THE INFLUENCES OF STAKEHOLDERS
UVN can not exist without the contribution of the stakeholders. All stakeholders have an interest in how UVN perform the business.
Internal stakeholders:
a) Management
They are managers who directly manage and organize the UVN’s operation. The managers must implement well to meet the expectation of shareholders.
b) Employees (labours)
They are the labours who directly produce the product for UVN and play an important role in quality and productivity. There are over 2000 direct employees working at Unilever Vietnam. Therefore, employees have a large impart on company’s operation.
External stakeholders:
a) Customers
UVN can not operate without the customers. Customers determine the revenue and profit of company. They also contribute the ideas through feedback to help the company improve the quality or model of product.
b) Suppliers
Suppliers are strategic partnerships of Unilever Vietnam in providing raw material, semi- finished–product also. Suppliers determine the price and quality of input materials. If suppliers provide cheap and good quality of input material, then outputs will have good quality and a competitive price and the customers also benefit.
Example: The two biggest suppliers of Unilever Vietnam
At present, UVN has two biggest suppliers are:
+ LIX Detergent Joint Stock company (LIXCO) (under controlled by VINACHEM) is specializing in producing detergent powder, detergent liquid, dishwashing liquid, fabric softener and toilet liquid. LIXCO has been a processor of detergent powder for UVN since 2000.
+ Duy Tan plastic is one of the leading plastic suppliers in Vietnam which specializing in the production from plastic. Duy Tan has been a plastic packaging supplier for UVN since 1997.
c) Competitors
The competitors always find out the weaknesses and strengths of company. The changes in price or product of competitors often impact on UVN’s business decisions.
Example: P&G is a main competitor in Vietnam. Here are some competitive product between P&G and UVN:
Tide >< OMO Head&Shoulder >< Clear
Downy >< Comfort Pantiene >< Dove
Rejoice >< Suns Olay >< Ponds
d) Shareholders
Shareholders are interested in good long term return on their investment and they also have a say in business decision. They always look for high profit and high dividend.
External stakeholders
a) Government
Changes in policies can influence directly on Unilever Vietnam business performance through tax and law. For example: Labor law, Environment law, Enterprise law.
b) Local authority
Local authority always asks for the protection of local environment and gives the permission for building or changing in an infrastructure.
c) Community
The local community provides the employees, staff, customers. The community also raises their voice if the company violates their rights or living environment.
d) Pressure group
Pressure group always protects the rights of the labors.
Example: Vietnamese General Confederation of Labors requires UVN implement taking care the employees (social welfare, wage, promotion…).
II - THE EXTENT TO WHICH UNILEVER VIETNAM ACHIEVES THE OBJECTIVES OF THREE STAKEHOLDERS
After 15 years of operation in Vietnam, Unilever has made some outstanding achievements to meet the objectives of three stakeholders.
Internal stakeholders
- Unilever Vietnam has done well in paying wages for employees and staff.
- The average monthly wage of an employee in UVN’s distribution network ranges from 1.3 million VND to 4 million VND or even higher.
- Unilever Vietnam creates professional ways of working, employees will accumulate skills, increase revenue, gain experience.
- Training and developing the human resource.
- Manager will receive a bonus if they do a good job than expect.
- Employees are sent to training course both overseas and in Vietnam, covering the professional course, teamwork, communication, computer skills, language and many others to develop their skills.
Connected stakeholders
- UVN does a good job to provide products to all consumers, whether they are low-income or high-income. UVN provides consumers with what they want in forms they can pay for. For low-income consumers, the price of UVN’s products is affordable for good quality, while for high-income groups, the price is reasonable and the quality is of international standard.
Example: The powdered laundry detergents, OMO compare with VISO, which is about 40% cheaper.
- UVN commits to treat fairly to all suppliers.
- UVN ensures the benefits for shareholders.
External stakeholders
- Unilever Vietnam applies the environmental measures such as implementation of “Safety, Health, and Environment (SHE) program; Manufacturing Sustainable Improvement program (MSIP).” It has met or exceeded the national environmental standards. There have been no reported cases of Vietnam’s environmental regulations been violated by Unilever Vietnam.
- “From 1995 to 2007, UVN had contributed 3027 billion VND to the State Budget, which average 8.4 percent of the pre-tax revenue.” The total revenue is nearly 1% of Vietnam's GDP in 2009.
