Nguyen Viet Phong

F05-173

BTEC HND IN BUSINESS (FINANCE)

ASSIGNMENT COVER SHEET
NAME OF STUDENT
REGISTRATION NO.
UNIT TITLE
ASSIGNMENT TITLE
ASSIGNMENT NO
NAME OF ASSESSOR
SUBMISSION DEADLINE

Nguyn VIt Phong

F05-173
Unit 1: Business Environment
Organisations in their Environment
1 of 2
Jubred A. Peano
November 20, 2012

I, __________________________ hereby confirm that this assignment is my own work and not
copied or plagiarized from any source. I have referenced the sources from which information is
obtained by me for this assignment.

________________________________
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Unit Outcomes
Outcome

Evidence for
the criteria

Assessors
Decision

Feedback

First
attempt

Understand
the
organisational
purposes of
business
LO1

Understand
the nature of
the national
environment in
which
businesses
operates
LO2

Identify the
purposes of
different types
of organisation

1.1

Describe the
extent to which
an organization
meets the
objectives of
different
stakeholders

1.2

Explain the
responsibilities
of an
organization
and strategies
employed to
meet them

1.3

Explain how
economic
systems attempt
to allocate
resources
effectively

2.1

Assess the
impact of fiscal
and monetary
policy on
business
organizations
and their
activities

2.2

Evaluate the
impact of
competition
policy and other
regulatory
mechanisms on
the activities of
a selected
organisation

2.3

Merit grades awarded

M1

M2

M3

Distinction grades awarded

D1

D2

D3

Internal
Verification

Rework

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Outcome

F05-173

Evidence for
the criteria

Assessors
Decision

Feedback

First
attempt

Internal
Verification

Rework

Assignment
( ) Well-structured; Reference is done properly / should be done (if any)
Overall, youve
Areas for improvement:

ASSESSOR SIGNATURE

DATE

DATE

NAME: ..........................................................................................

(Oral feedback was also provided)

STUDENT SIGNATURE
NAME : .............................................................................
FOR INTERNAL USE ONLY
VERIFIED
YES
NO
DATE
: ...........................................................................
VERIFIED BY : ...........................................................................
NAME
: ...........................................................................

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A REPORT OF BRITISH PETOLEUM

Prepared for:
Jubred A. Peano (Lecturer)

Course: Business Environment

Banking Academy, Hanoi
BTEC HND in Business

Prepared by:
Nguyen Viet Phong
Registration No.: ITP F05-173 (F05 A)
Submit date: 19th November, 2012
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Executive Summary
Vietnam is developing country and has a huge potential for any company to
penetrate into and implement their business plans. The economic system, resources,
and the policies of Vietnam also can meet the requirements of every international
firm in general and BP in particular to launch their business plan there. In this
assignment, the author has conducted many researches to gather information about
the characteristics of BP and the impact of Vietnam business environment on this
company.
In my reports, I've done some research on the company British Petroleum as
follows:
You are required to identify the legal structure and type of the organization
and state the purposes such as mission, values, aims, profits, market share,
goals, objectives of selected organization
(1.1)
Describe the extent to which selected organization achieves the objectives of
stakeholders. Identify the stakeholders, conflict of expectations and satisfaction
the stakeholders objectives
(1.2)
Explain the legal responsibilities of the selected organization and strategies
employed to meet objectives of stakeholders
(1.3)
Explain how economic systems in your country (Viet Nam) attempt to allocate
and make effective use of resources available within the country
(2.1)
Assess the impact of fiscal policy, monetary policy economy on selected
organization and stakeholders in your country
(2.2)
Evaluate the impact of competition policy and other regulatory mechanisms
on the activities of a selected organization

(2.3)

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Table of contents

Executive Summary ................................................................................................................................................ 5

