Methods of Analyzing Production and Business Efficiency

Technical level factor:

Advanced technology level allows enterprises to proactively improve the quality of goods, labor productivity and reduce product costs such as: product characteristics, product competitiveness. Thanks to that, enterprises can increase their competitiveness, increase working capital turnover, increase profits to ensure the expansion of the reproduction process.

On the contrary, low technology level not only reduces the competitiveness of enterprises but also reduces profits, hindering development. In short, the technology level factor allows enterprises to improve labor productivity and reduce product costs, thereby increasing competitiveness, increasing capital turnover, increasing profits, thereby increasing production and business efficiency.

Management factors:

This factor plays a key role in the production and business activities of an enterprise. Business management focuses on determining the right direction for the enterprise in an increasingly volatile business environment. The quality of the business strategy is the first and most important factor determining the success or failure of an enterprise. The management team will be the ones to decide on production and business activities: what to produce? produce for whom? how to produce? how much? Each of their decisions has a very important meaning related to the existence or destruction of the enterprise. They are the ones who decide how to compete? how competitive? And how? …

The results and effectiveness of corporate governance depend largely on the expertise of the management team as well as the organizational structure of the corporate governance apparatus. Determining the functions, tasks, and powers of each department and individual and establishing relationships between departments in that organizational structure.

Financial capacity factor:

This is an important factor that determines the production capacity as well as the leading indicator to evaluate the scale of the enterprise. Any investment in purchasing equipment, raw materials or distribution ... must be calculated based on the financial situation of the enterprise. An enterprise with strong financial potential will be able to equip modern production technology lines, ensure quality, reduce costs, product prices, organize advertising activities, strong promotions, and improve competitiveness.

In addition, with a strong financial capacity, accepting a short-term loss, lowering product prices to maintain and expand the business's market share, and then increasing product prices to gain more profits.

1.5.2.Group of factors outside the enterprise

Competitors:

Including direct competitors (who are engaged in the same production and business activities and consume the same products and services) and potential competitors (competitors who have not yet conducted business in the industry in which the enterprise is operating. Competitors who have enough potential and are ready to jump into business). If the competitors are strong, improving production and business efficiency will become much more difficult. Because at this time, the enterprise can only improve business efficiency by improving quality, reducing product costs to increase consumption speed, increase revenue, increase capital turnover, to create the ability for the enterprise to compete in terms of price, type, design, etc.

Thus, competitors have a great influence, it creates development motivation for businesses.

Market :

The market factor here includes both the input market and the output market of the enterprise. It is the decisive factor in the reproduction process of the enterprise.

For the input market, it provides factors for the production process such as machinery, equipment, etc., so it directly affects the product price, continuity and efficiency of the production process.

As for the output market, which determines the enterprise's revenue based on the acceptance of the enterprise's goods and services, the output market will determine the consumption rate, creating a fast or slow capital turnover, thereby affecting the enterprise's production and business efficiency.

Political and legal environment:

Factors in the political and legal environment strongly influence the production and business activities of enterprises. Political stability is one of the important premises for the business activities of enterprises. Changes in the political environment may benefit one enterprise but hinder the development of another group of enterprises and vice versa. A complete and unbiased legal system is one of the non-economic premises of business. The level of completion, change and enforcement of laws in the economy affect the planning, organization and implementation of business strategies of enterprises.

This environment has a direct impact on the production and business efficiency of enterprises because the legal environment affects the products, industries, business methods, etc. of enterprises. Not only that, it also affects the costs of enterprises such as circulation costs, transportation costs, etc. Especially, import-export enterprises are also affected by international trade policies, quotas assigned by the State, and protection laws for enterprises participating in business activities.

In short, the political environment has an impact on improving production and business efficiency by affecting business operations through a system of macro tools...

