RMIT International University Vietnam

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Course Code: BUSM2570

Course Name: Business Decision Making

Location where you Saigon South study:

Title of Assignment: Idividual Research Project

File(s) Word submitted

Student Duong Uyen Lam name:

Student e-mail s40129812 address:

Learning Facilitator in Son HX charge:

Assignment due May 21 2014 date:

Date of submission: May 21 2024

Number of pages 15

Word 2764 Count:

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Table of Contents
Question 1: Stakeholder map and impact analysis.....................................................................3

Question 2 – Risk identification and management.....................................................................5

Question 3: Impact of Al technologies.........................................................................................9

Question 4: Proposing strategic adjustment.............................................................................10

Question 5: Corporate Social Responsibility initiative............................................................11

Question 6: Diversity, Equality and Inclusion Policy...............................................................12

References.....................................................................................................................................12

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 Question 1: Stakeholder map and impact analysis
Strategic Decision:

Faced with reduced orders, Vietnamese clothing giant Garmex Saigon continues to lay off
employees on a large scale, laying off nearly 2,000 people this year (Tat Dat 2024).

High interest – Low influence High interest – High influence

Sales & Operation Unit Product development & technical unit

Stakeholde interest
Quality Assurance Production department

Customer Employees (Current & Layoff)

Low interest – Low influence Low interest – High influence

Accounting & Finance

Internal Affairs

Stakeholder influence

Figure 1: Stakeholder map of Garmex Saigon

In the strategic decision to implement large-scale employee layoffs at Garmex Saigon due to
reduced orders, various stakeholders are identified with differing levels of interest and influence.
Sales & Operation Unit, Product development & technical unit, and Production department and
Employees, both current and those facing layoffs, hold high interest and high influence positions.
This decision may lead to an overall decrease in productivity and efficiency as a consequence of
labor shortages, lower morale, and an exhaustion of expertise. The company may also experience
higher costs for hiring, training, and reduced efficiency. Insufficient time and money allocated

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for testing, along with a decrease in creativity, can adversely affect the quality of a product.
Work processes may experience disruptions, and inadequate coordination can lead to output
failure. Nevertheless, implementing staff layoffs might result in cost savings on labor and
enhance operational efficiency in the immediate term (Sandra J. Sucher and Shalene Gupta
2018). For sacked employees, this is a significant emotional and financial blow. They lose their
main source of revenue and face difficulties covering their living expenses and supporting their
families. Serious consequences can have detrimental effects on both mental and physical well-
being, leading to conditions such as stress, anxiety, depression, and other health problems. The
effect on the remaining employees is substantial. Their fear of becoming the next target leads to
decreased morale and productivity. The company's management confidence is negatively
impacted, leading to a decline in the company's attitude of unity and collaboration (Rajinikant
2023).

Garmex Saigon's sales and quality control departments both had a high interest over the decision
to lay off employees en masse. For the sales department, reduced orders directly impact
workload and future revenue, while the quality control department faces the stress of maintaining
quality standards with its smaller staffs. However, both of these departments have low influence
over layoff decisions, as they do not have direct control over the company's finances or high-
level strategic decisions. Instead, they focus on their specific responsibilities, like managing
customer relationships or maintaining product quality. Customers also have a high level of
concern about layoffs, especially about product quality and customer service, but they have low
influence over internal company decisions.

Furthermore, departments such as Accounting & Finance and Internal Affairs, despite their
modest level of interest, hold a high influence. Firstly, within the Accounting & Finance
department, while layoffs will result in savings in labor costs through a reduction in payroll
expenses, the company will also face expenses associated with terminating contracts. The
ultimate financial consequences will be dependent on the quantity of employees who are
terminated and the specific conditions outlined in their severance agreements. The following
department is the Internal Affairs department. The layoff decision will increase the workload of
this department in managing termination cases and maybe addressing any remaining employee
issues.

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Question 2 – Risk identification and management

Regarding strategic decision’s goals, Garmex Saigon determines that the garment industry is still
the main industry. However, the sewing situation is still difficult in terms of orders. Greening
conditions for the garment industry have not yet changed in time. The company will continue to
research and invest in new industries following trends to develop the company in the medium
and long term because traditional industries are very difficult. Besides, the company will also use
existing resources to exploit and cooperate in production and business (Garmex Saigon 2023)

Garmex Saigon Risk Register

1. Market shift: Fashion trends can change rapidly. If Garmex Saigon fail to adapt these trends,
they could lose market share to competitors who are quicker to respond. For instance, as
consumers increasingly favor eco-friendly products like textiles made from recycled materials
(Dipali Goenka 2023), Garmex Saigon risks falling behind by not adapting to this trend.

