Luận văn xây dựng chiến lược kinh doanh tại công ty kiểm toán và kế toán hà nội

THESIS mbaBUILDING BUSINESS STRATEGY AT THE HANOI COMPANY PROFESSION OF AUDITING AND ACCOUNTING FOR STAGE 2015 TO 2020... Building material bases 2.6 Analysis of shortcomings in the proc

THESIS mba

BUILDING BUSINESS

STRATEGY AT THE HANOI COMPANY PROFESSION OF AUDITING AND ACCOUNTING FOR STAGE 2015 TO 2020

1.1 Conception of business strategy

1.1.1 Concept of business strategy

1.1.2 Process of managing business strategy

1.2 Content of building business strategy of enterprise

1.2.1 Defining a vision, determining strategic targets and enterprise’s tasks

1.2.2 SWOT analysis tool

1.3 Deployment of business strategies

1.3.1 Targets, conditions of business environment and selected strategy

1.3.2 Organizing an apparatus for implementation

1.3.3 Allocating and adjusting resources

1.3.4 Building a plan for deployment

1.4 Summary and evaluation

1.5 The necessity of finishing the establishment of business strategies

1.6 Methods of studying and applying the strategies

11 11 12 14 14-15 16-21 22 22 22 23 23 24 25 25 25 Chapter 2: The real situation of establishing and implementing business

strategies of Hanoi Company Profession of Auditing and

Accounting Ltd – CPA Hanoi

2.1 An introduction of CPA Hanoi

2.1.1 Overview

2.1.2 Organizing structure

2.2 Analysis of business activities of CPA Hanoi in 2006, 2007 and 2008

2.3 SWOT analysis of CPA Hanoi

26 26 27 28-32

2.4 Analyzing some matters of establishing and implementing business

strategies in CPA Hanoi

2.4.1 Identifying the goals of business strategies of CPA Hanoi

2.4.2 Selecting business strategies

2.4.2.1 Determining the major services for the customers

2.4.2.2 Segmenting market and selecting targeted market

2.4.2.3 Building material bases and enhancing financial capacity

2.4.2.4 Managing human resource

2.4.2.5 Building suitable organizing structure with the services provided in

the future

2.4.3 Carrying out business strategies

2.4.3.1 Concentrating on major services

2.4.3.2 Formulating marketing plan

2.5.4 Building material bases

2.6 Analysis of shortcomings in the process of establishing and

implementing the business strategies in CPA Hanoi over the past 3

years

2.6.1 Shortcomings in identifying the strategic target

2.6.2 The process of establishing the business strategies

2.6.3 The process of deploying the business strategies

2.7 Analysis of reasons for the shortcomings

33-47 48

48 48 48 49-51 52

53 53 53 53 54 54 55 55 55-56 56-58 58 59

59 59 59-62 63

Chapter 3: Recommendations, solutions and conclusion

3.1 Summarizing the shortcomings of the strategies’ establishment and

deployment mentioned in Chapter 2

3.2 Recommendations

3.2.1 Strategy-building process

3.2.2 Recommendations during the process of implementing business

strategies

3.2.2.1 Developing customers by effective marketing strategy

3.2.2.2 Building up a reasonable organizing structure

3.2.2.3 Effectively improving personnel management policy

3.2.2.4 Completing criteria to evaluate and monitor quality of the

company’s services

3.2.2.5 Changing the structure of paid-in capital

3.2.2.6 Enhancing financial capacity

3.2.2.7 Integration and Globalization Strategy

3.2.2.8 Other services development

3.3 Solutions

3.3.1 Effective Marketing

3.3.2 Human Resource Management

3.3.3 Completing organizing structure of headquarter, branches and

representative offices

3.3.4 Finance

3.4 Foundations for implementing recommendations and solutions

3.5 Roadmap for implementing strategies

3.6 Limitations and orientation of studying in the future

64

64 64-71 72

72-79 80-81 82 83

84 84 85 85 85-86 86 87-88 89 90-91 92

Conclusion

References

Appendix

93 94-95 96- 105

DATA ANALYSIS SHEET

Sheet 2.1 Summarizing criteria by balance sheet

Sheet 2.2 Criteria of business statement (Currency: VND)

Sheet 2.3 The situation of clients, turnover of each service

Sheet 2.4 The situation of clients, turnover paid by each kind of client

Sheet 2.5 The situation of CPA Hanoi Staffs

Sheet 2.6 The analysis of basic financial criteria

Sheet 2.7 The staffs’ situation at Auditing Company 114 until December 31 st , 2008:

Sheet 2.8 The income situation of Auditing Company 114 according to the structure of services

Sheet 2.9 The client situation of Auditing Company 114, according to kinds of client

Sheet 2.10 Analyzing respective criteria of competitors in 2008

Sheet 2.11 Analyzing the turnover of competitors

Sheet 2.12 Analyzing other criteria of competitors

Sheet 2.13 Summarizing the market segment and targeted market selection

Sheet 2.14 Analyzing each kind of client

Sheet 2.15 Analyzing changes in the staff

Sheet 2.16 Analyzing staffs who were recruited over 3 past years (2007, 2008 and2009)

