Luận văn improving business performance at petrolimex chemicals limited company

DAT HOC QUOC GIA HA NOT KHOA QUAN TRI VA KINH DOANH NGUYEN TAI LONG NANG CAO HIEL QUA HOAT DONG KINH DOANH CUA CONG TY TNHH HOA CHAT PETROLIMEX IMPROVING BUSINESS PERFORMANCE AT P

DAT HOC QUOC GIA HA NOT

KHOA QUAN TRI VA KINH DOANH

NGUYEN TAI LONG

NANG CAO HIEL QUA HOAT DONG KINH DOANH CUA

CONG TY TNHH HOA CHAT PETROLIMEX

IMPROVING BUSINESS PERFORMANCE

AT PETROLIMEX CHEMICALS LIMITED COMPANY

LUẬN VĂN THẠC SĨ QUẢN TRI KINH DOANH

IIA NOI - 2020

ĐẠI HỌC QUỐC GIA HA NOT

KHOA QUAN TRI VA KINH DOANH

NGUYEN HAI LONG

NANG CAO HIEU QUA HOAT DONG KINH DOANH CUA

CONG TY TNIHI HÓA CHÁT PETROLIMEX

IMPROVING BUSINESS PERFORMANCE

AT PETROLIMEX CHEMICALS LIMUTED COMPANY

Chuyên ngành: Quản trị kinh doanh

Mã số: 8340101.01

LUẬN VĂN THẠC SĨ QUẢN TRỊ KINH DOANH

NGƯỜI IƯỚNG DẪN KIIOA HỌC: PGS.TS IOANG DINII PIM

TIẢ NỘI - 2020

DECLARATION

The author continns that the thesis's research outcomes result from the author's

independent work during the study and research period, and it is not yet published in other's

search and arhele

The other's research results and documentation (extraction, table, figure, forma, and another document) used in the thesis are correctly cited, and permission (if required) is given

The author is responsible for the Thesis Asscssment Committee, Hanoi School of

Business and Management, and the laws for the declaration mentioned above

Hanoi, Junc 30, 2020

NGUYEN HAI LONG

ACKNOWLEDGEMENTS

First of all, I would like to express any sincere thanks to Assoc, Prof! Dr Hoang Dinh Phi, for his patience, motivation, inspiration, passion, and vast knowledge, continuously supporting ms throughout the study course and thasis research

Besides the primary instructor, I would like to thank the HSB faculty and suppart staff to study and research my thesis

T want fo thank the Board of Di

ors of Pelrotimex Chemical Co, Lid, and my coticagucs for crcating all conditions for me to implement the topic and use the unit's data

to complete the article

Mairily, T world like to thank my family for all the suppor and encouragement dung this Master's couse and in my life

Hanoi June 30", 2020

NGUYEN HAI LONG

1 ‘the urgency of the topic

2 The rescarch objectives of the lopic

Object and scope of the study ,.nsnentnenenminnnene

3

4 Research question

5 Research methods

5.1 Data collection methods

5 2 Data analysis method

6 The significance of the topic

7, Structure of the topie

CHAPTER L THEORETICAL BASIS OF BUSINESS PERFORMANCE

1.1 Overview of business performance

1.1.1 The concept of business pzrforttanee

1.1.2 Distinguish between business performance and results

1.1.3 The persuasive nature of business operations

1.1.4 Classification of business performance .0

L.LS The Necessity and Meaning of Improving Business Operations

1.2 Content and consumption indicators in business performance analysis

1.2.1 Content analysis of business rcsulla

1.2.2 Qveral] effECẲ co th nh HH Hang g0 re

1.3 Evaluate the efficizncy of inpt resOtToss

1.3.1 Effective use Of Labor acssenmenninenenmienees

1.3.2 Effective use of fixed assets

1.3.3 Effective use of Tiquid assets

1.4, Factors affecting business perfortmanee

1.5 Content and anaLytical methods s. sec

1.5.2 Analytical method 17 1.6 Directions and measures ta ismprove business performance 2L CHAPTER I BUSINESS PERFORMANCE ANALYSIS OF PETROLIMEX CHEMICALS COMPANY LID

2.2.2 Characteristics of industrial chemical trading .30

2.3 Analyzing the business performance of Petrolimex Chemical Co, Ltd in the period

2.3.4 Analysis of the results of investment in the construction of technical matcrials of

2.3.5 Classification of salary and incoms of officers and employees of Petrolimex Chemicals Co., Ltd in the period 2017-2019

2.4 Analysis of the criteria for evaluating the business performance of Petrolimex

532

2.4.2 Evaluate the efẨieieney of tsing assets - Số

2.4.5 Evaluation of the efficiency of labor use 60

CHAPTER Uk SOLUTIONS TO IMPROVE BUSINESS PERFORMANCE

OF PETROLIMEX CIVEMICALS COMPANY LIMITED

3.1 Development orientation of Petrolimex Chemicals Co., Ltd in the future

3.1.2 Modium and long tonm đevcÏoprtiznL suategy - - - 62 3.2 Several solutions to improve the business performance of Petrolimex Chemicals Co.,

3 Thư solution to inercasing cost-cfficicnoy

3.2.3 The solution to inereasing the efficiency of labor Use ene

3.2.4 The solution to inereasing the efficiency of capital use - 69

3.3 Some recommendations for effective implementation of the above solutions 7

LIS? OF ABBREVIATIONS

LIST OF TABLES, CHARTS, AND DIAGRAMS

‘Table 2 10: Salary and income of the company's officers and employees from 2017 to

Table 2 11: Indicators reflecting the profitability of the company from 2017 to 2013 53

‘fable 2 12: Indicators for evaluating the efficiency of using assets of the company from

Chart 2 5; indicators for evaluating the efficiency of cost management of the company

from 2017 tO 209 ce cccecesseresseessesesssrsaserssseressseessenssaeesssersaverssseeesasessenssatiesases savers OO

Chart 2 6: Indicators for evaluating the efficiency of using the labor of the company for

