The urgency of the topic
Globalization and international economic integration present both opportunities and challenges for Vietnam's economy and business landscape As highlighted by the World Bank, Vietnam is transitioning towards a market-oriented economy, adopting open economic policies to enhance its participation in global markets This shift significantly influences the overall economy and the competitiveness of enterprises, enabling them to attract customers and expand their operations both domestically and internationally.
In a market-oriented economy, domestic enterprises face the challenge of effectively managing their production and business activities to thrive without government protection Entrepreneurs must conduct regular market research to identify strategies for growth and profitability, which includes expanding their business scale, enhancing employee quality of life, adopting advanced technology, optimizing resource allocation, and fostering international integration These elements are essential for sustainable development, crucial for a business's longevity Solvents and industrial chemicals significantly influence the economy, as their prices affect the input costs of various goods and are primarily driven by supply and demand dynamics Additionally, the cost of these chemicals is closely linked to global oil prices, allowing solvent and industrial chemical companies greater autonomy in determining their business outcomes, unlike petroleum businesses that are subject to government price regulations.
Petrolimex Chemical Co., Ltd is committed to enhancing its role in the evolving solvent and industrial chemical market, both regionally and globally To capitalize on emerging opportunities, the company has restructured its operations, enabling significant contributions to the chemical sector and the national economy Improving business performance is crucial amidst ongoing challenges, positioning it as the company's top priority for sustainability and growth This focus drives the company to refine its operational strategies, boost product consumption, optimize production resources, and analyze the impact of various factors on performance Recognizing the critical nature of these enhancements, the author has chosen "Improving Business Performance at Petrolimex Chemicals Limited Company" as the dissertation theme.
The research objectives of the topic
The goal of the topic is to:
- Systematize the theoretical basis of business performance in general
This article examines the business performance of Petrolimex Chemical Co., Ltd from 2017 to 2019, highlighting key factors that influence its operational success By analyzing the company's performance during this period, we identify critical aspects that impact its overall business outcomes.
- Proposing some solutions to improve the business performance of Petrolimex Chemical Co., Ltd in the future.
Object and scope of the study
- The object of study: issues related to the business performance of Petrolimex Chemical Company Limited
From 2017 to 2019, Petrolimex Chemical Co., Ltd experienced notable business performance, yet faced several weaknesses, including operational inefficiencies and market competition Opportunities for growth emerged through expanding product lines and entering new markets, while challenges such as fluctuating raw material prices and regulatory pressures posed significant risks To enhance its business performance, Petrolimex Chemical should focus on optimizing operations, investing in technology, and developing strategic partnerships to leverage market opportunities effectively.
+ About space: Thesis researching business performance at Petrolimex Chemical Company Limited
+ About time: Evaluate the business performance of Petrolimex Chemical Co., Ltd in the period 2017-2019, propose orientation and solutions for development in the period of 2021-2025.
Research question
The research of the topic aims to answer the following in-depth questions:
- How was the business performance of Petrolimex Chemical Co., Ltd in the period 2017-2019?
- What are the shortcomings in the chemical business, industrial solvents of Petrolimex Chemical Co., Ltd over the past years?
- What solutions to adopt to contribute to improving the business performance at Petrolimex Chemical Co., Ltd?
Research methods
Data collection methods
The thesis surveys the current status of Petrolimex Chemical Co., Ltd from 2017 to 2019
Data used in the thesis is mainly secondary data, including:
- Decrees, Decisions, Circulars of the Government, ministries, departments, and branches related to the operation of enterprises in general, industrial chemicals and solvents businesses in particular;
- Scientific works and domestic and foreign research works related to the business performance of the enterprise;
- Other documents related to natural conditions such as geographical location, population distribution, infrastructure, business environment, etc in the study area;
The official announcement of the research process data reveals significant findings, including previously conducted research results and pertinent information regarding the business activities of companies within the industrial chemical and solvent trading sector.
- Financial reports and reports on business strategies, tasks, and development projects of Petrolimex Chemical Co., Ltd in 2017-2019
Methods of collecting secondary data are done through the following ways:
To conduct a thorough study, it is essential to utilize keyword searches and access datasets from various authoritative sources, including the Statistical Yearbook, the Ministry of Finance, the Ministry of Planning and Investment, and the Ministry of Labor, Invalids, and Social Affairs Additionally, relevant literature from economic development, banking, finance, and research journals, along with legal documents such as decrees, circulars, and decisions from the government and related agencies, should be incorporated to enrich the analysis of business performance.
- Direct observation method: through observing the production and business operation at Petrolimex Chemical Company Limited.
Data analysis method
The thesis uses some information analysis methods to evaluate the business performance of Petrolimex Chemical Co., Ltd from 2017 to 2019 as follows:
Statistical analysis quantifies socio-economic phenomena and processes within specific historical contexts, revealing their numerical characteristics It assesses the degree of variation, highlighting the unique nature of relationships involved To conduct effective statistical analysis, it is essential to treat statistics as a foundational document and employ statistical methods as key research tools.
Statistical analysis plays a crucial role in economic management by utilizing robust theories and methodologies It helps identify the underlying causes of plan completion and management decisions, evaluates the impact of various factors on resource utilization, and uncovers the relationships and overarching patterns within the system.
In statistical analysis, the system requires an approach in both directions: analysis and synthesis
The analytical indicator method, which involves comparing data against a baseline, is widely utilized for analyzing business activities and forecasting socio-economic indicators in macroeconomics By examining trends and fluctuations in various chemical products, solvents, and market segments over time, this approach enables the synthesis of documents and accurate criterion calculations Ultimately, it ensures that document analysis is scientific, objective, and effectively captures essential research content.
This article analyzes and evaluates the business performance of industrial chemicals and solvents at Petrolimex Chemical Co., Ltd for the years 2017 to 2019 By synthesizing and comparing data across these years, we provide insights based on the results of our data synthesis and calculations The study employs a specific comparison method to highlight trends and performance metrics in the industry.
- Absolute numerical method: The difference between two criteria: analysis period and primary indicator
The comparative numerical method evaluates the completion level by analyzing the percentage of the index during the analysis period against the initial indicator, allowing for the assessment of growth rates through the absolute difference compared to the first criterion.
The comparison method provides a precise evaluation of the growth or decline in key performance indicators at Petrolimex Chemical Company Limited, enabling insightful analysis of the company's strengths and weaknesses.
The significance of the topic
Improving business performance has been mentioned in many previous studies by domestic and foreign authors For example, in his research, the author Truong Thanh Tu
Research conducted by various authors highlights key strategies for enhancing business performance across different sectors in Vietnam Vo Viet Chuong (2015) emphasizes the importance of developing networks, improving marketing activities, and diversifying product and service quality to boost the performance of the Joint Stock Commercial Bank for Investment and Development of Vietnam - Ha Tinh Branch Similarly, Doan Thi Nhat Hong (2014) suggests that SIMCO Song Da Joint Stock Company should optimize its capital structure, manage costs effectively, and enhance human resources and technology to improve overall performance Le Thi Hoa (2016) focuses on Tam Chien Company Limited, advocating for cost-effective practices and market expansion to drive success Collectively, these insights provide a roadmap for service providers and businesses aiming to retain customers, attract new ones, and ultimately increase revenue in a competitive landscape.
Recent studies have established a theoretical framework for their respective fields, assessing the current state of resource utilization, management, and business performance within organizations They propose various strategies aimed at enhancing human resource efficiency, with an emphasis on improving cost management, reducing input costs, and boosting revenue.
In recent years, Petrolimex Chemical Co., Ltd has conducted various studies primarily focused on market expansion and business performance enhancement However, there has been a lack of research analyzing the current situation and proposing actionable solutions for improving the company's performance This study aims to fill that gap by providing a thorough analysis and offering practical recommendations to enhance business performance at Petrolimex Chemical Co., Ltd in the near future.
This article establishes a comprehensive theoretical framework for understanding business performance within enterprises It provides an in-depth analysis of the company's production and business performance from 2017 to 2019, evaluating its current status Based on this assessment, the article proposes practical and effective measures aimed at enhancing the company's production processes and business activities in the upcoming years.
Structure of the topic
In addition to the introduction and conclusion, the thesis includes three chapters:
THEORETICAL BASIS OF BUSINESS PERFORMANCE
Overview of business performance
In a market-oriented economy, the primary objective of every business is to maximize profits To accomplish this, companies must create effective strategies at every stage, adapt to evolving market conditions, manage resources efficiently, and continuously assess their progress.
1.1.1 The concept of business performance
Business performance is an economic category associated with a market mechanism related to all production and business processes such as labor, capital, machinery, and raw materials
To achieve high performance, an enterprise must effectively utilize the essential elements of its business processes Economists analyze various aspects of business performance to provide diverse definitions, highlighting the complexity of measuring success in an organization.
