Recommendations to improve business efficiency of orient maritime service a branch of vosa corporartion

MINISTRY OF TRANSPORTATION MINISTRY OF EDUCATION & TRAINING VIETNAM MARITIME UNIVERSITY STUDENT NAME:NGUYEN THI KIEU ANH DISSERTATION GLOBAL STUDIES AND MARITIME AFFAIRS RECOMMENDATIO

MINISTRY OF TRANSPORTATION MINISTRY OF EDUCATION & TRAINING

VIETNAM MARITIME UNIVERSITY

STUDENT NAME:NGUYEN THI KIEU ANH

DISSERTATION GLOBAL STUDIES AND MARITIME AFFAIRS

RECOMMENDATIONS TO IMPROVE BUSINESS EFFICIENCY

OF ORIENT MARITIME SERVICE - A BRANCH OF

VOSA CORPORARTION

MINISTRY OF TRANSPORTATION MINISTRY OF EDUCATION & TRAINING

VIETNAM MARITIME UNIVERSITY

STUDENT NAME:NGUYEN THI KIEU ANH

CLASS: GMA 02

DISSERTATION GLOBAL STUDIES AND MARITIME AFFAIRS

RECOMMENDATIONS TO IMPROVE BUSINESS EFFICIENCY

OF ORIENT MARITIME SERVICE - A BRANCH OF

VOSA CORPORATION

Division: GlobalStudiesand Maritime Affairs

HAI PHONG -2015

ACKNOWLEGEMENT

For completion of this dissertation, it is indispensable the help and cooperation of

many people First of all, I would like to thank the International School of Education

for giving me the chance to learn the course and practice specifically I also thank my

supervisors Mr Vu Le Huy and Ms Vu Thi Thu Hang for the guidance and valuable

suggestion during the time I complete the internship report In addition, I also want to

express my thankfulness to all staffs of Orient Maritime Service (ORIMAS Haiphong)

who enthusiastically gave me necessary help, support and information to complete this

dissertation successfully

Due to limitation of knowledge and reality practice, there certainly have many

shortcomings and obstacles Therefore, I look forward to seeing the comments and

recommendation from instructors and lecturers to accomplish the dissertation

TABLE O F CON TENT S

Preface i

Acknowledgment ii

Table of Contents iii

List of Tables and Graphs v

List of Figures vi

INTRODUCTION 1

CHAPTER 1: Literature Review 3

1.1 Business efficiency 3

1.1.1 Definition of business activity 3

1.1.2Definition of business efficiency 3

1.2 The criteria to evaluate business efficiency 5

1.2.1 Some indicators evaluating business efficiency 5

1.2.1.1Return on sales (ROS) 5

1.2.1.2 Return on cost (ROC) 6

1.2.1.3 Return on equity (ROE) 6

1.2.1.4 Return on labor (R/L) 6

1.2.2Other factorsaffectingbusiness efficiency 7

1.2.2.1Subjective factors 7

1.2.2.2 Objective factors 8

CHAPTER 2:Evaluation of ORIMAS Haiphong in the period 2012 - 2014 10

2.1 Background of ORIMAS Haiphong 10

2.1.1 Historic development process of ORIMAS Haiphong 10

2.1.2 Organizational structure 14

2.1.3 Personnel 17

2.1.4 Services 18

2.2 Business efficiency of ORIMAS Haiphongin the period 2012 - 2014 19

2.2.1 The ROS of ORIMAS Haiphong in the period 2012 - 2014 19

2.2.2 The ROC of ORIMAS Haiphong in the period 2012 - 2014 20

2.2.3 The ROE of ORIMAS Haiphong in the period 2012 - 2014 20

2.2.4 The R/L of ORIMAS Haiphong in the period 2012 - 2014 21

2.3 Evaluating business efficiency of ORIMAS Haiphong in the period 2012 - 2014

22

2.3.1Evaluating business efficiency by human factor 22

2.3.2 Evaluating business efficiency by capital factor 24

2.3.3 Evaluating business efficiency by financial factor 25

2.3.4 Evaluating business efficiency by technical - facilities factor 28

CHAPTER 3: Recommendations to improve business efficiency of ORIMAS Haiphong in the period 2012 - 2014 30

