Project proposal group2 alibaba english centre

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HANOI UNIVERSITY FACULTY OF MANAGEMENT AND TOURISM -o0o - EXPENSE MANAGEMENT AT ALIBABA ENGLISH CENTRE Project Proposal Mentor: Mrs Do Van Anh 1704010124 Members: Nguyen Thi Hong Van 1804010043 Cao Thu Huyen 1804010047 Ngo Thi Huyen 1804010056 Dang Thi Khanh Linh _March 7th, 2022_ 1 Abstract Through 7 years of operation (2015-2022), Alibaba English Center has achieved remarkable and rapid growth in the number of students over 40,000 One of the top concerns of businesses is cost control Expense management is a critical factor since it also drives the company’s performance, particularly in SMEs and in periods of difficulty, specifically two years of Covid-19 Alibaba English Center is a medium-sized company, so the center also exposes to common problems of weak cost management For this reason, to support the company strengthen its brand, stay competitive in the market, and maintain strong performance, cost management is now a top priority for the center's management This project aims to improve the cost management system at one of the famous English Centers in Vietnam, which is Alibaba English Center Cost issues, the impact of costs on the organization's goals will be shown in the project This project aims to assist the company in solving cost-related issues, namely administrative costs, commission costs and salary costs Data are collected from the company to identify the problem existing in cost management system through interviews with managers and staff, direct observations of the process, and review relevant documentation Despite the difficulties of mutual trust between the team members and the CEO of Alibaba company, we expect to develop certain convenient tools and procedures to assist the management in controlling costs 2 Table of Contents Abstract 2 1.Introduction 4 2.Company introduction 4 a Brief history 4 b, Vision and Mission 5 c, Organizational structure 5 3 Problem Statement 6 4 Literature review 7 4.1 Expense management in small and medium-sized businesses 7 4.2 Expense management for English-teaching centres in Vietnam 8 4.3 Recording expenses under VAS standard 9 4.4 Administrative expenses 9 4.5 Salary expense management 10 4.6 Commission expense management 12 5 Methodology 12 6 Work allocation 13 7 Timeline for the completion capstone project 14 8 Potential obstacles and feasibility 14 REFERENCES 17 3 1.Introduction General and administrative expenses are expenses incurred in the process of organizing business activities that such enterprises have to spend to operate their business Enterprise administration costs are related to all activities of the enterprise, not separate for each specific activity At the same time, depending on how the business operates, the administrative costs also vary Consequently, what most directors are keen on is the means by which to deal with this expense in the most sensible manner for their business Enterprise management is a job that requires administrators to understand the organizational structure and standardize the management process as well as optimize the cost of effective enterprise management to bring greater profits In order to maximize profits, each business must maximize revenue and minimize costs For many businesses, administrative expenses account for a small proportion One of the important keys to help businesses manage business costs effectively is to determine business management norms This is the basis to help businesses make operating estimates because in order to make a labour cost estimate, there must be a norm of man hours, and the cost of raw materials must have a norm of raw materials In addition, it also helps managers control business activities of the enterprise because normative costs are the standard, the basis for evaluation, and contribute to timely information for managers to make daily decisions such as pricing a product, accepting or rejecting an order, analyzing profitability More specifically, it attaches the responsibility of each employee to the economical use of resources Good corporate cost management will help businesses operate effectively, optimize unnecessary costs, and control the finances of the business What problems exist in the cost management system of the enterprise? Which proposal is suitable for the current situation of the company? How to apply this plan in real situation? 2.Company introduction a Brief history Alibaba English - the company that we conduct research in is a limited liability company with its head quarter at 186 Giai Phong, Hanoi, founded by Mr Ngo Xuan Thang The company was established in August 2015 with a development path of nearly 7 years so far After 2 years of operation, up to 2017, Alibaba reached the top 100 typical young businesses in Vietnam Up to now, Alibaba has become the largest English centre in Hanoi with more than 40,000 students and it is also a language centre that has the cheapest tuition fee in Hanoi After 6 years of establishment, the company has now expanded to 7 facilities with 4 facilities in Hanoi, 2 facilities in Nghe An and 1 facility in Saigon The focus that our team wants to study is on facilities in Hanoi The training system at the company includes pronunciation, grammar, communication and TOEIC In addition to training knowledge about industry transfer, the centre also integrates teaching students about critical thinking, creative thinking, presentation