The profitability of capital and the results of implementing social policies are the main criteria for evaluating the efficiency of enterprises [32]. It can be seen that our Party's viewpoint has pointed out that the business efficiency of enterprises (specifically the capital profitability index) must be evaluated in combination with the interests of enterprises and the interests of society. However, the capital profitability index is not the only basis for evaluating the efficiency of the business process of enterprises. Besides, if only through the change of this index, analysts as well as enterprises still cannot have a deep and accurate insight into whether the enterprise has promoted and exploited its advantages to the fullest during the period or not.
In summary, the author of the thesis believes that this school of thought has the advantage of mentioning the issue of evaluating social efficiency when evaluating business efficiency, but the main disadvantage is that it "idols" enterprises to the point of thinking that if the business efficiency of the enterprise increases, social efficiency will certainly also increase. Moreover, the criteria for evaluating business efficiency according to this point of view are still limited to a single indicator.
Fifth is the view that business performance should be evaluated through the effectiveness of management activities.
This is also another point of view of Prof. Dr. Ngo Dinh Giao on business efficiency. According to him, profit maximization is the top goal that businesses aim for, so when studying business efficiency, we have also realized the very important role of organizing and managing business activities, which means that to evaluate business efficiency, we also need to pay attention to the efficiency of management activities. The efficiency of management activities is evaluated through the ratio between the useful results of management activities and the amount of resources used or wasted to achieve that result. The formation and implementation of useful results of management activities take place in a process.
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long-term process, sometimes lasting for many years. Therefore, the management process can be divided into separate stages and operations, and can also be divided into intermediate stages (parts) and interrelated final results of the management agency in general and between management stages in particular [38].
It can be seen that this viewpoint has mentioned a broad aspect of effectiveness, which is management effectiveness. The general assessment of management effectiveness is expressed in the final results of the activities of the management entity (enterprise, ministry, industry, region). However, according to the author, the effectiveness of management activities is the result of the synthesis of economic effectiveness, social effectiveness, and political effectiveness, so the determination is very complicated.
b. Concept and nature of business efficiency
Through the presented views on business efficiency, it can be seen that each scientist with different approaches has presented different views when evaluating the business efficiency of enterprises. However, the most common point that can be seen is that these views all believe that the ultimate goal of business efficiency is the comparison between the results obtained after the production and business process and the costs incurred to achieve those results. Therefore, when evaluating the business efficiency of enterprises according to the author, the measure used is often a comparison in one of the following two directions:
- First direction: Results remain unchanged or increase and costs decrease or remain unchanged - this case shows that the business is operating effectively, saving costs and earning profits. This case is achieved because the business has used reasonable costs or has effective cost-saving measures.
- Second direction: Results and costs increase together, but the rate of increase is different.
Costs increase more slowly than the growth rate of results – in this case, to evaluate business performance, it is necessary to conduct an evaluation over a relatively long period of time. This is a case that often occurs at the time of innovation in the business such as: implementing technological innovation, or product innovation, or investing in exploiting new markets, etc. In this case, businesses need to carefully consider and calculate relatively accurately the method of combining immediate benefits with long-term benefits to ensure that the business achieves business efficiency compared to before the innovation.
In addition, the business performance of an enterprise in the period, whether high or low, good or bad, also depends on the level of production organization and management, or specifically, the ability to coordinate input resources of each enterprise. Although it is possible to evaluate business performance through one or several indicators, in essence, evaluating the business performance of an enterprise is to evaluate the process of mobilizing and organizing production and business activities at the enterprise in a systematic relationship with all related subjects.
It can be seen that the views on business efficiency of the above scientists have shown that business efficiency is expressed in the level and ability to use resources in the production and business process of the enterprise. However, in order to be able to assess business efficiency most accurately, it is necessary to consider the category of business efficiency from both specific and abstract perspectives. If considered from a specific perspective, business efficiency is expressed in specific indicators and calculated numbers. But if considered from an abstract perspective, the assessment of business efficiency needs to pay attention to which factors have a level of impact or an important role in influencing the analysis and assessment of business efficiency. Therefore, in order to organize and manage production to bring high efficiency to the enterprise, all managers need to
Equip yourself with basic knowledge about business efficiency and apply it throughout the entire production and business process.
Therefore, from the above analysis and evaluation, the author has synthesized the schools of thought on business efficiency to draw the most general concept of business efficiency to apply in the thesis, accordingly: business efficiency is an economic category expressed by a system of specific economic indicators established on the basis of comparing the correlation between output results and costs or input factors, thereby reflecting the level of use of costs or input factors to achieve the highest results in the condition of harmonious combination between economic efficiency and social efficiency.
Based on the above concept, it can be seen that the minimum goal for a business to survive is to ensure that the results from production and business activities will be enough to cover the costs incurred to carry out that production and business activity. However, if considering the long-term development goal of the business, the results of the production and business process not only need to cover the costs, but also need to have an accumulation for expanded reproduction. At the same time, the long-term existence and development of the business also depends on how to coordinate production and business activities to harmoniously combine economic efficiency with social efficiency so that increased economic efficiency will lead to increased social efficiency or at least not decreased.
