Recommendations to improve the business efficiency of port of hai phong jsc chua ve terminal

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Recommendations to improve the business efficiency of Port of Hai Phong JSC-Chua Ve Terminal
PREFACE
Countries soon realized that foreign trade brings mutual benifits and at the
same time increase the overall wellbeing of world population. As the living standard
of people increases, so do their demand and purchasing ability for goods and
services. As the result the international trade has significantly increased over the
years. Since most of international trade was carried by seaway, it is undeniable that
the role of ports is becoming more and more important.
As the international trade was motivated, the cargoes flow between countries
increased through years; emphasized the important role of ports. To meet the
increasing demand for cargo transshipments, it is urgent issue to develop and
improve the business efficiency of Vietnam port system. Is a typical port in Hai
Phong, Chua Ve Terminal has contributed to economic development of Vietnam
and Hai Phong city in particular.
The internship at Chua Ve Terminal provided me a good opportunity to
experienced new things as well as reinforce knowledge. Regarding to my
dessertation, from my points of view, observing things, evaluating the company
business efficiency and giving solutions to improve stituation are primary tendor.
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
Dang Thi Thanh Nhan
TABLE OF CONTENT
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Recommendations to improve the business efficiency of Port of Hai Phong JSC-Chua Ve Terminal
Preface........................................................................................................................ i
Table of Content........................................................................................................ii
List of Abbreviation.................................................................................................iv
List of Tables and Graphs..........................................................................................v
List of Figures..........................................................................................................vi
INTRODUCTION...................................................................................................1
CHAPTER 1: LITERATURE REVIEW...............................................................3
1.1 Some definitions.........................................................................................3
1.1.1 Revenue....................................................................................................3
1.1.2 Cost..........................................................................................................3
1.1.3 Profit........................................................................................................4
1.1.4 Business efficiency...................................................................................4
1.1.5 Factors affecting business efficiency........................................................4
1.2 Some criteria to evaluate business efficiency...........................................6
1.2.1 Profit.........................................................................................................6
1.2.3 Labor productivity....................................................................................7
1.2.4 Salary........................................................................................................8
CHAPTER 2: EVALUATING BUSINESS EFFICIENCY OF CHUA VE
TERMINAL.............................................................................................................9
2.1 General information about Chua Ve Terminal...........................................9
2.1.1 Introduction of Chua Ve Terminal............................................................9
2.1.1.1 Introduction of Port of Hai Phong.....................................................9
2.1.1.2 Introduction of Chua Ve Terminal...................................................10
2.1.2 Map layout and geographical location of Chua Ve Terminal.................12
2.1.3 Infrastructure..........................................................................................14
2.1.4 Company main services..........................................................................15
2.1.5 Organization and functions....................................................................15
2.1.5.1 Level 1 Managers............................................................................17
2.1.5.2 Level 2 Professional Division..........................................................17
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2.1.5.3 Level 3 Operating teams..................................................................18
2.1.6 Personnel................................................................................................19
2.2 Evaluating the business efficiency of Chua Ve Terminal.........................19
2.2.1 Evaluating the general situation of the company....................................19
2.2.2 Evaluating business efficiency by profit..................................................27
2.2.3 Evaluating business efficiency by salary and labor capacity..................28
CHAPTER 3: RECOMMENDATIONS TO IMPROVE BUSINESS
EFFICIENCY OF CHUA VE TERMINAL........................................................31
3.1 Vietnam port system’s development planning till 2020 and orientation till
2030 according to Decision no.1037/QD-TTg of Vietnam Prime Minister....31
3.2 Orientation of Hai Phong seaport and the opportunities for Chua Ve
Terminal.............................................................................................................32
3.2.1 Orientation of Hai Phong seaport..........................................................32
3.2.2 Opportunities and orientation for Chua Ve Terminal.............................33
3.3 Recommendation.........................................................................................33
3.3.1 Improve the interaction inside the company...........................................33
3.3.2 Improve the quality of service.................................................................34
3.3.3 Improve the quality of labor force..........................................................35
3.3.4 Reduce costs...........................................................................................35
3.3.5 Enhance relations with VMU University................................................36
CONCLUSION......................................................................................................38
BIBLIOGRAPHY.................................................................................................39
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Recommendations to improve the business efficiency of Port of Hai Phong JSC-Chua Ve Terminal
LIST OF ABBREVIATION
JSC Joint Stock Company
