Improving competitiveness through financial solutions a study of vietnam posts and telecommunications (vnpt)

ĐẠI HỌC QUỐC GIA HÀ NỘI
KHOA QUẢN TRỊ VÀ KINH DOANH
---------------------

NGUYỄN ĐỨC ANH

IMPROVING COMPETITIVENESS THROUGH FINANCIAL
SOLUTIONS: A STUDY OF VIETNAM POSTS AND
TELECOMMUNICATIONS (VNPT)
GIẢI PHÁP TÀI CHÍNH NHẰM NÂNG CAO KHẢ NĂNG CẠNH
TRANH: NGHIÊN CỨU TẠI TẬP ĐỒN BƯU CHÍNH VIỄN
THƠNG VIỆT NAM (VNPT)

LUẬN VĂN THẠC SĨ QUẢN TRỊ KINH DOANH

HÀ NỘI - 2020


ĐẠI HỌC QUỐC GIA HÀ NỘI
KHOA QUẢN TRỊ VÀ KINH DOANH
---------------------

NGUYỄN ĐỨC ANH

IMPROVING COMPETITIVENESS THROUGH FINANCIAL
SOLUTIONS: A STUDY OF VIETNAM POSTS AND
TELECOMMUNICATIONS (VNPT)
GIẢI PHÁP TÀI CHÍNH NHẰM NÂNG CAO KHẢ NĂNG CẠNH
TRANH: NGHIÊN CỨU TẠI TẬP ĐỒN BƯU CHÍNH VIỄN
THƠNG VIỆT NAM (VNPT)

Chuyên ngành: Quản trị kinh doanh
Mã số: 60 34 01 02
LUẬN VĂN THẠC SĨ QUẢN TRỊ KINH DOANH

NGƯỜI HƯỚNG DẪN KHOA HỌC: PGS.TS. HỒNG ĐÌNH PHI

HÀ NỘI - 2020


DECLARATION

The author confirms that the research outcome in the thesis is the result
of author’s independent work during study and research period and it is not
yet published in other’s research and article.
The other’s research results and documentation (extraction, table,
figure, formula, and other document) used in the thesis are cited properly and
the permission (if required) is given.
The author is responsible in front of the Thesis Assessment Committee,
Hanoi School of Business and Management, and the laws for abovementioned declaration.

Date: November 2019

i


ACKNOWLEDGEMENT

I wish to express my deepest gratitude to my thesis advisor, Assoc.
Prof. Dr. Hoang Dinh Phi, dean of Hanoi School of Business and
Management at Vietnam National University. Without his enthusiastic

support, the goal of this project would not have been realized. I am gratefully
indebted to his very valuable advices on this thesis.
I would like to give great thanks to all my respected lecturers during
my two years of study at HSB. It is whole-heartedly appreciated that their
great advice proved monumental towards the success of this study. I wish to
thank all my colleagues and all my friends whose assistance was a milestone
in the completion of this project. I would like to recognize the invaluable
assistance that you all provided during my study.
Finally, I must express my very profound gratitude to my parents and to
my sister for providing me with unfailing support and continuous
encouragement throughout my years of study and through the process of
researching and writing this thesis. This accomplishment would not have been
possible without them. Thank you.

Hanoi, November 2019
Duc Anh Nguyen

ii


TABLE OF CONTENTS
DECLARATION ................................................................................................... i
ACKNOWLEDGEMENT .................................................................................... ii
TABLE OF CONTENTS ..................................................................................... iii
LIST OF ABBREVIATIONS .............................................................................. vi
LIST OF TABLES ............................................................................................. viii
LIST OF FIGURES .............................................................................................. ix
ABSTRACT ...........................................................................................................1
1. Rationale .................................................................................................. 1
2. Literature review...................................................................................... 2