Sheet 2.17 Analyzing changes in the number of clients

Sheet 2.18 Analyzing changes in the number of each separated client

Sheet 3.1 Summarizing recommendationsand solutions

USED TABLES

Table 1.1 Strategy managing process

Table 1.2 Enterprises’ tasks

Table 1.3 Analysis of macro factors

Table 1.4 Analysis of departmental environmentTable 1.5 SWOT matrix

Table 1.6 Mc Kinsey matrix

Table 1.7 Model 3c for assessment

Table 1.8 Implementing business strategy

Table 1.9 Strategy analysis

Table 3.1 Mc Kinsey matrix

Table 3.2 SWOT matrix

Table 3.3 Model of 7 service steps

Table 3.4 Model 3c for price-fixing

Table 3.5 Defining position

Table 3.6 Personal behaviors in organizationTable 3.7 Cooperation in business activitiesTable 3.8 Organizing structure

Table 3.9 The process of quality management

WTO – World Trade Organization

GDP - Gross Domestic Products

SBU - Stony Brook University

PESNT –Politic, Economics, Society, Nature, and Technology

SWOT - Strengths, Weaknesses, Opportunities and Threats

CPA HANOI –Company Profession of Accounting and Auditing Ltd

VACPA - Vietnam Association of Certified Public Accountants

CPA - Certificate of Public Accountant

VAA - Vietnam Automation Association

We are deeply indebted to teachers of GAMBA program who help usimprove the knowledge of business management in enterprises We appreciate theidea for organizing this semester that is conducted by ETC center of Hanoi NationalUniversity and GRIGGS University

Also, we would like to thank board of directors and departmental directors ofCPA Hanoi for their enthusiastic encouragement when we collected the informationabout the company to fulfill this assignment

EXECUTIVE SUMMARY

Hanoi Company Profession of Auditing and Accounting Ltd is one of thebest auditing companies in Vietnam Thanks to great experiences on auditing fieldover 10 past years, CPA Hanoi has enjoyed its stable position in domestic auditingmarket in Vietnam Its reputation is realized by many enterprises and trusted bystate owned offices In fact, many new auditing companies have been founded inrecent 5 years, so the auditing market becomes more and more competitive.Because CPA Hanoi is one of few enterprises which are allowed to list their shares

on the Vietnamese stock market, we choose CPA Hanoi to carry out our study onbusiness strategy We hope that this study will contribute to maintain its currentachievement and develop more stably in the future

Hanoi Company Profession of Auditing and Accounting Ltd possesses morestrong points than other companies with the same scale However, in the changingcontinuously and strongly competitive market economy, the company needs toestablish duly business strategy, additionally, it is required that the company fulfilsproposed strategies in order to reach the business goals

In the process of carrying out the study, we applied 2 models of PESNT and

5 competitors to analyze both external and internal environment of this CPA Hanoi.After comparing its current business strategy with the coming businessenvironment, we implemented the SWOT analysis to identify the company’sstrategic goals and emphasize on some of its businesses like marketing strategy,organizing structure, personnel management, and financial capacity On that basis,

we defined shortcomings and strong points, opportunities and threats In terms ofbusiness strategy, we analyzed 7 major factors of services generally and auditingparticularly, then we suggested different strategies to develop its market such as

central growth strategy, market segment, and the suitable ways to access each group

of client Because of the invisibility of services, the application of competitivestrategies must be flexible; we should not concentrate on only one specific businessstrategy In this assignment, we mention clearly a strategy for auditing activities Atthe end of this assignment, we used a number of tables to collect and identifyrecommendations, solutions so that the strategy can be implemented

We hope that all information mentioned in this report will be applied in thebusiness activities of CPA Hanoi

CHAPTER I: THE THEORETICAL FOUNDATION OF BUILDING

BUSINESS STRATEGY IN ENTERPRISES1.1 Conception of business strategy.

1.1.1 Concept of business strategy: “Strategy is the direction and the size of an

organization in a long period: strategy will bring advantages to the organization byarranging resources in the best way in a competitive environment to meet thedemand of the market and capital contributor’s expectation”

Up to now, there are a number of concepts of business strategy; however, thereare only three popular concepts which are:

Business strategy is an art:

Alain Threlart: “Strategy is an art which enterprises use to cope withcompetition and gain successes.”

Mr.Porter: “Strategy is an art of building firm competitive edge to defend.”

In conclusion, both Alain Threlart and M.Porter consider that business strategy

is an art for competition in market and developing enterprises

According to the management category, business strategy is a kind of plan:

G Arlleret: “Strategy is the specification of ways and facilities to obtain theestablished goals by policies.”

D.Blzrell and his group of authors: “Strategy is a general plan which leadsenterprises to the expected goals, which is the basis of making policies and themechanism of operation.”

Gluecl: “Strategy is a uniform, comprehensive and summarizing plan whichensures all the enterprise’s goals will be realized.”

According to the concept of combining the unification.

Business strategy is an art which combines activities and manages them to getthe long-term targets of enterprises

Chandler considers that strategy includes specifying the basic long-term targets

of enterprise as well as choosing a method or process of action, allocating essentialresources, and realizing the targets

In enterprises: “Business strategy is an art of organizing the facilities to achievelong-term targets of enterprises and have a relationship with business environment’schanges and competition.”