CVT Chua Ve Terminal
MT Metric Ton
VMU Vietnam Maritime University
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LIST OF TABLES AND GRAPHS
Table 1: The ratio of profit to cost.............................................................................6
Table 2: the ratio of profit to revenue........................................................................6
Table 3: The ratio of profit to fixed capital................................................................7
Table 4: The ratio of handling capacity to labor force...............................................7
Table 5: The ratio of salary to labor force.................................................................8
Table 6: Port infrastructure......................................................................................14
Table 7: Port equipment..........................................................................................14
Table 8: Financial result of Chua Ve Terminal 2011-2014......................................19
Table 9: Cargo throughput of Chua Ve Terminal....................................................21
Table 10: Revenue of Chua Ve Terminal 2011 – 2014 (million VND)...................24
Table 11: Cost of Chua Ve Terminal 2011 – 2014 (million VND)..........................26
Table 12: Ratio of profit to cost/revenue/ fixed capital 2011 – 2014.......................27
Table 13: Labor productivity and salary ratio..........................................................29
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Recommendations to improve the business efficiency of Port of Hai Phong JSC-Chua Ve Terminal
LIST OF FIGURES
Figure 1: Chua Ve Terminal....................................................................................12
Figure 2: Geographic location of Chua Ve Terminal...............................................12
Figure 3: Map layout of Chua Ve Terminal.............................................................13
Figure 4: Company organization.............................................................................16
Figure 5: Financial result of Chua Ve Terminal 2011-2014....................................20
Figure 6: Cargo throughput of Chua Ve Terminal in terms of cargo directions.......22
Figure 7: The ratio of profit to cost/revenue/ fixed capital 2011 – 2014..................28
Figure 8: the ratio of salary to labor force and labor capacity..................................29
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INTRODUCTION
NECESSITY
In the globalization era, enterprises and firms need to take effective use of all
its resources in order to survive and compete in competitive market. In other words,
it means company need to run business efficiency.
Business efficiency of enterprises is economic indicators reflecting the level
of using elements during production process. It also demonstrates the ingenious
combination of theory and practice in order to take the best use of the scarce
resources. Business efficiency has the big impacts on firm, individuals, as well as
national economy.
Chua Ve Terminal is a subsidiary that has always contributed to the
development of Port of Hai Phong JSC, one of the most modern ports in the North
Vietnam. However, in the recent year, the company was not profitable as it used to
be. Being a Hai Phong citizen, I want to try to analyze the company situation and
find the solutions to improve the situation the company. That is the reason I choose
the topic “Recommendations to improve the business efficiency of Port of Hai
Phong JSC - Chua Ve Terminal”
RESEARCH OBJECT
The research aims to evaluate the business efficiency of the company by
some indicators, and suggest some methods to improve the company performance.
It was divided into 3 main chapters:
Chapter 1: Literature review
Chapter 2: Evaluate business efficiency of Chua Ve Terminal
Chapter 3: Recommendations to improve business efficiency of Chua Ve
Terminal
Basic definitions, theories and indicators to evaluate business efficiency
were provided in Chapter 1. Chapter 2 describes the general information about Chua
Ve Terminal and use scientific methods such as analyzing and comparison to
evaluate the business performance of the company. Finally, the recommendations
were given in last chapter.
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RESEARCH SCOPE
The research focuses analyzing the financial result results from 2011 to 2014
and real conditions of the company.
The research was carried out in over 1 month in Chua Ve Terminal, Hai
Phong, Vietnam.
RESEARCH FINDINGS
After the research time, I understand more about the situation of the
company. Base on my knowledge and information I collected, some
recommendations were given. I hope it will have some use for the company to
improve its business.
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CHAPTER 1: LITERATURE REVIEW
1.1 Some definitions
1.1.1 Revenue
Revenue is the total monetary that the company gain from its business
activities during a certain period of time.
For a company, revenue includes:
- Revenue is gained from common business activities like selling products or
providing services.
- Revenue from financial operations which is generated from loan interests,
deposit interests, slow payment interests, foreign currency exchange rate
differences.
- Money from uncommon activities such as fines collected from customers for
breach of contract.
1.1.2 Cost
Cost is amount of money that firms have to pay in production, including
materials cost, wages, repair cost, equipment cost, infrastructure cost, utility cost,
financial costs…Total cost is made up of variable cost plus fixed cost:
- Variable costs (VC) are the costs that changes as company varies the
quantity of outputs produced (wages, cost of materials…)
- Fixed costs (FC) are the costs that do not vary based on activities or number
of goods produced, for example rental costs, depreciation.
Determine costs help company adjust price for products and services
appropriately. Lower and save costs in production are important tasks of business,
in order to be profitable. As the result, analyzing and managing costs effectively are
vital for an efficient business.
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1.1.3 Profit
Profit is the money that remained after total revenue minus total cost. It is the
final financial traditional aim of business operation and is a basic indicator to
evaluate business efficiency. Profit directly impacts all aspects of business operation
especially financial situation of companies.
1.1.4 Business efficiency
Business efficiency reflects the quality of business performance and how the
resources (labor, machinery, materials and capital) are used in production. Because
resources are scarce but the needs of society are growing, using resources efficiently
and effectively is essential for both development and survival of firms. Business
efficiency is important measure of economic growth and the basis to assess the
economic objective of firms in each period.