Table of contents .................................................................................................................................................... 6
Introductions ........................................................................................................................................................... 7
1.1 Identify the purposes of different types of organization within British Petroleum. .......................................... 8
1.1.a The legal structure of British Petroleum: .................................................................................................. 8
1.1.b Vision, mission, values, objectives of British Petroleum: ......................................................................... 8
1.1.c: Conclusion. ............................................................................................................................................. 10
1.2 Describe the extent to which an organization meets the objectives of different stakeholders. ....................... 10
1.2.a About Stakeholders of BP ........................................................................................................................ 10
1.2.b The extent of BP to meets the objectives of difference stakeholders. ...................................................... 14
1.3 Explain the responsibilities of an organization and strategies employed to meet them .................................. 16
1.3.1 Evaluation for Responsibilities of BP: ..................................................................................................... 17
1.3.1a Management Responsibilities: ........................................................................................................... 17
1.3.1b Social Responsibilities: ...................................................................................................................... 18
1.3.1c Environmental Responsibilities: ........................................................................................................ 18
1.3.1d Ethic and Business ............................................................................................................................. 19
1.3.1e Public Relations and Corporate Image ............................................................................................... 19
2.1 Explain how economic systems attempt to allocate resources effectively ...................................................... 20
2.1.1 Definition of economic systems .............................................................................................................. 20
2.1.2 Economic systems attempt to allocate resources effectively ................................................................... 20
2.1.3 The effectiveness of the uses of the resources of BP ............................................................................... 21
2.1.4 Economic system in Vietnam affects BP ................................................................................................. 22
2.2 Assess the impact of fiscal and monetary policy on business organizations and their activities. ................... 22
2.2.1 The impact of macro-economic policy to Vietnam Economy and BP ..................................................... 22
2.2.2 The impact of Global Economy to Vietnam Economy and BP ............................................................... 23
2.3 Evaluate the impact of competition policy and other regulatory mechanisms on the activities of BP. .......... 24
2.3.1. Impact of industrial policy ...................................................................................................................... 24
2.3.2. Impact of social welfare policy ............................................................................................................... 25
2.3.3. Impact of interest groups and pressure groups ........................................................................................ 25
Conclusion ............................................................................................................................................................ 26
Reference .............................................................................................................................................................. 27

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Introductions
In this assignment, my main research subjects are British Petroleum, major oil
and gas companies of the United Kingdom. I also give some information that I have
researched about Vietnam's economy in a number of stages. As well as the policies
and activities of the Vietnamese economy has influenced the company British
Petroleum. Here is some basic information about this company.
BP is an international oil and gas company that operates in more than 80
countries, servicing its customers with fuel for transportation, energy for heat and
lighting , as well retail services and petrochemicals products. The Company is split
into two segments, Exploration and Production, and Refining and Marketing.
Exploration and Productions activities are three key areas. Upstream activities which
include oil and natural gas exploring, field development and production. Another area
is called Midstream and includes pipeline, transportation and processing activities
related to its upstream activities. The third area is marketing and trading activities
which are the marketing and trading of natural gas, including liquefied natural gas,
together with power and natural gas liquids. Refining and Marketings activities
include the supply and trading, refining, manufacturing, marketing and transportation
of crude oil, petroleum and petrochemicals products and related services . BP is a
global group, with interests and activities which cover main business segments of
Exploration and Production, Refining and Marketing and Gas, Power and Renewable
energy (NYtimes.com). As of 2009 BP had total assets of $ 235,968 million and total
revenues of $ 246,138 million with the majority of their revenues coming from its
refining and marketing business and the majority of their profits from Exploration and
Production (BP.com).

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MAIN BODY

1.1 Identify the purposes of different types of organization within British Petroleum.
1.1.a The legal structure of British Petroleum:
The British Petroleum Company (BP) is an international oil and gas company
that operates in more than 80 countries. BP is headquartered in London, and the
workforce is about 92,000 people in 2008. In the same year, BP's worldwide network
consisted of 22,600 locations branded BP, Amoco, ARCO, and Aral. BP stock is
composed of original BP shares as well as shares acquired through mergers with
Amoco in 1998 and the Atlantic Richfield Company (ARCO) in 2000. The company's
shares are primarily traded on the London Stock Exchange, but also listed on the
Frankfurt Stock Exchange in Germany with the name is BP. In the United States
shares are traded in US dollars on the New York Stock Exchange in the form of
American depository shares (BP.com). So, with above information, we can see BP is
Public Limited Companies. And its also a Large and Multinational business.
1.1.b Vision, mission, values, objectives of British Petroleum:
According to Mintzberg, Mission describes the organizations basic function in
society, in terms of the product and services it produces for its clients (Business
Environment, 2010, p.26). So, we can understand the mission statement is the
purpose of existence of the organization, while the vision statement is where the
organization is going in the future.
From what I could find in www.BP.com, although not specifically labeled a
"Mission statement, BP has a published statement of "What We Stand For". And
its: We care deeply about how we deliver energy to the world. I think it really
is BPs mission. That Mission statement is very short and easy to understand, so, the
reader can understand why BP has become one of the world's leading companies of
petroleum. Above everything, that starts with safety and excellence in their
operations. This is fundamental to their success. BP approach is built on respect,
being consistent and having the courage to do the right thing.
As well as Mission statement, BP has a published statement of What We Do
is: We deliver energy to the world. Based on the definition of the vision, so, it is
the Vision statement of BP. Reading it, we can imagine the work that BP will do in
the future. It is to provide energy to the world. They find, develop and produce
essential sources of energy. They turn these sources into products that people need