1.1.1.2 Process of managing business strategy.

Managing business strategy is a process of studying environment to establishstrategic targets, policies, and business solutions of enterprises, to introducestrategies, business policies into practice, then adjusting, testing and evaluatingimplementation’s result and business strategy

Table 1.1 The process of managing business strategy (source: slide 41 - lecture ofstrategic management)

Process of managing business strategy

Policies

IMPLEMENTATION STRATEGY

Program 

Budget 

process

&

progres s

TEST & EVALUA TION

Result

1.1.1.2.1 Strategy-forming period.

Forming strategy is the process of establishing business tasks, doing survey torealize internal and external factors, offering long-term targets and choosingalternative strategies Sometimes, process of forming strategy is called ‘Formingstrategic plan’

The decisions in forming strategic period will connect organization with specificproducts, markets, resources and technology in a lasting time

1.1.1.2.2 Implementing strategy period.

Realizing strategy is often called action period of strategy administrators Mainactivities of this period are:

Establishing annual targets: these are points which organizations must achieve toget the long-term targets The annual targets must be measurable, quantitative,challenging, practical, suitable and preferential The annual targets are extremelyimportant in strategy; they are the basis of allocating resources

The policies: Policies are means of obtaining targets Policies are the same toannual targets, they are very important in implementing strategies because theygeneralize expectations of administration staff in the organization These policiesallow cooperation and synchronization between departments within theorganization

Resources distribution: Resources distribution is a central administrative activityincluding implementation of strategy Strategy administration allows resources to bedistributed according to priorities getting from annual targets

1.1.1.2.3 Evaluating strategy period

Most of strategy makers agree that evaluation strategies are important to achieveorganization’s prosperity; timely evaluations can warn the administration anddifficulties which can happen before becoming serious situation

Responding information must be adequate, timely and be a basis of evaluatingstrategy which can have no more different information than current one

It cannot be proved a typical strategy as the best, but it can be evaluated byserious errors.

Richard Rumel suggests four criteria to evaluate that strategy, which are:consistency; accordance; favor; feasibility

Strategy administration process comprises: Commitment -> Decision ->Action

Competitive edges of strategy

Sustainable competitive edges

Above average profit

1.2 Content of building business strategy of enterprise

1.2.1 Defining a vision, determining strategic targets and enterprise’s tasks.

Organization’s vision is very important for managers to build up long-termtargets and determine specific tasks to achieve the targets Its vision can be declared

by forms of enterprise’s slogan or can be enterprise’s motto

Targets system of enterprises has a general character that expresses an expectationachieving a particular result from a specific period Strategic target system showsexpectations of obtaining a certain result in strategic period

According to Philipte Lasserre, strategic target comprises issues which arerelated to business volume such as scale of operation, growth rate, market share and

so on; issues which are related to interest such as revenue, cost, interest and issueswhich are related to scale, threat, possession, etc

Determining tasks, strategic targets of enterprise is extremely importantopening stage in implementing business administration according to strategy Thetargets are identified clearly and specifically, which is important for enterprises to

be successful

The targets must be adjustable to suit with environmental changes, avoid therisks and take advantage of opportunities Nevertheless, it must be very careful asmodifying the targets because this change must be done with respondingmodifications in other related strategies as well as action plan

Identifying tasks: when identifying tasks, the enterprise need to define the followingconcerns: who need to be satisfied? How to meet the demand for consuming?

We can use the following three – dimensional frame model made by D Abell:Table 1.2: Enterprise’s tasks (source: Graph 11 on page 6 - the lecture of strategicmanagement)

Strategic vision and historical missions can be summarized in this table:

• Strategic vision refers to future

management’s direction of the

company “Where will we go?”

• Markets that need to be pursued

• Future focus is technology,

service or customer

management board is pursuing

• Confirm that most of thecompany’s missions willconcentrate on current business

“Who are we and what are wedoing?”

• Current products and services

• Customer’s demand is serving

Defining business lines

How to satisfy consumption demand?

Consumption demands

Who need to

be satisfied?

the demands?

thỏa mãn?

1.2.2 SWOT analysis tool

1.2.2.1 Analyzing external environmental factors:

External environment is a system of complex factors which always has abilities

to affect enterprise’s operation at different levels Fluctuation of these factors is out

of enterprise’s control; these factors alternatively affect strategic administration ofenterprise Therefore, to make the most use of opportunities, restrict and prevent therisks timely to raise efficiency, decrease damages in strategic administration,enterprises should analyze carefully external environmental factors, including microenvironment and macro environment

a Macro environment: including these factors: political – legal –governmental environment; economic environment; social and culturalenvironment; technological and natural conditions

TABLE 1.3 Analysis Environments

internal business environment

Economic factors

Political factors and laws

b Micro environment: including the analysis of five competition forces such as: potential competitors; direct competitors; customers; suppliers; alternative products

or services;

Table 1.4 Business Environment in the country (Source; charter 5 competition forces- slide 17 pages 9 Presentation Strategy management)

