Unit 1: Business and Business Environment Analysis of Hoa Phat Group

This report provides a comprehensive analysis of Hoa Phat Group, a leading industrial conglomerate in Vietnam. It begins with an introduction to Hoa Phat's business, including its history, product range, and market position. The report then delves into the external environment, examining the micro and macro factors influencing the company. This includes a detailed Porter's Five Forces analysis to assess the competitive landscape and a PESTLE analysis to evaluate the broader macro-environmental factors. The internal analysis section explores Hoa Phat's mission, vision, organizational structure, human resources, brand equity, and market resources. The report culminates in a SWOT analysis to synthesize the internal and external factors and inform business decisions. The analysis highlights Hoa Phat's strengths, weaknesses, opportunities, and threats, providing insights into its strategic positioning and future prospects in the Vietnamese market. The report is well-structured and includes relevant data and references to support its findings.

ASSIGNMENT 2 FRONT SHEET
Qualification BTEC Level 4 HND Diploma in Business
Unit number and title Unit 1: Business and Business Environment
Submission date 28/04/2021 Date Received 1st submission
Re-submission Date Date Received 2nd submission
Student Name Trương Hoàng Ngọc Student ID GBD20177
Class GBD0903 Assessor name Phan Tran
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I certify that the assignment submission is entirely my own work and I fully understand the consequences of plag
making a false declaration is a form of malpractice.
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Table of Contents
1. Introduction………………………………………………………………………………………………………

2. Micro and Macro Environment ................................................................................................................................
2.1. Porter’s Five Forces : .................................................................................................................................
2.2. PESTLE Analysis: ...............................................................................................................................................
3. Internal Analysis: .....................................................................................................................................................
3.1. Mission, Vision and Core Value: ......................................................................................................................
3.2. Organizational Structure: .................................................................................................................................
3.3. Human resources: ........................................................................................................................................
3.4. Brand name and Equity:...............................................................................................................................
3.5. Market Resources: .......................................................................................................................................
4. Business Decision: ...................................................................................................................................................
SWOT Model: ...................................................................................................................................................
Conclusion: ..................................................................................................................................................................
References ...............................................................................................................................

Hoa Phat is Vietnam's largest industrial engineering conglomerate. Hoa Phat began as a building machine and
machinery trade firm in August 1992, and has since grown into furniture, steel pipe, steel, refrigeration, real
estate, and agriculture trading and manufacturing. Hoa Phat has been publicly listed on the Stock Exchange
since November 15, 2007, under the ticker symbol ‘HPG.'Hoa Phat Group currently has 11 member firms and
25,424 employees working throughout the country and one office in Singapore. Steel manufacturing is the
Group's main source of sales and benefit, accounting for more than 80% of total revenue and profit.
Construction steel, hot rolled coil (HRC), prestressed concrete steel, drawn steel cable, steel pipe, and color-
coated corrugated iron are the major items in Hoa Phat's steel supply chain. Hoa Phat Group is the largest
producer of construction steel and steel pipes in Vietnam, with market shares of 32.5 percent and 31.7 percent,
respectively, due to a combined capacity of over 8 million tons of steel.
The macro environment has a significant effect on the business, and this report will demonstrate the
opportunities and challenges of micro-environmental influences. Furthermore, the review process reveals the
benefits and disadvantages of the company's internal causes, as well as the impact of all of the above on the
company's policies and decisions.(HPG,2021)

2.1. . Porter’s 5 Forces Analysis
2.1.1. . Bargaining power of suppliers (Medium)
Hoa Phat Group is a multi-business conglomerate that produces and operates a wide range of industrial and
household goods in Vietnam. In addition, the commodity serves as a source of raw materials for the production
of other goods. Hoa Phat Group can be secure in competing with steel producers both within and outside of
Vietnam by ensuring a reliable raw material supply at the Hoa Phat Integrated Steel Complex, which has a
potential of 1 million tons per year.
Heavy industry, such as iron and steel manufacturing, has recently been unable to self-supply 100% of alloy
steel and iron in Vietnam. China, Japan, and Russia continue to manufacture massive amounts of steel and
iron, as well as semi-finished materials (alloys), the majority of which are of low and mediocre quality. As a
result, any shift in the global economy will have a significant impact on the steel manufacturing industry in
Vietnam. Hoa Phat has many benefits as a leading company in the industry and in Vietnam, allowing it to
diminish the negotiating power of international suppliers.
Undifferentiated products: A large percentage of imported materials and steel products are of poor or average
quality, especially low-cost steel.( Course Hero, 2019)
Close cycle: With a total asset valuation of over 10,000 billion VND, HPG is a market leader in the near cycle
model, which includes ore extraction, steel forging, refining, and the production of alloy and finished steel
products. Hoa Phat has successfully received 60-70 percent of the alloy input. Hoa Phat also has two
subsidiaries as a result of its backward integration strategy: An Thong Mining Investment JSC and Hoa Phat
Mining JSC, both of which are responsible for drilling, exploiting, manufacturing, crushing, and selling iron ore
in Ha Giang and Yen Bai provinces. Per year, they will supply 700,000-900,000 tons of iron ore.