Diagram 2 5: The import process of Petrolinex Chemical Co., Ltd

Diagram 2 6: The management process of suppliets and contactors of Petrolimex

INTRODUCTION

1 The urgency af the topic Today, globalization and intemational economic integration bring new business opportunities ‘hey also pose many challenges that threaten the development of Vietnam's

econemy in general and busin survival According to the World Bank, Vietnam is one of the developing countries moving to a market-oriented economy with open economic

policies and strategies to participate in international economic integration The

development of the market-oricnted cconomy has a significant impact on Vietnam's economy in general and enterprises in particular, which is even more profound in

international competitiveness to attract customers and scale up the business domestically

and internationally

In a market-oriented economy, domestic enterprises must manage their production and business activities effectively to maintain and grow in the market once there is no government prolsetion TL is always a challenge for cntroproneurs to frequently do tarket research and find out the best way to thrive and generate profits It involves expanding business scale, improving employee's quality of life, applying advanced technology, allacating resources efficiently, and promoting infernational integration, These all set the

foundation for sustainable development, which is crucial for a busincss to maintain and grow Solvents and industrial chemicals play a significant role in the economy as the price

of solvents and industrial chemicals significantly impacts many other goods' input prices They arc mostly determined by the law of supply and demand in the market, The cost of solvents and industrial chemicals also depends heavily on the oil price on the world market, The solvent and industial chersical businesses are completely proactive im deciding their business outcomes, not regulated to the government's selling prices hke petroleum businesses

For cnterprises operating im the solvent and industrial chemical business, they Tost show their pionccring role in integrating into the platform, which is continuously changing within the regions and worldwide In that context, Petrolimex Chemical Co., Ltd has quickly seized the opportunity, renovated its organizational structure and operation Thereby, the company can proliferate, make significant contributions to the chemical business, industrial solvents in particular, and the national economy, To make this happen, measures that help to improve business performance are essential at this time Facing many difficulties and challenges, improving business performance is vilal, which is always the

company’s top priority it is a famdamental goal for the existence and development of the company Therefore, the company strives lo rescarch and adjust its operation dircetian, promote product consumption, effectively use production factors, and study the influence, the level, and ths tendency of each factor Recognizing the importance of improving the performance of production and business activities for each enterprise, the amhor chose the topic "Iraproving business performance at Pctrolimex Chemicals Limited Company” as the dissertation theme

2, The research nbjectives of the topic

The goal of the topic is to:

- Systematize the theoretical basis of business performance in general

- Analyzing and as Petrolimex Chemical Co,, Ltd fiom 2017 to 2019, From there, find out the existing aspects that aifect the business performance of Petrolimex Chemical Co., Ltd

ing the current status of the business performance of

- Proposing some solutions to improve the business performance of Petrolimex Chemical Co., Ltd in the future

3 Object and scope of the study + The object of stndy:

5 About time: L'valuate the business performance of Petrolimex Chemical Co Ltd

in the period 2017-2019, propose onientation and solutions for development in the period

of 2021-2025,

4, Research question

‘The research of the topic aims to answer [he following in-depth questions

- How was the business performance of Patrolimex Chemical Co Ltd in the

- What solutions to adopt to contribute to improving the business performance at

Pewolimex Chemical Co., Lid?

5, Research methods

5.1 Data collection methods

‘The thesis surveys the current status of Petrolimex Chemical Co., Ltd from 2017 to 2019

s# Data source

Data used in the thesis is mainly secondary data, incinding:

- Deer Tecisions, Cireulars of the Government, ministries, departments, and branches related to the operation of enterprises in general, industrial chemicals and solvents businesses in particular,

+ Scientific works and domestic and forcign research works related to the busin

performance of the enterprise;

- Other documents related to natural conditions such as geographical location, population distribution, infrastructure, business environment, ete, in the study arca;

- The data related to the research process of the topic has been officially

announced ‘The data inckudes: relevant research results that have been conducted

4 Methods of data collection

Methods of collecting secondary data are done through the following ways:

- Study, search by keywords, inherit datascts of previous studics from Statistical Yearbook sources, Ministry of Finance, Ministry of Planning and Investment, Ministry of Labor - invalids - Social Affairs, books, magazines such as Economic development mugavine, banking magavine, Finance magazine, Rescurch and cxchange magazin, and other journals; Dataset of previous studies related to the topie; legal documents about business performance such as Decrees, Circulars, Decisions, etc of the Government and relevant agencies

- Direct observation method: through observing the production and business operation at Petrolimex Chemical Company Limited

5.2, Data analysis method The thesis uses some formation analysis mnethods to evaluate the business performance of Petrolimex Chemical Co,, Ltd, ftom 2017 to 2019 as follows:

+ Statistical analysis method

- Statistical analysis synthesizes a specific nature of socio-economic phenomena and processes in certain historical conditions through numerical manifestations in particular, statistical analysis determines the variation's level, expressing the unique

rolationship’s nature and level Statistical analy

just take slatisties as a document, using

statistical methods as a research tool

~ Statistical analysis is of great importance in the economic management process

"Thanks lo rich theory and methodology, statisties can map oul the causes of the completion

of the plan and the management decisions; analyze the effects of factors on resource use, and determine the relationships and the general rule of the system

In statistical analysis, the system requircs an approach in both dixcctions; analysis and synthesis

4 Method of comparison

~ A Trehod of considering an analytical indicator based ơn the comparison with a baseline (first indicator) It is the most commonly used method to analyze business activities and analyze and forecast socio-economic indicators in the macroeconomic field This method compares the data over time with cach type of chemical produels, solvents, and different market segmentation) to determine the trends and fluctuations of analytical indicators It helps to synthesize documents calculate the correct criteria, and help the document analysis be scicntific, objcetive, and adcquatcly reflect the critical content research

- After synthesizing the data, we compare data between years, thus making comments and cvaluations through the resulls of synthesis and calcufation of data on the business performance of industrial chemicals and solvents at Petrolimex Chemical Co.,

Lid in the period 2017-2019 ‘The dissertation using the specific comparison method is:

~ Absolule numerical method: The differcnac hetwoon two criteria: analysis period and primary indicator

Comparative numerical method: A percentage of the analysis period index compared 10 the Gist indicator shows the completion level or the absolule difference rate

compared to the first criterion to know the growth rate.