1.6. Methods of analyzing production and business efficiency

1.6.1. Comparison method

The comparison method is the most commonly used method in analyzing business production efficiency. The essence of this method is to compare indicators and economic phenomena that have been quantified with the same content and similar characteristics. When using this method, it is necessary to master the following 3 methods:

Select the standard to compare:

The standard for comparison is the data of a period selected as the basis for comparison and is called the base of comparison. Depending on the purpose of the research, choose an appropriate base of comparison. The bases of comparison can be:

 Documents and data from the previous period to evaluate the development trends of indicators.

 Planned indicators (plans, estimates, norms) to evaluate the development trends of the indicators.

 Average indicators of the industry and region to affirm the position of the enterprise and the ability to meet market needs.

 The period's indicators compared with the base period are called period's performance indicators and achieved results.

Comparison conditions:

A prerequisite for using the comparative method is that the indicators used must be uniform.

-In terms of time: indicators must be calculated within the same accounting period and must be consistent on the following 3 aspects:

 Must have the same economic content

 Must have the same calculation method

 Must be in the same unit of measurement

- In terms of space: indicators must be converted to similar scale and business conditions .

Comparison technique:

Absolute comparison : This method shows the volume and scale of increase or decrease in the business performance indicators of the enterprise compared to other enterprises or between periods of the enterprise.

