ASSIGNMENT 1 FRONT SHEET
Qualification BTEC Level 5 HND Diploma in Business
Unit number and title Unit 32: Business Strategy (574)
Submission date 31/3/2021 Date received (1st submission)
Re-submission date Date received (2nd submission)
Student name Nguyễn Võ Ngọc Vũ Student ID GBD191057
Class GBD0802 Assessor name Nguyễn Hữu Nam Phúc
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I certify that the assignment submission is entirely my own work and I fully understand the consequences of plagiarism. I
understand that making a false declaration is a form of malpractice.
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Table of Contents
Introduction .................................................................................................................................... 4
Report ............................................................................................................................................. 4
1. The strategic context of the company ................................................................................. 4
2. Macro environmental audit ................................................................................................. 5
3. Industry/sector audit ......................................................................................................... 10
4. Stakeholder analysis .......................................................................................................... 13
5. Main opportunities and threats......................................................................................... 15
Conclusion ..................................................................................................................................... 16
References .................................................................................................................................... 17
Table of Figures
Figure 1 Logo of Shopee.................................................................................................................. 4
Figure 2 Households with computers per 100 households (Communications, 2014). .................. 7
Figure 3 Number of mobile phone subscribers per 100 inhabitants .............................................. 8
Figure 4 Internet users per 100 inhabitants (Communications, 2014). ......................................... 9
Figure 5 Porter's Five Forces (Gerry Johnson, Richard Whittington, Kevan Scholes, Duncan
Angwin, Patrick Regnér, 2014)...................................................................................................... 10
Figure 6 Shopee Stakeholder Map (Coggle, n.d.) ......................................................................... 13
Figure 7 Shopee’s stakeholder mapping (author's design) .......................................................... 14
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Introduction
This report will conduct some analysis about how the external factors influence the business
strategy decision-making through the macro-environmental audit, industry audit, stakeholder
analysis. Moreover, this report will apply some methods and theories as means of analyzing
such as PEST model, Porter’s Five Forces, stakeholder mapping,… Besides, to be more specific, it
will be used Shopee as an example to analyze.
Figure 1 Logo of Shopee
Shopee is the leading e-commerce platform in Southeast Asia and Taiwan. Launched in 2015, it
is a platform tailored for the region, providing customers with an easy, secure, and fast online
shopping experience through strong payment and fulfillment support (Shopee, 2021).
Report
1. The strategic context of the company
The strategic context of Shopee includes vision, mission, and objective. “We believe online
shopping should be accessible, easy, and enjoyable. This is the vision Shopee aspires to deliver
on the platform, every single day.” Shopee’s mission is: “We believe in the transformative
power of technology and want to change the world for the better by providing a platform to
connect buyers and sellers within one community” (Shopee, 2021). Shopee's objective is to
continue to develop and upgrade its e-commerce platform to become the best choice across
the region (Viet, 2017). This strategic context of Shopee put an influence on the decision-
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making of business strategy. For example, to obtain the objective which is maintaining the top 1
in the e-commerce industry in Southeast Asia & Taiwan, Shopee’s BOD should set a business
strategy to continuously develop the customer service as well as platform’s display quality.
Besides, to achieve its mission which is to change the world better by providing a platform to
connect buyers and sellers within one community, Shopee’s business strategy should have
some more promotion programs to widen the market not only in Southeast Asia & Taiwan but
also the whole Asia or even around the world. Without a business strategy, Shopee may take
risk of losing the position of the leading e-commerce platform by another competitive.
2. Macro environmental audit
Before proceeding with the business strategy, Shopee needs to conduct a macro-environmental
audit to analyze how macro factors influence the decision-making of Shopee. This should be
used PEST model to analyze. To be easier to analyze, Shopee in Vietnam should be used as a
specific area to make an analysis.
A. Political factor:
The Socialist Republic of Vietnam is one of the five remaining single-communist party states in
the world together with China, North Korea, Cuba, and Laos (Rosenberg, 2015). Since there
have been few riots, the Communist Party has kept the political environment relatively
peaceful. The most recent and serious incident was a violent anti-China protest in summer 2014
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in some major cities that destroyed many factories due to China's deployment of oil rigs in
disputed waters. Such factors have an uncontrollable impact on any business especially foreign
and non-state-owned organizations like Shopee (Dung, 2015).
B. Economical factor:
Vietnam’s GDP per capita is 2072,7 USD. The country falls in the lower-middle-income group
(IMF 2014) while 2021 projected real GDP is 6.7 % (IMF, 2021). Vietnam’s population is about
96 million and the country’s unemployment rate is reported to be 32 around 2.5 percent in
many recent years (economics, 2021).
According to Mr. Tran Trong Tuyen - general secretary of the Vietnam E-commerce Association,
said that the growth rate of e-commerce would increase sharply, up to 50% per year. According
to Tran Trong Tuyen, the size of Vietnam's e-commerce market could reach $ 10 billion in the
next five years (Nguyen NT and Tran TT, 2017). With that huge amount of potential customers
and the market value of the industry, the potential of e-commerce in Vietnam is undeniable
(TT, Nguyen NT and Tran, 2018). Therefore, Shopee should continue to maintain leading this
extremely potential market by appropriate business strategies.