(Source:)
* Some outstanding achievements of Unilever Vietnam
- High quality product of Vietnam” as selected by consumers from 1997 to now for detergents and personal care products
- The Prime Minister’s award in 2000 for “Excellent business achievement and social development contribution in education and community healthcare”
- 3rd Rank Labour Medal for “Excellent business achievement during the period 1996-2000 and contribution for social development of Vietnam”, in 2001, awarded by Tran Duc Luong – President of Socialist of Republic of Vietnam.
- 2nd Rank Labour medal in 2005.
- 1st Rank Labour medal in 2009
III - THE RESPONSIBILITIES OF UNILEVER VIETNAM AND STRATEGIES EMPLOYED TO MEET THE OBJECTIVES OF STAKEHOLDERS
In business performance, Unilever Vietnam is always being awareness of its responsibilities to all of the stakeholders. To meet the objectives, the company has proposed the strategies to satisfy an expectation of all stakeholders.
I - EXPLAIN HOW ECONOMIC SYSTEM ATTEMP TO ALLOCATE AND MAKE EFFECTIVES USE OF RESOURCES AVAILABLE WITHIN VIETNAM
Each nation has a particular economic system. Generally, there are three economic systems that most of the countries around the world using are command economy, free market economy, and mixed economy. However, each one has its strength and weakness. Specially, in Vietnam, the economic engine had to reform to get rid of obsolesent economic system.
Witnessing the success of Soviet Unions in growth of economy, before 1986, Vietnam followed Soviet Unions to apply the command economy and it received initial achievements. After a time, this economic pattern showed the weaknesses and serious gaps. One of the most outstanding gaps is incapable of allocating and making use of resources available effectively. This economic system set obstacles to integrate in world’s economy and it was also a barrier for Vietnam’s development. ‘’In 1986, the Sixth Party Congress introduced significant economic reforms with elements as part of a broad economic reform package called "" (Renovation), resulting in a . Private ownership was encouraged in industries, commerce and agriculture’’. To do well this renovation, Vietnam has focused on three important resources including human resource, nature resource and capital resource.
(Source: )
Like other contries, human resource plays an important role in the economy. Human is central of all activities. Vietnamese labour is young, plentiful and diligent. However, 86% labour of Vietnam is unskilled. To solve this problem, the government has invested more in education. From 1998 to 2004, the government spent 18000 billion VND for education. From 1995 to 2009, the governement spent about 33000 billion VND for universities. A curriculm is changed every year and the school’s facilities has been improved. The government builds a lot of industrial parks to create jobs for people. In 2007, Vietnam had 179 industrial areas. The government created jobs for 1.65 millin labours in 2006, 1.68 million labours in 2007 and 1.7 million labours in 2008.
( )
Natural resource is limited so that the government implements some policies. The government proposes the long-term program for exploitation. Exploiting forest combines with reforest and applying the new technology of exploitation to reduce the bad impact on the environment. Vietnam has many beautiful landscapes. To take the advantage of nature without damage and earning foreign currency, Vietnam focuses on developing tourism. In 2009, there are over 30 projects in tourism with a registered capital about 5 million USD. ( )
Another important resource is the capital. Generally, Vietnamese government has used internal and external captial effectively. The The government invested in important project in agriculture, traditional handicraft, education, infrastructure. To make sure the money is used in right purpose, the government monitor closely to the process of using capital. Vietnam is one of developing countries receive ODA from IMF, WB, ADB. The government uses the ODA in helping the poor people to have a better living condition, developing the economy in Central of Vietnam, protect the environment, defend the natural calamity.... According to Ministry of Planning and Investment of Vietnam, in 2009, the foreign investors registered to invest nearly 21.48 billion dollar and there were 1504 FDI projects.
(source : ).
In the other hand, policy of developing economy and society is also important. Vietnam is openning to call for the investment of foreign investors. Therefore, the government tries to create a flexible process for investors through simplifying the procedure for issuing investment licences ("The project 30’’, cut 30% step of procedure). Government encourages domestic enterprises to export to increase the foreign currency earnings.
Vietnam has been successful in adapting to the world economic changes and allocating the resources. However, Vietnam has not been regconized as a market economy country. In fact, Vietnam is a mixed economy. There are some key reasons for this matter. Vietnam has not implemented the eligibilities in VIII Term of IMF. The government plays an intrusive role in the foreign investment area that subjects foreign investors to Vietnam political’s dynamics. The consitution guarantees the supreme role of the Communits Party and its principles. This is a barrier for Vietnam’s products to export to North America or Europe. Therefore, Vietnam must try much more to setting a position in world economic map.
