Chapter 3 - The environment and corporate culture

1. The general, task and internal environments

ECONOMIC
Economic conditions can affect how well an organization performs in the
marketplace
Economic conditions and factors can include things such as unemployment rates,
interest rates, and consumer purchasing power
Economic dimensio represents the general economic health of the country or region
in which the organization operates.
2. What factors do we need to analyze regarding the economic
environment?
1. GDP
2. Unemployment rate
3. Consumer purchasing power
4. Inflation
5. Interest rate
6. Exchange rate
7. Tax
3. How does VN’s economic environment affect Vinamilk's performance?
1. GDP

- The general economy of VietNam has been adversely affected by the Covid-
19 pandemic. In 2020, the GDP growth rate dropped to 2.91% - the lowest
level in the decade. By 2021, the economy was still stagnant due to the deep
 impacts of COVID-19 on all of the aspects. GDP growth rate - at this time -
continued decreasing to 2.58%. In 2022, Vietnam witnessed a remarkable
recovery when the GDP growth rate reached 8.02% - the highest level in the
period 2011-2022.
- • A country with an increase in GDP will lead to an increase in demand, for
the number of products, goods, and services, an increase in type, quality, and
taste ... leading to an increase in market scale.
=> Requires Vinamilk enterprises to meet in each period. Vinamilk must advance
quickly by investing in factories, facilities, or innovative products.

- Furthermore, the emergence of COVID-19 has made people more interested in

healthy products, especially milk. That has created a great opportunity for the
milk market.
2. Unemployment rate

Although the Government has proactively and flexibly adapted policies in preventing
COVID-19 and implementing socio-economic recovery and development, for the
whole year 2021 the labor market is still facing many difficulties, with the
Unemployment rate higher than the previous year, of which urban areas exceeded the
4% mark
=>Abundant and increasingly high-quality human resources are an opportunity
for Vinamilk to recruit and develop personnel in its company.

4. Inflation
Inflation is a persistent increase in the general price level of goods and services over time
and a loss of value of a currency. When the general price level rises, a unit of currency buys
fewer goods and services than before, so inflation reflects a decline in purchasing power
per unit of currency.
-Inflation greatly affects costs, quantities, and interest rates as well as causing businesses to
face the strategy of making decisions about increasing selling prices or reducing costs and
having difficulty with increased long-term debt repayments when inflation occurs.
-Covid 19 had complicated changes in 2020 that affected the growth of different fields and
occupations. The inflation rate – at this time – reached 3.23% (higher than the previous
year's 0.44%). In 2021, despite being affected by the Russia - Ukraine conflict and the
global supply chain disruption, Vietnam's inflation was still well controlled at 1.84%. In
2022, the inflation rate increased to 3.15%.
=> Vina milk's market price of milk will increase, affecting the business's sales revenue
(price increases, fewer buyers, revenue decreases)
=> This is an opportunity for Vinamilk to access preferential capital sources from the bank
and maintain and expand its production scale.
-Customers' purchasing power and product consumption for Vinamilk's dairy products:
inflation in Vietnam tends to fluctuate complicatedly, causing prices of essential products to
increase, which makes consumers tend to Cut spending, affecting the business's product
consumption.
4. exchange rate
Fluctuation in exchange rates significantly affects Vina Milk's export operations and profits
=>By comparing the relative values of domestic and foreign currencies. Vinamilk can make
extremely efficient purchases and sales.
- When the exchange rate is low, the price of Vinamilk’s milk products abroad
increases, making them more expensive than those from other countries.
 Reducing competitiveness, limiting consumption, and as a result, limiting the
development of Vinamilk’s milk export operations
- When the exchange rate is high, the price of Vinamilk’s milk products abroad is
lower than those from other countries.
 Increasing competitiveness and milk consumption. Thereby creating conditions to
expand and develop Vina Milk's milk export operations
=>Fluctuations in exchange rates greatly affect orders and contracts because the orders and
contracts in the following days will be based on the new exchange rates, which change
unexpectedly (increase or decrease) at any time and it happens frequently
5. TAX

All the taxes that Vinamilk has to pay are:

 Business-license tax
 Profit tax
 Value-added tax (V.A.T)
 Import and Export tax
  Land use tax
⇒ Tax plays an important role in the investment and development process of all
businesses and Vinamilk is no exception. Vinamilk's top managers, along with
investors, must calculate so as not to affect business activities (capital, profits, etc.)

I. SUM UP

The macroenvironment in general, and economic conditions in particular, all have a

significant impact on corporate governance operations. It may be both an opportunity and a
challenge for businesses. Administrators must properly analyze the impacts that have
occurred and are currently taking place to take the best actions for the organization to
succeed.