skills and teamwork, more specifically and 4 also the brightest point Alibaba's is a dynamic environment that is different from other English centres b, Vision and Mission Since the company's establishment, the company has brought with it the desire of the founder of the company to bring English into the universal language for Vietnamese people in the current economic context of economic integration and globalisation, with the mission of helping one million students to speak English as their mother tongue Moreover, Alibaba also has a mission to build a strong English community and constantly strives to combine with leading partners in the field to create opportunities and a better future for Vietnamese people c, Organizational structure In order for the company to operate flexibly, the organizational structure plays a very important role Alibaba has a team of extremely young, dynamic and enthusiastic employees, the whole company up to now has about 150 employees The organizational structure of Alibaba one- member limited liability company, whose owner is also the director of the company, is in charge of Mr Ngo Xuan Thang and is responsible for the debts and related property obligations of the company within its charter capital The company has 4 main departments including marketing department, recruitment department, training department and sales department 5 3 Problem Statement Our team's target community will focus on the Alibaba English Center for all ages who want to learn with a focus on everyday communication as well as in-depth communication Alibaba English Center was established in 2015, after 7 years of operation, the center has 7 branches nationwide and more than 40,000 students With a system of training and teaching processes focusing on basic daily communication for all ages, Alibaba has affirmed its position in helping students practice listening and speaking English in real life However, when we went into the company's management system, we found that there was a gap due to weak cost management In particular, in the management of administrative costs, salary expenses, commission expenses, there are many weaknesses and loopholes that can lead to many serious consequences in improving the development of the company later After surveying and working with the company, we learned that there is no specific accounting department who will be responsible for recording all kinds of expenses and related documents And when recording all kinds of expenses will be due to Mr NCH, holds the position of lecturer vs cost control, after everyone uploads the data to a drive file for comparison Regarding salary, there will be an Excel file on Google Drive to control teaching activities as well as expenses after a lesson Moreover, when there are costs incurred, each employee is responsible for uploading to Google Drive the invoice or photo for comparison and payment to Mr NCH The Excel file would automatically calculate the amount of payables to workers in the formula: Payables to Workers= Salary (based our their claims)+ Expenses paid by them in advance Once Mr NCH alone takes care of all the work related to the costs incurred, it will lead to many loopholes Furthermore, because there is no accounting department in Alibaba, Mrs LA, an employee of the sales department, are the trustful one to record the transactions in a journal based on Drive file & based on Mr NCH’s checking at the end of the month However, Ms LA violated Circular 200 cost accounting principles because Mrs LA does not actively record expenses at the time of arising, but only records all expenses at the end of the month Due to the lack of strict cost management has led to the following consequences The first issue, based on firsthand observation after working in this setting for a long time, is administrative expenses for which there is no dedicated person or cost /asset management department In fact, lecturers/employees buy materials, print articles, parties and bonuses completely freely and upload expenses to Excel file, but this file is not paid too much attention Without a dedicated cash flow manager, photocopying, document printing, party money, bonuses, and fines are just a few examples, and without a warehouse manager, it's impossible to keep track of vouchers, duplicate paperwork isn’t processed, and anyone can come and go from the warehouse This leads to shady, unsubstantiated expenses, which can lead to a lot of shady, fraudulent activity The second cost concern is that payroll costs are quite complex In fact, lecturers and staff will automatically report the working day on an Excel file We found that Mr NCH was both a 6 teacher and a salary checker through his practical experience working at the company and looking through Alibaba's financial documents when asked by this group Finally, according to company policies, you will be paid a commission if you recommend others to join the trial course About how to calculate the commission for each person, each employee has contributed to the company as cumulative points and the employee self-declares his contribution in the Excel file However, three incidents of employees generating bogus emails to register for a trial course were uncovered by December 2019, and those three employees were also in charge of reviewing enrolled students As a result, I was able to deceive the number of students that signed up for a trial lesson in order to collect a commission The CEO has not