QUESTION 1

1. Compare the similarities and differences between the two business models of Vinshop and
G7 mart. Let's analyze whether Vinshop will die prematurely like G7 mart.

Similarities:

 Object: Retailers

 Model: Franchise

 Benefits:

 Create the direct connection between retailers and suppliers.

 Inter-mediational cost is disappeared.

 Standardize decoration

 Profitability optimization

 Quality good source

Differences:

Vinshop G7 Mart

Business model B2B2C B2B

Establish 5/10/2020 5/8/2006

Status Die In progress

Technology Make use of technology through Have limitations in applying

application Vinshop app in order management, technology
revenue management, terms of
payment (QR code), debit.

Purchasing strategy- Make profit on purchase price Make profit on sale price
Price (input), which make their product (output), which make their
price reasonable for both retailers product price high
and consumers with transparent
prices and preferential purchase
programs

Distribution system Provide good source of goods for Support each store (spend 50-
stores. Vinshop has a stable supply 200 million VND for each
chain and issues a set of standards in store). G7 Mart distributes
receiving and delivery products goods at higher price
compares to others, there was
also not enough goods to
supply for its mini shops
 Types of items Mainly, food, cosmetics, alcohol, soft Expanding product range
drinks, which are dominated market (include clean agricultural
share by many multinational product)
corporations

Finance Cooperate with Techcombank to Support G7 Mart at 50-200

launch a campaign called “Ung von” million each store  the
with up to 70 million VND, interest lowest total expenditure must
free for 40 days for grocery owners be up to 475 billion VND for
10,000 G7 Mart points

Analyze whether Vinshop will die prematurely like G7 mart

Reasons why G7 Mart dies prematurely:

- Equity management: Support G7 Mart at 50-200 million each store. Therefore, the lowest
total expenditure must be up to 475 billion VND for 10,000 G7 Mart points. This is too much
compared to the amount of capital that G7 Mart had before. This has led those in the retail
industry to question the feasibility of the strategy.

- Capacity for competition: G7 Mart's rival is the manufacturer. Trung Nguyen's product group
is distributed mostly by food, cosmetics, alcohol and beverages. These are the items that are
dominated by multinational corporations, and have a proactive distribution strategy
according to consumer habits in Vietnam. Moreover, G7 Mart only bought in the form of
retail sales contracts, but no guaranteed any price and quantity issues.

- Distribution system: There are not enough supplies for the mini shop chain that G7 opened.
Higher distribution prices than other distributors make G7 Mart discredit customers and
distributors.

- Technology application: had limitations in applying technology, G7 mart had not taken full
advantage of technology in management the sales chains.

Thus, if the business wants to thrive in the market, I think they should:

- Have a good equity management strategy: A common reason why businesses fail is that they
have insufficient operating funds. When the business does not have a clear plan on spending
and managing their capital, they will loss soon.

- Understand or appreciate the impact of global economic integration: We have only seen the
benefits of integration, but we have not grasped the flip side of it. Once global integration,
foreign goods and services enter our country with a fierce level of competition.

- Competition capacity: Enterprises that know how to cut costs, change technology, improve
production productivity, expand the market ... It is possible to compete with goods and
services from other enterprises.

- Flexible - Technology and management: Quick to improve in technology and management

capacity. Businesses should know how to stop and change at the right time or know how to
cooperate with businesses that are effective. They should make more creative investment
and breakthrough in new areas of business.
Let’s analyze Vinshop:

- Technology application: The application of technology to optimize the logistics process,

helping to reduce product costs to consumers is within the vision and strong commitment of
One Mount Group in creating a comprehensive digital technology ecosystem for
Vietnamese.

- Capital management: Not invest too much in each shop but help the grocery owners access
to capital easily with limited capital, the grocery store owner has difficulty importing bulk (2-
3 times the normal). VinShop helps to solve this barrier with loan support up to VND 70
million, free transaction, interest-free for up to 40 days

- Vinshop also wants to bring Vietnamese agricultural products to the Vietnamese market
without having to go through a foreign retailer.

