Strategic Management Process Short Essay
Profile Honda motor company, Ltd was founded on 24 september 1948 in Japan. Implementing its business strategy, the company is constantly evolving global manufacturing network with 91 branches. Among that branch, Honda Vietnam has played a key part of the success of global Honda. Honda Vietnam is established in 1996 with initial capital of $ 31. 2 million, they are a joint venture between Honda Motor Company of Japan (42%), Asian Honda Motor Company of Thailand (28%) and movers and Agricultural Machinery Corporation of Vietnam(30%).
Through many years of operation, Honda vietnam has developed and become a leading motorcycle manufacturer in Vietnam with 2 motorcyle factories and 1 car factory. the end of July 2011, Honda Vietnam has created nearly 8500 skilled labor employees working in companies and tens of thousands of workers in the satellite companies and authorized stores systems (HEAD). Besides that Honda Vietnam also has a network of distributors across the country with over 415 dealers and service authorized by Honda, Honda Vietnam has contributed more than 20,000 billion in taxes to the State budget by the end of June 2011.
These not only help Honda Vietnam become a leading motorcycle manufacturer in Vietnam, but also help them achieve many noble rewards, especially they have received the Third Class Labor Medal from the state of the Socialist Republic of Vietnam on july, 2005. In recent years, although facing big challenges such as the economic crisis ,along with the threat from the strong competition of companies, but Honda Vietnam always has a stabilizing of the development of sales through that maintain the position as a leading motorcyle manufacturer in Vietnam, specifically in 2010 the sales of Honda Vietnam’s Motorcycles are nearly 2. millions units . Besides that, although facing many strong competitors with strong potential finance and quality products such as yamaha, suzuky and so on , but company always maintain their position with over 60% maket share of the motorcycle market. Honda Vietnam always focus on improving technology, specifically they always focus on researching new technology to produce new quality products which can satisfy the demands of customers.
Besides focusing on improving technology, Honda Vietnam is also always put the environmental protection and social activities on the top priority. Within the framework of this test, I will just discussand analyze about the operation of manufacture and distribution of motorcycle of Honda Vietnam because motorcycles are popular means and widely used in Vietnam. The business to the business environment: The business as a transformation system: (Input, output, Analyze the environment: * PESTELS Political: The nature and stability of government, attitudes tax, social welfare , foreign trade and trading blocs * Technological: Spending on research by government and industry, Innovative development , rate of technology transfer * Economic: National economic trend (Wage rate, GNP, interest rate, inflation, unemployment. ) * Legal : Financial regulation Product safety, health and safety, Employment law * Social- culture * Eco- Environments Approaches to organization: The classical approach( Co-ordination, the scalar principle, the functional principle) * Specific management (Data gathering, worker selection and development, integrating the science and trainer worker, Re-division of the work business. * Management science theory (Quality of management,, operation management, Total quality management, Management information system. * Bureaucracy Organizational structure: Base on the functional, product, divisions or matrix An alternative view: (Jones and George. Joseph Mc Cann) key concept : Organization agility and resiliency. The political environment: * Political ideologies and business Political system: democratic and totalitarian (Communist, theocratic totalitarianism, Secular totalitarianism). * Economic system ( Market- driven economies, Centrally- planned economies, Mix economy * Governments and business assets( Promote economic development, Development of product or services that benefit to the country general. Provide good or services to the whole population, regardless of their economic, Earn profit for the government, Increase the power of the government, prevent the closure of failing company * Converting from a centrally- planned to the market economy * Politics, economic and the business Freedom of enterprise * North- South and East- West relationship * Politics, business and international trade * Attractiveness * Ethic question The economic environment * International trade theory ( Absolute advantage, product life cycle theory, new trade theory, Porter determinants of national competitive advantage) * Absolute advantages: 17th century, Thomas Mun stated the foreign trade brings benefit to the countries (Mercantilism) 18th century David Hume has suggested if there was a net flow of good from E to F, there would be a net flow of gold in the opposite direction. Comparative advantage: Ricardo’s principle of political Economic went further. The country should only export those good that it produced most efficient. Overall, both the theories show that potential world production and consumption are greater with unrestricted world trade. * Product life cycle: Introduction, growth, maturity, decline In the international market: ( Robert Vernon (1966) consider the life cycle of product in term of their different sale pattern in different countries and regions * New trade theory * Economic integrations * Free trade areas * Customs unions * Common Markets * Economic unions * Political union Regional trade agreements and MNEs ( Joint ventures and acquisition, Localizing operation) * Foreign direct investment Green- flied investment, acquisition or merger. Type of FDI: Horizontal FDI (Benefit: Transaction cost, Market imperfection, Strategy behavior, the product life cycle, local- specific advantages) Vertical FDI ( Forward vertical FDI, Backward vertical FDI. Market decision about FDI . : If the transport cost and tariff are low, then exporting may be the best option. If transport cost or tariffs are not low, licensing may be safe option, if the business need to tight control over the foreign.
