Improving the efficiency of coal importation at vinacomin coal import export joint stock company

NATIONAL ECONOMICS UNIVERSITY
EXCELLENT EDUCATIONAL PROGRAM
----------

BACHELOR THESIS
MAJOR: INTERNATIONAL BUSINESS MANAGEMENT

IMPROVING EFFICENCY OF COAL IMPORTATION AT
VINACOMIN JOINT STOCK COMPANY

Tran Tuan Kiet

HANOI - 2020


NATIONAL ECONOMICS UNIVERSITY
EXCELLENT EDUCATIONAL PROGRAM
----------

BACHELOR THESIS
IMPROVING EFFICIENCY OF COAL IMPORTATION AT
VINACOMIN JOINT STOCK COMPANY

Student
Major
Class
Student’s ID
Supervisor

: Tran Tuan Kiet
: International Business Management

: International Business Management K58
: 11162633
: Associated Professor, PhD. Ta Van Loi

HANOI - 2020


ACKNOWLEGEMENT
In order to successfully complete this thesis, I would like to express my sincere
thanks to the teacher who instructed Dr. Ta Van Loi for guiding me enthusiastically
during the process of my thesis.
I would also like to send my sincere thanks to the board of director of
Vinacomin Coal Import Export Joint Stock Company and its employees.
In particular, I would like to thank Mr. Dao Xuan Viet, Head of the Coal Import
and Export department, for helping me during my internship at the company.
Thank you sincerely!


TABLE OF CONTENTS
ACKNOWLEGEMENT
STATUTORY DECLARATION
LIST OF TABLES
LIST OF FIGURES
INTRODUCTION.......................................................................................................1
1. Rationale.................................................................................................................... 1
2. Related literature review............................................................................................1
3. Research and objectives ( em sao ko sửa theo gợi ý, thày đã sửa bao nhiêu bạn là
tasks and targets rồi? objective này khái gì bên dưới?...................................................2
3.1. Research goal..........................................................................................................2
3.2 objectives................................................................................................................. 2

4. Research object and scopes........................................................................................2
4.1. Research object.......................................................................................................2
4.2 Scopes...................................................................................................................... 3
5. Research methodology...............................................................................................3
5.1. Data collection method...........................................................................................3
5.2. Research methods...................................................................................................3
6. Research structure......................................................................................................3
CHAPTER 1: THEORETICAL FRAMEWORK OF IMPROVING
EFFICIENCY

IMPORTATION

AT

VINACOMIN

JOINT

STOCK

COMPANY............................................................................4
1.1 Overview of import..................................................................................................4
1.1.1 Concept of import.............................................................................................4
1.1.2 Characteristics and roles of import...................................................................4
1.1.3 Types of import.................................................................................................6
1.2 Theoretical background of business efficiency and business efficiency of import
activities......................................................................................................................... 7
1.2.1 Conceptual definition of the business efficiency of import activities...............7
1.2.2 Business efficiency of import activities classification......................................9
1.2.3 Factors influencing the business efficiency of imports...................................10

1.3 Theorical background on improving the business efficiency of import activities. .15
1.3.1 The necessity to improve business efficiency of import activities..................15
1.3.2 Measures to enhance the business efficiency of import activities...................16


CHAPTER 2: SITUATION OF IMPROVING EFFICIENCY OF COAL
IMPORTATION AT VINACOMIN JOINT STOCK COMPANY FROM 2017 TO
2019............................................................................................................................. 21
2.1 Overview of Vinacomin Joint Stock Company......................................................21
2.1.1 Establishment and development.....................................................................21
2.1.2 Overview of Vinacomin coal import activities...............................................27
2.2 Situation of improving efficiency of coal importation at Vinacomin Joint Stock
Company from 2017 to 2019.......................................................................................31
2.2.1 Situation of coal importation..........................................................................31
2.2.2 Criteria reflecting the efficiency of coal importation at Vinacomin from 2017
to 2019.........................................................................................................................
41
2.3 Assessment of the situation of improving efficiency of coal importation at
Vinacomin Joint Stock Company from 2017 to 2019..................................................44
2.3.1 Highlights.......................................................................................................44
2.3.2 Limitations......................................................................................................45
2.3.3 Causes of limitations......................................................................................46
CHAPTER 3: RECOMMENDATION TO IMPROVE EFFICIENCY OF
COAL IMPORTATION ACTIVITIES AT VINACOMIN JOINT STOCK
COMPANY..........................................................................48
3.1 Advantages and disadvantages of improving efficiency of coal importation at
Vinacomin.................................................................................................................... 48
3.1.1 Advantages.....................................................................................................48
3.1.2 Disadvantages.................................................................................................49
3.2 Goals and Orientations...........................................................................................49