yet discovered a complete solution to the two challenges outlined above This project will provide a way to solve the problems of cost management in the most appropriate way from our team's point of view This is the foundation for assisting firms in making operating estimates, as a labor estimate requires a norm of man-hours, and a norm of raw materials necessitates a norm of raw materials Furthermore, because standard expenses are the basis for evaluation, it assists managers in controlling business activities of the organisation by providing timely information for managers to make daily decisions, such as pricing a product, accepting or rejecting orders, and reviewing profitability More specifically, it ties each employee's accountability to the efficient use of resources It will positively affect the aspect of the community in the long run A positive effect on the organisation is that it will help the company understand the costs of money coming in and out, easy to manage as well as reasonable allocation without wasting money Alibaba will be able to operate more efficiently, reduce superfluous expenses, and keep track of its finances with good corporate cost management 4 Literature review 4.1 Expense management in small and medium-sized businesses In traditional accounting for costs, it is assumed that fixed costs are independent in the level of activity and variable costs change proportionately according to the changes in the level of activity Costs should be divided into fixed and variable ones Most management accounting expects that the proportion between costs and activity refers that a 1% increase in activity results in a 1% increase in costs, and a 1% decrease in activity results in a 1% decrease in costs (Allen, 2007) Cost management is a comprehensive index to measure the level of enterprise management Generally, firms with limited access to capital have higher internal costs including salary and rental expenses There are two categories in processing costs which are rational decision-making and motivational The rational decision-making treats expense as a consequence of weighting costs and economic benefits The other is motivation and stimulations, providing incentives to work, for example perksNotedly, in some companies, rewarding staff for firm performance improvement has now become a common practice However, because some of the expenses are variable, decision- making processes by management are put in several difficulties, which requires critical information (Rougnaghi, 2017) 7 Today, many firms manage their costs by utilising resources When current operation results are not good as expected, it is the manager's critical decision whether to maintain resources and keep the cost capacity in the short-term or immediately cut those The most common cost- related problem nowadays is that most information for expenses that managers receive are mainly from financial statements while a business can have various expense behaviours It was long believed that administrative, general and selling costs vary according to activity level However, recent experimental studies have revealed evidence that the reduction in costs may lead to lower quality in sales processing in the future (Anderson et al, 2019) Thus, in some cases, an increase in costs can result positively in business activities To decide firm cost and whether to reduct expenses, it requires a long process of consideration and analysis before imposing those costs to firms 4.2 Expense management for English-teaching centres in Vietnam Truong Manh, a Vietnamese strategic manager, pointed out a common model for English- teaching centres in Vietnam In his opinion, English-teaching centres in Vietnam commonly has to to financial issues due to poor expense management The cashflow indeed reflect the optimization of business operations Expenses are divided in 3 categories: marketing & sales expenses, managing and controlling expenses and others However, in Vietnam, English-teaching centres mainly assign a 8 specific person, usually known as an accountant to control both revenue and expense situations, which is considered as the great lack of expenses management Hence, there is a great risk of monetary frauds The founder is suggested to proceed with a short-term step which is to review all the transactions in the latest 2 months and then highlight those that may have least effect on the business operation to judge and decide omitting those transactions in the future Moreover, expenses for human resources should be considered because efficiency and effectiveness require a thorough judgement, which comes to be the common weakness in most English-teaching centres Employees are overpaid than their potentials, leading to over- expenses (Truong Manh, 2021) 4.3 Recording expenses under VAS standard Alibaba adopts the VAS standard There is no accounting apartment in the company All the transactions and reports are recorded and prepared by L.A- a trustful person having a degree in accounting and now working in the sales department At the end of each month, L.A would based on salary and expenses claimed earlier in the mutual Excel files by all the staff and checking results conducted by NCH, a person being responsible both for teaching at the centre and reviewing expenses to record all the transactions incurred and then prepare reports In fact, L.A actions violate TT 200- the VAS standards and accounting principles Under VAS, expenses are the accounts