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Bbe A2.2
Bbe A2.2
It is undoubtedly true that COVID-19 pandemic has exerted a negative impact on not only
Vietnam but also nations around the world. Therefore, most of business activities are affected
and delayed due to the barriers from the social distancing policies of the government.
Subsequently, the Vietnam government, with the desire to recover the national economy,
affirmed that it is necessary to eliminate the distancing policies and opened the border, leading
to many changes, which can both bring threats and opportunities for corporations.
In this assignment, I will research for the influences that external environment has on the
operation and business activities of Viglacera company, by applying the PESTLE framework, as
well as indicate the general picture of this firm and others in the same industry. Lastly, I will
make an analysis of impact that the internal factors affect the company, thus indicating the
suitable advice to make enhancements on distinctive and arisen issues of Viglacera.
TASK RESPONSES
Ronald (2021) argued that PESTLE analysis could be defined as a method to analyze and
control factors from the macro-environment, which might exert a remarkable impact on the
performance of a company. In this framework, there are 6 main factors that affect the
organizational performance, consisting of political, economic, social, technological,
environmental and legal.
It has been evidently true that Vietnam is a stable country in terms of political factor, with
almost no terrorism, protest, or disputes, etc. Based on Global Finance magazine, Vietnam is
highly politically safe, which is completely different to few countries confronting of wars, as well
as some natural disasters such as tsunami, earthquake, etc. The Police force has strongly
deployed numerous thematic peaks, in order to suppress crime, thus could contribute to the
maintenance of political security, preserve social harmony and safety, leading to a highly
peaceful environment (noichinhvn, 2022).
As a result, Vietnam has such a stable environment to run a business. In Viglacera’s case,
the company holds chances for a strong, far development, as Vietnam politics is not their
problem and burden.
According to Article 7 of Decree No. 81/2018/ND-CP of the Commercial Code, there has been
a limitation on goods or cargos discount, as it is not allowed to exceed a half of the price
(thuvienphapluat.vn, 2018). The Viglacera might be in a trouble as the above law is being
implemented on their business activities, due to the fact that the steel products of warehouse
rose to around 400 billion (Viglacera, n.d.) during the COVID-19 pandemic. Therefore, declining
the price for products deeply could become more far reached for Viglacera, giving rise to the
inventory difficultly released. As a consequence, there could be financial problems arisen
from the above reason.
2.1.1 GDP
Due to the impact that the COVID-19 pandemic has exerted on the world, the Vietnam’s
GDP has grown slowly. However, it shows some sign of recovery at the very beginning of this
year, as the GDP is projected to rise around 5% in comparison to the 2022 first quarter, also
better than the growth rate of the last 2 years (in the same period). In terms of GDP utilization
during first quarter of 2022, the final consumption went up by around 4%, whilst the
accumulated assets rose by approximately 3%, export and import of goods, as well as
services grew about 5% respectively (gso.gov.vn, n.d). Even it is undeniable that this rise of
GDP is not really compatible to an extremely fall in the last 2 years, but we must realize there
has been a gradual recovery for Vietnam economy to proliferate better in the next years.
Relating business to the recovery of economy, this is an ideal opportunity for many companies
in general, as the consumers’ financial burden has become much weaker, they are willing to
purchase products and services.
2.2 Industry
Porter’s Five forces can be defined as a model used for 5-competitive-forces identification
and analysis, shaping all industries and supporting determination over the strong and weak
points of an industry. Besides, this model could be successfully applied to any industry to gain
insights into the level competition, as well as make enhancements on organizational long-term
profitability (Porter's 5 Forces, 2022). In this paper, I choose 3 forces needed for analysis
purpose.
Nowadays, it is undeniable that numerous domestic firms, which produce ceramic tiles, plus
the penetration of low-price-product companies from China and other countries, has made this
industry much more competitive (Ximang .vn, 2021). The prices of each brands’ products vary
from affordability to luxury, while the consumers of Vietnam are sensitively price-certain.