To achieve their goals, businesses must focus on internal conditions, enhance the capacity of production factors, and reduce costs Improving business performance requires utilizing inputs effectively to maximize results while minimizing expenses It is essential to differentiate between efficiency and general production and business activities Efficiency can be defined as the comparison of outputs, such as value, revenue, and profit, against input resources, including labor, costs, assets, and capital Furthermore, business performance is a crucial economic metric that reflects the level of resource utilization and cost management in pursuit of business objectives In today’s economy, assessing business performance is vital for economic growth and evaluating economic goals over time Absolute efficiency is determined by analyzing these relationships.
The relative efficiency index is determined as follows:
• K: Business results (by the following criteria: Total value, Total revenue, profit)
• C: Input resources (including Labor, cost, capital, equipment)
1.1.2 Distinguish between business performance and results
From the above concepts, we can understand that business performance is an economic category that reflects using resources (equipment, machinery, fuel, and capital) to achieve the business's goal
Business performance is a critical measure of economic growth, reflecting the relationship between results and the costs incurred to achieve them It serves as a foundation for evaluating how well enterprises meet their production and business objectives over time Enhanced business performance enables companies to invest in machinery, improve employee welfare, and meet governmental obligations It is essential to differentiate between business performance and business results; the latter comprises absolute figures that indicate the scale of an enterprise's operations Achieving predefined goals during production is crucial, with results quantified through metrics like sales, revenue, and profit, as well as qualitative factors such as reputation and product quality.
The effectiveness of a business is reflected in its results, which highlight the significant scale of expenditures versus revenues Business results serve as indicators of product and operational performance, showcasing the quality and value of offerings that drive customer satisfaction and engagement However, these results primarily indicate the scale achieved, rather than the quality of production and business activities, as products are secondary to efficiency Results are essential for calculating and analyzing performance throughout each business cycle, illustrating the distinction yet close relationship between results and effects.
1.1.3 The persuasive nature of business operations
In general, economic performance is the category reflecting management skills, ensuring high results on socio-economic tasks set out at the smallest cost
Economic performance can be evaluated through both qualitative and quantitative perspectives Quantitatively, it is determined by the relationship between the results achieved and the costs incurred; a higher performance is indicated when the outcomes exceed the expenses, with a greater difference signifying superior performance Qualitatively, the level of economic performance reflects the effectiveness of production and business management capabilities.
The two qualitative and quantitative aspects of business performance are not separated
Economic performance does not always align with economic results, as performance serves as a comparative measure reflecting the relationship between output and gain While results are essential for analyzing efficiency, they do not reveal the extent of creation or the associated costs, failing to indicate the quality of that creation The core of economic performance lies in demonstrating economic development objectives and enhancing production and business activities to meet market demands effectively Efficiency is defined by the level of satisfaction achieved through the optimal selection and utilization of limited resources, ensuring that economic outcomes fulfill consumer needs.
Key Performance Indicators (KPIs) are essential metrics used to assess the success of an organization or specific activities, such as projects and products They measure performance against operational goals, like achieving zero defects or maintaining high customer satisfaction, and can also reflect progress toward strategic objectives Selecting the appropriate KPIs requires a thorough understanding of what matters most to the organization, which can vary by department; for instance, finance KPIs will differ from those relevant to sales.
In summary, improving the economic performance of social production and all other production and business activities is the most basic requirement of development goals
Performance encompasses a wide range of metrics, making it essential to understand the various efficiency indicators and their classifications Analyzing and evaluating performance requires a comprehensive grasp of these diverse efficiency metrics to ensure accurate assessments.
Performance indicators are distinct from business drivers and goals For instance, a school may use its student failure rate as a key performance indicator to assess its standing within the educational community, while a business might track the percentage of income generated from returning customers as a crucial KPI.
The key stages in identifying KPIs are:
•Having a pre-defined business process (BP)
•Having requirements for the BPs
•Having a quantitative/qualitative measurement of the results and comparison with set goals
•Investigating variances and tweaking processes or resources to achieve short-term goals
Key performance indicators (KPIs) serve as essential tools for evaluating the performance of organizations, business units, departments, and employees on a regular basis Effective KPIs are characterized by their clarity, significance, and measurability, ensuring that they are easily understood and actionable Organizations typically avoid setting KPIs that could be adversely affected by factors beyond their control, as such indicators tend to be disregarded in performance assessments.
KPIs must adhere to the SMART criteria, ensuring they are Specific to the business's goals, Measurable for accurate assessment, Achievable within realistic limits, Relevant to the organization's success, and Time-phased to reflect results over a defined period.
In order to be evaluated, KPIs are linked to target values, so that the value of the measure can be assessed as meeting expectations or not
For the business performance of an enterprise, it is divided into:
General business performance provides an overview of the business It shows the business performance of an enterprise's entire production and business process (or a division of the business) in a time
A division's business performance measures the effectiveness of specific operational areas within an enterprise, focusing on the utilization of various assets, raw materials, and core business activities, including joint ventures This assessment highlights the performance of individual sectors rather than the overall business performance.
The business performance of an enterprise is also divided according to the criteria of time:
Short-term business performance is the business performance reviewed and assessed in a short time, such as weeks, months, quarters, years, and several years
Long-term business performance refers to the evaluation of a company's success over an extended period, focusing on strategic planning and sustainable growth It encompasses both long-term and short-term metrics, highlighting the importance of continuous development and progress in achieving overall business objectives.
The relationship between long-term and short-term business performance is often dialectical, with instances of contradiction To achieve long-term objectives, companies may prioritize these over immediate gains, as evidenced by global retail giants like METRO and BIG C entering the Vietnamese market.
1.1.5 The Necessity and Meaning of Improving Business Operations
Content and consumption indicators in business performance analysis
To evaluate business performance effectively, profitability indicators are commonly utilized, as they provide insights into a company's financial success Additionally, various other metrics are employed to assess how efficiently a business utilizes its resources.
1.2.1 Content analysis of business results
Analyzing business results enables enterprises to pinpoint the factors influencing their operations and outcomes, as highlighted by Pham Van Duoc in his examination of business activities This comprehensive analysis facilitates informed decision-making, encompassing aspects such as business performance, production cost fluctuations, corporate financial statements, and revenue volatility.
1.2.1.1 The criteria for analyzing business results
The ratio of profit and net revenue:
The ratio of revenue/net revenue = Profit (before tax, after-tax)/Net revenue
This coefficient shows how much profit the enterprise gets (before tax, after-tax) from one dong of revenue
The purpose of this analysis is to identify the underlying trends in revenue fluctuations, focusing on the absolute changes in revenue, including both increases and decreases, as well as the corresponding rates of change By examining these metrics, we can gain valuable insights into the overall performance and dynamics of revenue over time.
Purpose: Analyzing the volatility of profit over time to evaluate the increase and decrease of profit and determine each factor's impact on profit
The revenue target for an enterprise is defined as the total value of goods and services sold during a specified period, typically one year, which is reflected in the issued sales invoices.
Turnover = Σ sale price x Quantity of goods sold
Revenue is divided into three categories:
With the VAT-inclusive sale price, the turnover is called VAT-inclusive turnover With the VAT-exclusive selling price, the revenue is called the VAT-exclusive revenue
Revenue without tax due to deduction of related items such as sales discounts, discounts, returns is called net revenue
The costs incurred by an enterprise encompass all expenses related to labor, materials, and other essential elements necessary for production and business operations, which are recorded in cash over a specific period The production costs primarily consist of material expenses, including waste, and are aligned with the business's objectives Operating expenses encompass costs associated with regular business activities, including both operational and financial costs, as well as other operating expenses Additionally, costs can be categorized into direct and indirect costs based on their nature and the factors that induce them.
Costs can be categorized as essential and non-basic based on their relationship to the technological and business processes involved in product production Additionally, costs are classified as variable and fixed according to their activity level Both production and business costs significantly influence a company's financial outcomes; when costs rise, profits decline, and when costs decrease, profits increase Therefore, businesses prioritize cost reduction and effective cost classification to optimize their results.
- Profit target: Business profit is an indicator reflecting the surplus-value or the level of business performance that the enterprise gains
Business profits include Profits earned from the results of production and business activities, profits earned from financial results, other profits
Gross profit = Net revenue - Total cost of goods sold Profit before tax = Gross profit - Total cost of insurance and administration 1.2.2 Overall effect
1.2.2.1 Efficient use of total assets
The production capacity of total assets:
SSX TS = Net revenue/Average total assets
This target shows how many VND of net revenue of the assets spent on business in the period
SSL TS = Return/Average Total Assets = ROA
This target shows how much profit is earned for every 1 dong of assets spent on business in the period
1.2.2.2 Efficient use of equity The productivity of equity capital
SSX VCSH = Net revenue/Average equity = ROE
This target shows how much revenue is generated for every 1 dong of equity invested in the business
SSL VCSH = Return after-tax/Average equity = ROE
This target shows how many dong of profit for every 1 dong of equity invested in the business
The production capacity of cost:
SSX CP = Net revenue/Total cost
This target shows how many dong of revenue for every 1 dong of expenses spent in the period
SSL CP = Profit/Total cost
This target reflects how many VND of profit for every 1 dong of expenses spent in the period.