that decrease economic benefits and are recorded at the time of occurring transactions or possibility of the future without already being paid or not (VAS,n.d) Moreover, the matching principle, which requires revenues and any related expenses should be recorded together at the same time, is also violated In addition, it is expected that the account should review evidence and reasonability for transactions by him or herself before recording, not just by relying on the others’ opinions and judgement 4.4 Administrative expenses Administrative expenses reflect directly on a company’s efficiency Research from the University of Texas shows that 82% of poor cash flow management leads to the failure of a small or medium-sized business The manager should review all office management tools to track the costs better (Akerks, 2016) Business is an organisation comprising many individuals Thus, there is a high risk of shortage in controlling administrative expenses, especially some variable costs like material printing, perks, and outside working expenses In an English centre, main costs come from studying material (Truong Manh, 2021) Some businesses have effective software and managing tools to control, but most neglect the importance of this matter, which leads to loss of the budget balance It is assumed that those expenses are the hardest to control, thus being the most-driven fraud (Styles et al, 2018) In Vietnam’s accounting system, administrative expenses (TK 642) are clearly classified into details including taxes, fixed assets’ depreciation, expenses incurred from conferences, research and training In Alibaba’s case, the cost spent for printing materials should be accounted for TK 6427 (Vietnamese Accounting System) 9 4.5 Salary expense management According to the internal auditing process for salary payables, Alibaba has now not fulfilled all auditing duties, especially the matter of lack of duty segregation There are 3 aspects that need to be reviewed periodically: incurring salaries expenses, calculating methods and recording in the company Internal control judgement helps businesses to identify possible misstatements and potential risk factors In terms of duty segregation, the managers or auditors should proceed with internal control to check the segregated responsibility between human resource department and accounting department In addition, internal auditors should check labour contracts, documents and company policies which authorise specific payroll and commissions to review recruiting procedure, payroll agreement and the independence in 3 different processes (reporting working hours, paying salaries and recording salary expenses) Moreover, payroll- related models in the company should be reviewed to prevent frauds and risks in payroll and duty completion confirmation and records These are the most important functions because of its direct and vast effects on salary expense management in the business (SCIC, n.d) Today, with economic development, there is a need for towards-large-scale- companies for building a firm salary management system Salary management system has a more complete definition than the word “salary management “itself It is a combination of controlling human resources and business operation as well as analysing company policy-making model and database (Zhang et al, 2012) Poor employee expense control can result in both employee dissatisfaction and higher cost processing Therefore, expense management has become a crucial corporate function nowadays In a research project, Suresh proposed using software as an effective way to manage the employees’ detailed working days and working hours 10 (Captured from Suresh’s project, 2020) Below are the weaknesses that may be caused due to the lack of duty segregation 11 (Cited in an experiment from Audrey’s research, 2010) Looking at the experiment, in smallest to medium-sized businesses, one person is assumed to be involved in many tasks Restriction in human resources may limit the number of employees, sometimes resulting in segregation of duties In addition, management’s daily involvement in material transactions can be related to mitigating segregation of duties issues Thus, a senior manager is required to be involved in all material transactions and directly involved in financial reporting (Audrey, 2010) Audrey primarily suggested an additional management review and reconciliations to boost internal controls Moreover, if management review is internally applied, managers should have appropriate knowledge for both accounting and understanding of the underlying transactions that are being reviewed 4.6 Commission expense management In an English-teaching centre, the driven target should definitely be sales that are English courses Therefore, performance-based commissions would be considered the best reward to motivate the sales team for their work engagement However, it could create an unhealthy competition in the company (Water, 2005) A salesperson may cut corners and use tactics that contradict the business's values just in order to grab the deals and thus receive their wanted commissions Occasionally, it is beneficial for the company when two or more salespersons work together as a sales team Different personnels support sales organisations to reach best solutions to identified accounts During the fiscal years, a company policy should be planned to utilise workforces and thus, motivate sales products (Sales Management Association, 