Currently, an extremely strong increase in house prices forces purchasers to allocate more
money in buying house, as well as furniture affordably and reasonably. Viglacera is holding a
big opportunity, as it manufactures a diversity of goods and prices. Thus, satisfying middle and
low-class customers will not be a challenge of Viglacera, particularly the middle and low-class
accounts for more than 80% (2022). As a result, they might be able to win over other brands
such as ToTo, American Standard, Vitto, etc.
There has been tile flooring appearing for a very long time many different competitors in
other industries, wooden flooring, stone flooring, etc. (to name but a few). Wooden floors have
become ubiquitous in recent years thanks to aesthetically fulfilling customers’ demand, it also
resists of scratch and shows no slip, unlike tile floors. Class, elegance and luxury do not matter
as space is the important factor the wooden planks bring for customers. Additionally, durability
is a competitive advantage of wooden floor, not easily cracked like other ceramic floor tiles.
Luxurious flooring lines that are imported could have guaranty of 30 years for users. With the
advantages mentioned above, it is clear that wooden flooring designs would be favored and
also installed in every corner of the house, even the areas that are highly affected by the
weather like balconies (Tungduongtiles, n.d). On the other hand, customers would highly prefer
to afford more wooden floors thanks to their reasonable price, which is totally different
compared to that of tile floors. Thus, there is a threat awaiting Viglacera as this company only
offer specialization in flooring, also they could not easily beat competitors.
Even though there is a huge number of companies entering building material industry,
Viglacera would never have to concern of it, as the reputation, prestige has been affirmed by the
company, also trust has been a part of customers’ notion when they purchase Viglacera’s goods
(Điều gì quyết định giá gạch lát nền Viglacera 2021 và bạn nên mua ở đâu? - Kingly ceramics |
Tổng kho gạch ốp lát, 2022). Additionally, there have been numerous achievements obtained by
Viglacera, such as top 5 most famous corporations constructing materials used for buildings, top
10 evaluation of companies constructing materials. Thus, Viglacera would be a big name
enough to not be overtaken by new entrants.
2.3 Market
Actually, there are some rationales explaining for the Viglacera in a monopoly competition.
Fierce competition in this market (building materials) has always happened as a number of
operations of companies. In this market, Bach Ma, Taicera, etc. are considered as the long-time
companies, while Catalan and Toko could be seen as the young ones. Furthermore, the
appearance of some imported brands from China or India, etc would be the important factors in
creating the competition. Thus, Viglacera would have to be pressured and threatened by
many old names in Vietnam in this building material field.
Relating the elasticity to this market, as there are various brands and models, customers are
definitely sensitive to price when purchasing a product. A company would face a fail customer-
retention if they make a small change in price of products, also make advantage for
competitors, as the customers will change to other companies (Tungduongtiles, n.d). As a
consequence, elasticity is thought to be very high, making a big threat to Viglacera, forcing the
company to make more changes to be unique and avoid similarity in products as compared to
others, due to the fact that keeping customer loyalty takes long time.
Generally, companies that produce brick in Vietnam owns some similarity in terms of
products, such as Ceramic, Granite, etc. Nevertheless, a big difference that Viglacera has
created is making emphasis on green technology, contributing to protecting environment
(Hailinh, 2021).
Batdongsan.com has made a survey with 1000 participants from the under-25-year-old
group. In this survey, more than a half of participants have intention of buying a house situated
in Hanoi and Hochiminh cities (Ninh Trang, 2022). Meanwhile, a survey created by the General
Statistics Office has indicated that Vietnam is during the Golden-population period, meaning that
youngers (those who are under 35) occupied for 36%. With the start of a rise in this group’s
income (reach to 2600 USD/year), there has been an arisen popular trend of the real-estate
owned by youngers. The report stated by DKRA Vietnam by 2019 has shown the gradual
growth of proportion of people under 35 purchasing a house (Ngan Nhi, 2021)
2 surveys mentioned before have proven that the age group of real estate customers is
becoming younger and younger, because youngers have tendency to purchase house for living
and investing purposes. Therefore, Viglacera could totally take advantage of this, as they have
become a long-standing name in real estate industry with daily updated information for young
generation, along with the slogan: “Inspiring young people” (Viglacera, n.d., 2021), leading to
the company attracting customers and being loved by new and potential customers.
