Recommendations to improve businessefficiency of orient maritime service abranch of vosa corporartion

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MINISTRY OF TRANSPORTATION MINISTRY OF EDUCATION & TRAINING
VIETNAM MARITIME UNIVERSITY
STUDENT NAME: NGUYEN THI KIEU ANH
DISSERTATION
GLOBAL STUDIES AND MARITIME AFFAIRS
RECOMMENDATIONS TO IMPROVE BUSINESS EFFICIENCY
OF ORIENT MARITIME SERVICE - A BRANCH OF
VOSA CORPORARTION
HAI PHONG - 2015
MINISTRY OF TRANSPORTATION MINISTRY OF EDUCATION & TRAINING
VIETNAM MARITIME UNIVERSITY
STUDENT NAME: NGUYEN THI KIEU ANH
CLASS: GMA 02
DISSERTATION
GLOBAL STUDIES AND MARITIME AFFAIRS
RECOMMENDATIONS TO IMPROVE BUSINESS EFFICIENCY
OF ORIENT MARITIME SERVICE - A BRANCH OF
VOSA CORPORATION
Supervisors: Ms. Vu Thi Thu Hang
Division: Global Studies and Maritime Affairs
Faculty: Economics
HAI PHONG - 2015
Recommendations to improve business efficiency of
Orient Maritime Service - a branch of VOSA Corporation
PREFACE
I declare that this report is my own unaided work. It has not been submitted
before.
If violated, I am solely responsible for and bear the punishments of the Institution and
University.
Student Name and Signature
Nguyen Thi Kieu Anh
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ACKNOWLEGEMENT
For completion of this dissertation, it is indispensable the help and cooperation of
many people. First of all, I would like to thank the International School of Education
for giving me the chance to learn the course and practice specifically. I also thank my
supervisors Mr. Vu Le Huy and Ms. Vu Thi Thu Hang for the guidance and valuable
suggestion during the time I complete the internship report. In addition, I also want to
express my thankfulness to all staffs of Orient Maritime Service (ORIMAS Haiphong)
who enthusiastically gave me necessary help, support and information to complete this
dissertation successfully.
Due to limitation of knowledge and reality practice, there certainly have many
shortcomings and obstacles. Therefore, I look forward to seeing the comments and
recommendation from instructors and lecturers to accomplish the dissertation.
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TABLE OF CONTENTS
Preface.............................................................................................................................i
Acknowledgment...........................................................................................................ii
Table of Contents..........................................................................................................iii
List of Tables and Graphs..............................................................................................v
List of Figures...............................................................................................................vi
INTRODUCTION .........................................................................................................1
CHAPTER 1: Literature Review ...................................................................................3
1.1 Business efficiency ..................................................................................................3
1.1.1 Definition of business activity....................................................................3
1.1.2 Definition of business efficiency ...............................................................3
1.2 The criteria to evaluate business efficiency.............................................................5
1.2.1 Some indicators evaluating business efficiency.........................................5
1.2.1.1Return on sales (ROS)...................................................................5
1.2.1.2 Return on cost (ROC)...................................................................6
1.2.1.3 Return on equity (ROE)...............................................................6
1.2.1.4 Return on labor (R/L)...................................................................6
1.2.2 Other factors affecting business efficiency................................................7
1.2.2.1 Subjective factors.........................................................................7
1.2.2.2 Objective factors..........................................................................8
CHAPTER 2: Evaluation of ORIMAS Haiphong in the period 2012 - 2014..............10
2.1 Background of ORIMAS Haiphong.......................................................................10
2.1.1 Historic development process of ORIMAS Haiphong.............................10
2.1.2 Organizational structure...........................................................................14
2.1.3 Personnel..................................................................................................17
2.1.4 Services....................................................................................................18
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2.2 Business efficiency of ORIMAS Haiphong in the period 2012 - 2014..................19