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everywhere. And BP strive to be a safety leader in our industry, a world-class

operator, a good corporate citizen and a great employer.
Values are the goals or aims of the organization will have an ideology based on
beliefs, value and attitudes (Business Environment, 2010, p.25). So, the values of
BP are known as the statement "What We Value" in BP.com. And their values have
5 keys: Safety, Respect, Excellence, Courage and One Team such the information
below.

With these criteria in value, BP has achieved much success in global business;
get the trust from their customers. Moreover, BP are also much focused about
environment pollution. Employees in the company always try my best and work as a
team to achieve the best results.

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According to Mintzberg (1997), Goals are the intentions behind decisions or

actions, the states of mind that drive individuals or organizations to do what they do.
And BPs goals in 2011 are Our goal is to grow operating cash flows to enable us to
both invest for future growth and increase distributions to shareholders.(BP Annual
Report and Form 20-F 2011, p.37). With those goals, BP has been active and
achieved very good results in 2011 with Sales and other operating revenues are $
375.517 million, Proved Reserves are 17.748 million barrels of oil equivalent
(BP.com).
Objectives are normally quantified statements of what the organization actually
intends to achieve over a period of time. According to BP.com, BPs objective is to
create value for shareholders by helping to meet the worlds growing energy needs
safely and responsibly. It means BP is working to enhance safety and risk
management, earn back trust and grow value. They are working to become a simpler
business, with a clear focus on what they do best. Their distinctive capabilities
include exploration, operations in deep water, the managing of giant fields and gas
value chains, and their world-class downstream business underpinned by
technology and relationships.
1.1.c: Conclusion.
At present, the most important purpose of BP is the global energy supply.
However, they are still interested in environmental pollution, social issues, and more
importantly, profitable. And with the statement of mission, vision, values, goals,
objective, BP has been operating true to their original purpose and growing.

1.2 Describe the extent to which an organization meets the objectives of different
stakeholders.
1.2.a About Stakeholders of BP
All enterprises have stakeholders; they are individuals or groups who have an
interest in how the enterprise performs because it affects them in some way. Simply,
stakeholders are likely to be affected by a proposed intervention (either negatively or
positively), or those which can affect the outcome of the intervention. And there are
eighteen groups of stakeholders divided into three broad types in each organization.
BP is one of the largest companies in the world, so they also have groups of
stakeholders relatively standard. These stakeholders have one very huge influence
to the operation of BP's business. Constructive dialogue with stakeholders helps BP

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to make responsible and sustainable decisions as a group. According to

www.BP.com, they have some main groups of stakeholder:

Industry

Board of directors

Local communities

Governments and regulator

Shareholder and analysts

Employees

Customers

Contractors and partners

Non- government organization

However, in this paper, we only learn about the main groups have a great
influence on BP. Addition to clarifying groups, objectives and the relevance of each
group and how BP solve problems and achieve their goals will be evaluate.
To identifies and assesses the effect of a different individual or group of
stakeholders on a company, we can use a strategy business tool, its Stakeholder
mapping. Based on it, we can evaluate the power of the parties involved, the likely
impact of the power companies and their lever of interest regarding the company.

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Within table above, we can understand about the group A, B, C, D as follows:

Group A: these stakeholders do not need much effort because they cannot
pose a threat because they have low interest and power.

Group B: These stakeholders have very high interest but have little power,
so, in order to maintain these groups, should provide information about the
company for them to do not miss any event.

Group C: These stakeholders may not see the level of their impact on the
company, so let's keep them satisfied. However, because they have low
interest so they unlikely to cause much disturbance.

Group D: These groups should be most interested companies to meet their

requirements so that they have enough power to serve the company and a
high degree of likelihood.

According to BP, the following table will show the importance of each
stakeholder group:
Stakeholders mapping
Broad Type

Internal
stakeholders

Stakeholders

Key

Keep

Keep

Minimal

players

satisfied

informed

effort

Board of directors

Employees

Shareholders

Connected
stakeholders

Customers

Local community
Government and regulators
External
stakeholders

Non- governmental organization

Industry
Table 1: Types Stakeholders of BP

Internal stakeholders:
Board of directors: BPs board of directors are highly involved in the crisis

as they are the decision making body of the organization, and have the
power to make managerial decisions and decisions about which initiatives
that should be taken to reduce the damage of the crisis.