3.3 Solutions and Recommendations to improve efficiency of coal importation at
Vinacomin.................................................................................................................... 51
3.3.1 Solutions from Vinacomin..............................................................................51
3.3.2 Recommendations to the Government............................................................52
( quá mất cân đối? chương 3 có 6 trang, giải pháp không nổi 3 trang vậy mà là chuyên
đề ?
CONCLUSION..........................................................................................................54
REFERENCES..........................................................................................................55


STATUTORY DECLARATION
I herewith formally declare that I myself have written the submitted Bachelor
Thesis independently. I did not use any outside support except for the quoted literature
and other sources mentioned at the end of this paper.
I clearly marked and separately listed all the literature and all other sources
which I employed producing this academic work, either literally or in content.
Ha Noi, …/ 05/ 2020

Tran Tuan Kiet



LIST OF TABLES
Table 1.1: Quality standards for coal used in thermal power.......................................35
Table 1.2: Quality standards for coal used in cement plants........................................36
Table 1.3: Quality standards of coke used for coke production....................................36
Table 1.4: Some countries and major suppliers supply imported goods to Vinacomin 37
Table 1.5. Import market structure of Vinacomin Import-Export Company................39
Table 1.6: Coal import types structure of Coalimex from 2017 to 2019......................40
Table 1.7: Proportion of import formalities in the period 2017-2019...........................47

Table 1.8. Overall import business performance..........................................................48
Table 1.9. Import profit margin of the company from 2017-2019................................49
Table 1.10: Efficiency indicators of working capital in the period 2017-2019.............50
Table 1.11: Labor productivity of the company in the period of 2017-2019................51

LIST OF FIGURES
Figure 1.1: Charter capital structure of Vinacomin......................................................28
Figure 1.2: Organizational chart of Vinacomin Company's governance structure.......32
Figure 1.3: Coal importation turnover of Coalimex from 2017 to 2019......................41
Figure 1.4: Demand for imported coal products from 2017 to 2019............................44
Figure 1.5. Coalimex's market share in three regions in 2018 and 2019......................45


INTRODUCTION
1. Rationale
The energy industry of Vietnam after 20 years of renovation and development
has made remarkable changes through its every step, contributing to building and
renewing the country, ensuring fuel resources for manufacturing sectors and
consumption sectors. In the energy industry, we need to mention the essential fields
such as electricity, crude oil, gas, uranium, coal ... especially among the above areas,
we need to pay attention to the coal industry because this is considered as one of
Vietnam's strengths when it is ranked 26 th in coal exportation and 23 rd in coal
importation in the world
Vinacomin coal import-export joint stock company, formerly known as
Coalimex, is a company with extensive experience in the field of mineral coal in
Vietnam. With the constantly growing trend of the economy and also with Vietnam's
accession to the World Trade Organization, the company has expanded its business
activities in many areas such as coal import and export, importing materials and
equipment, exporting labour, offices construction, renting buildings, …but coal
importation and exportation is still the number one priority of the company as it

contributes 80% of revenue. Although the coal importation and exportation sector play
an important role for the company, most of the revenue in this field is from
Vinacomin's coal exportation, which is understandable given that Vietnam is a country
with the 3rd largest coal reserves in the world. The company's coal importation
efficiency is very limited by many different reasons. Facing the difficult situation
because of the world economy and the youngness of the domestic economy which is
integrating into the world, improving the efficiency of coal importation at Vinacomin
is extremely necessary. For this reason, when practicing and learning about the
business process of the company, I would like to choose the topic "Improving the
efficiency of coal importation at Vinacomin coal import-export joint stock company".
Through the topic, I would like to offer some solutions and recommendations to help
the company import coal more effectively and at the same time help businesses to have
an overview and assessment of the status of their imported coal business.
2. Related literature review
In 2016, the thesis “Improving the efficiency of importing materials at
C&T Construction and Trading Joint Stock Company” Ms Nguyen Thanh Thuy
analyzed the import activities of at C&T Construction and Trading Joint Stock
Company but not in depth

1


In 2011, the thesis “Solutions to improve the efficiency of import and
export activities at Phu Mai Fiber Joint Stock Company “Mr Vo Ham Thinh
showed some solutions to improve import activities. However, Phu Mai Fiber
Joint Stock Company is the company operating in the garment industry and the
way they do import is different with Vinacomin Joint Stock company import
In 2012, the thesis “Enhancing business efficiency of Binh Hoa
Electronics Joint Stock company” Ms Nguyen Thi Hai Hoa pointed out the
organizational structure of the company but it is different from Vinacomin Joint