2.2.1 The ROS of ORIMAS Haiphong in the period 2012 - 2014....................19
2.2.2 The ROC of ORIMAS Haiphong in the period 2012 - 2014...................20
2.2.3 The ROE of ORIMAS Haiphong in the period 2012 - 2014...................20
2.2.4 The R/L of ORIMAS Haiphong in the period 2012 - 2014.....................21
2.3 Evaluating business efficiency of ORIMAS Haiphong in the period 2012 - 2014....
......................................................................................................................................22
2.3.1 Evaluating business efficiency by human factor......................................22
2.3.2 Evaluating business efficiency by capital factor......................................24
2.3.3 Evaluating business efficiency by financial factor...................................25
2.3.4 Evaluating business efficiency by technical - facilities factor.................28
CHAPTER 3: Recommendations to improve business efficiency of ORIMAS
Haiphong in the period 2012 - 2014.............................................................................30
3.1 Training and upgrading the quality of human resources........................................30
3.2 Mobilizing capital investment for maritime transport activities............................30
3.3 Providing customer care services...........................................................................31
3.4 Promoting marketing..............................................................................................31
3.5 Upgrading facilities and applying new technology................................................33
CONCLUSION............................................................................................................34
Reference......................................................................................................................35
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LIST OF TABLES
Table 1: The number of staff in ORIMAS updated in August, 2015...........................17
Table 2: The ratio of ROS in the period 2012 - 2014...................................................19
Table 3: The ratio of ROC in the period 2012 - 2014..................................................20
Table 4: The ratio of ROE in the period 2012 - 2014..................................................20
Table 5: The ratio of R/L in the period 2012 - 2014....................................................21
Table 6: Staffs’ education background in ORIMAS updated in August, 2015............23
Table 7: Evaluating working age in ORIMAS (statistics August, 2015).....................23
Table 8: The variations of revenue, cost, and profit of ORIMAS Haiphong in the
period 2012 - 2014.......................................................................................................25
Table 9: The variation of current income tax of ORIMAS Haiphong in the period 2012
- 2014............................................................................................................................27
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LIST OF FIGURES
Figure 1: The organizational chart of VOSA Corporation...........................................12
Figure 2: The organizational chart of ORIMAS Haiphong..........................................14
Figure 3: The R/L of ORIMAS Haiphong in the period 2012 - 2014..........................22
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INTRODUCTION
The Importance of Dissertation
According to information from the Vietnam shipping association, there are nearly
170 million tons of cargoes through Vietnam port system, creating turnover of
several billion USD for shipping industry. However, up to 80% of cargoes are
transported by sea on foreign ships. This figure not only reflects the status currently
of the domestic shipping activities, but also indicates that shipping agency service is
a field of promising activities for Vietnamese company.
As one of the leading names of shipping agent and freight forwarders, Vietnam
Ocean Shipping Agency (VOSA Corporation) is a multi - sector business company
which in shipping agent is an important operation, existed long life, and associated
with the company’s image.
In this 3rd internship, I was very fortunate to have an opportunity to learn and study
at Orient Maritime Service - a branch of VOSA Corporation. ORIMAS Haiphong
with experienced and professional staffs has been meeting the highly requirements
in Vietnam and over the world about shipping agency service, freight forwarding,
tallying service … ORIMAS Haiphong has also continually improved and
developed business with aim to provide the best services as well as to reach the
highest rank in all scope of business.
However, in recent year, ship’s agent sector has face to face more difficult because
of sources scares and many competitors. Nowadays, ORIMAS Haiphong also is not
immune from this situation. Although, there are many strong points, ORIMAS has
still existed limits affecting to business efficiency. Therefore, I finally decided to
choose topic “Recommendations to improve business efficiency of Orient
Maritime Service - a branch of VOSA Corporation” to demonstrate in my
dissertation.
The Object of Dissertation
This dissertation will focus on the analysis and evaluation business efficiency of
ORIMAS Haiphong and giving some recommendations that need to be improved.
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The Scope of Dissertation
This dissertation only related to business efficiency of ORIMAS Haiphong and all
of information and data is provided by ORIMAS Haiphong in the range between
2012 and 2014.
The Methodology of Dissertation
Through the research, collection, analysis and compare data of ORIMAS Haiphong
following economic indicators (ROS, ROC, ROE, R/L) maybe find out the factors
which have good effects and bad effects to business efficiency of this company.
Contemporaneously, based on the real situation of ORIMAS Haiphong find the
reasons of this, thus suggest some recommendations to improve business efficiency.