2010) Managers could find it hard to handle team members who earn different amount.One of the key solutions is setting realistic targets To avoid conflict, the managers should proceed with regular one-to-one reviews to make sure that all expectations are synchronised together Furthermore, all managers need to check whether their staff bring compliance with the company's values which are some signals of tricky behaviors in order to get the fake deals Otherwise, the company may suffer from the risk of losing valued clients and deteriorating company's ethics and reputation (James, 2019) 5 Methodology To proceed with the project, it is necessary to have enough specific and complete data to analyse the problems To obtain such information, we prepared several questions to ask these participants: 20 teaching assistants, lecturers, centre managers and CEOs The survey method that we carry out in this project is qualitative According to Bhadari (2020), different from the quantitative method, the qualitative method is the process of collecting and analysing non- numerical data to find out opinions and experiences It can be used to gather insight into an issue or research new ideas for a project Moreover, when using this method, the time to conduct qualitative research projects is usually quite short and costs less We asked a few questions to the teaching assistants to get information about the centre's current training system and also to get feedback after the training If quantitative methods make it 12 difficult to obtain specific information, qualitative methods can help with that To collect more detailed information, we interviewed the subjects directly After researching through the company's situation as well as contacting the company's management to arrange a face-to-face interview time, after the end of the Lunar New Year holiday, as soon as the company goes back to operation, we had the opportunity to arrange an interview right at the company's headquarter with a team of lecturers, teaching assistants and management Because the lecturers and teaching assistants are the ones who directly teach the class, they will have a better and deeper understanding of the problems or costs incurred during the class, so we expanded the scope of the interviews with the teaching assistants and tutors We also interviewed two people who are directly in charge of managing company expenses Firstly, Mr NCH - is a lecturer of the company, also a checker of the expenses declared by the employees in the company's activities Second one is Ms LA - staff with accounting degrees who are staff from the sales department in charge of recording transactions and preparing financial statements at the end of each month Through the tour to observe at the company's headquarters, we have seen firsthand how the company operates In addition, we are also provided with a financial statement from which it is easy to observe exactly the problems that the company encounters through the data presented in the financial statements 6 Work allocation Conductor Work Ngo Thi Huyen Get preliminary access to the company by her relationship with the CEO Ngo Thi Huyen Make an appointment with CEO & acquire financial statement via email Whole team Acquire company information (website, Facebook fanpage) Linh & Van Preliminary company tour to observe the work environment Whole team - Detect some problems: human resource management, inventory access, expense management - Discuss & decide on the most serious problem : expense management Whole team Design interview questions Cao Thu Huyen & Ngo Interview the CEO & staff Thi Huyen Whole team - Develop project proposals - Evaluate potentials and difficulties 13 Whole team - Propose recommendations & action plans - Apply experimental action research & get the feedback from the CEO 7 Timeline for the completion capstone project Date Plans Jan 10th- Extensive literature review about the company based on statistic about revenue, 17th expense, source of capital, profit, human resource training Jan 18th- Observation of business work and human resources department of company 27th Feb 7th- Analyse profit of company through financial statement & find some problems of 14th company Feb 15th- Identify the serious problem is poor expense management 20th Feb 21th- Interview with CEO and staff by quantitative methods 28th March 1st- Develop proposal of research 7th March 8th- Evaluate the potentials and drawbacks of problems 15th March Find solutions and action plans in the short term and long term 15th-31st April 1st- Apply action research in reality & get feedback from the company 15th April 16th- Finish research project & draw conclusions 30th 8 Potential obstacles and feasibility Processing this capstone, we encounter both advantages and challenges The biggest advantage is that Mr Ngo Xuan Thang, the CEO has the same purpose as we do- to find out the 14 company's problems Therefore, our accessibility to the company is easy and welcome The authors are provided great freedom in the methods of acquiring information (e.g company tour, direct interviews and data requests) However, there is a great problem here- the matter of trust and information security The authors wish to proceed with as close accessibility and investigation as possible to see if Alibaba English Centre has more problems rather than poor expense management However, perhaps Mr Thang shows his pleasure to reveal the part that he assumes is already his company’s