Risk class: Strategic

Severity of Harm: 4 - Failure to adapt to trends may lead to lost market share and profits.
Likelihood: 4 - Fashion trends change rapidly.
Risk Score: 16
Group Responsible: Product Development, Marketing, Sales
Action Plan:

 Conduct market research to identify emerging fashion trends.

 Develop a process for incorporating new trends into product lines.
 Invest in innovation and design to create unique and appealing products.
 Stay informed about consumer preferences for sustainable materials like recycled textiles.

2. Geopolitical instability: In 2023, geopolitical conflicts continue, inflation stay at high levels,
many countries maintain tight monetary policies to control inflation, aggregate demand weakens,
and economic recovery is slow in many countries, large market purchasing power decreased
significantly, leading to difficulties in the company's production and business situation (Garmex
Saigon 2023).

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Risk class: Strategic
Severity of Harm: 5 - Geopolitical instability can disrupt the global economy and reduce
consumer purchasing power.
Likelihood: 3 - Major disruptions are less common, but still possible.
Risk Score: 15
Group Responsible: Executive Management, Risk Management
Action Plan:

 Update global political and economic developments.

 Develop contingency plans to mitigate the impact of potential disruptions.
 Diversify markets to reduce dependence on any single region.
 Consider political risk insurance to protect against financial losses.

3. Quality Control Issues: Producing garments that don't meet quality standards can damage
Garmex Saigon's brand reputation and lead to customer returns. This can result in returns, lost
revenue, and difficulty attracting new customers.

Risk class: Operational

Likelihood: 3 - If proper procedures are applied, this problem can be prevented
Severity: 3 - Brand reputation and revenue can be affected.
Risk Score: 9
Group Responsible: Production, Quality Assurance
Action Plan:

 Implement strict quality control procedures throughout the production process.

 Invest in quality control equipment and technology.
 Regularly train employees on quality standards and inspection procedures.
 Establish a system for identifying and addressing quality issues promptly.

4. Production issues: Natural disasters, storms, floods, fires, and epidemics are unforeseen
circumstances that can cause production to be interrupted or suspended, resulting in financial
damages (Garmex Saigon 2023).

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Risk class: Operational
Likelihood: 2– Theses are uncommon events.
Severity: 4 - Disruptions can cause financial losses.
Risk Score: 8
Group Responsible: Production Planning, Risk Management
Action Plan:

 Develop a business continuity plan to address potential disruptions.

 Diversify suppliers to reduce reliance on any single source for materials.
 Invest in preventative maintenance for equipment to minimize breakdowns.
 Consider insurance options to mitigate financial losses caused by unforeseen events.

5. Fluctuations in raw material costs: Because domestic supplies fall short of demand, raw
materials must be imported to satisfy the production needs of Vietnam's garment industry. When
raw material prices and shipping costs fluctuate, importing materials will increase production
expenses, decrease business profits, and impact the production schedules of textile and apparel
companies that rely on imported materials (Garmex Saigon 2023).

Risk Class: Financial

Likelihood: 4 - Raw material price fluctuations are common, and Vietnam relies on imports.

Severity: 3- Increased costs can decrease profits and impact production schedules.

Risk Score: 12
Group Responsible: Procurement, Finance
Action Plan:

 Diversify raw material suppliers to reduce dependence on any single source.

 Negotiate long-term contracts with suppliers to secure stable pricing.
 Implement cost-saving measures in production to offset potential price increases.

6. Currency Fluctuations: Fluctuations in exchange rates could affect the cost of imported
materials or the profitability of exports (Garmex Saigon 2023).

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Risk Class: Financial

Likelihood: 3 - Major fluctuations are less common, but still possible.

Severity: 3 - Currency fluctuations can impact import costs and export profitability.

Risk Score: 9
Group Responsible: Finance, Sales
Action Plan:

 Monitor currency exchange rates and implement hedging strategies to minimize risks.
 Consider offering products in multiple currencies to mitigate exchange rate fluctuations.
 Negotiate flexible pricing structures with customers to account for potential currency
fluctuations.

