also increasing; as a result, the amount of consumption
will reduce. This leads to the revenue of Kinh Do also decrease seriously and the company might
fall into debt.
Social factors are also an important thing that dramatically affects to the business. Social factors
include:
Culture Living standard Population growth
When Kinh Do Group set the price of goods, it has to look at the local living standard. For an
instance, if people who live in a city have a low living standard, Kinh Do shouldnt set a high
price of good. This leads to selling below cost quickly and the company might be collapsed then.
Kinh Do has to set a suitable price with customers expenditure to attract them.
In general, businesses are affected by factors around them. Since the company was established,
the owners have to find an appropriate type of business and try to run and maintain the business
smoothly to avoid selling below cost. They have to divide works in an organization clearly and
reasonable to drive the company efficiently and not waste their time as well as investment costs.
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Referencing:
Energy for national sustainable development n.d, viewed 7 November 2011
< http://www.pvn.vn/>
Hoddereducation n.d, Types of Business Organisation - Public sector, viewed 9 November
2011.
< http://www.hoddersamplepages.co.uk/pdfs/cceabus3.pdf>
Kinh Do Group 2009, viewed 5 November 2011.
< http://www.kinhdo.vn/Default.html>
Projectsmart.co.uk 2000, PEST Analysis, Duncan Haughey n.d, viewed 20 December 2011.
< http://www.projectsmart.co.uk/pest-analysis.html >
Tutor2u n.d, Subject: Organization, Stakeholders and Business ethics n.d, viewed 20 November 2011
< http://tutor2u.net/business/gcse/organisation_stakeholders_ethics.htm >
Value Based Management.net 2011, PEST Analysis n.d, viewed 20 December 2011.
< http://www.valuebasedmanagement.net/methods_PEST_analysis.html >
RapidBI 2007, Write SMART objectives & goals, 29 January 2007, all right reserved by Mike
Morrision, viewed 15 December 2011
< http://rapidbi.com/created/writesmartobjectives/>
http://www.pvn.vn/http://www.hoddersamplepages.co.uk/pdfs/cceabus3.pdfhttp://www.kinhdo.vn/Default.htmlhttp://www.projectsmart.co.uk/pest-analysis.htmlhttp://tutor2u.net/business/gcse/organisation_stakeholders_ethics.htmhttp://www.valuebasedmanagement.net/methods_PEST_analysis.htmlhttp://rapidbi.com/created/writesmartobjectives/http://rapidbi.com/created/writesmartobjectives/http://www.valuebasedmanagement.net/methods_PEST_analysis.htmlhttp://tutor2u.net/business/gcse/organisation_stakeholders_ethics.htmhttp://www.projectsmart.co.uk/pest-analysis.htmlhttp://www.kinhdo.vn/Default.htmlhttp://www.hoddersamplepages.co.uk/pdfs/cceabus3.pdfhttp://www.pvn.vn/8/2/2019 giang ngoc.
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