Not suitable for FDI ( High-tec industries, an industry that is dominated by a small number of companies, the cost is of major importance. * The effect of FDI on host countries business Resource transfer benefit: Capital, technology, management resources, Employment benefit: Direct growth employment Balance of payment benefit: there is the capital inflow when the MNEs transfer capital during FDI, if the FDI replaces imports from MNE’s home countries, then there will be benefit for the host country’s current account, Export good from its new facilities country’s current account Competition and growth benefit: Cost of FDI for the host countries: Competition cost: Effect on local business of competition from MNEs, risk see from government, the price increase customer suffer Balance of payment cost: Effected by the return earning from the foreign subsidiary to its parent company, increasing in import to supply then new facilities National autonomy: Americanization, means that number of companies from other countries have carried out FDI. Other countries accepted benefit from greater independences in the world economy.
Government attitudes to FDI: restrict inward (damage local business, exclude, offer incentives to foreign business , gain profit from FDI ( knowledge, skill in management) Cost. Market position| Market share (%)| CR4| HHI| Honda| 60| 60| 3600| Yamaha| 13| 13| 169| Suzuki| 5. 5| 5. 5| 30. 25| SYM| 5. 1| 5. 1| 26. 01| Piaggio| 4. 2| | 17. 64| Lambretta| 3. 9| | 15. 21| Fusin| 3. 1| | 9. 61| Ducatti| 2. 9| | 8. 41| Lifan| 2. 3| | 5. 29| | | | | Total| 100%| 83. 6%| 3881. 42| The market share of motorcycles in Vietnam market (According to the Vietnam Competition Authority, 2012) The concentration ratio is calculated follow:
CRm = s1 + s2 +…. + sm where si is the market share and m defines the ith firm If there are a significant change in the market shares among the firms included in the ratio, the value of the concentration ratio would not change. HHI = s12 + s22 + s32 + … … + sn2 Where si is the market share of the ith firm The social-cultural environment * Element of the social-cultural environment: Culture Value: Abstract ideas about what group believe to be good, right and desirable. Norm: Regulation Society: share the common of value and value The element of culture:
Languages: transfer ideas and information, make easier to understand what is going on in particular situation People are much more likely to express themselves openly if they can speak in their languale , understand culture. Religion: Value and attitude: Avoid risk willing to take risk, View people as essentially bad good, Emphasizes competition collaboration, use status to maintain own power achieve the organization objective. Manner and customs: Business in particular their marketing departments need and accurate picture of their market.
There are also important different in social matter such as non-verbal communication, thumb-up sign has very different meaning in different countries. Material elements: the economic infrastructure ( Road, communications, energy supplies and so on. The social infrastructure (Healthy, housing, education), the financial infrastructure (bank insurance, financial services) Aesthetics: for marketing department, Education: level of education and the type of the education provide ( high education -> industries countries. Cultural change: Economic factor, satellite television and film, the internet and web, cheaper and faster travel.
More flexible attitudes to movement of labor. * Demographic change: Customer and workforce, * Ethical issue: Deontological theories: Teleological theories The technological environments: Technological development Technology can be define as “the sum of knowledge of the means and method of producing goods and services ( Penduin dictionary of Economics) * The development of new material: New material can appear in two types (completely new and may be improvement to existing products * Biotechnology and Pharmaceutical: The best published biotechnology development have occurred in relation to genetically modified ( GM) Crop.
There are high- yield disease –resistant plant, which the designer claim need lower level of pesticides and herbicides * Travel: Change in the speed and availability of travel have had a major impact on * business. Speed increase through the development of jet aircraft, motor way…, container * Communication: Improvement in communication result from development and use of Mobile phone, Answer phone, telephone conferences call , Fax * Energy use and waste disposal * Type of innovation Product innovation: new product, new services
Process innovation,: Improve the way which a product or services is produced Benefiting from technological development * Product development goal: Minimize development time, fit with customer needs, maximize product quality, production efficient * Minimizing development : creating new product , the competitions will be exploring similar areas. The most important of these are linked to the product lifetime cycle. The first entrant enter on new market can charge higher price Bring benefit from their name associated with the product. Short development time means the business can more frequently upgrade its product competitive advantage, link to cost. * Maximizing the fit with the customer need * Maximizing the product quality * Maximizing production efficient * Principle of product development Information technology within organization * Possible influences of technology on people at work: Influence to the specific member’s pattern , Nature of social interaction, role position and the nature of reward, impose the time dimension of work. IT, the organization and the external environment
Business to business (B2B) Business to consumer (B2C) Business to Employee ( B2E) Benefit of E- commerce: The number of profit for e-commerce : expansion the business’s market place, offering international link to both supplier and customer. Reduction on cost, reduction of supply chain inefficiencies , the cost benefit resulting from group purchasing, speed of procurement process Benefit to customer: shopping 24/24. Faster searching , many choice, cheaper price, interaction( Impact ) with other customer. Social benefit: More shopping from home reduce cost travel, pollution .