‘The comparison method allows us to accurately assess the growth or decline of the indicalors representing the company's business performanee, thus making comments on the business's right and wrong sides at Petrolimex Chemical Company Limited,

6 The significance of the topic

Improving business performance has bean mentioned in many previous stadies by domestic and forcign authors For example, in his research, the author Truong Thanh Tu (2010) has researched and proposed some solutions to improve service business performance on VNPT Tanoi’s fixed (stephone network, The authar focuses on providing solutions to improve business performance on a fixed-line fixed network, to keep existing customers, attract new customers, and increase revenue for service providers All these

credit quality to reduce risks, contribute to the increased signal Business results for tmsinesses [2] Recently, the author Doan Thi Nhat Tong (201 4) offers some solutions to

ics, diversify and improve the quality of products and services, improve

improve the business performance of SIMCO Song Da Joint Stock Company The author proposes that the Song Da Joint Stock Company should complete the capital structure, and use reasonabie costs, improve the quali fications and capacily of hunan resources, improve tho qualily of equipment - toclmotogy all contribute part Lo improve the performance of the umt in the future, 13] The author Le Thi Hoa (2016) again studies the problem of

improving the performance of production and business at ‘I'am Chien Company Limited

‘The author belicves thal the application of cost-clfeelive, reasomable and cfficient use of input fhetors and the survey to expand the market, boost consumption willl help the Company to be more successful in the future It is also a factor that helps increase the business performance of the Company [4]

In general, the above studies have achieved certain results such as providing a theoretical system for the field they researched, analyzing the current situation of use,

administration, and busin

ss performance al the unil and enterprise Many solutions te improve the performance of using human resources for their units/businesses Solution

groups focus on improving cost management, saving input costs, increasing revenue

At Polrolinisx Chamical Co, 14d, in recent ycars, there have heen seme roscarches

on enterprises, but these studies focus on market expansion or analysis to offer solutions to

3

improve business performance, In the coming time, there is no research to analyze the cunenl situation and propose solutions to improve business performance for the unit

‘Therefore, the author has chosen this study with the desire to make a small contribution to ths Company by analyzing and offering some solutions to improve business performance for Petrolimex Chemical Co., Ltd shortly

In terms of scicncc: The topic has systcmatized a relatively complete theoretical basis of business performance in the enterprise In practical terms: ‘The issue has been amalyved in-depth, assessed the current slatus of the company which is the production and business performance in the period 2017-2019, from which proposed appropriate and highly feasible measures improve the performance of the production process and business activities of the company in the corning years

7 Structure of the topic

In addition to the introduction and conclusion, the thesis includes three chapters:

Chapter I: TIIEORETICAL BASIS OF BUSINESS PERFORMANCE

Chapter II: BUSINESS PERFORMANCE ANALYSIS OF PETROLIMEX CHEMICAL COMPANY LIMITED

Chapter I: SOLUTIONS TO IMPROVE BUSINESS PERFORMANCE OF PETROLIMEX CITEMICAL COMPANY ETD

Due fo the limitations of time, capacity, and qualifications, this thesis still has room for improvernent We hope that the instructor's suggestions will help lo improve the topic

CHAPTER I: THEORETICAL BASIS OF BUSINESS PERFORMANCE

To survive and grow, a business, whether large, medium, or small, operating in any field, must be rm effectively, To know the cuxrent status of business operations, analyzing business performance plays a crucial part It helps the enterprise leaders to run the business better based on analyzed data

1.1 Overview of business performance

In a market-oriented economy, the overarching and long-term goal of every

1.1.1 The concept of business performance

Business peifoumance is an economic category associated with a matket mechanism related to all production and business processes such as labor, capital, machinery, and raw materials

‘An enterprise can only achiove high performance when using the cssential clements

of the business process effectively When referring to business performance, economists consider different aspects in order to give different definitions

For businesses to achieve their goals, it is necessary to pay attention to intemal conditions, promote production factors’ sufficient capacity, and minimize the costs ‘the requirement of improving busmess performance is to use reasonable inputs to achieve

stand ¢

thaxinmum results with rninimum costs However, fo un nature of efficiency, it

is also necessary to distinguish efficiency fiom production and business activities, We can draw the efficiency concept as follows: "Lifficiency is the comparison of outputs and faclors of inpul resources" [according to Nguyen’ Ngoc Lan - the topic of economic performance| That comparison can be a relative comparison and an absolute comparison Outputs are often expressed in terms of value, revenue, and profit ‘The resource input faclors are Tabor, cosl, assets, and capital Besides, it is also said thal "Business performance is an economic category in depth, reflecting the level of resource exploitation and costs Resources in the process of reproduction to achieve business goals "[according

to Do Thur Tung - textbook of financial nranagement] Today's business performance becomes more critical for economic growth and is the basis for assessing its economic goals in each period ‘The absolute efficiency is determined as follows:

A=K-C

‘The relative efficiency index is determined as follows:

3

A=KIC

Tuside

+ A: Business performance

+ K: Business results (by the following criteria: ‘Total value, otal revenue, profit)

* C: Input resources (including Tabor, cast, capital equipment)

1.1.2 Distinguish between business performance and results

Eom the above concepts, we can understand that business performance is an economic category thal reflects using resources (equipment, machinery, fuel, and capital)

to achieve the business's goal

Business performance reflects the organizational structure and is determined by the

results The production and tnsiness activ are absolute mumbers that reflect the

enterprise's output scale and business activitics after cach period In the process of produetion, it is necessary to achieve the goal being set earlier ‘Ihe results are represented

by some quantilalive indicalors such as sales, revenue, profil, amd qualitative indicators

such as ropulation, product quality

In terms of effectiveness, the results are different, The business results reflect the remaining significant scale that demonstrates the comparison between expenditures and revenuss, Business resulls are measures of the product and operational performance of a business, Results demonstrate the quality and value of products and services that lead to customer satisfaction and customer engagement, ‘I'he results only show that the scale achieved is large or small and docs not reflcet the qualily of production and business activities Products come atter efficiency Results are used to calculate and analyze performance in each business cycle Therefore, results and effects are two different but closely related concepts

1.1.3 The persuasive nature of business operations

In general, economic performance is the category reflecting management skills, ensuring high rosults on sovio-vconomic tasks scl ont at thy smallest cost

‘The economic category is understood ftom qualitative and quantitative

perspectives, Quantilative: The cconomie performance of performing cach socio-cconemic task shows the correlation between the results obtained and its cost If considering, the synthesis people can only get economic performance when the result is more remarkable than the cost spent; the more significant the difference, the higher the performance In terms of qualitative results: The level of cconomic porformance obtained reflects production and business management ability,

The two qualitative and quantitative aspecls of business performmanes are nal separated