Furthermore, the Hoa Phat Steel Integrated Complex model has expanded the corporation's
freedom from its suppliers. The Hoa Phat Steel Integrated Complex model has expanded the company's
freedom from its suppliers. The complex's production potential is:
. The iron ore manufacturing plant can handle 300,000 tons of ore per year.
. The cast iron mill can produce 850,000 tons per year.
. The steel billet mill can produce 850,000 tons per year - The steel rolling mill can produce 850,000 tons per
year
Despite the fact that productivity has recently fallen short of consumer demand, Hoa Phat has signed long-
term iron ore contracts with Anglo America Plc in England for 300,000 tons of iron; this would not impact Hoa
Phat's negotiating power with its suppliers because steel prices are falling.
Customers: Since the bulk of Hoa Phat's customers are members, the company faces no consumer scrutiny. As
a result, it is not too reliant on commodity supply; in other words, HPG is not “squeezed” by its manufacturers
and consumers.
Last but not least, HPG's reputation and long-term relationships with overseas vendors ensure that the firm
pays a fair price for its inputs.
In conclusion, the suppliers have some bargaining power with Hoa Phat.(Course Hero,2019)
2.1.2. Bargaining power of buyers (Low)
In terms of price, quality, design, and service, customers have a wide range of options. Customers continue to
be interested in the group's products with extensive and regular coverage. Customers who value a product will
pay more for it, boosting buyer power. As a result, the bargaining power of the parties is diminished. HPG's
main line of operation is steel manufacturing, which includes steel products, steel sheets, and rolling steel...
This sector has undergone many challenges in recent years, both on the domestic and international markets.
Buyers of HPG, on the other hand, have fewer negotiating power than buyers in other sectors since HPG's key
clients are construction firms who need to install high-end infrastructures, large homes, or civil works (Course
Hero,2019). The Central and Southern regions are the primary markets for steel production; however, the
group is also strengthening its presence in the international market. From 2010 to 2019, the sale value and
consumption market share of construction steel increased, indicating that steel supply demand is increasing.
Furthermore, HPG's offerings are distinct from others. To manufacture high-quality goods that met consumers'
demands, the standard ISO 9001:2000 was used in production management, as well as strict adherence to food
safety regulations.

( HPG’s Annual Report,2019)
Individuals who buy steel to build their own homes, in addition to building companies, may be HPG purchasers.
Since this type of customer requires a small sum and has a limited demand, they have no bargaining power
with HPG.(Course Hero,2021)
2.1.3. Competitive rivalry (Medium)
No Companies
/ Products
Price Design Market growth
1 HPG 465.000VND/
rebar 12
Hoa Phat Steel is
perhaps best known
for its three
intertwined triangles
emblem and
embossed Hoa Phat
lettering.
As the second largest
steel brand in
Vietnam, it has a long
history in the
industry. Hoa Phat
Steel has always been
chosen for the
HPG recorded net
sales of
VND64,340bn in
9M/2020, up 40.8
percent y/y from
the same
timeframe the
previous year.
The steel and
agriculture
industries are
significant
income
contributors,
accounting for

consistency of its
name.
84.0 percent and
11.2 percent of
overall revenue,
respectively. The
overall amount of
long steel goods
sold by HPG was
3.82 million tons,
up 94.5 percent
year on year. The
new factory – the
Dung Quat steel
complex – was
responsible for
the whole rise in
production
(DQSC). The firm
delivered 2.48
million tons of
building steel and
1.33 million tons
of steel billet in
9M/2020. China
accounted for
more than 60% of
global billet
market value.
Meanwhile,
owing to low
building demand
amidst the
prolon, Vietnam's
construction steel
industry grew at
a negative 3.02
percent y/y.(
Company
Research,2020)

