Solutions for improving the competitiveness of posts & tel. joint stock insurance company = Một số giải pháp nâng cao năng lực cạnh tranh của Tổng Công ty Cổ phần Bảo hiểm Bưu điện

vi

TABLE OF CONTENTS
ACKNOWLEDGEMENT i
ABSTRACT ii
TÓM TẮT iv
TABLE OF CONTENTS vi
LIST OF TABLES ix
LIST OF FIGURES x
LIST OF DIAGRAM x
INTRODUCTION 1
CHAPTER 1: BASIC ARGUMENTS ON COMPETITIVENESS IN
NON-LIFE INSURANCE BUSINESS 4
1.1 Concept and feature of insurance business activity 4
1.1.1 Concept on insurance business activity 4
1.1.2. Feature of insurance business activity 5
1.2. Non-life insurance business activity 6
1.2.1 Concept on non-life insurance business 6
1.2.2. Operation content of non-life insurance enterprise 6
1.2.3. Criteria for evaluating the product‟s competitiveness 16
1.2.4 Necessity to improve competitiveness of product in international
economic integration condition 21
1.3. Overview of non-life insurance market in 2011 23
1.4. Competitiveness of non-life insurance enterprise 24
1.4.1. Competitiveness and competitiveness forms 24
1.4.2. Competitiveness of non-life insurance enterprise 27
vii

1.4.3. Factors reflecting competitiveness of non-life insurance enterprise
31
1.4.4. Some factors affecting to competitiveness of non-life insurance

enterprise. 36
CHAPTER 2: REAL SITUATION OF COMPETITIVENESS OF
POSTS & TEL. JOINT - STOCK INSURANCE COMPANY (PTI) 38
2.1. Introduction about Posts & Tel. Joint - Stock Insurance Company (PTI) . 38
2.1.1. Introduction about the Company 38
2.1.2 Apparatus organization of PTI 41
2.2. Some features on competitiveness situation in non-life insurance
market in Vietnam at present. 45
2.2.1. Number of insurance enterprises: 45
2.2.2. Market share of non-life insurance enterprises 48
2.2.3. Insurance products to be deployed 50
2.2.4. Distribution system of non-life insurance enterprises 51
2.2.5. Financial resources of enterprise 51
2.3. Real situation on competitiveness of PTI 54
2.3.1. Financial . 54
2.3.2. Product of PTI 57
2.3.3. Distribution system 62
2.3.4. Commercial partner 65
2.3.5. Human resources 65
2.3.6. Product price, assessment quality and compensation settlement 68
viii

2.4. Operation result, position of PTI in the market 69
2.4.1. Result 69
2.4.2. Market share of PTI over the years 74
CHAPTER 3: SOME SOLUTIONS AIMED AT IMPROVING
COMPETITIVENESS OF PTI NON-LIFE INSURANCE
ENTERPRISE 78
3.1. Some recommendations for the State to improve the competitiveness
on non-life insurance enterprises. 78

3.2. Solutions for PTI insurance enterprise aimed at improving
competitiveness in the market 79
CONCLUSION 100
REFERENCES 101

ix


LIST OF TABLES

No
Subject
Page
Table 1
List of non-life insurance enterprises operating in Vietnam
insurance market
46
Table 2
Revenue of non-life insurance premiums in the entire market
of Vietnam
48
Table 3
Market share of some non-life insurance enterprises
(period 2009-2011)
49
Table 4
Charter capital of some non-life insurance enterprises
(2007-2011)
52
Table 5

Process of increasing charter capital of PTI
53
Table 6
List of shareholder of PTI
54
Table 7
Total provident fund of PTI (period 2009 - 2011)
56
Table 8
Revenue structure of PTI under operations (period of
2007- 2011)
60
Table 9
Statistic table of agents in the period 2007 - 2011
63
Table 10
Labor structure under knowledge level
66
Table 11
Original insurance revenue in the period 2007-2011
69
Table 12
Insurance revenue of PTI under each operations
(period 2007 – 2011)
70
Table 13
Revenue from agreeing reinsurance over the years
(period 2007-2011)
71
Table 14