3. Research objectives ................................................................................. 7
4. Research scope ........................................................................................ 7
5. Research methods .................................................................................... 7
6. Structure of the dissertation ..................................................................... 8
CHAPTER 1. BASIC THEORY ON FIRM’S COMPETITIVENESS AND
THE ROLE OF FINANCE IN IMPROVING COMPETITIVENESS OF
ENTERPRISES ......................................................................................................8
1.1. CORPORATE COMPETITIVENESS ................................................. 8
1.1.1. Theories of competitiveness and competitive advantage .............. 8
1.1.2. Methods of measuring and analyzing competitiveness ............... 12
1.1.3. External factors affecting competitiveness .................................. 20
1.2. THE ROLE OF FINANCE IN IMPROVING ENTERPRISES
COMPETITIVENESS ............................................................................... 22
1.2.1. Taxation ....................................................................................... 22
1.2.2. State investments on supporting industries ................................. 23
1.2.3. Enterprises’ financing policy ....................................................... 23
1.2.4. Enterprises’ investment policy .................................................... 24
iii


1.2.5. Enterprises’ distribution policy ................................................... 25
CHAPTER 2. ANALYSIS OF VNPT COMPETITIVENESS AND ITS
CONTEMPORARY

FINANCIAL

SOLUTIONS

FOR

IMPROVING

COMPETITIVENESS DURING 2014 - 2018 ....................................................26
2.1. BRIEF OVERVIEW OF VNPT ......................................................... 26
2.1.1. History and development of VNPT ............................................. 26
2.1.2. Characteristics of VNPT activities .............................................. 26
2.1.3. Business performance of VNPT in comparison with its
competitors............................................................................................. 28
2.2. THE COMPETITIVENESS OF VNPT DURING 2014 - 2018 ........ 37
2.2.1. Evaluation of VNPT’s competitiveness using Pyramid Model .. 37
2.2.2. Evaluation of VNPT’s competitiveness using 5-Forces model .. 44
2.3. EVALUATION ON VNPT FINANCIAL SOLUTIONS FOR
IMPROVING ITS COMPETITIVENESS DURING 2014 – 2018 .......... 50
2.4. EXTENDING THE ANALYSIS ....................................................... 51
CHAPTER

3:

PROPOSAL

OF

FINANCIAL

SOLUTIONS

FOR

IMPROVING COMPETITIVENESS OF VNPT IN VIETNAM .......................54
3.1. DEVELOPMENT ORIENTATION OF VNPT IN THE NEAR

FUTURE .................................................................................................... 54
3.1.1. Opportunities and challenges to VNPT ....................................... 54
3.1.2. Development orientation of VNPT.............................................. 56
3.2. RECOMMENDED FINANCIAL SOLUTIONS FOR IMPROVING
COMPETITIVENESS OF VNPT ............................................................. 58
3.2.1. Diversifying sources of capital .................................................... 58
3.2.2. Improving VNPT’s credit and inventory management ............... 59
3.2.3. Making investment decisions effectively .................................... 61
3.2.4. Innovating financial management team ....................................... 61
3.2.5. Creating a diverse and flexible price policy ................................ 62
iv


3.3. OTHER RECOMMENDATIONS ..................................................... 63
CONCLUSION ....................................................................................................67
REFERENCES
APPENDIX

v


LIST OF ABBREVIATIONS

1

AAG

Asia - America Gateway

2

ABC

Antecedent - Behavior - Consequence

3

ADSL

Asymmetric Digital Subscriber Line

4

AFTA

ASEAN Trade-in Services Agreement

5

ATM

Asynchronous Transfer Mode

6

EOQ

Economic Order Quantity

7

FTTC

Fiber to the Curb

8

FTTH

Fiber to the Home

9

GDP

Gross Domestic Product

10

ICT

Information and Communication Technology

11

IP

Internet Protocol

12

ISO

The

International

Organization

for

Standardization
13

IT

Information Technology

14

IXP

Internet Exchange Point

15

JIT

Just-in-time

16

MRP

Materials Requirements Planning

17

NGN

The Next Generation Network

18

ODA

Official Development Assistance

19

OECD

The Organization for Economic Co-operation and
Development

20

R&D

Research and Development

21

ROA

Return on Assets

22

ROE

Return on Equity

23

ROS

Return on Sales

vi


24

SDH

Synchronous Digital Hierarchy

25

SWOT

Strength - Weakness - Opportunity - Threat

26

VNPT

Vietnam Post and Telecommunications

27

VTF

Vietnam

Public

Utility

Telecommunications

Service Fund
28

WDM

Wavelength Division Multiplexing

29

WEF

World Economic Forum

30

WTO

World Trade Organization

31

xDSL

Digital Subscriber Line

vii


LIST OF TABLES

Table 2.1 VNPT financial indicators 2014 - 2018 ................................................. 32
Table 2.2 Comparison in price of the same service provided by VNPT, FPT,
Viettel 2019 ............................................................................................................ 35
Table 2.3 VNPT’s business result 2014 - 2018 (Unit: Million VND) ................... 39
Table 2.4 VNPT’s Accounting Balance Sheet 2014 - 2018 (Unit: Million VND) 40
Table 2.5 Strengths and weaknesses of VNPT’s competitors in the postal sector 45
Table

