Beside the tough competition among freight forwarders and logistics service providers in Vietnam, main reasons for these sales decline are some important customers have left the company
Trang 1TR NG I H C M TP HCM UNIVERSITE LIBRE DE BRUXELLES HOCHIMINH CITY OPEN UNIVERSITY SOLVAY BRUSSELS SCHOOL
MBAVB2
NGUYEN LUU QUYNH NHU
SOLUTIONS TO IMPROVE SALES PERFORMANCE OF ACT Co
(an International Freight Forwarder in Hochiminh City)
Trang 2DECLARATION
I declare that the work contained in this master project was performed by
me under the supervision of Dr Nguyen Van Ngai
Any data, quote, reference in this project are clearly identified
Trang 3ACKNOWLEDGEMENTS
I would like to thank Solvay Brussels School (SBS) and Open University
of Hcmc for giving me this opportunity to perform and complete my MBA I would like to thank all Professors of SBS for their teaching and good lessons through this course of MBAVB2 (2007-2009)
I would like to thank Dr Nguyen Van Ngai for his guidance and enthusiasm through this Project
I would like to thank to ACT Co for the necessary data that helps me fulfil this final project
I would like to thank my friends at MBAVB2 class, especially Van’s group, Juice’s group for supporting me through the course
Trang 4TABLE OF CONTENT
LIST OF TABLES
LIST OF CHARTS
LIST OF ABBREVIATIONS
EXECUTIVE SUMMARY 1
Chapter 1: INTRODUCTION 1.1 Statement of the Problem 5
1.2 Objectives of the Study 7
1.3 Scope and limitations of the Study 7
1.4 Methodology 7
1.5 Structure of the Study 8
Chapter 2: LITERATURE REVIEW 2.1 Theory of 25 Sales Strategy 10
2.2 Other Studies 18
2.3 Research framework 21
Chapter 3: INTRODUCTION OF AMERICA EUROPE CARGO (ACT) 3.1 Logistics service industry overview 22
Trang 53.2 Introduction of ACT Co., Ltd 23
3.2.1 Company history 23
3.2.2 Company’s vision, mission and core value 24
3.2.3 ACT’s Organization 25
3.2.4 Main activities at ACT Co and their basic processes 26
3.2.4.1 Export 26
3.2.4.2 Import 28
3.2.4.3 Customs Clearance 29
3.2.4.4 Inland trucking 29
3.2.5 ACT’s customers & Competitors 29
3.2.6 Current situation of ACT’s sales performance via secondary data 30
Chapter 4: SALES STRATEGIES 4.1 Current 25 sales strategies at ACT Co 32
4.2 Solutions to improve sales performance 44
4.2.1 Build a better rapport with customers 44
4.2.2 Understand the Customer’s Needs 45
4.2.3 Creative Selling 48
CONCLUSIONS 50 REFERENCES
APPENDIX
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LIST OF TABLES & CHARTS
Table 2.1: 25 Sales Strategies 10
Table 3.1: Sales & Profits performance through years 29
Table 4.1: 3PL selection criteria of customers 33
Table 4.2: Descriptive Statistics 35
Table 4.3: Export customers’ information 36
Table 4.4: Key answers of customers via in-depth interviews 37
Table 4.5: Profits & Sales calculation 47
Chart 3.1: Top five outsourcing logistics activities 21
Chart 3.2: ACT’s Organization 24
Chart 3.3: ACT’s sales performance through years 30
Chart 4.1: Buying Criteria 34
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LIST OF ABBREVIATIONS
ACT : America Europe Cargo Co., Ltd 20’DC : Twenty-feet dry container
40’DC : Forty-feet dry container
40’HC : Forty-feet high cube container
FCL : Full Container Load
LCL : Less-than-Container Load
B/L : Bill of Lading
GDP : Gross Domestic Products
AWB : Airway bill
D/O : Delivery Order
3PL : Third-party logistics
CIF : Cost, Insurance & Freight
CNF : Cost & Freight
FOB : Free on board
P.I.C : Person In Charge
SGN : HOCHIMINH CITY
Trang 9America Europe Cargo Co (ACT Co., Ltd) is an international freight forwarding company (brief as forwarder) in Hochiminh City that provides service
of international cargo transportation by sea (ship by sea), by air (ship by airplane), customs clearance, inland haulage All of these services are some main activities of logistics service Years of 2008, 2009 and 2010 were assessed
at the hard years for ACT as its sales had declined (falled more than 12%-16% in comparison with previous years from 2005 to 2007 which sales increased gradually each year) resulting its profit declined correlatively Beside the tough competition among freight forwarders and logistics service providers in Vietnam, main reasons for these sales decline are some important customers have left the company and some used the company’s shipping service less than before In order to understand why customers have no longer or less used ACT’s service than before and how they have assessed the service recently, surveys via questionnaires and in-depth interview were made, some important points were found as follows:
Based on survey respondents, four main factors affect to customers in choosing one shipping service are: good rates (price), good customer service (polite, professional, enthusiastic, flexible, fast (feed back)), close relationship
Trang 10In order to keep the current customers, increase their times of service uses and generate new customers, several solutions to improve sales performance of ACT are suggested as follows:
(1) Build a better rapport with customers
Frequent communication and various types of messages sent to customers are very necessary ways to tighten the relationship with them It’s possible to combine email, phone contact and face-to-face communication, etc
First, create customer database and contact them on a regular basis; discover customer’s interests and share with them Invite customers to go out for coffee, dinner, take them to a ball game, a concert or golfing
