factors affecting the application of performance based budgeting model case in retail sector in vietnam

ABSTRACT This thesis was conducted to identify factors affecting the application of the based budgeting model in retail enterprises in Viet Nam.. 15 2.5 Factors affecting application per

INTRODUCTION

The rationale of the thesis

Budget planning is an important stage, the role in and efficiency of the business Forecasting, calculating expenses, helping businesses stay on track, avoiding excessive spending It is the balance of departments for the next implementation plan and also the expectations and goals of the whole enterprise In countries around the world, especially developing nations, there is a need for businesses to control costs and maximize cost efficiency Therefore, to prevent and detect losses, businesses have implemented new methods and research new methods aimed at effective cost control At the same time, this issue has become problematic for researchers in accounting and corporate financial management, including researches on improving accounting systems to practice accounting based on accrual principles and researches on the application of new management accounting techniques such as modern budgeting

Performance-based budgeting is a budgeting approach that focuses on allocating funds based on the results achieved by the programs and the users of budgets Instead of simply attribute money based on what was spent in the past business periods, performance-based budgeting looks at how effective a program is at meeting its goals This can be used by governments, businesses, and other organizations

In Vietnam, budgeting and financial management have made great strides, especially in developing more effective business cost methods At the same time, the current effective and effective planning model is the Performance-based budgeting (PBB) model This model has become the dominant model in many countries, the PBB model aims to innovate the entire payment system (HTTT) managed to focus on performance (QQ), in which business management information is used in the whole process of planning and allocating resources (Budding, Grossi, & Tagesson, 2014) Meanwhile, in Vietnam, the traditional estimating model at enterprises is no longer suitable, because this model is more about controlling expenditures, allocating resources focusing on inputs, not building links between inputs and outputs, so it does not show how to use resources effectively and measure operational efficiency

The PBB model being widely adopted is not simple, requiring ways of budgeting, operating the plan; and a management culture that ensures performance-based accountability Moreover, for methodological change decisions, innovation is a process carried out by every individual, so considering the perception of the implementer is very important in adopting any change, which contributes to the success of that change (Ehsein, 2014) Therefore, in addition to changes in budgeting methods at enterprises, it is necessary to identify which factors will influence the application of PBB model by planners in enterprises in Vietnam, so that managers can make appropriate decisions affecting those factors, contribute to motivating planners to quickly adopt PBBs effectively

Budget planning is a measure for implementation, comparing reality with the plan to detect abnormalities and promptly handle and adjust accordingly The research on PBB is quite diverse, has been carried out in many different countries around the world and has different environmental conditions compared to Vietnam Moreover, these researches have focused only on PBB planning techniques, not on human behavior related to PBB application, and so far no research has been found in Vietnam Therefore, the research of the topic "Factors affecting the application of performance-based budgeting model: case in retail sector in Vietnam" is necessary, theoretical and practical.

Research objectives and questions

General objective of this thesis is to identify factors affecting the applicability of PBB model in retail enterprises in Vietnam.

Research questions

The thesis will answer the following questions:

 What is the business context in which the retail firms are making business? How this context affects the performance-based budgeting (PBB)?

 What are the impact factors identified by previous literatures?

 What is the application and the applicability of the PBB model as perceived in the retail enterprises in Vietnam? (both from the planners and the implementors of budgeting)

 What are recommended measures/solutions to promote the application of PBB model in retail enterprises in Vietnam.

Scope of research

 Research is only for the 18 retailers in Vietnam retails market which have their data published in the market; These 18 retailers are representative for the Vietnam retails market

 Scope of research: focus on detecting factors affecting the application of PBB model in retail enterprises in Vietnam

 Secondary data collected through reports, documents, research works published from

2019 to now, primary data collected from 04/2023 to now.

The structure of the thesis

In addition to the introduction, references, the thesis is structured in 5 chapters:

Chapter 1: An overview of the rationale of the thesis study The Chapter 2 provides general theory of factors influencing the application of a performance-based budgeting model in retail industries Chapter 3 provides research methodology on conducting study and sources of primary and secondary data Chapter 4 presents research results and discuss the implications of findings Chapter 5 concludes the study, identifying the limitations of study and continuous orientations of study.

