Pham Bich Nguyet

BUSINESS
GREENWICH UNIVERSITY

STRATEGY
Assignment 1
 ASSIGNMENT 1 FRONT SHEET Retake

Qualification BTEC Level 5 HND Diploma in Business

Unit number and title Unit 32: Business strategy (574)

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Learner’s name Learner’s code

Class Assessor name

Learner declaration:
I certify that the work submitted for this assignment is my own and research sources are fully acknowledged.

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Grading grid

P1 P3 M1 M3
 Grading
Assessment criteria Assessor’s Feedbacks
(achieved or not)

LO1 Analyze the impact and influence which the macro environment has on an organization and its business
strategies.
P1. Applying appropriate
frameworks analyze the
impact and influence of
the macro environment
on a given organization
and its strategies.

LO3 Evaluate and apply the outcomes of an analysis using Porter’s Five Forces model to a given market sector

P3. Apply Porter’s Five

Forces model evaluate
the competitive forces of
a given market sector for
an organization.
M1. Critically analyze
the macro environment
to determine and inform
strategic management
decisions.

M3. Devise appropriate

strategies to improve
competitive edge and
market position based on
the outcomes.

Summative feedbacks:
Assessor’s Signature Date
Contents
Introduction.................................................................................................................................................................6
1. The impact and influence of the macro-environment on the organization and its strategies.........................7
1.1 The strategic context...............................................................................................................................7
Mission, vision and objectives of Vinhomes........................................................................................................7
1.2 The macro environmental-PESTLE framework.........................................................................................8
1.3 SWOT analysis..........................................................................................................................................8
2. Porter’s Five Force model................................................................................................................................8
Introduction
1. The impact and influence of the macro-environment on the organization and its strategies
1.1 The strategic context
Mission, vision and objectives of Vinhomes.
As a member company of Vingroup, Vinhomes inherits and promotes the Group’s vision, mission
and core values. Considered being the number one real estate developer, trading and
management company in Vietnam, recognized for its superior scale, development speed and
service quality, leading the market to sustainable development, with the vision of becoming a
world-class enterprise. Moreover, Vinhomes's mission to pioneer exceptional living experiences
in Vietnam’s urban locations, featuring professionally planned residential complexes in harmony
with nature, integrated facilities and a green environment, together forming a new lifestyle for
the Vietnamese people. Vinhomes also nurtures its communities and develops a modern, lively
and gracious environment, so that its residents will enjoy an excellent quality of life.

Moving into 2020, Vinhomes plans to launch 46,300 units including 40,700 units in 3 mega
projects to be offered, expected to sustain pre-sale momentum. Implementing bulk sales to
remain a stable driver of return with transactions with highly reputable partners in discussion.
Besides, new project launches in 2020: Vinhomes Galaxy, Vinhomes Wonder Park, and Vinhomes
Dream City. For sales channels which is going to be innovative to enhance customer experience
and transparency. Specifically, direct and online sales to be rolled out in phases to replace the
agency sales model.

The concept “business strategy” and the role of strategy to obtain business objectives
Business strategy can be defined as the determination of the long-term goals and objectives of
an enterprise, and the adoption of courses of action and the allocation of resources necessary for
carrying out these goals[ CITATION Alf62 \l 1033 ]. In other words, dealing with how an organization
is going to compete within a particular industry or market.

The business strategy plays an essential role in the existence and development of the
organization. Building a sound business strategy or set of strategies that constantly evolve and
improve is a path to a better business. Without strategy, the business depends on blind luck. The
business strategy plays an essential role in the existence and development of the organization.
 Building a sound business strategy or set of strategies that constantly evolve and improve is a
path to a better business. Without strategy, the business depends on blind luck.

However, strategies do not happen just by themselves. The strategy involves people, especially
the managers who decide and implement strategy. Indeed, strategic management can be
interlinked thought of as having three main elements within it, includes understanding the
strategic position of an organization, making strategic choices for the future and managing
strategy in action[CITATION Ger \l 1033 ]. And it is these that obtain the business objectives and
goals.

So that for successful developers, a real estate business strategy is clearly defined with short- and
long-term goals. In essence, they've designed a roadmap to their destination that reveals not just
the easiest route, but highlights potential pitfalls along the way. For instance, they have to decide
a range of issues such as buy and hold land bank, environmental change, shifting political
climates, volatile markets, rising mortgage rates, and evolving technology trends are just some of
the challenges agents are facing everywhere. Therefore, the right selection of strategies will
showcase the potential of every realtor and their ability to overcome these difficulties as they
arise.

1.2 The macro environmental-PESTLE framework

Political factors
Political factors are concerned with how and to what degree a government may influence in the
economy or a certain industry [ CITATION Pau14 \l 1033 ] . This can include tax policies, trade tariffs,
environmental law, labor law, etc, that could affect the business environment.

In the context of the trade war between the United States and China, Vietnam became an
attractive country strongly interest because stable politic compared to other countries so that
received a lot of investment opportunities from domestic and foreign investors. However,
Vietnam under the socialist regime, there are certain policies about the limitation on land
participation in the real estate market. In addition, the transaction procedures are quite
complicated, and costly which reduce the ability of the real estate market to grow.