Economic performance is not consistent with economic results Economic

formames is the category of comparison, sxpressing: the co

and the gain The result is only a necessary factor to analyze and evaluate the efticieney itself The results have not shown how much it is created and at what cost, which means ths results have not shown the quality of creation outward The essence of economic performance is to show cconomie development goals and production and business activities to satisfy the market's needs better Efficiency refers to the degree of satisfaction, demanding the selection and use of limited resonrces; that is to say, the economic results satisfy the need

Another effective indicator is KPI: A performance indicator or key performance

indicator (KPT) is a Lype of performance measurement KPIs evaluate the success of an

organization or of a particular activity (such as projcets, programs, products and other initiatives) in which it engages Citen success is simply the repeated, periodic achievement

of some levels of operational goal (e.g, zero defects, 10/10 customer satisfaction), and

somelimes suc

is defined in terms of muking progress loward strategic goals Accordingly, choosing the right KPIs relies upon a good understanding of what is important to the organization What is deemed important often depends on the department

the KPIs useful to finance will differ fom the KPls

114 Classification of business performance

Performance is a broad aggregate calagory When approaching, analyzing, and evaluating, this indicator, it is necessary to know the diversity of efficiency indicators and efficiency indicators classification according to the bases

Performance indicators differ from business drivers and aims (or goals) A school might consider the failure rate of its students as a key performance indicator which might help the school understand its position in the educational community, whereas a business night consider the percenlagg of income from returning customers

‘The key stages in identitying KPIs are:

*Having a pre-defined business process (BP)

ä polential KPL

*Having requirements for the BPs

“Having a quantitative/qualitative measurement of the results and comparison with set

goals

“Investigating variances and tweaking processes or resources to achieve shori-term goals

Key performance indicators (KPIs) arc ways to periodically assess the performances of organizations, business units, and their division, departments and employees, Accordingly, KPIs are most commonly defined in a way that is understandable, meaningful, and measurable, Thoy arc rarcly defined in such a way that their fulfillment would be hampered by factors seen as non-controllable by the organizations or individuals responsible, Such KPIs are usually ignored by organizations

KPIs should follow the SMART crileria, This moans the meas has a Spavific

purpose for the business, it is Measurable to really get a value of the KPI, the defined

noms have to be Achievable, the improvement of a KPI has to be Relevant fo the success

of the organization, and ñmally il must be Time phased, which incans the value or outcomes are shown for a predefined and relevant period

In order to be evaluated KPIs are linked to target values, so thai the value of the THeasuc can be assessed as mccling expectations or nol

For the besiness performance of an enterprise, itis divided into

+ Gensral business performance

* Division business performance,

General business performance provides an overview of the business ft shows the business performance of an enterprise's entire production and business process (or a

division of the busmess) in a time.

A division’s business performance refers to the performance of each specific field

+ Long-term business performance

Shor-lenn business performance is the business performance reviewed and assessed in a short tine, such as weeks, months, quarters, years, and several years

Long-term business performance is the business performance that is considered over ä long lime in a

sociation with long-lormn stratezics and plans Long or shorl term business performance is sometimes concemned with the development and progress of the business

There is a dialectic relationship between long-term and short-term business performance, and in some cases, they contradict cach other, Sometimes, to reach long-term goals, enterprises can give up the short-term goals, for example, considering world renowned retail groups that have entered the Viemamese market like METRO (Cash & Carry) and BIG C (Big Coral)

1.1.5 The Necessity and Mcaning of Improving Business Operations

Objective necessity: In the conditions of production and business under the rmarkel

tmochanist, cach business has lo creale profits ta survive and develop to achicve the

highest production and trade; companies need to detennine the targets and investment orientation and strategies It is necessary to understand the influence factors, the level, and

tend of cach factor contributing lo business performanee, Tl can be done only bascd ơn business analysis In imperialism, the primary accumulation led to the proliferation of produetion; the production companies multiplied in both size and efficiency, with the fierce competition, To win this competition, an enterprise uccds to ensure sound

management of its activities to create an effective business solution as the capitalist

receives high quality and accuracy from many sources The accounting work cannat meet this requirement, so il is necessary lo have an independgnl, economic analysis science with rich research methods With significant economic development and high-tech achievements, practical analysis is more critical in the business management process bacause il helps managers find the most effective business plan for the economy, soci

and environment.

‘The context of a market-oriented economy requires businesses to apply for seiculific aelvances, upgrade operating systems, improve the produption process, and

business management to ensure produetivity and performance

In conclusion, analyzing the performance of production and business activities helps managers to make decisions, propose feasible plans to improve business performance, and utilize all the resources such as and capital, labor, land, and sơ on, the meaning of improving business performance

Por the tational economy: business performance is an essential economic calegory, reflecting the requirement of a time-saving rule that reflects resource use, production level, and retum level Its production relations in the market mechanism ‘t'he production force's

more and more

clapmont level is higher and higher, production rotations perfect,

and performance is improved The business performance brings the nation the distribution and use of resources more and more appropriately and brings high performance

Por the business itself Business performance in absolute terms is the profit eamed

It is the basis for cxpanding reproductions, improving the lives of cmployees For cach enterprise, especially businesses operating in the market mechanism, improving business

operations’ performance plays an essential role in enterprises’ existence and development Also, it helps businesses compete in the market, invest, expand, renovate, and modemize technical facilities for production and business

For employees: Business performance is the driving force that stimulates employees fo bo onflusiastic aboot production, always paying attention to their labor results,

Improving business activities’ efficiency means improving working life, promoting productivity, and improving business performances

1.2 Content and consumption indicators in business performance analysis

Kor a general assessment of business performance, people often use the profitability imdiealor, Thesc indicators reflcel the profilubilily of the business, Besides, many other indicators are used to reflect the efficiency of the use of enterprise inputs

1.2.1 Content analysis of business results

Analysis of business results hetps enterprises fully identify the causes affecting the business process and results |according to Pham Van Duoc - analyzing business activities) Since then, they are making business decisions efficiently Including Business performance analysis, Analyze business results; Analysis of production cost Huctuslions, Analysis of

corporate financial statements, Revenue volatility analysis

12

1.2.1.4 The criteria for analyzing business results

‘The ratio of profit and nel reverms

The ratio of revenue/net revenue = Profit (before tax, after-tax)/Net revenue

‘This coefficient shows how much profit the enterprise gets (before tax, after-tax) from one dong of revere

Revenue indicator analysis:

Purpose: ‘To see which underlying trend in revenue fluctuates, allows observing the fluctuations of revere, specifically, the absolute mumber of increase (decrease), the absolute rate of increase (decrease), the value of increase or decrease

Profit indicator analysis

Analyzing the volatility of profit over time lo ovaluale the incr

decrease of profit and determine each factor's impact on profit

1.2.1.2 Methods of determining results

Business results = © revenue - ¥ cost

~ Revenue target: The enterprise's revenue in the consideration period (usnally a year) is the total value of goods and services that the enterprise has sold during that period and issned the sale invoice)

Turnover = sale price x Quantity of goods sold

‘With the VAT-inelusive sale price, the tumnover is called VAT-inelusive lurnover

With the VAT-exclusive selling price, the revenue is called the VAT-exclusive revenue

Revenue without tax due to deduction of related items such as salcs discounts, discounts, retums is called net reverme

Cost:

The enlerprise’s cost can be understood as all the costs of living labor, animalization, and other necessary costs that the enferprise must spend in production and business manifest It is in cash and charged for a certain period Thus, the nature of the business's production cos! is always determined as the materral costs (waste) and must be associated with the business purpose Operating expenses of enterprises include, Expenses

of normal business activities include (business costs and financial costs), other operating expanses Buscd on the ability to induce costs and the objec! of costs, classify them inte

direct and indirect costs.

According to the relationship between the technological process that produces the produel and the business process, the cost is an csseritial cost and a nionebasic cost According to the relationship with the activity level, costs are classified: variable and variable costs ‘Thus: production and business costs have a direct impact on the business

results of enterprises If costs increase, the reanlt is reduced, costs decrease, the results

increase, so cntorpriscs always pay attention to reducing costs and classifying costs to get

the best business results

+ Profit largel: Business profil is an indicalor reflecting the susplus-value or the level of business performance that the enterprise gains,

Business profit = E revenue - E cost

Gross profit = Net revenue - Total cost of goods sold

Profit before tax = Gross profit - Total cost of insurance and administration 1.2.2 Overall effect

1.2.2.1, Efficient use of total assets

The production capacity of total asscts,

SSXzs = Net revenne/Average total assets This largel shows tw many VND of nel revenue of the assets spent on business in the pariod

Return on assets (ROA)

SSLy, = Return/Average Total Assets = ROA

This lagel shows how much profit is camed for every 1 dong of as

business in the period

1.2.2.2, Efficient use of equity The productivity of equity capital

SSXvosq = Net revenue/Average equity = ROE

This target shows how much revenne is generated for every 1 dong of equity invested in the business

Retin on equily (ROP):

SSLycsu = Return after-tas/Average cquity = ROE

‘This target shows how many dong of profit for every 1 dong of equity invested in

the business.

1.2.2.3, Effective use of costs

‘The production capacity of cast

SSX¿y = Net reveuue/Total cost

‘This target shows how many dong of revenue for every 1 dong of expenses spent in the perind

Cost profitability:

SSL¢p = Protit/Total cost

This largel reflects how many VND of profil for every 1 dong of expenses spent in the patiod

1.3 Evaluate the efficiency of input resources

1.3.1 Kfffective use of Labor

Average labor productivity

§8Xup = Total revenuc/Average total number of employees

‘This target shows how much revenme per employee generated during the period It reflects fhir Labor in the course of doing business

The profitability of Labor:

SSL» = Total profit/Average total number of employees

This targct shows how much profit onc employer ean ercate in a period

1.3.2, Effective use of fixed assets

‘The production capacily of fixed assets

S8Xscp = Average nel revenuellixed assets This target shows how muuch net revenue is eamed for every 1 dong of fixed assets spent on business in the period

‘The profitability of fixed assets

SSLrscy = Average profitifixed assets

‘this target shows how mmuich profit is eamed for every 1 dong of fixed assets spent

in business in the period

1.3.3, Effective use of liquid assets

‘The prochiction capacity of liquid assets

SSXrsip = Nel revenue/Average wor

This indicator shows how many dong of net revenue for every 1 dong of waking asset spent in business in the period

‘The profitability of lisgiid assots:

SSL = Average profitftiquid assets

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‘This target shows how many dong of profit for every 1 dong of working asset spent

in business in the period

The rate of labor asset tumover in the year:

TDLCrsrp= Revenue/Average working assets

1.4, Factors affecting husiness performance

Determining the factors that affect business performance is the perception coneetly mapping out the factors that affect individual results in business analysis ‘hus, slermining the effects of factors needs lo be accurate, timnely, identifying the targel factors

with economic phenomena, and determining the interaction between them According to the nature of factors affecting business performance, we can classify them according to 4 differcnt ways: the inavitabilily of faclors, tha impact trond of factors, and influsneing factors in the business environment, Subjective factors: Such as cost, labor tee, and labor time are factors depending on the internal resources of the business, Objective factors: Market prices, tax rates minimum ot average wages extemal impacts on business people Analyze business performance according to subjcctive and objcetive factors to evaluate the efforts and find ways to increase business performance

1.5, Content and analytical methods

1.5.1 Content analysis

‘The contents of the analysis of production and business activities are economic phenomena, economic processes thal have occumed, or an independent econamic accounting unit under many subjective factors and different objectivity These phonomena and processes are manifested under a specitic production and business result expressed by economic indicators

Production and business results can he the sesutl of cach scparate stage, such as purchases, production results, sales results, ar the business process's combined results: financial results When analyzing business results, people focus an the results of implementing orientations, goals, and plans In the analysis, busincss results are represented by economic indicators, It is the definition of the content and scope of the bussiness result, The analysis's main content is the business results snch as sales revenue, production value, cost, profit Towever, the business resulis are always analyzed concerning, the conditions (elements) of the business process such as labor, capital, and

materials When analyzing, it is necessary to understand quantity and quality indicators

Quantitative indicalors refleel the size af resudis or business conditions such as Tovơnue, labor, capital, and area On the contrary, quality indicators reflect business performance

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or efficiency of using business factors such as unit cost, cost ratio, profitability, labor productivity

The relatively complete construction of @ system of indicators with different indicator modulss, the classification of the influencing factors ftom different angles helps enterprises fully evaluate business tesults The enterprise themselves try to find the cause

of the strengths and weaknesses in order to take measures to inercasc business performance, When analyzing business results are expressed as economic indicators under the impact of new factors thal are “qualitative” process, iI is necessary to quantify the indicators and factors in the numerical values determined with a determined variability