Concepts used in the thesis

Budgeting is an action plan expressed as a value to accomplish programs with goals within a given period of time including an estimate of the resources needed and available, often compared to one or more periods in the past and expressing requirements for future resources (Andrews & Hill, 2003) There are many definitions of budgeting such as time period; entity; budget components or items; The level of detail of budget items; the extent to which budget items are binding on the organization; type of information for each item in the budget According to Ehsein (2014), budgeting involves financial planning, usually over a period of one year, aimed at achieving economic and social goals (Shah & Shen, 2007)

Normally, budget planning usually has the following 5 common types of budgets (ACCA, 2012; Hou, Lunsford, Sides, & Jones, 2011): (i) Master budget: including the budget of each department and the whole enterprise, providing managers, business owners (CEO) with a comprehensive picture showing the current state of corporate finance; (ii) Operating budget: is an estimated budget during operation to help estimate and analyze costs and revenue coming from daily operations of organizations and enterprises; (iii) Cash flow budget: is a type of budget that estimates the flow of money, in order to determine the positive amount of money in circulation in the business at a certain period of time; (iv) Financial budget: is a strategic budget to achieve resource efficiency with the most optimal productivity, thereby helping enterprises manage assets, revenue and expenditure, cash flow; (v) Static budget: is a type of budget where other factors such as sales, profit, inventory, change, the figures of this budget are always fixed

The position of budgeting in the performance –based system is depicted in the figure below (ACCA, 2012):

Figure 2-1: Contents of Model of Performance-based Management

Business capital planning is one of the important factors to determine the business scale of enterprises, enterprises with capital advantages will be favorable to expand areas, expand investment, is a necessary and sufficient condition for each enterprise to survive and develop Capital is not only a prerequisite for the establishment of enterprises but also one of the factors that play a decisive role in the development process of enterprises Therefore, a very important issue for enterprises today is the desire to use capital with the highest efficiency; To do that, enterprises need to take measures to manage and use that capital in the most effective way (Iratni, Djasuli, & Hayati, 2012)

Here are the objectives of a budgetary planning and control system (ACCA, 2012)

 Ensure the achievement of the organization‟s objectives;

 Provide a framework for responsibility accounting;

 Motivate employees to improve their performance.

Retail industry

Retail is the purchase of products from large manufacturers, wholesalers or retail companies and resale to the end consumer Retail organizations vary in size very widely They can be a single store or continuous stores consisting of multiple branches, including general department stores, specialty stores, discount stores and consumption cooperatives (Astarini, Utomo, Sari, Arif Rohman, & Priyo Negoro, 2020) Retail is the process of selling consumer goods or services to customers through multiple distribution channels for profit Retailers meet identified demand through a supply chain The term "retailer" is usually applied when the service provider processes small orders of a large number of individuals, who are end users, rather than large orders of a small number of wholesale, business, or government customers Shopping usually refers to the act of buying a product Sometimes this is done to obtain final goods, including necessities such as food and clothing; Sometimes it takes place as a recreational activity Leisure shopping often involves window shopping and going to the grocery store: this does not always lead to a purchase (Astarini, Utomo, Sari, Arif Rohman, & Priyo Negoro, 2020)

The retail sector exists both in the form of brick-and-mortar stores to online shopping platforms It is constantly changing and evolving, adapting to market changes and changes in customers' shopping habits Retail is a form of sale where products are distributed from manufacturers/wholesalers, or from trading companies, then resold to buyers The buyer is the last object of the transaction chain A retailer is a person/business that buys goods from a manufacturer or merchant, etc In bulk, wholesale prices and sell them in small quantities to the end consumer at a higher price

Store retail model: This type includes independent stores, malls, grocery stores, specialized stores, traditional supermarkets, Those who do retail business through stores always have a fixed location to attract a large number of visitors to visit and shop They often sell a variety of goods and large-scale stores such as shopping malls will use mass media for advertising Their peculiarity is that serving the needs of the individual and the family is primary However, there are still places specializing in trading specialized items for organizations and businesses such as stationery stores, computer and software stores, building materials stores, electricity and water supply stores, construction shops