2.6

Strengths

and

weaknesses

of

VNPT’s

competitors

in

telecommunications sector ..................................................................................... 47

viii


LIST OF FIGURES

Figure 1.1 Firm's Sustainable Competitiveness Pyramid....................................... 19
Figure 2.1 Organization chart of VNPT ................................................................. 28
Figure 2.2 Market share of postal providers by revenue 2016............................... 29
Figure 2.3 Market share (by subscriptions) of terrestrial fixed-line telephone
service providers 2016 ........................................................................................... 29

ix

ABSTRACT
1. Rationale
Recent times have witnessed a rapid development of the
telecommunications sector in many developing countries. This is due to the
emergence of internet and wireless services, which enables the entrance into
the sector of competitive service providers; and strong development of
international trade in telecom services. Telecommunications sector also
recognized that a liberalized telecom market could generate higher growth,
and produce better services. Thereby, this development resulted in
significant improvements of their telecommunications networks and
performance.
In Vietnam, telecom market has transformed from monopoly based to
competition-based approaches in the last two decades. In 2007, Vietnam was
recognized as the world’s second fastest growing telecom market by the
International Telecommunications Union. Recently the market has about 70
operating telecoms companies, approximately 47% of those was granted
licenses to provide telecommunications services whereas the rest established
network infrastructure (Vietnam News, 2017). In general, it can be seen that
the reforms have lifted the overall competitiveness of the telecom sector.
Initially, there was only one service provider in Vietnam, namely the
Vietnam Post and Telecommunications General Corporation (now the
VNPT Group), who laid the first stone for the development of the
telecommunications sector in Vietnam. VNPT remained its monopoly for
years,

managing

all

the

infrastructures

and

all

types

of basic

telecommunications services in Vietnam. However, the rapid growth of
telecom sector in Vietnam changed the landmark. The governmental decree
in October 2003 gave all telecom provider the freedom to establish network
and provide telecom services in Vietnam. As a consequence, VNPT lost
1


their monopoly position. In addition, for the past few years, while
commitments concerning Vietnam’s telecom sector has been made in its
Bilateral Trade Agreement with the US and within the ASEAN framework,
more and more service providers began to emerge in the market and has
been threatening the leading position of ringleader of the industry. The
competition from foreign companies such as Telstra (Australia), Alcatel and
France Telecom (France), Siemens (Germany) has also become stronger.
Although VNPT has currently been one of the top-five domestic telecom
companies in Vietnam1, its market share is only 17.5%, much lower than
other competitors, compared to Mobifone (31.8%) and Viettel (43.5%)

(Vechi, 2015).
In this context, in order to remain as one of the leading
telecommunications companies in Vietnam, it is very much essential for VNPT
to push much more effort on improving its performance and gain
competitiveness in the market. One of the most important solutions to enhance
the competitiveness is from financial perspective. For these reasons, the topic
“Improving the competitiveness through financial solutions: A study of Vietnam
Posts and Telecommunications (VNPT)” has been chosen for this master
dissertation.
2. Literature review
There are broad and varied definitions of competitiveness concept
based on different schools of thought and the level of analysis.

1

Five major service providers in Vietnam market are currently Viettel, Mobifone, Vinaphone,

VietnamMobile and GMobile.

