ASSIGNMENT 2 FRONT SHEET

Qualification BTEC Level 4 HND Diploma in Business

Unit number and title Unit 1: Business and Business Environment

Submission date 30 August 2020 DateReceived1stsubmission

Re-submission Date 1 September 2020 DateReceived2ndsubmission

Student’s Name Huynh Thi Tu Trinh Student ID GBD19989

Class GBD0805A Assessor’s name Alelie C. Zaragoza

Student declaration

I certify that the assignment submission is entirely my own work and I fully understand the consequences of
plagiarism. I understand that making a false declaration is a form of malpractice.

Student’s signature Trinh

Grading grid

P4 P5 P6 M3 M4 D2
rSummative Feedback:rResubmission Feedback:

Grade: Assessor Signature: Date:

Internal Verifier’s Comments:

Signature & Date:

 Assignment Brief 2
Higher National Certificate/Diploma in Business

Student Name/ID Number: Huynh Thi Tu Trinh

Unit Number and Title: Unit 1: Business and Business Environment (485)

Academic Year: 2020

Unit Assessor: Alelie C. Zaragoza

Assignment Title: ASSIGNMENT 2- Internal and External analysis of a Business

Issue Date:

Submission Date: 1 September 2020

Internal Verifier Name:

Date:

Submission Format:

Format:

• This assignment is an Individual report and specifically.

• You must use font Calibri size 12, set number of the pages and use multiple line spacing at 1.5. Margins must
be: left: 1.25 cm; right: 1 cm; top: 1 cm and bottom: 1 cm.
• You should use in text references and a list of all cited sources at the end of the essay by applying Harvard
referencing style.
• The recommended word limit is 2000-2500 words (+/-10%), excluding the tables, graphs, diagrams, appendixes
and references. You will not be penalized for exceeding the total word limit.
• The cover page of the report has to be the Assignment front sheet 2 (to be attached with this assignment brief).

Submission

• Students are strictly mandated to submit the assignment in due date (slot 38) and in a way requested by the
Tutor.
• The form of submission will be a soft copy posted on http://cms.greenwich.edu.vn/.
• Remember to convert the word file into PDF file before the submission on CMS.

Note:
 • The individual Assignment must be your own work, and not copied by or from another student.
• If you use ideas, quotes or data (such as diagrams) from books, journals or other sources, you must
reference your sources, using the Harvard style.
• Make sure that you understand and follow the guidelines to avoid plagiarism. Failure to comply this
requirement will result in a failed assignment.

Unit Learning Outcomes:

LO3 Use contemporary examples to demonstrate both the positive and negative influence/impact the macro
environment has on business operations.
LO4 Determine the internal strengths and weaknesses of specific businesses and explain their interrelationship with
external macro factors.

Assignment Brief and Guidance:

Assignment scenario.

You are working as an analyst in JP Morgan, a famous investment bank which aims to find out dynamic companies
around the world to make investment in. After submitting a written profile of a chosen company, your supervisor
believes this firm has an opportunity to be a profitable investment. The next task is for you to write an analysis of
the chosen company’s internal and external environment.

This time, you need to do the following:

1. The same company in Assignment 1.

2. The country or a specific province in the country, where the chosen company provides its products or
services, to make a research for the effect of the external environment factors.

This will be performed a report to the Director and should include the following structures.

Structure of the Report :

1. Introduction: this section should give a brief explanation of the purposes and structure of the report.
2. Identify the positive and negative impacts the macro environment has upon the chosen company. Student
need to explain the competitive environment (Five forces model) and 6 factors (PESTLE) of macro
environment. For each factor, you have to present the general impact of each in the business or the chosen
company.

3. Conduct internal analysis of the chosen company by analyzing the following factors: (i) Core value or Mission
or Vision; (ii) Organizational structure; (iii) Human resources; (iv) Brand name or brand equity; (v) Financial
 strength/ factors; (vi) Fix/physical assets; (vii) Market resources; (viii) Technology base or Research and
Development. Based on the previous analysis, identify the strengths and weaknesses of the company.

4. Explain how strengths and weaknesses interrelate with external macro factors. First, you have to search for
at least 1 real business decision-making of the chosen company (strategies/ action plans/ investment
decisions/ developing decisions). Next, you have to prove how the previous mentioned decision is affected
by (i) strengths or weaknesses of the chosen company and taken into consideration of (ii) factors of the
macro environment (PESTLE) and (iii) competitive forces of the competitive environment, which make an
effect on the chosen company. SWOT or TOWS must be applied to come up with meaningful analysis of the
internal and external business environment. Find an example to highlight how different companies have
different business decisions when they are affected by similar external factors.

5. Partnerships and other business ventures made by your chosen company.

6. Conclusion: summarize all the key points from the report.

7. Recommendation: Why do you think this business will be a good investment for J.P Morgan? Support your
answer.

8. Prepare a presentation. Note minimal use of words/sentences.

• Profile of the company

• Results of the internal assessment
• Results of the external assessment
• Why do you think this company is a good investment opportunity for J.P Morgan?
Learning Outcomes and Assessment Criteria (Assignment 1):

Learning Outcome Pass Merit Distinction

LO3 Use contemporary P4 Identify the positive M3 Apply appropriately LO3 & 4 D2 Critically
examples to and negative impacts the PESTLE model to evaluate the impacts that
demonstrate both the the macro environment support a detailed both macro and micro factors
positive and negative has upon business analysis of the macro have upon business
influence/impact the operations, supported environment within an objectives and decision-
macro environment has by specific examples. organization. making
on business operations.