Evaluate the efficiency of input resources
SSX LĐ = Total revenue/Average total number of employees
This target shows how much revenue per employee generated during the period It reflects fair Labor in the course of doing business
SSL LĐ = Total profit/Average total number of employees
This target shows how much profit one employee can create in a period
1.3.2 Effective use of fixed assets
The production capacity of fixed assets:
SSX TSCĐ = Average net revenue/fixed assets
This target shows how much net revenue is earned for every 1 dong of fixed assets spent on business in the period
The profitability of fixed assets:
SSL TSCĐ = Average profit/fixed assets
This target shows how much profit is earned for every 1 dong of fixed assets spent in business in the period
1.3.3 Effective use of liquid assets
The production capacity of liquid assets:
SSX TSLĐ = Net revenue/Average working assets
This indicator shows how many dong of net revenue for every 1 dong of working asset spent in business in the period
The profitability of liquid assets:
SSL TSLĐ = Average profit/liquid assets
This target shows how many dong of profit for every 1 dong of working asset spent in business in the period
The rate of labor asset turnover in the year:
Factors affecting business performance
Understanding the factors that influence business performance is crucial for effective analysis Accurate and timely identification of these factors, along with their interactions with economic phenomena, is essential Factors can be classified into four categories: the inevitability of factors, their impact trends, and their influence within the business environment Subjective factors, such as costs, labor fees, and labor time, are reliant on a business's internal resources, while objective factors, including market prices, tax rates, and minimum or average wages, represent external influences By analyzing both subjective and objective factors, businesses can assess their efforts and discover strategies to enhance performance.
Content and analytical methods
The analysis of production and business activities encompasses economic phenomena and processes that arise from various subjective and objective factors within an independent economic unit These phenomena and processes are reflected in specific production and business outcomes, which are quantified through economic indicators.
Analyzing production and business results involves examining various stages, including purchases, production outputs, and sales, culminating in financial outcomes This analysis focuses on the effectiveness of implemented strategies, goals, and plans, represented by key economic indicators Essential business results include sales revenue, production value, costs, and profits, all evaluated in relation to the underlying conditions of the business process, such as labor, capital, and materials It is crucial to differentiate between quantitative indicators, which measure the scale of results like revenue and labor, and qualitative indicators, which assess business efficiency through metrics such as unit costs, profitability, and labor productivity.
A comprehensive system of diverse indicator modules allows enterprises to thoroughly assess their business performance by classifying influencing factors from various perspectives This enables businesses to identify their strengths and weaknesses, facilitating targeted measures to enhance performance When analyzing business results through economic indicators, it is essential to quantify qualitative factors into numerical values, ensuring they are defined with specific variability.
In order to perform those specific jobs, it is necessary to study generalized business analysis methods
As awareness of economic phenomena grows alongside advancements in economic sciences and applied mathematics, computational engineering methods are increasingly utilized in analytical economics Each method offers distinct strengths and limitations, necessitating a high level of proficiency in their application to effectively achieve specific objectives.
The following are technical calculation methods commonly used in business analysis:
The comparison method is the oldest and most widely used The economic part compares the quantified economic indicators and phenomena with the same content and similar nature
The comparison method comes in many forms:
• Compare performance data with a benchmark or planned metrics
• Comparing actual data between periods and years
• Compare performance figures with average or advanced specifications - economics
• Compare the firm's data with those of respective firms or with competitors
• Comparison of technical-economic parameters of other economic options
The comparison method offers a significant advantage by allowing for the separation of general features and characteristics of the phenomena being analyzed This method evaluates aspects such as development versus underdevelopment and efficiency versus inefficiency, facilitating the identification of the best management solutions for specific cases A key requirement for effective comparison is that the calculation criteria or results must be similar in both content and determination method In comparative analysis, absolute, relative, and mean numbers are all comparable; absolute numbers represent the actual figures derived from the factors constituting the economic phenomenon, such as total production, total circulation costs, and total profit.
Analyzing economic phenomena through absolute numbers reveals their volume and scale For effective comparison, these absolute figures must share consistent content, calculation methods, scope, structure, and measurement units Consequently, the total applicability of comparative analysis is confined within a specific framework.
Relative numbers, expressed as percentages or factors, are essential for evaluating structural changes in unique economic phenomena, enabling comparative analysis between non-equivalent criteria, such as the relationship between goods consumed and profit For instance, a 1% increase in the volume of goods can lead to a corresponding 1% rise in total profit However, relative numbers fail to capture the internal quality or scale of these phenomena, necessitating the simultaneous use of both absolute and relative numbers for accurate comparisons While average numbers can reflect common aspects of economic phenomena, they often overlook the uneven development within the components of these phenomena Average metrics, such as average labor productivity or average working capital, facilitate general assessments of an enterprise's economic performance and help establish economic-technical norms Nevertheless, it is crucial to recognize that average figures do not exist in reality, and one must consider the maximum ranges of fluctuations when utilizing them.
Continuous substitution involves systematically replacing original or planned data with actual data related to factors influencing an economic indicator, based on the established relationships between these factors This method is applicable when a function can articulate the connections between various indicators and economic phenomena It is frequently used to assess the impact of factors on a specific indicator by isolating the substitution factor, while keeping other factors constant By comparing the functional differences before and after the substitution, one can determine the level of impact of the replaced factor For instance, if indicator A is linked to two factors, this relationship can be mathematically represented to facilitate analysis.
To calculate the effects of factors X and Y on indicator A Replace X, Y, respectively At that time, supposed to replace factor X before Y; we have:
• Influence level of factor X on indicator A:
• Influence level of factor Y on indicator A:
It can be seen that, in the same way above, if we replace factor Y first, factor X follows, we have:
• Influence of factor Y on indicator A:
• Influence level of factor X on indicator A:
The variation in replacement sequences can lead to differing outcomes regarding the influence of the same factor on a specific criterion, highlighting a significant limitation of this method Therefore, establishing a logical sequence for replacements is essential when employing this approach Typically, the sequence of continuous substitutions in the documents is outlined as follows:
• The weight factor was replaced First, the weight factor was replaced
• The primary factor is replaced First, the second factor is replaced later
When clearly identifying the influencing factors, it is beneficial to apply the principle of continuous substitution However, the presence of multiple quality and volume factors with similar properties complicates the determination of their replacement order In some cases, a more systematic approach, such as integral calculus, has been utilized instead of this method.
With the above example, we have A = f (X, Y) d A = f x d x + f y d y and ∆ A x = f x d x
When the actual ratio of A1 to Ao is within 5-10%, the calculated results across various replacement sequences remain relatively consistent Another limitation of this approach is the difference number method, which assesses the influence of each factor by utilizing its comparative difference number for calculations.
Also, with the above example, we have: A = f (x, y) with the replacement order x first, y after:
The difference number method is a simple yet effective analytical tool It's important to recognize that the impact of factors on the analyzed indicator aligns with the difference in those factors when the relationship is expressed through multiplication (x) or addition (+).
The impact of various factors on an indicator is assessed by examining the inverse relationship of the factor's difference, particularly when the function denotes the factor's connection to the criterion using a divisor (:) or a minus sign (-).
The article examines economic phenomena characterized by equilibrium relationships, emphasizing the significance of the equilibrium contact method in various financial analyses This method is essential for assessing the movement of goods and fuel materials, calculating breakeven points, and conducting trade balance analyses, providing valuable insights into economic stability and performance.
Graphical methods, such as pie charts and curve graphs, provide a generalizable approach to describing and analyzing economic phenomena These visual tools are particularly effective for illustrating abstract concepts, such as the relationship between supply and demand in goods, highlighting the interplay between costs, production, and business scale By representing the relationships between various economic factors through functions or systems of equations, these methods enable a clear understanding of the magnitude of the objects being analyzed and the effects of influencing factors.
BUSINESS PERFORMANCE ANALYSIS OF PETROLIMEX
Overview of Petrolimex Chemicals Company Limited
2.1.1 History and development of Petrolimex Chemicals Company Limited
Petrolimex Chemicals Company Limited, a wholly-owned subsidiary of Petrolimex Petrochemical Joint Stock Corporation, is a one-member limited liability company established under Decision No 033/QD-PLC-HĐQT on December 27, 2005 The company commenced operations on March 1, 2006, and is fully invested by the Vietnam National Petroleum Group.
- The symbol of Petrolimex Chemicals Company Limited uses the logo of Vietnam National Petroleum Group
- Charter capital: 180,000,000,000 VND (One hundred and eighty billion Vietnam dong)
2.1.2 Characteristics of business activities at Petrolimex Chemicals Company Limited
•The company’s main field of production and business activities:
Petrolimex Chemicals specializes in the trading, importing, and exporting of solvents, chemicals, natural rubber, and synthetic rubber In addition to these products, the company offers comprehensive services including transportation, warehouse leasing, preparation, testing analysis, consulting, and technical support to meet the needs of the construction industry.
• A list of some essential business items at Petrolimex Chemicals Company Limited
Toluene is a versatile solvent widely used in high-grade synthetic resin paints, as well as in the production of various materials such as unglazed rubber, plasticizers, and cement Additionally, it serves as a solubilizing agent for esters and cellulose, highlighting its importance in diverse industrial applications.