7. Change in trade regulation

Garmex Saigon, which operates primarily in the garment production and export industry, must
comply with international laws, regulations, and policies specific to the textile and garment
industries. Furthermore, the Enterprise Law, the Securities Law, and other pertinent legal
regulations influence the company's operations. Alterations in state rules, policies, and
international laws related to the textile sector influence the company's production and business
condition, as well as the textile industry as a whole (Garmex Saigon 2023).
Risk Class: Legal & Regulatory
Likelihood: 3 - Major regulatory changes don't happen frequently.

Severity: 4 - Non-compliance can disrupt operations and cause financial losses.

Risk Score: 12
Group Responsible: Compliance, Legal
Action Plan:

 Stay informed about upcoming regulatory changes affecting the textile industry.
 Conduct regular compliance audits to identify and address any potential issues.

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  Develop a plan to adapt production processes or sourcing strategies to comply with new
regulations.

Question 3: Impact of Al technologies

The extensive implementation of AI solutions carries a variety of impacts for the workforce..
One advantage of AI is its capability to generate precise predictions of future demand, thereby
surpassing the constraints of conventional forecasting approaches that frequently depend on
outdated models and overly simplistic assumptions. AI algorithms can analyze immense
quantities of data, including historical and real-time sales data, market trends, and other data,
using machine learning to identify complex patterns and trends that are difficult for humans to
identify. By utilizing these predictive analytics, Garmex Saigon is capable of forecasting sales
and demand, among other domains, and proactively making decisions regarding future outcomes
(The Upwork team 2023). Subsequently, the organization will adjust its offerings and provisions
to individual customers in accordance with the preferences and actions tracked by AL. This will
increase customer loyalty and satisfaction while optimizing resource utilization (Jeffrey Kagan
2024). To be more specific, Zara implements AI extensively throughout its operations, including
customer engagement and supply chain management. In contrast to many opponents, Zara
minimizes outsourcing in order to retain control and collect information at all business levels.
Zara incorporates artificial intelligence (AI) into its operations through strategic partnerships
with technology firms. For instance, in a partnership with Tyco, microchips were embedded in
apparel security tags to improve inventory visibility. In partnership with Jetlore, the business also
predicts client behavior by utilizing structured predictive variables such as size, color, fit, and
design. Zara employs sophisticated logistical systems and RFID identifiers to optimize inventory
management and shipping processes, thereby reducing wastage and ensuring consistent
availability of in-demand products. In the result, the turnaround period for new designs at Zara is
an exceptionally short one week, which is in stark contrast to the industry standard of three to six
months. The company possesses a substantial customers and ranks among the leading companies
in global e-commerce fashion transactions. Additionally, the organization's innovative approach
to utilizing AI for real-time monitoring and forecasting has reduced inventory carrying costs,
enhanced delivery precision, and shortened lead times (Alex Zeytsev 2023). Another advantage
of Al is its capacity to automate numerous aspects of the manufacturing process, increasing total
productivity. AI is integrated into production through predictive maintenance, which analyzes

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machine data to detect faults, failures, or wear, allowing maintenance personnel to take prompt
action and save downtime and repair costs. AI-equipped robots are utilized to conduct jobs
including assembly, material handling, and inspection, which improve accuracy and efficiency.
Artificial intelligence-driven quality inspection systems assess and evaluate items in real time,
discovering mistakes and deviations, eliminating human error, and lowering scrap and recycling
expenses. AI also facilitates smart manufacturing by creating digital twins, which aid in the
optimization of production lines and the making of informed resource allocation decisions
(Jeffrey Kagan 2024). A new study on the effects of generative AI on highly qualified workers
concludes that performance can increase by as much as 40% when AI is utilized within the limits
of its capabilities, as compared to workers who do not utilize it. Employee performance declines
by an average of 19 percentage points when AI is used to complete a task beyond that boundary
(Meredith Somers 2023).

Question 4: Proposing strategic adjustment

To resolve stakeholder concerns, Garmex Saigon should provide severance packages including
severance pay, health insurance, retirement benefits and stocks, outplacement service, and career
transition support as part of their employee benefits to assist sacked employees in finding new
jobs. Providing severance as a component of an employee's benefits package is a strategy that
Garmex can use to distinguish itself as a competitive workplace and attract and retain highly
qualified workers (Grace He 2023).

