(TIỂU LUẬN) OPERATING AND ADMINISTRATIVE EXPENSES MANAGEMENT AT TOPS MARKET (CENTRAL RETAIL VIETNAM)

FOREIGN TRADE UNIVERSITY HO CHI MINH CITY CAMPUS MID-COURSE INTERNSHIP REPORT Major: International Finance OPERATING AND ADMINISTRATIVE EXPENSES MANAGEMENT AT TOPS MARKET (CENTRAL RETAIL VIETNAM) Student: Nguyễn Lý Minh Như Student ID: 1913316123 Class: K58CLC2 Supervisor: Lê Trung Thành Ho Chi Minh City, August 2022 FOREIGN TRADE UNIVERSITY SOCIALIST REPUBLIC OF VIETNAM HO CHI MINH CITY CAMPUS Independence - Freedom – Happiness MIDTERM PROFESSIONAL REPORT REMARKS Student’s full name: Nguyễn Lý Minh Như Student code: 1913316123 Name of the report: Operating and administrative expenses management at Tops Market (Central Retail Vietnam) Remark: The student has completed the report properly under the guidance of the supervisor The supervisor is responsible for the title, purpose, subjects, scope and research method(s), and chapters’ titles, and main headings of the report (3 digits): 0.8-1.0 point(s) The student has failed to carefully follow the supervisor’s instructions The supervisor is responsible for chapters’ titles, purpose, subject, scope and research method(s), and titles and main headings of the report (2 digits): 0.5-0.7 point(s) The student has failed to carefully follow the supervisor’s instructions The supervisor is not responsible for the report: 0.1-0.4 point(s) The student has totally failed to follow the supervisor’s instructions The supervisor rejects the submission of the report: point Assessment of compliance with regulations, progress and work ethics (Maximum of 1.0 point, with one decimal number): Ho Chi Minh City,… /… / Supervisor (This page is intentionally left blank) STATUTORY DECLARATION I absolutely certify that I wrote this Mid-Course Internship report on my own initiative Except for the quoted literature, supervisor's instruction, and other reference sources indicated at the end of this paper, I did not rely on any other assistance I am well aware that breaching this rule will result in the failure of this study Ho Chi Minh City, / /2022 Student’s signature Nguyen Ly Minh Nhu (This page is intentionally left blank) ACKNOWLEDGEMENT It is a fantastic chance to work as a Finance intern at Tops Market Vietnam Despite the short time frame, it enhances my professional knowledge and required abilities As a result, I am grateful to everyone who has helped me, directly or indirectly, finish the internship report First and foremost, I would want to express my gratitude and appreciation to Tops Market Vietnam for allowing me to practice at the company I would like to thank Ms Le Thi Bich Tuyen, Finance Manager, and other members of the Finance team in particular for their focused assistance and for establishing favorable conditions for me to research, acquire facts, and exchange useful work experiences in order to enrich my knowledge Next, I'd want to express my heartfelt gratitude to my supervisor, Mr Le Trung Thanh, who has diligently led and supported me throughout the process of implementing and fully finishing this report His remarks and support have greatly enhanced and improved my work The report could not have been completed satisfactorily without his inspiration and directions Finally, my deepest gratitude goes to the professors at Foreign Trade University Ho Chi Minh City Campus for their excitement and attention to teaching, as well as for providing me with a solid foundation of professional knowledge throughout the past three years (This page is intentionally left blank) TABLE OF CONTENTS LIST OF ABBREVIATIONS LIST OF TABLES AND FIGURES PREFACE CHAPTER 1: OVERVIEW OF TOPS MARKET VIETNAM AND ITS BUSINESS OPERATION 1.1 History and development of Tops Market (Central Retail Viet 1.1.1 General information of Tops M 1.1.2 Business outcomes of Tops Ma 1.2 Job description and summary CHAPTER 2: OPERATING AND ADMINISTRATIVE EXPENSES MANAGEMENT AT TOPS MARKET 2.1 Overview of operating and administrative expenses manage Tops Market Vietnam 2.2 Main types of operating and administrative expenses of Tops 2.3 Operating and administrative expenses management process Vietnam 2.3.1 Step 1: Nominal expenses calc 2.3.2 Step 2: Actual expenses calcula 2.3.3 Step 3: Expenses variance anal 2.3.4 Step 4: Expenses forecast 2.4 Critical discussion of operating and administrative expenses management process at Tops Market Vietnam 2.4.1 Accomplishments CHAPTER 3: THE 2.4.2 Shortcomings OUTLOOK AND RECOMMENDATIONS FOR IMPROVEMENT IN OPERATING AND ADMINISTRATIVE EXPENSES MANAGEMENT AT TOPS MARKET 3.1 Opportunities and challenges 3.1.1 Opportunities 14 3.1.2 Challenges 14 3.2 Recommendation for improvement in operating and administrative expenses management at Tops Market CONCLUSION Net interest receipt (payment) Profit before tax (Source: Profit & Loss Statement in 2019,2020 and 2021 of Tops Market Vietnam) 1.2 Job description and summary Title: Finance Intern Location: Central Retail Vietnam, 163 Phan Dang Luu, Ward 1, Phu Nhuan District, Ho Chi Minh City Specialism: Finance team Level: Entry-level Position type: Fulltime Duties and responsibilities: I am responsible for assisting with the management of operating and administrative expenses To this, I must view all the contracts that are relevant to the operations, such as the maintenance service contracts, and determine whether there are any inconsistencies between the contract values and the actual expenses Furthermore, it is also my duty to forecast such expenses for the following year and analyze the data to identify strategy to minimize those operating and administrative costs Internship