opposite of the indicator

Absolute increase or decrease =

Value of the indicator - analysis period

Index value original period

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• Pre-tax Profit of Bidv Tien Giang in the Period 2011-2015 zt2i3t4l5ee zt2a3gsnon-credit services, joint stock commercial bank zt2a3ge zc2o3n4t5e6n7ts At that time, the Branch had to set aside a provision for credit risks, which reduced the Branch's income. Chart 2.2. Pre-tax profit of BIDV Tien Giang in the period 2011-2015 Unit: Billion VND 140 120 100 80 60 40 20 0 63.3 80.34 89.29 110.08 131.99 2011 2012 2013 2014 2015 Profit before tax (Source: Report on the implementation of the annual business plan of the General Planning Department of BIDV Tien Giang [24]) However, through chart 2.2, it can be seen that BIDV Tien Giang's profit is still increasing continuously, and its operating efficiency is currently leaking. This is a contribution of non-credit services, and this service segment will be increasingly focused on growth by BIDV Tien Giang to ensure the highest profit safety because credit activities have many potential risks. At the same time, focusing on developing non-credit services is consistent with one of the contents of restructuring the financial activities of credit institutions in the project "Restructuring the system of credit institutions in the period 2011-2015" approved by the Prime Minister in Decision No. 254/QD-TTg dated March 1, 2012 [14]: "Gradually shifting the business model of commercial banks towards reducing dependence on credit activities and increasing income from non-credit services". 2.2. Current status of non-credit service development at BIDV Tien Giang. 2.2.1. BIDV Tien Giang has deployed the development of non-credit services in recent times. Along with the development of the Head Office, BIDV Tien Giang's products and services are constantly improved and deployed in a diverse manner to ensure provision for many different customer groups in the area: individual customers, corporate customers, and financial institutions. Typical services are as follows: Payment services, treasury services, guarantee services, card services, trade finance, other services: Western Union, insurance commissions, consulting services, foreign exchange derivatives trading, e-banking services,... 2.2.1.1. Payment services: In accordance with the Prime Minister's Project to promote non-cash payments in Vietnam [15], banks in Tien Giang province have continuously developed payment services to reduce customers' cash usage habits through card services and electronic banking services such as: salary payment through accounts, focusing on developing card acceptance points, developing multi-purpose cards, paying social insurance by transfer, paying bills through banks, etc. Chart 2.3. Net income from payment services in the period 2011-2015 Unit: Million VND 6000 5000 4000 3000 2000 1000 0 3922 4065 4720 5084 5324 2011 2012 2013 2014 2015 Net income from payment services (Source: Report on the implementation of the annual business plan of the General Planning Department of BIDV Tien Giang [24]) Along with the technological development of the entire system, BIDV Tien Giang has a payment system with a fairly stable transaction processing speed, bringing many conveniences to customers. The results of observing chart 2.3 show that the income from payment services that the Branch has achieved has grown over the years but the speed is not high and the products are not outstanding compared to other banks. Domestic payment products such as: Online bill payment, electricity bills, water bills, insurance premiums, cable TV bills, telecommunications fees, airline tickets, etc. bring many conveniences to customers. Regarding international payment, this is an indispensable activity for foreign economic activities, BIDV Tien Giang is providing international payment methods for small enterprises producing agriculture, aquatic food and seafood that have credit relationships with banks in industrial parks in Tien Giang province such as: money transfer, collection, L/C payment. 2.2.1.2. Treasury services: BIDV Tien Giang always focuses on ensuring treasury safety and currency security, always complies with legal regulations, and minimizes risks in operations such as: counting and collecting money from customers, receiving and delivering internal transactions, collecting from the State Bank (SBV) or other credit institutions, receiving ATM funds, bundling money, etc. BIDV Tien Giang's treasury service management department is always fully equipped with modern machinery and equipment such as: money transport vehicles, fire prevention tools, money counters, money detectors, magnifying glasses, etc. to ensure absolute safety in treasury operations, immediately identifying real and fake money and other risks that may affect people and assets of the bank and customers. In addition, implementing regulation 2480/QC dated October 28, 2008 between the State Bank of Tien Giang province and the Provincial Police on coordination in the fight against counterfeit money, in the 3-year review of implementation, BIDV Tien Giang discovered, seized and submitted to the State Bank of Tien Giang province 475 banknotes of various denominations and was commended by the Provincial Police and the State Bank of Tien Giang province [17]. Chart 2.4. Net income from treasury services in the period 2011-2015 Unit: Million VND 350 300 250 200 150 100 50 0 105 122 309 289 279 2011 2012 2013 2014 2015 Net income from treasury services (Source: Report on the implementation of the annual business plan of the General Planning Department of BIDV Tien Giang [24]) However, as shown in Figure 2.4, income from treasury operations is not high and fluctuates. Specifically, in the period 2011-2013, net income increased and increased most sharply in 2013, then in the period 2013-2015, there was a downward trend. This fluctuation is due to the fact that fees collected from treasury services are often very low and can even be waived to attract customers to use other services. 