In order to mitigate risks, Garmex should implement a strategy of client base diversification,
thereby decreasing reliance on a singular market or customer segment. Diversifying into new
markets or product lines with more development potential will enhance the company's stability in
the face of market changes (The Strategy Institute 2023). In addition, incorporating AI-powered
solutions for production planning, inventory management, and demand forecasting into the
automation process will enhance production processes, minimize waste, and enhance efficiency.
Retraining the workforce in necessary new skill is also an important way for Garmex to adapt to
new technology and market needs (Oshima 2023).

To integrate Al most effectively, Garmex should ultilize AI to predict future demand by

analyzing historical sales data, market trends, and customer behavior. By adopting this proactive

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approach to inventory management, Garmex is able to efficiently fulfill client demand while
minimizing unnecessary inventory expenses (Akash Takyar n.d). AI systems also optimize
supply chain management to effectively handle inventory, logistics, and supplier relationships,
resulting in improved efficiency and operational cost reduction throughout the supply chain
(Joseph Tsidulko 2024). Finally, ultilizing AI to create new products that align with changing
client preferences will enable Garmex to outperform competitors and sustain profitability.

Question 5: Corporate Social Responsibility initiative

Garmex Saigon’s primary goal is to achieve sustainable development, and compliance with CSR
standards is the key component of driving Garmex Saigon to success. Corporate Social
Responsibility can be defined as a key performance indicator for an organization to play a
positive role in the community by taking into account environmental and social impacts of its
decisions (Tim Stobierski 2021).

Despite implementing labor cuts in 2023, Garmex Saigon continues to provide support to the
courageous Vietnamese mothers in Ben Tre by donating 10 million VND (Garmex Saigon 2023).
This action exemplifies the company's appreciation and accountability. In 2021, the company
allocated a total of 690 million VND to the "For the Poor" fund, providing assistance to policy
families and disadvantaged households (Garmex Saigon 2021). This contribution also aims to
enhance the quality of life and promote social stability.
Furthermore, Garmex Saigon is committed to environmental protection. In 2023, the company
achieved a significant reduction in CO2 emissions, amounting to 86.8% compared to the
previous year. The emissions decreased from 4,981.4 tons in 2022 to 658,723 tons in 2023
(Garmex Saigon 2023). This is a significant achievement, showing that the company not only
complies with environmental laws but also proactively implements measures to minimize
negative impacts on the environment. Additionally, Garmex employs propaganda programs and
reinforces the importance of resource conservation and waste classification at the origin, thus
aiding in the reduction of waste that is ultimately disposed of in incinerators and landfills
(Garmex Saigon 2023). To guarantee efficient treatment prior to release into the environment,
the company also evaluates and enhances the waste treatment system, categorizing waste types
prior to treatment. (Garmex Saigon 2023). This not just reduce pollution but also improves
resource efficiency.

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Question 6: Diversity, Equality and Inclusion Policy
Garmex places a high priority on creating favorable conditions for growth, Garmex places a high
priority on creating favorable conditions for growth, maximizing capabilities, and cultivating a
welcoming work environment, as reflected by its slogan, "Working together—sharing together to
succeed," because employee engagement and satisfaction are the key factors in retaining and
attracting more potential employees with strong beliefs that are suitable for Garmex Saigon.
Apart from effectively implementing mandatory insurance benefits and providing personal
protective equipment, the company also offers additional benefits to its employees, including
purchasing health insurance packages and providing Tet care for all employees working at the
factory (Garmex Saigon, 2023). This policy not only demonstrates respect for employees but
also improves employee morale and job satisfaction. When employees feel included, they
become more involved and make substantial contributions to the organization, which in turn
affects profitability, team morale, and employee retention. Individuals employed in inclusive
work environments also tend to experience enhanced physical and mental well-being, resulting
in reduced absence due to health-related issues (Kellie Wong, 2024).