Reduction in price, availability of product throughout the world, Improvement in public provision of services. The PGM-FI system for motorcycle: The PGM-FI system for small motorcycles with engines of 125cc or smaller, including air-cooled engines. To ensure clean exhaust gas and high fuel economy, the control of combustion through an accurate fuel supply is a must. As the conventional FI system (electronic fuel injection system) applied to motorcycles is bulky and costly, its application has been mostly in large motorcycles using multi-cylinder engines.
In the newly developed PGM-FI, in order to apply to small displacement models, the obstacles have been eliminated by fully using the PGM-FI systme to down-size components as well as making maximum use of the FI techniques attained from the large motorcycles. The compact PGM-FI offers new benefits such as the reduction of released environmentally detrimental substances and the improvement of driveablity, economy, etc. The legal environment: Legal system and organization: The three type of legal system: Civil law: Based on a system framework setting out the basic law for a country.
Use in 80 countries France, Germany, Japan, Russian Common law: is based on tradition, precedence and custom. Judge have to assess cases on the basic of a country’s legal history Theocratic law: is based on religious belief Legal system in practice National, regional and international legislation International obligations most often relate to membership of the United Union Regional legislation: Contracts : All business enter on contract, Offer, acceptance, consideration, Intention to create legal relation, capacity.
Properly right: property right is any resources for which an individual or organization hold the legal title. ( private action, public action) Safety: two aspect of safety need to consider: safety of worker, product, and services Trade description act (1968) ( protect customer from traders ), safe of good act ( 1979) the good must match the descriptions, The good must be satisfactory quality or purpose, the good must be fit for the purpose describe by the seller.
The consumer protection Act ( 1987) was based on an European Community directive that gave consumer the right to claim damager if anyone suffered personal injury or damage to properly as a result of individual who have purpose good. Legislation on personal right Labour relations : the government try to balance the right individual employees, groups of employer in union and employees. Minimum wage legislation: Human right: Corporate responsibility and human right: Sethi( 1975 suggest three possible way in which companies may act : Social obligation.
This type of organization thinks only of their most important stake holder ( the shareholder and so focuses on short- term profit Social responsibility: This type of organization goes beyond the legislation and tries to conform to social value Social responsiveness: The organization adopt corporately responsible action encourage public scrutiny of their actions and hope to encourage to future social change European emission standards are the most common standards that accept the limits for exhaust emission of new vehicles.
The emissions of nitrogen oxides (NOx), total hydrocarbon (THC), non-methane hydrocarbons (NMHC), carbon monoxide (CO) and particular matter (PM) are regulated for the most of types of vehicle (including motorcycles, cars, trains, lorries and so on) (Basing on Wikipedia, 2012) 28 December 2011 the Ministry of Natural Resources and Environment of Vietnam issued the Decree 47/2011/TT-BTNMT which regulates the national technical regulations about industrial waste water.
The ISO (International Organization for Standardization) 14001 standard is the international standard about environmental management system which is applied extensively around the world. The eco-environment The key eco-environment
Eco- Environment| Main sources | Related human activities| Expected effect| Protect wildlife | Pesticides| Agriculture, Transport, house building| Loss of species | Global climate change| Carbon dioxide, methane, CFCs| Power generation, transport| Temperature rise unpredictable weather| Ozone depletion | CFCs| Aerosol use, refrigerator | Loss of protection against the sun’s pray| Acid rain| Sulphur dioxide nitrogen oxides, ammonia| Burning fossil fuels | Crop and building damage, ill eath | Over- enrichment of rivers an lake| Phosphate, nitrates | Fertilizers, sewage | River polution| Dispersed dangerous substances| Chemicals| Many modern production processes| Damage to health | Government action : Town and country planning legislation( 1947) create green belts and tried to spate housing from industry properly Clean Air Act( 1956) Control of pollutions Act( 1974) Formation of the environment Agency 1995 Use the economic instruments: Tax, high rate tax wastes Eco- environmentalism from an economic viewpoint
The environment and the economy: amenity services, the spaces in which we work and spend our leisure time, Natural resources ( the inputs into the production process) waste product Total economic value: Use value ( an assessment of the benefit of the existing asset) Option value ( The value that it could have if put to a different purpose in the future). Existence value( the value something has Tool available to governments Legislation, environment tax, traceable permit, the sufferer pays Transport: (Impact Carbon Emission, noise pollution, climate change, air pollution Stakeholder theory and corporate responsibility
Stakeholders and the eco-environment, It increase impact of public opinion on companies and on non- profit organization, has led all organization to consider a wider group ( Shareholder and other provider of finance, customer, employees, the wider community, Government, other organization and groups Corporate responsibility and the eco- environment : need to find a suitable balance between the benefit of growth and the damage to the environment can be viewed a long a spectrum Market mechanisms and pressure group Market mechanism: try to gain competitive advantage
Pressure group: which most commonly try to create change by influencing public opinion through media Porter’s five forces (Michael E. Porter of Harvard Business School. 1979) * The bargaining power of suppliers * The bargaining power of customers * The threat of new entrants * The threat of substitute products * The competitive rivalry within an industry Corporate Social Responsibility Corporate social responsibility (CSR) is a concept whereby companies integrate social and environmental concerns in their business operations and in their interaction with their stakeholders on a voluntary basis (EU Definition of CSR). . Part a
In relation to your chosen organization and or its industry sector, briefly explain the “buyer power and supplier power” force of porter 5 forces analysis. There are five competitive forces which impacts on the success or failure of businesses include: • The bargaining power of suppliers • The bargaining power of customers • The threat of new entrants • The threat of substitute products • The competitive rivalry within an industry Within the framework of this test, I will explain two elements of Porter’s five forces model which are the bargaining power of customers and the bargaining power of suppliers.