summary: The internship at Tops Market was set forth on July th 2022, up to August 5th 2022 It was an honor to be given the opportunity to work as a Finance intern at Tops Market Vietnam I got enthusiastic advice and assistance from the Finance staff during my five-week training there The team members provide me with several opportunities to study, observe, and apply what I've learned The finance department prioritized preparatory training sessions in the initial weeks of practice to gain a fundamental grasp of the company's finance and accounting handbook The majority of the activities assigned by the line manager were organizing files and reviewing spending data Aside from the concentrated training sessions, I was also given the opportunity to self-discover missing information from the team members' actual working experience in following weeks Along with these jobs, I gained experience by assisting the line manager with ad hoc chores I am also conscious of the difference between the learning environment in the lecture hall and the actual working environment at the firm, therefore I will strive to use the gathered information and my strong resolve to meet the goals set CHAPTER 2: OPERATING AND ADMINISTRATIVE EXPENSES MANAGEMENT AT TOPS MARKET 2.1 Overview of operating and administrative expenses management activities at Tops Market Vietnam The retail market as well as the overall world economy have both been significantly impacted by Covid-19 It has compelled every firm in the country to examine its books carefully TMV is aware that they are searching for ways to boost revenues and save costs Adaptability has been a defining trait of companies that have thrived in the current economic climate While they may not have much control over growing sales, they can increase profits by dramatically reducing operating and administrative costs They're losing a bigger portion of their hard-earned money as they expand because their running costs will increase as well The operating and administrative expenses management process is based on a disciplined approach to cost reconciliation through a rigorous formula to save and cut costs for businesses, on the one hand, not to waste investment capital and to operate the system with a plan to adjust to the cost of business cooperation Each supermarket's management will record the operating costs as they occur on the SAP Logon 740 database system, and the contracts relating to those costs will be stored in the internal network The expenses management team is responsible for double-checking and reconciling the data on the contract with the actual data entered into SAP In reality, supermarkets will have both fixed and variable operating and administrative expenses, which may include expenditures incurred as a result of damaged infrastructure or contract breaches The double-check method assists the team in determining whether the cost difference is realistic, and it also serves as the foundation for the team to anticipate future expenses Managing operating and administrative expenses in accordance with TMV's culture of continuous improvement has contributed to improved transparency on cost variables, operational cost reductions, and increased autonomy, financial discipline, cost management, and waste reduction 2.2 Main types of operating and administrative expenses of Tops Market Vietnam The expenses incurred by a business in its usual day-to-day operations are referred to as operating and administrative expenses Daily, a supermarket system like TMV accrues substantial costs, which typically include Personal costs, Advertising and promotion costs, Utilities costs, Credit card and packaging costs, Fees and Duties and Outsource costs, and other costs Other costs are particularly crucial in everyday operations because they comprise vital costs such as maintenance, space renting, material costs, as well as cleaning and security fees Retail productivity, such as that of TMV, extends normal production theory by understanding that supermarkets provide not just items and services for purchase, but also a degree of certainty that the product will be available soon and of high quality Greater levels of products distribution result in TMV's higher operating costs since food items must be stored in optimal conditions, which necessitates advanced refrigeration systems and regular maintenance Furthermore, because the supermarket's unique character necessitates a big number of staff to manage the warehouse, each sales area, and the daily machine utilization capacity, the cost of paying personnel is very high Maintenance, cleaning, and security fees, for example, will also be greater than in other firms Below, in Figures 2.1, is the statistics of each operating and administrative expense at TMV, respectively: 10 Figure Operating and administrative expenses Operating and administrative expenses 43% l a n n o s r e o P in s i r t e v d A 2.3 Operating and administrative expenses management process at Tops Market Vietnam The operating and administrative expenses management process is particularly followed up by four specific steps including Nominal expenses calculation, Actual expenses calculation, Expenses variance analysis, and lastly but most importantly, Expenses forecast It is highlighted that fundamental record and forecast are the heart of the investment process as a whole 2.3.1 Step 1: Nominal expenses calculation This first step will use data stored in an online platform of operational contracts, which is referred as a data warehouse Types of contracts in the warehouse can be listed as contracts for refrigeration system maintenance, or