Total investment value of PTI over the years
72
Table 15
Market share of PTI in Vietnam insurance market
(period 2007 - 2011)
74


x

LIST OF FIGURES


No
Subject
Page
Figure 1
Market share of non-life insurance Companies in 2011
75
Figure 2
Market share of original insurance Companies in technical
operations (2011)
77



LIST OF DIAGRAM

1
Organization diagram of PTI

41

1

INTRODUCTION
1.1 Necessity of the thesis
Insurance market is considered as promising market that attracks most
financial investment co-operation. Revenue from non-life premiums increased
over the years, and accounted for a large proportion of the total revenue of
insurance in the entire market. Besides, insurance products are easy to copy.
The market for non-life insurance is a promised land which the companies are
directing towards. Therefore, it can be seen that each year the companies
entering the non-life insurance market are increasing in number. The
increasing number of insurance companies will lead to the risk of reducing the
market shares of the insurance companies, non-life insurance market of
Vietnam will compete more and more severely and violently. This matter will
require every business need to form a specific business strategy suitable with
each specific period, to enhance their capacity in the market, as well as in
front of the competitors, to not be “moved” out of the non-life insurance
market which is very eventful at present. In order to develop stably and gain
the expected market share, PTI should strengthen their competitive capacity.
Within the contend of this thesis, the author propose a number of
recommendations in order to increase PTI competitive capacity.
1.2 Research aims and objectives
The aim of this thesis is to create a competitive plan for PTI with a
numbers of recommendations in order to enhance the competitive capacity of
PTI in non-life insurance market. The ulitmate aim of this thesis is to make
PTI become more competitive in term of more efficiency of using finance
resource, human resource, brand name exploited and so on. In order to
achieve that target, there are some objectives that should be reached:

2

 Throughly research current theories of competitive theory including:
Non-life insurance activities, competitiveness capacity of non-life
insurance company, competitiveness forms and the necessity to
improve competitive capacity.
 Analysis the real situation of competitiveness capacity of PTI and point
out the position of the company in the market.
 Recommendations to PTI aimed at improving competitiveness
capacitiy of PTI‟s non-life insurance company.
1.3 Research questions
In order to give recommendations to improve PTI competitiveness
capacity, the thesis should finding answers for the following questions:
 Why PTI need to improve their competitiveness capacity?
 How to improve PTI‟s competitiveness capacity?
 What are solutions for PTI to improve their competitiveness capacity?
1.4 Research methodology
In the thesis, the author adopts statistic and analytical methods to
identify the most suitable solution for PTI for improving their effectiveness in
administrative and business activities in order to improve competitiveness
capacity.
Both primary and secondary data used in this thesis to analyze current
situation of competitiveness capacity of PTI. Based on the theories of PTI
and the author‟s own judment, the author presents the operation result and the
position of PTI in the market and gives suggestions to improve PTI‟s
competitiveness capacity.
1.5 Scope of the research
The thesis aims to find solutions to improve competitiveness capacity
of PIT. The thesis focus on:
3

 Study the PTI business result in field of capital, investement activities
and the main business activities in non-life insurance.
 Give suggestions to improve PTI‟s competitiveness capacity.
1.6 Significant of the research
The thesis has both theoretical and realistic significance. The thesis
provides a review of competitive theories that cover many aspects of business
activities including: cost management, human resource administration,
finance management and communication.
The thesis also provides the recommendations that are applicable to the curren
competitive activities of PTI


4

CHAPTER 1: BASIC ARGUMENTS ON COMPETITIVENESS IN
NON-LIFE INSURANCE BUSINESS
1.1 Concept and feature of insurance business activity
1.1.1 Concept on insurance business activity
Each individual or organization has demand on the safety; therefore, they
always find way to protect them, their relatives and the assets they are having
in the face of the upheavals in the life which can happen at any time. Being
aware of this issue, people from long time ago organized many forms having
features similar as insurance. Insurance really came out into society for the
first time in 1942, (with marine insurance company). Up to now, insurance
has developed very strongly and becomes popular financial activity all over
the world.
It can be understood that insurance business is the activity of the insurance
enterprise aimed at revenue-earning, thereby insurance enterprise accepts the
risk of the insurance buyer on the basis that the buyer pays the premium so

