Ineffective salesforce in improving quality worker life joint stock company (iqwl jsc)

1.2 Company vision mission With the aim of improving the quality of life of workers and their families, therefore, IQWL JSC has a vision is “a breakthrough employee benefits solution fo

UNIVERSITY OF ECONOMICS HO CHI MINH CITY

International School of Business

BUI QUANG HUY

INEFFECTIVE SALESFORCE IN IMPROVING QUALITY WORKER LIFE JOINT STOCK COMPANY

(IQWL JSC)

Ho Chi Minh City – Year 2021

UNIVERSITY OF ECONOMICS HO CHI MINH CITY

International School of Business

BUI QUANG HUY

INEFFECTIVE SALESFORCE IN IMPROVING QUALITY WORKER LIFE JOINT STOCK COMPANY

(IQWL JSC)

SUPERVISOR: Dr DOAN ANH TUAN

Ho Chi Minh City – Year 2021

TABLE OF CONTENTS

LIST OF ABBREVIATIONS 1

LIST OF FIGURES 2

LIST OF TABLES 3

ACKNOWLEDGEMENTS 1

EXECUTIVE SUMMARY 2

1 INTRODUCTION 1

1.1 Company history 1

1.2 Company vision mission 1

1.3 Products and services 2

1.4 Target customers: 3

1.5 Organization chart 4

1.6 Competitor’s information 5

2 COMPANY CONTEXT 6

3 SYMPTPOMS 6

3.1 Unachieved sales targets: 6

3.1.1 Definition of sales; sales target and its relationship 6

3.1.2 Diagnosis and analysis 7

3.2 High pressure on cash inflow for running business 9

3.2.1 Definition of cash inflow from operating activities and its important 9

3.2.2 Diagnosis and analysis 10

3.3 Increasing rapidly in proportion of expenditure compare to revenue 11

3.3.1 Business expenses 11

3.3.2 Diagnosis and analysis 12

4 PROBLEM 14

4.1 Potential problems 14

4.1.1 Ineffectiveness & Inflexibility in forecasting financial budgeting 14

4.1.2 Unprofessional trained salesforce 17

4.1.3 Instable of funding resources 19

4.2 Validating problem 22

4.2.1 Employee’s perspective 22

4.2.2 Manager’s perspective 23

4.2.3 Finance Manager’s perspective 24

4.3 The importance of main problems 26

5 CAUSE VALIDATION 27

5.1 Potential causes 27

5.1.1 Lack of professional HR in the training department 28

5.1.2 Budgetary constraints and lack of training opportunities 28

5.1.3 Poor tracking process of employee training knowledge acquisition 29

5.1.4 Differences in professional qualifications and competence of trainers 30

5.2 Cause validation 30

6 ALTERNATIVE SOLUTION 33

6.1 Alternative Solution 1: Propose to setting up professional training team 34

6.1.1 Exploration 34

6.1.2 Advantages and disadvantages: 35

6.1.3 Procedures: 37

6.2 Alternative Solution 2: Out sources professional trainers for staff 39

6.2.1 Exploration: 39

6.2.2 Advantages and disadvantages: 40

6.2.3 Procedures: 41

6.3 Alternative solution 3: Established post training evaluation system 42

6.3.1 Exploration: 42

6.3.2 Advantages and disadvantages: 45

6.3.3 Procedures: 46

6.4 Alternative solution 4: Focus on training budgeting to create training opportunities48 6.4.1 Exploration: 48

6.4.2 Procedure: 48

6.5 Solution justification 50

7 ACTION PLAN 51

8 REFERENCES: 58

9 APPENDIX 61

9.1 Financial statement report of IQWL from 2017 - 2020 61

9.1.1 Balance Sheet 61

9.1.2 Statement of income for the year ended 63

9.1.3 Statement of cash flow for the year ended 64

9.2 Supporting information 66

9.2.1 Interviewee’ information 66

9.2.2 Discussion objective 66

9.2.3 Interview outline 66

9.2.4 Interview guide 67

9.2.5 Transcript summary 68

9.2.6 Transcript for the group interview with the open – end question 79

9.2.7 Survey customer satisfaction (provide by IQWL JSC) 80

9.2.8 Survey customer satisfaction answer (provide by IQWL JSC) 82

IQWL JSC Improving quality worker life joint stock company

LIST OF FIGURES

Figure 1: Map of quantity potential customers 4

Figure 2: Organization chart of IQWL JSC in 2019 5

Figure 3: Comparison between actual sales and sales target 7

Figure 4: Actual sales by region from 2017 – 2020 8

Figure 5: Net cash flow from operating activities vs net revenue from 2017 - 2020 10

Figure 6: Proportion between expenses and revenue from 2017 - 2020 12

Figure 7: Proportion between expenses and revenue from 2017 – 2020 (Actual vs Plan) 13

Figure 8: The statistic about highest and lowest in average salespeople in 2019 by month 18

Figure 9: Initial cause and effect tree of IQWL 21

Figure 10: Main problem makes unable to achieve sales target at IQWL 27

Figure 11: Updated cause – effect tree map makes unable to achieve sales target at IQWL 28

Figure 12: Fish bone analysis diagram of unprofessional trained salesforce 33

Figure 13: The connection between balance scorecard and performance measures 44 Figure 14: Training budget flow (Referring from research (50) ) 49

LIST OF TABLES

Table 1: Net cash flow from operating activities vs net revenue (2017 – 2020) 10 Table 2: The variation of total revenue and expenses of IQWL from 2017 to 2020 compared to 2017 13 Table 3: Relationship between product share and profit margin in 2018; 2019 &2020

25

Table 4: Evaluation of the degree of impact for each potential cause 31

ACKNOWLEDGEMENTS

The graduate thesis procedure is the most crucial period in the lives of every student

A thesis is an essential assumption for us before we begin our job to develop research skills and useful knowledge For the completion of this thesis, I would like to express my sincere thanks to:

The Board of Management of University of Economics Ho Chi Minh City (UEH) especially UEH- Internal School of Business of creating favourable conditions in terms of facilities with a modern library system, a variety of books and documents that are convenient for searching and researching information