Second, offer customer with rewards to remind them of the company and services This way could help build better relationship with customers
Third, build two-way communication: send surveys to customers (online or offline) This makes customers feel they are listened by the company
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(2) Understand the customers’ needs
There are many ways to better understand customers’ needs: ask them directly, send them a customer satisfaction survey, periodically invite customers
to lunch or dinner
Via the questionnaire survey, ACT’s customers are looking for: competitive rates, credit offer, high commission And from the in-depth interviews, they are looking for more services from ACT Co such as warehousing, packaging or whole package service In order to adapt with these, ACT must lower rates; offer credits and consider highest possible commission to regular customers
(3) Sell creatively (creative selling)
The classical selling is used by many companies If this way of selling doesn’t work much for ACT, ACT must find other ways, even uncommon ways
to reach new and potential domestic and international customers:
Send everyday hundreds or thousands of business co-operation emails to overseas agents (overseas forwarders) who are found from some famous Freight Directory to seek more seafreight, airfreight inquiries from them
Contacts directly with Vietnamese suppliers on Alibaba website for export shipments or Vietnamese buyers for import shipments Try to contact with them
by sending emails or chat with them via some chat programs
Sells overseas by contacting with foreign customers from international trading websites: Alibaba website…
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Join in one or two international freight forwarding associations such as WCA, APLN, Freightnet to exchange business and create chances to get nominated shipments from overseas partners
Trang 13as one of many logistics service chains This is the simple form when freight forwarding companies play a role to buy freight rate from carriers and resell it to their customers (exporter or importer) to get a margin between the selling rate and buying rate
Roles of freight forwarding have been acknowledged very clearly in the globalization trend nowadays Freight forwarding creates good conditions for fast
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circulation of goods With freight forwarding and logistics service, trading and producing enterprises can save their time a lot and concentrate more on their business such as expanding new products, entering other markets Market economy developed, goods exchanged among countries have increased quickly Since competition of price among manufaturers is narrowing with every passing day, manufacturers have switched to the speed competition from freight forwarding aspect Hence, freight forwarders and logistics companies have chances to develop their business stronger International freight forwarders and logistics providers have increased to meet the needs of transporting cargo from producing places to end places of consumption Along with the development of import-export activities in Vietnam, more and more international freight forwarders found This has caused fierce competition among freight forwarding companies in Vietnam
America Europe Cargo Co., Ltd (ACT) established in 2004 is an international freight forwarder in Hochiminh City ACT’s providing main service
of international cargo transportation by sea and air from Vietnam to worldwide and vice versa
Three years recently (2008, 2009 and 2010), ACT saw more than 10% 16% decline in sales and correlatively profits were declined Looking at just three years from 2005 to 2007, sales increased gradually each year from 10.73%
-to 14.4% But in 2008, it fell 12.92% (sales reached only Usd 1,311,668 in comparison with Usd 1,506,332 in 2007), 16% in 2009 (sales of Usd 1,100,866) and 10.13% in 2010 (sales amount of Usd 989,331 in comparison with Usd 1,100,866 in 2009) Reasons for these declines came from some important
Trang 151.2 OBJECTIVES OF THE STUDY
Objectives of the study are to analyze the current situation at ACT company and propose solutions to improve sales performance
1.3 SCOPE AND LIMITATIONS OF THE STUDY
This project discusses key issue of how ACT’s sales declined in three recent years from 2008 to 2010 and solutions to improve sales performance in coming years are raised
Through the major factors have been discussed, there are more issues which still have not been details due to time contraints Mode of cargo transport mentioned in this project is mainly focused on containers shipping by sea and for export shipments only due to main sales from ACT are from handling export shipments Import shipments have just made up small part in the total sales
1.4 METHODOLOGY
Descriptive statistical and data analysis are used in this project
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Questionnaire was designed and delivered via emails to sixty ACT’s big customers in order to clarify more about which criteria for them to select an international transport service and how they assessed ACT’s service, from that ACT would give some solutions to adapt with Forty-five respondents returned but only forty (40) ones were complete and valid for data analysis Based on what survey respondents’ assessment on ACT’s service, descriptive statistics analysis was used on Excel with several criteria of Price, Commission, Credit period, Fast feedback, Customer service, Equipment availability, Reputation, Satisfaction with Min, Max, Mean, Standard Deviation Besides the survey via questionnaires, in-depth interviews were arranged with ten ACT’s regular customers at their offices Based on the discussion guideline, eight open questions were asked to understand deeply the customers’ needs and expectations from ACT