- Acetone: Cleaning agent, solvent for plastics and rubber, adhesives; as raw materials in pharmaceuticals
- IPA: Is a solvent used in cleaning, printing, to manufacture drugs, adhesives
Rubber solvent plays a crucial role in the rubber and tire industries, serving as a key component for machinery maintenance Additionally, it is utilized to produce soot-free fuel for glass and jewelry manufacturing, as well as gas for lighters and fuel for tourist kitchens.
- Methanol: Used directly in acetic acid production, formaldehyde, used in printing inks, paints, plant protection drugs
Butyl Cellosolve serves as a key solvent in various applications, including coatings and industrial water emulsions It acts as a binder for plastics and dyes used in water-based printing inks, and is a primary solvent for silk screen printing inks Additionally, it is utilized to dissolve pesticides in industrial settings and functions as a connector and solvent for household and industrial cleaners, detergents, hard surface cleaners, and disinfectants.
- Solvent T-sol White Spirit: Used as a deterrent to remove grease on metal surfaces; Used in the paint manufacturing industry
- Xylene: Used for high solubility for most synthetic resins especially, even in the case of low evaporation; Use in agriculture: insecticide, fungicide
- Methyl Ethyl Ketone: Used in footwear and lacquer industries
- Solvesso paint thinner, TDI 80/20; N-Butyl Acetate; MIBK…
2.1.3 Organizational and managerial characteristics at Petrolimex Chemicals Company Limited
• Leadership of Petrolimex Chemicals Company Limited
The president and director of Petrolimex Petrochemical Joint Stock Company serve as the key representatives responsible for managing the company's operations in alignment with its established objectives Their rights and obligations, as outlined in the company's charter, empower the president to oversee daily activities and report directly to the Board of Directors This leadership structure ensures effective governance and accountability within Petrolimex Petrochemical Joint Stock Company.
The Office of Administrative Organization plays a crucial role in advising and assisting company leaders with organizational and personnel management It is responsible for administrative tasks, including synthesis, clerical work, and archiving Additionally, the office oversees the company's emulation, reward, and disciplinary processes to ensure effective operations.
Department of Finance and Accounting: has the function of advising and assisting the director of the Company in directing and organizing the implementation of Finance,
Accounting, and statistics on the whole Company following state regulations, laws, and regulations of the Company; other assignments when assigned by the director of the Company
The Chemical Sales Department plays a crucial role in advising the Company’s director on product and service sales, conducting product research and development, and fostering market growth Additionally, it focuses on building and nurturing customer relationships The department is accountable to the director for all activities related to its designated responsibilities and authority.
The Technical Department plays a crucial role in supporting the Company's director by providing expert advice and assistance in technical management, construction, project progress, and quality assurance This department is responsible for planning, monitoring, supervising, inspecting, evaluating, and reporting on production activities at the warehouses as per the directives of Company leadership Additionally, it undertakes various technical tasks in alignment with the delegation of authority from the director.
- Hai Phong Chemical Branch: Has the function of directly implementing business activities in the Hai Phong and Northern provinces
- Saigon Chemical Branch has the function of directly performing chemical business activities in the city market Ho Chi Minh City and southern provinces
Nha Be Chemical Warehouse in Ho Chi Minh City plays a crucial role in managing the importation of ships and drums, ensuring a steady supply of goods for the chemical industry in the southern markets The facility focuses on optimizing technical resources, materials, and labor tools to support local business operations effectively.
Thuong Ly Chemical Warehouse in Haiphong plays a crucial role in managing the importation of ships and drums, ensuring a steady supply of goods for the chemical products industry in Northern markets The warehouse effectively utilizes local technical resources, materials, and labor tools to support its business operations.
Minh Huong Chemical Warehouse - Da Nang City, is a consignment warehouse responsible for partly ensuring the source of goods for central provinces such as Da Nang, Quang Binh
Phu Thi Chemical Warehouse - Hanoi City, is a transit warehouse between Hai Phong and some other northern provinces such as Hanoi, Ha Nam, Bac Ninh Phu Thi
Chemical Warehouse is directly under the management of the chemicals business department
Diagram 2 1: Organizational chart of Petrolimex Chemical Company Limited
Diagram 2 2: Organizational chart of the Chemical Business Department
Overview of industrial chemicals and industrial chemical business activities
Chemical commodities play a crucial role in the national economy and are ubiquitous in daily life, particularly in industrial settings However, due to their toxic and hazardous nature, it is vital to store and handle these substances with extreme caution to prevent environmental contamination The careful management of chemicals in production and consumption is essential to avoid potential accidents and ensure safety.
Vietnam's chemical industry constitutes 11.2% of the industrial structure, yet its production capacity remains inadequate compared to emerging Southeast Asian nations While the chemical sector is crucial for economic growth, its impact in Vietnam is still limited According to a 2016 report, the country lacks essential organic chemicals like chloroform, methanol, and ethanol, and there is also a significant shortfall in inorganic chemicals such as soda, nitric acid, and phosphoric acid Additionally, the development of pure chemical products for pharmaceuticals, scientific research, food processing, and rubber is hindered, along with the inability to manufacture plastic materials.
Vietnam, an agricultural country, prioritizes the development of its chemical industry, particularly in fertilizer production, which has seen a consistent annual growth of 10% Despite this growth, the current production capacity only satisfies 45% of the agricultural demand A significant challenge facing the domestic fertilizer industry is its lack of diversification in fertilizer types, leading to a heavy reliance on imports for DAP, nitrogen, and urea.
The chemical industry in Vietnam is mainly aimed at serving agriculture, industrial production, and consumption Those sectors include:
Fertilizers such as phosphate fertilizer, nitrogenous fertilizer, NPK fertilizer
Chemicals used to protect plants
Soda, soda, sulfuric acid, phosphoric acid, hydrochloric acid
Luminaire, oxygen, carbon dioxide, activated carbon, ammonia, petroleum product additives, welding rods, plastic materials
Chemicals used in the consumption
Gasoline, detergent, battery, rubber, paint
The development strategy of the chemical industry in Vietnam
The Vietnamese chemical market is strategically evolving to meet the growing development demands, with a focus on enhancing key sectors of the national economy The objective is to strengthen the chemical industry’s role in supporting the state economy, particularly through the production of essential chemicals for agriculture and rubber.
The Vietnam chemical market development plan 2016 has identified the targets as below:
To develop a modern and rational chemical industry, it is essential to establish concentrated industrial parks and large-scale chemical production complexes utilizing advanced technologies This approach aims to efficiently leverage domestic resources, fulfill local market demands, and reduce reliance on imports, while also focusing on export opportunities.
To meet market demands, it is essential to enhance the production methods for basic chemical products, focusing on traditional industries Additionally, investment in large-scale soda production is crucial to support the growth of light industry, building materials, metallurgy, and oil refining sectors.
Vietnam's chemical industry development strategy focuses on leveraging the country's mineral and plant resources to enhance sectors such as fertilizers, pharmaceutical chemistry, rubber, inorganic chemicals, and petrochemicals This strategy aims to foster international cooperation, ensuring a balanced and modern chemical industry while maximizing the potential benefits for the domestic economy and national defense.
The development plan promotes the use of advanced technology to produce high-quality chemical products that are competitively priced and environmentally friendly Additionally, it emphasizes the need to align this plan with the transformation of the industry structure and the broader economic sector.
2.2.2 Characteristics of industrial chemical trading
Historically, the chemical industry operated as a state monopoly, with only a select few authorized companies, such as the Chemical Company - Ministry of Trade, permitted to engage in trade However, the introduction of market mechanisms has led to increased competition, allowing numerous companies to enter the sector In recent years, the majority of chemical products in our market have been imported from countries like China and the former Soviet Union, among others.
The global market for solvents and industrial chemicals has expanded, with imports coming from countries like Germany, the USA, Japan, India, and Saudi Arabia In response, domestic chemical companies are ramping up production to compete with these imports, leading to a more diverse chemical market in terms of both quantity and variety This increased competition has also driven prices down significantly, intensifying the competitive landscape for businesses involved in chemical trading.
Analyzing the business performance of Petrolimex Chemical Co., Ltd in the period 2017-2019
2.3.1 Overview of production and business results of Petrolimex Chemical Co., Ltd in the period 2017-2019
From 2017 to 2019, Petrolimex Chemical Co., Ltd consistently increased its production and sales figures, despite challenges such as intense competition, fluctuating raw material prices, and stagnant demand As a result, the company has established itself as a leading solvent trading entity in both domestic and international markets The following data outlines the company's output and sales of key business products during this period.
Table 2 1: Output structure of the company's key business items from 2017 to 2019
The business performance report serves as a comprehensive annual financial statement that accurately depicts the overall business situation and outcomes of Petrolimex Chemicals Co., Ltd for the period from 2017 to 2019 It highlights the total value of products, labor, and services achieved, alongside the corresponding wastage incurred to attain these results.