II – THE IMPACT OF SOCIAL WELFARE AND INDUSTRIAL POLICY INITIATIVES ON UNILEVER VIETNAM AND THE WIDER COMMUNITY
In Vietnam, social welfare has been concerned for a long time. Before 1986, all activities related to social welfare were implemented by the government. As you know, the government can not cover all things of the society. Therefore, the care for people living condition or the employee’s needs could not be met completely. From 1986 till now, a big change in economic system makes a society more dynamic. People have more chances to participate in business or promote their ability. However, social welfare is not only a responsibility of the government, but it is also a responsibility of society and enterprises. In fact, Unilever Vietnam has done very well the social welfare which is an effective way to gain the trust and the loyalty from employees and staffs. Furthermore, social activities of UVN will create a good image in customer’s mind.
Social welfare of UVN’s distribution network (% of respondents)
“Employees working under the under a formal contract are qualified to receive all social benefits such as social insurance, health insurance, sickness allowance, periodical health examinations, sick leave, maternity leave and annual leave as governed by law. UVN’s monthly expenditure on retirement averages 900,000 per employee, this is in addition to the salary. The aim of this program is to ensure decent living standard for the employees during their retirement or insurance for their children’s education up to 18 years old. Since 2006, the company has offered a pension package for the employees through their corporate pension plan. Besides, UVN provides many other benefits to employees. Since May 2001, UVN has been a first company in Vietnam offer medical insurance to employee. In this program, an employee can use service at the best hospital and clinic in Vietnam for treatment. In the other hand, UVN show the big impact on the community. In 2004, UVN donated 600 million VND for health, hygiene, education and community projects, and 200 million VND for Vietnam Fatherland Front’s Fund for the poor. From 2006 to 2010, UVN intended to provide 70 billion VND for social and community projects to help improve the living condition of Vietnamese people.”
(Source:)
Before and after Vietnam being a member of WTO, the government had implemented many industrial policies. Here are some outstanding selected industrial policies that can influence on the Unilever’s operation in Vietnam.
Industrial policy of Vietnam today is a combination of policies, in many cases
there is an inconsistency. These policies have had the biggest impact on the industrial development of a country are providing a policy framework to encourage common for businesses
individual regardless of ownership. The most important of these policies as business rules
career in 2000 and 2005 and the rules regulations concerning the membership of Vietnam in
WTO. Equal importance, though not officially aimed at the development of Vietnamese industry
Nam is the country's efforts to expand and improve the quality of the education system, the
of the country from early 1990 to achieve macroeconomic stability, and maintain
stabilization of economic relations as well as international politics.
However, many current industrial policy of Vietnam is to give priority to some
ownership rather than on a specific industry or business overall. Most notably in
this type of policy is the policy provides for a special favor of state enterprises.
In the financial environment, the state enterprises received loans from the most
the commercial banks with large capital investments directly from the state budget. Top
State investment in infrastructure in areas such as central Vietnam has been implementing
to support the heavy industries under state ownership that is planned for
this region. The formation of state corporations with large-scale near-monopoly control of
with key industry is a form of government support for business only
state. Level in favor of the government for the public sector than the area
other areas has been reduced through WTO membership and the 2000 enterprise law
and 2005 but no means have been removed.
Structure and industrial performance of Vietnam
- Firstly, the results of Vietnam's industrial activity are the industrial added value which increased very fast growth. From 1990 to 2005, industrial value added with growth rates annual average of 10.9% or 4.72 times increase in 15 years time.
Industrial value ratio of state ownership and non-state
(Source: National Bureau of Statistics, Statistical Yearbook 2006, p.60)
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Secondly, the growth rate of industrial production was mainly higher due to maintenance industrial enterprises is financed by direct investment abroad, and from 2000 through investor's business in the country. Industrial growth of state ownership with the central rate 12% a year in the last decade (until 2005) and the local state industrial growth only 7.7% growth a year while the industrial enterprises of foreign direct investment increases 19.6% annual growth, and the private sector in the country, from a very small base, growth rate of 42.8%. In 1995, the proportion of state sector in total industrial output value decreased 50%, continued to decline each year and 25% in 2008.