LO4 Determine the P5 Conduct internal and M4 Apply appropriately

internal strengths and external analysis of SWOT/TOWS analysis
weaknesses of specific specific organisations in and justify how they
businesses and explain order to identify influence decision-
their interrelationship strengths and making.
with external macro weaknesses.
factors.
P6 Explain how
strengths and
weaknesses interrelate
with external macro
factors.
Student’s Name: Huynh Thi Tu Trinh

Assessor’s Name: Alelie C. Zaragora

Submission date: 28 August 2020

Word Count: 8450 words

TABLE OF CONTENTS

A. INTRODUCTION ............................................................................................................................................. 1

B. METHODOLOGY ................................................................................................................................................ 2

C. FINDINGS AND DISCUSSION .............................................................................................................................. 2

I. EXTERNAL ANALYSIS...................................................................................................................................................... 2
1. MACRO ENVIRONMENT .............................................................................................................................................................. 2
2. PORTER’S FIVE FORCES ANALYSIS OF VIETNAM AIRLINES .......................................................................................................... 4
3. PESTEL ....................................................................................................................................................................................... 11
4. POSITIVE AND NEGATIVE IMPACT THE MACRO ENVIRONMENT .............................................................................................. 13

II. INTERNAL ANALYSIS .................................................................................................................................................... 15

1. MICRO ENVIRONMENT ............................................................................................................................................................. 15
2. INTERNAL ANALYSIS .................................................................................................................................................................. 17

III. INTERRELATION OF STRENGTHS, WEAKNESS AND EXTERNAL MACRO FACTORS ................................................... 23

1. STRENGTHS ............................................................................................................................................................................... 23
2. WEAKNESSES ............................................................................................................................................................................ 24
3. OPPORTUNITIES ........................................................................................................................................................................ 24
4. THREATS.................................................................................................................................................................................... 25
5. TABLE COMBINING MATRIX ...................................................................................................................................................... 26

D. CONCLUSION AND RECOMMENDATION ..................................................................................................... 28

I. CONCLUSION ............................................................................................................................................................... 28

II. RECOMMENDATION ................................................................................................................................................... 28

E. REFERENCES .................................................................................................................................................... 29
TABLE OF FIGURES
Figure 1: Logo Vietnam Airlines ................................................................................................................................................. 1
Figure 2: Macro Environment .................................................................................................................................................... 2
Figure 3: Porter's five forces...................................................................................................................................................... 4
Figure 4: Middle East Route Map and Destinations................................................................................................................... 5
Figure 5: Middle East airlines .................................................................................................................................................... 6
Figure 6: Vietnam Airlines and potential competitors ............................................................................................................... 8
Figure 7: PESTEL ...................................................................................................................................................................... 11
Figure 8: Micro Environment ................................................................................................................................................... 15
Figure 9: Functional structure of Vietnam Airlines .................................................................................................................. 18
Figure 10: Income statement of Vietnam Airlines ................................................................................................................... 19
Figure 11: Balance sheet of Vietnam Airlines .......................................................................................................................... 20
Figure 12: International route map ......................................................................................................................................... 21
Figure 13: Mr. Lim Serh Ghee - Chairman of ST Engineering Aerospace ................................................................................. 22
Figure 14: SWOT analysis ........................................................................................................................................................ 23

TABLE OF TABLE
Table 1: Table combining matrix SWOT of Vietnam Airlines.................................................................................................... 27
 A. INTRODUCTION
This is the second report of the researcher on the typic of Business and Business Environment.We will analyze the
internal and external factors affecting businesses. Some models are used to analyze macro environments such as
5 forces and PESTLE. From that point out, the strengths and weaknesses that the company is facing and how a
company decision will be affected by those factors.Finally, draw conclusions based on the abstracts made above.

The company selected as Vietnam Airlines.This is one of the leading commercial airlines in Vietnam. With a long
history of operation, the company always opens many flight route around the world so that everyone can easily
use the service here with professional staff. Vietnam Airlines has made great progress and affirmed its brand year
by year with a series of prestigious awards such as ranked the Top 3 Most Progressive Airline in the World 2016
from Skytrax Review Organization, the Best Travel Marketing Award 2018 at the 21st Busan International Travel
Fair in Korea.

Figure 1: Logo Vietnam Airlines

1
 B. METHODOLOGY
To collect data about Vietnam Airlines, the researcher used the internet to get the background of the company.The
researcher is also using some of the services Vietnam Airlines so some data were based on personal experience.

C. FINDINGS AND DISCUSSION

I. EXTERNAL ANALYSIS
1. MACRO ENVIRONMENT
The company is not alone in its business environment. It is surrounded by and operates in a larger context. This
context is called the Macro Environment. It consists of all the forces that shape opportunities, but also pose threats
to the company.

Figure 2: Macro Environment

The Macro Environment consists of 6 different forces. These are: Demographic, Economic, Political, Ecological,
Socio-Cultural, and Technological forces. This can easily be remembered: the DESTEP model, also called DEPEST
model, helps to consider the different factors of the Macro Environment.

2
- Demographic forces relate to people. The name refers to the term Demography. The latter refers to the
study of human populations. This includes size, density, age, gender, occupation and other statistics. Why
are people important? Because, on the whole, their needs is the reason for businesses to exist. In other
words, people are the driving force for the development of markets. The large and diverse demographics
both offer opportunities but also challenges for businesses. Especially in times of rapid world population
growth, and overall demographic changes, the study of people is crucial for marketers.
- The Economic forces relate to factors that affect consumer purchasing power and spending patterns. For
instance, a company should never start exporting to a country before having examined how much people
will be able to spend. Important criteria are: GDP, GDP real growth rate, GNI, Import Duty rate and sales
tax/ VAT, Unemployment, Inflation, Disposable personal income, and Spending patterns.
- The Socio-Cultural forces link to factors that affect society’s basic values, preferences and behavior. The
basis for these factors is formed by the fact that people are part of a society and cultural group that shape
their beliefs and values. Many cultural blunders occur due to the failure of businesses in understanding
foreign cultures. For instance, symbols may carry a negative meaning in another culture. To understand
these forces, Hofstede’s cultural dimensions can be used: Power Distance, Individualism versus
Collectivism, Masculinity versus Femininity, Uncertainty Avoidance etc.
- Technological forces form a crucial influence in the Macro Environment. They relate to factors that create
new technologies and thereby create new product and market opportunities.
- Ecological or natural forces in the Macro Environment are important since they are about the natural
resources which are needed as inputs by marketers or which are affected by their marketing activities. Also,
environmental concerns have grown strongly in recent years, which makes the ecological force a crucial
factor to consider. For instance, world, air and water pollution are headlines every marketer should be
aware of. In other words, you should keep track of the trends in the ecological environment.