Costs of construction and production activities
* Loss on exchange rate differences " 3.762 57% 6.596 412% 1,600 17% 9,603
Chart 2 1: Sales structure of essential business products of the company from 2017 to 2019
Average income/person/mont h thousand 13.535 85% 15.854 0% 16,058 104% 15,497
Number of inventory turnaround days day 79 168% 47 81% 58.28 101% 57.43
4 The average cost of capital
Table 2 2: Summary of business performance of Petrolimex Chemical Company Limited in the period of 2017 - 2019
In 2017, the company achieved a sales volume of 126,118 tons/m3, reflecting a 7.62% increase from 2016 Key contributors to this growth included a significant rise in methanol output, supported by imports from partners like Petronas, which helped the company regain market share Additionally, MEK sales surged due to a strategic import plan aligned with market demand However, the company faced challenges with lower output items such as Toluene and Isomer Xylene, which saw declines due to reduced demand in the Chinese market and domestic saturation Despite these challenges, the overall sales volume in 2017 remained robust compared to the previous year, demonstrating the company's resilience and proactive measures to enhance DMHC consumption amidst a competitive landscape.
The company's total revenue from sales of goods and services in 2017 reached more than VND 2,011.7 billion; increased 9.18% compared to the implementation in 2016
In 2017, the average selling price of DMHC rose by 1.45%, coinciding with a relative increase in consumption The company's cost of goods sold (COGS) also saw a significant increase of 9.41% compared to 2016 While both COGS and output experienced moderate growth, the percentage increase in COGS outpaced the rise in sales output.
In 2017, DMHC experienced a notable increase in consumption volume alongside a slight rise in the average input unit price of 1.66% The company's gross profit from insurance and services reached over 131.1 billion VND, reflecting a 5.99% increase compared to 2016 This growth was attributed to a sales percentage increase of 9.18%, although it fell short of the 9.41% rise in the cost of goods sold Consequently, the realized gross profit for 2017 was modest, with the gross profit/revenue ratio standing at 6.52%, which is 97.08% of the previous year's performance.
Over the past three years, the company's gross profit rate has been declining, despite an increase in the absolute value of gross profit In 2017, operating expenses exceeded 90.9 billion VND, reflecting a 110.45% increase compared to 2016 While the absolute increase in operating expenses was modest, the percentage rise was more significant than that of gross profit, revenue, and consumption output Selling expenses in 2017 reached over 74.5 billion VND, marking a 5.67% increase from the previous year This percentage increase in selling expenses was lower than that of gross profit, output, and revenue, indicating the company's focused efforts on managing selling expenses, particularly in variable costs.
In 2017, general and administrative expenses rose to over 16.3 billion VND, marking a significant increase of 39.08% compared to 2016, despite a modest absolute value change This surge was attributed to the company's positive business performance in 2016, leading to higher salary and social insurance expenses The operating expenses to revenue ratio for 2017 was 4.52%, reflecting a slight increase of 1.16% from the previous year, while the selling expenses to revenue ratio decreased to 3.70%.
In 2017, interest expenses rose to over 32.6 billion VND, marking a 10.26% increase from 2016 Conversely, losses from exchange rate differences and payment discounts significantly decreased to 1.5 billion VND, a drop of 83.34% compared to the previous year, contributing to a boost in financial profit and overall business performance While selling expenses increased at a slower rate than gross profit, output, and revenue in 2016, the company effectively managed these costs, particularly variable expenses General and administrative expenses in 2017 exceeded 16.3 billion VND, showing a sharp percentage increase of 39.08% despite a modest absolute rise, in line with increases in output, cost of goods sold, and revenue, resulting in a reasonable growth in gross profit.
In 2017, the company, buoyed by a strong business performance in 2016, received approval for its salary fund, leading to a notable increase in expenses for social and health insurance compared to the previous year.
In 2017, the company's operating expenses ratio was 4.52%, reflecting a slight increase of 1.6% from 2016 This indicates a marginal rise in the operating expenses compared to the previous year Conversely, the ratio of selling expenses to revenue in 2017 decreased to 3.70%, showing a slight improvement over 2016.
In 2017, the company's operating profit reached over 40.2 billion VND, representing 97.13% of the profit from the previous year Despite an increase in output, the profit from business activities saw a slight decline due to unit selling prices being lower than production costs, resulting in a reduced percentage increase in gross profit from insurance and service insurance compared to operating expenses The company's financial profit was recorded at -25.8 billion VND, a significant improvement of 22.77% from 2016, with a decrease in absolute value of 7.6 billion VND This loss was primarily attributed to interest expenses exceeding 32.6 billion VND, marking a 10.26% increase from the prior year, while losses from exchange rate differences and payment discounts fell dramatically to 1.5 billion VND, an 83.34% reduction.
In 2017, financial revenue rose to 8.3 billion VND, marking a significant increase of 46.93% from 2016 This surge in revenue, coupled with a notable reduction in exchange rate losses, played a crucial role in enhancing overall business performance and substantially decreasing financial losses compared to the previous year.
In 2017, the company achieved a remarkable pre-tax profit exceeding VND 15.4 billion, reflecting a significant increase of 91.67% compared to the previous year While gross profit rose by 5.99%, operating expenses surged by 10.45%, which hindered potential growth in business activities However, financial expenses saw a notable decrease of 12.68%, primarily due to a substantial reduction in foreign exchange losses, which dropped by 83.34% Additionally, revenue from financial activities surged by 46.93%, contributing significantly, alongside increased sales volume, to the overall pre-tax profit growth in 2017.
In 2018, the company's consumption volume surged to 159,153 tons/m3, marking a 26% increase from 2017 This significant growth was driven by the production of essential products like Toluene, Xylene, and Ethyl, alongside a steady rise in MTBE output Overall, the sharp increase in sales volume reflects the company's effective strategies to enhance DMHC's sales amidst challenging market conditions.
In 2018, the company achieved total revenue exceeding 2,841.6 billion VND, marking a 41% increase from 2017 This growth in consumption revenue was driven by a rise in both sales volume and average selling prices, attributed to higher input costs Additionally, the cost of goods sold (COGS) rose by 42% compared to the previous year, primarily due to an 11% increase in global oil prices.
Analysis of the criteria for evaluating the business performance of Petrolimex
Petrolimex Chemical Company Limited from 2017 to 2019
Indicators reflecting the profitability of Petrolimex Chemical Co., Ltd for the period 2017-2019
2.4.1 Evaluate the effectiveness of profitability
Table 2 7: Indicators reflecting the profitability of the company from 2017 to 2019
Through the above data, we see:
In 2016, for every 100 VND invested in assets, 0.57 dong of profit after-tax was generated In 2017, for every 100 VND invested in assets, 0.96 VND in profit after-tax In
2018, for every 100 VND invested in assets, 0.68 VND in profit after-tax was generated In
2019, for every 100 VND invested in assets, 0.33 dong of profit after-tax was generated Thus, the return on assets ROA was quite low for businesses in the whole survey period
Between 2017 and 2019, the return on assets experienced significant fluctuations, starting at 0.57% in 2016 and rising to 0.96% in 2017, a nearly 50% increase However, this upward trend was short-lived, as the return dropped to 0.68% in 2018 and further declined to 0.33% in 2019, marking the lowest point in the survey period, which signals potential concerns for the company's financial health.
Between 2016 and 2019, the return on assets for Petrolimex Chemical Co., Ltd showed significant fluctuations, peaking at 6.5% in 2017 before declining to 2.43% in 2019 While the company strives to boost revenue in the industrial chemical solvents sector, its primary focus remains on profit after tax rather than mere revenue generation To enhance profitability, it is crucial that revenue growth outpaces cost growth During the period from 2017 to 2019, the company's profit-to-turnover ratio was relatively low, highlighting the challenges in achieving sustainable profit growth.
Chart 2 2: Indicators reflecting the profitability of the company from 2017 to 2019
Rate of return on revenue: In 2016, it reached 0.35%, which shows that for every
In recent years, the company's profit margin after tax has shown fluctuations, with 0.35 VND generated per 100 VND of revenue in 2016, increasing to 0.62 VND in 2017, then declining to 0.39 VND in 2018, and further down to 0.23 VND in 2019 As a unit within the commercial sector, the return rate on sales tends to be lower compared to other industries Despite these figures, the profit margins remain modest, highlighting the need for businesses to implement effective cost control measures to ensure sustainable development.
2.4.2 Evaluate the efficiency of using assets
4 Average short-term assets Million 1,361,053 1,366,154 1,086,736 932,926
5 Average long-term assets Million 297,118 265,732 208,252 190,466
6 The production capacity of total assets
8 The production capacity of short-term assets (8 = 1/4) Times 1.79 2.08 1.85 1.98
9 Rate of return on short-term assets
10 The production capacity of long-term assets (10 = 1/5) Times 8.21 10.69 9.66 9.67
11 Return on long-term assets (11 = 2/5) % 1.85% 4.16% 5.94% 3.39%
Table 2 8: Indicators for evaluating the efficiency of using assets of the company from 2017 to 2019
The data indicates a steady increase in the average total assets of the business, rising from 1,123,391 billion in 2016 to 1,658,171 billion in 2019 This growth reflects the company's commitment to expanding its production and business activities, demonstrating a strategic investment expansion in both breadth and depth.