Stock Company
In 2015, the thesis “enhancing the efficiency of importing machinery at
Mecanimex State-owned Limited Liability Company” Ms Vu Huong Lien
provided solutions and recommendations to enhance efficiency of importation
but Vinacomin is a Joint stock company which is different from Mecanimex
State-owned Limited Liability Company
In 2017, the thesis “ Improving efficiency of importing frozen food at
Intimex Export-Import Joint Stock Company “Mr Tran Nhat Tan demonstrated
the same problem with Vinacomin company but the company size of Intimex
Export-Import Joint Stock Company is smaller than Vinacomin company so in
my viewpoint I need to make it more accurate with the scale of Vinacomin
company
3. Research and objectives
3.1. Research goal
The thesis will be focusing on the study of the coal importation
performance at Vinacomin, assessing the efficiency of coal importation and
therefore proposing solutions to improve efficiency of coal import activities.
3.2 objectives
Giving statistics on the situation of coal importation of Vinacomin coal
import-export company and assessing the status of business efficiency through
indicators
Through the above criteria and evaluation, propose solutions to improve
the efficiency of the company's coal importation and make recommendations to
the government.
4. Research object and scopes
4.1. Research object
Propose solutions to improve efficiency of coal importation at
Vinacomin coal import-export company

2

4.2 Scopes
Space: The thesis focuses on research to improve the efficiency of coal
importation at Vinacomin coal import-export joint stock company
Time: Thesis which studies the efficiency of coal importation at
Vinacomin coal import-export joint stock company from 2017-2019 and vision
to 2024
5. Research methodology
5.1. Data collection method
5.2. Research methods

Synthetic method: The purpose of this method is to systematize and
contribute to more elucidate basic theoretical issues on improving efficiency of coal
importation at Vinacomin Joint Stock company

Quantitative method: Using statistics and surveys to calculate, analysis
and compare about the situation of improving efficiency of coal importation at
Vinacomin Joint Stock company

Qualitative method: From the results of the actual survey and the
interview, author make assessments and explain the results.
6. Research structure
In addition to the introduction, conclusion, appendix and references, the main
content of the thesis is divided into 3 chapters as follows:
Chapter 1: Theoretical framework of improving efficiency coal importation at
Vinacomin Joint Stock Company
Chapter 2: Situation of improving efficiency of coal importation at Vinacomin
Joint Stock Company from 2017 to 2019
Chapter 3: Suggested recommendation to improve efficiency of coal

importation activities at Vinacomin Joint Stock Company

3


CHAPTER 1: THEORETICAL FRAMEWORK OF
IMPROVING EFFICIENCY IMPORTATION AT
VINACOMIN JOINT STOCK COMPANY
1.1
Overview of import
1.1.1 Concept of import
It is unequivocal that imports are the components of international trade.
Imports consist of transactions in goods and services of jurisdiction (such as a
nation) from non-residents. Importation is the action of buying or acquiring
products and services from another country to another nation. The buyers of
goods and services is referred to as “importers” and are based in the country of
import.
The national accounts provide a general delimitation of imports as
below:
An import of good takes place when there is a shift of ownership from
non-resident to a resident; this does not imply that the good in question
physically crosses the borderline. However, in specific cases national accounts
impute changes of ownership even though in legal terms of no change of
ownership occur (e.g. cross border financial leasing, cross border deliveries
between affiliates of the same enterprise, goods crossing the border for
significant processing to order or repair)
In conclusion, import is one of the core activities in the international
trading business, the process of exchange goods between countries based on the
principle of currency exchange or barter. It is not a single act of trading but
system of trading relationships in an economy that has both internal and

external organizations. Moreover, imports are foreign goods and services
bought by residents of a country, including citizens, businesses, and the
government. It doesn’t matter what the imports are or how they are sent.
Imports are anything produced in a foreign country and sold to domestic
residents. They can be shipped, sent by email, or even hand-carried in personal
luggage on a plane
1.1.2 Characteristics and roles of import
1.1.2.1 Characteristics of import
 Market: The import markets are diverse, goods and services can be imported
from many different countries, based on the comparative advantage of each country