The analysis is also based on secondary data from internal and external sources (desk research): annual reports of ACT through years (2005-2010)(internal data) and SCM research relating to logistics activities in 2008 (external data)
1.5 STRUCTURE OF THE STUDY
This project includes four chapters:
Chapter 1 shows the problem of the company; objectives, scope and limitations of the study, methodology and structure of the study
Chapter 2 introduces a sales strategy matrix which was designed to present 25 sales strategies written by Peter R Garber (2007) in relation to two critical factors concerning selling to customers – relationship and performance
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In an update to the study of sales strategy, four other studies with keys to keep and create sales were selected to review and officially state that no study at ACT on this sales strategies was made before
Chapter 3 presents the sector review, ACT’s history, organization, main activities, customers, competitors and current situation of ACT’s sales performance
Chapter 4 analyzes in details each strategy that are supported with questionnaire survey and in-depth interview’s results to find out which strategies ACT should concentrate on among 25 strategies Several solutions to improve sales performance of ACT Co are presented here also
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Chapter 2
LITERATURE REVIEW 2.1 THEORY OF 25 SALES STRATEGIES
There are a lot of literatures on sales strategies such as “101 Successful Sales Strategies” (Stephan Schiffman, 2005), “25 Sales Strategies and Activities” (Peter R Garber, 2007), etc Each of them grants some significant contributions to the understanding more about sales activities in a company
Increasing sales is always a main concern for any company doing business, especially for companies which have been facing with declined sales issue To improve this situation, many sales strategies were introduced by famous economists, business consultants
After a thorough review of some books on sales strategies, the book of
“25 Sales Strategies and Activities” written by Peter R Garber (2007) is used as
an useful reference guide and resource This book provides a Sales Strategy Matrix that can be used in many different ways The matrix is designed to present each of the 25 sales strategies in relation to two critical factors
concerning selling to customers – relationships and performance
On this matrix, the position of each strategy shows how much it emphasizes both relationship and performance As shown on the vertical axis of the matrix, the relationship index is measured from highest at the top to lowest at the bottom Relationships deal with how the customer perceives company as a supplier based on past experience and interactions with the company Similarly,
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the performance index is shown on the horizontal axis as highest to the right and lowest to the left Performance for this purpose is more focused on what company as a supplier actually deliver to the customer Strategies on the matrix are further classified as highest, higher, moderate, lower, lowest
Table 2.1: 25 Sales Strategies
Source : Peter R Garber (2007), 25 Sales Strategies and Activities
Belows are summaries of 25 sales strategies as listed in the book:
Strategy 1: Know the customer
This strategy is almost entirely focused on building on company’s relationship with the customer Knowing the customer is important to virtually every one of the other 24 strategies It can also be critical to determining which other sales
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strategies the company might want to develop with customers Selecting Know the customer does not diminish company’s need to perform to the customer’s expectation
Strategy 2: Build Rapport
Building rapport with a customer can be the most important factor in their buying decision-making process Without this rapport with the customer, there is far less chance of understanding each other’s needs and how these can be met through company’s business relationship together
Strategy 3: Honesty is the Best Policy
Honesty is the Best Policy is really less of a sales strategy as it is a guiding principle for dealing with customers It appears where it does on the matrix because it forms the core or center for company’s relationship with the customer
It is not directly linked to performance, but certainly has an influence
Strategy 4: Understanding the Customer’s Perspective
Understanding the customer’s perspective helps company be better prepared to both build a stronger relationship as well as improve the performance as perceived by the customer
Strategy 5: Selling the “Sizzle”
Company wouldn’t use this strategy in a circumstance in which either relationship or performance would be a critical or determining factor for the
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customer The type of situation in which company could use this strategy might
be when these factors are less important to making the sale
Strategy 6: What’s in a Name?