The Structure of Dissertation
Chapter 1: Literature review
Chapter 2: Evaluation of Orient Maritime Service in the period 2012 - 2014
Chapter 3: Recommendations to improve business efficiency of Orient Maritime
Service in the period 2012 - 2014
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CHAPTER 1: LITERATURE REVIEW
1.1 Business efficiency
1.1.1 Definition of business activities
Business activities means that engage in for the primary purpose of making a profit.
Business activities can include things like operations, marketing, production and
administration. In economics, business activities encompass all the economic
activities carried out by a firm during the course of business. Business activities are
ongoing and are focused on creating value for shareholders. The results of business
of the business enterprise are what have been achieved after a course of action that
they put efforts and money. Results achieved and not achieved reflect the efficiency
of enterprise business objectives, proposed objectives are their results should be
achieved. The results can be achieved measurable quantities of the product as
consumed each type and volume of production, sales, profits, market share. The
quantity also reflects only qualitatively purely qualitative as its reputation, product
quality.
1.1.2 Definition of business efficiency
In the current market mechanisms in our country, the long - term goals of the
business enterprise is efficient of business and maximize profitability. The business
environment is always change, so requirement every business must have the
appropriate business strategy. The business is an art requiring quick calculations, to
recognize problems at the strategic level. Efficient business operations is always
associated with business activities, may consider it on several angles. To understand
the concept of efficient business activities should be considered economic effects of
a phenomenon.
“The economic efficiency of a phenomenon (or process) economy is a category
economic reflecting the level of use of resources (human, financial and material
resources and capital) to achieve the objectives identified provisions”, which
embodies the correlation relationship between the results obtained and the entire
cost spent to get results, also reflect the quality of economic activity.
From the definition of economic efficiency of such a phenomenon, we can
understand business performance is an economic category reflecting the level of use
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of resources to achieve the objectives set out, it appears the correlation between the
results obtained and the costs spent to obtain such results, the greater the difference
between two quantities are, the higher the efficiency is. On this perspective, the
effect is identical to the profitability of businesses and the ability to meet in terms of
quality of products for the needs of the market.
Business efficiency means the ratio between the input to run a business operation
and the output gained from the business.
Business The input
=
efficiency The output
In which, inputs would typically be cost, employee or time/effort. Outputs would
typically be revenue, profit, new customers, customer loyalty, market
differentiation, headcount productivity, innovation, quality, speed and agility,
complexity or opportunities.
In this dissertation, I only focus on the ratio of return on sales, cost, equity, and
labor. It means equivalent the input is profit after tax while the output includes
revenue, cost, shareholders’ equity, and labor productivity. More detail, the
following is some definitions.
 Profit
Profit is the amount of money that a company receives after exceeding the
expenses, costs and taxes needed to sustain the activity from the amount of revenue
gained from a business activity. In other word, profit is the final financial results of
business activities as well as is a quality criterion to evaluate business efficiency.
Profit is calculated by minus total revenue and total cost.
 Revenue
Revenue is the amount of money that a company actually receives from its business
activities, usually from sale of goods and services to customers during a certain time
period.
Revenue is calculated by multiplying the price at which goods or services are sold
by the number of units or amount sold.
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 Cost
Cost is the total amount of money that needs to be spent by a business, usually a
monetary valuation of effort, material, resources, time and utilities consumed, risks
incurred, and opportunity forgone in production and delivery of a goods or services.
 Shareholders’ equity
Shareholders’ equity represents the amount by which a company is financed
through common and preferred shares. A firm is total assets minus its total
liabilities. Equivalently, it is share capital plus retained earnings minus treasury
shares.
Shareholders’ equity comes from two main sources. The first and original source is
the money that was originally invested in the company, along with any additional
investments made thereafter. The second comes from retained earnings which the
company is able to accumulate over time through its operations.
 Labor productivity
Labor productivity measures the amount of goods and services produced by one
hour of labor. More specifically, labor productivity measures the amount of real
GDP produced by an hour of labor. Growing labor productivity depends on three
main factors: investment and saving in physical capital, new technology and human
capital. Labor productivity also is a measurement of economic growth of a country.
When improving business efficiency, the output to input ratio improves. In other
words, it uses the lowest amount of inputs to create the greatest amount of outputs
and reduce the amount of wasted inputs.