- Care much about benefits of customers, retailers and other businesses:

 The introduction of VinShop helps grocery store owners keep up with modern
technology life. Grocery store owners have the opportunity to increase their income
up to VND10 million per month, not only through pure sales but also through new
revenue by participating in the display of goods of brands and many programs to
connect and introduce products to the end users of VinID continuously organized.
VinShop also brings special benefits to grocery store owners, including rich sources
of goods from suppliers, transparent prices, preferential purchase programs, smart
goods management.

 VinShop helps businesses increase market coverage through online ordering for
grocery owners on mobile apps. VinShop has now helped directly connect suppliers
with more than 20,000 grocery store owners in the two largest markets in the
country, Hanoi and Ho Chi Minh City. HMRC will continue to grow strongly in the
near future. Especially, the opportunity to immediately reach more than 10 million
users of VinID app helps brands understand the consumer behavior with the aim of
capturing trends and planning financial business more effectively. VinShop also helps
increase the visibility of brands by displaying "stall 4.0" and easily controls the
display image of goods at all grocery stores.

 Consumers will benefit from the whole process of improving chain efficiency by
buying cheaper products at any grocery stores nearby. Customers will also have a
more modern shopping experience at familiar stores such as receiving many
promotions and cashless payments through VinID Pay e-wallet...

 Based on the reasons above, I believe that Vinshop will not die prematurely like G7 mart.

QUESTION 2

2. According to Tuoi Tre Online, the total number of people participating in multi-level
marketing in 2019 is about 1.1 million, of which the number of people who generate
revenue and commission accounts for about 50%, reaching about 12,575 billion VND.
Thus, on average, each person generating revenue is only 2 million VND/month. However,
many students and workers have been drawn to participate in the hope of earning billions
of dollars a year from this participation.
- Study about the multi-level business model and its downside.

- Find out why many people want to start a business this way, and explain the ways to attract
participants of multi-level companies

- Give some examples of how the laws of Vietnam and other countries have regulated the control
of multi-level business.

Study about the multi-level business model and its downside

- Multi-level Business Model is a direct selling method through a pyramid structured

network of distributors. People recruited as independent distributors sell company’s
products or services. These distributors recruit distributors of their own. They earn
commission on their own sales revenue and on the sales revenue of their downline
recruits, who are below them in the structure. The main focus is on recruiting
downline and selling as much as you can to earn more commission.

MLM tree structure

 Multi-level selling has the following characteristics:

- Multi-level selling is a type of direct selling, a marketing method for retailing goods.

- The wholesale insurers market their goods through participants organized at various
levels.

- Participants enjoy commissions, bonuses, and other economic benefits from the
results of their own sales and those of other participants in the network they organize.

Downside:

 First, for multi-level business:

Businesses with variable multi-level business behavior have tainted the face of genuine businesses. It
has a negative impact on legitimate multi-level businesses because more and more participants are
lured, scammed to become victims of nefarious multi-level business, which will damage the
reputation of other legal multi-level business. Typically, the scam of The Vietnam Multi-level
Business Company in 2016 has shocked the public, causing significant damage to society. From the
scams of multi-level business companies, leading to consumers' apprehension towards multi-level
enterprises and the products of these enterprises; along with the psychology of regardless of
whether the business is genuine or illegal exists in the majority of consumers.

Therefore, multi-level businesses have difficulty in creating trust with consumers, now this bad
reputation is more difficult and makes the competitive environment become unhealthy.

 Second, for multi-level sales participants and consumers :

When the form of fixed assets is transformed, participants will be the first to suffer direct damage. It
takes a lot of money to become a member of the network.

For consumers, nefarious employers often focus on deceiving participants rather than improving
product quality. Therefore, the appearance of these kind of multi-level businesses makes consumers
bewildered about the quality of the products they are using. In addition, poor quality goods, not true
to what is marketed will appear more and more. Consumers spend a lot of money to buy goods but
not commensurate with that amount. The fact that businesses give wrong information to consumers
to buy products is a scam, but this behavior is increasingly sophisticated, with many tactics.
Therefore, not all consumers are knowledgeable enough to distinguish and they can easily become
victims to these illegal multi-level businesses.