C. Social factor:
According to Nielsen (2015), the survey results indicated the average number of money that
every Internet user spent on e-commerce in Vietnam is $ 160 per year. This lead to the annual
growth rate of Vietnam's E-commerce market has reached 22% and the e-commerce access
rate is up to 28%. Moreover, represented by the report of Vietnam E-commerce Association
(VECOM), 32% of enterprises in Vietnam have set up business relations with foreign partners
through online channels since 2016). Meanwhile, 11% of businesses decide to take part in e-
commerce and website operations (Nguyen NT, Tran TT, Wang CN, and Nguyen NT, 2015). This
shows that online shopping becomes a tendency in Vietnam.
D. Technological factor:
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In 2012, the total number of desktop computers and laptops in use is 6 980 353, which means
of every 100 inhabitants, there are around 7,86 computers. These numbers in 2009 are 4,880
800 and 5.63 respectively (Communications, 2014).
The number of households with computers in every 100 households from 2008 to 2012 is
shown
Figure 2 Households with computers per 100 households (Communications, 2014).
The number of mobile phone subscribers in 2013 is 123,735,557, which is approximately 138
percent of the population (Communications, 2014). The next figure shows the number of
mobile phone subscribers per 100 inhabitants from 2009 to 2013:
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Figure 3 Number of mobile phone subscribers per 100 inhabitants
A number of 33,191,166 people meaning around 37 percent of the population is connected to
the internet in 2013 (Communications, 2014). Vietnam is ranked 18th in the world for the
number of internet users and 20 percent of the total internet users have already made
purchases online (VECITA, 2014). The number of internet users per 100 inhabitants from 2009
to 2013 is displayed in the following figure:
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Figure 4 Internet users per 100 inhabitants (Communications, 2014).
Information technology in Vietnam is developing rapidly and is actively supported by the
government. However, it is still at its early stage ( Costello, 2010). The percentage of the
population connected to the internet is still relatively low. The number of people who already
made transactions online stands at 20 percent (VECITA, 2014) meaning a large number of
internet users are not quite familiar with purchasing products or services online (Tran, 2019).
These factors could become a disadvantage for companies in the sharing economy, which is
heavily technology-based.
Conclusion: Through this macro-environmental analysis, it can be seen that the e-commerce
industry in Vietnam is evaluated extremely potential. Moreover, the population of 96-million
people is such a potential market that every large company especially in the e-commerce
industry try occupying the market share. Besides, the statistics in the Technological factor also
provide some very important information about how many there are households with
computers, mobile phone subscribers, and Internet users in Vietnam. All of these things play an
important role for Shopee to make a business strategy in Vietnam. However, the key driver of
changes of Shopee is the Economical factor which shows that the growth rate of e-commerce
would increase sharply, up to 50% per year, and the size of Vietnam's e-commerce market
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could reach $ 10 billion in the next five years (Nguyen NT and Tran TT, 2017). This shows that
the market size of Shopee Vietnam is giant, which creates a lot of opportunities for Shopee to
invest and thrive.
3. Industry/sector audit
This report uses Porter’s Five Forces to analyze the level of competitive factors in the e-
commerce industry sector in Vietnam. The five basic forces include threat of new entrants,
bargaining power of suppliers, bargaining power of buyers, threat of substitutes, and rivalry
among existing competitors.
Figure 5 Porter's Five Forces (Gerry Johnson, Richard Whittington, Kevan Scholes, Duncan Angwin, Patrick Regnér, 2014)
a. Threat of new entrants:
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There may be various numbers of new entrants in the same industry to compete with Shopee.
These new participants may bring new capacity and the desire to occupy the market share.
However, Shopee absolutely has some barriers to entry into the e-commerce sector in Vietnam.
First and foremost, the cost for designing a website or an application as well as promotion at
the first stage is extremely expensive. However, there is a truth that a lot of great organizations
still lost when jumping to the e-commerce industry even though they have a very strong
financial strength for example VNG, Vingroup (Cafebiz, 2014). The reason is, besides financial
factor, the human resource is also an important factor when joining this sector. Unlike other
sectors like the game industry, it could be known whether the company lost or profit only in 6-
12 months. While e-commerce needs to be persistently invested until 3-5 years to know
(Cafebiz, 2014). However, there are some threats from other great and successful foreign e-
commerce companies which are planning to join this sector in Vietnam like Rakuten from
Japan, Weloveshopping from Thailand, Gmarket from Korea,…
b. Bargaining power of suppliers
The suppliers of Shopee are the famous brands or those who want to sell something but every
item will be guaranteed to be real and quality assurance. Therefore, the bargaining power of
Shopee’s suppliers is that they have to collaborate with famous brands or attract them to
collaborate with Shopee. From that, the buyers will have the trust in Shopee and this was done
quite well by Shopee with Shopee Mall but still should be developed more.
c. Bargaining power of buyers
Because too many e-commerce companies were launched and competed with each other by
thousands of discounts, coupons, groupons,… the bargaining power of buyers becomes bigger
than ever. They would be ready to leave Shopee whenever if they found a discount in other
brands.
d. Threat of substitution
Besides, one of the most difficult problems of Shopee in specific and the whole e-commerce
sector in Vietnam is the customer’s trust. The Vietnamese still have not believed completely in
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online shopping. Especially in the fashion sector, for example, like today's customer journey,
she came to Shopee to shopping, then she chose a favorite jean. However, she did not believe if
it might be real. Then, she decided to come to offline stores to buy this jean to be safe.