3.1 Training and upgrading the quality of human resources 30

3.2 Mobilizing capital investment for maritime transport activities 30

3.3 Providing customer care services 31

3.4 Promoting marketing 31

3.5 Upgrading facilities and applying new technology 33

CONCLUSION 34

Reference 35

LIST OF T ABLE S

Table 1: The number of staff in ORIMAS updated in August, 2015 17

Table 2: The ratio of ROS in the period 2012 - 2014 19

Table 3: The ratio of ROC in the period 2012 - 2014 20

Table 4: The ratio of ROE in the period 2012 - 2014 20

Table 5: The ratio of R/L in the period 2012 - 2014 21

Table 6: Staffs’ education background in ORIMAS updated in August, 2015 23

Table 7: Evaluating working age in ORIMAS (statistics August, 2015) 23

Table 8: The variations of revenue, cost, and profit of ORIMAS Haiphong in the period 2012 - 2014 25

Table 9: The variation of current income tax of ORIMAS Haiphong in the period 2012 - 2014 27

LIST OF F I GUR ES

Figure 1: The organizational chart of VOSA Corporation 12

Figure 2: The organizational chart of ORIMAS Haiphong 14

Figure 3: The R/L of ORIMAS Haiphong in the period 2012 - 2014 22

INTRODUCTION

The Importance of Dissertation

According to information from the Vietnam shipping association, there are nearly

170 million tons of cargoes through Vietnam port system, creating turnover of

several billion USD for shipping industry However, up to 80% of cargoes are

transported by sea on foreign ships This figure not only reflects the status currently

of the domestic shipping activities, but also indicates that shipping agency service is

a field of promising activities for Vietnamese company

As one of the leading names of shipping agent and freight forwarders, Vietnam

Ocean Shipping Agency (VOSA Corporation) is a multi - sector business company

which in shipping agent is an important operation, existed long life, and associated

with the company’s image

In this 3rd internship, I was very fortunate to have an opportunity to learn and study

at Orient Maritime Service - a branch of VOSA Corporation ORIMAS Haiphong

with experienced and professional staffs has been meeting the highly requirements

in Vietnam and over the world about shipping agency service, freight forwarding,

tallying service … ORIMAS Haiphong has also continually improved and

developed business with aim to provide the best services as well as to reach the

highest rank in all scope of business

However, in recent year, ship’s agent sector has face to face more difficult because

of sources scares and many competitors Nowadays, ORIMAS Haiphong also is not

immune from this situation Although, there are many strong points, ORIMAS has

still existed limits affecting to business efficiency Therefore, I finally decided to

choose topic “Recommendations to improve business efficiency of Orient

Maritime Service - a branch of VOSA Corporation” to demonstrate in my

dissertation

The Object of Dissertation

This dissertation will focus on the analysis and evaluation business efficiency of

ORIMAS Haiphong and giving some recommendations that need to be improved

The Scope of Dissertation

This dissertation only related to business efficiency of ORIMAS Haiphong and all

of information and data is provided by ORIMAS Haiphong in the range between

2012 and 2014

The Methodology of Dissertation

Through the research, collection, analysis and compare data of ORIMAS Haiphong

following economic indicators (ROS, ROC, ROE, R/L) maybe find out the factors

which have good effects and bad effects to business efficiency of this company

Contemporaneously, based on the real situation of ORIMAS Haiphong find the

reasons of this, thus suggest some recommendations to improve business efficiency

The Structure of Dissertation

Chapter 1: Literature review

Chapter 2: Evaluation ofOrient Maritime Servicein theperiod 2012 - 2014

Chapter 3: Recommendations to improve business efficiency of Orient Maritime

Servicein theperiod 2012 - 2014

CHAPTER 1: LITERATURE REVIEW

1.1 Business efficiency

1.1.1Definition ofbusiness activities

Business activities means that engage in for the primary purpose of making a profit