4


that businesses have many opportunities to expand, narrow or change their import
markets to adapt to the needs of the market
 Legal aspect: import activities involving owners, partners, business owners,
companies in different countries, each country has different laws on economic and
import. As a result, it bears the dominance of many legal systems and procedures and
is governed by the legal system, the filing procedures related to different countries
Input and output: Inputs (sources of supply in which the source of imports) and output
(customer) of the business are diverse and often change according to the needs of
consumers in the country and the business conditions of the company. Transportation
modes: Depending on the type of goods, materials, equipment, agreements on both
sides that have different modes of transportation, which is often followed by
INCOTERM and The Uniform Custom and Practice for Documentary Credits. Some
main modes of transportation are airways, roadways, railways and seaways. The
shipping and handling costs should be clearly stated in contracts to avoid affecting the
business performance of the business.
 Methods of payment: In the import business, the parties use a variety of

payment method such as: Cash-in-advance, Documentary collections, Consignment
and so on, which is agreed by the two parties and stipulated in the terms of the
contract. However, the mainly used method of payment is letter of credit (L/C).
Currency used in payment in import depends heavily on the exchange rate between
local currency and foreign currency
1.1.2.2 Roles of import
Firstly, imports offset the shortage of demand due to inadequate
domestic production. Moreover, imports also create new demands for society
with a variety of types, models, quality for the market. It means that imports
contribute to a positive balance between supply and demand in the domestic
market to meet the needs of the imbalances of the economy, ensuring the
development of a stable economy.
Secondly, imports help the country exploit its comparative advantage,
exploiting the economic advantage of economies of scale when participating in
international trade. Not only create more domestic consumption goods,
importing but also create input materials for domestic production, creating
technology transfer. As a result, it contributes to the development of social
production, saving costs and time, creating a uniform level of socio-economic
development, saving costs and time, creating a uniform level of socio-economic
development, contributing to the elimination of monopoly status in the country.

5


Thirdly, imports increase competitiveness in the market with highly
competitive imported products, creating new capacity in production. Domestic
enterprises have to face in a great competition, in order to survive they have to
be more active and rise. As a result, the efficiency of domestic production has
been improved, domestic goods become more competitive, labors have more
opportunities to find jobs, thus contributing to improving the socio-economic

life.
Finally, combined with exports, imports create a close relation between
domestic
production and consumption and the world economy, facilitating international
division
of labor development.
1.1.3 Types of import
1.1.3.1 Direct import
Goods are purchased directly between seller and buyer without the
help of any intermediaries, the exporter sends the goods directly to the importer.
In the field of self-trading, the enterprise is in full control of itself and conduct
the activities of seeking partners, negotiating the signing of contracts and have
to invest their own capital of trading in imported goods and bear all transaction
costs, market research, freight forwarding, payment of goods and consumption
tax. Enterprises shall have to pay their own capital for expenses incurred in
their business activities and gain all the profits earned as well as take
responsibility for such losses if they suffer from losses. When consuming the
import goods, the enterprise shall be liable to turnover tax and /or profit tax.
When conducting the import under this method, endeavors must lead statistical
surveying at home and abroad, completely figure costs, guarantee beneficial
import business, follow national legitimate approaches and universal.
1.1.3.2 Indirect import
- Entrusted import
Entrusted import is one of indirect import activity, which formed
between a domestic enterprise operating in the field of trading of some
imported goods but failing to meet conditions on financial capability and
business partners. The functions of direct foreign trade shall proceed to import
goods at their requests. The consignee shall negotiate with the foreign party to
carry out the import procedures at the request of the consignor and be entitled to
a commission called the consignment fee. The relationship between the trustee

and the trustee is fully regulated in the trust contract. The trustee will pay a sum
6


of money to the trustee in the form of a trust fee, while the trustee is responsible
for fulfilling the terms of the entrustment contract entered into between the
parties. This method helps enterprises to receive the trust does not take much
cost, low risk but profit from this activity is not high.

Barter import
Barter import is one of the main operations of convection trade, which is a
form of importation for export. This activity is not paid in money but in goods.
Imported and exported goods are equally valued. The purpose of import barter is not
only to gain profit from import but also to export goods and have income from export.
- Joint ventures import
It is an activity of importing goods on the basis of economic integration
voluntarily between enterprises, of which at least one party is a direct importing
enterprise in order to coordinate skills for the same transaction and proposal. The
rights and responsibilities of each party shall be determined according to the
proportion of their contributed capital. Compared to self-employment, joint ventures
are less risky because each joint venture enterprise imports only a portion of its capital,
the rights and responsibilities of the parties also increase with the capital contribution.
The cost sharing, the business imposes as per the extent of contributed capital, the
benefits separated by the two gatherings isolated relying upon the understanding in
light of contributed capital, in addition to the obligation of each side to bear. Moreover,
enterprises that receive goods will be calculated import-export turnover. When selling
goods for consumption, only the turnover on the number of goods shall be calculated
according to the capital contribution percentage and subject to turnover tax on such
turnover.
- Processing import