 Third, the negative impact on society :

The unfair competitive environment is illustrated by the way these companies attract participants or
say badly about other's reputation among participants, as well as between businesses... More
seriously, these things can disrupt human-human relations, disrupt social security order, create an
unhealthy competitive environment and also have an effect on the morality of the nation.

It also creates disunity among relatives, because people deceive each other to sell multi-level goods.
This type of business also contributes to arousing cruelty in every person. Because when money is
put into business, at the risk of losing capital, people are willing to lure their relatives to become
victims. As a consequence, not only an economy crisis appears, but a society will also be lost much
more moral values.

Find out why many people want to start a business this way, and explain the ways to attract
participants of multi-level companies

- Why do many people want to start a business this way?

 Multi-level companies have relatively low-cost for representatives. Because the

startup fees of an MLM are much smaller than starting a small business or a
franchise, it is easier to invest in and walk away from these "sunk costs." A sunk cost
refers to money that has already been spent and cannot be recovered. It is easier to
walk away from $500 lost than it is $20,000 funneled into a small business.

 Every individual in the system benefits from obtaining many commissions.

 The companies benefit from selling a lot of goods.

 The amount of goods in good circulation brings a lot of value to consumers.

 Contributing to the development and growth of the economy.

 Minimizing intermediary costs for manufacturers: Because goods go directly to

consumers, there will be a lot of cost reduction for distribution points.

 Solving the problem of unemployment for society: From housewives, students to

office workers, ... All can participate in multi-level business model to earn for living.
Especially, the work environment is very flexible in terms of location and time.
 Accordingly, this model not only helps society solve the problem of unemployment
but also contributes to economic growth.

 Due to not having to invest much in intermediate cost, the quality of products from
multi-level companies is quite high. Therefore, consumers can easily access and use
the product.

- Explain the ways to attract participants of multi-level companies.

 The target of this company is mostly housewives and the unemployed because
they don't ask for experienced people to participate, but choose people who
have little understanding and knowledge but have gullible relationships with
households to make it easier to sell and promote services.

 Multi-level companies have attractive promises of income levels and

promotion. Every individual in the system benefits from obtaining many
commissions.

 They also offer talkshows or training with the aim of seducing and attracting
people to participate in big business deals.

 In addition, the multi-level businesses apply efficiently these characteristics:

 Peer pressure: People often look outwards, observe the outside world
and on which to evaluate or orient their lives. Therefore, people are
often very easy to attract, imitate their peers.

 Fear of missing out: Participants fear themselves of not excelling as

others, fearing of falling behind when not participating in projects that
make money and selling multi-level caves can help them.

 Lazy and greedy: People are always looking for the easiest and
quickest action options, in order to save energy but expect to receive
more than what they spend. Thus, people both want to constantly
achieve more benefits, and always prioritize the easiest and least
expensive options. Multi-level companies have attacked this very
weakness, in order to tempt participants.

Give some examples of how the laws of Vietnam and other countries have regulated the control of
multi-level business.

- In Vietnam:

 The Government has just issued Decree No. 98/2020/ND-CP providing for
sanctioning administrative violations in trade, production, sale of counterfeit
goods, prohibited goods and protection of consumer rights, which stipulates
fines for administrative violations of business activities in multi-level methods.
 Specifically, a fine of from VND 80-100 million shall be imposed on a multi-
level sales enterprise that commits one of the acts: Requiring others to make a
deposit or pay a certain amount to be signed a contract to participate in multi-
level sales; requires others to purchase a certain amount of goods in order to
be contracted to participate in multi-level sales; allow multi-level sales
participants to receive money or other economic benefits from the
introduction of others to participate in multi-level sales activities and not from
the purchase or sale of goods of that referred person; The fine is twice the
above-prescribed fine in case the violation is committed from two provinces or
centrally-run cities or more.