Business activities can include things like operations, marketing, production and

administration In economics, business activities encompass all the economic

activities carried out by a firm during the course of business Business activities are

ongoing and are focused on creating value for shareholders.The results of business

of the business enterprise are what have been achieved after a course of action that

they put efforts and money Results achieved and not achieved reflect the efficiency

of enterprise business objectives, proposed objectives are their results should be

achieved The results can be achieved measurable quantities of the product as

consumed each type and volume of production, sales, profits, market share The

quantity also reflects only qualitatively purely qualitative as its reputation, product

quality

1.1.2 Definition of business efficiency

In the current market mechanisms in our country, the long-term goals of the

business enterprise is efficient of business and maximize profitability The business

environment is always change, so requirement every business must have the

appropriate business strategy.The business is an art requiring quick calculations, to

recognize problems at the strategic level Efficient business operations is always

associated with business activities, may consider it on several angles To understand

the concept of efficient business activities should be considered economic effects of

a phenomenon

“The economic efficiency of a phenomenon (or process) economy is a category

economic reflecting the level of use of resources (human, financial and material

resources and capital) to achieve the objectives identified provisions”, which

embodies the correlation relationship between the results obtained and the entire

cost spent to get results, also reflect the quality of economic activity

From the definition of economic efficiency of such a phenomenon, we can

understand business performance is an economic category reflecting the level of use

of resources to achieve the objectives set out, it appears the correlation between the

results obtained and the costs spent to obtain such results, the greater the difference

between two quantities are, the higher the efficiency is On this perspective, the

effect is identical to the profitability of businesses and the ability to meet in terms of

quality of products for the needs of the market

Business efficiency means the ratio between the input to run a business operation

and the output gained from the business

Business efficiency =

The input The output

In which, inputs would typically be cost, employee or time/effort Outputs would

typically be revenue, profit, new customers, customer loyalty, market

differentiation, headcount productivity, innovation, quality, speed and agility,

complexity or opportunities

In this dissertation, I only focus on the ratio of return on sales, cost, equity, and

labor It means equivalent the input is profit after tax while the output includes

revenue, cost, shareholders’ equity, and labor productivity More detail, the

following is some definitions

 Profit

Profit is the amount of money that a company receives after exceeding the

expenses, costs and taxes needed to sustain the activity from the amount of revenue

gained from a business activity In other word, profit is the final financial results of

business activities as well as is a quality criterion to evaluate business efficiency

Profit is calculated by minus total revenue and total cost

 Revenue

Revenue is the amount of money that a company actually receives from its business

activities, usually from sale of goods and services to customers during a certain time

period

Revenue is calculated by multiplying the price at which goods or services are sold

by the number of units or amount sold

 Cost

Cost is the total amount of money that needs to be spent by a business, usually a

monetary valuation of effort, material, resources, time and utilities consumed, risks

incurred, and opportunity forgone in production and delivery of a goods or services

 Shareholders’ equity

Shareholders’ equity represents the amount by which a company is financed

through common and preferred shares.A firm is total assets minus its total

liabilities Equivalently, it is share capital plus retained earnings minus treasury

shares

Shareholders’ equity comes from two main sources The first and original source is

the money that was originally invested in the company, along with any additional

investments made thereafter The second comes from retained earnings which the

company is able to accumulate over time through its operations

 Labor productivity

Labor productivity measures the amount of goods and services produced by one

hour of labor More specifically, labor productivity measures the amount of real

GDP produced by an hour of labor Growing labor productivity depends on three

main factors: investment and saving in physical capital, new technology and human

capital Labor productivity also is a measurement of economic growth of a country

When improving business efficiency, the output to input ratio improves In other

words, it uses the lowest amount of inputs to create the greatest amount of outputs

and reduce the amount of wasted inputs

1.2Thecriteriaevaluating business efficiency

1.2.1 Some indicators evaluating business efficiency

1.2.1.1Return on sales (ROS)

Return on sales is a financial ratio that is used to measure a company’s

performance This measure is helpful to management, providing insight into how

much profit is being produced per a unit VND of sales It is best to compare

profitability of different companies, or the same company over different years An

increasing ROS indicates the company is growing more efficient, while a

decreasing ROS could signal looming financial troubles.Return on sales is

calculated using this formula:

ROS =

Profit after tax Total revenue

1.2.1.2 Return on cost (ROC)

Return on costrefers to the ratio of the total costs to the sales of the company, at

once indicates the amount of costs created to each VND of income.This is also an

additional indicator of the ROS.This greater indicator shows that a low cost still

brings profitable production and business activities to the business In the reserve

pattern, if the ratio of next year is greater than previous year, the company has to

review the process of doing business to offer feasible solutions improving business

efficiency.Return on costs is calculated by the formula:

ROC =

Profit after tax Total costs

1.2.1.3 Return on equity (ROE)

Return on equityis the amount of net income returned as a percentage of

shareholders equity It measures a corporation's profitability by revealing how much

profit a company generates with the money shareholders have invested.The return

on equity is useful for comparing the profitability of a company to that of other

firms in the same industry

Return on equity is calculated by:

ROE =

Profit after tax Equity

1.2.1.4 Return on labor (R/L)

Return on laborassesses the value of money that each employee contributes to

profit, which considers the impact of labor productivity to the profit of the

company In addition, the review indicators also help business set out measures to

employee how to generate the highest possible profit, as well as increase the

efficiency of business activities

Return on labor is calculated by the following formula:

Human are the decisive factor for all business operations of the company In this

era, brain content is increasingly highly, the professional level of employees is more

and more influential Human can invent new technologies and put them to use to

create great potential for improving business efficiency Human factor directly

impacts labor productivity, the level of use of resources, so it directly impacts

business efficiency

 Capital factor

This is a factor reflecting the strength of the company Through that company funds

can be mobilized in business, distribution capabilities, to effectively invest the

resources, ability to effectively manage business capital to reflect the development

of the company and evaluate business performance Capital factor which is one of

key factors determining the size and scale of the company have the opportunity can

be exploited

 Financial factor

The financial capacity is the most important issue will enable the company to

survive in the economy The company is financially strong, not only ensure the

business activities ongoing stability but also offer suitable development strategies

for their companies The financial capacity of the company directly affects the

company’s reputation, ability to take initiative in business, the ability to consume

and the competitiveness of companies Therefore, the financial situation of the

company greatly affects the company's business efficiency

 Technical - facilities factor

Technical facilities are important tangible physical elements to serve business

activities, help companies conduct business activities The more increasingly

rational layout technical facility of the company is, the more contribute it

is.Nowadays, the role of technical facilities is more and more appreciated To

improve business efficiency, companies must continually invest in this sector,

especially investment in research and development

1.2.2.2 Objective factors

There are the factors affecting from outside, have positive or negative effect to

business efficiency, including:

 Natural condition

Natural conditions, mineral resources, natural disasters, floods were greatly affect

the company's business efficiency

 Population - labor

The population of a country also significantly impacts the company's business

efficiency If in a populous country, it will take advantage of cheap labor from

hiring costs will drop

 Scientific and technical progress

Company takes advantage of using the modern technical equipment, the business

efficiency will be better and reduced consumption of labor, time - saving, labor

productivity is also higher

 Government management

The economic policy of government is not less impact to business efficiency All of

policies have beneficial or negative impact on the development of the company,

encouraged or limited companies

 Business market

In globalization age with increasingly tense competition among logistics companies,

the market is always changing, fluctuations each day Therefore, the company needs

to grasp the trend of each market to offer appropriate business policies,

development or selection of business sectors rely on keeping up with trends

direction and tastes of consumers

CHAPTER 2 EVALUATION OFORIENT MARITIME

SERVICE (ORIMAS HAIPHONG)IN THE PERIOD 2012 -

2014 2.1 Back ground of ORIMAS Haiphong

2.1.1 Historic development process of ORIMAS Haiphong

ORIMAS Haiphong is directly under Vietnam Ocean Shipping Agencies

Corporation (VOSA Corporation) as a subsidiary company Therefore, I mention

about overview of VOSA Corporation and ORIMAS Haiphong in this part

a Overview of VOSA Corporation

Vietnam Ocean Shipping Agency Corporation (VOSA Corporation) is a member of

Vietnam National Shipping Lines (VINALINES) was established on March 13rd,

1957 in Haiphong according to the Decree No 50/ND of the Ministry of Transport

and Communications

Being awarded of the fact that Ho Chi Minh City is the largest commercial center of

