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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/


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