The production capacity of total assets has shown slight fluctuations over the years, with 1.64 VND of net revenue generated for each VND of assets in 2016, followed by an increase to 1.55 VND in 2017 However, by 2019, this ratio decreased to 1.47 VND Despite these variations, the production capacity remains above 1, indicating that investment and production activities are consistently active.
In 2016, enterprises generated a profit of 0.57 VND after-tax for every 100 VND invested in total assets, which rose to 0.96 VND in 2017, marking an increase of over 68% However, this upward trend was short-lived, as profitability declined to 0.68% in 2018 and further to 0.33% in 2019 This decreasing rate indicates insufficient efficiency in utilizing total assets, primarily due to businesses expanding their investments without achieving high effectiveness To address these challenges, enterprises must implement targeted measures to enhance asset utilization.
The production capacity of short-term assets has shown a trend that mirrors the overall trajectory of total assets, experiencing a gradual decline from 1.98 times in 2016 to 1.85 times in 2017 This trend reversed in 2018, with production capacity rebounding to 2.08 times However, in 2019, the production of short-term assets faced another decline, dropping to 1.79 times.
In 2017, the enterprise achieved a remarkable return on short-term assets, earning 1.14 VND in after-tax profit for every 100 VND invested, marking the highest rate in four years Conversely, 2019 saw a significant decline, with the return dropping to just 0.4 VND per 100 VND invested, indicating ineffective utilization of short-term assets by the business.
The productivity of long-term assets showed slight fluctuations during the survey period In 2018, an investment of VND 100 in long-term assets yielded a net revenue of VND 10.69 However, in 2019, the same investment of VND 100 resulted in a decrease, generating only VND 8.21 in net revenue.
The return on long-term assets consistently surpasses that of short-term assets, indicating that businesses utilize long-term assets more effectively.
Chart 2 3: Indicators for evaluating the efficiency of using assets of the company from 2017 to 2019
2.4.3 Evaluate the efficiency of capital use
Equity is the share of the owner of a business to serve the business The table below analyzes the efficiency of the enterprise's equity use in the period 2017-2019
Table 2 9: Indicators for evaluating the efficiency of the company's capital use from 2017 - 2019
The average equity in the above table of the business increased steadily from 2017 to 2019, especially in 2018 It increased by 41% While the return on equity: In 2016, with
Over the years, the company's return on equity has shown a declining trend, with 100 VND of equity generating 3.72 VND in profit after tax in 2016, 6.5 VND in 2017, 5.73 VND in 2018, and dropping to just 2.43 VND in 2019 These figures indicate a concerning decrease in the efficiency of equity utilization, highlighting the urgent need for a strategic plan to enhance performance and profitability.
Production capacity targets of equity: In 2018, the productive capacity of equity was 14.7 times That means 1 dong of equity spent generated 14.7 VND of revenue This
Between 2016 and 2018, the Business Department experienced its highest rate increase in three years However, in 2019, this growth began to slow, with a return of only 10.75 times, indicating that every 1 dong of equity invested generated just 10.75 VND in revenue.
2.4.4 Evaluate the efficiency of cost use
5 The production capacity of the total cost (5 = 1/3) Times 22.35 27.78 22.12 22.38
Table 2 10: Indicators for evaluating the efficiency of cost management of the company from 2017 to 2019
The table illustrates a steady increase in the business's total costs from VND 82,326 billion in 2016 to VND 100,134 billion in 2019 This upward trend is justifiable as the company continues to expand its operations However, it is essential to further analyze whether the growth rate of costs aligns with the growth rate of net revenue during this period.
100 VND of cost, it created 7.85 VND of profit after-tax In 2017, with 100 VND of cost, it created 13.61 VND of profit after-tax (increased compared to 2016) is the highest level
In 2019, the cost of 100 VND generated only 5.05 VND in after-tax profit, marking a decline from 2018 and indicating the lowest profit margin observed This decline reflects a significant decrease in the business's cost-efficiency, suggesting that the enterprise has not utilized its resources effectively.
It is not a good trend for future development
Chart 2 4: Indicators for evaluating the efficiency of the company's capital use from 2017 to 2019
As for the productivity of the cost From 2017 to 2019, the production capacity of the cost fluctuated around 22 times
It means that for every VND 1 spent, it generates 22 VND of net revenue on average In
In 2018, production capacity costs surged by 27.78 times, marking a 25% increase from the previous year However, projections for 2019 indicate a decline, with production capacity costs expected to revert to 22.35 times, signaling potential challenges for businesses.
2.4.5 Evaluation of the efficiency of labor usage
The unreasonable labor division will waste the labor force; the employees who do not work with the right expertise will cause drowsiness, depression, and ineffective work
If labor is fair, it will encourage the employees to promote their forte, the competent departments, and higher labor productivity
3 Total number of employees Million 119 115 111 104
4 Rate of return of labor (4 = 2/3) People 46.29 96.23 111.41 61.96
Table 2 11: Indicators for evaluating the efficiency of the company's labor use from 2017 to 2019
Through analyzing the data from the table above, we can see: The number of employees in the company is relatively stable during the analysis period The highest was
119 people in 2019, and the lowest of 104 people in 2016
Chart 2 5: Indicators for evaluating the efficiency of cost management of the company from 2017 to
Chart 2 6: Indicators for evaluating the efficiency of using the labor of the company for the period 2017 to
Development orientation of Petrolimex Chemicals Co., Ltd in the future
3.1.1 The main goals of the company
In the upcoming period, the company's primary goal is to establish a well-organized structure that emphasizes its core operations in solvents and industrial chemicals, while systematically addressing challenges faced between 2017 and 2019 to foster stable growth.
Petrolimex aims to establish itself as a leading enterprise in the solvent and industrial chemicals sector, enhancing its competitive edge both domestically and internationally The company is committed to successfully implementing its strategic plan for the years 2021-2025, which focuses on robust growth and market expansion.
1 Total main sales volume (tons) 135,000 148,500 160,380 173,210 187,067
3 Total profit before tax (billion VND) 5.8 10.5 18.5 20.5 22.5
4 Total payment to the State budget (billion VND) 152 170.24 185.56 202.26 220.47
5 Value of investment execution (billion VND) 25.06 21.27 9.20 19.50 34.00
Table 3 1: Plan for the year 2021-2025 of Petrolimex Chemical Company Limited
3.1.2 Medium and long term development strategy
The core business specializes in solvents and industrial chemicals, with a primary focus on the Southern market Committed to wholesale distribution, the company aims to achieve an annual revenue growth of 10%.
- Maintaining and improving the quality management system, according to ISO
9001: 2015 standards Building recruitment plans, estimating the company's personnel, implementing training plans, retraining to add knowledge to improve the experience, and improving all officers' and employees' skills
To enhance work efficiency, new KPIs will be implemented and evaluated for departments, units, and individuals This initiative aims to increase awareness among officers and employees regarding the organization and execution of their assigned tasks in alignment with established targets, ultimately contributing to the achievement of the company's overall objectives.
- Focus on the management and efficient use of cash flow to meet its capital needs for investment activities and business activities Completing the development of a set of
Source: Business Department financial management criteria; Study how to control and manage internal units more effectively Efficient use of automated devices to control loss and performance
Monitor and analyze the performance of branches and the sales department on a daily, monthly, and quarterly basis Each month, provide strategic direction and recommendations to enhance planning and ensure targets are met Stay attuned to market trends and engage with select suppliers to optimize operational efficiency.
- Continue to coordinate with market development partners in depth and width, associated with building the company's image in customers' eyes
- Develop marketing programs suitable for each stage of market development, focusing on increasing retail output
- Put customers at the center of their thoughts and actions, building human resource values based on capacity and corporate culture - Building Petrolimex cultural values "To go further."
Several solutions to improve the business performance of Petrolimex Chemicals Co., Ltd
After thorough analysis and research on Petrolimex Chemicals Co., Ltd., it is evident that the company has managed to survive and thrive in challenging times by leveraging its strengths and gradually establishing a solid market position However, certain disadvantages still hinder its business performance To address these limitations, the author suggests implementing strategic measures aimed at enhancing production and business efficiency for Petrolimex Chemicals Co., Ltd in the future.
To enhance business performance, it is essential to optimize the relationship between outputs and input resources A key strategy for achieving this is by increasing sales revenue Effective solutions for boosting revenue include implementing targeted marketing campaigns, improving customer engagement, and diversifying product offerings.
❖ Apply a rewarding policy suitable for the company's employees to increase revenue
Material rewards can significantly boost revenue by motivating affiliates and the sales department To enhance retail sales, the company should establish clear criteria for rewards and set general targets, ensuring that each branch and sales team understands the bonuses available for achieving their goals.
The bonus for each liter of solvents and retail industrial chemicals exceeds the delivery plan, contingent upon timely payment collection, prevention of bad debts, and adherence to financial and fire safety standards.