Specialized retail model: This model is slightly more improved than the above model because they focus more on investing in utilities, shopping experiences, and specific needs of customers This is a strategy for them to survive the fierce competition of large-scale retail stores, of business websites, of e-commerce trends

Non-store model: This model does not have a fixed store, transacting mainly through television, internet, vending machines or mobile counters With the exception of vending machines, all these types of retail do not have a fixed location or store to display goods The advantage of this field is that there is no need to import goods, store goods in large quantities You can just import samples for customers to see or get photos of suppliers to show customers, when customers are satisfied, you will contact them to pick up goods The disadvantage is that you cannot control the amount of goods, so it is a bit passive, in many cases where customers need them, the goods in the warehouse are out or no longer produced

Online sales model: The internet has contributed to changing the face of the retail sector, it is also the glue connecting businesses, markets with individual consumers Any analyst would admit that retailers who don't understand the impact of the internet are less likely to invest in developing online channels and miss out on an important opportunity to increase sales

Vending machine model: This type of retail is popular in developed countries and has been present in the United States for nearly a century now and has proved quite effective Just like other forms of sales, the key to success for a machine selling business is to choose the right time, location, and product type This type of business is attractive in that it does not have to invest and operate but quickly collects cash Consumers are also quite fond of this form because of its convenience and convenience

Enterprises operating in the retail sector in Vietnam require large amounts of capital, capital turnover needs to be fast, so the issue of capital management to achieve high efficiency, has great significance for improving business efficiency and competitiveness of each enterprise In recent years, Vietnam has integrated into the international economy comprehensively, retail enterprises of countries with strong economies have gradually been present in the Vietnamese market, thereby creating fierce competition of enterprises with the same retail sector; make the management of business capital in each enterprise more concerned The top goal of enterprises is business efficiency, increasing profits to continue business maintenance and business expansion, benefiting owners and creating jobs for employees.

Performance-based budgeting

Performance-based budgeting can be a valuable tool for organizations that are looking to improve the efficiency and effectiveness of their programs Performance-based budgeting is a budgeting approach that focuses on allocating funds based on the results achieved by the programs and the users of budgets Instead of simply attribute money based on what was spent in the past business periods, performance-based budgeting looks at how effective a program is at meeting its goals This can be used by governments, businesses, and other organizations (ACCA, 2012; Andrews & Hill, 2003)

2.3.1 General process of the budgeting model

PBB is a planning model that requires both public enterprises and governments to establish a management system related to the allocation and use of financial resources such as: information on funding costs, inputs, outputs and the relationship between outputs and inputs and their impact on desired outcomes want of the government as well as alignment with policy objectives (Trenovski & Nikolov, 2016)

Purpose – Aim is a summary of overall objectives, socio-economic strategic objectives, demonstrating a vision that includes the efforts that the organization is undertaking Objectives – Objectives are brief statements of the main objectives pursued in the medium to long term, reflecting the key components of the intended strategy (Trenovski & Nikolov, 2016; Robinson, 2013) Inputs: defined as labor, materials and other resources used by state agencies and public enterprises to carry out output production activities, thereby creating the results of output (Su Dinh Thanh, 2005) Outputs: are products and services created and provided to society by state agencies and enterprises

Figure 2-2: Basic process of PBB

Processes – Processes are activities, strategies, or activities used to produce outputs designed to deliver results Outcomes are the effects of the Government on the community (intentional or unintentional) from the process of creating an output or group of outputs

Economy is the quality and quantity of appropriate financial, human and material resources and the lowest relevant costs, assessed through input measurements and compared with standards and norms Efficiency is information related to output with required input resources, is the level of input minimized for a certain level of output, or output is maximized for a certain level of input Effectiveness is information about the range of outputs achieved relative to policy objectives, the degree to which actual results are achieved, about the results obtained, through relevant outputs or management costs Appropriateness is the degree to which actual results align with community needs and strategic goals

2.3.2 Key benefits of performance-based budgeting

There are many benefits, including (ACCA, 2012; Andrews & Hill, 2003; Arsani &

 The PBB promotes more efficient use of resources: By focusing on programs that are getting results, organizations can avoid wasting money on programs that are not effective