Therefore, offline stores are the threat of substitution of Shopee.
e. Competitive rivalry
At present, there are 3 direct competitors of Shopee in Vietnam which are Tiki, Lazada, and
Sendo. All of them has a unique selling point that customer will remember when it is
mentioned. For example, almost all customers, when they want to buy books or electronic
devices and need them in 2 hours, will immediately remember Tiki due to its high reliability and
Tiki Now - Express delivery service in 2 hours.
Research in CSFs about E-commerce is in its infancy (Huang, J., Zhao, C., & Li, J., 2007). (Rockart,
1979) is a pioneer, and defined CSFs as “the limited number of areas in which results if they are
satisfactory, will ensure successful competitive performance for the organization”. (Wang, J.-S.,
& Pho, T.-S., 2009) used the Delone and McLean information system success model (De&Mc
model) and found that system quality, service quality, information quality, and complementary
relationships have an impact on brand credibility. This model posits brand credibility with two
dimensions, namely, trustworthiness and expertise. The authors hypothesized that the factors
from the De&Mc model have a positive impact on brand credibility (Nguyen, 2016). However,
these are two factors that Shopee is lacking. The competitive advantage of Shopee is the ease
of registration, low commission fee (2%), and easy quality assurance policy, which lead to the
diversity of products and sellers. However, it brings a problem in terms of fake products and
poor quality goods, which results in the loss of trustworthiness from customers. Besides,
another drawback of the goods’ diversity is the lack of expertise. While Tiki expertise in books,
Sendo expertise in tourism and services (Iprice, 2021), Shopee has not created expertise for
itself. Therefore, Shopee should identify the expertise for itself to be always on the top of
customer’s mind and propose some policies in terms of controlling the registered-for-sale
goods’ quality. At that time, it could be sure that Shopee is totally in Blue Oceans with
significant competitive advantages.
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4. Stakeholder analysis
Figure 6 Shopee Stakeholder Map (Coggle, n.d.)
The above figure is the Shopee stakeholder map which includes: The government, investors,
suppliers, customers, employees, media, and regulators. From a startup in 2015 until now,
Shopee becomes the leading company in the E-commerce industry in Southeast Asia and
Taiwan with thousands of stakeholders. To make a business strategy, a stakeholder analysis
plays an indispensable role, in which a stakeholder mapping should be conducted.
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Figure 7 Shopee’s stakeholder mapping (author's design)
With investors, customers, and suppliers, Shopee should especially pay attention and take care
of them because they are the key players who can decide whether Shopee survive and develop
or not. About regulators, media, and employees, they are those who are dedicating for Shopee
to run and implement almost all the company’s tasks. So Shopee should keep satisfied them to
make sure they are working in the best condition and feel it worthy to devote for Shopee. Next
is the government who has the right to allow Shopee to survive or not in their country but they
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do not pay much interest on any individual company including Shopee. So Shopee should keep
informed them every activity to demonstrate that Shopee is working legally in their country.
This stakeholder analysis is very important when any company wants to formulate a new
strategy because of some reasons. Firstly, it is a method for determining the power and
interests of various stakeholder groups. Secondly, different stakeholders put different
influences on organizational purpose and strategy, dependent on the extent of their power and
interest. Managers can assess the influence of different stakeholder groups through
stakeholder analysis. From that, Shopee’s BOD can provide appropriate business strategies for
each kind of stakeholder.
5. Main opportunities and threats
Through all the external analyses above, it can be drawn some opportunities and threats for
Shopee in Vietnam.
a. Opportunities
- Attract a lot of investors by the leading position.
- Also, attract more talents from other competitors.
- Spend less money on promotional activities due to the big market share.
- Based on the strict industry characteristics, the threat of new entrants is low.
- The growth rate of e-commerce would increase sharply, up to 50% per year.
- Shopping online becomes a tendency.
- The number of potential customers is extremely high.
b. Threats
- The competitive rivalry is high when other competitors are still investing and promoting
extremely fierce.
- Lack of the CSFs of E-commerce is trust and expertise, which should be improved soon
unless Shopee will be lost the leading position by other competitors.
- Still have to compete with offline stores until the Vietnamese change the shopping
behavior.
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Conclusion
This report has just conducted some external analysis of Shopee – an e-commerce company.
Through them, it could be seen that Shopee is in an advantageous time with a range of
opportunities. It is the advantages of the economical factor with high industrial growth rate, the
huge size of Vietnam's e-commerce market, and the online shopping tendency. However, there
are still some threats that Shopee should give appropriate strategy to avoid these threats.
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