The bargaining power of customers Customers will have a direct affection to the existence and development of companies in general, and Honda Vietnam in particular. In Vietnam market, there are many companies which operate in the same field with Honda Vietnam such as Yamaha, Sym and so on, many of them has a strong financial resources as well as prestigious brand with many beautiful and quality products. This brings to customers more choices, and their choices will base not only on the brand name, but also on the quality, price and services. For example, In Vietnam, in 2011, Yamaha introduced Yamaha nozza into market with handy eatures, fuel economy, unique design and affordable price (31 millions VND), this motorcycle model created a “fever” on the motorcyle market, the supply was not enough for the demand, this leads to the scarcity of this motocycle model, so the price was pushed higher(32 millions VND, even 39 millions VND), besides that customers must order and wait for a time to receive their products. Understading this, Honda also launched into market Honda vision with the same fuctions but with an amazing price (28. 5 million VND) as well as with a large amount of products to ensure customer can buy and receive their product immediately.
As a result, this affects to the choices of customers, and Honda attracts a large amount of customers through that affecting to the sales and market share of yamaha, meanwhile Honda Vietnam continue to maintain their position as a leading motorcycle manufacturer of Vietnam in 2011 with over 60% market share. The bargaining power of suppliers Supplier power will be high when there are few competitors and this means that they can concentrate their power in an industry, so that they can influence the prices, quantity of goods produced and so on.
In the case of Honda, although Honda has purchases raw materials and spare parts from many suppliers, but there still have some key suppliers for company, so these supplier will have an important role to Honda; and because of this importance, Honda can be difficult when negotiating with these suppliers due to they will be able to take some actions which lead to difficulties for Honda such as raising price of materials, lowering product quality and so on, therefore Honda has to accept the losses, before finding a new suitable suppliers.
Outline the economic system of the main county or countries within chosen company Honda Vietnam is operating in operating in Vietnam market which has an economic system as follow: The current economic system of Vietnam is socialist-oriented market economy. This is a mixed economy which is not only operate under the market mechanism, but also has the regulation of state. The objective law of market economy are respected, the economic blood vessels and other significant sectors (mining, banking, national defense, electricity and so on) are controlled by state.
The international practice in management and economic operation are properly applied. The economy is dominated by the rules of the socialist economy. The economic system of Vietnam has diversified forms of ownership, but the state economic sector has the leading role in the economy, the economic state and collective are increasingly becoming a solid foundation of the economy. Vietnam is still basically an agricultural country with the population of 90 millions and labour force is 47. 7 million (2010 est), the main import goods are seafood, rice, coffee and rubber, and the main export goods are machinery, equipment, tools, spare parts, all kinds of petroleum, iron and steel. Most important trade partners are EU, USA, China and Japan. Vietnam has established diplomatic relations with 168 countries and been the member of many international organizations such as WTO, Asean, Apec and so on, this helps Vietnam attract many FDI and ODA from many countries, specifically FDI in 3 years from 2007 to 2009, Vietnam attracted about 112. 8 billion US. dollars of registered capital, in 2011 FDI of Vietnam is 11 billions US dollar and ODA in 2011 is 7. 9 billions US dollars. The growth of GDP of Vietnam is fairly high , specifically in 2006-2007 are 8. 2% and 8. 7%, but because of the affection of global economic crisis and inflation the growth of GDP reduce significantly, in 2011 the growth of GDP is 5. 8%. However , although the growth of GDP is low, but it is fairly high compare to the global index.
Interest rate in Vietnam tend to decrease, at this time, the interest rate is 15% , but in the near future the interest rates will be down around 12%, this will create favourable conditions for companies to approach loans to expand investment and production. As for foreign exchange rate, now the VND is losing value against the USD, meanwhile the USD tend to lose value against some other foreign currency, this will bring to Vietnam many threats than benefits, because Vietnam is an economy of processing and assembly, if not imported, there will be no production.