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Employees: BPs employees who do all the work of BP, an oil company,

they have the workers on the rig and the office staff. Therefore, they have
enormous influence and interest.
Connected stakeholders:
Shareholders: means who are interested in the business of BP.? They put

their money for BP business and wish to receive more dividends. The
money they spend corresponding to their power in BP. BP is Public
Limited Companies, so the number of their shareholders is extremely
large and the small and medium shareholders, they can only keep
informed about BP.
Customers: Customers are the most important to the business of BP.

They also have relatively high power in BP. They connect with BP in the
business and more interested in the product, price, service, etc.; they
have high interest. So BP should take great care to customers.
External stakeholders:
Local community: Local community simply people, organizing activities

around BP workplace. They do not have much power for BP, but more
interested in BP. Because, with specific job-related BP oil - a product that
affects everyone. So BP need to keep informed for them.
Government and regulators: BP engages with governments on many

fronts, from consulting on environmental regulation to understanding our

tax liabilities and collaborating on community or entrepreneurial initiatives.
In some places, they work in partnership with governments through
production-sharing contracts. However, their attention to BP is not much,
despite their great power.
Non- governmental organization: This stakeholder has both low power

and interest for BP. they engage with regional and international nongovernmental organizations (NGOs) in a variety of ways. For example,
new projects often consult with relevant local and international NGOs,
who may contribute valuable insights into our plans and provide
specialized expertise with understanding and managing impacts.
Industry: The challenges the world faces in the energy future are too big
to be addressed by any single organization, so BP are working through
business and industry groups to help establish standards and address
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complex energy challenges. BP has their memberships in industry and

business organizations, such as Biofuels, Climate change, Ethics and
Compliance. So the industry does not interest in BP, but still have their
high power
1.2.b The extent of BP to meets the objectives of difference stakeholders.
Stakeholders have many goals to achieve. Each group of stakeholders has
a variety of different objectives. BPs trying to implements those objectives
day by day. The following table is designed to clarify the objectives and what
BP has done,
Type
Internal
stakeholders

Connected
stakeholders

External
stakeholder

Stakeholders

Objectives

Achieved

Job security

High salary

Job satisfaction and conditions

Possible capital growth

A steady flow of income

Growth of investment funds

Government

Tax

and regulator

Environmental Protection

Employees

Shareholders

Not
achieved

Table 2: Stakeholder objectives

Employees:
Job security: BP needs employees who have the right skills for their roles
and who understand the values and expected behaviors that guide
everything they do as a group. Despite of many such employees, BP has
always respected their employees and treat them with the best possible.
We aim to ensure equal opportunity in recruitment, career development,
promotion, training and reward for all employees, including those with
disabilities. Where existing employees become disabled, our policy is to
provide continuing employment and training wherever practicable. (BP
Annual Report and Form 20-F 2011,p.74)
High salary: Is one big company and with large revenues, salaries of
employees working at PB are very high BP and works in BP always been
one wishes for everyone. The average salary for British petroleum jobs is
$61,000. Average British petroleum salaries can vary greatly due to
company, location, industry, experience and benefits.
(http://www.simplyhired.com, 2012)

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Job satisfaction and conditions: with such a large number of employees,

in order to satisfy all requirements is not possible, but BP is still trying to
create the best working conditions for their employees. Evidence is The
survey includes 10 questions which make up the employee satisfaction
index. The overall employee satisfaction index score for 2011 (62%) was
below the score from 2009 (65%) but above that of 2008 (59%). (BP
Annual Report and Form 20-F 2011,p.74)
Government and regulator:
Tax: As a multinational company and norms, BP always correct tax
regulations in each country where their business. The amount of tax paid is
huge and it contributes 1 no small part to the government. The charge for
corporate taxes in 2011 was $12,737 million, compared with a credit of
$1,501 million in 2010 and a charge of $8,365 million in 2009. The effective
tax rate was 33% in 2011, 31% in 2010 and 33% in 2009. (BP Annual
Report and Form 20-F 2011,p.57)
Environmental Protection: Although there are many efforts to protect the
natural environment, BP is still cannot control a serious accident. The
Deepwater Horizon rig exploded on April 20th 2010 in the Gulf of Mexico killing
11 people and the following oil spill caused massive environmental damage to the
area around the Gulf Coast. British Petroleum, who owned the rig, was widely
criticized by both the public and the media due to its poor handling of the oil
spill.(BP.com, 2010)
Shareholders:
Possible capital growth: In 2011 BP restored your dividend, and BP
report that they increased the dividend by 14% in February 2012, in
accordance with their policy.(BP.com) BP is developing a stable and
gradual recovery from the crisis. And with the increase of the dividend, it
will make BP's equity growth
Growth of investment funds: According to BP.com, BP will use additional
operating cash prudently. They want to use around half for increased
investment in their project inventory for growth, and around half for other
purposes. This may include increased distributions to shareholders through
dividends or share buybacks or repayment of debt.
Overall, by the efforts of business, research and development, BP has launched the
optimal operating strategy to meet their goals as well as other stakeholders.
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1.3 Explain the responsibilities of an organization and strategies employed to meet them
Every organization, whether large or small, whether activities and business in
any field, they have responsibilities for many aspects. BP also, their responsibility is
also divided into three basic types and they also have their own strategies to
implement them. Following table will clarify that.