Processing is a form of import whereby the importer (being the
processor) imports the raw materials from the exporter (the processor) to carry
out the processing in accordance with the provisions of contract signed between
the two parties.
- Import for re-export Import for re-export is the import of goods but
not for domestic consumption but for export to a third country for profit. These
imports are not prepared in the re-sent out nation. Along these lines, this
method of import is actualized through three nations: importing nation,
exporting nation, re-exporting. This transaction includes both import and export
for the purpose of recovering the amount of foreign currency that is larger than
the original amount spent. When conducting temporary import for re-export,
enterprises must concurrently carry out two separate contracts, including the
7


goods purchase contract signed with the trader of the exporting country and the
goods sale contract signed with the trader of the importing country.
1.2 Theoretical background of business efficiency and business efficiency of
import activities
1.2.1 Conceptual definition of the business efficiency of import activities
1.2.1.1Concept of business efficiency
According to clause 16, article 4 of Law on Enterprises (2014) in
Vietnam stated that "Business means the continuous execution of one, some, or
all of stages of the investment process such as manufacturing, selling products
or services on the market to earn profit." Therefore, in essence, all businesses
seek to maximize their profits. In Oxford University dictionary, efficient is
defined as accomplishing most extreme efficiency with least squandered
exertion or cost. However, depending on the field of study, there are many
different opinions about business efficiency, which is divided into four basic
groups.

At the first group, British economist Adam Smith (1998) said that
business
efficiency is the result obtained in business operations, especially the sales of
goods.
In
this view, business efficiency is similar with business results and pointer reflect
business execution and it does not mention the cost, meaning that if the
businesses have the same result, they are equally effective despite the fact that
operations have two different cost levels.
The second group believes that business efficiency illustrates the
relative
proportion amongst results and expenses to accomplish that outcome. The
benefit of this view is that it mirrors the inherent idea of monetary
effectiveness. Be that as it may, the quantitative and subjective connections
between the outcomes have not yet been shown and the level of linkage has not
been completely reflected.
The third group points out that business efficiency is the amount
estimated by the exchange between the addition of the outcome got and the
expansion of the cost. In this view, business execution is considered through
relative uses and mirrors the relationship between the outcome acquired and the
cost spent, the development of business results and business costs. In any case,
the greatest inconvenience of this definition is that undertakings don't assess the
business execution in the usage time frame since they don't consider
8


indisputably the level of business results and business costs. As needs be, the
expansion of income might be considerably bigger than the increment in costs
but it cannot be presumed that the business is productive.
The fourth group says that business efficiency demonstrates the

relationship
between the development of cost that makes the business result and mirror the
level
of
production resource utilization. This point of view meets enough necessities of
business proficiency like mirroring the correlation of development speed
amongst results and expenses and demonstrates endeavors' capability of
utilizing resources.
To sum up, business efficiency is the economic category which shows
the
concentration of economic development in depth, reflecting different levels of
use
of
resources in the process of reproduction in order to achieve business objectives.
It
is
an
important measure of economic growth rate and is the formation to assess the
economic performance of businesses in each period. In practice, trade and
economic efficiency does not exist in isolation from production, in contrast to
the effects of trade having a multifaceted effect on the economy, measured on
the basis of indicators, efficiency of the entire production process.
Theoretically, the basic content of economic and commercial efficiency is the
driving force for economic development, contributing to increasing social
productivity, saving social labor and increasing national income. It will create
more income for production and improve the living standard and consumption
of domestic consumers.
1.2.1.2Concept of business efficiency of import activities
Import-export business is a form of business activity in general and
revolves around business activities, it is expanded in the space of exchange of

goods and categories of goods. Business efficiency of the import products is
based on the view of business efficiency in general. Thus, the nature of import
and export activities is the nature of the business. Moreover, import business
efficiency is the level of cost savings and the increase in economic efficiency
that is specific to the import business in other word. It reflects the level of
human resources used of to achieve the highest results at the lowest cost.