Inflation rate in Vietnam has been higher in recent years. Prices on world market fluctuations, the increase of some commodities such as petroleum, steel and so on have affected the domestic prices, making the consumer price index (CPI) increase. although Vietnam’s CPI in 6/2012 has decreased 0. 26% from the previous month, after 38 consecutive months of increases, but according to some economic experts of Vietnam, a sign of deflation has occurred, the basic reason is aggregate demand is going down as a result of monetary tightening is too strong.
Contract law is an important area of business law. Consider how the requirement of contract law affects your select company. The law of contract is a set of rules governing the relationship, content and validity of an agreement between two or more persons. Contract law as a promise or an agreement giving rise to obligations which are enforced or recognized by law. In the process of operation. There are many contracts which Honda Vietnam will be involved.
They can be the contracts between Honda Vietnam with its stakeholders such as suppliers, employees, customers and so on. these contracts will have an important role to company, because they will be legal evidents when there are some problems occur in the process of implemening contracs between Honda Vietnam and their stakeholders. Contracts will consider as a valid one , when related parties meet the requirements of the contracts.
Specifically, Offeror will offer a contract and they will be leagally bound by the term stated in the contract, then the offeree must confirm to argree with all the parts of the contracts, although The contract is formed by an offer and an acceptance, but in order to be valid, it must also recite consideration. In the case of Honda Vietnam, they will be involved in many contracts, so it requires that they have to review terms in the contracts to avoid affcting badly to company.
For example when Honda offer a purchase contract to their suppliers, they will need to review whether the terms of their offer is correct or not and they must ensure that suppliers confirm to agree with all the parts of contracts as well as the concideration of the contracts must be correct. If one of these requirements are not conducted correctly, Honda can be suffered many losses such as they will buy the wrong qanlity of goods ( incorrect terms), suppliers will not change faulty goods ( suppliers do not confirm to agree all parts of contract) and so on.
In addition,Honda needs to ensure that contracts comply with government regulations and have considered carefully the sincerity, ability to comply with contractual cooperation of the parties. In the process of contracting, if Honda has no carefull observation, this will lead to serious consequences. specifically, in labor contracts, Honda does not carefully investigate and consider the profile of employees and sign the contract with minors, so company can be fined by government as well as when employees make big damage, Honda will be responsible in front of the law.
Based on selected company explain what are the main ethical and business arguments in favor of corporate social responsibility Corporate social responsibility (CSR) is a concept whereby companies integrate social and environmental concerns in their business operations and in their interaction with their stakeholders on a voluntary basis (EU Definition of CSR). The main ethical and business arguments in favor of corporate social responsibility are the ways that Honda Vietnam treat social and environmental issues (ethical or unethical) and the ways which are applied by the company to carry out their business.
In Honda, the company believes value which is delivered to society is evaluated the best through the responsibilities in developing, producing and consuming products, enhancing the safety feauture of products, minimizing effectively the impact of products on the global environment and contributing positively to a better society for this generation and future. Honda Vietnam not only have responsibilities for their products which are environmental and safety responsibilites, but also have activites to contribute to society such as safety, charitable, environmental activities.
Environment: Like other members of the global Honda, Honda Vietnam is interested in environmental issues and the development of friendly environmental products Education support: because of the future of the younger generation in Vietnam, Honda Vietnam is always interested in supporting education through activities such as giving teaching tools, offering scholarships to students with outstanding achievements Charitable activities: Honda Vietnam Company has always timely support for people when there are disaster, floods and conducting many other charitable activities such as a fund for purchasing cancer treating machines for hospitals of Paediatrics, established the Children Fund and community Development Fund. Other community activities: beisdes educational and charitable activities , the company also organizes contest “Safe driving” named “I love Vietnam” in more than 20 provinces across the country, sponsor sports and cultural activities New technology is a source of opportunities and threats and challenges in business. Explain with selected company examples. Because of the demand of people, Companies constantly research and launch new technology , these technology bring to companies many benefits through that creating opportunities for them in developing.
However, these techonology will also be able to bring to companies many potential threats and challenges in the case companies do not control effectively. In the case of Honda Vietnam, Company puts to use the PGM-F1 which is electronic fuel injection system, this system has been used for some kinds of Honda’s motorcyles such as Air Blade, Future Neo and so on. There are some information about this system “the control of combustion through an accurate fuel supply is a must to ensure clean exhaust gas and high fuel economy. As the conventional FI system (electronic fuel injection system) applied to motorcycles is bulky and costly, its application has been mostly in large motorcycles using multi-cylinder engines.
