Summary of doctoral thesis in business management improving the efficiency of bus services in thua thien hue province

HUE UNIVERSITY UNIVERSITY OF ECONOMICS HOANG HUNG IMPROVING THE EFFICIENCY OF BUS SERVICES IN THUA THIEN HUE PROVINCE SUMMARY OF DOCTORAL THESIS IN BUSINESS MANAGEMENT CODE: 9.34.01.

HUE UNIVERSITY UNIVERSITY OF ECONOMICS

HOANG HUNG

IMPROVING THE EFFICIENCY OF BUS SERVICES IN THUA THIEN HUE

PROVINCE

SUMMARY OF DOCTORAL THESIS IN BUSINESS MANAGEMENT

CODE: 9.34.01.01

HUE 2020

This thesis was completed at the University of Economics, Hue University

Supervisor: Assoc Prof Dr Tran Van Hoa

At………….am/pm on ………/…………/2020

INTRODUCTION

1 Rationale of the study

Nowadays,Thua Thien Hue (TTH) has three companies of bus services:Thua Thien Hue Coach Joint Stock Company, Hoang Duc Co., Ltd, Phu Loc Automobile Transport Cooperative.More than 65 vehicles are nowrunning on 18 routes throughout the province [20] Over the past fifteen years, TTH has had preferential policies to develop bus systems, such as changing the enterprise management model from a one-member state-owned limited company

to a privately-owned limited liability company model funded by private equity; supporting businesses to access capital with low interest rates to innovate facilities; converting fixed passenger routes to bus transportation routes; reducing corporate income tax; organizing businesses bidding for bus transportation subsidies; opening more routes; purchasing additional equipment and means of transport; improving quality of passenger services, etc.However, the business efficiency has not been high and contributed to make urban transportation newer There are many reasons leading to this situation They are specified asthe local socio-economic dynamism is not high; infrastructure does not keep pace with increasing needs of road traffic; the number of buses is limited; bus quality is more and more degraded leading to the pollution

of dirt and smoke and thus people do not show their expectations of bus transportation, enterprises mostly organize their management, supervision and operation of activities of means

of transport and drivers.The quality of bus services is not high so it has not attracted residents access to buses.The maintenance of subsidies on 5/18 routes has created subjectiveness among businesses greatly affecting social security, the urban face and limiting the local economic development process In this situation, how to improve the efficiency of bus services, harmonize the State’sobjectives, enterprises and users of bus services, maintain the sustainability of Thua Thien Hue province’s economy in general, and the bus businesses in particular is much paid attention by local leaders and enterprise Stemming from the urgent issues posed in reality and the requirements of efficiency, the author of this paper desires to carry out a study titled "Improving the efficiency of bus services in Thua Thien Hue"

2 Research aims and objectives:

2.1 Aims:Improving the efficiency of bus servicesin Thua Thien Hue

- Clarifying the capital structure of enterprises; loan ratio compared with equity capital; costing growth rate compared with capital growth rate; revenuegrowth rate over cost growth; level of profit increase; actual transporting compared with capacity; the degree of demand response through using secondary data to determine the degree of efficiency

- Identifying factors and the impact degree of each factor on the quality of industry and customs, and clarifying the relationship between service quality and efficiency of bus activities in Thua Thien Hue

The thesis, therefore, hoped to provide some implications for the improvement of the bus services in Thua Thien Hue province

3 Research questions

- Who is the beneficiary from the efficiency of bus services?

- How is the quality of bus services in Thua Thien Huecurrently?

- What are constitutional factors of bus service quality and which factors affect the efficiency of bus services? The relationship among them?

- What are the benefits and and limitations of bus transportation?

- How to improve the efficiency of bus services in the coming time?

4 Research subject and scope

4.1 Research subject: Bus services are activities that are both public-utility and independent

accounting of enterprises Therefore, the efficiency of bus service business affectsnot onlyenterprise itself, but also the local socio-economy and passengers Therefore, improving the efficiency of bus services is the same as increasingefficiency and benefits for enterprises,

local socio-economy and bus users in Thua Thien Hue

4.2 Research scope:

- Scope of content: The efficiency of bus services is in a wide range Thus, the thesis mainly focuses on studying and analyzing factors affecting the socio-economic efficiency of stakeholders such as State (local), enterprises and bus users Based on research results, some solutions to improve the efficiency of bus transportation in Thua Thien Hue province are proposed

- Geographical location: Bus services are promoted in all 6 districts, 2 towns and 1 city

of Thua Thien Hue province Therefore, the study focuses on Thua Thien Hue province

- Time period:

Secondary data from 2013 to 2017 are used to analyze and assess the current situation of