Vietnam which has the best conditions for the international cargoes exchanges and

in order to meet the current situation, VOSA has moved its head office to Ho Chi

Minh City in 1993

In 2006, VOSA Corporation has been equitized from the State-owned company to

the Stock - Holding Company (Public Company) in which the main shareholder,

VINALINES, holds 51% of the Charter Capital, and other shareholders, the

Vietnamese and foreign investors including the staff, hold 49%

VOSA is one of the first shipping agents in the Vietnam Shipping Industry

Throughout over a period of 50 years, nowadays VOSA has its national network of

14 branches which are located in 10 provinces and cities along the coast and one

representative office in Hanoi In the situation of the market mechanism, to assert

themselves, VOSA provides services as a shipping agent and also has expand edits

business other services such as: Ship broking agent, chartering and canvassing

cargoes; Freight forwarding, transport - related services and delivery of goods in the

form of multi - modal transport; Container agent for several forwarding firms in the

world; Participating in exporting and importing many kinds of cargoes

VOSA is also presently a full - fledged member of the following organizations:

- 1985: Entered the Baltic International Maritime Council (BIMCO)

- 1994: Entered the Vietnam Ship Agents and Brokers Association (VISABA)

- 1995: Became a member of Vietnam National Lines

- 1996: Entered International Federation of Freight Forwarders Associations

- 1997: Entered International Air Transport Association (IATA)

- 1997: Entered Vietnam Chamber of Commerce and Industry (VCCI)

- 1998: Entered the Vietnam Freight Forwarders Association (VIFFAS)

 Organizational chart of VOSA Corporation

Over the development period, VOSA has had different changes in the

organizational structure to suit each stage situation, perform the function of ship

broking and chartering, ship’s agencies, freight forwarding, warehouse services,

trading and logistics In order to contribute to the national economy, the company

also has a special structure to satisfy the requirements of customer service in the

field of industry But basically, it is the organizational structure ensuring the

flexibility and efficiency to achieve the final object is productivity

At the present time, the departmental system along with the associated 14 branches

is built according to the optimal model to fit the current condition of the business

Figure 1: The organizational chart of VOSA Corporation

Source: http://vosa.com.vn/About_us/Organization

Broad of Directors

General Meeting ofShare Holder

Broad of Management

Inspection Committee

Foreign

Relations

Department

Accounting Department

Human Resources Department

Investment Department

DA NANG

DA NANG

VOSA BEN THUY BEN THUY

VOSA SAI GON SAI GON

VOSA NHA TRANG NHA TRANG

ORIMAS HAI PHONG HAI PHONGHAI PHONG HAI PHONG

VOSA QUY NHON QUY NHON

VOSA CAN THO CAN THO

NYK Line (Vietnam)

NYK Logistics (Vietnam)

China Shipping (Vietnam)

SYMS (Vietnam)

b The foundation and development of ORIMAS Haiphong

 General information

ORIENT MARITIME SERVICE (ORIMAS HAIPHONG)

 Head Office: 54 Le Loi Str., Ngo Quyen Dist., HaiPhong City, Vietnam

Orient Maritime Services (ORIMAS Haiphong) has formerly Vietnam Tallying

Corporation (VIETTALCO HP) and operated under Vietnam Ocean Shipping

Agency Corporation

VIETTACO HP which previously was a service department doing business in

tallying services for imports and exports has activities under the management of

VOSA Corporation Then, according to Decision No 726 BNGT/TCCB of Ministry

of Industry and Trade and Decision No 203-CP of Government Council on

November 23rd, 1961, Minister of Industry and Trade signed decree to establish

Vietnam Tallying Corporation, referred to as VIETTALCO This decision was

issued on August 22nd, 1969

During the period of centrally - planned economy, shipping agency business has

become monopoly, so that this sector gained the highest revenues in Vietnam’s

economy But whiles witching to the free economy, tallying have appeared more

firms, more kinds of tallying cargoes, and this company had to deal with intense

competition With this situation, to establish conditions for VIETTALCO solving

problem, VOSA leadership has assigned VIETTALCO as container agent for China

shipping parallel to tally cargo operations

As a result, on September 23rd, 2002, Decision No 55/QD-TCTL decided to rename

company as Orient Maritime Services Company, referred to as ORIMAS Haiphong