 Improved accountability: Performance-based budgeting helps to hold programs accountable for their results

 Better decision-making: By having a better understanding of how programs are performing, organizations can make better decisions about how to allocate resources

There are also some challenges to implementing performance-based budgeting These include (Arsani & Sihombing, 2020; Astarini, Utomo, Sari, Arif Rohman, & Priyo Negoro,

2020; Jan van Helden, Johnsen, & Vakkuri, 2008):

 Developing clear performance measures: It can be difficult to develop clear and measurable performance indicators for some programs

 Data collection: Collecting data on program performance can be time-consuming and expensive

 Gaming the system: There is a risk that program managers will try to manipulate the performance measures in order to get more funding

Thus, the performance-based budgeting model in the retail sector is understood as an overview of retail sector activities in a given period, in financial terms, including revenues and expenses, and supplemented by other information about these activities, such as the desired function, goal, or impact For businesses operating in the retail sector, there is a need for performance-based budgeting, which is an indispensable factor in the business process After all, the essence of budgeting is financial planning, planning the management, administration and use of capital of enterprises How to preserve and develop business capital growth, improve business results and efficiency Management and

Comment [Chi LE1]: Done management of business capital is a matter of constant concern of business CEOs, investors, and objects with interests related to the operation of enterprises (Shah & Shen, 2007; Phạm Quang Huy, 2016; Oc, 2019)

2.3.4 Pros and cons of the model

Enhance better communication between budgeting members and citizens: When implementing PBBs, units must clarify program objectives and define performance goals, giving units and employees a better sense of performance expectations PBB helps state managers communicate more effectively about their activities, performance results, and the public benefits of their programs to the public (Natasha Burns, 2006; Trenovski & Nikolov, 2016; Andrews & Hill, 2003)

Improving the efficiency and effectiveness of public management in state agencies: businesses increase flexibility and autonomy to manage service delivery, thus helping to restructure failed programs or eliminate unnecessary ones through performance evaluation, leading to increased flexibility in using resources more efficiently and effectively, and providing better information to decision-makers (Natasha Burns, 2006; Trenovski & Nikolov, 2016; Andrews & Hill, 2003)

More information makes budgeting decisions easier: PBBs add value to discussions as performance information is taken into consideration to determine funding levels With proper performance information, politicians are able to pressure units to improve and better understand the issues involved In addition, information on measuring good performance will help governments compare the performance of their units with other suppliers; choose the extent and combination of outputs to which agencies need to be funded to achieve government outcomes (Natasha Burns, 2006; Trenovski & Nikolov, 2016; Andrews & Hill, 2003)

Help improve accountability and transparency of government operations: PBBs are seen as a key tool for demonstrating transparency and accountability of the unit to the legislature and the public On the other hand, PBBs categorize resources by program and provide better performance indicators, improve accountability, and make managers more accountable for decisions about programs that affect budget outcomes (Natasha Burns,

2006; Trenovski & Nikolov, 2016; Andrews & Hill, 2003; Astarini, Utomo, Sari, Arif Rohman, & Priyo Negoro, 2020)

Other benefits: PBB facilitates the performance of audits, monitoring, evaluation and reporting of performance Furthermore, PBB improves performance by connecting budgets and program performance over time PBBs also help save costs, reduce services doubling, and encourage a better understanding of government operations (Natasha Burns, 2006; Trenovski & Nikolov, 2016; Andrews & Hill, 2003)

There are a number of disadvantages (Natasha Burns, 2006; Trenovski & Nikolov, 2016; Andrews & Hill, 2003; Astarini, Utomo, Sari, Arif Rohman, & Priyo Negoro, 2020) PBBs increase the workload of public officials (Andrews & Hill, 2003; Arsani & Sihombing, 2020)(Melkers and Willoughby, 2001) and are vulnerable to intimidation due to fraud and misrepresentation Although PBBs require programs and an accounting system to assist in calculating unit costs, most governments are unable to meet these requirements Therefore, budgeting does not adequately connect programs with costs Consensus between legislatures and managers on organizational goals and related performance measures is often difficult to achieve because many agencies have multiple and often conflicting goals Problems arise in defining and establishing appropriate performance measurements, e.g the lack of data available to generate information about the outputs and outcomes of programs over time; Entities lack internal procedures to ensure that performance data is accurate The quality of poor performance measures is a common defect that undermines the success of PBBs

PBBs do not take into account the difficulties faced by practitioners such as the time it takes them to research their information, needs and expertise In addition, the need for too much information is a particularly common drawback of this model

As such, the PBB model has become the dominant planning model in many countries, as efficiency is based on performance information to allocate resources This model aims at the innovative development of an entire management information system focused on performance, in which performance information is used in both the planning process and the allocation of resources PBB needs to be researched and applied to achieve the strategic development goals of the units.