that the enterprise pays the insured amount to the beneficiary or compensates
the insurance buyer as happening the insured events. This concept expresses
clearly the following contents:
Firstly: Insurance business has the economic and profit purpose, this is the
purpose which the insurance enterprises direct toward. Only by gaining the
profit, can the insurance enterprise exist and develop in the condition of the
market economy. Profit helps the enterprise pay off to the individuals and
organizations and provide capital for itself. High profit level also helps the
enterprise maintain the reserve fund source which is big enough, limit the
assignment and re-insurance and have condition for improving the income
level for personnel. Besides the profit objective, the insurance enterprise must
5

meet the demand of the customers, help the customers stabilize their life and
business production as having sudden loss and damage happened to them, at
the same time, the insurance enterprise is responsible for implementing fully
the obligations to the State. Besides, the appearance of the insurance business
form also contributes to guaranteeing the safety and stability for the society to
develop stably.
Secondly: The nature of the insurance business activity is that insurance
enterprises accept the risk which is transferred to them by insured party; that
means they accept to pay the insured amount or compensate as happening the
insured event. On the contrary, the insurance enterprise will collect the
premium, this revenue source will form the reserve fund, compensation fund,
pay off other related and profitable insurance costs. However, the insurance
enterprise only accepts the insurance for the risks which will happen in the
future and have unexpected, unreliable nature and do not depend on subjective
desire of the person insured… The specific characteristics of the insured risk
express the scope in which the insurers must determine and select. This thing
also affects partly to the business activity of the insurance enterprise.

Thirdly: Insurance business is often attached to the reinsurance business
activity. Reinsurance business is the activity of the insurance enterprise aimed
at creating profit, thereby the insurance enterprise receives another premium
amount to undertake to compensate for the responsibility to be insured.
Besides, reinsurance business also helps the insurance enterprise expand the
relations with commercial partners, take advantage of the capital resources,
experience to grasp more information, support the training of officers…
1.1.2. Feature of insurance business activity
Insurance business is the special service business sector; it has the following
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specific features:
Firstly: The legal capital level applied for insurance enterprise is very great; it
is not true that any individual or organization has ability to organize the
insurance business activity. In Vietnam at present, the legal capital applied for
non-life insurance enterprises is 300 billion Vietnam dongs.
Secondly: Insurance also has social significance; it is the guarantee on the
safety of financial situation, it helps the person insured be stable on life and
business production. Therefore, the State is interested in this business field, the
State regularly checks and controls closely; this issue not only helps ensure the
interest of the person insured but also contributes to stabilizing the society.
1.2. Non-life insurance business activity
1.2.1 Concept on non-life insurance business
Non-life insurance is still used as a general concept with the significance
containing all operations of damage insurance (property insurance, civil
liability insurance) and human insurance operations not belonging to the life
insurance (accident insurance, disease and illness insurance…). According to
the law on insurance business of Vietnam, the term of non-life insurance is
explained as follows: “Non-life insurance is the type of insurance operations
for property, civil liability and other insurance operations not belonging to

life insurance”.
1.2.2. Operation content of non-life insurance enterprise
1.2.2.1. Business of original insurance operations
a. Feature
This is the basic activity, basis for the existence of the insurance enterprise.
This activity is an uninterrupted process from the stage of issuing the
7

application to the person insured, collecting the premium, monitoring the
process of implementing the insurance Contract, assessing the loss and
settling the insurance compensation.
The enterprise implements the activity of original insurance business
according to some operations, thence collects the premium and implements its
main function which is to form the monetary fund from the contribution of the
majority to compensate the damage and loss of some individuals, contribute
to stabilizing the business production and the life of the person insured.
The procedure on implementing the activity of original insurance business
start from the work that insurance enterprise through agent network or
employees exploits, offer the insurance services to each customer object
having demand. As both Parties agree the basic conditions in order to enter
the insurance contract, the person having demand on participating in the
insurance will send to insurance the request or requirement on being provided
the insurance service, on that basis, the insurance contract is established and
signed. The contract is the legal proof showing the establishment of rights and
obligations between both Parties: insurance enterprise and person insured.
According to the regulations of the Law on insurance business (Article 17,
Article 19 and Article 20), the insurance enterprise has the following basic
rights, obligations and responsibilities:
- Obligation to compensate for pay the insured amount timely to the person
insured or the beneficiary.