2


According to Michael Porter (1990), the leading researcher on
competitiveness and competitive strategies, the concept of competitiveness
can be understood as the company’s ability to obtain the market share and
generate higher profit than its current average profit. Under mercantilism,
according to Krugman (1994), competitiveness is a different name of
productivity, considering the rate of growth of one enterprise compared to
the others in the same industry.
In deeper research, according to the UK Department of Trade and

Industry (2001), competitiveness is the capacity to supply the right goods
and services of the right quality, at the right price and at the right time. On
the other hand, Chikan (2008) defined the competitiveness of an enterprise is
its capability to sustainably satisfy the requirements of customers at a profit.
In addition to the concept, Reiljan, Hinrikus & Ivanov (2000) took the
conflict of interest approach to competitiveness. They also identified three
different levels of competitiveness as (i) ability to survive, (ii) ability to
develop, (iii) superiority. Of which, ability to survive is the lowest level of
competitiveness, which is the capacity to adapt passively to the competitive
environment without any significant change or development. The medium
level of competitiveness is ability to develop, in which an enterprise is
considered to be competitive if they can actively respond to changes in the
competitive environment, thus improving their qualities and efficiency.
Superiority is the highest level of competitiveness, in which an enterprise is
considered competitive if their operations are more efficient, faster
development or better qualities than other competitors, thereby influencing
on the competitive environment.
Regarding the determinants of corporate competitiveness, Buckley,
Pass & Prescott (1988) indicated that competitiveness has 3 dimensions
including potential, process and performance, whereas Waheeduzzaman and
3


Ryans (1996) identified competitiveness as a buildup of many other
disciplines (i.e. comparative advantage, price competition, strategic and
management, including historical and socio-cultural disciplines). According
to Vlachvei et al. (2017), dynamic capabilities, flexibility, agility, speed, and
adaptability are recognized as the most important sources of competitiveness
in the business environment. In addition, Anca (2012) emphasized that there
is a close relationship between the various levels of analysis of

competitiveness (i.e. product, firm, industry, organization, etc.). In
particular, the quality of a product will determine whether an enterprise can
survive competition, whereas a firm’s performance will determine if an
industry or country can compete internationally. According to Michael
Porter (1990), there are five forms of competitive advantage any firm may
possess, including human resources, physical resources, knowledge
resources, capital sources and infrastructural resources.
Although there are unsettled arguments from different schools of
thought, most researchers agree that competitiveness is a complex concept
due to the differences in definition and methods of measurement. Overall,
the concept of competitiveness focuses on 3 major aspects: (1) Different
parties (including individuals and organizations) compete with each other in
order to improve their position in the market; (2) Competition between the
parties aims to obtain specific benefits such as market share, a certain group
of customers, potential benefit in order to generate higher profits or
maximize the firm’s value; (3) The participants might use different
approaches (via price, product, brand, marketing, quality of human
resources, financial resources, capital resources etc.) to beat the competition.
Regarding the competitiveness in the telecommunications sector, there
is also a number of studies from various perspectives. Trauth E. & Pitt D.
(1992) traced the movement towards competitions in two different telecom
4


markets (the United States and the United Kingdom), and found out there are
3 major pressures for changes in the industry (i.e. technological, industrial
and economic pressures). The research also stated that the continuing
strength of the competitive social project in telecommunications cannot be
denied. They suggested that different countries should progress along
different telecommunications policy paths.

In the study on competitive trends in the telecommunications industry,
Fletcher & Kolle (2017) has identified the 4 trends as areas of competitive
competence. First trend is digital customer service, in which telecoms
companies invest in digital technologies that remove the need for staff, and
also invest in bots to simple recurring tasks that do not need a high-touch
customer engagement. Second trends in telecoms industry is to invest in
security and encryption as a service, which leverage digital trust (i.e.
security and privacy) is considered as a competitive advantage, and also
invest in platforms for billing and payments. Third trend is to sell services
not data, in which the companies invest and explore in connecting devices to
form value added services in the smart home and smart office space. The
fourth is content exclusivity, which implies the trend that the companies are
likely to offer different digital services at reduced or zero rating. In this
trend, the companies are also aware of erosion of net neutrality and potential
brand damage from negative user awareness.
Wilson P. & Gibbons (2014) suggested that the most successful
enterprises are those that continually search for and find ways to create new
value. They emphasized that value is not price driven but the value in the
process and purse growth. They also indicated three rules that drive longterm

superior

performance

in

competition

for

telecommunication

enterprises, including: (i) Better before cheaper (i.e. Do not compete on
price, compete on value); (ii) Revenue before cost (i.e. Drive profitability
5


