Understanding business

environment report
Question 1:
Pestle analysis of Vinfast electric vehicles company:

Political: Vinfast in Vietnam has a great advantage from the government because, in 2022, the
electric car excise tax and registration fee were reduced. “Under a Decree recently issued by the
Government, battery-powered electric cars are to be exempt from the registration fee for three years,
starting from March 1. The fee shall be paid at a rate equal to 50% of the fee for petrol and diesel fueled
cars with the same number of seats over the next two years” (Vietnamnet 2022). These new policies will
help the local market in electric vehicles catch up with the trend of the world of the automotive industry
even in a short term.

Economical: There are many factors that influence Vinfast like inflation, GDP growth, and citizen
higher income, but what affects most is the fluctuation of the exchange rate. Vinfast focuses especially
on the foreign market, this is shown that they spend about 2 million dollars to build a factory in the USA.
However, this number is just in phase one of building it and it will be higher because the exchange rate
of VND and USD are not the same. For the past four years, the rate keeps rising and this make the cost
of construction and material more expensive in the USA than in Vietnam.

Social: Although the trend of electrical is gaining more and more popularity, the awareness of
Vietnamese people about this is still low. First of all, it takes many years to change the mindset of
Vietnamese people because they have used gas power vehicles for a long time and to them, electric
vehicles are not as good as them. Secondly, there are not so many places in Vietnam to place an electric
charging station for vehicles that use electricity while there are many gas stations almost everywhere.
This causes an uncomfortable experience for people who run out of battery and want to charge while
driving. Lastly, because it is the new era of electric vehicles, there are not so many options for customers
to choose from. Most of the big companies like Apple are now just in the design plan for an electric car
whereas gas-powered cars are having hundreds of options from every tier, especially in the Vietnam
market where only Vinfast has electric cars.

Technological: To produce and compete with other big companies in electric automotive
industries like Tesla, modern technology is required. However, it is quite hard for VinFast to achieve
these technologies because most of it is from overseas and have to pay a very high price to have it.

Legal: The government in Vietnam now have a plan to reduce the gas fuel vehicle in some big city
because, in 2019, Hanoi – the capital city of Vietnam – ranked seven in the world’s most polluted capital
city. This is a chance for the electric car because is renewable energy and does not affect the
environment. However, this also means they have to care more about their manufacturing to lower
carbon emissions which will more costly.

Environment: With the world issue that is global warming now becoming more and more serious,
the reason for it because of mostly carbon emissions. Government from many countries now
encourages citizens to use electric cars instead of traditional ones to protect the environment. Vinfast
now attracts people who care about the environment and now become the only company that produces
electric cars at reasonable prices in Vietnam.

From the PESTLE analysis above, it is clear to see that Political, Economical and Social are the three main
elements that affect Vinfast’s electric vehicle business. The world now changing and many big
companies started to create their own electric vehicles if VinFast does not have a proper solution it will
have very serious consequences.

Question 2:
Many countries in the world now have a tax called the pink tax. This is a tax for feminine products such
as tampons as luxury items rather than fundamental items in everyday life. Research shows that a
women lifecycle spend close to 2000 dollar on tampons. “Women have an average of 456 periods in
their life, which translates to 9,120 tampons used. At an average price of seven dollars for a box of 36
tampons, the total amount women spend on tampons is approximately $1,773.33” (Duquesne university
2018). And the tampon tax, which allocates this is non-essential products, adds to the burden of
menstruating individuals and discriminates against them by making some products necessary for daily
life costly. For some countries like the USA, if menstrual products are free from taxation, it will lower
government income collection.” Cutting tax on both diapers and tampons in California is estimated to
eliminate about $55 million in revenue per year, for instance” (Global citizen 2021). However, this shows
a huge disrespect and discrimination to women while they have to pay for services and goods higher
than men. However, there are still some countries that accept the risk and eliminated the tampon tax
like Australia. In 2019, the Australian government decided to scrap the tampon tax of 10% GST (good
and service tax). The tampon tax is an inequality type of market failure because the cost of tampons is
high both the cost of it and demand are high while men do not have to pay. The government has this
policy because they want to eliminate the barrier between women and men, and reduce gender
discrimination. “According to 2017–18 Final Budget Outcome total GST revenue amounted to $65 billion
in 2017–18. It was reported in June 2015 that a Parliamentary Budget Office costing had found the
exemption for feminine hygiene products would reduce revenue by $35 million in 2017–18 and by $480
million over a decade” (Parliament of Australia 2018). The government accept the risk and decided to
intervene in the tampon market, making the prices of it many following years drop and easy to approach
women than before. However, people who do not support this scrap said it will not actually influence
women’s financial situation. To improve gender equality more possible and effective, the government
should think about more policies to apply it. They could make a policy that raises women’s wages to
solve the gender wage gap. It persists when comparing women to men in the same education level or
age, race, and ethnicity. One more policy that government could make is to support women’s care
organizations. These organizations help women with both physical and mental problems that they have
in life. If government help them, their reputation of it will be higher and more chance to approach
women in rural areas.