In the newly developed PGM-FI, in order to apply to small displacement models, the obstacles have been eliminated by fully using Honda’s techniques to down-size components as well as making maximum use of the FI techniques attained from the large motorcycles. The compact PGM-FI offers new benefits such as the reduction of released environmentally detrimental substances and the improvement of driveablity, economy, etc. ” (Fuel Injection System for Small Engines, Honda global). Through these information we can see that, this new techonology of Honda has many highlights such as fuel economy, stability of machines and friendly environment product. This will lead to big opportunities for Honda in Vietnam market, because with these highlights customers will be attracted easily through that increasing the sales and market share of Honda in Vietnam market.
However, this system will also bring to company some challenges and threats, specifically, the challenge which this system bring to company are this system will require many parameters such as angle of rotation coolant temperature, mixture ratio and so on, but due to need too many parameters to optimize the fuel injection process, so it is very easy to have problems. This will lead to threats for Honda Vietnam about the sales, revenue and market share in the case company cannot control effectively challenge above. What are differences between the Concentration Ratio (CR) and the HerfidahlHirschmann Index (HHI) method of measuring industry market concentration?
How would they different measures give different results for your chosen industry Concentration ratio (CR) and HerfidahlHirschmann Index (HHI) are the basic indicators to assess the degree of market concentration. * CR is a measure of the total output produced in an industry by a given number of firms in the industry, it mean that often used to calculate a group of largest firm in an industry and to illustrate the degree to which an industry is oligopolistic CRm = s1 + s2 +…. + sm (with sm is the market share of the mth firm) * HHI uses the markets of all companies in the industry and squares them in the calculation to place more weight on the larger firms HHI = s12 + s22 + s32 + … … sn2 ( With sn is the market share of the nth firm) The main differences between CR and HHI will be the ways they measure the market concentration * The Concentration Ratio (CR) does not use the market shares of all firms in the industry so the information about distribution of firm size is not enough provide. * The HHI is calculated the sum of square of the market share of every firm in the industry. The picture of concentration can express a clearly through this method. In the case of motorcyles production market of Vietnam, we have the following table: Market position| Market share (%)| CR4| HHI| Honda| 60| 60| 3600| Yamaha| 13| 13| 169| Suzuki| 5. 5| 5. 5| 30. 25| SYM| 5. 1| 5. 1| 26. 01| Piaggio| 4. 2| | 17. 64| Lambretta| 3. 9| | 15. 21| Fusin| 3. 1| | 9. 61| Ducatti| 2. 9| | 8. 41| Lifan| 2. 3| | 5. 29| | | | | Total| 100%| 83. 6%| 3881. 42| (Basing on Vietnam Competition Authority, 2012)
In the case of motocycle production industry in Vietnam, the different measure of CR and HHI will not lead to the different results, because with the concentration ratio (CR4) is 83. 6% (>80%) and HHI is 3881. 42 (>1800), we can see that these ratio show that the concentration in motorcycle production market of Vietnam is quite high, this will be more likely to occur on competition issues. because the market power concentrated in a small number of enterprises, then the risk of abuse of market power, the coordination between the large business in controlling market is quite visible. Part b: * The main effects of ecological factors to a range of industries
According to Budge et al , 2004, there are six key eco-environmental issues: Protecting wildly: wildlife includes all non-domesticated plants, animals and other organisms, and they can be found in all ecosystems. Deserts, forests, rain forests. However, with the increasing demand of housing needs, transport and agriculture expansion, Human has cut down trees as well as used pesticides which are are substances or mixture of substances intended for preventing, destroying, repelling or mitigating any pest. These will affect directly to the ecosystem, specifically, because of deforestation, variety of plants and animals will be extinct and this is the cause of flooding, besides that using pesticides can lead to air, water and soil polution through that affecting directly to crops, animals and the heath of human.
These will affect strongly to some sectors Ecotourism (lack of ecosystems and rare plants, animals), animal husbandry( pesticdes will be carried by wind to breeding farms; and this will afect to the health of animals). Global climate change: is the result of activities generate greenhouse gas emissions, overexploitation activities of greenhouse gases sinks such as forest biomass, the ecosystem marine, coastal and other human land to meet housing demand, agriculture, business and so on, specifically CO2 and NO2 is been produced by human creations and activities and CH4 is produced by manufacturing units such as oil companies, coal mining and so on. The Global climate change will lead to global warming and unpredictable weather through that affecting strongly to the health of human and production activities.
These will affect directly to some sectors such as food processing ( the temperature rise will lead to foods be easy to be spoiled), agriculture ( unpredistable weather will lead to more floods or little rain through that killing crops). Ozone depletion: this phenomenon is caused because of CFC gases, these gases will create conditions for the ultraviolet radiation reaching the ground more. CFC gases are used in commercial and home refrigeration units, aerosol propellants, electronic cleaning solvents, the Ozone depletion will affect directly to the crop,aquatic animals and the health of human because they will be loss of protection against the sun’s rays, therefore there are some sectors will be affected such as agriculture and aquaculture. Acid rain: this phenomenon is generated by the combustion of natural energy sources like oil, coal and so on.
