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History Since reclaiming Gia Lam Airport from the French over 47 years ago, Vietnam’s civil aviation industry has grown steadily into one of the country’s most vibrant economic sectors, and the national carrier - Vietnam Airlines – is now poised to become a major regional airline. Vietnam Airlines’ history dates back to 1956. Starting with a fleet of only five small aircraft, the first international route was to Beijing, followed by Vientiane in 1976 and Bangkok in 1978. In April 1989, the airline was established as a state enterprise, and in 1996 Vietnam Airlines Corporation was formed, bringing together several service companies with the airline at its core. A six-seat management boards whose members the prime minister runs appoint the corporation. Singapore, Manila, Kuala Lumpur and Hong Kong were added to our network in the late 1980s and early 1990s. With new destinations, including Paris, Taipei, Kaohsiung, Seoul, Osaka, Tokyo, Sydney and Melbourne, Vietnam Airlines now flies form Hanoi, Da Nang and Ho Chi Minh City to 13 domestic locations and 23 major international cities. In April 2001, Vietnam Airlines increased the frequency of flights between Vietnam's most popular domestic destinations. Our newest domestic route, launched in early 2002, runs between Ho Chi Minh City and central city of Vinh. For international flights, our Indochina route links Ho Chi Minh City with Vientiane and Phnom Penh. We also offer five flights per week from Ho Chi Minh City to Guangzhou; seven flights to Osaka; and five flights to Kaoshiung. In May 2001, Vietnam Airlines launched a route in cooperation with China Airlines to the United States. Now you can fly with us between Ho Chi Minh City, Los Angeles and San Francisco. Direct flights between Hanoi/Ho Chi Minh City and Kunming and Beijing were added to Vietnam Airlines' network in 2001. We launched direct flights between Ho Chi Minh City and Tokyo on April 22, 2002; direct flights from Hanoi to Tokyo started on June 29, 2002. The reopened routes to Moscow are also started for the July 2002. In June of this year, Vietnam Airlines Corporation held a ceremony at Noi Bai International Airport to mark the purchase of three ATR72-500 aircraft from the French firm AIR. We also bought four new Boeing 777-200ERs and five new Airbus A321-200s, bringing our total fleet up to 31 aircraft: 11 Boeings, 10 Airbus, 2 Fokker 70s, and 8 ATR 72s. After receiving its first Boeing 777-200 in April 2003, Vietnam Airlines put this plane into operation in May. Three more Boeing 777s will arrive in June, August and September. In 2002, Vietnam Airlines carried some four million passengers and 60,000 tons of cargo. At the end of the year we unveiled our new logo, the Golden Lotus. I: In our organization, First, we will look at the type of the organization. There are two kinds of business organizations: - Unincorporated: - sole trader - Partnership - Incorporated: - private limited company - Public limited company What is private company? Private company is business owned by private entities or people. Mostly it operated for profit or some non-profit organization. And Public limited company is business owned by public (government). It operated for provide goods or services. Some are profit or non-profit Vietnam Airlines is a Public Limited Company that owned by government. Structure and management mechanism of Vietnam Airlines Corporations: The Vietnam Airlines Corporations (hereafter Corporation) was established on May 27, 1995 according to the Decision No. 32/TTG of the Vietnamese Prime Minister. The Corporation consists of: • Seven dependently financed units, including Vietnam Airlines (VNA) the core unit of the Corporation - Eleven independently financed units - Six joint ventures - One joint-stock company (Pacific Airlines) - Two professional units Its aims Vietnam airline’s aim is to give you the best and widest choices in Vietnam airline flight reservations at competitive prices. c. Its stakeholders One reason for the difficulty in understanding social responsibility is that managers must confront the question, responsibility to whom? The organization’s environment consists of several sectors both inside and outside the organization. From a social responsibility perspective, enlightened organizations view the internal and external environment as a variety of stakeholders. A stakeholder is any group within or outside the organization that has a stake in the organization’s performance. Each stakeholder has a different interest in the organization. There’re 8 important stakeholders. Owner, creditors, suppliers interest are served by managerial efficiency, that’s, the use of resources to achieve profits. Managers and employee expect work satisfaction pay, and good supervision. Customers are concerned with decision about the quality and availability of goods and services. Other important stakeholders are the government and community. Most corporations exist under the proper charter and licenses and operate within the limits of the law and regulations imposed by the government, including safety laws and environmental protection requirements. The community includes local government, the natural and physical environments and the quality of life provided for residents. But Vietnam airline has not stakeholder because these company undertaken 100% capital from government for this form company. They called public enterprise company D: responsibilities as a company There are 4 types: 1. Economic responsibility: the business institution is the basic economic unit of society. Its responsibility is to produce the goods and services that society wants and to maximize profit for its owner and shareholder. Quite often, corporation are said to operate solely to maximize profit. Certainly, profit is important to a firm, just as a grade point average is important to a student. Profit provides the capital to stay in business, to expand and to compensate for the risks of conducting business. There is a responsibility to make a profit to serve society. Imagine what would happen to out society if large company or Monopoly Company did not make profit and went out of business. Thousands of people and the economy would be affected. 2. Legal responsibility: all modern societies lay down ground rules, laws and regulations that organizations are expected to follow. Legal responsibility defines what society deem as important with respect to appropriate corporate behavior. Organizations are expected to fulfill their economic goals within the legal framework. Local town councils, stake legislatatiors, and federal regulatory agencies impose legal requirements. 