Business efficiency has played an important role to each individual, firms as
well as country economy. For employees, business efficiency has direct impact on
their incomes as well as their spiritual life. A company that runs business efficiently
will ensure a stable job and high incomes for workers. To company, business
efficiency mean gained profit, it is not only vital for the survival and development
of enterprises, but also is the fundamental factor for reproduction and enlarging
scale of business activities. Business efficiency shows how company used its
resource, and then company can evaluate and adjust or change the appropriate
methods of operating and management if needed. To nation, running business
efficiently will contribute to the development of country economy and attract
foreign investment. In short, improve business efficiency will have positive effect
for company and individual in particular and for nation in overall.
1.1.5 Factors affecting business efficiency
a. External factors
Competitive environment: The competition between businesses is vital
elements to create opportunities and threats for companies. The level of
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competitiveness directly affects supply, demand; the selling prices and product
consumption rates…thus affect business performance.
Price and consumers: Price, product quality, income, habits and tastes of
consumers are decisive forces in the development or failure of enterprise.
Nature resources: also affects the business efficiency. If a country has
abundant of resource, the cost of raw materials will cheap, lead to the cost of
production decrease, thus increase the profit; improve the competitiveness and
efficiency of business. On the other hand, sometimes natural resource also has bad
impact to a business. For example, the price of material is high because the country
has no resource.
Government policy: government policies ensure a fair environment for every
business models. The companies are responsible for follow the nation as well as
international regulations and laws.
Science - Technology: Technology and science level of company directly
affect its productivity as well as quality of goods, affect the saving of materials.
Technology helps firms eliminate the production cost, thus lower the products price.
However, modern technologies require a huge investment.
Infrastructure: including transportation networks, communication systems,
electricity, water… The firms that located in area has convenient transport systems,
utilities service stable will easier to develop and expand production, lower the cost
and improve business efficiency.
b. Internal factors
Workforce: Labor force is determinant factor for success and failure of enterprise.
They create new products suit consumer tastes and affect the service quality of
firms, thus have directly impact to business performance.
Organization structure: organization structure of a firm is considered as brain in the
body because the impact of organization to business results is enormous. It is the
factor that helps companies overcome others bad elements and impacts. A
inappropriate organization will waste human resources, takes time to make
decisions. In order to running business efficiently, personnel should be well
arranged.
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Finance: Enterprise with strong financial capability will ensure the stability business
activities. Besides, firm will be able to invest on modern equipment as well as
technology, thus improve the productivity and quality of products/services.
Financial capability also helps company become more active while running
business.
1.2 Some criteria to evaluate business efficiency
1.2.1 Profit
Table 1: The ratio of profit to cost
The ratio of profit to cost (U)
P
Formula U=
TC
Notes TC: Total cost P: Profit
This ratio reflects the how much profit one unit of cost can
generate. The greater the value is, the better the business
Meaning
performance. If the result is higher than the previous year’s, then
say the company is doing well.
Table 2: the ratio of profit to revenue
The ratio of profit to revenue
P
Formula U=
R
Notes R: Total revenue P: Pre-tax Profit
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This ratio shows how much profit a unit of revenue can generate.
If the value of the ratio is higher than previous year’s, then the
Meaning
company operating more efficiently compared to earlier years
and vice versa.
Table 3: The ratio of profit to fixed capital
The ratio of profit to fixed capital (U)
P
Formula U=
FC
Notes FC: Fixed capital P: Pre-tax Profit
This ratio reflects how the efficient the fixed capital is used. The
value of result shows how much profit a unit of fixed capital can
Meaning generate. The higher the result is, the more efficiency the fixed
capital is used. If the value of the ratio is lower than previous
year’s, then the company has not made the best use of resources.
1.2.3 Labor productivity
Table 4: The ratio of handling capacity to labor force
The ratio of handling capacity to labor force (U)
HandlingCapacity
Formula U=
L
Handling capacity: the L: Average labor force in certain
Notes
quantity of handled cargoes. period
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This ratio reflects the labor productivity, it points out how many
handling capacity per one person in certain period of time. If the
Meaning
result is higher than previous years, it means the company has
used labor force efficiently.
1.2.4 Salary
Table 5: The ratio of salary to labor force
The ratio of salary to labor force (U)
Salary
Formula U=
L
Notes Salary L: labor force
The ratio shows the average money that one employee of
company receive in certain period. If the result increased after
Meaning
years slower than labor productivity, it means employees has
worked efficiently and bring more profit for company.