9


Efficiency of importation of goods is a measure of the between the results
obtained from the Import business and all costs incurred to achieve that result
(including physical and labor costs)
In terms of business: business efficiency of import products is only
possible to be gain with the return on maximum profit at minimal cost which
indicates the ability to use the resources necessary to serve the importing
business of the company
In Term of social: The business efficiency of import products is only be
achieved when the aggregate social benefits of imprisonment for goods and
services are larger than the costs of' producing these goods and services
domestically, which means that importing has contributed to increased
efficiency social security, quality and reduce product's price.
1.2.2 Business efficiency of import activities classification
1.2.2.1 Cost effective parts and cost-effective aggregation of import activities
Each enterprise conducts its business activities in the conditions of its own
resources: the level of technical equipment, the level of organization, labor
management and business management. By their ability, they provide the society with
products at a certain cost and every businessman wants to consume his goods in the
most quantity. However, the market operates according to its own rules. One of the
most standout amongst the most evident market rules influencing the economy is

administer of law. The market just acknowledges the normal social utilization required
to deliver a unit of merchandise. Esteem law puts all organizations at various cost
levels on a typical trade plane, which is the market cost. In general, the cost of labor is
social labor, but for every business that evaluates business performance, the cost of
social labor is reflected in other types of expenses
The market is the place to decide the price of the product. When importing
business enterprises, it is essential to guarantee the cost to be lower than the sales
products in the market. When assessing economic efficiency, social labor costs will be
represented by specific costs:
- Cost during the import operation
- Costs outside of the import operation
1.2.2.2 Absolute efficiency and relative efficiency of import activities
The determination of efficiency serves two basic purposes:
Firstly, to show and assess the utilization of various sorts of expenses in
business
Secondly, to dissect the monetary hypothesis of various options in the execution
of a specific errand
For the two purposes above, the business efficiency is divided into two
categories:
10


- Absolute efficiency is the amount of efficiency that is calculated for each
specific business plan by determining the level of benefits obtained with the amount of
costs spent
- Relative efficiency is determined by a comparison of the absolute efficiency
of the options, or the difference in the absolute effectiveness of the alternatives. This is
a fundamental base to decide the best import business plan
Determining the absolute effectiveness is the basis for determining the relative
efficiency. However, there are relatively well-refined performance indicators that do

not depend on the determination of absolute efficiency. For example. Comparing the
cost of different options to the lowest cost option is essentially just a comparison of the
cost of the options rather than the comparison of the cost effectiveness
1.2.3 Factors influencing the business efficiency of imports
1.2.3.1 Internal factors
 Financial resources
The financial resources of the enterprise can be: own capital, capital from
mobilized sources, owner capital, or investment capital, etc. In the business strategy,
finance is a crucial factor in the existence, development and expansion of the company
Importers often have to borrow money to deposit, collateral or pay for imported
goods. If the capital is limited, business will miss out on business opportunities,
particularly while completing numerous agreements, the dissolvability of endeavors is
low
 Human resources
Human is the center of all business, the key component of the
management and have great influence on the success of the firm on the way of
doing business. Other than doing the employment to profit, people with ability
to utilize gear productively and refresh new innovation add to business
effectiveness. Besides, nature of their employments additionally depends on
their insights to apply new developments that assistance them to run all the
more successfully
 Corporate Governance
Corporate governance focuses on identifying a business right direction in
a changing business environment. Quality of the business strategy is the first
and most vital factor deciding achievement success or failure of a business. A
group of officials, particularly senior administrators, who drives the business by
prudence and ability has a part to play the most imperative, the definitive
impact on the achievement of a business. The outcomes and execution of
corporate administration are exceedingly reliant on the expert level of the
11

administration group and in addition the authoritative structure of the corporate
administration.
 Facilities
Facilities, from storage yards, transportation vehicles, office equipment,
are the cornerstone of business operations, which can bring strength in business.
The technical facilities provide the partner with trust, creating a competitive
advantage with competitors.
 Reputation
Business credibility is the decisive factor in the competitiveness and
position of the business. If the function of entrusted import, when the
prestigious enterprises will have many units in the country entrusted import for
enterprises. The goods of the business easier to consume than the business do
not indecent, lose credibility with customer.
1.2.3.2 External factor
 International environment
International political context:
International business first and foremost requires executives and businessman to
pay attention to international law, the laws of each country in which the business has
been and will operate. Each country has its own legal systems to regulate international
business activities, including international trade law ( export, import of goods,
services), foreign investment law, tax law. Each country often sign agreements and
treaties and gradually form the business cooperation process on the basis of treaties or
agreements. True financial execution as of late has demonstrated that with the rise of
monetary unions, traditions associations, political cooperation and respective or
multilateral assertions have developed, making positive conditions for exchanging
business in the district and global. In the manner, it can be stated that it is just based on
a firm comprehension of the lawful arrangement of every nation and that
understandings between the new nations enable the business to settle on the correct

choices in the decision of nation, district, business frame, business things to expand
benefits while limiting risks.
International economic context:
Economic is factor that attracts the attention of all executives, the impact
of the elements of this environment is more direct and dynamic than some other
factors of the general environment. The evolution of the economic environment
always contains opportunities and threats for businesses in different sectors and
has a potential impact on the strategies of the business.