Economic factors
Economic factors are determinants of an economy’s performance that directly impacts a
company and have resonating long term effects [ CITATION Pau14 \l 1033 ] . Economic factors
include inflation levels, income growth, interest rates, foreign exchange rates, economic growth
patterns etc.

Per capita income in Vietnam is increasing, especially the rapid growth of Vietnam dollar
millionaires in recent years, reaching 12372 people in 2019 - the 4th fastest growing in the world
[ CITATION Kni19 \l 1033 ]. The middle class also explodes with expected to reach 44 million people

by 2020, the demand for high-end real estate is very promising. Therefore, Vinhomes has been
very successful in capturing the market trend in developing high-end apartment projects, which is
expected to bring a huge revenue source.

Social factors
Social factors influence people's choices including the beliefs, values, and attitudes of society.
Trends in social factors impact on the demand for a company's products, how that company
operates [ CITATION Pau14 \l 1033 ].

According to CBRE, demand for real estate in the next years is forecast to be high because of the
"golden population" structure development. Currently, in Vietnam, the number of working-age
population accounts for nearly 70% of the total population. Today's successful young people also
 like to have an independent life, separate from their families. Facing the increasing demand,
Vinhomes developed the affordable housing segment with the 'Happy Town' not only solves a
part of the problem of housing demand in the market but also creates stable cash flow for its
company.

Technological factors
These factors refer to innovations in technology that may impact on the operations of the
industry and the market favorably or unfavorably [ CITATION Pau14 \l 1033 ] . Advances in
technology can have a major effect on business success - with companies that fail to keep up
often going out of business.

Vinhomes apply technology to the operation of their projects, which will allow residents to
request and receive services quickly and conveniently, from managing access to buildings, parking
basements, maintenance, and cashless payment services. The Company also deploys 4.0
technology in the construction, management, and operation of the projects to reduce site
clearance and construction time, manage costs and reduce waste.

Legal factors
These factors include the discrimination laws, antitrust law, consumer law, employment law, and
health and safety law[ CITATION Pau14 \l 1033 ]. It is clear that companies need to know what is
and what is not legal in order to trade successfully and ethically.

The legal environment in Vietnam has been increasingly improved. Policies that have indirect
impacts such as the promotion of external investment in the locality can increase the demand for
real estate which can make the price increase. Direct policies such as allow overseas Vietnamese
to buy multiple houses in Vietnam, and foreign-invested companies or representative offices of
foreign companies in Vietnam can also buy real estate [ CITATION Hou14 \l 1033 ]. This is expected
to stimulate the demand for real estate ownership of foreign customers and increase foreign
capital flowing into Vietnam's real estate market.
Environmental factors
These factors include all those that influence or are determined by the surrounding environment.
These factors include ecological and environmental aspects such as weather, geographical
location, climate, and climate change, etc[ CITATION Pau14 \l 1033 ].

Environmental issues are increasingly being concerned in Vietnam. Therefore, Vinhomes

promotes the use of green construction materials, building green products and living spaces close
to natural elements. Furthermore, the geographical location also affects directly to the real estate
value. Vinhomes projects are located in prime locations of Vietnam’s top tier cities, cities which
undergo fast urbanization, and those with significant potential for tourism development.

1.3 SWOT analysis

Strengths
In Ho Chi Minh City, the secondary market in the central high-end apartment segment is expected
to be more active due to the scarcity of primary supply. Therefore, the launch of the Vinhomes
Grand Park mega project in 2019 will help meet market demands. Meanwhile, the provinces
continue to attract Vietnamese and foreign investors, especially in localities near Hanoi and Ho
Chi Minh City, where investments in technical and social infrastructure are synchronized.

Vinhomes has the largest land bank among all property developers in Vietnam, sufficient for the
projects developed not only in 2019 but also in the next 10 to 15 years. Especially the Company’s
pipeline projects are located in prime locations of major cities across the country.

Not only own the large land bank, but also create an ecosystem which makes Vinhomes's
apartment became more valuable. Vinhomes projects are large-scale integrated developments
with comprehensively planned infrastructure and amenities which leverage the Vingroup
ecosystem including Vinschool educational facilities, Vinmec international hospitals and clinics,
Vincom shopping, entertainment and culinary complexes, VinMart supermarkets and VinMart
mini-marts and convenience stores, forming a comprehensive lifestyle offering. Vinhomes always
aims to create a highquality living environment where every home is truly “where happiness
lives.”
Weaknesses
Opportunities
According to the National Financial Supervisory Commission, Vietnam’s GDP growth in 2019 is
estimated to reach 7% based on improving internal economy-driven factors. In addition,
Vietnam’s economy can be supported by international factors such as shifting production centers
due to US-China trade conflicts and prospects for new trade agreements such as CPTPP and other
bilateral agreements.

From 2018 to 2025, Vietnam’s urban population is projected to grow at an annual rate of 3.5%,
the fastest growth rate among Southeast Asian countries. Rising incomes and living standards are
strong positive signals for the residential and resort property segments.