- Political forces is include legislation regulating business and increased emphasis on ethics. New government
legislation can change how businesses interact with the micro environment while social factors put pressure
on the marketplace to be sustainable and change inset business practices.

3
 2. PORTER’S FIVE FORCES ANALYSIS OF VIETNAM AIRLINES
When companies join or start a new industry,they must use Porter's five forces and Vietnam Airlines is no
exception. Porter's five forces are a model that identifies industry strengths and weaknesses. This model refers to
the 5 forces that affect companies such as threat of new entrants, bargaining power of buyers, bargaining power
of suppliers, threat of substitutes and degree of rivalry. The strength of these forces will determine the level of
competition, the attractiveness of the organization and will help us understand the current competitive position of
the organization and the position that the organization wants to achieve in the future.

Figure 3: Porter's five forces

2.1. Threat of new entrants

In recent years, the air transport market in Vietnam has really exploded as a series of private and state-owned
airlines vied for market share in the price competition. In the future, the low-cost airline service continues to
expand and the level of competition is increasingly high, along with the competition in the domestic market,

4
Vietnam Airlines still has to stand up. competition with airlines from countries inside and outside the region. In
2013, fares on flights from Europe to Vietnam decreased significantly. If in the past, these routes VNA competed
mainly with the airlines of France and Germany, now, when German airlines have to make room for airlines from
the Middle East, VNA is forced to compete with their competitors. very strong, hard to weigh. While VNA has only
4 routes to Western Europe (Paris, Frankfurt, London, Moscow), Middle East airlines have routes to all cities in
Europe.

Figure 4: Middle East Route Map and Destinations

(Flight Connections, 08/27/2020)

5
 Figure 5: Middle East airlines

(Triadvisor, 2020)

The threat of new entrants refers to the possibility of new competitors entering the industry and raises the level of
competition, there by reducing its attractiveness. It seems that the entry threats in airlines industry are WEAK
because the pool of entry candidates is small and industry members will strongly contest the efforts of new entrants
to gain a market foothold. However, there are several BARRIERS that new entrants encounter and must hurdle,
including:

- High capital requirements: The airline industry is one of the most expensive industries, due to the cost of
buying and leasing aircrafts, safety and security measures, customer service and manpower.
- Restrictive regulatory policies: According to Decree No. 76/2007/ND-CP dated May 09, 2007 of the
Government on air transportation business and general aviation, enterprises applying for this industry’s
business licenses must satisfy the conditions of quality andquantity of aircrafts; operation, maintenance
and human resources to operate and maintain aircraft, capital source to assure the possession of aircraft;
and legal capital ranging from 200-1000 billion. This legal capital is so high that it prevents enterprises from
operating private airlines in Vietnam.

6
Another obstacle for new entrants is brand value. Brand identity is important in airlines industry, and benefits large
airlines. Major carriers allocate considerable resources marketing efforts. Frequent flyer programs and other
incentives have been successful in enticing travelers to fly with certain carriers. This incentive can often be strong
enough to cause a customer to choose one carrier over another - even when another carrier offers alower fare.
Barriers to entry are also heightened by the hub system. Carriers can offer travelers more choices while tying up
less capital through their hubs. As a result, the hub system creates market power for large carriers.

ð The financial and Government policies pressure put on newbies of domestic airlines industry is so heavy
that it is greatly difficult for them to jump in.

2.2. Degree of competition

We can divide Vietnam Airlines' potential competitors into two main groups: group of small and medium airlines
in the region, group of major airlines in the world.

- Small and medium airlines:

+ These are mainly newly established domestic airlines or small airlines in the region that have just opened
flights in Vietnam, this group of airlines often take advantage of the following advantages to compete.
+ Small and medium scale, compact management system leading to low cost.
+ Advanced technical technology helps reduce costs (make use of the Internet for ticketing, use new
generation aircraft more flexibly). For example, AirMekong uses a series of Bombardier CRJ 900 jets, thus
doing unprecedented things such as flying directly from Hanoi - Phu Quoc, Pleiku, and Con Dao.
+ Choose short routes, actively build new routes that have not been exploited by Vietnam Airlines.
+ Divide long flights into short ones reasonably. For example, with the HCM - Bangkok route, a Cambodian
airline can open a HCM - Siemrep - Bangkok route to take advantage of a group of customers who like to
travel with the expectation that a flight can go to 2 places.
+ Established under the model of low-cost airlines (minimizing costs in many ways such as: homogenizing
seats, using only one type of aircraft, eliminating food and beverage services, free newspapers, wanting to
be For service, you pay extra money. For example, some airlines have been established: VietJet Aviation
Joint Stock Company (VietJetAir) or Air Mekong.

7
- Major airlines in the world:
+ Because the Vietnamese aviation market is quite small, this group of large airlines often does not build
direct flights or fly within Vietnam.
+ However, these airlines can compete with Vietnam Airlines by:
• Building a flight route to Vietnam that transitions to another country with a more stable market (eg
Thailand or Singapore) so that with the opposite direction from Vietnam, they will be able to greatly
reduce prices to promote their trade. effectiveness, killing competitors, but profit does not affect
too much.
• Using strong financial resources to conduct strong discounts in order to build a name, build trust
among customers, cause small competitors a lot of difficulties or even go bankrupt.
• Linking with a domestic airline through capital contribution forms (Currently the government's new
policy is very open, not only encouraging the establishment of private airlines, Vietnam will also call
for investors. Foreigners join the association provided that the legal representative is a Vietnamese
citizen, the charter capital of the foreign company does not exceed 49%.) For example, Qantas
Airways used to buy 30% of the shares and become a strategic shareholder of Jetstar, thanks to its
very strong potential, Quantas Airways has helped Jetstar bring prices near impossible.