Beside that, some cheap ceramic tiles origined from China are consistently updated, as well
as there are many low-quality materials appeared in Vietnam market. However, a plethora of
people are not well-aware of these low-quality products. Consequently, using terrible materials,
and not making product classification might be the key to to the misaligned size of tiles, also the
uneven tile surface. Meanwhile, granite tiles that are high-gross and warping, with the bricks
meeting the flat surface requirements, the producer would grind them into glossy tiles for selling
high-end price (VNTvietnam, 2018). Thus, customers might be in favor with domestic bricks as
opposed to the Chinese ones, as it provides better quality and also reasonably-priced products.
Vietnamese abandoning Chinese goods would pave the way for many domestic businesses,
including Viglacera to make a victory of the customers’ hearts.
Nowadays, the proliferation and evolution of technology has many impacts on people’ life and
businesses’ operation. In the world of changing, to make a big development, most of enterprises
would aim for emphasizing on the transformation of business techniques associated with
technology. As a result, there could be a time and effort requirement on creating the most
developed platforms. In order to keep information updated, making a remarkable increase in
productivity and approach as many more customers, applying technology into process of
production would be an extremely good choice (Lee, 2019). Generations are developing and
evolving in Vietnam, and they are turning into more contemporary-day as time passes, it is true
that generation and virtual generation could be the essential keys to supporting people and
businesses, adapting to the economic system, making enhancements in contemporary-day
world (Manh Chung, 2022). More and more people are in favor of cost savings of things they
are using. Therefore, Viglacera would enjoy this, as they could launch a product-line that has
been innovated. For instance, Z-Cera technology becomes unique in sanitary ware field
(Viglacera, n.d., 2021). In the strives to protecting environment, the company also launched
glass products that contributes to saving energy, with very little level of emission, thus mitigating
the need for air conditioning (Vnexpress, 2018).
As people really consider the following factors of digital shopping: ease, savings and diversity
during the COVID-19 pandemic, there has been an explosion of the access to online shopping
(Thanhnien, 2022). Thus, Viglacera has taken the advantage of this trend, creating an e-
commerce platform, helping customers easily approach to the products and services.
Additionally, for consulting customers purposes, the company has applied the 3D House
Experience design. This application would offer allowances to the consumers to obtain
reference to 3D-paintings, improving experience of them (Viglacera, n.d.).
The concern over the environment-related problems has been risen rapidly, possibly due to
the effects of climate change, the scarcity of energy sources and the exhaustion of nature.
According to Giaoducthoidai (2019), building materials industry seems to be one of the major
causes to polluted environment. In a newly made research, industry of construction cause
damage to 23% of air-related pollution, a half of climate change and landfill waste. In research
separated by the US Green Building Council, this industry uses nearly a half of world-wide
energy, with the emissions from buildings commercialized are projected to show increase by
1.8% a decade later.
Viglacera is holding a big chance to suggest a measure to tackle well with environment-
related problems, especially noteworthy is autoclaved aerated concrete, contributing to the
mitigation of CO2 emitted to the environment while the construction is in progress
(Viglacera,n.d, 2020)
5.2 Climate
People residing in the north area of Vietnam have to experience 3 hot weather waves during
the spring season, which has been an usual thing for them. At the time when wet weather
triggers water pooling on the floor, the slippery might lead to the fall of both children and elder
people (Hai Van, 2020). Thus, making consideration of North consumers would be necessary
before selecting tile flooring for their own homes because of the above-mentioned negative
factors. This is a big problem of Viglacera, as their products sometimes do not fulfil customers’
satisfaction and suit the weather characteristics of some areas, especially in the north place in
Vietnam.