Primary data were collected at businesses, Departments of Transport and passengers using local bus services in the studied area in 2017

5 New contributions of the thesis

(i) To the State (local): The thesis has analyzed and clarified the benefits of bus use compared to the use of public transports such as saving local budget through price subsidies cut-down; reducing personal vehicles and traffic jams,decreasingthe appropriation of road surface area and environmental pollution, etc Besides, the thesis has also pointed out the limitations and shortcomings of bus activities such as poor infrastructure for buses, the shortage of shelters, stops, signs, parking lots, lines roads, especially transit stations In addition, the thesis has also revealed that the overlap coefficient of the network segment is up

to 50.53% of the route length affectingthe efficiency of bus services in Thua Thien Hue province

(ii) For enterprises of bus services: In addition to the safety and low cost of bus transportation, the thesis also sheds light on the unreasonable capital structure of enteprises because the loan is greater than the equity capital; cost growth rate is 1.5 times higher than capital growth rate; revenue growth is smaller than cost growth; the level of revenue increase

is equivalent to the level of subsidy and the lowest rate of profit increase Besides, the thesis also shows that compared to the capacity,actual transporation only reaches 12.06%, the level

of demand satisfaction was only 8.53% although the local govermenthas had mechanisms and policies to subsidize, supported investment in renovating vehicles, and reduced taxes of corporate income as well as expanded routes In addition, according to the assessment of managers analyzedusingthe Structural Equation Modelling(SEM),it is shown thatamong Response level, Empathy level, Reliability, Guarantee level, Tangibles affecting positively the efficiency of bus services, and Investment, Subsidies, PerceivedQuality, and Costs of positive impact on bus services, Investment (0.74) is the strongest factor of impact and the Subsidy (0.36) isthe weakest factor on the efficiency of bus services The remaining factors such as perceivedquality (0.54) and costs (0.61) have a neutral impact on the efficiency of bus services in Thua Thien Hue

(iii) For passengers using bus services: The thesis has clarified (i) group of factors that constitute perceivedquality, including: tangibles, demand satisfaction, level of sympathy, reliability, level of responsiveness, level of guarantee; and (ii) group of factors affecting Effectiveness: Subsidies, Costs, Perceived quality level Besides, the thesis has built a SEM model to determine the influence level and correlative relationship among the factors on perceivedquality of bus services,the positive relationship between service quality and service

efficiency As a result, it can be determined that empathy level (0.94) and reliability (0.61) make the strongest impact, the level of assurance (0.11) makes the weakest impact on the perceived quality;the cost (0.79) and the perceived quality (0.68) make the strongest impact and the price subsidy (0.66) make the weakest impact on the service efficiency in Thua Thien Hue The remaining factors such astangible means (0.58) and Responsive level (0.44), and price subsidy (0.66) take a neutral effect on the quality and efficiency of bus services in Thua Thien Hue,which have notbeenidentified in any previous study

CHAPTER 1 LITERATURE REVIEW AND RESEARCH METHODS

1.1.1 Identify the research model of the efficiency of bus services from literature review

(i) Efficiency from the viewpoint of State (local) management: The thesis uses FSA, CBA and MCA models to analyze benefits for the community and society through local budget savings;infrastructure development; reduction of subsidy level; reduction of environmental pollution; decrease of personal vehicles; reduction of traffic jam and road occupying

(ii) Effeciency from the enterprise's point of view: The thesis uses FSA, CBA, MCA models to analyze factors such as capital structure of enterprises; revenue growth rate; profit margin; performance of input use; average acquisition cost per passenger; energy saving; saving of investment costs; operating frequency; capacity utilization coefficient; accessibility and route networks; degree of demand response; and analysis methods of EFA, CFA, SEM model to determine the factors that constitute the quality of services for bus transportation and ones affecting the efficiency of bus services as well as their correlative relationship

(iii) Efficiency from the passengers’ perpective: The thesis uses CBA analysis model to evaluate benefits if passengers use buses instead of personal vehicles through fuel cost saving, time saving, saving of overall costs for a trip and safety assurance Besides, the thesis also uses the EFA analysis model through the variables: tangibles, level of sympathy, reliability, level of sympathy, level of guarantee, subsidies, costs As a result, the thesis builds a SEM model to clarify the influence level, the correlative relationship among the factors that make

up the perceivedquality, the factors affecting theefficiency of bus services,the relationship between the perceived quality of bus services and the efficiency of bus services in Thua Thien Hue

1.2 RESEARCH MODEL OF THE THESIS

On the theoretical basis, the studies have referenced and adjusted variables and scales

to suit the context and characteristics of the study field and area, the variant SERVQUA model is used for measuring the relationship between theperceived quality and the efficiency

of bus services in Thua Thien Hueas proposed in Figure 1.1

Figure 1.1 Proposed research model

(Source: Author's proposal)