Figure 6: Vietnam Airlines and potential competitors

8
 2.3. Threat of substitution
The availability and threat of substitutes refers to the likelihood that companies in one industry come under
competitive pressure from the actions of companies in a closely adjoining industry whenever buyers view the
products of the two industries as good substitute. Substitutes for air travel include travelling by train, bus or car to
the desired destination. The degree of this threat depends on various factors such as money, convenience, time
and personal preference of travellers. The competition from substitutes is affected by the ease of with which buyers
canchange over to a substitute consisting of three factors:

- Availability and Price Attractiveness of Substitute: comparison to other means of transportation, airlines
ticket price is much higher. Nevertheless, this gap will get smaller on the long route from the North to the
South. So, airlines still has its stand in domestic market.
- Comparibility of Substitute (quality, performance, and other relevant attributes): airlines has the highest
level of quality, speed and safety. However, in domestic market, esepecially on short routes, competitive
advantages get worse because it takes time for passenger both onair and to travel to airport and vice versa
while airports are located far from city centers.
- Switching cost: Due to low fare non-stop flights, Jetstar Pacific and Vietjet Air can lure both price sensitive
and convenience oriented travellers away from these substitutes. Furthermore, two full-service airlines
Vietnam Airlines and AirMekong have programs named Golden Lotus Plus Program (VNA) and Mekong Club
(AirMekong) which can be seen as a commitment of customers with airlines carriers in which frequent flyers
can benefit from the number of miles travelling with these airlines including free tickets, priveleged service
and remarkable convenience. As long as passengers join in these programs, their switching cost will be
higher.
ð Because the majority of Vietnamese people is budget-income, the switching cost is low and the location of
airport is far from city center, in domestic travel, airlines is left behind other means of transportation
because of its price and inconvenience.

2.4. Customer power

Buyer power is determined by switching costs, the relative volume of purchases, the standardization of the product,
elasticity of demand, brand identity, and quality of service. Because of the Internet, pricing information is less
fragmented and easier to compare. Often, a traveler can find price discrepancies for the same exact flights. Airline
travel is not cheap, and can be the most expensive part of a family vacation. Hence, for some buyers, price sensitive
9
and search for the best deals available, demand is very elastic. Nonetheless in Vietnam airline industry, bargaining
powers of buyers is not that strong. There are limited options of choosing a low cost airline with relatively quality
standard. They may choose Jetstar (which recently merger with VNA) or some newbie in the market such as
AirMekong or Vietjet in which reputation has not yet developed and received negative feedbacks from customers
(Anonymous, 2011). In other words, variation of choosing forcustomer is narrow. In terms of long-haul flight which
is purchased infrequently, there arefew foreign airline companies which exploit international routes from Vietnam
due to the monopoly of VNA.

ð Limited in options especially for long distance, infrequently in purchase item and monopoly in providing
core product have decreased the bargaining power of buyers in airline market.

2.5. Supplier power

Factors relating to the bargaining power of suppliers include the threat of forward integration and the
concentration of suppliers in the industry. Suppliers for aviation industry ranging from aircraft makers, fuel
corporation, flight academy which provides pilots, flight attendances, etc to a catering company. Generally,
bargaining power of suppliers in aviation industry is strong for following reasons. Firstly, Vietnam aviation industry
is dominated by Boeing and Airbus. In details, VNA has 10 Boeing 707 and around 50 Airbus for all kinds. The
concentration supplier is undermines the ability of airlines to exercise control over suppliers. It sounds impossible
for Vietnam airline industry to integrate backward into aircraft makers to self - manufacture onits own. Secondly,
according to Mr. Luu Thanh Binh, Vice president of VNA, main force to aviation industry comes from aviation fuel
which constitutes around 80% of operating cost and directly effect to the price of each air ticket. High fuel prices
forced airlines to cut 10-20% of current spending on all items, use fuel - efficient aircrafts, operate flexible schedule.
Besides, the monopoly of Vietnam Aviation Petroleum Corporation - Vinapco pushes domestic companies into a
dilemma which is they have no option but to choose Vinapco as their fuel suppliers. A typical example which clearly
show the huge power of Vinapco is the case of JPA on March 31st 2008, Vinapco sent a written request to increase
the cost of Jet A1 fuel from VND 593,000/ton to VND750,000/ton with the deadline within 1 day. While Jetstar had
not agreed and tried to negotiate, on April 1st, Vinapco stopped supply fuel for this airline which leads to 30 delayed
flights and more than 5000 affected customers.

ð Valuable and critical characteristics in product provided as well as the jejuneness for particular inputs
(aircraft and fuel) enhance bargaining power of suppliers versus Vietnam airline industry.
10
 3. PESTEL

Figure 7: PESTEL

This is a model used by many businesses. Pestel stands for Political, Economic, Social, Technological, Legal and
Environmental. It is used to analyze and observe the factors of a macro environment that affect corporate
performance. Through 6 factors in the model, all factors outside the business are objective and through which the
enterprise uses as a strategic tool to help us know the growth and recession of the market and understand the
business position, opportunities of the company and make the company more developed in the future.

3.1. Political
This factor considers the way in which a company’s operating environment is influenced by government practice,
whether at the international, national, regional or local level. Considerations that may affect business plans include
upcoming changes of government, prevailing instability, competition policy, spending and tax regimes, business
and labour regulations, business policy and incentives, the government’s approach to trade and tariffs and a range
of other short- and long-term issues. It is important to note the distinction between specifically political and more
broadly legislative factors.
11
 3.2. Economic
The Economic aspect of a PESTEL analysis considers the general state of the economy, goods, services and finances,
including inflation, interest, economic growth, exchange rates and unemployment, as well as geographic factors
influencing the economic environment. Consequently, information relating to the Economic factor may be found
across IBISWorld reports, with the weighting differing depending on the industry.

3.3. Social
Social factors in a PESTEL analysis are varied and can differ substantially depending on the industry or business in
question. Longer-term social factors, such as demographic trends, alongside shorter-term social trends, such as
changing behaviour regarding social media and purchasing practices all influence company performance.

Societal trends can have a considerable influence on business practices. Recently, this has been most notable
regarding public concern over environmental issues, which has prompted a number of changes to business
practices across many sectors of the economy. Reputation is intrinsically linked to the Social factor of the PESTEL
framework, and consumer-facing companies can face substantial reputational damage if they do not effectively
consider social and market trends. Ultimately, social factors affect how a company conducts business, and can also
change the ways in which a company interacts with its customers.