Dr Doan Anh Tuan had spent his valuable time reading the thesis and gave me valuable comments and corrected my errors in the thesis draft as well as final thesis The management team and colleagues in Improving Quality Worker Life JSC for creating favourable conditions for me to providing data, statistics, information, reports; assisting me having practical contact, answering questions to helps me gain more understanding, practical knowledge to finish the thesis

My family, relatives, and colleagues for always being there, supporting, and encouraging

Due to the lack of talent experience as well as the limitations of knowledge, the thesis will certainly inevitably have shortcomings I look forward to receiving comments, suggestions, and recommendations from the committee to improve the essay

Finally, I would like to wish you good health, success, and happiness

EXECUTIVE SUMMARY

"Not achieving sales targets" is considered a major concern for all most businesses,

in particular for service companies By utilizing a wide range of current technology to generate convenient services, services companies are continually modernizing, enhancing customer utility as well as attracting more potential customers in order to push their sales revenue However, technology is just the enhancing factor, the quality of employees especially salesforce remains fundamental to the performance of services ' s company because salesforce is considered as the connection between clients and the company

In reality, an unprofessional trained salesforce is the largest concern in IQWL JSC This prevents the new salespeople is unable to satisfy tasks requirement on time while the experienced salesforce is stuck in attracting potential customers The quality of service to convince customers to purchase products will decrease which affect the sales revenue This research wants to give effective ideas for promoting the quality of salesforce in order to help the core business activity of IQWL will be more grown from there It is also expected to reduce its company cost and boost IQWL's sales revenue Furthermore, the training policies will also be interested and enhanced for IQWL's employees

1 INTRODUCTION

1.1 Company history

In 2007, in the beginning, Improve The Quality of Worker’s Life Joint Stock

Company (IQWL JSC) was established with the purpose to provide a pre-paid payment in the form of an electronic mobile wallet At that time, the mobile top-up agent network is a nice niche business, but not large enough to be interesting Therefore, the company owner continues to search for "product and fit market", started to zoom into the idea of "credits" being a powerful enabler and wherever "credit" payment is available, "credit" always wins The challenge to provide credits is to be able to quantify and estimate its "risk" counterpart Aha moment when the company owner asking the question "what if we can latch on the payroll as a key enabler for providing credits to employees?" As a result, improving the quality of worker’s life concept was born

In 2013, after starting to create technology, product, market research, to validate

the improve the quality of worker’s life, IQWL JSC became a for-profit social organization that offers workers in developing countries a ground-breaking job compensation package

at their place of employment The program enables manufacturers, social organizations, banks, and service providers to provide the lowest total cost of access to basic life-changing products and services to workers at the bottom of the economic pyramid, who earn only

$100-500 per month As a result, to close the affordability gap, IQWL offers a financial alternative for the purchasing of goods and services with a 3 – 6 months’ interest-free deferred payment plan

1.2 Company vision mission

With the aim of improving the quality of life of workers and their families, therefore, IQWL JSC has a vision is “a breakthrough employee benefits solution for low and medium-income workers in developing countries, providing workers access to basic life-changing products and services that improve quality of life for both themselves and their families and contribute to their professional growth and productivity” In order to fulfil this vision, IQWL JSC explains the mission as follows:

“IQWL JSC aims to give employees immediate access to essential products and services that will improve their quality of life and wellbeing and enable Comfortable, Healthy, Smart and Prosperous Living both in the workplace and at home”

With the mentioned mission and vision, IQWL not only providing employees and their families more access to goods and services to make their lives more comfortable and convenient, but it also creates value propositions that are great opportunities for manufacturers and retailers The value propositions include expanding and providing access

to an untapped market as well as increasing revenue, brand awareness, and identity for brands & suppliers And also for employers, IQWL improves the skills and competence of their workers at work as well as decreases the turnover of employees

1.3 Products and services

In order to accomplish its mission, IQWL has created a standard set of values for workers and their families so that they have easy access to perfect lives such as comfortable, healthy, smart, and prosperous

- Comfort living (means life to enjoy) offers access to basic home appliances and electronics products that can save time on housework, allowing workers to spend more time with their families or to relax and enjoy life after hard working days The products including mobile phone, air conditioner, refrigerator, electric cooker, washing machine…

- Healthy living (means the greatest wealth is health) offers rewarding knowledge and

a wide range of high-quality healthcare products and services, expressly tailored to care for the well-being and health of workers and their most valuable loved ones For example: prenatal vaccinations, cervical cancer shots…

- Smart living (means work smart, live smart) helps workers and their children access essential educational products and services Smart living offers program members a wide range of high-quality options for educational facilities, physical classroom-style learning curriculum, and online learning to enhance opportunities for worker’s self-development as well as improving the quality of education for both children and them such as English course for worker’s children

- Prosperous living access to loan products, insurance, and long-term financial planning products

1.4 Target customers:

IQWL JSC is the pioneer in providing services and benefits for manufacturer workers

in Viet Nam On the path of confidence and sustainable growth, IQWL JSC has built strong operations with more than 350 companies in Vietnam and impact the lives of more than 50,000 workers and their families IQWL JSC enables manufacturers, social organizations, banks, and service providers to provide the lowest total cost of access to basic life-changing products and services to workers at the bottom of the economic pyramid, who are the official workforce who have to join social insurance and earn only $100-500 per month As

a result, to close the affordability gap, IQWL offers a financial alternative for the purchasing

of goods and services with a 3 – 6 months’ interest-free deferred payment plan

IQWL's customers are workers, but it does not mean that IQWL directly approaches directly each worker Instead, IQWL has cooperated with the Vietnam General Confederation of Labour to deploy its service The Vietnam General Confederation of Labour will introduce IQWL to its member unions, where the member union will introduce

it to industrial parks for IQWL to contact the companies' labour unions Due to the introduction of the Vietnam General Confederation of Labour, it is not difficult to approach companies, via labour unions Since then, IQWL through the company's labour union to approach workers, and IQWL will get a large amount of worker information from here As

a result, it can be stated that the number of prospective consumers for IQWL is incredibly huge and readily available IQWL's mission is simply to lure them to utilize services and products through salespersons

Mrs Hong, Head of Sales department shared that:

“Our target customers are the official workforce who have to join social insurance According to statistics Ministry of Labor, War Invalids, & Social Affair, in 2019, Vietnam has about 96 million people and approximately 56 million total workforces The current number of official workforce about 16 million, and adding 1 million new members [this number is expanding more than 5% annually] each year, reaching about 20 million by

2025 (who has income from $100 - $500 per month) This official workforce is scattered throughout the provinces and cities of Vietnam As a result, besides headquarter in HCM city, our company also has branches in the northern and central of Vietnam These

Figure 1: Map of quantity potential customers

branches along with headquartering will responsible for managing 7 regions which are Ha Noi, Hai Phong, Da Nang, HCM City, Dong Nai, Binh Duong, and Mekong delta These regions have about 7,7mllion of workers and our company will focus on regions such as the industrial park in HCM city, Dong Nai province, and Binh Duong province”

(Source: IQWL internal report)

1.5 Organization chart

The organizational structure of IQWL JSC is quite clear, under the control of the Board of Directors (BOD), Chief executive officer (CEO) plays a management role and be responsible for whole company activities There are seven functional departments in IQWL JSC which are Finance, Human Resources, Product & Marketing, Sale, Support,

Information Technology, and Risk In particular, in each department, the head of the department will take responsibility for professional activities Besides that, with the aim of ensuring quality, ethical and long-term development, IQWL JSC also has different committees such as audit, enterprise risk, nomination & remuneration, and products & sales

to support BOD as well as CEO The following figure is a detailed organization chart for IQWL JSC

Figure 2: Organization chart of IQWL JSC in 2019

(Source: IQWL’s company structure)

1.6 Competitor’s information

There is no company that has built a comparable business model like IQWL JSC on the market However, in the current market, there are banks, consumer lending companies such as Homecredit, FEcredit that are now providing instalment packages associated with commercial companies like Thegioididong, Dienmayxanh, FPTshop for buying their products Hence, in a certain aspect, these banks and consumer lending companies are considered IQWL’s competitors

These consumer lending companies receive great support in capital from banks because they are actually subsidiaries of banks With this advantage, they can provide larger financial support packages and having a longer instalment period than IQWL However, banks and consumer lending companies often contact workers directly while IQWL cooperated with workers through the labour union of their companies It means the labour union will solve and ensure no disadvantages happened for their employees when any problems occur Therefore, from the worker’s view, IQWL is more reliable Furthermore, consumer lending companies just provide a loan for the worker to purchase products while IQWL offers workers and their families more choices to access standard life with Comfortable, Healthy, Smart, and Prosperous as mentioned above

2 COMPANY CONTEXT

In discussion with Ms Hong - Head of the sales, she mentioned that:

“The total number of workers who are participating in social insurance is about 20 million people and is gradually in recent years With the operation of 7 regions spread across Vietnam with abilities to contact 7.7 million workers who also is considered as the potential customers of IQWL, the top management of the company expected that when IQWL attract just about 1 -2% of this amount then IQWL not only to expand in terms of the business market but also in terms of financing result such as revenue, profit.”

However, the truth that the company is facing is not the same as the expectations of the top management Based on interviews with Mr Hoang, CFO; Mrs Minh, financial controller; Mrs Hong, Head of sale; Mrs Hanh, Head of HR, and employees at sale department, as well as examining the secondary data from the organization’s internal reports, the following three symptoms can be identified: negative profit, the gap between collection period and payment period increasing and negative in cash flow from operating activities

3 SYMPTPOMS

3.1 Unachieved sales targets:

3.1.1 Definition of sales; sales target and its relationship

According to Tyler(1), the net income earned by selling products or services related to the company's primary activities is referred to as sales revenue In order words, sales revenue is the money earned by a corporation from the sales of products or the offering of services The primary objective of any company, whether a small convenience store or a publicly-traded multinational corporation, is to make money, so sales revenue is a tool to measure the size of the business market share The sales figure represents how much money

a company makes before any expenses are deducted As a result, "top-line growth" indicates that a company's gross profits or sales have risen and sale is just a measure of a company's ability to generate revenue Siragher(2) mentioned that there is a truth that success in any company often begins with a strategy and a sales plan is an example A sales plan is a strategy that outlines the company's sales goals and tactics, as well as the steps the company will take to achieve those goals Most companies consider sales strategy to be a "working" document that outlines sales objectives and the tactics used to accomplish them

3.1.2 Diagnosis and analysis

Based on the primary data collection from the sales and financial & accounting department, the picture of the business situation and especially the sales achievement of IQWL gradually appeared As seen in the graph below, the IQWL is having trouble in making its achievement sales target

Figure 3: Comparison between actual sales and sales target

(Source: IQWL internal report)

992,004

1,158,293

777,896

435,902 715,948 692,079

According to the above graph, the IQWL did not complete the sales target during the

4 years from 2017 to 2020 even though the sales plan was adjusted during that period In

2017, the IQWL sale actually occupied 72% compares to the plan, the actual sale was 715,948 million VND while the plan was 992,004 million VND While the company adjusted the plan to make it closed to reality over the following three years, it nevertheless still not achieved the plans as a set Based on the figure above, it is obvious to see that, the rate to complete the plan had increased from 60% to 69% and 81% in 2018, 2019, and 2020 respectively, despite this, the sale target as a whole was not fulfilled In 2018, 2019, and

2020 the real’s sale was 692,079; 540,497; 354,175 million VND while targets were 1,158,293; 777,896; 435,902 million VND respectively

Figure 4: Actual sales by region from 2017 – 2020

For more detail, figure 4 depicts the information of actual sales by region at IQWL from 2017 to 2020 It is obviously seen that that sales in the South account for the majority

of total sales, which is always greater than 86 percent (86 percent in 2017; 91 percent in 2018; 92 percent and 87 percent in 2019 and 2020 respectively) In general, sales in each region are declining, similar to IQWL's total sales condition Although sales in the Southern region increased from 616,8 million to 632,4 million from 2017 to 2018, there is a dramatic dip two years later, with sales falling to 497,2 million and 307,3 million in 2019 and 2020,

respectively In the Northern, despite a fall from 67,7 million in 2017 to 30,8 million in

2019, Northern sales have increased marginally to 40,1 million in 2020 In contrast to the preceding two regions, Middle sales have declined rapidly, from 31,3 million in 2017 to 6,6 million in 2020 (17 million in 2018 and 12,4 million in 2019 respectively)