This strategy is focused on building company’s relationship with the customer Names can open doors for company that would otherwise remain closed Part of company’s business goals should be to learn as many of company’s customers’ organizations’ names as possible, or at least know where to access this important information Names of products, processes, policies, materials, principles, etc that are important to customer should also be of great interest to the company
Strategy 7: Selling Up, Down, All Around
This strategy is based on the belief that often it is as important who a company know as it is what company know Often, regardless of how good a service or product is that company has to offer, if company doesn’t make sales presentative
to the right people, company won’t get the business Company needs to get the attention of the people on many levels of the customer’s organization before a buying decision can be made
Strategy 8: Contingency Selling
Customers want to be assured that company can be counted on to provide product or service without interruption for as long as they want
Strategy 9: Creating the Need
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This strategy is lower on both the relationship and performance indexes because
it focuses on something external to both the supplier and the customer Creating the need does not mean that company should sell something to the customer that they do not need Rather, this sales strategy is really more of an education process in which help customers understand how they can benefit from buying company’s product or service
Strategy 10: Having the Latest Technology
Technology can be a tremendous advantage in sales, and having the latest technology can put company way out in front of their competition The technology itself will most likely address the performance aspect of what company has to sell, again giving company a distinct advantage in this area as well
Strategy 11: Understand the Customer’s Needs
This strategy is focused strongly on relationships that are essential to understanding the customer’s needs Meeting the customer’s needs is the true definition of quality A sales strategy based on this objective needs to be committed to providing the highest quality product or service possible to meet the customer’s needs
Strategy 12: Empowering Customers
Empowering customers requires a solid relationship and performance history be already established with the customer Empowerment involves trusting others to make important decisions and to take action Empowering the customers puts
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him or her in control of many the decisions and actions that company might normally control This way the customer is not totally dependent on to get the product or service that company provide
Strategy 13: Cutting Costs
This strategy is positioned in the center of the matrix Costs are so important to the customer that they are neither solely determined by relationship nor performance
Strategy 14: Just-in-Time Opportunities
Just-in-time concepts have become very popular in many business applications such as inventory control and delivery Jus-in-time means that the product or even service is provided at the exact time that it is needed by the customer
Strategy 15: Pull-Through Sales
Pull-through sales is like reaching company’s goals through indirect methods Company achieves one thing by accomplishing something else Pull-through sales creates the need or demand for a particular product or service
Strategy 16: Creating Buying Habits
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The positioning of this strategy on the matrix emphasizes how important relationships are to having customers continue buying from company However, company can depend on customer loyalty to go only so far
Strategy 17: Selling Service
The selling service strategy focuses highly on both relationships and performance It would be possible to provide service that would satisfy the customer with only a strong relationship or a strong performance
Strategy 18: Full-Service Selling
Providing full-service selling is becoming a necessity in business today service means that the company does as much for the customers as possible Customers are busy in running their own business and often value someone who can take over certain aspects of their responsibilities Relationships under these circumstances are less important than actual performance The more customers learn to depend on one company, the less direction they need to give to this company
Full-Strategy 19: Global Approach
Relationships get more complex the more global they become Being able to continuously and consistently provide the quality customers require on a large or global scale can be a tremendous challenge
Strategy 20: Value-Added Sales
Trang 25Strategy 22: Adapting to Change
Change can be difficult, even a traumatic experience for customers Helping customers adapt to change requires to provide reassurance that they will still receive the same quality service or product as they did before the change
Strategy 23: Beating the Competition
Company has to be really good to beat the competition This requires company not only to be able to outperform competition but also to convince the customer that company can This challenge becomes tougher and tougher as the competition for customers increases This strategy focuses company to continuously find ways to improve company’s performance to ensure that company stays ahead of the competition
