Macro and Micro Environmental Factors - Vinamilk

1. Introduction
Vinamilk was established on the basis of taking over 3 dairy factories left by the old regime in
1976. In 1985, Vinamilk was honored to get the Third-Class Labor Medal. Their industry is
beverage. Their products are fresh milk, sweetened condensed milk, milk powder or yogurt.
2. Analysis of macro environment
2.1. Political factors:
Vietnam’s political stability is highly valued compared to other countries in the region. Over the
past decade, Vietnam has become the center of FDI attraction with a steady growth over the
years at 10,4% from 2013 to 2019 (reached 16.2 billion USD in 2019- an increase of 81%)
(baotintuc, 2020). Therefore, stable political background positively affects Vinamilk’s business,
attract investors and bring sustainable development to Vinamilk.
According to data released by Transparency International, the Corruption Perception Index of
Vietnam in recent years has increased, showing a positive trend with the anti-corruption efforts
of the party and government. Specifically, Vietnam reached 33/100 points, ranked 117/180
globally in 2018 and increased 4 points in 2019 compared to 2018, ranked 96/100 globally (tcnn,
2020). Accompany with the government against corruption, Vinamilk always focuses on
complying with the law and this is mentioned in the Code of Conduct and internal regulations of
the company. They have a fraud control system, compliance committee, legal department or
internal declaration control to prevent and deal with corruption. Anti-corruption rules in
Vinamilk are clearly set out and are communicated to all employees in different ways: directly
through management, superior or send email to staffs. They also have prevention activities such

as conflict of interest declaration, awareness training, integration training for new employees,
fraud investigation and periodic reporting (Sustainable development report, 2019).
Vietnam is a mixed economy which private freedoms are restricted and controlled the economy
by the government; therefore, government plays a crucial role in economy. The government also
offers many taxes policies to assist the milk industry in general and Vinamilk in particular.
2.2. Economic factors:
GDP has rose in Vietnam. Specifically, GDP in 2019 achieved impressive results, with 7,02%
exceeding the target set by National Assembly. This is the second consecutive year that
Vietnam’s economic growth has reached over 7% since 2011 (baoquocte,2019). Vietnam’s fast-
growing economy has impact positively on domestic purchase and Vinamilk in particular.
“Brand Footprint” is always a prestigious ranking because it reflects consumer behavior when
built on a “Consumer Reach Points” (CRP). This is a measure of the household in the study
choosing to buy a brand and how they often buy. According to the report in 2020, Vinamilk’s
CRP are at the top of the chart and help them become the brand that Vietnamese consumers
choose to buy most in eight years. In 2020, despite the Covid pandemic, thanks to Vinamilk
building a strong foundation in the domestic market, the first quarter business results, revenue
growth of 7,3% compared to the same period in 2019, reached 14.153 billion VND (nhandan.vn,
2020). To meet the shopping needs of consumers, the company always improves labor
productivity, product quality and bring to the market high-end products such as baby milk
powder Organic or drinking yogurt. The company regularly updates the changes of the economic
environment, assesses and analyzes the effects then takes appropriate action for the company’s
goals.

Since Vietnam officially joined WTO in 2006, the economy has increasingly integrated with the
region and the world and promoted economic growth. Vietnam’s economy still maintains an
average growth rate of nearly 7% per year and in 2018 reached the highest level in a decade-
7,08% (tapchitaichinh, 2019). After 13 years of joining, Vietnam has gained many important
achievements and raised the country’s status in the world. However, joining WTO also put the
dairy processing industry into more fierce competition, including Vinamilk. The main reason is
that many countries in the organization WTO are producing milk with very low prices, low
production costs but the quality of the product is still guaranteed. This also has negative impact
on economy of Vinamilk. Nevertheless, they are trying to develop product groups suitable for
domestic consumption to maintain market share. Vinamilk implements a series of customer care
programs, supports farmers to develop dairy herds and establishes concentrated cow breeding
areas for high productivity to reduce production costs for farmers and preserve in industrial
direction to processing high value products.
According to calculations by the Ministry of Finance, the inflation index for 2019 is estimated to
increase 2,73% but lower than in previous year.The main reason for the increase in inflation is
due to the increase in prices of some goods according to the annual regulations such as consumer
goods (baoquocte,2019). Vinamilk is also calculating plans to try to keep the market price
unchanged, not to increase prices to cause unpleasant psychology to consumers.
The overall unemployment rate for the whole country in 2019 was 1,98%, of which the
unemployment rate in urban areas was 2,93% and rural areas was 1,51%. The underemployment
rate of workers in the age group in 2019 was estimated at 1,26%, in urban areas was 0,67% and
in agriculture at 1,57% (voh.com.vn, 2019). Vinamilk is the best workplace in Vietnam and
helps Vietnam reduce unemployment rate. Vinamilk has more than 10,000 staff members