These statistics indicate that the actual sales of a company have deteriorated as well

as not accomplished the plan Not achieving sales targets may come from an unprofessional salesforce Without skills and knowledge, salesforce cannot spearhead IQWL's attack on the market to approach and persuade customers to buy and use IQWL's products and services Therefore, salesforce activities are important and if IQWL's s management wants

to fulfill the sale target they need to manage and develop a high-professional trained salesforce It is a process that involves a lot of different jobs and becomes increasingly complex As a result, an unachieved sales target would be a symptom that must be addressed to mitigate undesirable consequences for the company's success in the future

3.2 High pressure on cash inflow for running business

3.2.1 Definition of cash inflow from operating activities and its important

Based on Fitzgerald(3), cash flow is described as the cash and cash equivalents that the entities have at the end of a particular period of time It was the result of the regarding of cash inflows and cash outflows of a normal organization's operation In other words, it assesses a company's ability to handle its cash position, or how well it generates value for its shareholders such as raising cash to pay debt commitments and covering operating expenses There are three major sections were classified and reflected cash flow activities such as operating, investing, and financing activities(3) McBeth(4) believed through operating cash flow, the health of the company's operation and core value business was provided insight and clarity To put it another way, it represents how much cash a business earns from selling its goods or services Hence, among the above cash flow activities, operating cash flow is the most critical part the higher sales the more stable cash inflow which can help the company have enough money to repay loans, reinvest in its operations and cover its expenses without generating additional funds (investment activity) or receiving lending money (financing activity) in order to continue operating

3.2.2 Diagnosis and analysis

These numbers below were summarized as the net cash flow from operating activities and net revenue of IQWL from 2017 to 2020 Through the summary, it is easy to realize that from 2017 to 2020, IQWL 's cash flow from operating activities usually negatively along with the decrease in net revenue of IQWL at the same period which means that IQWL cannot be earned money by itself to running a business

Table 1: Net cash flow from operating activities vs net revenue (2017 – 2020)

Figure 5: Net cash flow from operating activities vs net revenue from 2017 - 2020

(Source: IQWL internal report)

As shown in the table and figure above, the IQWL suffers high pressure in cash for operating the business itself The net cash flow from operating activities is about negative 69,691 million VND in 2017 In 2018, although the situation had somewhat improved compared to 2017, the net operating cash flow still was negative and was approximately minus 27,404 million VND It seems that the improvement in 2018 will serve as the basis

to revive 2019 However, the real situation was not like expected, the figure dropped down significantly to a negative 165,590 and 174,960 million VND in 2019 and 2020

respectively The company has negative cash flows from operations, implying that it was unable to generate enough cash to contain its operating expenses such as labors cost, selling expense, taxes, and so on., indicating a lack of working capital for operating In the main,

it suggests that cash flow from operating activities at IQWL was not sufficiently concentrated The company either making too little sales which is one of the reasons cause the IQWL JSC often experiences cash inflow deficiency It is obvious to see that, during the time of IQWL has to cash flow from operating activities from minus 27,404 million VND drop down to minus 174,960 million VND from 2018 to 2020 was the result of the decrease in significant sales from 715,948 million VND to 354,175 million VND To put it another way, due to the decrease in sales, IQWL may face with lack of working capital for carrying business which can lead to high pressure on cash inflow for running a business

3.3 Increasing rapidly in proportion of expenditure compare to revenue

3.3.1 Business expenses

Hansen and Kleiner(5) convinced that the cost of operations that a corporation incurs

in order to produce income is referred to as an expense An item of expenditure is the money expended, or expenses incurred, by a company in order to raise revenue Accounts expenses, in essence, reflect the cost of doing business; they are the sum of all activities that, ideally, result in a profit in the future To say understandably, costs incurred in the usual course of business are known as business expenses They will apply to both small and large businesses The income statement includes business expenses To arrive at a company's taxable net income, business expenses are subtracted from sales on the income statement Braymen(6) believed that profitability is the main priority of every company, as well as the tools to evaluate business performance Therefore, the company makes a profit when its expenses do not exceed the revenue In case the company cannot manage expenses well, it will suffer losses which means when the business earns less than it spends during a particular period However, most businesses do not go out of business just because temporarily their expenses are over their income To sum up, business expenses need to take into account carefully to make sure that it is not over or its proportion of the increase

is not too fast and much

3.3.2 Diagnosis and analysis

The below figures presents proportion between expenses and revenue from 2017 -

2020 of IQWL as well as the comparison between the actual and plan

Figure 6: Proportion between expenses and revenue from 2017 - 2020

(Source: IQWL internal report)

In general, because the IQWL suffers losses from the 2017 – 2020 period, the proportion between expenses and revenue is quite high and usually more than 100% In

2017, the proportion takes an average of 126% The ratio of expenditures to revenue increases slightly to 127% in 2018 before increase significantly to 141% and 150% in 2019 and 2020 respectively

The company already planned the losses, hence IQWL anticipated the ratio between expenses and revenue was around 110% As the planning, the ratio quite stable which was fluctuated from 107% to 112% However, the actual happened not like estimating The actual proportion always is higher than planned

141%

150%

Figure 7: Proportion between expenses and revenue from 2017 – 2020 (Actual vs

Plan)

(Source: IQWL internal report)

As the figure above, the gap between reality and plan has increased and has particularly increased in recent years In 2017, the ratio between expenses and revenue was about 18% between reality and plan (the plan was 108% and reality was 126%) This gap has sharply increased from 20% to 41% in 2018 and 2020 respectively

Table 2: The variation of total revenue and expenses of IQWL from 2017 to 2020

The rapidly increasing ratio of cost to revenue shows that IQWL JSC is having difficulties in cost management or that the growth rate of revenue cannot meet the growth rate of costs With this above information, IQWL is facing can be both, but it is possible that the reason that the growth of sales does not meet the growth rate of costs is the main factor As the detailed information in table 2, in fact, if taking 2017 as a benchmark, the total cost of IQWL will decrease from 97% in 2018 to 85% and 61% in 2019 and 2020

respectively, while total revenue decreased sharply and quickly from 96% in 2018 to 76% and 51% in 2019 and 2020 respectively