Responsibilities of BP
Responsibilities Specific Responsibilities of BP
Management

- Provide customers with the

Responsibilities best product and service.

Strategies Employed
- BP cooperation in production of
electricity with Petro Vietnam and

- Give employees the best

EVN.

work environment.

- The average salary for British

- Generate profits for

petroleum jobs is $61,000.

shareholders.

(simplyhired.com,

2012)

- Profit attributable to BP
shareholders for the year ended 31
December 2011 was $25,700
million and included inventory
holding gains. (BP Annual Report
and Form 20-F 2011-p.56)
Social

- Creating jobs for people

Responsibilities - Investment in education

- BP has invested more than US$6

million in community projects

- Investment in enterprise

across Vietnam, with particular

development.

focus in Ba Ria Vung Tau Province.

- BP has provided over
US$620,000 in sponsoring
Vietnamese students to pursue
graduate studies in the UK

Environmental

- Funding for environmental

Responsibilities improvement activities.

- BP Vietnam has funded

environmental programs in Ha

- Investment in Science and

Long Bay and Cat Ba total of $

technology in environmental

260,000.
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protection

- BP fund up to $1 billion for

restoration projects that will restore
injured natural resources in the Gulf
of Mexico.
- Has 59 projects screened in early
planning for environmental impact

Ethic and

- Business ethics

- Requirements of which apply to all

Business

- Ethical practice

employees, such as anti-bribery

and corruption, anti-money
laundering and competition / antitrust law compliance.
- BP also operates a range of
compliance training and monitoring
programmes for our employees.
(BP Annual Report and Form 20-F
2011, p.46)

Public

- Communicate with and

- BP uses a variety of methods,

Relations and

listen to our customers.

including interviews, surveys,

Corporate

- Create a good relationship

feedback tools and marketing

Image

with the government

programmes.
- Training the Vietnams
government employees

1.3.1 Evaluation for Responsibilities of BP:

1.3.1a Management Responsibilities:
For BP, responsible management is their top concern. BP has the specific
responsibility to care about customers, employees and shareholders. To expresses
their responsibilities, BP had Strategies employed positive:
Provide customers with the best product and service: It means BP must
always focus on research and development of their products to achieve
customer satisfaction, with BP, such things as fuel, petrol ... even, in Vietnam,
BP cooperation in production of electricity with Petro Vietnam and EVN.
(vietbao.vn)
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Give employees the best work environment: After the customer, to have good
business results, BP regardless of its employees to meet them the best
conditions to work. Ensure safe and worthy salary is what employees would
like. And the average salary of employees in BP very desirable with $ 61,000.
(simplyhired.com,

2012)

Generate profits for shareholders: to prove its business activities effectively,

the simplest way is to create more profits for shareholders. With their ability,
BP has given shareholders a huge amount is $ 25.700 million in 2011.

1.3.1b Social Responsibilities:

Creating jobs for people: to demonstrate social responsibility, BP always
takes actions beneficial to the whole society. Every year, they create jobs for
thousands of people by recruiting staff for various positions. BP received both
disabled people and gives them a suitable works.

Investment in education: Focus on investment in education is also a way of

expressing social responsibility. BP should have practical impact on education
in their places of business. BP has provided over U.S. $ 620,000 in
sponsoring Vietnamese students to pursue graduate studies in the UK.
(BP.com)

Investment in enterprise development: In a number of places where BP work,

they run a range of programmes to develop local supply chains and build the
skills of businesses. These range from financing for small and medium-sized
enterprises to sharing global standards and practice in areas such as health
and safety. Such as BP has invested more than US$6 million in community
projects across Vietnam, with particular focus in Ba Ria Vung Tau Province.