Question 3:
Vietnam nowadays has about 49 different banks all over the country. This industry is more to be
affected by big banks and has large asset like BIDV or Vietcombank because the number of citizens who
believes in and choose these bank is higher. They are sustainable and almost can not crash because they
are supported by the government very much whereas many small banks like ACB or SCB are on the edge
of bankruptcy. This industry is most likely the competition between a big corporation and if one of them
change the flow of money, the others will have to change too. From the research, it is clear to see that
this industry is an oligopoly in Vietnam.

If the Vietnamese government allowed big banks to consolidate, every top assets bank will merges
together, becoming the one and only bank in the market, controlling the whole industry, make it
becoming a monopoly. Look into the advantages if this happens, every company and citizen are forced
to believe and choose them to be the partner. And the bank can charge higher fees for their services
because they are the only ones provided. For example, in Vietnam, the electricity industry is monopoly
by EVN corporation. They are the only ones providing electricity to every household, which gives them
disproportionate power to higher the prices unreasonable. “Depending on cost changes, EVN will be
allowed to raise prices by up to 10 percent every six months without seeking gov't approval” (VNExpress
2017). However, there are still some disadvantages of a monopoly. First of all, the industry will have
fewer innovation chances to the trend of the world. It will affect the finances of the country and could
reduce the annual revenue because every native company has to depend on one bank. Another point is
that customers will have to incur greater costs since there would be no competitors for banks to keep
the prices affordable.

After the merger, the government should keep an eye on the banking industry to prevent abuse of
power and protect citizens from rising expenses. They should make policies to keep the bank working
more effectively and help the cash flow of the country to improve. To conclude, the government should
merge the small or bankrupt banks and avoid big banks consolidating to improve the banking industry.

Question 4:
Assuming that Coca-cola and PepsiCo are the two only companies in the beverage industry, and they
share the same market with each other, this will lead them to two choices that is to compete or stay on
the same. The prisoner's dilemma is among the most well-known game theories ever. Although it may
not have been used with actual prisoners, a framework for deciding between collaboration and
competition might be helpful in many types of strategic decision-making. And I have created it to
analyze the action of each company:

Coca - Cola

Advertising Without Advertising

Share the market evenly, higher PepsiCo increases its market share
Advertising the profit but have to spend on Coca-Cola lost part of the market
PepsiCo Advertising
Coca-Cola increases its market Both companies are still the same
Without Advertising share and share the market evenly
PepsiCo lost part of the market without spend.
Coca-cola has combined and shared 50% of the market for each other in the soft drink industry. If one of
the two companies decided to compete and advertise, the other will lose its market share. Even though
they try to take it back, a part of the share still belongs to the one who has the advertisement. If both of
them decided to compete and launch a marketing campaign, this will depend on which advertisement is
better and depend on customers’ behavior. However, in the end, the market share after this is not
changing much, they still keep their market share but will cost for the advertising campaign. But after it,
more people will have chances to approach products from these two companies, making the profit
higher. Another situation that could appear is that both companies decided to keep the market the
same and not do anything to improve the revenue of beverage goods. From the analysis of the above
payoff matrix, we could see that the Nash equilibrium is that both companies decided to compete with
each other and launch a marketing campaign.

References
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