3.4. Technological
The era of 4.0 technology is developing in Vietnam, therefore, Vietnam Airlines is also actively developing its
products, services and commerce to meet and enhance the customer experience.

The Technological aspect of a PESTEL analysis covers the rate of technological changes, R&D activity and
automation. This can be both in terms of an industry’s direct activities, and how it is affected by such changes
through its supply chain. Digital technologies have been particularly prominent in recent years, but mechanical and
physical technological development remains important. Technological developments can be in terms of production
and operational practices, or the product or service itself. An assessment of the technological factors that affect a
company also includes disruptors to traditional modes of operation.

3.5. Environmental
Environmental is a factor affecting Vietnam Airlines' economic activities, it depends on the weather, climate,
environmental policies, climate change and pressures from NGO’s. Although trends in environmental factors can
12
be hard to predict, assessing an industry’s exposure to environmental changes is an important part of a PESTEL
analysis, both in terms of the extant impact of environmental factors, and what future planning a business may
need to undertake. As climate risk becomes an increasingly important factor in business analysis, this factor of the
framework become more critical.

In addition to the direct impact of climate change, as consumers become more environmentally conscious, a
business’s sustainability strategy and its environmental reputation are also important factors to consider.
Additionally, there can be a degree of overlap between the effect of this factor, and Social and Legal pressures, as
public opinion and the regulatory landscape are increasingly influenced by the state of the environment.

3.6. Legal
A PESTEL analysis includes assessment of the legal and regulatory regime under which a company or industry
operates. This factor is focused on the laws directly connected to a business and its area of activity. This can include
employment law, such as the National Minimum Wage and National Living Wage, health and safety regulations,
environmental regulation, GDPR and data protection laws, and numerous other standards and pieces of regulation
governing operations, either domestic or international in character.

The legal factors that affect every business in the world and Vietnam Airlines are no exception. It includes
discrimination laws, antitrust laws , employment laws , consumer protection laws, copyright and patent laws ,
health and safety laws.

4. POSITIVE AND NEGATIVE IMPACT THE MACRO ENVIRONMENT

4.1. Positive
Through 5 forces, we can see Vietnam Airlines is still one of the leading airlines in Vietnam. Therefore, the company
will have many potentials as well as opportunities to access advanced technology, promote more strongly in the
future so that the company will increasingly innovate in a positive direction. In today's airlines system, not only
domestic airlines but also airlines with foreign capital, high competitiveness so Vietnam Airlines constantly strives
to improve quality products and services and ensure to meet customer needs and satisfaction, have a smart
strategy, specific and clear goals, when politics is stable along with high stock prices will attract more shareholders
and bring high profits for the company.

13
Thanks to PESTLE, the company can analyze and keep up with macro impacts on the company. Currently, Vietnam's
politics and law are stable, so airlines expand and develop flight routes in the country as well as internationally to
meet and create opportunities to reach many customers. Vietnam's economy is in the process of development,
human demand is also increasing, thus bringing high revenue to the company. The speed of development of
information technology has helped meet and enhance the customer experience. The environment does not affect
banks much, thus creating opportunities for Vietnam Airlines to grow.

4.2. Negative
In the 5 forces model, we can see a large number of competitors in the same field so the company faces an impact
on revenue. Besides, there are many new airlines participating in this market, leading to Vietnam Airlines losing a
large number of customers, reducing revenue. When the purchasing power of buyers decreases, the company will
create attractive incentives to attract customers or be affected by Vietnam Airlines' revenue and profit. Within
PESTEL model, Vietnam has a stable political situation, but that does not mean that the future still exists, businesses
need to manage carefully and have a contingency plan for potential risks. Good trade growth is also an advantage
for development rivals, increasing competitiveness in this area. Grasping the psychology of customers, other
airlines always create attractive incentives to attract customers, causing Vietcnam Airlines to face reduced sales,
or this year Vietnam was affected by the Covid 19 epidemic causing economic difficulties in fields especially in the
air sector, the number of customers using air services drops significantly, leading to a decline in sales and the
increase in total debt, so the economy is not always stable. Moreover, the airlines always observes the market and
sets goals suitable to each situation for the company to grow day by day.

14
 II. INTERNAL ANALYSIS
1. MICRO ENVIRONMENT

Figure 8: Micro Environment

The micro environment is the operating environment of the firm. This is because the functioning of the micro
environment has a direct and immediate bearing on the company. They are more interlinked with the company
than macro environmental factors.

Let us take a look at some of the most important and common elements of the micro environment. These elements
are different for different organizations. But the following ones are usually found in almost all companies.

1.1. Customers
The main purpose for the existence of most organizations is to satisfy the needs and wants of the customers. The
enterprise aims to please the customer and earn a profit in return.

So the ultimate aim is to provide the best products/services to the customer at the best prices. Failure to do so
may result in failure of the business.

15
This is why it has become increasingly important to listen to customers and value their feedback. This is why
customer consumer surveys have increasing importance in today’s markets.

1.2. Competitors
There are no pure monopolies in the world. Every organization, whether big or small, has competition and
competitors. So the company has to keep a constant check on their competitors.

The company must ensure that their products have a USP that makes them different and unique in the market. The
products offered must also be better and cheaper than those of the competition.

1.3. Employees
Employees or labor is one of the most important factor of production for a company. Human resources are a
significant factor in the success (or failure) of a firm. Hence employing the correct people, best suited to your firm
is of vital importance.

And training and development of these employees is also essential. If care is not taken in this matter the
organization can never succeed, because employees are the back bone of every organization.

1.4. Sharesholders
Shareholders invest in the company, but they are not merely investors. They own shares of the company, so they
are actually owners of the company in a way. This means they get a say in the running of a company.

Shareholders will also demand a return on their investment. So, it is the company’s duty to earn profits and pass
on this benefit to the shareholders. They have to create wealth for these shareholders.

To keep their interest dividends also have to be paid. So, the company must find the right balance between the
health of the company and the benefits to the shareholders.

1.5. Suppliers

Suppliers provide the firm with the materials and factors of production they need to run the business. The relation
between the company and the suppliers is a power equation. Both depend on each other for their survival.