To sum up, after analyzing and evaluating among the three above symptoms that IQWL is facing, it is clear to see that the unachieved sales target is completely considered

as the main symptoms that IQWL needs to focus on Sales target was set up with the purpose

of allowing IQWL's management to monitor its success and determine if the company is

on track Therefore, one of the best measures of how well IQWL JSC is doing is the number

of sales that IQWL generates Missing sales targets not only obviously demonstrates that the company does not have well performance but it also leads to some consequences effects For example, sales that do not reach the target can lead IQWL to have not enough income

to cover its expenses incurred which is also planned Besides that, do not complete the sales plan also leads to IQWL endure higher pressure on cash which means IQWL may not have enough cash inflow to re-invest in business operations

4 PROBLEM

4.1 Potential problems

With the purpose of figure out, what are the problems which conducting the mentioned above symptoms such as negative profit, negative in cash flow from operating activities, and increase in the gap between collection period and payment period? The fundamental research method and undertaking the reality were used such as scrutinizing and examining the internal department's reports, financial reports, and other documents In addition, with the intention of express the existed problems, in-depth interviews with the key people were taken, along with applying the academic institution of former research The IQWL is currently encountering a number of problems that contribute to the above phenomena

4.1.1 Ineffectiveness & Inflexibility in forecasting financial budgeting

Based on the data analysis above, the ineffectiveness & Inflexibility in forecasting financial budgeting is concerned with increasing rapidly in the proportion of expenditure compare to revenue Fitzgerald(7) realised that budgeting is the process of planning how a

business can spend its own capital The term "budget" refers to a spending plan Making a spending strategy allows a business to know ahead of time whether it'll have enough money

to do what it needs or wants Furthermore, Cassar and Gibson(8) supposed that budgets serve

as a management tool to ensure that the organization's objectives and strategy are met on a timely basis Variations in budget and actual results must also be investigated and tracked, with appropriate disciplinary measures implemented for future time frames Furthermore, forecasting takes into account shifting market dynamics, strategic plans, error corrections, and updated expectations in the initial accepted budget

Based on the present method of operation, Mr Hoang CFO said that:

“At the beginning of a new year, based on the actual result performance of last year, the BOD will have annual meeting and outline directions as well as operational goals for the next year These goals are often based on an investor's expectations After pointing out, these goals will then be transformed into targets for implementation by the managers.”

Furthermore, Steffan(9) stated that financial planning must be a cohesive mechanism that covers all strategic aspects of the enterprise In the financial planning process, a lack

of cross-departmental collaboration has a significant effect on the financial information used to drive decision-making Loew(10) thought that leading organizations are said to have both a top-down and bottom-up approach to planning Senior management has initial direction and a top-down vision of strategic priorities Then, from the ground up, department heads formulate a method for meeting certain targets For the top-down and bottom-up methods to meet, this method would also necessitate regular iterations

According to the IQWL's current operation, there is a lack of bottom-up forecast activities This is due to the fact that centralized control, also known as decisions by supervisors, is mostly practiced centrally, and performers are not completely aware of their contributions to the process To be more precise, the forecasting mechanism has not yet been adequately developed because top managements continue to keep and make decisions without employees' roles Furthermore, at IQWL, forecasting is currently focused mostly

on historical evidence and updates from related teams, which can be seen as one of the operation's weaknesses

As stated by Mr Hai – Regional sale manager of HCM regional:

“Like other regional managers, I have received the operating budget for the region that I manage The budget includes all operating expenditures such as renting an office, logistics, and other relevant However, it is really difficult for me to control these expenses cause some reasons For example, the most difficult to control relates to logistics cost because this cost depends on the oil price, the weight of goods, and distance from the warehouse to workers’ houses Therefore, a fixed budget allocated from headquarter really make me difficult for me balance the cash flow follow the approved budget.”

Mrs Minh – financial controller also emphasized that:

“The tasks related to preparing and managing the budget were not given adequate consideration, resulting in unforeseen costs As a result, it had an impact on the company's budget and efficiency Head office directly planning, allocates, and manages costs for each area The regional manager is not responsible for the costs or profits of the Region Therefore, the spending regional manager depends on the Head office approved budget, also not interested in ensuring regional profits To be more precise, a shortage of bottom-

up activities was not used to plan and execute budgets, whilst the department was still troubled by top-down activities After getting the budget, I will input these statistics in the system when there are any expenditures that need to pay the related department/manager will upload these relevant documents for me to check If there is an over budget, the system will warn me, and I will ask them back person who requested payment about the reasons for the excess budget If their explanation is clear and reasonable, then I will inform to CFO After getting confirmation from CFO, I will approve these expenses.”

In actual reality, there is no formal framework budgeting for IQWL because the present way of working is to achieve objectives and attempt and agree with targets when it was assumed to start from the bottom-up to top-down activities It's clear that IQWL hasn't utilized the budget and takes action accordingly when the cost incurred unexpectedly As a result, an aggressive target budget was generated which was unable to offer an accurate forecast, implying that costs had exceeded expectations It had a major influence on operating expenses, which resulted in a lower profit margin

4.1.2 Unprofessional trained salesforce

According to the analyzing data presented in the section above, unachieved sales targets can result from an unprofessional trained salesforce Ohai(11) convinced that good salespeople, on the other hand, listen more than they talk They intuitively realize that the consumer feels happier because he or she is able to communicate what is on his or her mind with them A successful salesperson knows that the purpose of the work is to supply the customer with what the customer needs and that the necessary prerequisite is to research what the customer wants in-depth and in detail

At IQWL, salesforces are the ones who connect and contact customers personally and directly, so their performance has a strong impact on consumer decisions and dictates a portion of customer loyalty such as continuing to purchase IQWL products and services Actually, salespeople play a vital role in the business's growth since they operate directly (field sales) via face-to-face contact or indirectly (telesales) with customers via phone or email Their efficacy has an influence on IQWL’s sales and revenue

Mrs Hong – Head of sale commented that:

“IQWL salesforces have between one and three years of experience, but they come from various backgrounds knowledge Some of them have degrees in business hence may have less experience and expertise in persuasion and selling However, based on each person's disposition, sensibility, and acumen, they can have varying attitudes and behaviours toward their respected customers And they mainly educate themselves and gain more experience in order to achieve positive results in their own right.”