Contribute to the growth of industrial output value by ownership
(Source: General Statistics, Statistical Yearbook 1998 and 2008)
In relation to Unilever Vietnam
Since Vietnam was officially a member of WTO in 2007, there are a lot of challenges and advantages as well for Unilever Vietnam.
The government encourages foreign-invested businesses develop long- term and comprehensive partnership with local SMEs through their backward and forward linkages in order to magnify trickle-down effects. The government also encouraged the dissemination and sharing of examples of responsible investors (Unilever Vietnam). To do that, UVN should be willing to be studied and the results disseminated widely. If a company operates ethically, the outcome of the study should be favorable, raising its reputation and position in the business community. Additionally, the government requires the stringent fulfillment of CSR, including employment policies, working condition and welfare benefits, product quality, and on protecting the natural environment. Besides, the government promoted the development of business supporting industries and services such as professional superannuation trust fund, agencies training and providing professional personnel, development of competitive upstream industries to help businesses in general and multinational corporation in particular to cut down the production costs and compete globally.
(Source:)
III – THE IMPACT OF MACRO-ECONOMIC POLICY (FISCAL AND MONETARY) MEASURES AND INFLUENCE OF THE GLOBAL ECONOMY ON UNILEVER VIETNAM AND STAKEHOLDERS IN VIETNAM
In 2008, a world economy showed a somber picture originated from financial crisis in the United States. What we can see clearly was an inflation that took a high cost at fuel, power, farming product… That is a reason why the volume of consumers of products decreased significantly. Unilever Vietnam is not an exception, which is the number one brand household in Vietnam had to influenced seriously by the World economic crisis. The consumers tend to pay less for buying because of inflation. Not only UVN is influenced by this crisis, but other companies are in the same case also. Confront with this situation, the government propose some macro-economic policy measures to solve this issue.
Firstly, we concern about the fiscal policy of the government. Since November 1st 2009, the taxation for all enterprises is at 25% and in 2011; the enterprise will only pay 20% for the taxation. This is an advantage for Unilever Vietnam. The company has more money to re-invest in innovation, infrastructure or expanding manufacturing scope. Therefore, UVN can increase the productivity and profit also. Moreover, the shareholders can receive more dividends. Personal income tax has been implemented since 2009; in this case, if a person receives a wage more than 5,000,000 VND/moth, he will pay 5% for this income. “According to a report of Ministry of Finance, in 2009, the income of government is 390,650 billion VND, equal to 100.2% estimation. The government expenditure is 115,900 billion VND, equal to 6.9% GDP, increasing 28,600 compare to expectation.” (Source: ). In 2009, total investment was 704,200 billion VND that increases 15.3% compare to 2008. In 2009, total FDI invested Vietnam reached to 21,48 billion $, there were 839 projects registered. (Source: ). The government also improves the infrastructure, builds more schools and hospitals, and increases the living condition. This policy can lead to the increasing of GDP in recent year. In 2009, GDP increased 5.32%.
Secondly, we consider about monetary. In 2009, state bank supported 4% for enterprises. It encourages the enterprises to import products. Since May 1st, 2010, the government decreased rate interest for borrowers at 0.5% or 1%. The government performs the monetary policy to decrease 25% the interest rates and increase the money supply. The basic interest rate was increasing from 7% to 8% in 2009. However, the government must control the supplying money because it can cause the inflation. The CPI in 2009 increased 0.24% compare to 2008. With a loosening of monetary policy and implement the economic stimulus of Government that increases the credit growth. (Source:http://www.vietnamplus.vn/Home/Thay-doi-chinh-sach-tien-te-Linh-hoat-va-than-trong/20102/33961.vnplus)
Although many policies are carried out, totally, the economic speed rate in Vietnam is low that makes the consume low, too. The Trade law still has many shortcomings. Government puts a high tax on luxury goods that Unilever Vietnam is producing such as skin cream; shower cream … Besides, the population and family planning policy in Vietnam makes the population structure older which is not an advantage of Unilever Vietnam. In a situation of supply is more than demand, there is a severe competition in Vietnam’s market. That is a challenge for Unilever Vietnam and the stakeholders.
CONCLUSION
In general, Unilever Vietnam is a famous brand name in Vietnam because of good business operation and contributions for social activities. However, with a complex fluctuation of World’s economy and Vietnam’s economy, there will be a lot of challenges and opportunities for Unilever Vietnam in the next years.
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