1.2.2.2 Analyzing enterprise’s internal environment:

Enterprise’s internal environment comprises a system of tangible and

intangible elements existing in the process of enterprise’s operation and directly affecting the progress of strategy administration Each enterprise has a differently internal environment, having both strong points and weak points, and changing by time

Potential competitors

Suppliers

Competitors in the industry

The competition between firms in

Ability to pressure

customers

Risks of products and services instead

Analyzing internal environment is a necessary need to every kind oforganizations in an economy This is the basis helping enterprises clearlyunderstand their strong points and weak points compared with their competitors; atthe same time helping administrators realize ability of catching markets’opportunities in each period In other words, analyzing internal environment is to

“Have both feet on the ground”, and thanks to doing so administrators have a basis

to define tasks, suggest targets and formulate strategy which are adjustable tointernal and external environment of organizations

Analyzing strong points and weak points of internal environment is done by basic contents: Analyzing and evaluating resources such as human resources,

material resources including production capital, machine and equipment stock, reserve raw material, information on business environment; intangible resources including main thought on business philosophy; business strategies and policies adjustable with environment; efficient organizational structure; customer’s goodwilland loyalty…

Analyzing the operation of function departments in organizations including: marketing department; human resource department; finance and accounting

department…

All the enterprises have both strong points and weak points in business fields Noenterprise is all weak or all strong in every field The internal strong points and weakpoints combining with external opportunities and threats are basic elements whichenterprises should regard as building strategy Determining the strong points andweak points based on comparing with other enterprises in their field and theiroperation’s results The strong points are the ones which are done better than theircompetitors, the ones which are not easy for the competitors to have, and becomecompetitive edges of enterprises The weak points are the limitations of enterprises;they are points which enterprises need to adjust as building strategy

1.2.2.3- Evaluation method of business environment

In evaluating factors of business environment, there will have a number ofopportunities and threats; there is a need to find out a method concentrating on themost attractive opportunity and the worst threat.

Popular methods are used:

- Summarizing scale of business environment

- Matrix of internal and external factors

- Analysis of SWOT matrix

- The priority’s order of opportunities and threats

Using SWTO matrix to summarize the above analyzing process is necessary andappropriate

Being a business manager, you need to have a strategy to be successful.Business strategy looks toward further future of company Company’sadministrators are easy to forget and miss a business strategy because they are sobusy with current work In this situation, you cannot know how to locate yourbusiness and where it stands With good strategic skills, you will set up real targetsand clearly know how to achieve them in the future Strategy decides yourenterprise’s future or the enterprise can lose the position in market for thecompetitors However, before choosing or building a business strategy for

enterprise, you should analyze Strong points, Weak points, Opportunities,

Threats or in other words SWOT So what is SWOT?

Table 1.5 SWOT matrix model (source: SLIDE 26 – Lecture of strategic management)

Analyzing SWOT

Internal environment’s factors of an enterprise can be classified as Strong points(S), weak points (W); external factors can be classified as opportunities (O) andthreats (T) This analysis for strategic environment is called the analysis of SWOTmatrix.

The analysis of SWOT matrix provides helpful information in harmonizingresources and company’s capacity with competitive environment in which company

is operating Therefore, this is a tool in choosing strategy

Strong points: strong points of an enterprise are resources and capacity which

are used as the basis of developing competitive edges

Weak points: having no above-mentioned strong points is weak point of

enterprise

Opportunities: external context can create new opportunities for enterprise to

grow and develop

Threats: the change of external environment can also bring back a lot of threats

to enterprise

SWOT connection

• S – O strategies: pursuing the most appropriate opportunities by the strongpoints of enterprise

• W – O strategies: overcoming the weak points to pursue opportunities

• S – T strategies: determining the ways which enterprise can use its strategies

to decrease damages from external threats

• W – T strategies: setting up a defensive plan to prevent the weak points ofenterprise from external environment

1.2.2.4 Evaluating ability of competition:

To evaluate competitive ability of an enterprise, people often use MC KINSEYmatrix

Table 1.6 MC KINSEY matrix (source: SLIDE 25 – lecture of strategicmanagement)

Popular business strategies are often referred: function strategy; business

level strategy; global strategy; company level strategy; evaluating and choosingsuitable business strategy

Business strategies of an enterprise include growth strategy, business strategies

of SBU, function strategy

Three basic strategies for competition applied in reality include strategy for costdomination, strategy for distinguishing product, and strategy for centralizationGrowth strategies include: central growth strategy (consisting of 3 smallstrategies of market penetration, market development, and product promotion);Integration strategy for growth (consisting of 3 small strategies of merger,acquisition and joint-venture); Business diversification strategy (includingdiversification strategies of concentricity, laterality and mixture); Function strategy(including strategies of finance, personnel, technology, marketing, production andinvestment)

When using cost dominated strategy, the model 3c can be used

Table 1.7 the model 3c for pricing-fixing (source: lecture of marketing strategy)

COMPETITOR’S Prices and prices

of substitutes

PRICE ( No possible profit at this price )