Weitz and Bradford(12) believed that salespeople in each field have different positions based on particular tasks or functions and involve a diverse set of experience, abilities, and capacity, but it plays an important role between buyer and seller long-term relationships in all regions Personality (attitudes, motivation, soft skills, and task perception) behaviours

in sales are linked to a complex buyer and seller relationship Its mission is to achieve the purpose of doing business such as signing buying orders or sales contracts

The company wants to increase revenue, in addition to old customers, it must reach new customers, but currently, the actual productivity is lower than expected productivity (expected yield per the maximum number of customers that salespeople can access based

on the available database, which means that database is available for 1000 customers, but the salespeople only approached and sold 30-50 customers in the data set Therefore, with existing sales skills it is clear that it is difficult to reach new customers to expand customers for increasing revenue The main reason is that salespeople does not fully understand product features to advise customers, lacks marketing methods, limited time for customer interaction (lunchtime, recess, work time ) - other comment from Mrs Hong

Furthermore, Mrs Minh financial also believes that: Currently, the effectiveness of the sales team is quite low, average salespeople sell 250 million per month while the average ceiling can be reached is 800 million per month This means that if a company has

an effective salesforce, the monthly revenue of IQWL will increase up to 3.2 times

Figure 8: The statistic about highest and lowest in average salespeople in 2019

by month

(Source: IQWL internal report)

For a long time, salesperson inefficiency has been the factor that leads to unsuccessful

in growing the sales Because consumer financial services and consumer durables products comprise complex in both financial information and a user guide Therefore, this is required the salespeople had to understand clearly products and service in order to deliver appropriate information to customers

0 200,000,000

4.1.3 Instable of funding resources

Stable funding structures are crucial in improving the efficiency of the business and its value The financial fund determination includes determining how to incorporate the different streams of funds that a business uses to support its activities and capital expenditures These outlets include long-term debt finance, short-term debt finance, also known as debt financing, preferred stock, and common stock, also known as equity financing Therefore, instable of funding resources can lead to high pressure on cash inflow for running a business

From the point of Modigliani and Miller’s(13) view, they formulate capital structure theory, which suggests that in an ideal capital market, finance policies have little effect on firm value, but later they contend that firm value can be improved by adjusting the capital structure due to the tax advantages of debts Myers and Majluf (1984) developed the pecking order theory assumes that there is no optimal capital structure for a firm According

to this theory, since there is a piece of an asymmetric information between managers and investors, therefore to minimize this asymmetric information firms prefer to finance using retained earnings, debt and equity respectively

Mrs Minh – FC of IQWL mentioned that:

“As our business provided the offers a financial alternative for the purchasing of goods and services with a 3 – 6 months’ interest-free deferred payment plan hence, the high number in average collection period is inevitable Besides, it is also necessary to pay the supplier on time because if not done, the supplier may delay the order after order, leading

to the company having no source of goods to deliver to customers on time These two factors lead to the cash gap is so high.”

Mr Hoang also comments that in order to solve this issue, IQWL has intended to partner with banks for consumer financing However, there is a limitation due to current regulatory barriers and the size of the business IQWL is a small-scale enterprise Banks only work with large corporations when they choose to launch new products, and those products must be compatible with the bank's business plan For example, the bank may have different strategies depending on the time, such as concentrating solely on the business customer segment some banks do not need to build consumer credit Therefore, finding a

bank willing to partner with IQWL consumes a long time and a lot of persuasions because collaboration necessitates high-level partnership bait, collateral, and the opportunity to deploy the device and infrastructure on both sides Furthermore, because the company's business model does not generate assets other than account receivables, no fixed assets, the IQWL that borrows from the bank must have collateral Accounts receivable cannot be pledged as collateral for a loan As a result, if IQWL requires operating capital, the parent company or investors must have collateral The current approach to ensure cash flow management at IQWL JSC is primarily concentrated on whether they require yearly funding from a parent company or regional banks.

Figure 9: Initial cause and effect tree of IQWL

4.2 Validating problem

Section 4.1's potential problems will be validated from different perspectives such as sales staff, head of sales department, and associated divisions such as finance Interviews were performed to gain extra evidence from the financial department in order to verify problems The interview will concentrate on a few topics that will offer further insight into the company's current situation The interviewee's ideas about the existing tasks at the IQWL, as well as current experience for certain activities at the agency, will be the subject

of the main questions The transcript of the interview is included in the appendices This section contains literature that serves as a foundation before proceeding to the causes validation steps As according to the information described above, since IQWL has approached workers through the company's labor union, and IQWL will obtain a substantial amount of worker information from here As a result, it is possible to assert that the number

of potential IQWL customers is enormous and readily available The objective of IQWL is simply to entice them to use services and products through salespeople which is mainly related to the ability to persuade and attract customers based on sales knowledge and skills

4.2.1 Employee’s perspective

Based on Mihail(14) ideas, the competitive advantages of business are getting clear task allocation in teamwork and professional communication skills Well-defined teamwork and communication skills have many advantages, including a single face to clients, quicker decision-making, resource sharing at a low cost, and an increase in productivity In fact, however, there are not clear allocation tasks between the telesales team and the field sales team

Ms Thao - Telesales member of IQWL shares that:

“In some cases, I make phone calls to persuade the client, but this client was referred

by another telesales or a field sales representative It means that there is no clear allocation

of customer data for sales departments They establish job distribution based solely on team members' skills, rather than the company's need to efficiently respond to volume Multiple team sales may be assigned to a single customer data file or vice versa, there is one customer data file that does not deliver to the sale team Obviously that, the duplicate in allocation or unallocated sale data can cause limits the ability to acquiring new customers

Furthermore, in this case without professional communication skills, I cannot transfer all product's information in a short time if they need to use IQWL's services or products again.”