1.3.1c Environmental Responsibilities:

Funding for environmental improvement activities: As an oil and gas
company. BP toxic products and have the ability to destroy the environment,
so their environmental responsibilities very large. During their activities, BP
always have to act in order to improve the environment, and protect the
environment in which they work. But that is not enough; BP also sponsors a
large amount of money for activities to improve the environment of the
community. BP fund up to $1 billion for restoration projects that will restore

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injured natural resources in the Gulf of Mexico. BP Vietnam has funded

environmental programs in Ha Long Bay and Cat Ba total of $ 260,000

Investment in Science and technology in environmental protection:

technological development in the protection of the environment and BP are
much focused, they invest a lot of money into the development of biofuels and
other environmentally friendly technologies According to BP.com, they has
59 projects screened in early planning for environmental impact

1.3.1d Ethic and Business

Business ethics: According to BP Annual Report 2011, they have
requirements of which apply to all employees, such as anti-bribery and
corruption, anti-money laundering and competition / anti-trust law compliance.

Ethical practice: BP also operates a range of compliance training and

monitoring programmes for our employees.

1.3.1e Public Relations and Corporate Image

Communicate with and listen to our customers: BP uses a variety of
methods, including interviews, surveys, feedback tools and marketing
programmes. Marketing through television and print advertisements and other
channels is the most visible way in which BP communicates with customers.
They have a responsibility to market our products and our brand in ways that
are consistent, truthful and compliant with legal requirements.

Create a good relationship with the government: BP engages with

governments on many fronts, from consulting on environmental regulation to
understanding our tax liabilities and collaborating on community or
entrepreneurial initiatives. In some places, BP works in partnership with
governments through production-sharing contracts. They aim to maintain
dialogue with all relevant government agencies, ministries and regulatory
departments at every stage of our presence in a country.

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2.1 Explain how economic systems attempt to allocate resources effectively

2.1.1 Definition of economic systems
An economic system is simply a society are trying to satisfy human needs
and wants by producing goods and services. Production of goods and services is
affected by the limited supply of factors such as labour, land and natural resources
and capital. There are three kinds of economic systems, named as:

Free Market Economy: is an economy which has government intervention is

kept to the minimum while supply and demand and the ability to pay influence
decision making.

Command Economy: is an economy which the government control what is

produced, how much is produced, the price and who the goods are available
to.

Mixed Economy: is an economy combines elements of both free private

enterprises and intervention, in varying guises, by the state.

2.1.2 Economic systems attempt to allocate resources effectively

Based on the features of economic systems and the specific case of
Vietnam, Vietnam has a mixed economic system. According to Vietnam-ustrade.org,
Vietnam is now in transition from a centrally-run to a market economy. The countrys
Constitution recognizes a socialist oriented multi-sector economy operating under
both the market mechanism and management by the State. Foreign and domestic
private sectors are among the economic sectors constitutionally recognized in
Vietnam. There are currently state-owned enterprises, state-private joint-stock
companies, foreign invested enterprises, domestic private firms, cooperatives and
household businesses operating in the country. A level playing field is being created
to encourage all economic sectors to expand and develop. However, Vietnam
government still keeps controls of some kinds of business, like the electricity,
petroleum, and water. Therefore, there are few good sources which are cited as the
good conditions for the organization such as: Land and natural resources, Labour
resources, Capital resources.

Land and natural resources: Vietnam has natural material plentiful and rich
minerals, agriculture, forestry and fishery such as Coal, crude oil, zinc,
copper, silver, gold, manganese, iron. Agriculture, forestry, and fisheries
(20.58% of GDP, 2010): Principal products--rice, coffee, cashews, maize,
pepper (spice), sweet potato, pork, peanut, cotton, plus extensive aquaculture

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of both fish and shellfish species. Cultivated land-12.2 million hectares. Land
use--21% arable; 28% forest and woodland; 51% other. It is advantage for
economy of Vietnam. Vietnam has used this advantage as well as attracts
foreign organization to invest in the country. The government has been doing
many things to protect natural material while using it to improve economic.

Labour resources: human resources are always the most important factor to
decide the strength of the whole country. As of 1/4/2009, Vietnam's
population: 85,789,573 people, second most populous country 13 in the world
and 3rd in the region. The young generation accounted 55% national
population so that Vietnam has a major advantage of labour resources.