Strategy 24: Creative Selling
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Being creative in company’s approach to customers is all about finding different and unique ways to educate them about the performance of company’s product
or service
Strategy 25: Worth the Price
It only makes sense that this strategy would be all performance oriented If the customer is going to pay more money for something, then he/she has every right
to expect it to be “worth the price” If not, all the relationship building that company could ever try to achieve most likely will be all for naught This is the strategy of doing what you said company would do and delivering on the goods
2.2 OTHER STUDIES
In an update to the study of sales strategy, two articles on SalesVantage com, one on Inc.com and one on Businessknowhow.com were selected to review Hereunder are their findings about sales strategies after their researchs
First is from “Protecting Your Good Accounts from the Competition”by
Dave Kahle (2008), which stated 3 proven strategies will help a company prevent their hard-earned business from disappearing into the hands of price
cutting competition Strategy One ‘Deepen relationships with the key decision makers’: make it a point to develop personal relationships with the key people
Spend one-on-one time with them outside of the work environment Strategy
Two ‘Close any open doors that may exist in the account’: clean up all issues
such as: invoice problem, promises made that haven’t been kept, slow feedback - all these are potential open doors for competition The largest open door,
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however, is pricing If this is a good account, customers probably have been doing business with company for few years The company is entirely possible to rise prices on some products or services above market levels This can be an open door if any competitors decide to attack it So, the company may better the business in the long run by strategically lowering prices on those items Strategy
Three ‘ Hold regular “business reviews’: schedule a meeting with key
customers Go through all the reports about their buying, their payment history, company’s service levels, etc Then, all people go out for lunch together This regular business review establishes the company in the minds of the customer
Second is from “Creating Sales: The secret to finding hidden, but ripe
opportunities” by Jill Konrath (2006), which showed her project involved depth interviews with top law firms In interview after interview, she kept hearing that the key to sales success was: returning phone calls promptly; giving good customer service; building strong relationships; entertaining & golfing with clients; having law school friends finally in position of power
in-Third is from “Survival Tactics: Sales Strategies” written by Jennifer A
Redmond (2001), which introduced five strategies should be taken to increase sales or at least hold company steadly: ‘Expand your sales force and marketing teams without hiring additional staff’; ‘Take one-to-one and value-added approaches to marketing’: one-to-one marketing through seminars is taking precedence over mass marketing through billboards, traditonal advertising, and direct mail; ‘Enter new markets’; ‘Alter your maketing message’; ‘Reach out to existing and prospective clients with a message for the times’
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And Fourth is from “Top Eight Marketing and Sales Strategies” by
Gregory P Smith (2000) with eight strategies for marketing and sales Strategy
1 ‘Think big and audit your time’: no matter the size of the business, place a mental image in one’s mind as the largest and most successful company in the industry Spend more time with more important tasks such as marketing strategies, improving customer relations, and implementing new strategies to expand the business Strategy 2 ‘Be different and stand out from the competition’ Strategy 3 ‘Build relationship with your customers’: contact customers on a regular basis Mail them a postcard, birthday card, newsletter, etc to keep name, phone number, and service of company on their mind Strategy 4 ‘Collect E-mail Addresses’: get permission from customers to use their e-mail address Periodically send updates and notices to client list E-mail can be a powerful and inexpensive marketing tool Strategy 5 ‘Hire top sales people’: Successful business realize the quality of their sales staff is critical to sustaining their growth in the marketplace Strategy 6 ‘Put a shopping cart on your website’: This is coming from people who want to save time, avoid crowded stores, convenience and the ability to shop outside of store hours Strategy 7
‘Pay-per-click advertising’ Strategy 8 ‘Use customer service commandments to creat good habits’
In sum, the above 25 sales strategies written by Peter R Garber is valued
as a good model for ACT to apply It’s concise, applicable and updated (published in 2007)
This project is the first research on the sales strategies at ACT Co There was no study at ACT Co on this subject before
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2.3 RESEARCH FRAMEWORK
The research is based on the following framework:
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Chapter 3 INTRODUCTION OF AMERICA EUROPE CARGO (ACT) CO
3.1 Logistics service industry Overview
Logistics service industry in Vietnam has developed quite rapidly as regards speed and quantity To preliminary statistical data, there are about 800 enterprises in Hochiminh City area at present operating logistics service against
900 nationwide As estimated by Department of Planning and Investment of Hochiminh City, every week one forwarder or logistics company is granted licence It is learned from many experts that if the above trend continues, Vietnam will overcome Thailand (1,100 enterprises), Singapore (800), Indonesia, Philippines (700-800) with regards to quantity for logistics companies running this business domestically in next coming years (Xuan Nghi (2009), VnEconomy electronic newspaper) In near future, logistics service will become one important industry in Vietnam, contributing 15% GDP for the whole country while export, import turn-over reach 200 billion USD
To “The 2008 Logistics Survey” conducted by SCM Corp., top five outsourcing logistics activities in Vietnam are: International transportation (59%), Warehousing (73%), Customs clearance (68%), Forwarding (77%), Domestic transportation (100%) (see chart 3.1) This result follows the international outsourcing trend Complicated logistics activities such as orders management, consolidation, freight payment management, etc were not selected
As customers didn’t want to share their business secrets to external parties due to their information relating to these activities was very sensitive
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Chart 3.1: Top five outsourcing logistics activities
Source: The 2008 Logistics Survey, SCM Corp
3.2 Introduction of ACT Co., Ltd
3.2.1 Company history
ACT is the abbreviation of America Europe Cargo Co., Ltd – an international freight forwarder in Hochiminh City, found in 2004 as a Vietnamese private-
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owned company The company majors in international freight forwarding, providing service of cargo transportation from Vietnam to worldwide and vice versa Over the years, ACT has grown strongly in providing services related to logistics Its revenues and profits increased each year from the early years of establishment ACT has staff of 15 available to serve clients with complete range
of quality services at minimum possible cost and transit time Besides, ACT has partners throughout the world to take care customers’ international freight requirements International freight forwarding is what ACT considers to be priority, particular emphasis is placed on reliability and accuracy of the operation being performed
3.2.2 Company’s vision, mission and core value
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3.2.3 ACT’s Organization
Chart 3.2: ACT’s Organization
Source: ACT’s internal data This organization chart shows ACT has operated under a functional structure It’s simple and Director of the company can control every department directly
Sales department: they contact directly with customers, send offer and persuade customers to use the company service This department is the important one to make profit for the company
Documentation department: they are responsible for export/import documents, contacting with overseas agents With this department, the company activity will go smoothly Moreover, they support the sales department in term of document issue or agent transactions
Accounting department: they are responsible for receiving/sending payments from/to buyers/suppliers They help to keep the business in good order
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Logistics department: do customs clearance, arange inland trucking, prepare other export/import documents to enable any shipments go/come smoothly in case customers ask for this service
For reward policy, ACT gives 10% as commission of the excess of sales target to sales people With good performance, promotion will be granted and salary will be increase based on competence
3.2.4 Main activities at ACT Co and their basic processes
3.2.4.1 Export
Seafreight service
Transporting cargo by sea (by ship) Normally all cargoes are containerized into 20 feet container or 40 feet container (20’DC, 40’DC, 40’HC) Rates will be calculated on types of container (for FCL shipment) or per cubic meter (for LCL shipment)
Seafreight export process:
Order Acceptance i Equipment Arrangement ii Cargo Departure iii B/L issuance iv Agent/Consignee notification v Delivery
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Process Explanation: ACT arranges space and equipment (empty containers) with shipping lines when receive shipping orders from shippers After cargo loading, Bill of Ladings are issued Then, pre-alert (information of the shipment) will be sent to overseas agents for their awareness that there’s shipment coming
to their country Agent at destination notifies cargo arrival to consignee
Airfreight service
Transporting cargo by air As the urgent and important natures of shipment, customers would like to ship their cargo by air to meet the time required For air shipping, rates are much more expensive than the ocean shipping but it’s the fastest way Freight (rates) will be calculated on chargeable weight (either gross weight or volume weight is higher) in kilogram
Chart 3.3: Airfreight export process