3. Ethical responsibility: ethical responsibility includes behaviors that are not necessarily codified into law and may not serve the corporation’s direct economic interests, to be ethical, organizational decision makers should act with equity, fairness and impartiality respect the rights of individuals, and provide different organization’s goals and tasks. Unethical behavior occurs when decisions enable an individual or company to gain at the expense of society. 4. Discretionary responsibility: Discretionary responsibility is purely voluntary and guided by a company’s desire to make social contributions not mandated by economics, laws or ethics. Discretionary activities include generous philanthropic contribution that offer no monetary return to the company and are not expected. Example, IBM needed to reduce the size of its sales force due to the recession. Instead of firing people, they stop hiring and let normal turnover decrease sales force size. Discretionary responsibility is the highest criterion of social responsibility because it goes beyond societal expectations to contribute to the community’s welfare. II: A: the type of economic system it operates in. Vietnam economic system is currently based on a mixed market economy. Fourteen years ago in 1986, it’s economic system was also based on a command market economy. In 2000, Vietnam had GDP of $28 billion and the estimate for 2002 is 31 billion. The unemployment for 2000 is estimated to be 15% and the inflation rate for 2000 is estimated to be 8%. Although no major economic reforms have been undertaken in Vietnam within the last 14 years, faced with a lack of physical resources and a small domestic market in 1975 after independence, the government of Vietnam adopted a pro-business, export-oriented economic policy framework. Combined with state-directed investments in strategic government-owned corporations the country’s economic strategy was a success as seen through the average growth rate of 6.2% between the economic reforms in 1975 to 2002. B: the role and influence of the state and its policies on the company The 1995 amended Civil Aviation Law: Though the 1995 Civil Aviation Law has already been amended it is necessary to add language on the promotion of competition and privatization. The additions will specify methods for doing business and how to transfer the right of independent decisions on prices, charges and fees to private businesses. The language could be as follows: “Gradually promote competition and privatization in the aviation sector, giving private businesses more opportunities to decide on prices, charges, and fees of their air services and goods” Decree No. 68 of the Vietnamese government (October 25, 1995) on the functions, tasks, powers, and organizational structure of the Civil Aviation Association of Vietnam (CAAV). Article 1 of this Decree states the following condition: “The Civil Aviation Association of Vietnam is an agency under the authority of the Government, which performs the functions of State management over the civil aviation throughout the country.” Article 1 explains how the Vietnamese Government would maintain its monopoly policy in the aviation sector. These restrictions could complicate decision-making procedures and may not coincide with the principles of GATS/WTO, ICAO, and ASEAN. The principles of these organizations require a pro-competitive, non-discriminatory environment. Thus, maintaining this Article may block Vietnam ’s accession to the WTO. Decree No. 04/CP of the Vietnamese government (January 27, 1996) approving “regulations on the organization and operation of Vietnamese Airlines Corporations.” Chapter I, Article 1 of this Decision states: “ Vietnam Airlines Corporations (hereafter Corporations) established by the Government’s decision is a large-scale States Corporation, with Vietnam Airlines as the core and consisting of member units, which are independently and dependently financed businesses, and professional units. These units are interactively linked to each other for economic, financial, technological, information, training, research, and marketing benefits. Their aim is to promote stimulation, spread professionalism, and cooperate in production to fulfill the tasks assigned by the Government: that is, improving the business ability and efficiency of the member units and the Corporation as a whole, by responding to the demands of the economy.” Decision No. 818/TTG of the Prime Minister of Vietnam (December 13, 1995) on the prices, charges, and fees of aviation Article 1 of the Decision stipulates: “The Government shall uniformly manage civil aviation prices, charges, and fees, including the transportation of passengers, cargo, postal matter, and parcel post on international and domestic routes, and the rent of charter flights.” Decision No. 202/CT of the Prime Minister (June 1992) on names of state-owned enterprises (SOEs) that can be privatized “The Government shall fully manage all strategic sectors such as electricity, water distribution, and aviation.” Domestic Political Strategy The first step towards reaching consensus among the CAAV, the Vietnam Airlines Corporations, and other functional units is to lobby key individuals of these entities: The Director General of the CAAV and the Director General of Vietnam Airlines Corporations. The Agreement will not be achieved without the support of either of these individuals. Fortunately, they have the same “progressive” standpoint on the Aviation Development Strategy (1999) and the Strategy to develop Vietnam Airlines Cooperation (2000). In addition, it is critical to gain the support from the Director of Air Transport and Navigation Department of the CAAV, and Vice Director General of the CAAV, in charge of international affairs. These two individuals will be chief Vietnamese negotiators for the Agreement. Next, the Department of International Relations and the Department of Planning and Investment of the Vietnam Airlines should coordinate to send a White Paper to the Director General of CAAV and the Director of Vietnam Airlines Corporations. The draft should highlight both short run and long run goals of the agreement and the benefits that the agreement will bring the aviation sector and other commercial sectors closely The Department of Legal Affairs of the CAAV should draft proposed language for the amendments of following legal documents, explaining the importance of the amendments to the agreement (See Legal Analysis). This proposal should be approved by the internal Civil Aviation, and sent to the Ministry of Legal Affairs. The CAAV should take advantage of the support of those who advocated for the following documents: - The amended Civil Aviation Law 1995 ratified by the National Assembly of the Socialist Republic of Vietnam on April 20, 1995 . - Decree No. 68/CP of the Vietnamese government (October 25, 1995) on the function, tasks, powers, and organizational structure of the Civil Aviation Association of Vietnam (CAAV). - Decree No.
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