Capital resources: Vietnam is developing country, so most of capital is from

investments foreign organization and loan from the World Bank. After
Vietnam joined in WTO, many foreign companies invested their money in Viet
Nam. On the other hand, Vietnam is invested from Official Development
Assistance (ODA capital), Foreign Direct Investment (FDI). Project no 1 has
US$130 million in total capital, of which $120million comes from ordinary
capital resources (ORRC) and $10 million is from the Asian Development
Fund (ADF). The loan airs to assist Vietnam as the country reform a number
of state-owned enterprises and their affiliated companies to improve their
efficient and governance.

2.1.3 The effectiveness of the uses of the resources of BP

Labour resources: Vietnam has a large workforce can provide to BP's

business activities in Vietnam effectively. Vietnam's population is nearly 88
million and the number of people in working age is around 51million,
accounting for 57% of the population. However, the quality of workers in
Vietnam is quite low compared to other countries in the region. Thus, if BP
would like to have the best performance in Vietnam, they have made many
plans to improve the quality of their local labour. By working with local
government to train more workers and their employers.

Land and natural resources: land resources of Vietnam is a lot of potential,

the total number of unused land in Vietnam accounted for 10% of the total
land resources, BP offered many benefits to be able to build more projects in
Vietnam. Moreover, the amount of untapped crude oil in the waters of
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Vietnam is huge. So BP can make use of the natural resources to do their

business and profitable for them.

Capital resources: Total investment in Vietnam has increased in many years.

This proves that Vietnam's economy is growing well and the Vietnam
government is expanding the policy to attract foreign investment and support
foreign investors such as BP.

2.1.4 Economic system in Vietnam affects BP

BP is an energy company working in the oil and gas industry that it is
guaranteed by the government of Vietnam. Therefore, it will be more difficult for BP
to compete with the Vietnam National Oil and Gas companies, domestic enterprises
in the energy and gas industry. Furthermore, according to Decree No.84/2009/NDCP of Vietnam government about petroleum business, any business activities in
this industry must be under control of the government, so BP cannot set the price for
their products; they have to give a fixed price as the Vietnamese government.

2.2 Assess the impact of fiscal and monetary policy on business organizations and their
activities.
2.2.1 The impact of macro-economic policy to Vietnam Economy and BP
Macroeconomic policy is known as the government policy aimed at the
aggregate economy, usually to promote the macro goals of full employment, stability,
and growth. Common macroeconomic policies are fiscal and monetary (Economic
Glossary, nd).There are two common macro-economic policies: Fiscal policy and
Monetary policy.
Fiscal policy involves the use of government spending, taxation and
borrowing to influence both the pattern of economic activity and also the level and
growth of aggregate demand, output and employment (tutor2u, nd).
Monetary policy directly affects cash flow and the economy of the country,
monetary policy affects economic activity through the four points that interest rates,
exchange rates and control money supply, control over bank lending and credit (BPP
Professional Education, BE, 2010, p.155).These are two important policies of
macroeconomic policy in Vietnam. They are an effective tool which helps the
government guide the whole economy.
Clearly, that fiscal policy affects every business. Financial policies related to
taxes, government spending, borrowing and debt. There are four types of taxes:
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income tax, profit before tax (corporate tax), value added tax (VAT), import duties
and quotas. These taxes are collected in different ways (directly or indirectly) as on
personal income, savings, profit. Corporate income tax will be reduced by 30%, 50%
VAT on the products made of aluminium fell from 3% to 0% (115/2010/TT-BTC
Circular of the Minister of Finance). 10% VAT applied to consumer goods, 5%
applies to goods and services related to agriculture, education, health care
(Government, 2008). However, the rate is still higher than many countries in the
world.
Fiscal policy impacts BP directly. Annually, BP has to pay corporate income
tax for government. The corporation tax is fixed at 25% profit of the company. BP
has also pay VAT. However, when the Government reduces 30% corporate tax in
2009, BP can keep a lot of money.
Vietnam went through an economic crisis in 2009.Thanks to monetary policy,
the whole Vietnamese economy get rid destruction. At that time, the State Bank of
Vietnam to interest rate subsidies, tax deferred wage disbursement time. In the
second quarter of 2009, GDP increased by 4.5% and 5.8% during the third quarter.
In 2010, the Vietnamese government to change the exchange rate between VND
and USD to 13%, higher than 3% during the same period in 2009. This helps to
maintain the balance of the economy and reduce inflation. Monetary policy also
strongly impacts on BP. While the interest rate stays at high level, stakeholders
would rather keep money in the bank than investing into BP. It could be not good for
the operation of BP.