Stages of development of the performance-based planning model in the retail

During this phase, there were 9 typical countries that sought to implement PB or PBB performance budgeting models (US, Philippines, India, Malaysia, Netherlands, UK, Australia, Denmark, New Zealand) Mid-twentieth century, with the trend towards performance-based management The first PBB was implemented in the United States in

1949 by the Hoover Commission in response to financial stress and financial scandals PBBs are integrated with the programmatic planning model and focus on organizational structures implemented across the state and local governments (city and county) Financial stresses in the United States have necessitated the need to provide more budget measurement information to the corporate sector and were an initial impetus for the shift to PBB implementation

Financial stresses have also been cited as drivers of PBB implementation in the UK, Australia, New Zealand and Denmark However, for developing countries (such as in the Philippines, India, Malaysia) there is pressure from former colonial powers and programs to finance projects (mainly those funded by the United States and the United Nations support is the main driver for the move to PBB implementation However, the first stage of effective PBB implementation and the effectiveness of corporate sector budgets have not been improved While PBB implementations have led to better use of performance information in budgeting systems, this performance information is not used properly in linking performance information to resource allocation

This problem occurs due to weak performance measurement capacity and the reluctance of managers and legislators to use performance information for budget-related decisions Therefore, in the early stages, PBB implementation was ineffective Another reason why the goal of the first wave of PBBs was not fully achieved (especially in developing countries but was funded by the United States and the United Nations) is that the transition to PBBs stemmed from donor organizations' funding programs rather than from the needs of that country In response to these difficulties, PBBs were modified into a number of other forms of budgeting (such as the 1965 planning program-based budgeting system; the

1973 management by objectives (MBO) model; and zero-based budgeting (ZBB) in 1970

In addition, PBBs have a number of disadvantages, such as increased paperwork in the budgeting process, lack of performance information needed for analysis and difficulty in measuring the costs and benefits of programs, and complexity in linking programs to budget structures in the PBB system (as is the case of the United States)

By the 1980s, PBBs were revived to make the government more business-like, to ensure that the government provided the necessary services and was accountable to its citizens This rebirth of PBB was more customer-oriented, and PBB as part of NPM, dominated the budget reform process

2.4.2 From the 1990s to the present

After the early stages of the PBB, since the 1980s, the performance-based planning (PBB) model has been adopted by many countries to improve the accountability and effectiveness of public programs The past 3 decades have seen a clear trend from developed nations bringing a stronger performance-focused orientation to managing public spending New Zealand and Australia are considered precursors to management or performance-based planning in the late 1980s Then, by the early mid-1990s, were Canada, Denmark, Finland, France, the Netherlands, Sweden, the United Kingdom and the United States Also, from the late 1990s to the early 2000s, Austria, Germany, and Switzerland introduced different versions of these reforms At the same time, PBBs are also growing rapidly in other countries in the Organization for Economic Co-operation and Development (OECD), which is seen as a way to make governments more competitive, spend efficiently and as a response by taxpayers to skepticism about government spending leading to more accountable government Subsequently, many countries expanded PBB implementation and introduced new legislation requiring benchmarking and performance measurement

As can be seen, the 1990s were a golden era for PBB reform In particular, the U.S Congress passed the Chief Financial Officer Act of 1990 and the Government Performance and Results Act of 1993, which together laid the legislative foundation for reform to the PBB in recent years The George W Bush administration also initiated a performance ranking scheme to link performance to grant program requirements Besides reform at the federal level, many U.S state and local governments introduced the PBB version in the