II. ANALYZING STRONG AND WEAK POINTS OF VIGLACERA
1. STRONG POINTS
Technology being significantly evolved and developed is the most distinctive merit of
Viglacera during the process of production. By the end of 2021, Viglacera became the one of
the pioneers to install and apply newly developed technology called: Continua+ line, also they
obtained Bach Ma Ceramic Tile Factory (kienviet.net, 2021). The company also makes an
impression of a toilet integrating three proliferated technologies Turbo Vortex, or Touchless
device, allowing discharging automatically and disconnection, because of infrared ways
(tuoitre.vn, 2021). Along with the slogan: “Being a pioneer of green technology”, there has been
always a domination of Viglacera in the market with the machine and equipment latest
advanced. Vietnam Report has released a report stating that this company ranked first in back-
to-back three years, in the list of 500 companies operating in Vietnam in field of producing and
trading building materials (Viglacera, n.d., 2021). This time, it could be undoubtedly true that
ending the domination of Viglacera is not possible for any enterprise, especially in technological
aspect, which is always ahead of time.
Another strong points of Viglacera is a wide-range export network. In recent periods, the
company has been listed on top 20 biggest companies in field of ceramic tile in the world,
consolidating its lead in domestic and affirming its position in the world (Viglacera vào top 20
doanh nghiệp gạch ốp lát lớn nhất thế giới | Doanh nghiệp | Vietnam+ (VietnamPlus), 2022).
Some potential and developed countries such as Korea, Japan or USA have always imported
Viglacera’s goods. Additionally, approximately 40 nations around the world are using the
company’s products (Từ “Thương hiệu quốc gia” Viglacera quyết tâm ghi dấu ấn trên bản đồ
thương hiệu quốc tế - Tổng công ty Viglacera - CTCP, 2022). This big export network is an
extremely significant advantage for Viglacera to enlarge and diversify market, competing against
other companies, also expected to contribute to a further development of the company.
Finally, high level of education and training could also be a competitive advantage for
Viglacera, as the Viglacera Vocaltional College shows some effectiveness and profession. Apart
from the area of real estate as well as building materials, Viglacera makes investment and
setting expectations in this college. In order to adapt to the needs of business, industry and
society nowdays, aiming and setting training programs for building materials, diversifying
courses, creating complete curriculum with various research topics are expected to be intensive
enough (Viglacera, n.d., 2021).
2. WEAK POINTS
Low ability to control finance would be expected to be the weaknesses of Viglacera, as the debt
showed rapid growth, reported by reputable news. Take Dang Xa II New Urban Area project as
a prime example, it causes VND 30,161 billion deficit in total budget (Hoang Ha, 2021).
Consequently, the Viglacera’s parent company-Gelex, has the liabilities showing increase by
more than 100% in 2021, reaching to VND 40,680 billion (Minh Minh, 2022). The company is
now facing a challenging time in terms of finance, partly due to the post-pandemic effects partly
from the low possibility of managing finance as because of enterprise’s various-industries-
entrance.
Another weak points of Viglacera is their problem in combining the marketing strategies and
the social media. In details, Viglacera shows inferiority when it comes to comparing the
approach of customers on their Facebook page with the TOTO one. Specifically, TOTO has
more than 100,000 LIKES on their page, while the figure for Viglacera only stands on nearly
2000 LIKES (Viglacera, n.d). Similarly, the people reacting to TOTO’s page reached about 200
people, doubling that of Viglacera (TOTO, n.d.). The following data has indicated that promoting
marketing strategies on social media is the Viglacera’s incompleteness, giving rise to passing
out number of young people.
REFERENCE LIST