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APL Vietnam Resource Allocation and Economic Policy Effects

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Published: Tue, 26 Sep 2017

Economic systems attempt to allocate APL Vietnam’s resources effectively

When people begin to buy and sell their products, economy was born, however, come with that there are many problems happen, so it’s time to set up a system to solve these problems in the effective way. And there are three types system that can help to solve problems; they are free market economies, command economies and mixed economies.

  • Free market economies

In free economies system, it’s just like its name; it’s free so the resources are allocated through the interaction of free and self-directed market forces. In this system, what the products should be produced depend on the customers, how to produce is depend on producers and who will get the products will base on the purchasing power of customers.

  • Command economies

In this system, command economies mean the economies will be under the control of the Government. At this time, the scarce resources will be allocated by the Government, everything will be decided by the Government, what to produce and for whom to produce will be determined by Government preferences and how to produce will be determined by government and their employees.

  • Mixed economies

Mixed economies system has the distinct private sector as well as public sector, most the decisions are made by the Government with the market orientation. In this system, what to produce will be determined partly by consumers preferences and partly by Government, how to produce will be determined half by producers and half by Government and for whom to produce is determined half by purchasing power and half by Government preferences.

(sources: economicsonline.co.uk[5/7/2013])

As you can see, the main differences of three systems above are about what to produce, how to produce and for whom to produce. These three things are the factors that make these three systems become distinction to each other.

Now, in my opinion, the UK is now using open economy system, to know about this clearly, we should know what the open economy system is. Open economy is mostly free from trade barriers and where exports and import for a large percentage of GDP. No economy is surely 100% total open or closed in term of trade restrictions. Degree of openness of an economy determines a government’s freedom to pursue economic policies of its choice, in term of the percentage of the GDP dependent of foreign trade the UK is more open economy than the US.

(sources: businessdictionary.com[5/7/2013])

To the open economic system is good or bad for UK, now we can see some example for the reliable resources, according to BBC news the gross domestic product in Q1 of 2013 increased 0.3%. GPD growth between Q4 2011 and Q1 2012 was revised from a fall of 0.1%, this means the UK economy did not take any impact from the double-dip recession as previously report.

(sources: bbc.co.uk[5/7/2013])

(sources: tradingeconomics.com[5/7/2013])

On top of that, the grow in service industries resumed in Q1 2013 has increased by 0.5%, the output of distribution, hotels and restaurants industries increased by 1.2% in Q1 2013, the output of transport, storage and communication industries rose by 1.4% in Q1 2013 because of the increasing in computer programming, consultancy and related activities, land transport and telecommunication and the output of government and other services increased by 0.4% in Q1 2013.

 

The impact of the fiscal and monetary policy on APL Vietnam and their business activities

UK fiscal policy is concerned with Government spending, taxation and the budget deficit. For an example, if UK Government reduces the budget deficit through higher taxes and lower spending, this is a deflationary fiscal policy or tight fiscal policy.

UK monetary policy involves using interest rates and other monetary tools to influence the level of consumers spending and Aggregate Demand (AD)

The target that the UK monetary policy headed to is to control the inflation within a target of CPI 2% +/-1. On top of that, UK also considers other macroeconomic like growth and unemployment.

However, the UK monetary policy is not set by the Government, it’s set by the Monetary Policy Committee (MPC) of the Bank of England, they are independent of setting the interest rate however, they have to meet the target of Government is to control the inflation.

(sources: economicshelp.org[6/7/2013])

These two policies are very important to the economy around the world in general and UK economy in particular, because these policies can be used to deal with two main problems of economy, they are unemployment and inflation. As you know, the fiscal policy is used to fight with the unemployment because it requires popular actions like increasing spending and cutting taxes. However, when fighting with inflation Government need to take unpopular action reducing spending and rising taxes, so Government has to use monetary policy to deal with inflation. So I can say, it’s very important for UK economy.