1.3 Deployment of business strategies

1.3.1 Targets, conditions of business environment and selected strategy:

1.3.1.1 Reviewing the targets of business strategy:

Enterprise needs to review and revaluate chosen strategic targets to see whetherthey are suitable with company’s situation or not? And its implementation

1.2.1.2 Reviewing conditions of business environment and chosen strategy.

In current situation, there are a number of environmental factors to raise theposition of strategy administration, big social aspect has affected to a branch andcompanies in this branch such as: demography, economy, politics, cultural andsocial companies, technology and science of globalization

With the markets are more competitive, value chain is an important tool toimprove competitive ability of enterprise Globalization and liberalization economyhave bring back instability to making strategy

1.3.2 Organizing an apparatus for implementation.

Organizing the apparatus is a process of determining work that need to bedone; establishing departments and boards, assigning task to units, person; creatinghorizontal and vertical relationship in internal organization to realize its strategictargets in effective ways Organizing engine effectively is to ensure goodimplementation of administration function and efficiently serve common targets.The tasks in the correlation of enterprise decide which organizing models arechosen to set up such as: online model, function model, mixed model After that,administrators implement the process of organizing apparatus including seven steps:

determining enterprise’s targets; analyzing work; establishing departments and boards; determining staff; assigning tasks; organizing cooperating and realizing tasks; verifying and reorganizing.

Table 1.8 7 steps for implementing business strategy

1.3.3 Allocating and adjusting resources:

Resources are the asset of one company, including human resource,trademark value, and the input of production process of a company such as:equipment capital, staff skills, trademark, financial resource, good managers

These resources have tangible and intangible relationship such as: finance,material, organization, human resource, innovation, and fame

Therefore, at present, enterprises need to adjust human resourceappropriately and scientifically, and to define criteria such as value, rarity, tooexpensive to imitate, and having no alternative product Main competences areresources and ability to bring back competitive edges to a company, creating the

Analyzing its business Identifying enterprise objective

competitive distinction of a company and reflecting that company’s characters,helping company neutralize the threats and making full use of future opportunities.

1.3.4 Building a plan for deployment:

General business strategy of enterprise has the orientation of all its activities and

it is built by the following steps:

Strategic planning: determining mission, vision and major value, analyzing andformulating strategy

Concretizing strategy: identifying strategic targets and decisive ideas, definingtargets, measurement tools, and strategic initiatives

Setting plan: Improvement plan of operating process, formulating sale plan,planning the capacity of resources and budget provision

Implementation: operating plan and functions

Monitoring and evaluating: evaluating strategy and assessing implementation.Experimenting and adjusting strategy

Analyzing profit and strategy

Analyzing strategies: use the following model to analyze the strategic factorsTable 1.9 The model of strategic analysis (source: slide 39 on the page of 20 –lecture on strategic management)

EMPLOYEES

DECREASE

GLOBALIZATIONDECONSTRUCTION

LEADERSHIP

1.4 Summary and evaluation:

Enterprises need to wrap up, summarize and assess process of setting up and effectuate the periodic business strategy annually or by the proper time, so that they can find out factors to make success as well as find out limitations to fix in time.

1.5 The necessity of finishing the establishment of business strategies.

High competitiveness of the market economy and fluctuating world’s economy situation has both positive and negative sides There are factors which directly or indirectly affect enterprises; therefore, there will be considerable impacts to the implementation of business strategy’s targets So, the managers should review their targets frequently and supplement suitable business strategy to achieve the targets and maintain the sustainable development of enterprises

1.6 Methods of studying and applying the strategies

In the process of carrying out the project, we have used these methods: Collecting document: primary document including: original documents

of our unit on business administration, financial statements, our company’s annually summarizing report, company’s regulations, secondary documents such as the copy of annual report of Vietnam Association of Certified Public Accountants, the documents of Government and Ministry of Finance which are related to company’s operating field, information from newspapers and on the websites of Ministry of Finance, Ministry of Planning and Investment, Vietnam Association of Certified Public Accountants…

Using of question table related to researching issue

Directly interviewing Director Board, Operation Manager in our Company on the company’s real situation in setting up and implementing business strategy.

Analyzing collected document and information and completing the project according to chosen content.

CHAPTER II: THE REAL SITUATION OF ESTABLISHING AND IMPLEMENTING BUSINESS STRATEGIES OF HANOI COMPANY PROFESSION OF AUDITING AND ACCOUNTING LTD– CPA

HANOI

2.1 Introduction of Hanoi company profession of auditing and accounting Ltd – CPA Hanoi

CPA HANOI has 120 staff members who possess bachelor’s and graduate diplomas from Vietnam and other countries, such as UK, Ireland, France,Australia, HongKong, Belgium, etc At present, there are 15 staff members grantedauditor certifications; 2 members certified by the Association of Chartered CertifiedAccountants – ACCA, 5 members having assessor certification Important staffmembers all have at least 7-30 years of experience concerning auditing, finance andaccounting

post-In September, 2006, CPA HANOI became a member of AicA Itsheadquarter is in Hong Kong and there are many branches in Malaysia, Indonesia,The Philippines, Thailand, Japan, The Netherlands, Taiwan, etc

CPA HANOI is among a few auditing companies authorized by the NationalStock Exchange Committee to check joint stock companies which operate on thestock market and many other public joint stock companies

In 2009, CPA HANOI was awarded 3 prestigious prizes: TOP TRADE SERVICEAWARDS 2008 awarded by the Ministry of Industry and Trade; Integrating and

Developing Enterprise Prize by the national committee on thought and culture;Prestigious Service Provider Prize by the National Stock Exchange Committee.