contracts for the purchase of equipment, etc The Finance department will allocate the cost of equipment from those contracts throughout the entire contract duration, which is normally equal to one-year period Take the maintenance and repair contracts as an example, the cost of which be fixed or not will depending on the terms and conditions generated in the contract I 11 need to categorize the fixed costs in order to simplify the comparison process, which is comparing those costs with real recognized expenditures In particular, because each contract may have additional content revisions, I must recognize the expenses regarding those under the amendment as well as those in accordance with the matching principle for better quality of the data 2.3.2 Step 2: Actual expenses calculation In this following step, I will calculate the actual expenses on the basis of the costs that each store records on the SAP system to list out the costs related to each contract filtered in the previous step Usually, these actual costs will be immediately recorded by the store at the time it happened and because there are circumstances that would make this cost different from the nominal cost we calculated in step For this reason, I need to aggregate those differences for further analysis in the next step 2.3.3 Step 3: Expenses variance analysis Expenses variance analysis is a type of research that looks at budget irregularities by examining the gap between allotted expenditures and real recorded costs To begin, our finance team might compute the fundamental cost variance by subtracting the actual spending from the projected expenditures based on contracts The cost variances can be price differentials or quantity arbitrage Price differences can occur when the recognized costs have not been updated in accordance with new amendment of contracts, or it may be because the store has received a non-contractual promotion from the supplier In addition, the quantity difference occurs when the demand for equipment changes resulting in a change in the quantity of equipment purchased compared to the original contract Once we have detected variations in our budget's primary components, we must ensure that they add up to the overall cost variance and then create a report that includes all cost variations discovered by the firm when we are confident that our findings are correct 12 2.3.4 Step 4: Expenses forecast Expense forecasting is a continuous action that takes place over a set period of time TMV will rely on this to more in-depth market research in order to identify the business's strengths and flaws Based on watching the expenses record, we work out what we will spend every month Next, we divide them by 12 to get our average monthly costs Then, we determine which expenses are necessary or unnecessary after determining the average amount of money we spend per month Necessary expenses are related to the expansion or functioning of our business Paying for office space or electrical expenses, for example Non-necessary costs are those that can be reduced without jeopardizing your company's capacity to thrive 2.4 Critical discussion of operating and administrative expenses management process at Tops Market Vietnam 2.4.1 Accomplishments TMV has an extremely well-organized operating and administrative expenses management process, which has their own systems to draw references from and monitors their own risk, all of which input into the data warehouse on a daily basis They also have a series of processes that look closely at that data, the operation's features, and perform a variety of checks to ensure the system's integrity On the company's whole 4.0 system, all data and operations are conducted and recorded systematically into SAP Furthermore, the company's close cooperation between departments is highly valued, as it makes work more efficient and integrated That makes it easier to track expenses because there is a link between the stores and the office We can also easily contact the store to verify the cause of the expenses difference if it occured Employees may utilize software to retrieve costs and related contracts as needed, and the report is 13 immediately evaluated for TMV The reports created from the collected data may be analyzed by managers and financial service providers To enable reconciliation and payment, software is frequently interoperable with current payroll systems What I appreciate most in this approach is the expenses forecasting It assists TMV in forecasting and controlling future operational expenditures When TMV has a constant and accurate picture of operational and administrative expenditures, we can make more strategic decisions regarding our business 2.4.2 Shortcomings As previously stated, some operating and administrative costs are affected by differences in real-time transaction data between the payment card and the system In the lack of real-time transaction data, users may forget to upload their receipts, causing month-end processing to be delayed The context is also removed from the rapid approval procedure Moreover, TMV has an automatic system that integrates the cost management platform, identifies inconsistencies, but the system has only been put into use for TMV, so there are still many errors that lead to the cost difference 14 15 CHAPTER 3: THE OUTLOOK AND RECOMMENDATIONS FOR IMPROVEMENT IN OPERATING AND ADMINISTRATIVE EXPENSES MANAGEMENT AT TOPS MARKET 3.1 Opportunities and challenges 3.1.1 Opportunities In reality, international economic integration has created many chances and challenges for retail enterprises such as supermarkets, in addition