2
VietNam-
Japan Group
497.000/rebar
12
Pomina steel is
quickly recognized
due to its apple-like
logo.
In today's
Vietnamese industry,
Pomina Steel is a
respectable and high-
quality brand.
Pomina Steel is one
of the brands in our
country that
produces iron and
steel of high quality,
protection, and
longevity.
Pomina Steel
Company is a
privately owned
Vietnamese
construction steel
company. For the
industry's biggest
growth scope
(billet refining
800,000 tons and
steel rolling 1.1
million tons).
Currently, it has
the country's
highest market
share (14.3
percent ). Pomina
was one of the
first firms in
Vietnam to own
modern
manufacturing
facilities. Meet or
exceed
development
goals.(Sang Chinh
Steel
Group,2019)
Competitive advantage
HPG: HPG would be able to maximize its profitability, experience a more stable environment, and reduce the
possibility of product fluctuations by implementing a vertical integration business model. Due to the capital-
intensive nature of the steel industry, small domestic players are unlikely to be able to implement an
integrated business model; instead, they will be forced to exit the market eventually, while HPG should be able
to maintain its dominant role. Low-value steel goods, such as rebar, will continue to be covered by the
government's tariff policies in comparison to imported products. HPG has a comparable cost base to Chinese
firms when it comes to high-quality materials. HPG; however, as a local steel manufacturer, is familiar with the
characteristics and tastes of the Vietnamese steel industry, allowing it to save logistics costs and shipping time
for domestic customers.(Company Research, 2019)

POMIINA: Pomina steel was set up, clearly defined competitive strengths with advanced
technology. And products are exported to the market, not in price competition. That is why the investment and
construction of Pomina focus on investment in depth. From downstream to upstream, from forging to rolling.
To ensure the best quality of steel. All Pomina production equipment is equipped with European equipment.
Pomina applied ConSteel embryo production technology. And the most advanced Siemen Vai rolling from Italy
and Germany.(Sang Chinh Steel Group, 2019)
Over the course of the project's life, the consistency of Pomina steel has been certified. Pomina pulled
imported steel back thanks to high-quality materials. Most major schemes, like Phu My Hung, use it as their
first option. Vincom, Sesan Hydropower, Phu My Bridge, Ca Mau Fertilizer Power, Dung Quat Oil Factory,
Hoang Anh Gia Lai, Vincom, Sesan Hydropower, Phu My Bridge, Ca Mau Fertilizer Power,...
Conclude: Opportunities. In conclusion, we can see that HPG has a significant competitive edge in the
Vietnamese steel industry. Customers love this company because of its friendly service approach, advanced
technology, and strong brand image.
2.1.4. Threat of Substitutes (Low)
No Companies/ Products Prices Design
1 HPG 465.000VND/ rebar 12 The three intertwined
triangles symbol and
embossed Hoa Phat
lettering are perhaps
the most recognizable
features of Hoa Phat
Steel.
It has a long history in
the steel industry as
Vietnam's second
largest steel brand. The
name Hoa Phat Steel
has always been chosen
for its quality.
2 Tan Hong Nhat
Furniture
10 milion VND/ red
wooden bed
Tan Hong Nhat Wood
Furniture is a company
that specializes in
providing high-quality
wooden furniture, such
as kitchen cabinets,
tables and chairs, beds,
wardrobes, TV racks,
and chalkboard tables.
Real or synthetic wood
is used to create goods
that meet the needs of
consumers. Supply and