 A fine of from VND 5-10 million shall be imposed on participants in multi-level

sales activities in the locality where the enterprise has not been granted
certification of registration of local multi-level sales activities.

 A fine of 10-20 million VND shall be imposed on a multi-level sales participant

who commits one of the violations: Requiring others to make a deposit or pay
a certain amount or to buy a certain amount of goods in order to be signed a
contract to participate in multi-level sales; providing false or misleading
information about the bonus plan, rules of operation, benefits of participating
in multi-level sales, features, uses of goods, operations of multi-level sales
enterprises; ...

 Acts of participating in the activities of multi-level organizations and

individuals not yet granted certificates of registration of multi-level sales
activities will be fined from VND 20-30 million.

 A fine of from VND 30-50 million shall be imposed for conducting multi-level
business without being granted a certificate of registration of multi-level sales
activities with nefarious profits of less than VND 200 million or causing
damage to others up to less than VND 500 million, except for cases specified.

 Fine up to VND 60 million for paying the total value of commissions, bonuses...
in excess of 40% of revenue

 A fine of 30-40 million VND shall be imposed on a multi-level goods enterprise

that commits one of the following acts: signing a multi-level sales contract
with an individual who is not eligible to participate in multi-level sales as
prescribed by law; failing to terminate a contract with a multi-level sales
participant when a multi-level sales participant is sanctioned for prohibited
acts in multi-level sales activities; failing to make or improperly comply with
regulations on making lists of trainers, keeping attached records, publishing
the list of trainers on the website and notifying the Ministry of Industry and
Trade; ...

 A fine of from VND 40-60 million shall be imposed on a multi-level sales

enterprise committing one of the violations: Failure to perform or improperly
comply with regulations on notifying the Department of Industry and Trade
when organizing conferences, seminars and training on multi-level sales
attended by 30 or more people or attended by 10 participants multi-level or
more sales households in the locality where the trader has been granted
 confirmation of registration of multi-level sales activities; failing to coordinate
with the authorities in the process of the authorities performing their
responsibilities for monitoring, inspecting and supervising conferences,
seminars and training on multi-level sales of traders; pay multi-level sales
participants the total value of commissions, bonuses and other economic
benefits, including benefits enjoyed under the promotion, in a year exceeding
40% of the multi-level sales revenue in that year of the trader;

 Multi-level sales enterprises carrying out promotions using a multi-level

network, many branches in which participants of the promotion have more
than one location, code or other equivalent forms will be fined from 60-90
million VND.

 Thanks to Decree No. 98/2020/ND-CP, the total number of people participating in multi-level
business model in the 2020 is 832,385 - decreases 25% compared to the end of 2019. By the end of
June 2021, the number of people participating in this kind of business decreased by 8.5% - 761,502
people. The total tax paid by multi-level business model in the State budget in 2020 reached more
than 1,837 billion VND, in the first 6 months of 2021 was more than 1,338 billion VND.

- In other countries:

 Bangladesh:

In 2015, the Government of Bangladesh banned all types of domestic and foreign MLM trade in the
country.

 China:

In 2005, Chinese government enacted a law called Regulation of Direct Sales and Regulation on
Prohibition of Chuanxiao (Chuanxiao stands for MLM). With this regulation, China makes clear that
while Direct Sales is permitted in the mainland, MLM is not.

 Saudi Arabia:

MLM marketing is banned in Saudi Arabia by imposing religious fatwa nationally, for this reason
MLM companies like Amway, Mary Kay, Oriflame and Herbalife sell their products by online selling
method instead of MLM.
QUESTION 3

3.

a) Explain and give examples of Maslow's hierarchy of needs. Why is Maslow's hierarchy of needs
important to managers?

b) Hieu knew that his company would provide a holiday in Bali for the best salesperson of the
year. He almost won last year and now he really wants to take the trip. He is working very hard
because he thinks he has a good chance to win. What theory does this support? WHY?

a) Explain and give examples of Maslow's hierarchy of needs. Why is Maslow's hierarchy of
needs important to managers?