1.3 RESEARCH METHODS

1.3.1 Qualitative research methods

In order to identify the factors that make up theperceivedquality and efficiency level of bus services, expert interviewswere conducted with a semi-structured questionnaire The interviews were done through same questionnaires The questionnaire consists of many factors which are composed and listed by group Group 1 relates to the perceived quality: level of responsiveness, level of sympathy, level of guarantee and tangibles Group 2 relates

to the Efficiency: Investment–Subsidies - Perceivedquality- Costs All lecturers and enterprise managers involved in the interviews agreed upon the perceived quality Regarding the factor of efficiency, the experts requested to add Investment factor

1.3.2 Quantitative research method

- Select and develop a scale;

- Comparative method;

- Financial Statements Analysis (FSA);

- Multi-criteria analysis (MCA);

- Cost- benefit analysis (CBA);

- Exploratory factor analysis (EFA);

- CFA and SEM model ;

- Data access method;

- Other research methods

The level ofresponsiveness

Cost

Reliability Level o f sympathy

CHAPTER 2 THEORETICAL AND PRACTICAL BACKGROUND

2.1.2 Perspectives of efficiency:

- From the traditional point of view: Effeciency is the ratio between obtained results

and the spent, or in contrast, the cost per product unit or product value

- From the modern viewpoint (i) Dynamic status of the relationship between input and

output: (ii) Time factor is considered as an important factor in the difference calculation ; (iii) Financial, social and environmental efficiency: financial efficiency must be consistent with the updated trend, the local and national sustainable growth and development strategies

2.2 THEORETICAL BACKGROUND OF EFFICIENCY IMPROVEMENT

2.2.1 Concept of Efficiency improvement

Efficiency improvement is an economic category reflecting the enterprises’ capacity to use the workforce, materials and financial resources to achieve greater efficiency and lower costs It is considered to be more effective asthe present value of the future obtained value is greater than theinitial capital

2.3 THEORETICAL AND PRACTICAL BACKGROUND OF EFFICIENCY IMPROVEMENT OF BUS SERVICES

2.3.2.1 Concept of bus:

According to the Circular No 65/2014/TT -BGTVT dated November 10, 2014 of the Ministry of Transport, it is defined that bus is a vehicle with a capacity of 17 passengers or more There are 3 types of buses: minibuses accommodating up to 40 passengers, average

capacity of 61 passengers or more [5]

Busis a passenger vehiclewhich is designed with 17 seats or more and has a floor space for passengers standing at 0.125 m2 as prescribed

2.3.2.2 Public passenger transportation by bus

According to Decision 34/2006/QD-BGTVT, Public passenger transportation is a service

to transport passengers by car along a fixed route with stops for picking up, dropping off and

in which the vehicle is run according to the chart

According to Decision No 13/2015/QD-TTg, it can be understood that bus transportation

is a service that passengers are transported on a fixed route by bus, with stops for picking up, dropping off and in which the vehicle is run according to the chart Bus service is a type of transportation with fee collection as prescribed and the vehicle is operatedbased on a

prescribed chart and itinerary to serve the needs of daily travelingfor city residents

CHAPTER 3 CURRENT SITUATION OF BUS SERVICES IN THUA THIEN HUE 3.1.CHARACTERISTICS OF BUS SERVICES IN THUA THIEN HUE

3.1.2 Characteristics of transportation and bus services

3.1.2.1 Characteristics of transportation

From 2013 to 2017, the proportion of road passenger transportation increased steadily, specifically in 2013 it reached 92.5%, in 2017 it reached 96.1% compared to the local transport Tohave an overview of the uptrend, please see Chart 3.1

Figure 3.1 Proportion of road passenger transport

3.1.2.2 Features of bus services in Thua Thien Hue province

Table 3.4 The proportion of bus transport compared to road transport in the period of

2013 - 2017 in Thua Thien Hue province

(Unit: Million turns)

Bus transport 0.768 1.150 1.397 1.763 1.862

Bus / road transport density (%) 6,40 7,77 8,47 10,05 9,95

(Source: Statistical Yearbook of 2013 - 2017 and Department of Transport of TTHProvince)

As shown in Table 3.4, during the period of 2013 - 2017, the average annual bus transport took over 8.5% of the total number of passengers using road transport services.Although the number of vehicles was not bigand there are a few routes, a relatively abundant of passengers use bus services This shows that passengers tend to use bus services more and more

Tỷ trọng vận chuyển đường bộ/vận chuyển địa phương

Transport of local passengers (million passengers) Road passenger transportation (million passengers) Proportion of road transport / local transportation