1990s However, PBB initiatives have yet to be introduced in developing nations this decade For example, Thailand, Egypt, India, Malaysia, the Philippines and Sri Lanka all still introduce their own version of PBB

Some countries have adopted reforms to reduce costs, enhance government efficiency, and increase public satisfaction with public programs Others adopted PBBs because of external pressure from donor countries, and international organizations demanded greater transparency in recipient countries, demonstrating the funds used and the outcomes foreign aid delivered Currently, PBB has gained immense popularity in countries around the world However, this does not imply that it always provides quick fixes to many of the problems that the government faces In addition, with the long experience of developed countries in PBB reform, PBB tends to create many new challenges for policy makers to innovate the entire ICT focusing on performance to facilitate reform to PBB and requires tremendous time and resource commitments in the process executor.

Factors affecting application performance-based planning model in the retail

Performance-based budgeting (PBB) is a great system in theory, but its success hinges on several factors Here's a breakdown of some key influences (ACCA, 2012; Grizzle &

PBB was affected by the Organizational Commitment

 Buy-in from leadership: If top management isn't fully behind PBB, it can be difficult to implement effectively Strong leadership commitment is crucial for setting clear expectations and ensuring everyone understands the importance

 Employee engagement: Employees need to understand how their work contributes to achieving program goals Clear communication and involvement in setting performance measures can boost employee buy-in

PBB was affected by the Resources and Systems

 Human Resources: Skilled personnel are required to develop clear performance measures, collect and analyze data, and track progress

 Information Systems: Reliable data collection and analysis are essential for PBB Having the appropriate information systems in place is crucial

 Financial Resources: Implementing PBB can require upfront investment in training, data collection systems, and potentially even restructuring programs

PBB was affected by the Performance Measurement and Accountability

 Setting Clear Goals and Measures: Well-defined goals with measurable performance indicators are essential Unclear or easily manipulated measures can undermine the effectiveness of PBB

 Rewards and Sanctions: A system of incentives (rewards for exceeding goals) and consequences (for underperformance) can motivate staff and hold programs accountable

 Leadership Style: Supportive and collaborative leadership that fosters open communication is beneficial for PBB

 Administrative Improvement: Streamlining bureaucratic processes can ensure smooth implementation and data collection

 External Factors: Unexpected events or changes in the organization's environment can impact program performance and require adjustments to PBB

By carefully considering these factors and fostering a culture of performance-driven budgeting, organizations can maximize the effectiveness of this approach.

Principles of the application of performance-based planning in the retail

The budget should show a clear alignment with the strategic goals and business plan of the business For example, for a telecommunications enterprise, the strategic goal of the enterprise is to rent a telecommunication station to optimize costs, respectively, the cost of buying a station/buying land will have to be replaced by the cost of renting a station in the budget The plan should also show the expected arising situations to ensure the initiative of the business

Budget items and expenses should be based, shown by detailed explanations, analyses and evidence for monitoring For example, the stationery purchase cost item will need to show the quantity and unit price For quantity, there should be a specific explanation of how the demand for quantity is calculated, whether the unit price complies with the company's norms, is it calculated per capita, is it based on the numbers of previous years? For unit prices, it is usually necessary to have a quotation from the counterparty, in case there is no quotation available, it is necessary to take historical data / actual payment as the basis for estimation

The timing for budget usage varies for each type of business For businesses in a volatile retail business, budgets are built for short periods of time, whereas for more stable businesses, budgets are usually built for longer time periods Budgets are made separately for each department/business unit to ensure practicality Enterprise master budget planning is the more set of separate budget plans The approval and adjustment of the budget must be carried out in a transparent manner, the budget data is only provided to the appropriate audience

In the process of developing a budget plan, the following issues should be limited: Repeated edits before completion, the budget is too focused on financial plans and goals The budget plan not only reflects financial data but also reflects the direction of operation, therefore, the lack of information about operating data will make the budget plan difficult to operate, track and manage The budget is too detailed The monthly budget details are not necessary, difficult to be accurate, but will usually be prepared quarterly like the financial reporting period

It is necessary to clarify the philosophy of "Achieving goals", the implementation may deviate much from the set budget but achieve the priority goals of the business, and with reasonable explanations, these differences will be accepted A good example is budget planning in the field of building construction The goal of the activity is that the construction work is completed and put into use Normally, when planning the budget at the beginning of the year, the unit will base on the investment rate of similar works/quotations at the beginning of the year and the budget value will be large; at the same time should be "Control" For example, set specific limits for budget items and tend to tightly control performance within the approved budget For example, the budget plan of support departments mainly works in the office, the management will often require very detailed norms to serve the needs of cost control, limiting excess spending The accounting department will set detailed cost norms such as vehicle fuel costs, business expenses, office expenses and departments must budget on the basis of norms.