Psychologist Abraham Maslow theorized that people have five basic needs: physiological, security,
social, esteem, and self-actualization. Maslow’s hierarchy arranges these needs into the order in
which people strive to satisfy them

- Physiological Needs

Physiological needs are the most basic, imperative needs that must be met so that humans can live,
survive, and move toward the next needs in the Maslow Demand Tower.

Physiological needs include needs such as breathing, food, water, clothing, shelter... When these
needs are satisfied, people can function and develop well.

This is considered the most basic and important need, because if this need is not met, all of the
above needs will not be able to be fulfilled.

Example: You can't continue to work at a company and expect to advance when your income is too
low, not meeting your daily living expenses.
Or you can't continue to work in a state of hunger and thirst because your body will feel tired and
have no strength to continue your work.

- Security Needs

The next need in this tower is safety. This makes perfect sense because of the physiological need for
people to survive, then next they need something to ensure maintenance and help them be more
secure to grow.

Security needs include:

 Health

 Personal security

 Emotional security

 Financial security

The development from physiological needs to security needs is most evident in the idiom "Be sure to
dress well" into "Eat well".

Example: When the income is low or depending on your family often choose cheap addresses to eat
to save costs, ensure enough to cover life and serve physiological needs. However, as your income
increases, you will tend to take a better care of your health and choose clean and quality restaurants
to enjoy.

In the enterprise, this factor is expressed by paying all kinds of insurance for employees, provide
work environment with good equipment.

- Social Needs

When their basic needs are fully met, they begin to want to expand their relationships such as
friendship, love, partner, co-workers, etc. This need is expressed through relationships such as
family, friendship, intimacy ... to create a sense of belonging, closeness, help people feel free from
loneliness, depression and anxiety.

Example: As a freshman, the first thing you are interested in is finding a good, safe place to study.
After a period, you start expanding your friendships in class to help you feel happier, less homesick
or not alone when you go to school. Don't stop there, if this need is dissatisfied, you can continue to
join school's clubs to expand your relationship.

- Esteem Needs

At this level, human needs refer to the desire to be valued and accepted by others. They start trying
to get recognized by others. This need is expressed in a person's self-esteem, confidence, trust, and
level of success.

The need to be respected in the Maslow demand tower is divided into two categories:
The desire for fame, respect from others: expressed through the reputation, status, position that
others achieve in society or in an organization or group.

Self-esteem: this is an extremely important factor for self-development, it manifests itself in the
importance of self-dignity and morality. A person's lack of self-esteem can lead to guilt, often
worrying about the difficult things in life.

Often, people who have received respect and recognition from others tend to respect themselves,
be confident, and proud of their abilities.

To achieve this need for respect, people need to try and strive to develop themselves. Achievements
and results that deserve to be contributed will make others respect you more. This need is most
evident in trying to advance at work.

Example: After having joined the school's clubs to satisfy the need to expand the relationship. After
a while, you start wanting to be a leader in that group of people, wanting to be respected by
everyone. At this point, new demand has appeared and you start to make an effort, trying to achieve
by participating in activities more often, working hard to contribute to the club... Over time, you are
nominated as a team leader or higher position in the group. And this is where your respected needs
are met.

- Self-Actualization Needs:

This is the highest human need. It is located at the top of the Maslow demand tower. Once you have
satisfied all your needs at the four levels below, the need to express yourself to be recognized begins
to appear. And Maslow argues that this need does not stem from the lack of something like the
other four needs, but from the desire for human development.

This need often arises in successful people, who continue to develop their potential, strength,
wisdom to be seen by others. Most of these people work to satisfy their passions, to find the values
that truly belong to them. Therefore, if this need is not met, people will regret that their passions
have not been fulfilled.