12


In the conditions of the globalization trend and the regionalization of the
world economy, international business especially import activity is increasingly
expanded and developed, to adapt to this trend, enterprises must gradually
increase their ability to adapt the new conditions of domestic and foreign
business environment. In addition, the speed of economic development of the
country reflects the market's ability to consume goods. When a country has a
high growth rate, the ability to consume goods on the market increases, the
demand for imports and the ability to exchange goods is also greater. Inflation
and deflation also affect the ability of the economy to participate in
international trade, import and export of goods.
International technology context:
Science and technology influence all zones of financial and bring
numerous advantages, especially in the field of import it is likely to bring high
proficiency. The development of science and technology in the world has
diversified the categories of goods, created new goods as well as the
modernization of the communication system. Advanced technology allows
enterprises to actively raise high quality of goods, labor productivity and lower
production costs. These factors have impact on the product aspects such as

product characteristics, product prices and competitiveness of the product. As a
result, businesses can increase their competitive ability, enhanced turnover of
working. On the contrary, if technical level is low, it would reduce the
competitiveness of enterprises, hence, reduce the profit.
 National Environment
Political context
Politics is the first element that investors and corporate executives care
about in order to forecast the level of safety in their operations in countries and
areas where business is concerned. Factors, for example, political shakiness or
vacillations in a nation or district are starting signs that assistance chiefs
distinguish what the opportunity or risk to settle on speculation choices,
creation and business in the market zone of national or universal.
 Government stability
Political factors have a strong impact on imports. If a country's political situation is
unstable, with civil war or high rate of protest, import activity is limited because
exporters are afraid of risk
 Foreign trade policy and the legislation across different countries
The policy regime, the law of the state are the factors that businesses of
import and export are bound to be unconditional. Enhancing import business is
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led among the subjects in different nations, therefore, it is not just influenced by
the administration, approaches and laws in the nation. National laws are
common practices or regulations that unify nations into common treaties,
forcing states to adhere to all activities including commercial activity. In
addition, international laws prohibit countries from importing commodities that
have a negative impact on the community, such as drugs or nuclear weapons.
Economical context
The economic environment determines the attractiveness of the import

market. The key factors in the economic environment of a country where
business is often concerned are the level of economic growth, living standards,
population structure and social stratification
 Exchange rate
The exchange rate between foreign currency and VND directly affects the
profit of import-export businesses. As in export-import business, sales and cost
of goods sold are calculated in both the strong currency and the domestic
currency. On the basis of comparing the foreign exchange rate of imported
goods with the exchange rate, ventures will decide how much benefit and
misfortune when they propel the import of such products from which it is
conceivable to ascertain the cost all the more effectively for development of
import business effectiveness
 Tariff barrier
Tariff barrier are taxes levied on each unit of imports and exports of a
country, this is the most important measure to implement trade policy. Import
tax is the commitment that the business needs to pay to the state. The duty
including VAT, import charge, extract impose, and so on, that influences the
benefit of the undertaking through the activity or lessen the aggregate cost with
the exception of benefit expense and pay impose, expanding the cost of
working together so the benefit of the business will be diminished.
 Growth rate of the economy
The economy in the high development time frame will have more
opportunities for venture to extend business exercises of endeavors, though the
economy will diminish prompting decrease of utilization costs, at the same time
rise the aggressive power.
 Inflation
High or low inflation would affect the rate of investment in the economy.
When inflation is too high it will not encourage savings and create big risks for
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businesses' inflation is too high it will not encourage savings and create big
risks for businesses' investment, the purchasing power of society will be
reduced and the economy will be stagnant.
Social and cultural context
Natural conditions include geographical location, climate, natural landscape,
these factors are not only vital in human life but also important factor in
shaping the ntext: competitive advantage of products and services. Moreover,
each country has its own unique culture and social environment.
- Demographic population
Population has impact on different components of the full-scale condition,
particularly social elements and monetary variables. Changes in the populace
condition will straightforwardly influence the difference in the financial and
social condition and influence the business methodology of the business.
- Geographical location
Geographic location is a critical factor for economic development as well as
for import and export activity of a country, Favorable geographical location is a
condition for a country to take advantage of international labor allocation, or to
promote the import and export of services such as tourism, transport.
 Natural resources
Natural resources are one of the important factors that underpin national and
regional structures for import and export. It affects the type of goods, the size of
imports and exports of the country
 Natural condition
These natural conditions such as weather, climate, and season have greatly
affected the technological process and business progress of enterprises,
especially enterprises deal in importing seasonal items such as agriculture,
forestry, fishery. With the weather conditions, climate and certain crops, the
business must have specific policies suitable to that condition. And when such
factors are unstable, it will make the business policy of the business is not