mount a complete
kitchen cabinet set as
well as other kitchen
appliances, including
cooker hoods (Faber,
Giovani, Rinnai,
Sunhouse, Canzy,
Zenka, Fagor, Malloca,
Napoli, Cata,...), kitchen
tiles, and all types of
kitchen glass.
Competitive Advantage
HPG: Production prices provide a significant comparative edge in the short to medium term. Since there is no
distinction between construction steel materials, manufacturing cost is a critical factor in determining a
company's competitive advantage. According to our figures, the cost of billet production in HPG's blast furnace
is just 9.1 million VND/ton in 2019, which is 10-17 percent less than the cost of billet production in domestic
electricity furnace companies. After the Dung Quat Iron and Steel Complex became operational, HPG was able
to raise market pressure on rivals in the South and Central. With this result, Hoa Phat Steel sustained its
business spot in the steel industry ( SSI, 2019)
Tam Hong Phat Furniture: Tan Hong Nhat Wood Furniture is dedicated to providing high-quality goods at a
fraction of the cost of similar products on the market. With a team of highly skilled, passionate learners, the
firm has a team of designers with a wealth of talent and experience who are constantly updating the new
developments. This means the Tan Hong Nhat Wood Furniture models are one-of-a-kind in terms of style and
long-term longevity. Tan Hong Nhat Wood Furniture looks forward to collaborating with design units to
introduce to market better quality items with more advanced technology practices, with all of the company's
passion and efforts.
Conclude: Threats . HPG is affected by alternative product variables such as product quality, operation, price
competitiveness, demand, revenue, and development. People will construct at home, which is cheaper and less
expensive. This is seen as a threat to HPG so people would consume less, resulting in sales reduction.
2.1.5. Threat of new entrants (Low)
New competitors have little chance of affecting Hoa Phat Group's market share. This is attributed to two
factors: the incredibly high cost of starting a business in the market, as well as the additional high cost of
establishing brand awareness. Any new entrant into the steel industry's markets would need a large sum of
money to promote and build product demand. Furthermore, mature technologies find it impossible for
emerging entrants to reach the market because they must first acquire the necessary technologies before they
can compete successfully. As a result, rival organisations will struggle to overcome it.

In the steel industry, the Hoa Phat Group faces numerous challenges. One of the challenges HPG
faces is the influx of newcomers. To begin with, there are some newcomers, such as foreign companies that
have recently invested in Vietnam. Posco (South Korea), Essar Steel (India), Tycoons Worldwide Group
(Taiwan), Minmetan (Australia), among others are among the global investors. The steel industry, on the other
hand, necessitates a large amount of money and strong technological expertise, making it difficult for many
small businesses to join. Only HPG and HSG are able to sustain a healthy profit while the profits of other
businesses are declining. In a fiercely competitive market, price takes precedence over consistency. Those
organizations that have a well-known brand identity, a wide market share, and tight cost management may
exist. As a result, the newcomers have placed some pressure on HPG in the steel industry, but not a lot.
2.2. PESTEL Analysis
This in-depth PESTEL study of Vietnam aims to discuss some of the country's current political, economic, social,
technical, environmental, and legal issues. The Socialist Republic of Vietnam is Vietnam's official name. It is one
of the world's most populous nations and aspires to become an industrialized country as soon as possible.
A. Political Factors
The president of Vietnam is the elected head of state and the military commander-in-chief, while the prime
minister is the head of government. It is a country where the Communist Party of Vietnam (CPV) plays a
prominent role in almost every aspect of life. Many observers contend, however, that while Vietnam's political
ideology is socialist, many of its economic policies are neoliberal.. Vietnam has a policy of establishing and
retaining friendly ties with all countries around the world, regardless of their political views on international
issues. It belongs to the United Nations (UN), the World Trade Organization (WTO), the Association of
Southeast Asian Nations (ASEAN), the Non-Aligned Movement (NAM), and a number of other prestigious
organizations. Despite Vietnam's tumultuous past with the US, the two countries' ties have vastly strengthened
in the last two decades.(Hawandwhat,2020)
However, according to Human Rights Watch (2020), Vietnam has a dismal human rights record. Freedom of
speech, union, and nonviolent democratic assembly are all severely limited, and activists are routinely
incarcerated. Since the Communist Party of Vietnam dominates the country's institutions, journalists and
media outlets are often subjected to retaliation for discussing controversial issues or criticizing the regime.
Similarly, corruption is a challenge, despite Vietnam's attempts to eliminate it since 2016. The legislation must
be continually improved and supplemented, but Vietnam still has a stable political environment, allowing
domestic and foreign businesses to spend, produce, and do business with confidence. At the same time,
Vietnam is rapidly integrating into the global economy, providing numerous opportunities for international
companies to invest in the country as well as increasing pressure on domestic businesses to develop.