problem needed to solve immediately Furthermore, as Alibaba, from a less popular English centre, is planning to create a turning point in order to wide spread its reputation all around Vietnam, the company has to stay away from risks such as scandals or internal information stolen Sharing with us on an informal call, he displayed his confusion on our capstone purposes When it comes to the matter of mutual trust, he seemed to express his doubt on whether all the information he provided will be published and if it will be revealed to his company’s competitors Obviously, no company wants to reveal publicly its weakness and what to improve All want their customers to believe in the thing- called “perfection inside and out” Thus, in fact, Mr Thang limited our investigation on finding other problems and just let us access the information that he believed can reveal poor expense management, his company's problem On the same side as Mr Thang, his staff, who we conducted preliminary interviews with, also welcomed us with careful words Especially, when being asked about their work duty and their colleague’s, we had difficulty to ease their hesitation due to the fear of getting fired and devastating their co-worker to co- worker relationships Understanding all those challenges may affect our capstone’s results, at the moment when we are writing this capstone proposal, we are still convincing Mr Thang to provide us more realistic and full-aspect data and information with a firm promise which was all the finding from this capstone would be served in Hanoi University scope only Meanwhile, we plan to proceed in-depth interviews with the staff by getting closer to them, designing “trick and trap” questions and most importantly, ensuring their identities are hidden This process could take a long time Additionally, the reflectivity should be aware There are 4 centre branches in Hanoi and others in Nghe An and HCM city Although reporting statements provided can fully reflect the company’s financial situations, the direct research scope conducted in its headquarter of Hanoi due to objective conditions may lack representation However, an extensively thorough and objective study is attempted as much as possible An objective obstacle that should be listed here is the tense situation of Covid-19 in Hanoi, where all the investigation takes place right now As a fact, most corporations during Covid-19 have lower income An assumption is put that if Alibaba’s income was lower and expenses were higher due to the pandemic, the capstone conclusion may be affected Thus, apart from current data, the company also needs to provide information in previous years In addition, the serious pandemic situation prevented us from proceeding with an extensive tour to Alibaba’s Hanoi office quarter on 15th Feb as expected because there were up to 4,000 positive cases that time, then the direct investigation indeed took place in 3 days, not 5 days as planned due to social restrictions As the result, we would perhaps to proceed the remaining work online and update the Covid-19 situation in Hanoi at the same time, 15 To sum up, despite all those challenges, the authors highly appreciate and place a great positivity towards the feasibility of the capstone as mentioning our biggest advantage which is the CEO’s willingness and welcome to implement the expense management Therefore, it is assumed that Mr Thang in the future would continue his support to put our action plans into experiment To obtain his trust and this capstone’s success, our team has been attempting to conduct research, company feasible accessibility and then draw the preliminary action plans Meanwhile, we still keep contact with the company to get his permission and persuade him to allow us more authority Once this capstone succeeds, it is believed to be a turning point for Alibaba, which suits best for the company at this time- the time of conquering the English-teaching market and competing with strong competitors When the expenses are better controlled, operate effectively, optimise unnecessary costs, and control the finances of the business 16 REFERENCES 1 Allen, 2007 Cost accounting system 2 Akerks, 2016 A modern guide to manage G&A expenses University of Texas 3 Audrey, 2010.Addressing Problems with the Segregation of Duties in Smaller Companies Kennesaw State University 4 Dunnes Styles et al,2018 Elevating your management: Administrative expenses 5 Sales Management Association, Nov 2010 Sales Commission Plan Policy 6 Sarah James, 2019 Ways to manage commission policy Stardshieve University 7 SCIC,n.d Tổng hợp thủ tục kiểm toán quy trình tiền lương – KIỂM TOÁN NỘI BỘ Retrieved from https://kiemtoanscic.com/van-ban/tong-hop-thu-tuc-kiem-toan-quy-trinh- tien-luong 8 Suresh,2020 Employee expense management system.Journal of emerging technologies and innovative research 9 Mohammed Rougnaghi, 2017 Implementation of cost management in corporations Business Journal Research 10 Truong Manh, 2021 Three steps to optimise expenses in managing English-teaching centres in Vietnam EasyEdu 11 Zhang et al (2012) Elsevier University Salary management for small and medium-sized businesses 12 Water, 2005 Structure commission policy: Enhance your position Illinois Community College 13 VAS,n.d Nguyên tắc kế toán các khoản chi phí theo TT 200 Retrieved from http://ketoanthienung.org/tin-tuc/nguyen-tac-ke-toan-cac-khoan-chi-phi.htm 14 Vietnamese Accounting System Hạch toan chi phi quản li 17