References
GSC (2023) About US. Garmex Saigon Corporation, accessed 21 May 2024.
https://www.garmex.vn/.
GSC (2024) Report on company management in 2023, Garmex Saigon Corporation., accessed
21 May 2024. https://www.garmex.vn/wp-content/uploads/2024/01/20240122-GMC-Bao-cao-
tinh-hinh-quan-tri-cong-ty-nam-2023.pdf (Accessed: 31 March 2024).
GSC (2021) Report on company management in 2021, Garmex Saigon Corporation., accessed
21 May 2024.
https://static2.vietstock.vn/data/HOSE/2021/BCTN/VN/GMC_Baocaothuongnien_2021.pdf

Goenka D (2023) How changing consumer trends are shaping the textile industry of the future,
LinkedIn website, accessed 21 May 2024. https://www.linkedin.com/pulse/how-changing-
consumer-trends-shaping-textile-industry-dipali-goenka/

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He G(2023) Severance Package: Ultimate Guide, teambuilding website, accessed 21 May 2024.
https://teambuilding.com/blog/severance-package-ultimate-guide

Kagan J (2024) How AI Can Help To Increase Productivity - Nifty Blog, Nifty Blog | Delivering
our thoughts and findings on the future of project management! website, accessed 21 May 2024.
https://niftypm.com/blog/how-ai-can-help-to-increase-productivity/

Oshima (2023) The Impact of Automation on Labor in the Apparel Industry, LinkedIn website,
accessed 21 May 2024. https://www.linkedin.com/pulse/impact-automation-labor-apparel-
industry-oshima-official/

Rajinikant (2023) The Consequences of Layoffs: Understanding the Impact on Employees, the
Economy, and Company Morale, LinkedIn website, accessed 20 May 2024.
https://www.linkedin.com/pulse/consequences-layoffs-understanding-impact-employees-
economy-/

Somers M (2023) How generative AI can boost highly skilled workers’ productivity | MIT Sloan,
MIT Sloan website, accessed 21 May 2024. https://mitsloan.mit.edu/ideas-made-to-matter/how-
generative-ai-can-boost-highly-skilled-workers-productivity

Stobierski T (2021) What Is Corporate Social Responsibility? 4 TypesArrow DownArrow

UpAuthortag, Business Insights Blog website, accessed 21 May 2024.
https://online.hbs.edu/blog/post/types-of-corporate-social-responsibility

Sucher JS (2018) A Better, Fairer Approach to LayoffsNavigation MenuAccount MenuAccount

MenuSearch MenuClose menuSearch, Harvard Business Review website, accessed 20 May
2024. https://hbr.org/2018/05/layoffs-that-dont-break-your-company?registration=success

Takyar A (n.d.) AI in inventory management: An overview, LeewayHertz - AI Development

Company website, accessed 21 May 2024. https://www.leewayhertz.com/ai-in-inventory-
management/

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Tat Dat (2024) Financially troubled Garmex Saigon to sell land following 2,000 job cuts -
VnExpress International, VnExpress International – Latest news, business, travel and analysis
from Vietnam website, accessed 20 May 2024.
https://e.vnexpress.net/news/business/companies/financially-troubled-garmex-saigon-to-sell-
land-following-2-000-job-cuts-4716417.html

The Strategy Institute (2023) The Power of Diversification: Why Your Business Needs to
Consider It Now | TSI, The strategy Institute website, accessed 21 May 2024.
https://www.thestrategyinstitute.org/insights/the-power-of-diversification-why-your-business-
needs-to-consider-it-now

The Upwork Team (2023) How AI Is Used in Decision-Making Processes | Upwork, Upwork
website, accessed 21 May 2024. https://www.upwork.com/resources/ai-in-decision-making

Tsidulko J (2024) Benefits of AI in Supply ChainMenu, Oracle website, accessed 21 May 2024.
https://www.oracle.com/scm/ai-supply-chain/

Wong K (2024) Benefits and Challenges of Diversity & Inclusion in the Workplace, Achievers
website, accessed 21 May 2024. https://www.achievers.com/blog/diversity-and-inclusion/

Zaytsev A (2024) Case Study: Zara's Comprehensive Approach to AI and Supply Chain
Management - AIX | AI Expert Network, AIX | AI Expert Network website, accessed 21 May
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chain-management/

Appendices
Appendix 1: Stakeholder map of Garmex Saigon
High interest – Low influence High interest – High influence

Sales & Operation Unit Product development & technical unit

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 Quality Assurance Production department

Customer Employees (Current & Layoff)

Low interest – Low influence Low interest – High influence

Accounting & Finance

Internal Affairs

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