According to CBRE, demand for 2019 is forecast to be high. In addition, the income of the
Vietnamese people is increasing. The middle class, as well as the super-rich class, are increasing in
number. As a result, the resort property segment still has great potential in 2019 driven by
increased demand.

Threats
In 2019, the inflation rate is forecasted at less than 3.6% by the National Financial Supervisory
Commission. Despite the recent rise in food prices and input material costs, the upward pressure
on CPI is not significant, given the low-price level increases forecasted for world commodities .

2. Porter’s Five Force model

2.1 Implement the industry/sector audit by using relevant analytical tools and models
Industry/sector analysis (competitive analysis): Porter’s Five Forces model
a. Threat of new entrants
New entrants to an industry can drive competition and impact the profit of the market
participants in the industry [ CITATION Por08 \l 1033 ].

The real estate market is relatively unique; however, it is not easy to participate in this market,
the threat of new entrants seems to be medium and even low. Even though the estate market
yield high returns, it requires large capital and the difficulty in borrowing funds for development
 from banks. Moreover, if an enterprise wants to implement a project, the applications must be
reviewed and approved by the competent authority. With high-input, high-yield, and high-risk, a
new player will have a great deal of trouble just moving into this industry. As a result, the barriers
to new entrants are an advantage for Vinhomes to maintain its position and develop its market.
The fewer competitors, the more opportunities to acquire the market-leading position in
Vietnam.

b. Bargaining power of suppliers

Professor Michael Porter wrote in his book of "competitive advantages" that the bargaining
power of suppliers refers to the pressure can put on participants in an industry by raising their
prices for goods or services. The suppliers of the real estate are lands, construction contractors,
building material and equipment.

The bargaining power of the supplier at Vinhomes seems to be very high. Today, there are a large
number of suppliers of raw materials in the estate sector, it is easy to change suppliers to obtain
lower cost and high-quality. However, the cost of workers and lands are much higher. Especially
the supply of land is limited in real estate, it can affect the competitive environment and profit
potential. Consequently, the supplier of land has high bargaining power in the Real Estate
Industry.

c. Threat of substitutes
The threat of substitutes is as the level to which products or services are exchangeable with other
products or services in the same industry [ CITATION Por08 \l 1033 ] . The threat of substitutes when
customers are attracted with an attractive price, high quality and more comfortable that they
ready to switch to substitute products.

In the real estate business, substitute might be some kind of existing private and social housing
for sale or for rent which is available a lot. In practice, the clear difference in the price of the
residential market and the real estate market is huge, the customers more likely to be attracted
by the residential market [ CITATION Mai18 \l 1033 ] . Due to this, the threat of those substitutes
seems to be quite high for Vinhomes.
 d. Bargaining power of buyers
Powerful customers are able to exert pressure to drive down prices, or increase the required
quality for the same price, and therefore reduce profits in an industry [ CITATION Por08 \l 1033 ].

Currently, in Vietnam, the number of the working-age population accounts for nearly 70% of the
total population, the potential of real estate is capable of developing. Moreover, Vinhomes target
to the middle and wealthy class, focus on developing high-end apartment segments. Because of
the few numbers of luxury apartment exist in the market, it is hard to switch to other suppliers
ensuring the quality like Vinhomes. Not to mention that despite the fierce competition among
rivals, in terms of brand value, Vinhomes gains the upper hand over other companies. Thus, the
bargaining power of customer seems low.

e. Rivalry among competitors

Rivalry Among Existing Competitors takes several forms of competition including “price
discounting, new product introductions, advertising campaigns, and service
improvements”[ CITATION Por08 \l 1033 ].

It must be said that the estate industry is a trend recently, the number of competitors is
increasing day by day which creates a fiercely competitive environment and reducing the rate of
profit. Despite having the competition of Novaland, FLC, Phu My Hung, and etc, if take a look at
the current number of Vinhomes projects, we can see that Vinhomes is holding the position of
dominating the real estate market in Vietnam.

The industry life cycle analysis

“Giá trị bất động sản tăng lên nhờ việc kết nối thuận lợi với các dịch vụ tiện ích như trường học, bệnh
viện, điểm bán lẻ chất lượng cao”, Vingroup đánh giá. Và cũng tương tự Vinhomes, mỗi một lĩnh vực
kinh doanh trên đều có chiến lược để đẩy mạnh quy mô càng lớn càng tốt.

Không chỉ diện tích đất rộng, các dự án của Vinhomes còn có vị trí rất đắc địa tập trung nhiều tại 2 thành
phố lớn nhất Việt Nam. Chẳng hạn ở Hà Nội, các dự án của Vinhomes “ken đặc” quanh bán kính 10 cây
số trung tâm thành phố, với 10 dự án Vinhomes và 3 dự án Vincity. Các dự án tiêu biểu có thể kể tới
Times City, Royal City, Vinhomes Nguyễn Chí Thanh hay xa hơn là Vinhomes River Side ở Long Biên.