1.2 The criteria evaluating business efficiency
1.2.1 Some indicators evaluating business efficiency
1.2.1.1 Return on sales (ROS)
Return on sales is a financial ratio that is used to measure a company’s
performance. This measure is helpful to management, providing insight into how
much profit is being produced per a unit VND of sales. It is best to compare
profitability of different companies, or the same company over different years. An
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increasing ROS indicates the company is growing more efficient, while a
decreasing ROS could signal looming financial troubles. Return on sales is
calculated using this formula:
RO Profit after tax
=
S Total revenue
1.2.1.2 Return on cost (ROC)
Return on cost refers to the ratio of the total costs to the sales of the company, at
once indicates the amount of costs created to each VND of income. This is also an
additional indicator of the ROS. This greater indicator shows that a low cost still
brings profitable production and business activities to the business. In the reserve
pattern, if the ratio of next year is greater than previous year, the company has to
review the process of doing business to offer feasible solutions improving business
efficiency. Return on costs is calculated by the formula:
Profit after tax
ROC =
Total costs
1.2.1.3 Return on equity (ROE)
Return on equity is the amount of net income returned as a percentage of
shareholders equity. It measures a corporation's profitability by revealing how much
profit a company generates with the money shareholders have invested. The return
on equity is useful for comparing the profitability of a company to that of other
firms in the same industry.
Return on equity is calculated by:
RO Profit after tax
=
E Equity
1.2.1.4 Return on labor (R/L)
Return on labor assesses the value of money that each employee contributes to
profit, which considers the impact of labor productivity to the profit of the
company. In addition, the review indicators also help business set out measures to
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employee how to generate the highest possible profit, as well as increase the
efficiency of business activities.
Return on labor is calculated by the following formula:
Profit after tax
R/L =
Number of labor
1.2.2 The other factors affecting business efficiency
1.2.2.1 Subjective factors
 Human factor
Human are the decisive factor for all business operations of the company. In this
era, brain content is increasingly highly, the professional level of employees is more
and more influential. Human can invent new technologies and put them to use to
create great potential for improving business efficiency. Human factor directly
impacts labor productivity, the level of use of resources, so it directly impacts
business efficiency.
 Capital factor
This is a factor reflecting the strength of the company. Through that company funds
can be mobilized in business, distribution capabilities, to effectively invest the
resources, ability to effectively manage business capital to reflect the development
of the company and evaluate business performance. Capital factor which is one of
key factors determining the size and scale of the company have the opportunity can
be exploited.
 Financial factor
The financial capacity is the most important issue will enable the company to
survive in the economy. The company is financially strong, not only ensure the
business activities ongoing stability but also offer suitable development strategies
for their companies. The financial capacity of the company directly affects the
company’s reputation, ability to take initiative in business, the ability to consume
and the competitiveness of companies. Therefore, the financial situation of the
company greatly affects the company's business efficiency.
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 Technical - facilities factor
Technical facilities are important tangible physical elements to serve business
activities, help companies conduct business activities. The more increasingly
rational layout technical facility of the company is, the more contribute it is.
Nowadays, the role of technical facilities is more and more appreciated. To improve
business efficiency, companies must continually invest in this sector, especially
investment in research and development.
1.2.2.2 Objective factors
There are the factors affecting from outside, have positive or negative effect to
business efficiency, including:
 Natural condition
Natural conditions, mineral resources, natural disasters, floods were greatly affect
the company's business efficiency.
 Population - labor
The population of a country also significantly impacts the company's business
efficiency. If in a populous country, it will take advantage of cheap labor from
hiring costs will drop.
 Scientific and technical progress
Company takes advantage of using the modern technical equipment, the business
efficiency will be better and reduced consumption of labor, time - saving, labor
productivity is also higher.
 Government management
The economic policy of government is not less impact to business efficiency. All of
policies have beneficial or negative impact on the development of the company,
encouraged or limited companies.
 Business market
In globalization age with increasingly tense competition among logistics companies,
the market is always changing, fluctuations each day. Therefore, the company needs
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to grasp the trend of each market to offer appropriate business policies,
development or selection of business sectors rely on keeping up with trends
direction and tastes of consumers.