The energy is generated from the fossil of plants and animals, so in addition to carbon and hydrogen, they also contain many other elements such as sulfur (S) and Nitrogen (N). When burned, these elements combine with oxygen to form the oxide and then combine with water to create acid rain. Acid rain is not simply to make the buildings be more quickly eroded, it is also a major influence on the survival and development of plant and animal species. Small insects and fish when meet acid rain are very difficult to adapt and survive. Trees will not only be directly affected by acid, but also be indirectly affected by acid rain erode the soil around the and lead to inadequate nutrition to continue to survive. This phenomenon will affect directly to agriculture, aquaculture and animal husbandry.
Over-enrichment of rivers and lakes: overuse of fertilizers, and the discharge of untreated waste water of companies into the environment, this will lead to chemicals such as phosphates, nitrates, Zn and Cr will flow directly into rivers, lakes, causing over-enrichment of rivers and lakes, causing anaerobic in water layers below. These will affect directly to the survival and development of crops and aquatic animals, therefore it will lead to a strong impact on agriculture and aquaculture. Dispersed dangerous subtances: In order to increase the competitiveness, revenue, companies has increased investment and put to use many modern production processes, although this brings many benefits to companies. however it can also lead to the dispersed dangerous chemicals such as S, Zn Hg and so on. This will affect directly to the health of human and animals.
Because of the dispersed dangerous chemicals, this factors will affect to some sectors such as agriculture and animal husbandry * In greater depth explain how the work of ecological factors has impacted on your chosen organization or industry As we have mentioned above, the eco-environmental factors can lead to serious influence on many aspects of businesses which operate in different fields; and Honda Vietnam is not an exception, the eco-environmental factors can affect indirectly and directly to Honda Vietnam such as sales, labours, brand name, cost of production and so on. the following are the influence of eco-environmental factors on Honda Vietnam. Firstly, we will consider about serious impact of global climate changes on Honda Vietnam.
Specifically as many production, trade, service company and so on, Honda Vietnam has also built offices and factories in the delta, where there is good traffic conditions to facilitate the transportation of raw materials and goods. However, in the case of Global climate change, this lead to threats for Honda Vietnam, because Honda Vietnam can face unpredictable weather such as flood risk will be more challenges in the drainage and flooding because of the rise of rivers and sea. The harsh climatic conditions and natural disasters increase will cause difficulties in the transportation and supply raw materials to support the production process of Honda Vietnam, besides that these also reduces the life of the works, plant, components, machinery and equipment.
We can see clearly a realistic impact of global climate change which Honda Vietnam indirectly face, specifically, Thailand is a country where supplies mainly the spare parts and materials for many countries in the region( including Vietnam), but as we know, one year ago Thailand faced the worst floods for this country in 50 years this creates many diffiulties for Honda Vietnam due to the main source of supplying the spare parts and materials is interrupted because of the impact of flood, this affects to the plans of Honda Vietnam’s production, this forces Honda Vietnam have to have adjustments in their plans of production to adapt to this situation.
In addition, acid rain is also a factor that have direct impact to Honda Vietnam. As we know, Vietnam is enhancing industrialization, this will lead to many impacts on environment of Vietnam, specifically, factories will release sulphur dioxide and nitrogen oxides into atmosphere, this leads to the formation of acidic gases, this gases will be carried by wind and dissolve in rainwater to form acid rain, this will impact directly to the durability of building and human health. In fact, according to the study “Assessing the current state of acid rain in Vietnam” of the Institute of Hydrometeorology and Environment, 50% of the rain is acid rain in Vietnam.
This will affect directly to businesses in Vietnam in general, and Honda Vietnam in general, specifically acid rain will corrode and damage the constructions and materials caused significant damage to the company. Next, we will consider about the impact of global climate change and over-enrichment of rivers and lakes on Honda Vietnam in an indirect way. Firstly, in Vietnam, average daily concentration of dust in the air in cities such as Hanoi, Ho Chi Minh, Haiphong, Da Nang and so on in some intersections is higher allowed standard for 3-5 times and concentrations of CO, NO2 per day in some major intersections exceeded permitted standards from 1. 2 to 1. times, this will require the state of Vietnam in making suitable regulations to prevent the global climate change, specifically, government of Vietnam has issued the decision on the application of Euro 2 standards for new motorcycles which are manufactured, assembled and imported in Vietnam and from the date of 01/01/2017, the State will adapt Euro 3 standards for motorcycles. this will affect directly to the output of Honda Vietnam, their products will need to be designed and produced according to the standards which government requires. As for over-enrichment of rivers and lakes, we will base on an example to explain the impact of this factor on Honda Vietnam. In 2008, Vedan company was found to discharge large amounts of untreated wastewater into Thi Vai river .