with higher volume and price, not lower cost); (iii) there are no other rules
(i.e. Do whatever you have to in order to remain aligned with the first two
rules).
In a different approach, Grzybowski (2004) used panel data for the 15
EU countries from 1998 – 2002, and found out that the competitiveness of
mobile telecommunications industry is significantly influenced by the
regulation policy implemented throughout the liberalization process of fixed
telephone lines. Also, the implementation of the number portability for
mobile services has a positive impact on competitiveness.
In Vietnam, there are several studies on corporate competitiveness in
Vietnam. Tran Van Tung (2004) analyzed the economic and national
competitive advantage and competitive strategy of the company. Vu Trong
Lam (2006) systematized the concept of corporate competitiveness in the
process of international economic integration in Vietnam and suggested some
solutions to improve the international competitiveness of the company in
Vietnam.
Some researches focused on the competitiveness of telecommunications
industry and companies in Vietnam such as Bui Xuan Phong (2007),
Nguyen Dang Quang & Tran Xuan Thai (2008), Nguyen Duc Kien (2011),
Tran Thi Anh Thu (2012), CIEM (2006). However, most of them evaluated
the overall competitiveness of telecommunication industry or a telecom
company and

proposed

some

general

solutions

to

improve

the

competitiveness of the industry or company. Few studies focused deeply on
the field from financial approach and evaluated the performance of
improving the competitiveness through financial solutions. This can be seen
as a research gap for further studies in the dissertation.

6


3. Research objectives
Though the literature review shows that competitiveness in
telecommunication services is not a new topic, researches on the
competitiveness in telecommunication industry from financial solutions
approach are still a few. This is the research gap available for further
research.
In this dissertation, first of all, the study aims to clarify basic theories
on corporate competitiveness and financial solutions for improving

competitiveness of enterprises.
Second, this study evaluates the competitiveness of VNPT through the
comparison between enterprises in the industry. Also, the actual performance of
improving the competitiveness through financial solutions in VNPT will be
focused.
Third, some financial solutions for improving competitiveness of
VNPT in the future will be analyzed and recommended.
4. Research scope
The main research object of the dissertation is the competitiveness
performance

of

VNPT

and

financial

solutions

to

improve

its

competitiveness. Therefore, the study will focus on analysis of evaluation
criteria, factors affecting the competitiveness of VNPT. Some comparisons
among major service providers will be analyzed. Research scope ranges

from 2014 to 2018.
The research basically uses secondary data from official annual
reports, financial statements of companies, General Statistics Office, and
other topic-related articles, journals and academic research.
5. Research methods
The dissertation uses traditional qualitative approach to analyze
theoretical

concepts.

Besides,

the
7

dissertation

employs

statistics,


comparison, analysis, synthesis, interpretation and induction to evaluate the
competitiveness of selected companies and show the actual performance of
improving competitiveness through financial solutions.
6. Structure of the dissertation
The dissertation consists of 3 chapters:
Chapter 1: Basic theory on firm’s competitiveness and the role of finance in
improving competitiveness of enterprises
Chapter 2: Analysis of VNPT competitiveness and its contemporary

financial solutions for improving competitiveness during 2014 - 2018
Chapter 3: Proposal of financial solutions for improving competitiveness of
VNPT in Vietnam
CHAPTER 1. BASIC THEORY ON FIRM’S COMPETITIVENESS
AND THE ROLE OF FINANCE IN IMPROVING
COMPETITIVENESS OF ENTERPRISES

1.1. CORPORATE COMPETITIVENESS
1.1.1. Theories of competitiveness and competitive advantage
1.1.1.1. Definition of competitiveness
Competitiveness is a vital characteristic of the market economy. There
are broad and varied definitions of competition and competitiveness concept
based on different schools of thought and the level of analysis.
According to the surplus value theory, competition is a rivalry among
capitalists in order to seize favorable conditions in production and
consumption of goods to achieve super profits. In the deep study on
capitalist competition, K. Marx discovered that the fundamental of
competition is adjusting the average profit rate among sectors. Industries
with high profit margins will attract more investors than the others.
Meanwhile, Samuelson (1948) mentioned the competition in the relationship
8