16
So it is necessary for the company to have healthy and amenable relations with their suppliers. This is essential to
the smooth running of the organization. For example if the company has a falling out with one raw material supplier
it could delay their whole production process by days.

1.6. Media

Every company is going to need media to promote their brand and market their products. So it is necessary that the
company maintain their relationship and their status quo with the media.

Any negative coverage in the media can lead to huge losses for the company. This is why companies hire
PR managers to help them use the media to a positive effect.

2. INTERNAL ANALYSIS
2.1. Core value of vision
Vietnam Airlines is making a great effort in comprehensive and powerful innovation in the current development
and integration period. However, to do that, the company always has strategies and goals to develop. Vietnam
Airlines has a vision: they always take advantage of opportunities to promote existing things, expand on a large
scale, continue to innovate so that the company can become more and more perfect, keeping up 6 with the regional
and world standards, striving safety is number 1, the foundation for all activities. In addition, customer is the center,
Vietnam Airlines understands the organization's development associated with the trust of customers, one of the
largest listed companies globally, which has contributed greatly to the development of Vietnam.

17
 2.2. Organizational structure

Figure 9: Functional structure of Vietnam Airlines

Vietnam Airlines is a company with a functional structure because each department has different tasks and
functions and is divided clearly and separately. Functional structure brings many benefits to the company Vietnam
Airlines such as: easy operation when there is a specific leadership organization, which makes it easy for the
company to manage and communicate with all the company's activities and projects. The company can simplify
mechanisms to control multiple items, and a large number of employees will help the company make decisions as
quickly and accurately as possible and clearly identify the company. Besides, there are clear goals and tasks that
will attract professionals with expertise that the company aims to manage, in addition to having a complete system,
so training and learning employees will be easy and don't waste time. In addition, work efficiency and personnel
quality are increasingly high.

18
 2.3. Brand assets
Over 64 years of development and growth, the Vietnam Airlines brand has made important contributions to the
stability and development of the country's economy, while creating significant effects on the regional and global
financial community. With a long history of operation and a team of competent and sensitive employees in a
modern. Vietnam Airlines has always been the first choice of domestic people and foreigners. Always oriented to
international standards in operation, Vietnam Airlines has been continuously voted as the best airlines in Vietnam
by prestigious organizations in the world. With the intellect and dedication, generations of Vietnam Airlines' staff
and employees have been and will always make efforts to build. Vietnam Airlines into a more sustainable
development, with the goal that by 2020,Vietnam Airlines will become the No.1 bank in Viet Nam.

2.4. Financial strength / factors

Thanks to extremely smart strategies Vietnam Airlines is more profitable than before. Vietnam Airline has recorded
spectacular growth in terms of both profit, total assets and equity. That is also one of the conditions for Vietnam
Airlines to become the leading airline in Vietnam. Looking at the Report on business results of Vietnam Airlines in
2019, Net revenue is 98,228,084, Gross profit is 10,968,576, Operating profit is 2,450,236, Profit after tax belongs
to shareholders of parent company is 2,537. 461 and Net profit 2,345,802.

Figure 10: Income statement of Vietnam Airlines

(Investing, 2020)

19
 2.5. Fix / physical assets

Figure 11: Balance sheet of Vietnam Airlines

(Investing, 2020)

Base on Vietnam Airlines Balance sheet, we can see Vietnam Airlines's activity growing in Q3/2019 to Q4/2019, the
company's total assets increased. It can be seen that Vietnam has been affected by the Covid-19 epidemic recently.
That has great effected on airlines. As a result, the company's total assets in Q2/2020 was drastically reduced.

Total liabilities also decreased, but not significantly, total liabilities of Vietnam Airlines in Q3/2019 was 60912112.55
VND, Q4/2019 was 58307621.9 VNĐ , Q1/2020 was 55345704.54 VND and Q2/ 2020 was 55287810.22 VND.

Total Assets and Total Liabilities are clearly stated above.According to the latest information,we can see the Total
Equity is 11402927.31.

2.6. Market resources

After more than half a century of operating in the market, Vietnam Airlines is one of the leading airlines in Vietnam.
Therefore, the company always opens many flight routes around the world so that people can easily use the service
here with 12 Vietnam Airlines - Jetstar Pacific codeshare flights on domestic routes every day

20
(Bộ giao thông vận tải, 05/18/2020). Vietnam Airlines is constantly developing and improving the quality of flight
services, especially the airline always develops its fleet by adding a variety of modern aircraft. With a total of 90
aircrafts of all kinds including VASCO (a subsidiary of Vietnam Airlines). Among these 90 aircrafts, the company
mainly operates Airbus A321 - 200 type, 58 aircraft are operated on many international routes such as Taiwan,
Singapore, and domestic flights in off-peak hours. In addition, there is also an Airbus A330 - 220 with 2 aircraft, this
aircraft is used by Vietnam Airlines for flights to Europe, Northeast Asia, Australia and peak-hour flights. Airbus
A350 - 900 XWB with 12 aircraft. Boeing 787 - 9 Dreamliner with 11 units, this is the only Boeing aircraft of Vietnam
Airlines is operating. This is a modern aircraft with the most utilities. And ATR 72 with 7 aircraft, although it is an
aircraft operated by VASCO, but VASCO is considered a subsidiary of Vietnam Airlines, so it is still counted as
Vietnam Airlines' aircraft, this aircraft is exploited at HCMC - Con route. Island and Hanoi - Dien Bien Phu. (Travel
Top - Online Booking, 2020)

Figure 12: International route map

(Viet Air, 2020)
21
With a long working history and professional staff, Vietnam Airlines is a leading choice of corporations, businesses
and individual customers. Talking to target customers, Vietnam Airlines always focuses on customers and wants to
become the number 1 airlines for customer satisfaction so the company always brings the best, most modern and
always oriented services the community.

2.7. Technology base

On September 26, Vietnam Singapore Technologies Engineering Aerospace (VSTEA), a joint venture between
VAECO Aircraft Engineering Company Limited, a member unit of Vietnam Airlines, and the Company ST Engineering
Aerospace Company was officially launched in the witness of leaders of State Capital Management Committee at
Enterprises, Ministry of Transport, Ministry of Science and Technology.