+ The bonus level will be higher when selling the excess number of goods according to the partial progression schedule
+ The company's bonus must be enough to become the motivation to strive and compete for sales staff
+ Besides, the branches and sales departments that exceed the revenue plan also rewarded management levels
+ The preliminary review, review, and commendation must be done monthly to encourage the employees to achieve good results and motivate them next time
To enhance motivation and foster healthy competition among units, it is essential to summarize the rewards during preliminary meetings This approach not only highlights the accomplishments of the rewarded units but also encapsulates the overall performance of the company, inspiring emulation and driving collective success.
Department leaders should establish targets and bonuses within specific timeframes, such as three or six months If the Branches and Sales Departments consistently fail to meet these targets after one year, it may result in salary and bonus reductions, and leaders may be replaced by more qualified individuals.
❖ Apply customer policies to increase sales
To boost sales efficiency and improve customer acquisition, particularly with significant potential clients, the Sales Department must create a dedicated marketing and sales strategy This plan should focus on practical products that effectively promote the company's offerings.
The solvent-chemical industry operates under unique characteristics that necessitate a tailored sales mechanism and policy Unlike other sectors, the company opts for direct distribution to manufacturing and large trading firms, bypassing agents to eliminate discounts and promotional strategies This approach ensures that pricing is straightforward and reflects the true value of the products offered.
+ Selling price according to the market from time to time
The domestic solvent market is highly competitive, with companies frequently adjusting their selling prices by 5-7% within a single day To stay competitive, businesses must adopt a flexible pricing strategy that allows them to quickly respond to market changes and maintain their market position.
To optimize cross-border sales, the company consistently monitors and assesses the crude oil, naphtha, gasoline, and petrochemical markets to determine the best timing for sales Additionally, it exercises caution in selecting foreign partners, choosing to collaborate exclusively with reputable and established firms in the region to mitigate risks associated with contract execution.
+ Selling price according to the formula
The company utilizes a formula pricing system to cater to a diverse customer base, with prices determined weekly or monthly based on Platts or ICIS newsletters, alongside an Alpha level set through negotiations or bid outcomes Key products sold at formula prices include Toluene, Xylene, Acetone, N-Butyl Acetate, Ethyl Acetate, MEK, and Methanol, the latter being mandatory for all manufacturer customers However, in the Northern region, the company encounters significant competition from the Northern Chemical Joint Stock Company in the methanol market.
Dinh Vu port offers a strategic advantage with its tank facilities, allowing it to accommodate ships exceeding 10,000 tons This capability not only reduces freight costs but also enhances access to affordable goods for businesses and consumers alike.
The company's effective sales policy has led to stable and growing sales volumes over the years, ensuring that customer needs are promptly met and reinforcing its competitive position in the market.
+ The administrative division needs to develop programs to manage customers: potential customers, traditional customer groups, a group of long-term customers, a group of retail customers
Identifying target customers is crucial for defining key market segments and understanding potential clients who can significantly impact business growth By analyzing competitors, companies can assess their market position, address weaknesses, and leverage their strengths to enhance overall competitiveness.
To improve efficiency and avoid distractions from multiple tasks, it's essential to establish a dedicated sales team focused on customer outreach and relationship building By prioritizing specialized training in sales skills, this team will effectively drive contracts and strengthen the company's overall performance.
Some recommendations for effective implementation of the above solutions
To fully realize the potential of solvent and industrial chemical businesses, it is essential for the state to establish early development strategies and create an open legal framework This includes synchronizing legal documents and implementing specific measures to protect the pricing of solvents and industrial chemicals Additionally, increasing preferential loans for investment and extending debt repayment periods will enable businesses to invest more deeply and pursue industrialization and modernization in their production processes.
To ensure the healthy development of the solvents and industrial chemicals market, it is essential for the government to foster a competitive environment and establish equal legal conditions for all enterprises Additionally, implementing effective measures to prevent monopolistic associations is crucial, as price increases can lead to market destabilization.
The Chemical Department should enhance the accountability of state management agencies, particularly at the local level, by implementing rigorous inspections and evaluations to ensure that enterprises, organizations, and individuals adhere to compliance standards within their jurisdiction.
To enhance management and ensure compliance with chemical safety regulations, it is essential to increase the penalties for violations while also focusing on the development of designated small chemical trading zones within urban areas.
The Party and State prioritize the solvents and industrial chemicals sector as a crucial focus for development investment This industry has significantly contributed to industrialization, modernization, and social stability while supporting the growth of various other sectors Production units in this field supply essential raw materials and fuels necessary for daily life and are vital for the operations of other industries Consequently, it is imperative for the solvents and industrial chemicals business to undergo continuous renewal and improvement, as highlighted in the thesis on enhancing business performance at Petrolimex.
Chemicals Limited Company” the author gave the following issues:
This article explores the theory of enhancing business performance by examining key performance evaluation criteria, including profitability, capital, labor efficiency, and cost efficiency, along with other financial indicators Additionally, it highlights the internal and external factors that influence a company's overall business performance.
Following a comprehensive overview of Petrolimex Chemicals Co., Ltd., including its formation, development, and business lines, the thesis provides an in-depth assessment of the company's business performance from 2017 onwards.
2019 At the same time, the thesis analyzes and evaluates the business performance of Petrolimex Chemicals Co., Ltd in the period 2017-2019 through a system of indicators:
The evaluation of profitability reveals a consistently low profit rate on revenue, remaining below 1% An analysis of the return rate on assets from 2017 to 2019 shows significant fluctuations, with 2017 marking the lowest point at just 1.3% This trend indicates potential concerns regarding the company's financial health.
The rate of return on equity has shown similar fluctuations, while return on assets increased significantly from 9.9% in 2014 to 28.2% in 2015, before declining to only 6.9% in 2017 As a commercial sector business unit, the company's return on sales tends to be lower compared to other industries, making the overall ratio relatively modest To achieve sustainable development, it is essential for businesses to implement effective cost control measures.
The evaluation of enterprise performance based on capital reveals a significant decline in the production capacity of long-term assets In contrast, short-term assets demonstrated an impressive increase in production capacity, rising from 6.7 times in 2016 to 9.28 times in 2017 Additionally, the overall production capacity of total assets also saw growth, increasing from 5.4 times in 2016 to 6.37 times in 2017.
In 2017, the company's total cost profitability ratio declined sharply from 0.7% in 2016 to 0.2%, indicating a significant decrease in cost-effectiveness This reduction in profitability suggests a downturn in the company's cost efficiency and a diminished production capacity, highlighting ongoing challenges in managing operational costs.
The evaluation of labor efficiency reveals a decline in employee profitability rates by the end of the survey; however, a resurgence in labor productivity was observed in 2017, indicating a positive trend for the company.
The financial indicators for Petrolimex Chemicals Co., Ltd reveal a declining payment ratio, signaling potential challenges for the company's financial health Additionally, an analysis of the internal and external factors affecting the company's performance from 2017 to 2019 highlights both achievements and limitations that have hindered operational efficiency in recent years.
Third, based on analyzing limitations, the author proposes many solutions to improve business performance for Petrolimex Chemicals Company Limited The solutions include:
+ Solutions to increase outputs to improve business performance, such as solutions to increase revenue
+ Solutions to minimize input factors to improve business performance, such as solutions to increase capital efficiency, solutions to increase cost efficiency, and solutions to increase employment risk management solutions
1 Nguyen Thi Ngoc Bich (2017), "Some solutions to improve the business performance of VNPT Hai Phong Company," Master thesis, Hai Phong Tourism University
2 Nguyen Van Cong (2009) "Business Analysis Curriculum," National Economics University Publishing House
3 Nguyen Trong Co, Nghiem Thi Than (2015) "Curriculum for Corporate Financial Analysis," Financial Publishing House
4 Doan Thi Nhat Hong (2014), "Some solutions to improve business performance at Simco Song Da Joint Stock Company," Master thesis, Hanoi Institute of Posts and Telecommunications Technology
5 Truong Ngoc Loi (2015), "Some solutions to improve business performance at Ben Tre Solvents and Industrial Chemicals Company by 2020", Master Thesis, University of Economics, Hai City Room
6 Nguyen Thi Tuyet (2016), "Some measures to improve business performance at HCM High-Tech Building Materials Trading and Production Joint Stock Company," Master Thesis, University of Goods Hai - Vietnam
7 Petrolimex Chemicals Company Limited, Department of Finance - Accounting, Financial statements for 2017 - 2019
8 Petrolimex Chemicals Company Limited, Department of Finance - Accounting, Management report from 2017 to 2019
9 Petrolimex Chemicals Company Limited, Department of Finance - Accounting, the consolidated financial statements have been audited for the period from 2017 to 2019
10 Petrolimex Chemicals Company Limited, Administration - Personnel, Labor report, documents, and documents on the operation regulation of Petrolimex Chemicals Company Limited for the period from 2017 to 2019.