In order to perform those specific jobs, it is necessary to study generalized business

methods

1.5.2 Analytical metho

anal

‘With the development of awareness of economic phenomena and the development

of the economic sciences and applied mathematics, computational enginzering methods are

‘used in analytical coonomic scicnec To achicve cach method's purpose has its strengths and limitations; it requires proficiency in applying it to achieve the set purpose

‘The following are technical calculation methods commonly used in business

analysis:

1.5.2.1 Comparative method

‘The comparison method is the aldes| and most widely used The ecanortic part compares the quantified cconomic indicators and phonorena with the same content, and similar nature

‘The comparison method comes in many forms

* Compare performance data with a bnehmnark or planned metrics + Comparing actual data between periods and years

+ Compare performance figures with averags or advanced specifications - ccouonics

* Compare the firm's data with those of respective firms or with competitors

* Comparison of tschnical-econamic parameters of other econamic options The most significant advantage of the comparison method is separating the compared phenomena’ general features and charactetistics The aspects of development or underdevelopment, efficiency, or less efficiency are assessed Adequate to find the best and most optimal managernent solution in cach specific casc When applying the

compatison method, the principal requirement is: The calculation criteria or results must be

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similar in terms of the reflected content and the way of determination In a comparative

analysis, absolutc, relative, and mean numbers arc comparable The absolute number is the

‘he relative number is the number expressed as a percentage or factor Using a tolative mumber to cvaluats unique ccoomic phenomena’ structural elranges allows us to

link non-equivalent criteria for comparative analysis For example, establish a relationship between the two ctiteria of the volume of goods consumed and the protit to deduce, If the volume of goods increases by 1%, the total profit can be increased by 1% Llowever, the relative number docs not reflect the intemal quality nor the scale of the cconomic phenomenon, Therefore, in many cases, when comparing, it is necessary to combine both absolute and relative numbers simultaneonsly The average number reflects the most common aspect of the phcnomenon, ignoring the uneven devclopment of the parts constituting the economic phenomenon ‘The average can be expressed in terms of total (average labor productivity Average working capilal ) Tt can also be expressad in tolative numbers (average fee vale, ale of return .) Using the average number allows for

a general assessment of the enterprise's economic parfoumance, building the economic - technical norms llowsver, it should be noted that the number of average codes does not exisl in teatily Therefore, when using il, il is necessary la take inlo account the maximum ranges of fluctuations

1.5.2.2 The continuous replacement method

Continuous substilution is lo replace, in tum, the original or planned data with the actual data of the factors affecting an economic indicator analyzed according to the logic of the relationship between the factors The method of continuous substitution can be applied

wh

sn a fimchon can express the ratalionship between indicators and belween factors and economic phenomena Contimous substitution is often used to calculate the influence of the factors affecting the same indicator being analyzed In this method, the substitution faelor is the faclor for which the cffeci is catculated Whils the othar factors remain the same, then compating the functional difference between what was before and what has

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been replaced will calculate the impact level Lffect of the replaced factor Assume that indicalor A has a relationship wilh two factors, and (hat relationship can be expressed as a function:

A=£(X, Y) and Ao=£ (Xo, Yo)

At=f(X1, YD

To calculate the cffects of factors X and Y on indicator A Replace X ¥, respectively At that time, supposed to replace factor X before Y; we have:

+ Influence level of factor X on indicator A:

Ax £(K1, Yo) - f(Xe, Yo)

+ Inftuenee level of factor Y on indicator A:

Ay=C(X1, ¥!)- COKE, ¥o)

It can be seen that, in the same way above, if we replace factor Y first, factor X follows,

we have:

+ Influence of factor Y on indicator A:

Ay-—f (Xo, Y1) - f (Xe, Yo)

+ Infiuenee level of factor X on indicator A:

Ax=f(X1, YD - f(a, Y1)

Thus, when the replacement sequence is different, different results can be obtained

on the same factor's influence on the same criterion It is the prominent drawback of this method Determining the logical sequence of eplavemnen| is a requirement when using this melhod Thơ soquzneo of continuous substitution in the decurnents is usually specified as follows;

* ‘Phe weight factor was replaced Lirst, the weight factor was replaced

* The primary factor is replaced First, the secant factor is replaced later

+ When it is possible to distinguish clearly the influencing factors, it is convement

to apply the above principle in continnons substitution, ‘There are many quality and volume faclors sizmultancously, ic., many factors have the sume properlies, it becomes difficull to determine the replacement order Some documents have been methodical, Integral calculus instead of this method,

With the above example, we have A=C(X, ¥)

đA fxdxtfydy

and Á Ax=fxdx

AAy=lydy

When the actual ratio compared to the original indicator (Al compared to Ao) is not more than 5 - 10%, the catculatsd results in any replacernent sequence will be

approximately the same Another distortion of this method is the difference number method In this method, to determine each factor’s influence level, we use each factor's comparative difference mmber to calculate

Also, with the above example, we have: A— f (x, ¥) with the replacment order x first, y after:

AAx=C(Ax Yo) where AX =X - Xo

AAy FỢ(,Ay)whaeAY Vi Yeo

It is a short and straightforward difference number method, However, when using

if, il should be noted The sign of the effect of factors on the analyzed indicator eoincid

1.5.2.3 Balance cantact method

It describes and analyzes cconomic phenomena when there is an equilibrium relationship or an equilibrium need exists The equilibrium contact method is widely used

1.5.2.5, Partitioning method

It is a statistical method and is widely applied in economic analysis, especially in

cl of the influencing factors

Tmacroceonomic analysis Hicrarchy is the division of parl, constitucnts of Ihe phonemenon being studied according to that phenomenon's primary signs The classification method

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allows stadying phenomena in the correlation or dependency association, separating from the effects affecting the criteria, analyzing the more defined factors, finding ont the laws and trends Typical for economic phenomena and economic developments This method

is also used to explore and research the commodity market, grouping customers, customers

1.5.2.6 Correlation comparison method

It is a statistical method used to study nonlinear correlation relationships between econemic phenomena Correlation comparison is often used to format economic relationships and quantity them through experimentation with large numbers of statistics, understanding development trends, and regularity in the development and relationships of various coonomic phenomena

1.5.2.7 Other applied math methods

In economic analysis, which has been applied to many apphed mathematical methods, the number of mathematical methods applied in economic analysis is increasing Popular imcthods are lincar planning math, game theory, crowd scrvice theory The methods above are chosen to perform economic activity analysis depending on the object

of analysis and how information is presented in each specific casa

1.6 Directions and measures to improve business performance

Improving business performance is a fundamental goal of every business Because

However, an enterprise's business performance is affected by the synthesis of many factors, many stages to improve business operations’ efficiency, it is necessary to salve the synthesis, synchronize many problems and many solutions Legal effect First of all, the activities of production and business of the enterprise must always solve the following fundamental problems:

to build the tos!