between market and product consumption, in which enterprises compete for
their market share to dominate the competition. Under mercantilism,
competitiveness is a different name of productivity, considering the rate of
growth of one enterprise compared to the others in the same industry
(Krugman, 1994).
If competition is the battle between enterprises in the same
environment to increase their value, the competitiveness is about the ability

to win the competition and create competitive advantage. According to
Michael Porter (1990), the leading researcher on competitiveness and
competitive strategies, the concept of competitiveness can be understood as
the company’s ability to obtain the market share and generate higher profit
than its current average profit. In the whole industry, the average
profitability of the industry would be increased as a result of the
competition.
In deeper research, according to the UK Department of Trade and
Industry (2001), competitiveness is the capacity to supply the right goods
and services of the right quality, at the right price and at the right time. On
the other hand, Chikan (2008) defined the competitiveness of an enterprise is
its capability to sustainably satisfy the requirements of customers at a profit.
In addition to the concept, Reiljan, Hinrikus & Ivanov (2000) took the
conflict of interest approach to competitiveness. They also identified three
different levels of competitiveness as (i) ability to survive, (ii) ability to
develop, (iii) superiority. Of which, ability to survive is the lowest level of
competitiveness, which is the capacity to adapt passively to the competitive
environment without any significant change or development. The medium
level of competitiveness is ability to develop, in which an enterprise is
considered to be competitive if they can actively respond to changes in the
competitive environment, thus improving their qualities and efficiency.
9


Superiority is the highest level of competitiveness, in which an enterprise is
considered competitive if their operations are more efficient, faster
development or better qualities than other competitors, thereby influencing
on the competitive environment.
Although there are unsettled arguments from different schools of
thought, most researchers agree that competitiveness is a complex concept

due to the differences in definition and methods of measurement. Overall,
the concept of competitiveness focuses on 3 major aspects: (1) Different
parties (including individuals and organizations) compete with each other in
order to improve their position in the market; (2) Competition between the
parties aims to obtain specific benefits such as market share, a certain group
of customers, potential benefit in order to generate higher profits or
maximize the firm’s value; (3) The participants might use different
approaches (via price, product, brand, marketing, quality of human
resources, financial resources, capital resources etc.) to beat the competition.
1.1.1.2. Level of competitiveness
Competitiveness can be divided into 4 levels, depending on the
circumstances, they are: (1) National level; (2) Industry level; (3) Enterprise
level; (4) Product level.
Competitiveness at national level is the capacity of a nation to
produce goods and services that not only maintains and increase real GDP
but also meets the demand of international market in the long-run.
According to the World Economic Forum (2018) (WEF), there are eight
determinants of competitiveness at national level, including: (i) level of trade
openness (i.e. tariff and non-tariff barriers, import and export policy),
exchange rate, foreign direct investment); (ii) the role of government (i.e.
governance, size of government, fiscal policy, tax system, inflation); (iii)
financial stability (i.e. credit ratio, financial risk, investment and savings);
10


(iv) technology (i.e. technology capacity, technology transferring, R&D); (v)
infrastructure (i.e. transportation, telecommunication, electricity, water); (vi)
management

level

(i.e.

business

management,

human

resource

management); (vii) labor (i.e. number of labor, efficiency and flexibility in
the labor market); (viii) legal institutional level.
Competitiveness at the industry level is the capacity to create and
maintain profits and market share in the domestic and international markets.
Industrial competitiveness can take place within the industry, between
industries in the same country, or the same industry in different countries.
Competitiveness at enterprise level is the capacity of the companies to
maintain and expand their market share and profits. Fafchamps (1995)
indicated that the competitiveness of enterprises is their ability to create
products with the average variable cost lower than its price in the market,
while OECD Competitiveness Outlook Report (2018) referred the
competitiveness of enterprises to the ability to generate the relatively high
income on the basis of using factors of production effectively. This
definition confirmed the links between competitiveness of enterprises and
their competitive advantage relating technology and product quality. In
short, competitiveness at enterprise level concerns the outstanding ability of
enterprises via factors of production, cost reduction and product quality in
order to achieve market share and profit.
Competitiveness at product level is understood as the superiority of

goods and services compared to the others in the same industry. The
outstanding level is assessed by the consumers regarding products’ quality,
innovation, customer services, etc. There are 4 factors influencing the
competitiveness at product level, including (i) comparative advantage; (ii)
national economic growth; (iii) economic environment; and (iv) business
activities.
11