The Law on insurance business also stipulates clearly that if two Parties in the
contract do not have specific agreement on this term, the insurer has to the
insured amount or compensate within 15 days from the date of receiving fully
the valid claim dossier requiring the payment of the insured amount or
8

compensation (Article 29).
- The insurance enterprise is responsible for providing sufficient information
relating to the insurance contract, explaining the conditions and terms of
insurance; rights and obligations of the person insured, guiding and
explaining every necessary procedure so that the person insured prepares the
claim dossier for requiring the insured amount as the insured event happens.
- Insurance enterprise also has specific rights corresponding to the received
responsibility; that is the right to collect the premium, the right to request the
amendment of some conditions and terms of the contract, contract termination…
If the insurance enterprise has implemented the compensation, it is allowed to
transfer the rights of the person insured in order to require the third person
returning the entire or a part of the compensated amount due to the fault
caused by such third person.
The person insured also has specific rights and obligations:
- The person insured has obligation of declaring honestly the information they
know relating to the insurance object since the signing of the contract, paying
the premium fully, declaring honestly as happening the insured event, has
obligation of taking precautions and preventing from risk, limiting the loss,
preserving the right to claim the third person for insurance enterprise…
- The person insured has right to enjoy the compensation money or be paid
the insured amount from the insurance enterprise as the insured event
happens; right to be provided information relating to the insurance contract
and the process of preparing the insurance claim dossier, right to change some
conditions and terms in the contract…

Through the result of the activity of original insurance business, the insurance
9

enterprise will show its position and image, thereby promote its
competitiveness in the market and especially in front of the competitor. The
result from insurance business work is the foundation and basis for insurance
enterprise having sufficient potentials to expand the activity and strengthen
the investment activity aimed at bringing high profit and sustainable
development.
b. Division of non-life insurance operations
Depending on different division method, the non-life insurance operations can
be divided into the following basic types:
b1. Classification under the insurance object
According this method, it is divided into three groups: Property insurance,
civil liability insurance, non-life human insurance.
- Property insurance: This is the type of insurance in which the insured object
is property (fixed or current) of the person insured. For example, insurance for
the material damage of mechanical vehicle, goods insurance of the goods
owner in imported and exported goods insurance, property insurance of the
house owner in robbery insurance. The insurance value is the actual value of
the insured property; it is the important base to calculate the premium and
payment limit of the insurance compensation money.
- Civil liability insurance: the insured object is the civil liability of the person
insured for the third person in accordance with the law. For example, the civil
liability insurance of the mechanical vehicle owner, civil liability insurance of
the employer, public liability insurance etc… are different from property
insurance and human insurance; the object of the civil liability insurance is
abstract. The civil liability insurance applies some principles such as:
compensation principle, legal right transfer principle.
10

- Non-life human insurance: is the type of insurance having the insurance
object being life, health, working ability of human but it is different form life
human insurance, non-life human insurance is the type of insurance only
relating to the risk such as: disease, accident, loss of working ability and
death. The feature of this type is that it does not relate to the life-span of
human. For example: accident insurance 24/24, passenger accident insurance,
tourist insurance…, the principle of paying a flat rate is applied mainly as
paying the insured amount (i.e on principle, the insurance payment amount
will be based on subjective regulation of the contract and the insured amount
is agreed as signing the contract, not be based on the actual damage.
However, it is possible to apply in combination with the compensation
principle as paying the arisen medical costs in the insured scope of the human
insurance contracts.
b2. Classification under the compulsory nature
According to this method, there are: Compulsory non-life insurance and
voluntary non-life insurance.
- Compulsory non-life insurance: is the type of insurance in which the law has
regulations on obligations of participating in the insurance of the organization
and individuals having certain relations with the compulsory object to be
insured. Normally, for the type of compulsory insurance, the law will regulate
the insurance condition, premium level, minimum amount of money which
the organizations and individuals insured and the insurance enterprise have
obligation of implementing.
Compulsory insurance is only applied for some types of insurance aimed at
protecting the public interest and social safety. However, the compulsoriness
does not lose the voluntary, equal principle in the contract relation as the
11

