FOREIGN TRADE UNIVERSITY
FACULTY OF BUSINESS ADMINISTRATION
MASTER OF INTERNATIONAL BUSINESS
Maybe you are interested!
-
Improving the business environment for Vietnamese tourism enterprises in the globalization process - 18 -
Factors of the Internal Business Environment -
Analysis of External Environment Affecting Travel Business Operations -
Improving the business environment for Vietnamese tourism enterprises in the globalization process - 7 -
International business environment: Basic issues, opportunities and challenges for Vietnamese enterprises - 14
---------***----------
GRADUATION THESIS
TOPIC NAME:
BUSINESS ENVIRONMENT OF WOODEN FURNITURE PRODUCTION AND TRADING ENTERPRISES – CURRENT SITUATION AND SOLUTIONS
Student name : Dao Xuan Minh Class : English 5
Course 44
Instructor : Dr. Nguyen Trong Hai
Hanoi, May 2009
INTRODUCTION
1. Urgency of the topic:
In the context of our country entering the stage of industrialization and modernization, the construction and promotion of the development of industrial production sectors play an important role in the economy. Therefore, in order to help each sector have the best development conditions, it is necessary to consider and evaluate the impact of factors in the business environment on the operations of enterprises in the sector. This is not only meaningful for the manufacturing enterprises themselves but also the basis for the government and state management agencies to have timely policies and adjustments to support the sector.
In the past decade, our country has witnessed the rapid rise of an industrial production sector, which is the wood furniture manufacturing and trading sector. The rapid increase of enterprises, along with the formation of large industrial zones specializing in wood furniture production across the country, has shown the development potential and importance of the industry to the country's economy. Up to now, when our country's economy is increasingly integrating deeply with the world economy, the industry has become one of the leading export sectors and created trade and commerce relationships on an international scale. The government's signing of trade agreements and participation in economic organizations has further deepened the industry's participation in the global market. Therefore, businesses in the industry are increasingly facing many complex fluctuations in the business environment that affect their development. The current problem of the wood furniture manufacturing and trading industry in particular and all manufacturing industries in general is how the impacts from the business environment affect the entire industry, and how the businesses in the industry will respond to those fluctuations. On the other hand, what should the government do to support and create favorable mechanisms for
businesses overcome difficulties. That is also the reason why I decided to choose the issue: "Business environment of wood manufacturing and trading enterprises: Current situation and solutions" as the topic of my graduation thesis.
2. Research purpose:
Firstly, from the general theoretical basis of the business environment and internal factors of the business environment, analyze and evaluate the current situation of their impact on the wood furniture manufacturing and trading industry.
Second, from the analysis and assessment of the current impact of the business environment on the wood furniture manufacturing and trading industry, provide orientations, solutions and recommendations to improve the industry's business environment.
Third, provide lessons and experiences for other manufacturing and business sectors.
3. Research objects and scope:
The research object of this topic is the business environment, the current status of the impact of factors in the business environment.
The research scope of the topic is "wooden furniture manufacturing and trading enterprises" .
4. Research method:
The thesis is researched on the basis of combining analytical and synthetic methods, combined with practice, going from the general to the specific, from statistical data to analysis and evaluation to propose solutions and proposals to contribute to perfection.
5. Thesis structure:
In addition to the introduction and conclusion, the thesis consists of 3 chapters as follows:
Chapter I: Overview of the business environment.
Chapter II: Current status of business environment of wooden furniture manufacturing and trading enterprises in Vietnam.
Chapter III: Some solutions and proposals to contribute to improving the business environment of wooden furniture manufacturing and trading enterprises in Vietnam.
The author hopes that through this thesis, he can research and contribute his own opinions on important issues that many businesses in the industry are interested in. However, due to limited knowledge, this thesis certainly cannot avoid many shortcomings. We look forward to receiving additional comments and corrections from teachers and students.
I would like to sincerely thank Dr. Nguyen Trong Hai and those who helped me complete this thesis!
CHAPTER I: OVERVIEW OF THE BUSINESS ENVIRONMENT
I. Concept of business environment.
The business environment is always an issue of concern to business administrators, industry associations, state management agencies and the government because it affects the performance of businesses and the entire economy. From the perspective of administrators, the business environment is understood [5,83] as:
The business environment is the context that covers all business activities of enterprises in the economy. It includes the totality of objective and subjective factors that interact with each other and have a direct or indirect impact on the business activities of enterprises.
II. Factors of the business environment and their impact on businesses.
When considering the groups of factors of the business environment that affect the operations of the enterprise, as well as the decisions of the enterprise's management to come up with solutions to deal with those factors, the business environment is divided into 2 groups [7,16]: The external business environment and the internal environment of the enterprise.