This need is manifested in the fact that people can give up a job that offers high status, fame and
attractive salaries to do the jobs that they love, passionate about.

Example: A senior financial analyst. This is someone who has a secure, well-paid job and happy
family. This person is in a respected position at their company and among their colleagues. It is
unlikely that this person's motivation is focused on their physiological or security needs, as these are
clearly met. Instead, they will seek to strive for personal growth and happiness. They will seek to
meet their self- actualization needs and discover what the world has to offer them, and what they
must serve the world.

Why is Maslow's hierarchy of needs important to managers?

- For HR management: Knowing Maslow's hierarchy of needs, managers can manage in

a smarter, more ingenious and efficient way. Knowing this, managers can understand
the needs of each individual in the company, offering policies such as salary, working
conditions, reasonable vacations and promotion regimes suitable for good employees.
As a result, businesses can recruit more talented employees to help the company
grow.
Example:

 Physiological needs:

Employees are paid fair salary by evaluating their positon and their dedication for the company.
Moreover, that amount of salary must ensure the minimum expenses for employees. Besides, the
company or the managers should offer perks such as gas, lunch, suitable work time and rest.

 Security needs:

The company must ensure good work conditions for employees. This is expressed through the
signing of labor contracts, compliance with the provisions of law on the payment of social insurance,
health insurance for employees and unemployment insurance.

 Social needs:

Meeting the social needs in management is expressed by building teamwork, forming trade unions,
departments. In addition, it is necessary to organize trips, team buildings or extracurricular activities
annually for staff and employees to maintain good relationship among team members and also the
time for them to refresh mind.

 Esteem needs:

At work, there should be clear career advancement for employees in terms of salary and position.
Give authority with responsibility to each employee, also have rewards and punishment to
encourage employees.

 Self-Actualization needs:

Explore and provide opportunities to develop the strengths of each individual in the company.
Consider leadership positions for the best employees. Give employees empowerment with the aim
of contributing to the development of the company.

- For marketing: Businesses need to rely on the characteristics of the customer group
according to each level of needs and choose the most effective communication
channel. Understanding the needs of customers as affordability is the key to helping
businesses create many advantages for themselves in fierce competition in the
market.

b) Hieu knew that his company would provide a holiday in Bali for the best salesperson of the
year. He almost won last year and now he really wants to take the trip. He is working very
hard because he thinks he has a good chance to win. What theory does this support?
WHY?

This scenario supports Expectancy Theory: The assumption that motivation depends not only on how
much a person wants something but also on how likely he or she is to get it

- A person who wants something and has reason to be optimistic will be strongly
motivated.
 - If you do not believe you are likely to get what you want, you may not be motivated to
try to get it, even though you really want it.

Motivation
Expectancy Instrumentality Valence
Effort Performance Reward
Can he hit his Will hitting his Does he find the
target if he works target lead to rewards
hard? reward? desirable?

1. Expectancy

Expectancy is the belief that if an individual raises their efforts, their reward will rise as well.
Expectancy is what drives a person to gather the right tools to get the job done.

2. Instrumentality

Instrumentality is the belief that the reward you receive will depend on your performance in the
workplace. For a reward to have a positive impact on someone’s future contributions at work, it
should follow some basic guidelines

Generally, instrumentality increases if you feel that you have more control as to how, why or when
you will receive rewards.

3. Valence

Valence is the importance you place on the expected outcome of your performance. This often
depends on what your individual needs, goals, values and sources of motivation are.

 Hieu believes that the more effort he puts into working the more opportunity he can be the
best salesperson of the year (expectancy) and he believes that if he can be the best
salesperson of the year, he can have the trip to Bali, which he really wants (instrumentality)

He works hard because he knows that only by working hard, he can achieve his target, in addition,
he really wants to take this trip and he is confident to win the title the best salesperson of the year
because he almost won it last year (valence)
 In this case we can see that Hieu really wants to become the best salesperson of the year
which helps him to have a wanted trip to Bali and he is confident that he can have a good
chance to win it because he almost won last year.