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CHAPTER 2: EVALUATING BUSINESS EFFICIENCY OF
CHUA VE TERMINAL
2.1 General information about Chua Ve Terminal
2.1.1 Introduction of Chua Ve Terminal
2.1.1.1 Introduction of Port of Hai Phong
Trading name: PORT OF HAI PHONG JSC (so-called PORT OF HAI
PHONG)
Location: 20052’N – 106041’E
Address: No 8A Tran Phu, Ngo Quyen District, Hai Phong City, Vietnam
Fax: 84.031.3836943
Email: [email protected]
Website: www.haiphongport.com.vn
Port of Hai Phong is one of the most modern sea ports, traffic hubs of the
North Vietnam. Was built and used since the French colonization with only 6
warehouse and 3 pier, over140 years of development Port of Hai Phong has
expanded and grown. By the end of 2014, the company has managed and exploited
21 piers with total length of 3,546 meters; the output reached 19.6 million tons,
revenue was 1.390 billion VND. At the moment, Port of Hai Phong has over 250
modern cargo handling equipment for serving container operation such as floating
cranes, gantry cranes, portal cranes, rubber-tired gantry cranes, forklifts, reach
stackers… and is capable for ships of 40000DWT.
Along with the development of Vietnam economy and society, especially the
development of maritime services; Port of Hai Phong not only has expanded in
terms of operating scale and technology, but also changed the organization model.
In 2007, Port of Hai Phong became a limited liability company one member, July
2014, it became the first enterprise of Vietnam Maritime sector perform
equitization, entitled “Port of Hai Phong Joint-stock Company”
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Nowadays, Port of Hai Phong is the port that has highest cargo volume in
North Vietnam; its subsidies include: Hoang Dieu Handling Enterprise (Hoang Dieu
Terminal), Tan Vu Handling Enterprise (Tan Vu Terminal), Bach Dang Terminal,
and Chua Ve Handling Enterprise (Chua Ve Terminal).
2.1.1.2 Introduction of Chua Ve Terminal
Enterprise name: CHUA VE HANDLING ENTERPRISE (also CHUA VE
TERMINAL)
Address: 5 –Chua Ve Street, Dong Hai ward, Hai An district, Haiphong City
Tel: (+84-31) 3827102
Fax: (+84-31) 3629544
Director: Vu Nam Thang
Chua Ve Terminal (CVT) is a subsidiary of Port of Hai Phong, it was built in
1977 and the main purpose was receiving aids from the Socialist countries. When
just established, CVT included two regions:
- Region 1(main area) where working departments were constructed, it also
was the place for making transactions and port operation investigation. It
located at the junction of Binh Hai, May Chai Ward, next to Cam port.
- Region 2 (Doan Xa area) located far away region 1 a distance of about
1000m to the Dinh Vu. This is a large area but only was used a small part of
about 350m quay and 15000m2 of yard for storing sand stone (construction)
and receiving military goods in wartime.
In 1995, due to requirements for better production, the Terminal split into
two firms: Chua Ve Handling Enterprise and Doan Xa Handling enterprises. Chua
Ve Handling enterprise received Doan Xa area and main facilities.
July 1996, Port of Hai Phong borrowed ODA Capital to expand and
reconstruct CVT for containerized cargoes operation; the total investment cost 40
million USD. Under the Transportation, Vietnam Maritime Administration, and
Port of Hai Phong’s care, CVT expanding follows 2 stages:
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- Stage 1: from 1996-2000: 150m pier, old yard and 40000m2 new yard were
improved and built for operating containerized cargoes, some 3200m2 CFS
warehouse and new constructions serving producing and daily operating also
were erected.
- Stage 2: from 2001 to 2006, CVT built 2 350m piers, 60000m2 yard,
invested specialized equipment including: 4 quayside crane, 12RTG,
information technology system to serve the handling and management of
container on the yard; improve in port shipping channel.
As the result, in 2008 cargo volume of the Terminal reached nearly 14
million tons, more than 10 million tons compared to 1995’s. Chua Ve Terminal has
been and will continue to contribute to the development and production of Port of
Hai Phong as well as Vietnam economy.
(A)
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(B)
(C)
Figure 1: Chua Ve Terminal
(Source: Port of Hai Phong website)
2.1.2 Map layout and geographical location of Chua Ve Terminal
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Figure 2: Geographic location of Chua Ve Terminal
(Source: Port of Hai Phong)
Chua Ve Terminal: 20°52’N - 106°43’E
Chua Ve Terminal is located next to Cam River, 4km from the city center to
the east of Haiphong and 20 nautical miles from zero buoys. To access the
Terminal, ships need to go via stream Nam Trieu, Dinh Vu Channel then enter Cam
River. The stream is shallow; the depth is only -8.4, -7.8 or even some area just
reach -5.5m. The depth in front of Quays is -8.5m; however the speed of sediment
has limited the accessibility of CVT. The Terminal can only capable for maximum
10,000 DWT ships.
The layout of Chua Ve Terminal
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