Performance-based budgeting model in the retail industry

According to the ACCA, standard performance management process include the contents below (ACCA, 2012)

1 Specialist cost and management accounting techniques (Costing; Activity based costing; Target costing; Life cycle costing; Throughput accounting; Environmental accounting)

2 Decision-making techniques (Cost volume profit (CVP) analysis; Limiting factor analysis; Pricing decisions; Short-term decisions; Risk and uncertainty

4 Standard costing and variance analysis

4.3 Behavioral aspects of standard costing

5 Performance management systems, measurement and control

5.2 Sources of management information and management reports

2.7.2 The planning and control cycle

According to the standard applied by the ACCA (ACCA, 2012)

Objectives establish the direction in which the management of the organisation wish it to be heading They answer the question: 'where do we want to be?'

Once an organisation has decided 'where it wants to be', the next step is to identify a range of possible courses of action or strategies that might enable the organisation to get there

The organisation must therefore carry out an information-gathering exercise to ensure that it has a full understanding of where it is now This is known as a 'position audit' or 'strategic analysis' and involves looking both inwards and outwards

(a) The organisation must gather information from all of its internal parts to find out what resources it possesses: what its manufacturing capacity and capability is, what is the state of its technical know-how, how well it is able to market itself, how much cash it has in the bank and so on

(b) It must also gather information externally so that it can assess its position in the environment Just as it has assessed its own strengths and weaknesses, it must do likewise for its competitors (threats) Current and potential markets must be analysed to identify possible new opportunities The 'state of the world' must be considered Is it in recession or is it booming? What is likely to happen in the future?

Having carried out a strategic analysis, alternative strategies can be identified An organisation might decide to be the lowest cost producer in the industry, perhaps by withdrawing from some markets or developing new products for sale in existing markets This may involve internal development or a joint venture

The strategies must then be evaluated in terms of suitability, feasibility and acceptability

Management should select those strategies that have the greatest potential for achieving the organisation's objectives

Step 4 Choose alternative courses of action

The next step in the process is to collect the chosen strategies together and co-ordinate them into a long-term financial plan Typically this would show the following

 A description of the long-term objectives and strategies in words

Step 5 Implement the long-term plan

The long-term plan should then be broken down into smaller parts It is unlikely that the different parts will fall conveniently into successive time periods Strategy A may take two and a half years, while Strategy B may take five months, but not start until year three of the plan It is usual, however, to break down the plan as a whole into equal time periods (usually one year) The resulting short-term plan is called a budget

Step 6 Measure actual results and compare with plan

Actual results are recorded and analysed and information about actual results is fed back to the management concerned, often in the form of accounting reports This reported information is feedback

Step 7 Respond to divergences from plan

By comparing actual and planned results, management can then do one of three things, depending on how they see the situation

(a) They can take control action By identifying what has gone wrong, and then finding out why, corrective measures can be taken

(b) They can decide to do nothing This could be the decision when actual results are going better than planned, or when poor results were caused by something which is unlikely to happen again in the future

(c) They can alter the plan or target if actual results are different from the plan or target, and there is nothing that management can do (or nothing, perhaps, that they want to do) to correct the situation

Figure 2-3: The Planning and Control cycle

Here are the objectives of a budgetary planning and control system

 Ensure the achievement of the organisation's objectives

 Provide a framework for responsibility accounting

- Motivate employees to improve their performance

The planning and control cycle has seven steps

- Step 4 Choose alternative courses of action

- Step 5 Implement the long-term plan

- Step 6 Measure actual results and compare with the plan

- Step 7 Respond to divergences from the plan

Planning and control occurs at all levels of the performance hierarchy to different degrees Budgetary control occurs at the lower levels of the performance hierarchy Used correctly, a budgetary control system can motivate but it can also produce undesirable negative reactions „Aspirations‟ budgets can be used as targets to motivate higher levels of performance but a budget for planning and decision making should be based on reasonable expectations