+ Caplure market, needs and the responsivenoss of busine:

suitable products and business strategy,

2

+ Prepare necessary conditions and factors for production and business processes, for high-quality products and lower product costs

« Organize the consumption process to get the most prominent revenue at a low

cost and in the shortest time

Thus, in order to improve business performance, from a general perspective, an cutcrprisc must well perform the following basie tasks

+ By all measures possible to increase the results of production and business both in kind and vaine

+ Reducing the cost of spending both in kind and value to achieve that result

* Reduce the length of time it takes to achieve business results per unit cost

Going into dolail about cach cfficieney indicate, in order lo improe

Aisioncy ina way comrespanding to a particular efficiency indicator, we have different specific measures: Increase the output of the product produced in order to reduce the fixed costs per unit of product Through practical research comes a necessary conclusion as follows: most businesses, It has a function of total costs in the short term Furthermore, it is a lincar function corresponding to each specific output range

TC = FC +Q AVC

With a lincar ovethcad fmction, the average cost Ñmnetion has the Íom o a hyperbole (decreasing with output): So the firm's most efficient production output is according to design maximum capacity From a production perspectiv

+ Expand the system of sales agents and product introduction stores

* Conducting general business

+ Tieprove product quality

+ Product discounts

+ improve sales quality,

+ Doing well in the afler-s

2

Save on average total fixed and variable costs (reducing the consumption of living and animalived Labor) with the fellowing solutions

+ Innovating production technology,

+ improved production organization and labor arganization

* Innovating business management One of the directions for innovation in business manageuicnt is intemal cost accounting

From the above general analysis, the following observations are drawn: Business performance is the rosl critical goal of enterprises in the markel mechanism, especially for equitized enterprises The task is to clarify equitized enterprises’ current efficiency to offer solutions to improve enterprises’ business performance

For a tong lime, in theory, quite @ few methods sorve the cvaluation of busin performance, However, in practice, the effectiveness evaluation method has not received proper and reasonable attention and guidance By legal documents, it is the assessment of ths actual performance of state-owned enterprises Therefore, to assess Petrolimex Chemicals Co., Ltd, the author will mainly use the combined cfficicney indicators such as profit and rate of return on capital the thesis will analyze efficiency indicators on each side comprehensively

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CHAPTER II BUSINESS PERFORMANCE ANALYSIS OF PETROLIMEX

CHEMICALS COMPANY LTD

2.1, Overview of Petrolimex Chemicals Company Limited

2.1.1 History and development of Petrolimex Chemicals Company Limited

Petrolimex Chemicals Company Limited is a one-member limited liability company, invested by Petrolimex Petrochemical Joint Stock Corporation, a Vietnam

National Petroleum Group subsidiary, and 100% owner of charter capital Decision No 033/QD-PLC-HDQT December 27th, 2005 of the Board of Directors of Petrolimex Petrochemical Joint Stock Company The Company officially came into operation on

March Ist, 2006

- The symbol of Petrolimex Chemicals Company Limited uses the logo of Vietnam

National Petroleum Group

*The company’s main field of production and business activities:

Trading, importing, and exporting Solvents, Chemicals, Natural rubber, Synthetic

rubber, and other products in the field of Solvents, Chemicals, Natural rubber, Synthetic

rubber associated with the construction brand "Petrolimex Chemicals"; Providing

transportation services, warehouse leasing, leasing preparation, testing analysis, consulting,

and technical services

* A list of some essential business items at Petrolimex Chemicals Company Limited

~ Toluene: Has a vast range of applications as a solvent for most high-grade

synthetic resin paints Also available as solubilize ester, cellulose, and toluene is also used

as a solvent in the manufacture of unglazed rubber, plasticizers, and cement

= Acetone: Cleaning agent, solvent for plastics and rubber, adhesives; as raw

materials in pharmaceuticals

- IPA: Isa solvent used in cleaning, printing, to manufacture drugs, adhesives

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- Rubber solvent: Used in the rubber industry, in the fire industry Detergent for the mainteramec of machinery equipment, They make soot-free fuel for the glass and jewellery industries, making gas for gas lighters and fuel for tourist kitchens

- Methanol: Used directly in acetic acid production, formaldehyde, used in printing

inks, paints, plant protection drugs

~ Butyl Collosolve: As a primary solvent for coating; Binder for industuial water emulsions; Binder for plastics and dyes in water printing inks, Main solvents for silk screen, printityy inks solvents; Solvents dissolved for pesticides in the industry, Comectors and solvents for household and industrial cleaners, detergents, hard surthee cleaners, disinfectants

- Solvent T-sol Whito Spirit’ Used as a deterrent to remove grease on motel

surfaces; Used in the paint manufacturing industry

- Xylene; Used for high solubility for most synthetic resins especially, even in the case of low evaporation: Use in agriculture: insecticide, fungicide

- Methyl Ethyl Ketone: Used in footwear and lacquer industrics

- Solvesso paint thinner, TDI 80/20; N-Butyl Acetate; MIBK

2.1.3 Organizational and managerial characteristics at Petrolimex Chemicals

Company Limited

+ Leadership of Petolimex Chemicals Company Limited,

‘The president and the dirsclor is the representative of Petrolimex Petrochemical Faint Stock Company to mamage and responsible for Petrolimex Petrocherical Join! Stock Company to develop the Company according to the objectives set by the Patrotimex Petrochemical Joint Stock Company assigned ‘The rights and obligations of the company president arc provided in the Company's charter He is the person who dircetly manages all daily activities and responds to the Board of Directors of Petrolimex Petrochemical Joint Stock Company, the President of the Company for the implementation of Rights and obligations of the company director is provided in the Company's charter

+ Company's Departments

Office of Administrative Organization: has functions and duties to advise and help leaders of the Company Io implement the work of organization and persormel; Responsible for administrative work - synthesis, clerical - archive, In charge of the emulation, reward, and discipline of the Company