stable and is the first factor destabilizing business directly affect business
performance.
1.3 Theorical background on improving the business efficiency of import
activities
1.3.1 The necessity to improve business efficiency of import activities
 Scarcity of production possibility urges the enhancement of business
efficiency of import activities
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The needs of resources is accelerating rapidly while the social
production resources are limited. Because the market only accepts the right kind
of products with the right quantity and quality, the rule of scarcity requires all
businesses to answer exactly three questions: What produce? How to produce?
Who to produce? In order to see the necessity of improving business efficiency
for enterprises in the market economy, we first have to study the market
mechanism and operation of enterprises in the market mechanism.
For enterprises engaged in import activities, the resources used are the
amount of foreign currency spent, time and labor. In the event that the firm does
not utilize resources monetarily, at that point the cost of contributions for
imports builds, prompting expanded costs for organizations to meet difficulties
in production and consumption.
 Fierce competitive market
Competitive environment requires enterprises to explore and invest in
making progress in business. As the market grows, the competition between
businesses is getting fiercer. It is no longer competitive in products but also in
terms of quality, price and other factors. While the general target of the business
is maximize the profit, rivalry is a factor that drives the business up but vice
versa it is likely to make the business does not exist competition in the market.
Therefore, they must provide goods and services of good quality at reasonable

price. On the other hand, business efficiency is synonymous with reduce the
cost of increasing the volume of goods sold, the quality is constantly in the
market. To achieve the goal of survival and expansion, enterprises must win the
improved.
 Improvement in living standards and mental health of employees
When business efficiency is enhanced, enterprises have the opportunity
to develop and increase the number of new occupations. In addition to, the
productivity of import exercises specifically is a fundamental condition for
ventures to survive and create, if the proficiency of import exercises is
continually enhanced, the outcomes acquired increasingly, this implies the wage
of the specialists additionally increments. At the point when specialists have
high pay, they will have conditions to deal with material and profound life for
themselves and their families.
1.3.2 Measures to enhance the business efficiency of import activities
1.3.2.1 Measures to increase revenue

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Increasing sales is one of the essential approaches to enhance business
proficiency for all organizations in general and import organizations
specifically. Businesses need to find a way to boost up output or in other word,
the company needs to sell more products or sell products at a higher price.
Develop a sound business strategy and plan that is appropriate to
business situation. The right strategy and business plan allow the business to
shape the direction that the business is going to achieve in the future and it
allows the company to make the most of resources, contributing to the increase
of profit.
Develop and implement marketing plans and policies, promote research
and explore the market to understand the needs of customers. The

implementation of marketing plans and policies: product policy, price policy,
promotion policy, distribution policy along with the promotion of market
research and marketing, contributing to increase the efficiency of business
operation.
1.3.2.2 Measures to reduce the cost
Cost of production is one of the main determinants of profit and price of
the products, cutting unnecessary costs would increase profits and reduce
product costs, hence, enhance the business performance. Therefore, cost
management is a top concern for managers.
Cut down on cost of raw materials, for instance, price fluctuations
depend on both objective (changing supply and demand in the market, changes
in government policy ...) and subjective reasons (choosing quality of goods,
calculation method price of raw materials and warehouse). Volatility of raw
materials used depends on the level of management of raw materials, skills of
workers directly producing, status of operation of machinery and equipment,
conditions of production. Raw materials account for a very large proportion of
production costs of manufacturing enterprises usually about 60 - 70%.
Improving labor productivity can cause the quantity of hours spent to
deliver a unit of item to be decreased or to influence the unit of work in a unit
of time to be expanded. The consequence of enhancing work profitability will
bring down the cost of wages per unit of item. In addition to, raising the
professional level of all employees in the enterprise, arranging jobs suitable to
the professional qualifications of each person, well labor efficiency,
incompletely to expand compensation, another part to build the benefit of the
business. This can both guarantee creation and enhance the expectations for

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