parties are voluntary to select the partner and agree on the issues which do not

have to comply with in accordance with the united regulations of the law.
- Voluntary non-life insurance: is the type of insurance in which the person
insured has full right to select according to his demand and desire, the
insurance contract is signed on voluntary basis between the insurer and the
person insured.
1.2.2.2. Reinsurance business
Reinsurance is the operations which the insurer use to transfer a liability part
accepted with the person insured for one any many other insurers on the basis
of transferring to that person a part of the premium.
Reinsurance is a very important activity and always goes abreast with the
original insurance business; it is considered as the shield for the operation of
each insurance enterprise, a form which the insurance enterprise insures for
itself after receiving all risks of the customers. At the same time, the
reinsurance activity also helps the enterprise have more revenue source, thus,
this activity is attached special importance.
Reinsurance business includes the activity of agreeing the reinsurance and
activity of transferring the reinsurance.
a. Agreeing reinsurance
Agreeing the reinsurance means an insurance enterprise accepts the insurance for
a risk part of other insurance enterprise in an original insurance contract. In the
view of insurance business, the activity of agreeing the reinsurance is a form of
selling the insurance. After agreeing the reinsurance, the person agreeing the
reinsurance can transfer the reinsurance to other people agreeing the reinsurance.
The activity of agreeing the reinsurance has the purpose of increasing the
12

revenue source from premium for the enterprise, besides, the greater purpose
of the activity of agreeing the reinsurance is to share the risks between the
insurance enterprises. In the mixing relation in the market, an insurance
enterprise sometimes stands at the position of the person receiving the risk but

it is sometimes at the position of the person sharing the risk.
The enterprise agreeing reinsurance is responsible for the risks it accepts
which are equivalent in terms of scope and conditions, terms as the original
insurance enterprise accepted with the customer. However, liability limit will
be corresponding to the rate of agreeing reinsurance in the original insurance
contract. Thereby, as the insured event happens, the Company agreeing
reinsurance also has to implement the obligation of compensating and paying
the insured amount to the original insurance Company in strict accordance
with the liability part it accepted.
To compensate for the costs spent by original insurance enterprise to sign the
insurance contract with customer, the Company agreeing reinsurance must
pay to reinsurance transfer Company a certain fee amount called reinsurance
transfer commission. Corresponding to the liability part to be accepted, the
reinsurance agreeing Company will receive a premium revenue part from the
reinsurance transfer Company; this is the revenue from the activity of
agreeing reinsurance.
b. Reinsurance transfer
It can be seen that the safety demand in the activity of insurance business is
always put on the top level; therefore, an insurance enterprise must find way to
insure for itself through reinsurance transfer. Reinsurance transfer means an
insurance enterprise transfers a part of its insurance liability undertaken to the
customer (person insured) to one or many other insurance enterprises.
13

Capital resources of an insurance enterprise are always limited number, but
for the activity of original insurance business, at the same time, the insured
amount which the insurance enterprise undertook with the customer may be
very great. If the loss happens with disaster nature, the enterprise will have
danger of default. This matter makes the enterprise bankrupt and the customer
cannot overcome the loss consequence as well. Thus, the activity of

reinsurance transfer helps insurance enterprise stabilize the financial situation;
helps customer participating in insurance feel secure about the compensation
payment ability of the insurance enterprise; helps insurance enterprise be
active in calculating the maximum financial liability limit at any certain point
of time; help share the risks in community… Thereby, create for insurance
enterprise the best competitiveness to develop its activity of original
insurance business.
Being similar to the activity of receiving reinsurance but at reverse position,
the reinsurance transfer Company also has to transfer to the Company
agreeing reinsurance a part of the original premium corresponding to the
liability part to be transferred. In return, reinsurance transfer Company will
collect a certain amount of reinsurance commission under the agreement from
the Company agreeing the reinsurance. The liability for settling the
compensation and claim arising from original insurance contract will be
shared between the transfer Company and agreeing Company under
reinsurance contract.
However, in both cases of transferring and agreeing reinsurance, the clue to
settle compensation and claim with customer still is original insurance
Company - the one directly signing the insurance contract.