These various aspects are not separate but facilitate each other. For
example, competitiveness at product level is the basis for creating the
competitiveness at enterprise level and national level. A product or service
trusted by customers will generate higher profit for the companies, then
improving the competitiveness at product level and contributing to
competitiveness at enterprise, industry and national level.
In a nutshell, competitiveness can be considered at many different
levels. However, according to the research objectives, the criteria and
discussions in this dissertation will only focus on analyzing and assessing
the competitiveness at enterprise level, thereby implying specific solutions
to enhance the competitiveness for enterprises in telecommunications and
especially VNPT.
1.1.2. Methods of measuring and analyzing competitiveness
1.1.2.1. Determinants of firm’s competitiveness
There are various criteria of assess the competitiveness of an
enterprises. Pass & Prescott (1988) indicated that competitiveness has 3
dimensions including potential, process and performance, whereas
Waheeduzzaman and Ryans (1996) identified competitiveness as a build-up
of many other disciplines (i.e. comparative advantage, price competition,
strategic

and

management,

including

historical

and

socio-cultural

disciplines). According to Vlachvei et al. (2017), dynamic capabilities,
flexibility, agility, speed, and adaptability are recognized as the most
important sources of competitiveness in business environment. In additions,
Anca (2012) emphasized that there is a close relationship between the
various levels of analysis of competitiveness (i.e. product, firm, industry,
organization, etc.). In particular, the quality of a product will determine
whether an enterprise can survive competition, whereas a firm’s
performance will determine if an industry or country can compete
12


internationally. According to Michael Porter (1990), there are five forms of
competitive advantage any firm may possess, including human resources,
physical resources, knowledge resources, capital sources and infrastructural
resources.
However, due to the fact that the main objective of this study is to
give financial solution to improve the enterprise’s competitiveness, this
dissertation will approach from the financial perspective. The author will

focus on several financial factors as the basis to analyze the actual
performance of competitiveness improvement of the selected company in the
next chapter.
From a financial perspective, the criteria for measuring the
competitiveness of enterprises consists of: (1) market share; (2) profitability;
(3) product quality; (4) price; (5) branding.
a. Market share
Market share is the portion of a market controlled by a particular
company or product. This indicator reflects the competitiveness of an
enterprise based on its outputs. Market share indicates how well a company
compete in the market.
The bigger the market share of an enterprise, the stronger its
competitiveness. Market share is measured by the ratio of revenue or
quantity of products consumed by the enterprise in a certain period of time
to the total revenue or sales volume in the market. This indicator can be
estimated by the following formula:
tpi =

x 100%

where tpi is the market share of the enterprise i;
DI is the revenue or sales volume of the enterprise i;
D is total revenue or sales volume in the market.

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This formula indicates the competitive position of the company’s
goods or services at a specific point of time. However, it is difficult to
calculate this indicator in several circumstances (e.g. the company’s market

share is too small; or the company export goods and services; the company
supply special kind of services).
Due to the nature of competitiveness measurement, this indicator is
estimated at a specific time in the past. It is difficult to observe the change of
competitiveness over time. Therefore, researchers prefer to consider the
change of market share over a certain period of time, usually from 3 to 5
years.
In the case that market share and market share growth cannot be
calculated, the revenue growth rate will be used instead. The revenue growth
rate is estimated for enterprises at all times. The formula is as follows:
rt = (

-1 ) x 100%

where rt is the revenue growth rate of the enterprise i;
Dt is the revenue or sales volume of the enterprise at the current period;
Dg is the revenue or sales volume of the enterprise at the original period.
The revenue growth rate reflects the changes in the output of the
enterprise. However, this indicator cannot estimate the position of the
enterprise in the market.
b. Profitability
Profitability of an enterprise can be measured by its revenue, profit
and rate of return.
Revenue is the total benefits that an enterprise can earn from their
daily production and business activities in a period of time. Revenue also
can contribute to the owner’s equity. This is an important source of finance
for businesses to cover up business expenditure and reinvestment. Higher
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