2.2.2 The impact of Global Economy to Vietnam Economy and BP

The economy is now dealing with the consequences of 2009 financial crisis.
The depression started in the United States and then led to others countries.
According to VOA news, East Asia has been hardest hit. In February, exports from
China fell twenty-six percent from a year ago. The World Bank estimates that up to
three trillion dollars of public and private loans in developing countries must be
repaid that year.
When it affects the Vietnam, in the first quarter of 2009, the impact of the
crisis became apparent when GDP increased by only 3.1%. During the first eight
months of the year, Vietnam's export ratio only14.2% and the import ratio is worse -

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less than 28.2% of the accumulation foreign currency decreased significantly from $
23 billion (2008) USD16.5 billion (August, 2009).
BP has also been hit hard by the economic crisis. Due to the severe decline
in the export of Vietnam, BP has faced a major problem; it is the fuel demand of the
domestic production activities will be reduced. Moreover, the Vietnamese
Government has implemented a number of policies to attract foreign investment and
support. Therefore, BP may lose the advantage of the policy support from the
Government of Vietnam before.

2.3 Evaluate the impact of competition policy and other regulatory mechanisms on the
activities of BP.
2.3.1. Impact of industrial policy
Industrial policy allows government to take an active role to support
investment, to encourage a faster rate of economic growth in industry, to halt the
decline of the manufacturing sector (BPP Professional Education, 2010, p.161).
A country wish growth and economic development will require the appropriate
economic policies in each stage of development. Among those policies, industrial
policy is the most important policy for large industrial contribution to GDP and is the
driving force for agri-cultural development as well as services. Because Viet Nam is
developing country, industrial policy is the most important policy is the core of the
industrialization strategy.
However, the fledgling local companies are often unable to compete with
foreign companies. Therefore, the Vietnamese Government has launched a number
of industrial competition policies to protect Vietnamese companies to compete with
foreign companies in some industries. For example, in the oil and gas industry,
accounts Vietnam National Oil and Gas Company for 55% of the energy market,
accounts Vietnam National Oil and Gas Company for 25% of the energy market,
account Saigon Oil and Gas Company 10% of the energy market. That means that
only the remaining 10% for BP in the energy market. Therefore, BP will have to face
many difficulties in doing business in Vietnam with this case.

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2.3.2. Impact of social welfare policy

According to BPP Professional Education (2010), social welfare seeks to
protect and directly improve peoples standards of living. In Vietnam, the welfare
policy has been applied for everybody, especially disabled people, wounded
soldiers, and the victims of dioxin. There are about 5 million Vietnamese, accounted
for more than 6% of the population, are disabled. These people are treated equally
to other normal ones. Vietnamese government lays down a strategy to build schools
for disabled children so that they can have a chance to gain the knowledge like every
student.
From 2011 to 2020, the government will try to address the issues in three
main areas: labour markets, social insurance and poverty reduction. According to
Decree No. 70/2011/N-CP and Decree No. 98/2009/ND-CP the government
increased the minimum wage to 1,400,000 VND to 2,000,000 VND will push up the
labour cost for the company. Also, Vietnamese Labour Law 1994, last edited in2007
stated that employees must have the right to be provided health insurance in the
company. BP will have to increase its labour costs in providing its employees with
protection from not only diseases and accidents but also other things such as get
pregnant etc. On the other hand, according to the Vice Minister for Labour, War
Invalids and Social Affairs (MOLISA) NguyenThanh Hoa, the government will try to
put into practice the policies including providing of unemployment benefits to the
unemployed. This is good sign for BP as it will not have to worry about straining its
budget to buy insurance which also covers the risk of losing jobs for their employees.
Therefore, the employees and the trade union of BP will be able to feel more
secured about the workers source of income if they are to be unemployed.
2.3.3. Impact of interest groups and pressure groups
Interest groups and pressure groups have a major impact on business
operations of BP. BP always interested in their employees and the remuneration
policy with talent. Association of employees have high requirements with BP. And
they will stand to ensure the rights of workers in BP. Forced BP to implement their
obligations to their employees.

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Conclusion

Business environment around BP is quite complex. BP

has to compete with many competitors to maintain its position
in the energy market. However, the developing of Vietnam
economic also provides BP many opportunities to widespread
the popularity as well as expand its business. The author
recommends that BP should take a deep research into the
demand of Vietnam market for the standard of petroleum
products to improve their outcome in order to overcome their
competitors step by step to retain more customers and gain
more profit.

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