Processes of the Chemical Business Department at Petrolimex Chemical Limited Company
Method of management of suppliers, contractors
Responsibility Order of work Forms and related documents
Quotation; Customer reviews; Contract; Contract Appendix
Sales Manager, Finance and Accounting
Sales Warehouse announcement; transport rental; delivery
Consider the ability to meet customer requirements
Customs declaration; Export permit; relevant documents
Delivery and internal transport bills ; Bill of sale
Diagram 2 3: Sales process of Petrolimex Chemical Company Limited
Step 1: Plan to sell and receive customer requests
Sales staff based on sales plan and reception of customer supply needs by phone, fax, or email
Step 2: Consider the ability to meet customer requirements
The marketer works with relevant departments within the Company to review the following essential requirements:
To ensure accuracy in product identification, verify if the name of the product or type of goods aligns with those offered by Petrolimex Chemicals Company Limited You can access this information through the Solomon system by navigating to the inventory module and using the item code (code 10.250) for detailed product insights.
- Quantity: Inventory, production capability (drumming)
- Time and progress of delivery: The ability to arrange transport
- Payment method: in cases where customers have overdue debts, marketers consult the department manager (by phone or email)
- The ability to hire other services attached to the Petrolimex Chemicals Company Limited's products, as requested by the customer
Apply for an export license
Update data, complete and save documentary records
If the customer's main requirements are not met (the type of stock, out of stock): it is the end of the review
When customer requirements regarding type and stock are met, the Sales staff must report their ability to fulfill these requirements to the Chief of Sales Department or an authorized individual for inspection and approval via phone or email Following this, negotiations with the customer can continue to finalize other terms of sale If both parties reach an agreement, the next steps include preparing the Quotation form (BM-QT-KDHC-02-02), the Customer evaluation form (BM-QT-KDHC-02-01), and the Contract or contract appendix if a Principal Contract has been signed; otherwise, the process will be terminated.
Step 3: Negotiate with the customer
Forms of transactions, negotiation with customers to come to sign written contracts:
Quotations, as outlined in form BM-QT-KDHC-02-02, must be checked and approved by the Sales Manager or an authorized individual These documents serve to inform customers about the selling prices of one or more products, regardless of whether the quantities are specified or not Quotations can be communicated through various formats, including written documents, emails, or phone calls.
- Contract/contract addendum: made by the Sales staff, the Chief of Marketing Department (or authorized person), and Chief Accountant (or authorized person) before submitting for signature
When a customer requests a call for tender, the Sales Manager and Chief Accountant, or their authorized representatives, review the submission before it is approved and signed by the Company Director or an authorized individual.
Step 4: Prepare a quote; Contract; appendix contract
When the negotiation ends and is approved by both parties, the contract is signed The signing is shown:
When customers request a quote for goods, marketers can provide pricing information through various channels such as phone, fax, or email The quoted prices are determined based on the selling price decisions made by the company's director and may vary over time.
In case a customer requests a written quote for the goods, the marketer prepares the form (BM-QT-KDHC-02-02)
- Making a shipment contract: Applied if the customer pays with deferred payment but has a specific quantity of goods or requests a written sale contract
A contract in principle is established when customers engage in deferred payments, make periodic purchases, require an unspecified quantity of goods intermittently, or request a sales contract through documentation.
- Make an annexe to the Contract: Applied if the customer has signed a principle contract or the two parties have agreed by the Contract Appendix
- Call for bid: When the customer recognizes that Petrolimex Chemicals Co., Ltd has won the contract
Step 5: Check and sign a quote; Contract; appendix contract
In the context of contract management, a contract addendum is initiated by the client The sales team verifies the details and forwards them to the legal expert For the contract addendum requested by Petrolimex Chemicals Company Limited, prior approval is required before signing.
In case Petrolimex Chemicals Co., Ltd establishes:
The sales team prepares customer quotations using the specified form (BM-QT-KDHC-02-02) and submits them for review and approval to the Sales Manager or an authorized individual.
Sales staff prepares a contract or contract addendum, which is then submitted to the Sales Manager and Chief Accountant for review Following their inspection, the document is forwarded to the Public Director for final approval Ultimately, the contract is signed by the Company or an authorized representative.
A call for bid requires the Sales Manager or authorized representative and the Chief Accountant or authorized individual to review the proposal, followed by approval from the Company Director or authorized personnel This process is initiated only upon customer request.
Step 6: Notify the warehouse, hire subcontractors for transport and delivery
Once the quotation and contract addendum have been approved and signed, the Sales staff must promptly notify the warehouse, transport subcontractors, and forwarders (if applicable) through fax, email, or phone.
- Quantity of goods to be delivered
- Time and place of delivery
- Means of transport (in case of chartering or customer transporting by themselves) Step 7: Set up the export order
Sales order form in Solomon (Access to Solomon: Module/Sales Manager (screen/Order of Shipments/Delivery (code 40.110))); To submit to the Head of the
Department of Marketing and Administration or authorized person for inspection and approval
Step 8: Track and complete delivery procedures
Once the shipping order is signed and approved, the Sales team promptly sends the shipment order to the warehouse and relevant parties to initiate the shipping process and issue the invoice.
In industrial and export processing zones, customers requiring customs procedures or export licenses can rely on the Sales staff to prepare and submit the necessary documentation This submission is made to the Chief of Sales Department or an authorized representative, who then has the authority to review and present the documents to the Company Director for final approval.
Sales staffs working with warehouses, freight subcontractors, and forwarding subcontractors (if any) monitor the delivery process until completion
When handling customer complaints, sales staff must verify the issue and create a Goods Inspection Record (form BM-QT-KDHC-02-03) in the presence of relevant parties Additionally, they should document the complaint using the Complaint Handling Record (form BM-QT-KDHC-02-04) and report the findings to the Sales Manager for further guidance.
Step 10: Update data, complete, and save the document
Update figures, complete sales record documents: Marketing professionals check and update all data from receiving customer requests, contract changes until delivery is complete , handling complaints… (if any)
Contract liquidation occurs at the request of the parties involved and must be signed by the individual or position that originally signed the contract The details of the contract liquidation process are outlined in Appendix 04, which is part of Official Letter No 018/CV-PLC.HC-GĐ, dated January 22, 2010 This letter provides regulations and guidance for the implementation of chemical purchase and sale contracts, including their liquidation.
Change contract: When the customer or PLC.HC needs to change the contract, and the implementation process is like a sales review from step 2 to step 5
Retain for a minimum of 5 years in business departments the following documents:
- Liquidation of the Contract (if any)
- Transaction documents are related to the process of considering contract changes
Responsibility Working order Forms, related documents
Sales Manager, Finance and Accounting
Sales Manager, finance and accounting department
Tracking table of domestic purchases
Tracking table of domestic purchases
Communicate delivery plan with supplier, warehouse or marketer
Warehouse delivery department; Purchasing staff
Delivery record; Invoice; Quality certificate (if any)
Diagram 2 4: Domestic purchase process of Petrolimex Chemical Company Limited
PROVISIONS ON PRODUCTION AND TRADING OF CHEMICALS SUBJECT
TO CONDITIONAL PRODUCTION AND TRADING IN THE INDUSTRIAL
Enterprises involved in the trading of industrial chemical solvents must adhere to the regulations set forth by the Chemical Department of the Ministry of Industry and Trade, ensuring compliance with specific conditions for both product trading and chemical handling.
Being an enterprise, cooperative, or household business established under the provisions of law, having business lines of chemicals;
The physical and technical foundations must satisfy the following specific requirements:
Chemical production and storage workshops must comply with national technical standards, ensuring appropriate design for their scale and technology They must include emergency exits marked with clear signage to facilitate safe evacuations Adequate ventilation and lighting systems are essential, adhering to regulations to support safe chemical handling Electrical equipment must meet fire and explosion prevention standards Facilities should be constructed to resist chemical exposure, prevent slips, and include proper drainage systems Clear chemical safety regulations and warning signs must be prominently displayed, detailing hazardous properties and safe operating procedures Lightning protection systems are necessary, and outdoor tanks require containment measures to prevent environmental contamination during incidents Additionally, workshops must meet fire safety, environmental protection, and occupational health standards as mandated by law.
Requirements for technology, equipment, tools, packaging
Technical equipment must adhere to national safety standards, ensuring compatibility with chemicals and technological processes while meeting production capacity and business scale requirements Additionally, machinery, equipment, and materials that have strict occupational safety and sanitation guidelines, as well as test measuring devices, require regular inspection, calibration, and maintenance in accordance with current machinery inspection regulations.
When storing and transporting hazardous chemicals, it is essential to classify and sort them based on their nature to prevent dangerous reactions Chemicals that have differing safety requirements or fire prevention needs should never be stored together Additionally, all chemicals in warehouses must be preserved in accordance with national technical standards and regulations to ensure safety and facilitate effective responses to potential chemical incidents.
Warehouse locations and areas must meet the requirements of national technical standards and regulations;
Having a store or place of business, a place for sale that meets the requirements of chemical safety, fire and explosion prevention, and fighting by the law;
Chemical storage containers and packages must ensure quality and environmental sanitation by law; Chemical transport vehicles must comply with the provisions of law;
When establishing a chemical warehouse or renting chemical storage, it is crucial to ensure that the facility meets all safety regulations for chemical handling This includes compliance with fire prevention and explosion control measures Utilizing a warehouse operated by an organization or individual involved in the chemical trade can also fulfill these safety requirements effectively.