14

1.2.2.3. Assessment, compensation and claim to third person
Insurance enterprise can also implement directly the activity of assessment,
compensation and claim to third person to serve the business activity of the
enterprise or be the agent implementing service on assessment, compensation
and claim to third person for other insurance enterprises.
In the consideration of the angle being activity serving the direct insurance
business activity of the insurance enterprise:
Assessment is the activity implemented directly by insurance enterprise or

through a company or other assessment agent to implement the reason
determination and loss level aimed at serving the compensation settlement
and payment of insured amount to customer.
Compensation or payment of insured amount means the insurance enterprise
implements the commitment in the insurance contract to pay the person
insured a certain amount of money as the insured event happens.
Claim to third person is the activity implemented directly by insurance
enterprise or through a company or another intermediate agent to require the
third person compensating for the loss due to the fault of such third person
after the insurance enterprise compensated and accepted right transfer from
the person insured.
Assessment, compensation and claim to third person is very important stage
in insurance business activity, it is the factor affecting directly to quality of
the insurance product because at this stage, product of the insurance enterprise
will be actually used and evaluated by customer. If the quality is good, the
insurance enterprise retains old customers and attracts new customers,
increases market share, increases prestige. Therefore, many insurance
enterprises consider the activity of assessment, compensation as a form of
15

advertisement without cost of the Company.
In the consideration of the angle being agent implementing the service on
assessment, compensation and claim to third person:
Insurance enterprise can use its available advantages with the verifiers,
compensators providing the service on assessment, compensation to other
insurance enterprises in case the insurance enterprises have no ability to
implement well that work. Then the incomings from the service supply are
considered as revenue of the insurance enterprise. In the condition as present,
for some small, newly-established insurance enterprises, the branch network
is not spacious, the lease of some other insurance enterprises as the agent for

assessment, compensation as the insured event happens is necessary, it
contributes to settling quickly the rights for customer participating in
insurance, improving product quality of the enterprise. For some big,
prestigious enterprises having apparatus for implementing the assessment,
compensation professionally, the supply of this service brings relatively great
incomings and has special significance in the condition that the activity of
original insurance business is more and more difficult.
1.2.2.4 Investment activity
Besides the original insurance business activity of the Company, the
investment activity also brings a relatively great income source for the
enterprise. The profit source from the investment activity helps the enterprise
improve its financial considerably; therefore, all insurance enterprises in the
world place the investment activity parallel with the insurance business
activity, and these two activities have assistant and supplementary relation to
each other.
The insurance business activity has reverse business cycle; it means the
16

enterprise will have revenue first and the business cost is determined later.
For this characteristic, the insurance enterprises always hold a very great free
temporary capital amount. And of course, to take full advantage of this capital
resource, the insurance enterprise will use it to invest into the fields permitted
by the State such as: depositing at the bank, buying public bond, investing
into securities, contributing capital into joint venture, investing into real
estate… The profit from the investment activity will help the enterprise
improve the financial , thereby, increase the ability of paying insurance to the
customers.
According to the statistics of some big insurance Companies in the world, the
revenue of insurance premium gained from insurance business activity is
often approximate to the amount of money which the enterprise has to

compensate. Therefore, if there is no investment activity, the profit of the
enterprise is nearly zero; thus, the investment activity will be the factor
deciding the profit of the insurance enterprise.
Capital resources from operations provision of the enterprise is considered as
the debt which insurance owes the customer. Therefore, to void the situation
of default of the enterprise as well as guarantee the interest of customers, the
State needs regulate closely the use of this fund, including the limit and fields
to be invested.
1.2.3. Criteria for evaluating the product’s competitiveness
Today, together with the globalization and international economic integration,
defining and measuring the international competitiveness is increasingly
attracting the concern of economists, especially in the international analysis.
Due to the complication, multi-trend of research area, it is difficult to unify in
the way of measuring, analyzing and evaluating products.
17

We can evaluate product‟s competitiveness via different criteria‟s including
quality and quantity-based criteria.
In the scope of this theme, the referred criteria are as follows:
1.2.3.1. The growth speed of product
The evaluation of product‟s growth speed is to emphasis on the variation from
this period to others. It is used to compare the data by the time. The
calculated results are performed by the relative numbers reflecting the trend
of event. It is also defined by inter- growth speed or fixed growth speed.
The inter-growth speed is to define the vibration by comparing the letter data
and the very previous one.
The fixed growth speed is to define the vibration by choosing a fixed root
(maybe business period or landslide period). Taking the data from one period
compared with one from the fixed one. By this way, a standard of results is
gained to reflect the trend of considered event.