Every business's activities aim at the ultimate goal of profit, and increasing profits is also considered by businesses as an increase in business efficiency. However, if business efficiency is only evaluated through the fluctuation of profit indicators, businesses have ignored the reason for obtaining that level of profit and do not care about whether the distribution and use of profits is reasonable or not.
Therefore, each enterprise itself needs to be aware that the enterprise does not operate individually but is under the general management of the State, the operation of the enterprise has a significant impact on the fluctuations of the national economy. It is this connection that forces enterprises when evaluating business performance to not only focus on the profits earned but also need to evaluate the legality of the profits generated, on the other hand, it is also necessary to pay attention to the contributions of the enterprise to the development of the economy in accordance with the policies of the State. In addition, the evaluation of efficiency also needs to pay attention to the fact that the enterprise distributes profits not only to ensure the interests of the owner but also to ensure the interests of the employees, the interests of the collective and the interests of society. This means that the evaluation of the business performance of an enterprise is not simply an evaluation of the economic efficiency of the enterprise alone but also the social efficiency obtained from the effective operation of the enterprise.
Therefore, if a business achieves high economic efficiency but does not achieve social efficiency assessment indicators, it means that the business is not operating effectively during that business period. This problem can be explained as follows:
First of all, on the business side, business efficiency measures the level of resource use of the business, so it has a direct impact on the existence and development of the business. Effective business has a great impact on all aspects of business operations, not only helping the business ensure the reproduction process, improve the quality of manufactured products..., but also enhancing the competitiveness of the business in the market.
Next, for society, business efficiency in enterprises has an impact on many aspects of social activities. It can be seen that, as a cell of society, participating in contributing to the existence and development of society, the efforts of enterprises to increase business efficiency will also contribute to increasing the strength of the national economy, such as: increasing the gross national product, increasing revenue for the budget, increasing the labor force used, improving people's lives...
From there, the author came to the conclusion that the evaluation of business efficiency must be comprehensively evaluated, evaluating both the economic efficiency of the enterprise combined with social efficiency. Socio-economic efficiency is a comprehensive efficiency, considered and evaluated in the entire national economy, so the cost and benefit indicators of socio-economic efficiency are the costs and benefits of the entire national economy.
However, the category of social efficiency is a difficult one to define, for the following reasons:
First, social efficiency can be determined through perception, but it is difficult to measure with specific numbers. Therefore, it is difficult to determine social efficiency accurately.
In addition, the effects of different objects have mutual impacts in different directions, even opposite ones. For example, when a business expands its coal mining scale, the social benefits can be clearly seen as increasing the value of the gross national product, creating more jobs for workers, but the downside is that it depletes the resource that is difficult to regenerate.
The social efficiency achieved is the contribution of the enterprise to the general socio-economic development goals. Social efficiency can also be assessed qualitatively or completely quantitatively.
Quantitatively, social efficiency is reflected in the level of business contributions to the budget, to social issues, etc., for example:
- The increase in the level of enterprises' contribution to the state budget (such as corporate income tax, value added tax, export tax, resource tax...) will increase social efficiency and vice versa.
- The total number of jobs created by enterprises for the social labor force increases, which is also a factor that increases social efficiency and vice versa. Employment here is reflected in both the number of workers directly employed in enterprises and the number of workers employed in indirectly related industries...
Qualitatively, social performance is assessed through perceptions of a business's contribution to society such as:
- Contribute to improving the professional qualifications of the country's human resources through the business's interest in regular training for managers, functional staff, direct workers, etc.
- Contribute to improving the technical level of social production when businesses invest in upgrading and changing equipment.
- The level of improvement of people's material and spiritual life.
- Development of health, education and culture.
- Impacts on social infrastructure such as transportation, electricity, water.
- Positive or negative impacts on the environment due to the use of input factors or waste from the output of the business.
- Other impacts on the country's socio-economy such as: participating in the international division of labor, regenerating resources, developing new industries...
From this, it can be seen that business activities of enterprises can bring positive or negative impacts. If the impact is negative, then costs must be spent to overcome the consequences, but if this cost is greater than the benefits that society
If the society receives (both quantitative and qualitative), the existence of the enterprise will no longer be accepted because it will not be able to bring economic efficiency to the enterprise, as well as socio-economic efficiency to the country.
Thus, it can be affirmed that development inevitably requires businesses to pay attention to business efficiency and strive to improve business efficiency, and this is considered the basic goal of every business. Based on the needs and development orientation of the future, the entire economy is gradually shifting towards the depth of the investment process, and efficiency measures are increasingly affirming their important position when evaluating the production and business activities of enterprises.
1.1.2. Business performance evaluation criteria
Business performance evaluation criteria clearly define the nature and quality of a process or an aspect of a business's production and business process.
In reality, no one can accurately assess a problem just by feeling. Business efficiency is the same, it is necessary to have a relatively reasonable standard for accurate assessment, on that basis, it is possible to make accurate and reasonable management decisions, especially when it is necessary to make a decision to synthesize many measures to achieve a common goal but the impact of each measure on the results is in many different directions, even opposite directions. For example, when investing in improving production equipment, it can bring the business increased production output, increased revenue, but on the contrary, the investment cost may have to be relatively high and reduce the amount of labor used.
Thus, it can be seen that sometimes to achieve business goals, enterprises must take two-sided measures, on the one hand increasing business efficiency but on the other hand reducing social efficiency, or