According to estimates, Vedan can discharge up to 5,000 m3/day of waste water into river, through this case Vedan has incurred two expensive price, firstly, they have to pay a large amount of money for fines of state and compensation for farmers, sencondly, the next expensive price they have to pay is prestige of the brand which is the decisive factor for sustainable development of enterprises, specifically Vedan’s products were boycotted by the people and a variety of supermarket systems, besides that according to Thomas Friedman “ the world is flat”, so this “sunspots” could affect to Vedan not only in Vietnam market, but also in many other markets around the world. It’s a loss which company does not easily offset. In short, Honda need to comply with the regulation of govermance about environmetal protection in the process of fabrication, assembly and manufacture to avoid from serious losses they can incur. Finally, we will consider about the impact of ecological on human resources of Honda, the ecological factors such as Global climate change, acid rain or ozone depletion can affect directly to the health of labours of Honda, these factors can lead to some disease about skin , cardiovascular, respiratory.
This can lead to the shortages of labors through that leading to the stagnation in production. * Critically assess and evaluate how your chosen organization or industry has responded to ecological factors As we mentioned above, there are many eco-environmental factors which can impact strongly on Honda Vietnam, so like other members of the global Honda, Honda Vietnam is interested in environmental issues and friendly-environmental products to respond to eco-environmental factors. Honda Vietnam implement the process of environmental protection in a uniform and comprehensive way on two main aspects: internal environment and external environment. * Internal environment:
Honda Vietnam always ensure the health of labours who are working in Honda Vietnam by attaching importance to the development of a safety and friendly working environment. Specifically, in 2003, the company focused on operation of improving the working environment for labours with activities such as reduced temperature, dust, CO2, setting up noise reduction system and central air conditioning system,etc keep the working environment clean. With central air-conditioning system, the temperature in the working position is always maintained below 30oC even though the outdoor temperature is 40oC. All dust of welding phase is collected and processed to ensure healthy working environment.
This system has contributed to reduce the CO2 concentrations in the plant from 5107mg/m3 in 2003 to 1403mg/m3 in 2004 and lower than 900mg/m3 in 2005, 2006. * External environment: Besides Internal environment, Honda Vietnam also pay attention to the external environment. In 2001, Honda Vietnam received a certificate of environmental management according to international standard ISO 14001. The company has adopted environmental management system ISO 14001 in a comprehensive manner in the production process with modern waste , wastewater treatment systems and enhance energy efficiency. Honda Vietnam are interested in treatment and recycling technologies .
So Honda Vietnam has adopted the new and modern technology to minimize the amount of waste into the environment. Incineratorof company with modern techniques design to ensure no dioxin emissions (the agent that causes cancer, birth defects, deformities, etc). This system helps Honda Vietnam reduced the reduce the emission to a lower level than incineration emissions standards of Vietnam’s dozens of times and reduce to 60% toxic ash. As we know, wastewater plant is hugely important priorities of the industrial plant. Honda Vietnam has invested and upgraded wastewater treatment system in the plant life. Wastewater treatment system of the plant is always in good condition, meet and exceed all the requirements of the standards of Vietnam.
Honda Vietnam has invested and upgraded the processing system of industrial waste water and now this system can handle industrial waste water from 1. 3 m3 per hour up to 4. 5m3 per hour. The Company has used the biochemical method and combined with five strict processing stages to replace the evaporation method in the process of treating industrial waste water before discharging it into the environment, ensure that water discharged to environment lower than the permitted standards in terms of both chemical, microbiological and physical, can be used for water supply purposes. This system contributes to reduce the consumption of hundreds of tons of LPG per year and reduce emissions of millions m3 CO2 axis.
In order to prevent and minimize the impact of global climate change, Honda Vietnam in recent years has carried out many afforestation activities under the framework of Afforestation and Reforestation Clean Development Mechanism (AR-CDM) project to build a healthy living environment through that preventing the impact of global climate change. In addition, in order to minimize the problem of emissions of motorcycles, company has invested and applied in modern techonology to create friendly environmental products, for example company researches and apply the fuel injection technology in motorcycle production. This technology will bring many benefits to customers in fuel economy. Outstanding points of the internal combustion engine will greatly reduce emissions into the environment.
In short, through the ways that Honda Vietnam respond to ecological factors, we can evaluate that Honda Vietnam not only pay attention to exploit and make profit in Vietnam market, but also is quite effectively implementing their role and obligations to the ecological environment of Vietnam, specifically, Honda Vietnam always actively improve and enhace the efficiency in processing waste as well as put the benefits of people and environment on the top in the process of their operation. These will not only help Honda Vietnam have significant contributions in preventing and minimizing bad impact of ecological factors to environment, but also help them have a high evaluation from the state and consumers of Vietnam through that bulding a prestigious brand, so Honda Vietnam can maintain their loyal customers and attract potential customers through that Honda vietnam can beat strong competitors in Vietnam such as yamaha, Sym to maintain position as a leading motorcyle manufacturer in Vietnam.