to enormous prospects When there is no decrease but instead maintains the growth rate, Vietnam's retail market remains a bright area Because of the plentiful supply of goods, the potential for TMV’s development remains quite high Furthermore, internet purchasing is becoming increasingly popular, particularly during times of social separation, so it continues to satisfy people's demands effectively Online purchasing has been increasingly popular in recent months Even amid social separation, all commodities and services are given to users in need Furthermore, TMV is always developing and possesses more profitable retail business know-how 3.1.2 Challenges As a result, an increasing number of international firms with potential cash, technology, and good management abilities are joining, resulting in tough competition on a level playing field TMV must have the correct strategic direction as well as control operating costs in order to boost competitiveness and develop sustainably in the market TMV must design a flexible and effective cost management information system to evaluate, process, and give timely information to managers in order for them to forecast the future 3.2 Recommendation for improvement in operating and administrative expenses management at Tops Market 16 The number of personnel principles must be synchronous with the need for personnel So, the first step in operating and administrative expenses management is to construct a staff structure that is appropriate for meeting the needs of the user Increasing the quantity of personnel is completely unnecessary and will have a negative impact on the surrounding personnel Moreover, ensuring labor safety will help businesses significantly reduce operating and administrative expenses In the long term, ensuring that technicians maintain the correct procedures and on time to avoid damage to equipment can contribute significantly to cost savings for a company Before serious and costly damage occurs, TMV needs to regularly check and maintain their equipment so that damaged parts can be replaced Besides, understanding the small expenses in office activities such as paper, ink, mail, telephone, gas and transportation for employees, etc may seem like a small and inexpensive amount, but in reality, it is still an amount of money relatively large cost if calculated over the long term TMV can switch from report aggregation to using a software tool that allows automatic report output, saving time in making reports of personnel and printing reports 17 CONCLUSION Businesses can only survive and grow in an interconnected economy with numerous competing forces if they know how to properly mix and utilise inputs while ensuring the finest output quality Efficient operating and administrative expenditure management is critical in developing business strategies that optimize earnings and contribute to the long-term growth of the company Based on real work experience gained during an internship at Tops Market Vietnam, as well as references from many sources mixed with my perspective, this report provided an overview of the firm as well as operating and administrative expenditures management from which to draw lessons and make recommendations to address the remaining problems The study also dives into the TMV's unique management approach about the processes in the overall process of controlling operational and administrative expenditures The report will outline the nature of the activities in order to create an overall but not entirely comprehensive picture of this profession In addition, the report assesses the accomplishments and shortcomings in expense management through the process that I observed and implemented at the company to draw lessons and make recommendations to improve the operating expenses management efficiency, avoid any loss, and aim to cut costs and improve profits Despite numerous efforts, my analysis and appraisal of the topic "Operating and administrative expenses management at Tops Market (Central Retail Vietnam)" would undoubtedly have flaws owing to limits in capability, experience, and internship time throughout the internship process As a result, I am looking forward to obtaining genuine assistance and comments in order to properly complete the report 18 REFERENCES Tops Market Vietnam, 2019 Profit and Loss Statement Internal Circulation Only Tops Market Vietnam, 2020 Profit and Loss Statement Internal Circulation Only Tops Market Vietnam, 2021 Profit and Loss Statement Internal Circulation Only Huyen, T., 2022 Việt Nam: thị trường có Chi Phí Vận Hành bình qn thấp khu vực châu Á [Online] Tap chi Doanh nghiep hoi nhap Available at:[Accessed August 15, 2022] Trang, T., 2022 Các yếu tố ảnh hưởng tới lực cạnh tranh cac doanh nghiệp bán lẻ hàng tiêu dùng Việt Nam [Online] Lang Son Statistical Office Available at:[Accessed June 6,2022] Robert B King and Ephraim Leibtag, Supermarket Characteristics And Operating Costs In Low-Income Areas, 2004 Website Tops Market Vietnam Available at: [Accessed 15th August, 2022] ... EXPENSES MANAGEMENT AT TOPS MARKET 2.1 Overview of operating and administrative expenses manage Tops Market Vietnam 2.2 Main types of operating and administrative expenses of Tops. .. Figures 2.1, is the statistics of each operating and administrative expense at TMV, respectively: 10 Figure Operating and administrative expenses Operating and administrative expenses 43% l a n... Overview of Tops Market Vietnam (Central Retail Vietnam) and its business operation Chapter 2: Operating and administrative expenses management at Tops Market Vietnam Chapter 3: The outlook and recommendations