Furthermore, Ms Trang - Field sales member of IQWL comment that:

“I can only reach clients during lunchtime and when I leave the company to go home,

so I need to take advantage of this time to convince the client Moreover, when workers need to buy products such as televisions, they just say they need to buy televisions without knowing all about their needs and features of the television, so I need to explain in detail, the ratio elaborate each category for them to understand It takes a lot of time”

4.2.2 Manager’s perspective

From Cross and et al(15) perspective, in the formulation and execution of company goals, the sales force can play a critical role The relationships between sales force operations and sales revenue are a significant field of research, given the diversity of the sales force's knowledge and skills in use today and their possible effect on organizational success To Kahle’s(16) way of thinking, sales forces are high-energy, quick-thinking, and opportunistic individuals To be effective in the field of professional sales, salespeople must acquire vital knowledge and learn necessary skills, which will enable them to conduct the job as delegated

Based on the sharing about the actual situation of the sales force in IQWL, it can be emphasized that the performance of the sales force has not been taking care of seriously which leads to the sales not as target expected

Mrs Hong - Head of Sale stated that:

“There is a large amount of information regarding the products for sale It is really difficult to remember all of them and obviously, there are not too many salesmen who can grasp all that information It means they are lack of products and services knowledge that they provide For example, for the all product types such as mobile, washing machine, refrigerator…, there are about 3 brand names with providing nearly 15 models in total It

is really hard for a salesperson to understand clearly all information as well as the specifications of them Therefore, they may face certain difficulties in promoting and persuading customers to buy the product.”

Besides, from Barker’s(17) perspective with the purpose of convincing customers to purchase products, besides providing essential products to their needs, the salesforce must

be acutely communication, problem-solving, and persuasion in whatever circumstances Consequently, sales forces require to have soft skills which include: negotiation, sales, problem-solving, consulting as well as catch up with consumer demand trend In fact,

IQWL salespeople lack these necessary skills Mrs Hong also shared that: “IQWL's sales force includes telesales and field sales, to persuade workers to buy goods, sales forces often call and interact with workers during the free time such as lunch or recess However, during this time period, most customers don't want to be disturbed by call or consulting because it

is relaxing time” Furthermore, Mr Hai regional sales manager mention that “regional characteristics, environmental patterns, and local characteristics all influence shopping habits Due to the virtues of frugality and hard work the workers in the Middle of Vietnam

do not like to purchase washing machines while as a result of the cold weather and long winter, the workers in the North of Vietnam do not like to purchase air conditioner” (Appendix 9.2.9) Mrs Hong believes that “Soft skills are also important, as a salesperson, they must know how to open the story and direct the customer's interest into what's selling however, most salespeople do not know these skills” Consequently, if salesforces do not

have high professional skills in market knowledge and consulting skills, they will be losing opportunities to attract customers

4.2.3 Finance Manager’s perspective

Furthermore, lack of service knowledge often leads to inadequate performance of sales procedures, resulting in arbitrarily change the instalment payment time for customers which leads to budget management deficiency in each region In order to avoid these issues, the regional sales manager must be coordinated with a salesperson to make them understand clearly the services they provide Should not addition instalment time by themselves to attract customers to buy products or focus only to sell products that easy to sell but low margin This practice aids in keeping related sales managers keep in contact, using a budget, and taking appropriate measures to avoid unexpected cost of financial and risk costs

To Mrs Minh (FC)’ s way of thinking:

“Salesperson usually only cares about sales without thinking about the core of the problem They think that the more products they sell, the better it doesn't matter whether the product has a high or low margin or if there any risks after selling it.”

Table 3: Relationship between product share and profit margin in 2018; 2019 &2020

(Source: IQWL internal report)

From the above table, it is easy to realize that, mobile is the most popular product (due

to its ease of sale and universal need), it occupied 64.26% in 2018 and 64.22% in 2019 respectively and rapidly increase to 75.82%, however, the profit margin of mobile is nearly lowest while other products such as mattresses, rice cookers, and refrigerators have highest profit margin which is 36.1%, 30.9%, and 25.8% respectively but the product share is low which is round from 0.46% to 6.73% in 2019 and 1.02% to 4.44% in 2020 It obviously comprehends that if salesforce equipped with full knowledge of the products and services that they offer, they will concentrate on delivering products with high-profit margins in order to assist IQWL to increase revenue as well as profit

To sum up, based on all perspectives from employee to manager show that the skills and knowledge of salesforce are very important For sales staff, skills will help them convinces or handle unexpected problems with customers For sales managers, skills and knowledge of salesforce will improve the staff's performance, while to the finance view, knowledge about the product will enable salesforce to focus to sell on the product which brings the highest gross margin to IQWL Mansoat and Möbus(18) believed that salesforce without well-equipped about skills as well as clearly tasks assignment together with

products and service's knowledge can make to firm fail to retain loyal customers as well as attracting potential customers leading to unable to achieve sales targets It directly influenced revenue decreasing which can make a gross profit reduce

4.3 The importance of main problems

Overall, it is important for IQWL to improve the efficiency of its salespeople in order

to boost sales According to El-Ansary(19), an efficient sales department not only allows businesses to raise customer recognition, it also increases sales, which contributes to lower cash flow pressure To boost the present situation, the sales force must not only have thorough knowledge of the industry, goods, and services available, but also soft skills such

as sales and technical skills high business knowledge, problem-solving abilities, and negotiating abilities(18)

Mrs Hanh claimed that “In order for companies to increase market quality, workers must have in-depth knowledge of the job and goods in order to make good suggestions to consumers Furthermore, targeting and enticing consumers to purchase goods is very difficult because it incorporates a great deal of expertise from multiple fields Employees should be trained with advanced information capabilities such as persuasion, customer service, and rejection handling This not only raises employee morale but also enhances sales productivity.”