Department of Finanes and Accounting: has the funetion of advising and assisting the director of the Company in directing and organizing the implementation of Finance,

25

Accounting, and statistics on the whole Company following state regulations, laws, and regulations of the Company; other assignments when assigned by the dircetor of the Company,

Chemical Sales Department: has the Ñmclion of advising and assisting the director

of the Company on the sale of products and services of the Company, product research and development, market development, customer 1clationship building, and development Be responsible to the director of the Company for those activities in the assigned duties and authority

‘Technical Department; has the function of advising and assisting the director of the Company in the fields of technical management, construction, progress, quality for the

of authority of the director

+ The subordinate units

- Hai Phong Chemical Branch: Has the function of directly implementing business activities in the Ilai Phong and Northem provinces

~ Saigon Chemical Branch has the funetion of dircetly performing chemical

business activities in the city market Ho Chi Minh City and southem provinces

- Affiliated chemical warehouses tnchids:

Minh Ilnong Chemical Warehouse - Da Nang City, is a consignment warehouse responsible for parlly ensuring Ihe source of goods for central provinces such as Da Nang, Quang Binh

Phu Thi Chemical Warehouse - Hanoi City, is a transit warehouse between Hai

Phong and some ollier northern provinces such as Himoi, Ha Nam, Rac Ninh Phu Thi

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Chemical Warehouse is directly under the management of the chemicals business

2.2 Overview of industrial chemicals and industrial chemical business activities

2.2.1 Characteristics of chemical products and industrial chentcal business

Chemical commodities are an essential commodity in the national economy In life,

chemicals appear everywhere, and It is indispensable in industrial factoriss Chemical is a toxic and dangerous commodity to humans, sa it is necessary to have a treasure trave and

carcfully preserve it to avoid being released into the environment Duc to this item's

dangerous nature, the use of chemicals in production and consumption requires great care

to avoid unforlunate accidents,

Our country's chemical industry accounts for a significant proportion of the industrial structure of 11.2% However, compared to the newly developed countries in

Sonlhi

st Asis, tho chemical produetion capaoity is sử] lao smafl Thơ chơnnieal indusiry

is mostly a vital seetor in a country's economy, but its role is still limited Vietnam chemical industry report in 2016, the chemical industry in our country has not produced nscessary organic chemicals such as chloroform, methanol, ethanol Furthermore, there

is still a lack of inomanic chemicals Demand for usc is significant such as soda, nitric acid, phosphoric acid Altematively, the development of pure chemical products for pharmacenticals, scientific research, food processing, and rubber and cannot still manufacture plastic materials

With the characteristics of being an agricultural country, Vietnam always attaches greal importance lo developing chemicals The strategy for domestic fertiliver production hws continuously increased production al 10%/ycar However, our eument forlitiver production capacity can only meet 45% of the demand for agricultural use, The weakness

of this domestic chemical fertilizer industry is that it is not diversified in fertilizer types

‘The demand for DAP, nitrogen, and urea has ta depend heavily on imports,

‘The chemical industry in Vietnam is mainly aimed at serving agriculture, industrial produetion, and consumption Those sectors include:

> Chemicals for agriculture

> Fertilizers such as phosphate fertilizer, nitrogenous fertilizer, NPK fertilizer

Chemicals used io protect plants Basic inorganic chemicals

Soda, soda, sulfuric acid, phosphatic acid, hydrochloric acid

vvvv Chemical industry

28

> Luminaire, oxygen, carbon dioxide, activated carbon, ammonia, petroleum produel additives, welding rods, plastic materials

> Chemicals used in the consumption

> Gasoline, detergent, battery, rubber, paint

‘The development strategy of the chemical mdustry in Vietnam

With the cwrent development demand, the Vietnamese chemical markel has built a strategy to develop the industry, The goal of developing the chemical industry in our country is to focus on the national economy areas At the samme time, the chemical industry also ensures the leading role of the state economy ‘These are the chemicals used for agrivulturc, rubber, and necessary chomicals

‘The Vietnam chemical market development plan 2016 has identified the targets as balo:

‘Yo step by step, build a chemical industry with a rational and modem structure

Comccntrated industrial parks amd large-scale chemical production complexes with advanced technologies must be formed Especially to etticiently use domestic resources, mest domestic market requirements, and replace imported goods with the guideline towards exporting abroad

To achieve the above objectives, the planning tasks also clearly stated the basic chemical product development methods It is to step up the production of traditional

industries of necessary chemicals fa Teel market demands Besides, itis nocossary to siuly and prepare to invest in large-scale soda and soda production, To serve the development of light industry, building materials industry, and metallurgy, and oil refining

‘The primary orientation of the chemical industry development sirelogy in Vietnam

is to promote the advantages of mineral and plant resowees This promotion promotes other fertilizers, pharmaceutical chemistry, rubber, inorganic chemicals, and petrochemicals, Simultaneously, to expand cooperation with other countries to build a well-balanced and modcm chemical industry in Vicnam, Simultancously, it must promote the highest level of potentials for the domestic economy and national defense,

Besides, this development plan snecuraged the application of mors modem technology for high-quality chemical products These products are priced competitively and minimize the detrimental effects of chemical technology production on the environment, Besides, this dovelopmicnt plan mast go hand in hand with transforming the

industry structure and the ceonomie sector in general

29

2.2.2, Characteristics of industrial chemical trading

In the past, chemicals were a state monopoly, and only a few authorized companies

were allowed to do business, such as Chemical Company - Ministry of Trade Under the

impact of the market mechanism, many companies are allowed to trade in this product,

making the chemical industry's competition increasingly fierce In the past years, our market's chemical products were mainly imported from China, the former Soviet Union,

and some other countries

Today, solvents and industrial chemicals can be imported from many countries

worldwide, such as Germany, America, Japan, India, Arab Saudi Many domestic chemical

companies started to produce more products that could compete with imported goods,

making the chemical market increasingly diversified in quantity and variety Prices are also

significantly reduced The business market is filled with fierce competition for businesses

engaged in chemical trading

2.3 Analyzing the business performance of Petrolimex Chemical Co., Ltd in

domestic and international markets Below is the structure of the company’s output and

sales of crucial business products in 2017-2019

Table 2 1: Cutput structre of the company's key’ business tents from 2017 to 2019

Source: Business Department