The establishment of VSTEA is the activity of concretizing the memorandum of understanding between VAECO and
ST Engineering Aerospace signed in April 2018, marking the birth of an aircraft maintenance and repair joint venture
company (aircraft components) the first and only one in Vietnam to date.

With the cooperation of two leading aeronautical engineering companies in Vietnam and Singapore, VSTEA will
provide maintenance and repair services for aircraft equipment to domestic and international airlines, including
services for A320 family and some equipment for popular aircrafts such as Boeing 787, Airbus A350, A320, A321,
ATR 72 ... at the same time supporting technical issues such as pneumatic, hydraulic, electrical components,
electronics, wheel, brake and safety equipment. (Vietnam Airlines - VNA Spirit, 09/26/2019)

Figure 13: Mr. Lim Serh Ghee - Chairman of ST Engineering Aerospace

22
III. INTERRELATION OF STRENGTHS, WEAKNESS AND EXTERNAL MACRO FACTORS

Figure 14: SWOT analysis

1. STRENGTHS
- It can be said that the strongest point of Vietnam Airlines is the Government's support to its nationwide
and global network. Large financial scale and diversified and modern aircraft fleet bring Vietnam Airlines
strong image and reliability. Vietnam Airlines has been known nationwide for decades, so it is chosen by
customers without much advertising. Vietnam airlines are an official member of the Skyteam airline alliance,
so the international route network will be wider.
- Taking advantage of opportunities in recent years, VN airlines have accelerated their aircraft purchase
projects. Up to now, VNA's projects have basically been completed with a fleet of 5 long-range B777 aircraft,
20 medium-range aircraft (B767, A320, A321), 11 short-range aircraft such as foker70, atr72 and in the
future. VNA's fleet will increasingly qualify to compete with other countries in the region.
- VN airlines have been perfected to ensure that the international quality is qualified to serve international
inbound and outbound flights. Aircraft maintenance services at factories A75 and A76 are increasingly
improved in quality, capable of maintaining modern aircraft.
- Another strong point of Vietnam is the support of ground systems, airports, logistics, petroleum,
warehouses ... so its competitiveness is very high.
- Information technology system is very advanced in terms of security and convenience: add infant not
through the company, via email will save a lot of time. This system allows Jetstar to develop multiple agents
without fear of losing control.

23
- Provide insurance services for customers traveling to any destination of VNA Airlines. Enjoy your flight with
peace of mind. With a reasonable fee from visitors will be completely assured for unexpected situations
with practical benefits.
- The strong brand is known by many people. Professional, enthusiastic and attentive staff. Fast shipping
time, fast turnaround time. Occupying a large share of the domestic aviation market.

2. WEAKNESSES
- Vietnam Airlines: State management mechanisms can lead to slow and dependent decision-making. The
degree of flexibility in operation will certainly not be high.
- The international flight network is too few, especially long flights compared to other regional airlines. It is
not possible to create a large transit point for major international airports in Vietnam like other countries
in the region.
- The fare of Vietnam airlines is too high. Not only on domestic routes, on international flights, the fare of
Vietnam Airlines is also higher than many airlines in the region. The same route Hanoi - Kuala Lumpur, but
the fare of Vietnam Airlines is 20 USD higher than Malaysia Airlines (420 USD compared to 400 USD, round-
trip within 14 days). For Hanoi - Guangzhou segment, if traveling by Vietnam Airlines, passengers will have
to pay 308 USD / round trip ticket (within 45 days) but on the same flight, Southern Airlines (China) only
sells for 298 USD / ticket.

3. OPPORTUNITIES
- The fact that Vietnam joined the World Trade Organization - WTO has created a premise for our country's
air transport industry to have further progress in the future.
- Vietnamese airlines are having the opportunity to expand their routes globally and domestic routes. With
many advantages in flight routes and support from the government, Vietnam Airlines will become a large
corporation in the continent if it knows how to make use of it.
- Technology development:
+ Modern information and communication technology helps VNA to promote better corporate image.
+ Modernize payment methods to promptly meet customers' needs, quickly and conveniently book
tickets. Example: Online booking,...
+ Access to advanced aircraft lines.

24
- Tourism develops well with economic growth in a stable political and security environment. Increasing
tourism demand is an opportunity for short-term tours to develop for tourists wishing to take a weekend
vacation. It is also an opportunity to expand international flights during major holidays.
- According to the International Air Transport Association (IATA), the future of Vietnam's aviation industry is
very positive. In 2014, Vietnam is expected to become the third fastest growing international passenger
and cargo market in the world (after China and Brazil) and a developed market for domestic passenger
transportation. the second fastest growth after China.

4. THREATS
- The "open sky" policy creates favorable conditions for international airlines to penetrate into our country's
export freight market. In just 4 years 2002 - 2006, the number of airlines present in Vietnam has increased
from 19 to 31, creating huge competitive pressure on Vietnam Airlines.
- The market for visitors from outside to Vietnam is having quite fierce competition. The total European
market in and out of Vietnam decreased, due to the competition of Middle Eastern airlines that are
massively entering Vietnam.
- VNA only has 4 routes from Western Europe (Paris, Frankfurt, London, Moscow), if passengers from other
major cities in Europe come to Vietnam, they must move to these 4 points. While Middle East airlines are
flying to all cities in Europe. For example, Emirates flies to 33 cities in Europe with a frequency of 1-2
flights/day, they gather passengers to the Middle East and then fly back to Vietnam with a frequency of one
flight / day by large plane. This has a direct effect on other airlines.
- Vietnamese airlines face the risk of fierce competition, losing market share when other enterprises join
such as: Mekong air, Trai Nguyen, Vietjet airasia, Indochina airlines...
- For many years, Vietnam Airlines has not received additional funding from the budget. State capital recently
increased mainly due to the recognition of capital contribution when transferring Vinapro Company to
Vietnam Airlines; due to transfer of state capital at Jetstar Pacific from SCIC. The State only financed the
project of Vietnam Airlines to establish the Cambodia Angkor Aviation Company. In general, state capital at
Vietnam Airlines is still lower than equity.
- The increase in gasoline prices increases costs and reduces profits when the airlines increase fares.