The external business environment is the factors or forces outside the enterprise that can affect the business's performance, which contains a series of different and very complex factors. In which, the external environment includes two factors: the macro environment and the micro environment, also known as the industry environment.
1. Macro environment.
Macro-environmental factors are uncontrollable, independent, and not influenced by the business. When changes occur, they often do not have as fast an impact on the business as industry-environmental factors. Researchers have classified uncontrollable factors into:
The controls are divided into the following groups [7,17] depending on their properties:
1.1. Economic environment.
The current state of the economy and its future trends affect the success of a business's operations as well as the management process. The main factors that businesses often analyze are: Growth rate and general situation of the economy, income and purchasing power, interest rates and credit availability, inflation, monetary policy and exchange rates.
Indeed, the economic growth rate during periods of prosperity, recession or crisis will affect people's spending and consumption needs, thereby affecting the revenue and profits of businesses. When the economy is in a period of high growth, consumers' income increases and jobs are secured, leading to increased purchasing power in society. Therefore, businesses will have many opportunities to make profits and invest in expanding operations. On the contrary, when the economy falls into recession or crisis, leading to reduced income, increased unemployment, and people tend to tighten spending, businesses will have to face many challenges to survive. Declining profits also increase the level of competition in the industry. Usually, when the economy declines, governments are forced to intervene to introduce policies to support businesses, while businesses will have to restructure their operations and implement many measures to stimulate consumption such as promotions and price reductions.
In addition, interest rates also affect the demand for products and the cost of capital of enterprises. With low savings and lending interest rates, enterprises can borrow capital at lower costs, creating conditions for business development. Consumers will also spend or invest in other areas instead of depositing a lot of savings in banks. On the other hand, if interest rates are high, enterprises will have difficulty borrowing capital because they are under pressure from high capital costs. Therefore, the profits of enterprises are reduced and people
People then deposit more money in savings. In addition, the difficulty in credit loans is also a factor affecting consumption and investment borrowing activities of enterprises. For small and medium enterprises that often have to borrow due to capital constraints or enterprises with large capital needs for investment in production and business, any fluctuations in interest rates and credit borrowing capacity can strongly affect these enterprises. Especially, goods with high demand, high sensitivity to income and price are also affected. Specifically, when banks reduce lending conditions and standards, expand preferential loans for customers when buying a certain item, demand for this item inevitably tends to increase, leading to an increase in the price of this item. This is completely similar for enterprises, when enterprises will borrow to invest more in preferential fields. On the contrary, if banks tighten loans and accelerate recovery, borrowers including consumers and businesses will be forced to quickly find ways to speed up the capital recovery process if they do not have enough money to pay back the bank. Therefore, they will have to find ways to quickly sell the items and objects they have purchased or invested in, leading to a tendency for prices of items to decrease.
Inflation and the issue of fighting inflation are also important factors that need to be considered and analyzed. If the inflation rate in the economy is high, businesses will face many difficulties. Firstly, the increase in commodity prices will reduce purchasing power and consumer demand for goods. Secondly, input costs and operating costs of businesses will also increase. These two things will reduce business revenue and profits. In addition, investment projects will also become riskier, and eventually businesses will be less enthusiastic about investing in production development and even forced to temporarily suspend those investment projects. Not only that, the state itself will also have to intervene, proposing measures to strictly control prices and curb inflation. In fact, in some places in the world, controlling
Price controls have gone beyond the control of the government, high inflation makes it impossible for businesses to operate smoothly and earn the desired profit level in the face of a decline in consumption. In short, high inflation is a threat to businesses.
Monetary policy and exchange rates can also create opportunities or risks for businesses. In theory, the exchange rate is a comparison of the value of domestic currency with the currencies of other countries. A decrease in the value of domestic currency will encourage exports and limit imports. Exporting businesses have the opportunity to increase profits while importing businesses have to bear higher input costs. Conversely, an increase in the value of domestic currency will limit exports and encourage imports. At this time, profits from export activities decrease, while importing businesses as well as foreign countries benefit.
1.2. Political and legal environment.
Business operations and decisions of business leaders are also strongly influenced by developments in the political and legal environment. In particular, the government and specialized management agencies play a major role in creating developments in this environment. They influence what organizations can and cannot do. As production develops, the intervention of the government and management agencies increases over time. The impact can be opportunities, obstacles or even risks for businesses. These impacts are reflected in: political stability, trade policies and development policies of the government, and the regulatory legal system.
Political stability at home or abroad (where the business operates) is one of the factors attracting foreign investment.
In addition, the government's trade policies and socio-economic development policies also clearly show the government's strategies, attitudes and viewpoints towards each related industry. Based on these policies, businesses and investors can know the development orientations.