Over the past 10 years of operations, CPA HANOI has been providingservices to thousands of clients who are enterprises operating in every sector of theeconomy as well as other organizations

CPA HANOI’s operating principles are independent, objective, andconfidential in dealing with clients’ information With the top priority of providingprestigious, high-quality services, we aim at exceeding clients’ expectations

Organization structure of the company, its services and clients are presented

in appendix 01 attached to this document

2.1.2 Analysis of business activities of CPA HANOI in 2006, 2007, and 2008:SUMMARY OF TARGETS ON BALANCE SHEET (Currency Unit: VND)

Table 2.1 (Source of reference: Extracted from CPA HANOI’s Financial Statement)

Paid-in capital 2.000.000.000 2.000.000.000 1.545.000.000Undistributed profit 2.700.600.000 1.919.036.600 816.760.400

Total amount of capital 8.826.027.000 7.808.956.700 3.584.424.800

TARGETS FOR BUSINESS RESULTS (Currency Unit: VND)

Table 2.2 (Source of reference: Extracted from CPA HANOI’s Financial Statement)

Analysis of the company’s income in 2 years: 2007 and 2008:

a REVALUE according to service types:

Currency Unit: MillionVND

Table 2.3 (Source of reference: Extracted from CPA HANOI’s Financial Statement)

b ANALYSIS REVALUE according to groups of clients:

Unit: ClientsTable 2.4 (Source of reference: Extracted from CPA HANOI’s Financial

Statement)

Amount Rate % Amount Rate

%

c Staff situation of the auditing company up to Dec 31, 2008:

Table 2.5 (Source of reference: Extracted from CPA HANOI’s Financial

Statement)

Numbe

r ofpeople

Rate

%

Numbe

r ofpeople

Rate

%

2 Staff without auditing certifications 96 62

3 Staff with price assessment 5 4

Graph 2.6: Analyzing basic financial criteria

2006

Year2007

Year2008

I Structures of assets and capital

1 The structure of assets:

- Short – term assets/ total assets

- Long –term assest/ total assets

%

%

76,8323,17

47,5652,44

50,2249,78

2 The structure of capital:

- Debt/ total capital

- Owned capital/ total capital

%

%

29,3870,62

48,2351,77

44,1455,86

0,772,6152,5

0,4310,9860,86

0,4751,140,97

4 Profit rate:

Profit rate on revenue

Profit rate before tax/ net sales

Profit rate after tax/ net sales

%

%

11,948,59

15,8311,34

8,16,14

Profit rate before tax/ total asset % 27,1 20,39 15,18Profit rate after tax/ total asset % 19,51 14,6 11,52Profit rate after tax/ paid-in capital % 27,63 28,10 20,62

Speed of increasing the number of clients % 11,5 12,5 18,7

Based on the statistics above, it can be concluded that the operation of the company

is stable and grows at high level Particularly, the company’s revenue in 2007increased 23% in comparison with 2006, in 2008 it enjoyed a year on year rise of65% Profit criterion was always steady; profit rate after tax on paid-in capital hitthe record of over 20% Liquidity criteria are at satisfied level The number ofclients goes up annually; financial situation is encouraging in some respects

2.3 SWOT analysis of CPA HANOI:

2.3.1 CPA HANOI’s strengths:

CPA HANOI’s strengths are shown in the following points:

CPA HANOI is the first limited company in Hanoi Up until now, the companyhas acquired over 10 years of experience in the areas of auditing, and financial,accounting, tax consultancy

The company attracts about 300-400 clients to its offices every year, and inmany consecutive years, the company is among the top ten of companies havinglarge number of clients according to Vietnam Association of Certified PublicAccountants’ (VACPA) and the Ministry of Finance’s ranking statistics (A report

at the accounting companies’ annual meeting of the Ministry of Finance andVACPA)

The company has a contingent of professional personnel who have highqualifications, enthusiasm and experience in the areas of accounting and auditing.Specifically: Up to October 2009, the number of staff members was 120 Of the97% of staff members having bachelor’s and post-graduate diplomas, 50 peoplehave 5-35 years of experience and make up 30%

The company’s management board consists of many staff members havingmany years of experience in the area of accounting and auditing Specifically,management board members have 25-35 years of experience, enthusiasm for theprofession

The company is one of the 6 companies having official offices, which helps toconsolidate clients trust in the company Other auditing companies must all hireoffices.