Mrs Minh also claimed that improving the consistency of salesforce training courses would assist IQWL in lowering financial costs as well as the possibility of sales workers voluntarily extending the installment payout time due to a lack of detailed comprehension Furthermore, it would assist the sales team in increasing efficiency at work, understanding what they need to do, and improving employee collaboration

Figure 10: Main problem makes unable to achieve sales target at IQWL

5 CAUSE VALIDATION

5.1 Potential causes

Westover(20) suggested that training takes a long time which begins when trainees sign

up for training and ends when they have acquired the necessary expertise, skills, and attitudes and can apply them in the workplace and in daily life This ensures that businesses must have both a successful training policy and a post-training strategy in place to ensure that employees have the ability to practice their skills and strengthen their jobs However, due to differences in teacher skills and expertise, as well as teaching time constraints, this approach is ineffective in these areas Based on the review of literature and evidence from in-depth interviews, the following revised cause-effect chart for IQWL' sale department was established:

Figure 11: Updated cause – effect tree map makes unable to achieve sales target at IQWL

5.1.1 Lack of professional HR in the training department

According to Mrs Hong, there is no dedicated training staff at IQWL It means this does not actually have a team specialized in sales capacity preparation for the sales department This current practice is that the seasoned employees tutor new employees which can know as on-the-job training On-the-job training happens at the current working site of real jobs as they do their actual job(21) Nonetheless, with the varying skills of unprofessional coaches such as different knowledge perspectives, heterogeneous methods, and inadequate time to prepare new workers, this method is unsuitable for use in a salesforce at IQWL Furthermore, the expertise of co-workers is may be limited due to the quick change in technology products, or in some cases, experienced staff does not like to reveal any of their knowledge; they tend to keep their own technical secrets to themselves Since the products and services are continuously changing, the salesforce must provide comprehensive expertise and knowledge related to those As a result, salesforce must have extensive expertise and communication skills in order to provide updates to consumers and build confidence in those who use IQWL' s products and services

5.1.2 Budgetary constraints and lack of training opportunities

As London(22) mentioned that the value of training and the expenditure of training is self-evident It reflects how well organizations guide their staff and consider strategies and initiatives to enhance staff qualifications which can bring valuable potential benefits to the

business Many businesses choose to cut expenses that are deemed deficits to use the budget for commercial operation purposes However, at the moment of economic integration, incorrectly reducing the cost for training programs would have no small impact such as personal not fulfil their skills while working, causing the slow the development of the company, decreases in quality The less training, increase the losing competitor's benefits, and the work is interrupted continuously, causing stagnation in business activities, the business cannot expand the market as owners' expectations This fact is happening in the salesforce at IQWL, the investment risks of training workers are not taken seriously, resulting in the lack of professional salesforce

5.1.3 Poor tracking process of employee training knowledge acquisition

Finally, the poor tracking process of employee training knowledge acquisition is raised as a possible source of major problems in IQWL According to empirical research, poor staff training comprehension of purpose resulted in poorer employee performance As stated by Ludwikowska(23), increased employee training understanding led to increased employee productivity, which could result in higher employee success As said by Mrs Hong, due to lack of performance evaluation can lead to poor training awareness from employees Performance evaluation is the mechanism by which the manager level analyses and reviews an employee's job conduct by evaluating it to predetermined expectations, records the outcomes of the comparison, and uses the results to give guidance to workers about where and when changes are required Performance appraisal is the aspect of the performance measurement and improvement process that assesses an employee's commitment to the organization over a given time span(24) Therefore, if performance evaluation was performed methodically and regularly in IQWL, salesforce is more mindful

of the value of preparation, they will regularly partake in training sessions, learning new job-related skills and habits In keeping with Aswathappa (25), workers with higher training knowledge have a greater understanding of the ideals that businesses should offer to them and making business enhances work performance, increasing the competitiveness of businesses, improving organizational stability

5.1.4 Differences in professional qualifications and competence of trainers

People, according to Stefaniuk, Tomasz (26) play a vital role in the organizational structure As can be observed, the human aspect is always the most important variable, guides the training process of the business directly The term "human factor" not only applies to trainees and trainers but also to management personnel The professional qualifications and abilities of trainers are crucial factors of successful training However, if the trainers have poor skills, have a varied experience, or be unprofessional, the training quality will suffer In truth, the success of training is dependent on the knowledge and skill

of the trainers; however, at the sales departments experienced staffs with varying skills, knowledge, and performance to educate new staffs; as a consequence, information will be conveyed in a heterogeneous manner, which will have a direct influence on staff performance Furthermore, this type of training is not systematic; the instructors have no training knowledge, thus they are constrained in the teaching process, limiting the training results

5.2 Cause validation

The previous section has drafted three possible causes for IQWL 's unprofessional trained salesforce Around the same time, it is clear that these causes are mostly to blame for the crisis in some way However, since IQWL 's human and financial capital for solving the problem are very small, and because not all factors can be affected or modified by the firm, it is fair that only the root cause can be determined – the one factor that is most important and possible for corrective action With this goal in mind, the following section will depend on primary data gathered from the additional in-depth interviews with the Head

of sales, Chief Finance Officer, and Head of Human resources Three factors influenced the selection of these interviewers because they are the business's main influence decision-makers Second, they are the most insightful about the market in terms of resource supply, the severity of the challenge, the appropriateness of the solution, the possibility of success

of corrective actions, and so on Finally, they would be solely responsible for the whole problem-solving process's execution and management

Initially, this thesis required Mr Hoang, Mrs Hanh and Mrs Hong to determine the degree of impact of each possible source To be more precise, these leaders were asked to rank each factor's effect (such as Lack of professional HR in the training department, Budgetary constraints and lack of training opportunities, Differences in professional qualifications and competence of trainers and Poor tracking process of employee training knowledge acquisition) on a scale of 1 to 5, with 1 being the least influential and 5 being the most influential respectively Table 4 identifies the lack of professional HR in the training department as the most significant cause of IQWL’s unprofessional trained salesforce, with an average score of a maximum of 5 Meanwhile, budgetary constraints and lack of training opportunities is ranked second, differences in professional qualifications and competence of trainers is ranked third and the fourth rank is poor of tracking employee training knowledge acquisition with a mean ranking of 3.66, 3.33 and 3 respectively It means that all of them decided that the lack of professional HR in the training department

Budgetary constraints and lack of training opportunities

Poor of tracking employee training knowledge acquisition

professional qualifications and

Source: Result of the survey’s report

This retrieved finding is consistent with previous research from an empirical standpoint As stated by Rodriguez and Walters(27) conducting employee training is a necessary process so that personnel can hone their working skills, improve their professional capacity in the process of working in each enterprise today This is a must-have condition to help businesses survive and develop for a long time when they have a team of high-quality, flexible, and responsive workforce that can meet all criteria about the job that the business sets goals Following that, in order to better explain the above quantitative finding, this study considered the opinion of interviewees derived from the