(sources: economics[6/7/2013])

APL logistics is now working in UK, so UK environment takes many impacts to APL Company because of these policies. As you do know, the world now is in the inflation so the monetary policy will be used. The actions of Government can be increasing the interest of bank loans, reducing the money supply for company and increasing taxes. For APL logistics, they are big problems for company because APL logistics is an international company, when it comes to UK; it needs the helps from Government now the inflation happens, of course the profit of company will go down, however, at this time, the interest rate of bank loans are high, APL cannot approach the loans because APL has to pay more, and with the limited of money supply so it cannot help APL very much at this time, and Government also increases the taxes. The expenses are high compare with the retained earnings are low, APL has to help itself to overcome the inflation, if doesn’t it has to go bankrupt, and this is the reason why so many companies go bankrupt when inflation happens.

On top of that, the balance of money is also focused by the Government; it’s about import and export. The APL company s working in logistics, this is the main field that company work on, in other words, APL is developing or not depend on the import and export of the host country, in this case is UK. The import and export of company need to balance, if the export is greater than import, foreign debts will arise, if there are too many debts this country may be in trouble of bad debts. So to control the import and export, UK government has increased the import taxes so if there are any products come to UK from other countries, consumers have to pay more. Most of people don’t want to pay more because there are many other alternative products that come from UK with lower prices, and the import will automatically reduce. To increase the export, UK government can reduce the prices of which products are exported so the taxes can also reduce when UK’s products go to other countries. There are two possibilities that APL logistics has to face with, and in some cases, if the import and the export of one country is decreasing, this will have a bad impact to APL logistics, in this case is UK.

The impact of competition policy and other regulatory mechanisms on the activities of APL Vietnam

In general we can understand the policy is the policies intended to prevent collusion among firms and to prevent individual firms from controlling the market, and having excessive market power. Major forms include oversight of mergers and prevention of price fixing and market sharing.

(sources:.investorwords[7/7/2013])

In UK, competition lax is a flexible instrument. With one exception, the legislation is based on the premise that each case should be judged by the actual effect which a practice has on competition and whether it is against the public interest. The public interest has a broad meaning and is not precisely defined in the legislation.

(sources: http://businesscasestudies.co.uk[7/7/2013])

Although we know that, if there is not competition there will be no development, so you can see the competition is very important because companies will try to make their products become better and cheaper to meet the need of consumers. However, because of the competition, many companies can forget the customer’s health; they just focus on their profit like products with low quality and sell at normal price (like any other good quality products). They just want to attract more customers so they can have more profit. Another reason that makes Government have to release the competition law is “dumping”, this will destroy the price standard in the market.

So the Government makes market because a healthy market by setting the standard of products, all the products want to sell to the market, have to pass all the standards that Government released. With the dumping, Government will control all the prices in the market, if company want to sell any products to market, these products need to have the agreement of the Government, on top of that, Government will public the prices of food, gas, electricity to prevent companies that work in these fields increase the prices. On top of that, there are two basic rules in the market that never steal customers from other companies and when one company want to compare products between its product to other companies’ products they can’t use the really name of other companies’ products. With all these basic things that I have mentioned above, Government try to control the competition that doesn’t make it become a disaster.

The competition policy makes the market become healthier; this means it makes all the businesses are more responsible of what they do. For APL logistics, working in UK this policy make APL thinks carefully before APL wants to do something. For example, if APL promises about the quality that APL provides to customers, it must be exactly right of what company say. On top of that, when APL wants to merge or buy other companies in UK, it must be under the supervising of the Government to prevent dominating a market by a firm, in this case is APL. So it’s very hard for APL if company wants to expand its company thought buying another company. So everything must be clear to prevent the misunderstanding of taking the controlling of market.

(sources: Wikipedia[7/7/2013])

On top of that, there are some other regulatory mechanisms that APL has to follow when doing business in UK.

Health law: as you can see, APL logistics has many mega ships, and when APL works in UK, these ships also release many carbon dioxin and this will make the air become polluted and cause many bad impacts to people who live in UK. So to work in UK, those ships have to meet the standard of pollution or use some green technologies to reduce the carbon dioxin.

Labor law: APL logistics is a big company so it’s very need the big number of employees, to protect UK people, the UK Government releases this law to protect the employees. APL must be treat employees fairly, the working hours or the holidays, and salary all the things must be clear and public to prevent the misunderstanding and lack of is responsibilities when some things unlucky happen.


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