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CHAPTER 2
EVALUATION OF ORIENT MARITIME SERVICE
(ORIMAS HAIPHONG) IN THE PERIOD 2012 - 2014
2.1 Back ground of ORIMAS Haiphong
2.1.1 Historic development process of ORIMAS Haiphong
ORIMAS Haiphong is directly under Vietnam Ocean Shipping Agencies
Corporation (VOSA Corporation) as a subsidiary company. Therefore, I mention
about overview of VOSA Corporation and ORIMAS Haiphong in this part.
a. Overview of VOSA Corporation
 General information
VIETNAM OCEAN SHIPPING AGENCY CORPORATION
(VOSA CORPORATION)
 Head Office: 5th Floor, Petroland Tower, 2 Tan
Trao Str., 7 Dist., Ho Chi Minh City, Vietnam
 Tel: (84 - 8) 54161820 - 54161821 - 54161821
 Fax: (84 - 8) 54161824 - 54161823
 E-mail: [email protected];
 General Director: Mr. Vu Xuan Trung
 Development process
Vietnam Ocean Shipping Agency Corporation (VOSA Corporation) is a member of
Vietnam National Shipping Lines (VINALINES) was established on March 13 rd,
1957 in Haiphong according to the Decree No. 50/ND of the Ministry of Transport
and Communications.
Being awarded of the fact that Ho Chi Minh City is the largest commercial center of
Vietnam which has the best conditions for the international cargoes exchanges and
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in order to meet the current situation, VOSA has moved its head office to Ho Chi
Minh City in 1993.
In 2006, VOSA Corporation has been equitized from the State-owned company to
the Stock - Holding Company (Public Company) in which the main shareholder,
VINALINES, holds 51% of the Charter Capital, and other shareholders, the
Vietnamese and foreign investors including the staff, hold 49% .
VOSA is one of the first shipping agents in the Vietnam Shipping Industry.
Throughout over a period of 50 years, nowadays VOSA has its national network of
14 branches which are located in 10 provinces and cities along the coast and one
representative office in Hanoi. In the situation of the market mechanism, to assert
themselves, VOSA provides services as a shipping agent and also has expand edits
business other services such as: Ship broking agent, chartering and canvassing
cargoes; Freight forwarding, transport - related services and delivery of goods in the
form of multi - modal transport; Container agent for several forwarding firms in the
world; Participating in exporting and importing many kinds of cargoes.
VOSA is also presently a full - fledged member of the following organizations:
- 1985: Entered the Baltic International Maritime Council (BIMCO)
- 1994: Entered the Vietnam Ship Agents and Brokers Association (VISABA)
- 1995: Became a member of Vietnam National Lines
- 1996: Entered International Federation of Freight Forwarders Associations
- 1997: Entered International Air Transport Association (IATA)
- 1997: Entered Vietnam Chamber of Commerce and Industry (VCCI)
- 1998: Entered the Vietnam Freight Forwarders Association (VIFFAS)
 Organizational chart of VOSA Corporation
Over the development period, VOSA has had different changes in the
organizational structure to suit each stage situation, perform the function of ship
broking and chartering, ship’s agencies, freight forwarding, warehouse services,
trading and logistics. In order to contribute to the national economy, the company
also has a special structure to satisfy the requirements of customer service in the
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field of industry. But basically, it is the organizational structure ensuring the
flexibility and efficiency to achieve the final object is productivity.
At the present time, the departmental system along with the associated 14 branches
is built according to the optimal model to fit the current condition of the business.
General Meeting of
Share Holder
Broad of
Management Inspection Committee
Broad of Directors
Foreign Human
Investment Accounting
Relations Resources
Department Department
Department Department
BRANCHES NETWORK JOINT VENTURE
VOSA ORIMAS VOSA VOSA
HA NOI HAI PHONG NHA TRANG VUNG TAU NYK Line (Vietnam)
HA NOI HAI NHA TRANG VUNG TAU
VOSA VOSA VOSA VOSA
HAI PHONG BEN THUY SAI GON CAN THO NYK Logistics (Vietnam)
BEN THUY SAI GON CAN THO
VOSA VOSA VITAMAS
QUANG NINH DA NANG China Shipping (Vietnam)
QUANG NINH DA NANG
NORTH VOSA
FREIGHT QUY NHON
SAMTRA SYMS (Vietnam)
FREIGHT QUY NHON
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