2.2.1.3. Guarantee and trade finance services: BIDV Tien Giang, thanks to the advantages of the province and the favorable location of the Branch, has continuously focused on developing income from guarantee services and trade finance. Chart 2.5. Net income from guarantee and trade finance services in the period 2011-2015 Unit: Million VND 14000 12000 10000 8000 6000 4000 2000 0 5193 5695 2742 3420 8889 3992 11604 12206 5143 5312 2011 2012 2013 2014 2015 Net income from guarantee services Net income from Trade Finance (Source: Report on the implementation of the annual business plan of the General Planning Department of BIDV Tien Giang [24]) Through chart 2.5, we can see that BIDV Tien Giang's income from guarantee services and trade finance has grown over the years. The reason is: Among BIDV Tien Giang's corporate customers, the construction industry is the industry with the highest proportion of customers after the trading industry, this is a group of customers with potential to develop guarantee services. The second group of customers is corporate customers in the fields of agricultural production, livestock and seafood processing with high import and export turnover in the area. are the target of trade finance development. In addition, BIDV Tien Giang also focuses on continuously developing these customer groups to increase revenue for many other products and services in the future. 2.2.1.4. Card and POS services: As a service that BIDV Tien Giang has recently developed strongly, it can be said that this is a very potential market and has the ability to develop even more strongly in the future. Card services with outstanding advantages such as fast payment time, wide payment range, quite safe, effective and suitable for the integration trend and the Project to promote non-cash payments in Vietnam. Cards have become a modern and popular payment tool. BIDV Tien Giang early identified that developing card services is to expand the market to people in society, create capital mobilized from card-opened accounts, contribute to diversifying banking activities, enhance the image of the bank, bring the BIDV Tien Giang brand to people as quickly and easily as possible. BIDV Tien Giang is currently providing card types such as: credit cards (BIDV MasterCard Platinum, BIDV Visa Gold Precious, BIDV Visa Manchester United, BIDV Visa Classic), international debit cards (BIDV Ready Card, BIDV Manu Debit Card), domestic debit cards (BIDV Harmony Card, BIDV eTrans Card, BIDV Moving Card, BIDV-Lingo Co-branded Card, BIDV-Co.opmart Co-branded Card). These cards can be paid via POS/EDC or on the ATM system. In addition, with debit cards, customers can not only withdraw money via ATMs but also perform utilities such as mobile top-up, online payment, money transfer,... through electronic banking services. In order to attract customers with card services, BIDV Tien Giang has continuously increased the installation of ATMs. As of December 31, 2015, BIDV Tien Giang has 23 ATMs combined with 7 ATMs in the same system of BIDV My Tho, so the number of ATMs is quite large, especially in the center of My Tho City, but is not yet fully present in the districts. Basic services on ATMs such as withdrawing money, checking balances, printing short statements,... BIDV ATMs accept cards from banks in the system. Banknetvn and Smartlink, cards branded by international card organizations Union Pay (CUP), VISA, MasterCard and cards of banks in the Asian Payment Network. From here, cardholders can make bill payments for themselves or others at ATMs, by simply entering the subscriber number or customer code, booking code that service providers notify and make bill payments. Chart 2.6. Net income from card services in the period 2011-2015 Unit: Million VND 3500 3000 2500 2000 1500 1000 500 0 687 1023 1547 2267 3104 2011 2012 2013 2014 2015 Net income from card services (Source: Report on the implementation of the annual business plan of the General Planning Department of BIDV Tien Giang [24]) Through chart 2.6, it can be seen that BIDV Tien Giang's card service income is constantly growing because the Branch focuses on developing businesses operating in industrial parks, which are the source of customers for salary payment products, ATMs, BSMS. Specifically, there are companies such as Freeview, Quang Viet, Dai Thanh, which are businesses with a large number of card openings at the Branch, contributing to the increase in card service fees [25]. Table 2.6. Number of ATMs and POS machines in 2015 of some banks in Tien Giang area. Unit: Machine STT Bank name Number of ATMs Cumulative number of ATM cards POS machine 1 BIDV Tien Giang 23 97,095 22 2 BIDV My Tho 7 21,325 0 3 Agribank Tien Giang 29 115,743 77 4 Vietinbank Tien Giang 16 100,052 54 5 Dong A Tien Giang 26 97,536 11 6 Sacombank Tien Giang 24 88,513 27 7 Vietcombank Tien Giang 15 61,607 96 8 Vietinbank - Tay Tien Giang Branch 6 46,042 38 (Source: 2015 Banking Activity Data Report of the General and Internal Control Department of the Provincial State Bank [21]) Through table 2.6, the author finds that the number of ATMs of BIDV Tien Giang is not much, ranking fourth after Agribank Tien Giang, Dong A Tien Giang, Sacombank Tien Giang. The number of POS machines of BIDV Tien Giang is very small, only higher than Dong A Tien Giang and BIDV My Tho in the initial stages of merging the BIDV system. Besides, BIDV Tien Giang has a high number of cards increasing over the years (table 2.7) but the cumulative number of cards issued up to December 31, 2015 is still relatively low compared to Agribank, Vietcombank, Dong A (table 2.6). div.maincontent .content_head3 { color: black; font-family:"Times New Roman", serif; font-style: normal; font-weight: bold; text-decoration: none; font-size: 14pt; } div.maincontent .p { color: black; font-family:"Times New Roman", serif; font-style: normal; font-weight: normal; text-decoration: none; font-size: 14pt; margin:0pt; } div.maincontent p { color: black; font-family:"Times New Roman", serif; font-style: normal; font-weight: normal; text-decoration: none; font-size: 14pt; margin:0pt; } div.maincontent .s1 { color: black; font-family:"Courier New", monospace; font-style: normal; font-weight: normal; text-decoration: none; font-size: 14pt; } div.maincontent .s2 { color: black; font-family:"Times New Roman", serif; font-style: italic; font-weight: normal; 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Relative comparison : This method shows the structure, relationship, growth rate and popularity of the indicator.