25
 5. TABLE COMBINING MATRIX
OPPORTUNITIES (O) THE THREATS (T)

1. Make good use of the State's 1. Slow response for low-cost

support
2. Make good use of the domestic
SWOT matrix
economic factors.
3. Good response to the needs of
tourists.
4. Make good use of elements of
Vietnamese society
airlines
2. The application of scientific
achievements is still slow
3. Depends on vendor.
4. Not making good use of natural
factors.
5. Haven't attracted big customers.

STRENGTHS (S)

1. Aircraft fleet has a low lifespan

2. The technical workforce is Flight network solutions

increasingly specialized.
Fleet solutions Low cost airline solutions
3. The safety level in exploitation is
Distribution system solutions Exploiting policy solution
quite high.

4. The reservation system of ticket

agents is relatively large.

5. High extraction seat coefficient.

WEAKNESSES (W)

1. The flight crew is small Airport Solutions

compared to the competitors.
Solution products and services Alliance solution

26
2. Qualified staff do not have much
experience in aviation operations.

3. Service quality is not high.

4. The flight network is not wide.

5. The financial potential of

Vietnam Aviation Corporation is
still limited

Table 1: Table combining matrix SWOT of Vietnam Airlines

27
 D. CONCLUSION AND RECOMMENDATION
I. CONCLUSION
Through the above article, we have a better overview of Vietnam Airlines about the strategic vision of the assigned
tasks as well as the positive and negative impacts of the macro environment affecting the company by using use
two models of 5 forces and PESTLE. Achievements that businesses have brought, vision, mission, organizational
structure of the company, human resource management, brands, finance, fixed assets, market resources or
technology application. It is the foundation that helps us analyze the strengths and weaknesses of the selected
business, from which we consider whether this is a company with growth potential, worth investing in and can
beat. The competitors are not. When an enterprise decides to invest, they must analyze and determine based on
macro factors to make that decision.

II. RECOMMENDATION
It is no coincidence that Vietnam Airlines outperforms most of the other airlines in the industry. Based on the
analysis of external, internal environment and the cited statistics tables, it can be seen that Vietnam Airlines has
the leading position of stock prices in stock exchange trading, bringing high profits. best for investors, there are
always strategies and goals that suit each situation in the market. On the basis of high technology, we bring
products and quality services to meet the needs of customers, expand flight routes to reach more customers and
bring the brand image abroad. Vietnam Airlines always strives, so over the years, Vietnam Airlines has built a solid
foundation, stable development, creating momentum for a new breakthrough in the context of integration and
having tremendous achievements. Therefore, Vietnam Airlines is worth investing in, having potential for
development and bringing high profits.

28
 E. REFERENCES

Google, n.d. Google. [Online]

Available at:
https://www.google.com/search?q=macro+environment&tbm=isch&ved=2ahUKEwjN9qjTh7vrAhVEA6YKHd_LBYs
Q2-
cCegQIABAA&oq=macro+&gs_lcp=CgNpbWcQARgBMgIIADICCAAyAggAMgIIADICCAAyAggAMgIIADICCAAyAggAM
gIIADoFCAAQsQM6BAgAEEM6BwgAELEDEEM6CAgAELEDEIMBUO9_WJ-LAWDqoAFoAHAAe
[Accessed August 27 2020].

Flight Connections, 08/27/2020. Flight Connections. [Online]

Available at: https://www.flightconnections.com/route-map-middle-east-me
[Accessed 27 August 2020].

Official website of Vietnam Airlines, 2020. Vietnam Airlines. [Online]

Available at: https://www.vietnamairlines.com/vn/vi/home
[Accessed 27 August 2020].

Triadvisor, 2020. Tripadvisor. [Online]

Available at: https://www.tripadvisor.com.vn/TravelersChoice-Airlines-cMiddleEast
[Accessed 27 August 2020].

Green, A., 12/01/2020. IBIS world. [Online]

Available at: https://www.ibisworld.com/industry-insider/how-to-use-industry-research/how-to-use-ibisworld-
research-in-a-pestle-analysis/
[Accessed 27 August 2020].

Investing, 2020. Investing. [Online]

Available at: https://www.investing.com/equities/vietnam-airlines-jsc-income-statement
[Accessed 27 August 2020].

29
Investing, 2020. Investing. [Online]
Available at: https://www.investing.com/equities/vietnam-airlines-jsc-balance-sheet
[Accessed 27 August 2020].

Viet Air, 2020. Viet Air. [Online]

Available at: https://vietair.com.vn/ve-may-bay-theo-hang/ve-may-bay-vietnam-airlines
[Accessed 27 August 2020].

Bộ giao thông vận tải, 05/18/2020. Bộ giao thông vận tải. [Online]
Available at: https://mt.gov.vn/vn/tin-tuc/66663/lien-danh-vietnam-airlines---jetstar-pacific-gioi-thieu-gia-ve-bay-
noi-dia-chi-tu-49-000-dong-chang.aspx
[Accessed 27 August 2020].

Travel Top - Online Booking, 2020. Travel Top - Online Booking. [Online]
Available at: https://traveltop.vn/tin-tuc/vietnam-airlines-co-bao-nhieu-chiec-may-bay-va-gom-nhung-loai-nao/
[Accessed 27 August 2020].

Vietnam Airlines - VNA Spirit, 09/26/2019. Vietnam Airlines - VNA Spirit. [Online]
Available at: http://spirit.vietnamairlines.com/vi/emagazine/tin-tct-105/chinh-thuc-ra-mat-cong-ty-tnhh-ky-
thuat-cong-nghe-hang-khong-viet-nam-singapore-4454.html
[Accessed 27 August 2020].

Xem tài liệu , 07/31/2020. Xem tài liệu. [Online]

Available at: https://xemtailieu.com/tai-lieu/bai-thuc-tap-nhom-quan-tri-chien-luoc-hang-hang-khong-vietnam-
airlines-342658.html
[Accessed 27 August 2020].

30