To evaluate the growth speed of the product, criteria of the revenues of sold
product.
The comparison of revenue growth speed shows the enterprise‟s product
consuming level compared with the competitors in the same field. This
criterion is more advantageous than the market share criteria in the way the
enterprise cannot define the whole consumption of whole market, especially
in so big market. On addition, in case of so small or insignificant market share
this criteria does not have much meanings and in this institution, it is more
meaningful to compare the revenue growth speed with competitors.
18

1.2.3.2. The market share of the product
The market share of a product evaluating its ability to occupy that market.
The bigger market share the stronger its competitive is. That the market share
of an enterprise or a nation increases or decreases reveal their competitive
with other competitors.
The product‟s market share in a specific market is defined via the formation:
The product‟s market share (%) = x 100
This criterion shows the market occupation, role and position of that product
on the market. In the international market, this criterion is used to evaluate the
efficiencies of export activity of each nation because the common target of
export nation is to enlarge the market share for its product.
Therefore, to exist and compete strongly, the product has to occupy an
amount of market share whatever much or little. Therefore, w can evaluate the
product‟s competitive , strong point or weak point compared with other
competitors in that field.
1.2.3.3. The product’s attraction on design and pattern
The unique and attraction in the product„s design and pattern is an important
factor affecting strongly on the product consumption . Among the criteria to
choose a product, the pattern is almost paid more attention although the

quality of that product has not known about. For the texture product this
criteria is more especially crucial because the aesthetic demand of consumers
is more and more appreciated, they choose the product according to the
fashion trend so that product is just used in a certain time and that is why the
factor of pattern is positioned at first. However, to satisfy the demand of
almost consumers it is essential to censor cautiously in every phase of
19

production in order to achieve perfect product both in quality and its attraction
character.
In the export market, this criterion is also in the form of catalogues of the products.
1.2.3.4. The quality and price of the product
The quality is the satisfaction of the technical demand. The product‟s quality
represents in: the usage criteria, technology criteria, safety etc…For the
texture products, it is represent by the material, quality of product processing.
The quality of product depends mainly on the technology applied in the
activity of product quality management. Nowadays, together with advanced
scientific achievement the factor of quality more depends on the factor of
technology. Price (according to the Marketing‟s definition) is the symbol of
product value in the commercial activities. Therefore, Price has great impact
on the enterprise‟s decision to participate in the competitive market.
Price is under the impaction of many factors: revenues, cost, benefit, product
quality etc…so that, to enhance the competitive position, enterprises need to
minimize the cost of business and production activity because they are very
the factor making the price increase.
Apparently, quality and price are two important criteria in promoting the
product‟s competitiveness and decide the buying in the bigger market of
consumers. The demand and purchasing ability of consumers are different.
Thus, a reasonable price will hook consumer at different part of market.
Moreover, the product quality is the measurement of the enterprise‟s mark

credit.
20

1.2.3.5. The profit rate
The purpose of business is to bear profit, of enterprise establishment is to seek
for profit and act on profit. Therefore, profit is the most efficient measurement
of the competitive strength of enterprise.
The profit is the balance between the revenues and the cost spent during the
business activity. To evaluate the business management the criteria of profit
rate is used.
Profit rate is the criteria reflecting the profit that an enterprise gains in a
certain time per one unit revenue from selling pure product.
This criterion is defined as following:
The profit rate =
The profit rate reflects the competitive of enterprise, the management ability
of board of directors. Because if this criterion is low, it means that the
competitive level on the market is very hard so competitors have to decrease
price to take over the market. In converse, if this criterion is high, it means
that the consumption market of this enterprise is quite advantageous and the
competitiveness level is not high now.
It can be said that, the profit rate is one criteria helping to reflecting clearly
the competitiveness of enterprise. Therefore, during the operation, enterprise
should continue improving technology, reduce the production cost, maintain
the price stability to keep the competitive of product and prevent other
competitors to penetrate in the market any time.