In which: Gi: analysis period indicator value Go: base period indicator value

Advantages: simple, easy to implement, allows to separate common and unique features of the comparison phenomenon. On that basis, we can evaluate effective or ineffective activities to find the optimal solution in each case.

Disadvantages: This method has a major disadvantage which is that it cannot determine the level of influence of each fluctuating factor on the indicator to be analyzed.

1.6.2. Continuous replacement method

The method of sequential substitution is a method of determining the level of influence of each factor on the fluctuation of the analyzed indicator. Continuous substitution is to replace the original data with the actual data of the factors affecting an economic indicator analyzed according to the logical relationship between the factors.

Comparing the difference in the function between the previous one and the one it has replaced determines the influence of the replaced factor. The method of sequential substitution is illustrated as follows:

A is the indicator to be analyzed

and are the data for the analysis period and the base period, respectively.

is the amount of change in indicator A

To determine the impact of each factor x, y, z on index A, we replace the variable factors in turn. We have:

The influence level of factor x on indicator A:

The influence level of factor y on indicator A:

The influence of factor z on indicator A:

Summary of influencing factors:

Advantages: This method helps determine the level of influence of each factor related to the analysis index. From there, appropriate measures can be found to change each factor, improving the effectiveness of the analysis index.

Disadvantages: To use this method, the factors related to the analysis index must have a relationship in the form of a product or quotient. Arranging the order to determine the level of influence of the factors is also very complicated.

1.6.3 . Method of calculating the difference

The method of calculating the difference is a special form of the method of continuous substitution, which aims to analyze the favorable factors that affect the fluctuations of economic indicators. This method fully respects the content of the steps of the method of continuous substitution. They only differ in that when determining the influencing factors, it is simpler, just grouping the terms and calculating the difference of the factors will give us the level of influence of each factor on the analyzed indicator.

Thus, the difference method is only applicable in cases where factors are related to the index by a product and can also be applied in cases where factors are related to the index by a quotient.

1.6.4.Balance method

During the business operation of an enterprise, many quantitatively balanced relationships are formed between the two sides of the factors and the business process. Based on these balanced relationships, the analyst will determine the influence of the factors on the fluctuations of the analysis index.

In the total relationship, the absolute influence of each component is independent of each other and is determined as the absolute difference of those components.

1.6.5. Detailed analysis method

- Details according to the components of the indicator: Economic indicators are often divided into constituent elements. Detailed research helps us accurately evaluate the constituent elements of the analyzed indicators.

- Time-based details: Business results are always a process in a certain period of time. Each different period of time has different causes. This detailed analysis helps us to accurately and correctly evaluate business results, thereby having effective solutions in each period of time.

- Details by location and business scope: Business performance results are created by many departments, by many different scopes and locations. This detailed analysis aims to evaluate the business results of each department, scope and different locations, in order to exploit the strengths and overcome the weaknesses of different departments and scopes of operation.

1.7. Some indicators to evaluate production and business efficiency

To accurately and scientifically evaluate the production and business efficiency of an enterprise, it is necessary to develop a system of appropriate indicators including detailed indicators. These detailed indicators must reflect the productivity, costs and profitability of each factor and each type of capital.

1.7.1. General indicators

 Productivity .

Productivity is an indicator that reflects how many units of output production results one unit of input factors brings. The larger the value of this indicator, the higher the efficiency of input use, leading to higher business efficiency. On the contrary, the smaller the value of this indicator, the lower the efficiency of input factors, leading to low production and business efficiency.

Productivity =

In there:

- Output factor value is: total production value, net sales revenue and service provision, total pre-tax profit...

- Input factor values ​​are: labor, wages, material costs, business capital.

 Profitability .

Profitability or profitability is an indicator reflecting how many units of profit a unit of input or output unit brings in business results.