CPA HANOI is among the 20 auditing companies having high quality auditingand checking system meeting Vietnam auditing standards The average annualgrowth rate is over 25% with high level of business efficiency CPA HANOI is one

of the 6 companies awarded TOP TRADE SERVICE AWARD Prize in 2008 and

2009 by the Ministry of Industry and Trade It is one of the 10 auditing companiesawarded the “Integrating and Developing Enterprise Prize” by the CentralCommittee on Thought and Culture It is also one of the 13 companies recognized

as prestigious auditing companies according to a poll by the National Stock MarketCommittee and clients

CPA HANOI is among the 20 auditing companies becoming members of theinternational auditing group This is an important condition which allows expandedcooperation to take place and promotes the company’s image to the world At thesame time, overseas working and training missions also create opportunities for thestaff to improve their professionalism and foreign language capacity

Through the analysis of the above financial report, it can be seen that thecompany’s financial situation is very good, it is not in debt with banks or creditinstitutions; therefore no financial pressure or business result requirements are putupon the company It is proactive in carrying out its business strategies

2.3.2 CPA HANOI’S WEAKNESSES

Apart from its strengths, CPA Hanoi still has some weaknesses, which are:

The number of its foreign invested company clients is still small (about 50foreign invested companies are its regulars) Despite their high qualification, thestaff’s language capacity is still low At present, just about 15 staff members candeal directly with foreign experts As a result, its expansion opportunity is limited

Some members move to other companies or units every after 3-4 years, whichcauses difficulty in training and building a key contingent of staff, those who work

as team leaders

Internal managerial mechanism has not been efficient Specifically, thecompany’s internal regulations have been formulated; however, these regulationsare not brought into full play The company’s management board does not pay dueattention to checking the effectiveness of those regulations; while too much focus isput on professional areas

Staff recruitment process is not really effective The company has built a set ofregulations concerning staff recruitment; however the process is done throughadvert in newspapers or magazines, rather than direct contact with universities, such

as the National Economics University, the Institute of Finance, etc The company’simage and information about it are still little The company’s website wasestablished in 2006; however, its website is poor in information As a result, it hasnot been so effective

Personnel management policy does not reach high level of efficiency Thecompany has built standards to assess staff’s working efficiency every 6 months.However, the implementation of those standards is still limited For example awardsfor staff are not timely, or pay rise is not done at a suitable timing

Staff’s income is still low, though it is fairly good in comparison with othercompanies in the same areas Policies on salaries for key staff are not appropriate;adjustments should be made timely to keep these staff members working for thecompany

The structure of the company’s organization is not appropriate It has not set updepartments focusing on specific areas Specifically, the company has divided itsorganization into departments, however, these departments have low level ofprofessionalism, or their functions are overlapping

2.3.3 Analysis of business opportunity: (OPPORTUNITY for business)

2.3.3.1: Analysis of the general environment affecting the company’s business:

Stable politics: ever since our country was liberalized and fully united, under theleadership of Vietnam’s Communist Party, Vietnam has achieved many victories.The socio-political system is constantly consolidated and improved Political andsocial organizations, unions are established under the rule of law and aimed at thegoal of building a wealthy and strong Vietnam Vietnam is believed to be a safedestination for international tourists

High economic growth rate in many consecutive years: According to VietnamNews Agency (Nov 23, 2009), “The main achievement attained during 2006-2010period is to sustain the growth rate, which is estimated to reach the average of 6.9%

in the 5-year period It is estimated that Vietnam will surpass the target to raise itsper capita income to US$ 1,200 by 2010, lifting Vietnam out of low-income countrylist” Vietnam’s economic opening up policy has brought some certain fruitfulresults which are reflected by increasing FDI According to Saigon EconomicsTimes (Nov 1, 2009), FDI into Vietnam in 2008 reached US$19.32 billion, whilethe first 10 months of 2009, Vietnam received US$ 20.34 billion in FDI” Foreigninvestors now have more and more positive points of view about Vietnam’seconomy On November 17, 2009, Grant Thornton Vietnam announced the result of

a survey which showed 59% of the readers asked had positive opinion aboutVietnam’s socio-economic situation (Vietnam News Agency, November 17, 2009).Especially, when Vietnam officially became a member of WTO, manyopportunities were created for Vietnam’s enterprises to develop their products andservices through export or cooperation with foreign partners Auditing services andfinancial consultancy are put under the same impact

Vietnamese culture, which is imbued with national identity, had a chance todevelop in many past years A series of cultural values have been recognized asworld heritage, such as: Central Highland’s Gongs, Bac Ninh folksong etc

Businesses’ culture is also mentioned a lot in the media, and this type of culture

is believed to have significant influence on Vietnam’s businesses The role andeffects of independent auditing activities are appreciated much more clearly bybusinesses; as a result the need for auditing companies is on the rise

Technological factor: Science, technology, information technology aredeveloping quickly, and they are applied in business and management activities.Software for business administration such as accounting software, humanmanagement software, inventory software etc is widely used in enterprises Thatresults in the need for auditing staff to improve their knowledge

2.3.3.2 Analysis of the sector environment’s influence on the company’s operation:

2.3.3.2.1 Vietnam’s law regulates auditing sector and price assessment:

For state auditing activities: The following are basic documents regulating

activities of state auditing up until now:

Law on State Auditing approved by the 11th National Assembly’s 7th session May

20, 2005

The National Assembly Standing Committee’s decision on the organizationand operation of State Auditing

Standard State Auditing system

For Independent Auditing:

Resolution No 105/2004/NĐ –CP dated March 30, 2004 of the government onindependent auditing

Resolution No 130/NĐ-CP dated October 31, 2005 of the government tosupplement and amend Resolution No 105/2004/NĐ-CP

Circular No 60/2006/TT-BTC dated Jun 28, 2006 of the Ministry of Financeinstructing the implementation of Resolution No 105/2004 NĐ-CP;

Decision No 94/2007/QĐ-BTC dated November 16, 2007 of the Ministry ofFinance on recruitment and granting of certificates for auditors

Vietnam’s auditing standards system (37 standards)

Restrictions on auditing activities caused by above documents are:

Conditions to establish an auditing firm, for example a limited company

There shall be at least 3 people with auditing certificates, the president shall

be an auditor and have minimum of 3 year experience since he received the auditingcertificate The president shall contribute no less than 10% to the company’schartered capital He is not under contract with other organizations

Services of an auditing firm: to audit financial statements, operations,conformity, internal activities, balance sheet, financial information Other servicesinclude: Financial consultation, tax consultation etc

Conditions for auditors to practice their profession: Professional ethics,integrity, conformity with the law, independence, impartiality, diploma, minimal 4year experience in relevant fields, certificate of the ministry of Finance, employee

of a legal company, labor contract, ability to use foreign languages, proficiency inusing computer, etc

Conditions for public joint stock companies and listed companies:

Auditing companies can choose to audit listed companies which meet thefollowing conditions: Domestic enterprises have a legal capital upwards of 2 billion,and foreign companies have minimum legal capital of US$ 300,000, and 7professional auditors with at least 2 years of experience in the field of auditing.Companies have been operational for more than 3 years in Vietnam, its minimalnumber of clients is 30 over 2 year period; Companies have submitted all requireddocuments

For internal auditing:

Decision No 832/TC/QD/CDKT dated October 28, 1997 of the Ministry of Financeissuing regulations on internal auditing for state-owned enterprises

Circular No 52/1998/TT-BTC dated April 16, 1998 of the Ministry of Financeinstructing the implementation of the Decision No 832/TC/QĐ/CĐKT;

Circular No 171/1998/TT-BTC dated December 22, 1998 of the Ministry ofFinance instructing the implementation of regulations of internal auditing for state-owned enterprises

For asset assessment:

Ordinance on price issued according to order No 40/2002/PL-UBTVQH10 datedApril 26, 2002;

Resolution No 170/2003/NĐ-CP dated December 25, 2003 of the governmentproviding detailed regulations of some articles of the ordinance on price;

Resolution No 101/2005/NĐ-CP dated August 03, 2005 of the government on priceassessment;

Circular No 17/2006/TT-BTC dated January 18, 2006 of the Ministry of Financeinstructing the implementation of Resolution No 101/2005/NĐ-CP

Vietnam’s standards of price assessment

The basic content of documents above relevant to the restrictions of priceassessment is:

Conditions to establish a price assessment organization: the organizationmeets all legal requirements, and has upwards of 3 price assessors

Standards for recruitment and issuance of certifications: price assessors shallsatisfy the following conditions: having university diploma with a major relevant toprice assessment, having certification of price assessment training, having at least 3consecutive years of experience; having assessor certification granted by theMinistry of Finance, having a labor contract with an assessment organizationoperating in conformity with Vietnam’s law

Other relevant documents: value added tax law, enterprise income law,

export-import tax, special consumption tax, etc

2.3.3.2.2 Providers

Service providers of the company shall operate in relevant areas such aselectricity, water supply, transport, office services, catering services, etc

Generally, service providers in the areas of hotels, restaurants and aviationmake up a major share As for hotel service providers, there is tough competitionand therefore there are more options For transport services, there are not manyoptions because at present there are few providers in the area In short, thepossibility for service providers to create pressure on companies is low; thereforecompanies have many options in choosing service providers.

2.3.3.2.3 Competitors:

First of all, we need to learn about the general operation of the independentauditing sector in Vietnam through statistics acquired until December 31, 2008(According to a report of Vietnam Association of Certified Public Accountants at anannual meeting for presidents of auditing companies on July 1, 2009)

a General information:

There are 141 registered companies;

12 companies do not meet requirements to register;

22 companies stop their business;

4 companies are emerged to form 2 companies;

2 joint stock companies are converted in to limited companies;

15 newly established companies;

38 companies meet the conditions for listed auditing companies;

There are 175 auditing offices nationwide;

34 auditing companies have 3 auditors each; 24 companies have 4 auditorseach; 24 companies have from 5-7 auditors 32 companies have more than orequal to 10 auditors

18 companies are members of international auditing group

b Staff general information of 114 auditing companies recorded until December 31, 2008::

Table 2.7: STAFF OF 114 AUDITING COMPANY (Source: extracted from areport Vietnam Association of Certified Public Accountants 2009)

Numberofpeople

Rate

%

Numberofpeople

Rate

%

1 Total staff until December 31 6.200 100 5.414 100

In which: Professional members 5.645 91.05 4.561 80.6Members with auditing certifications 1.016 18 944 21.6

2 Members without auditing