A budget can be set from the top down (imposed budget) or from the bottom up (participatory budget) (ACCA, 2012)

3.2 The advantages and limitations of implementing ZBB

Factors influencing the adoption of a performance-based planning model in the

There are a number of factors (Burns & Kedia, 2006; Chan, 2003; Foltin, 1999; Grizzle & Pettijohn, 2002) First, driving factors include (i) supports from the organization, (ii) the willingness of users to use and adapt PBB Lack of user (psychological process) adoption and adaptation is a significant obstacle to the success of any project Therefore, the acceptance of the implementer is the key factor determining the success or failure of any project Users can decide whether "apply" or "against" based on the assessment of changing the conditions and the difficulty/challenge in implementing a new system If users feel threatened by the system to be implemented or by its effects on their work environment, the willingness to apply would be changed considerably Thus, based on the research review, six influencing factors can be proposed, including: (i) the perception of PBB's relative advantage; (ii) barriers; (iii) endogenous capacity for change; (iv) organizational support; (v) Jurisdiction to apply; (vi) institutional applicability These are the factors that influence the adoption of the PBB model

2.8.1 Perception of PBB's relative advantage

Attitude towards a behavior is the degree to which the performance of the behavior is evaluated positively or negatively Positive attitude make user perceive relative advantage of the PBB offering greater value than the current situation, thus want to take the benefits as they are worth the costs incurred when changing from the status quo to the new situation (i.e., the implementation of PBB planning) The transformational benefit refers to the perceived utility that users will enjoy when moving from the status quo to performing technical planning operations under PBB) The move to PBBs can be beneficial in the form of strengthening the PBB in an individual mission The Rogers' diffusion theory explains that the perception of people in the network would lead to a higher likelihood of adoption (Burns & Kedia, 2006; Chan, 2003; Foltin, 1999; Grizzle & Pettijohn, 2002; Garcia, Bardhi, & Friedrich, 2007; He & Ismail, 2023)

A prominent barrier in planners' perception of preferring to maintain the old model is the perceived loss, the switching costs, the perceived dissonance, perceived disagreement, and other negative attitudes that users will suffer when moving from the status quo (traditional model) to the new information system (PBB model) (Burns & Kedia, 2006; Chan, 2003; Foltin, 1999; Grizzle & Pettijohn, 2002)

Self-efficacy for change is defined as an individual's confidence in his or her ability to adapt to new situations (e.g., how to work with the PBB model) In endogenous competence, personal trust can influence users' perceptions and ways of thinking, and their motivation to succeed (ACCA, 2012)

2.8.4 The support of the organization

The provision of support from the company to the users creates favorable condition for being able to competently use the system It is the advantages provided by the organization to help users adapt to change The main support system includes emotional support, career development and a reward system Informal support includes support from colleagues and supervisors in the workplace One of major supports is manager allocate time and encourage PBB adoption (Burns & Kedia, 2006; Chan, 2003; Foltin, 1999; Grizzle & Pettijohn, 2002)

The institutional perspective (Foltin, 1999; He & Ismail, 2023) looked at the institution through a close look at mission and values, authority, and operational capacity Based on institutional perspective, some scholars adapted the case research for reform to the PBB model, through which countries wishing to adopt the PBB model need to address weaknesses in three areas including "authority", "acceptance" and "ability" to expand the reform space

PBB applicability is defined as the ability of an institution to complete the adoption of the PBB model The capability refers to 3 aspects: the ability to assess MPI, personnel capability and technical capability In addition to competence and authority, Andrews also deals with acceptance, including political acceptance, acceptance of management and motivation The higher political and managerial acceptance for reform there is, officials face incentives to actually approach PBBs, leading to improvements that can be expected to facilitate reform Thus, the expectation of acceptance can be that extraordinary successes will affect both the issue of ability and the issue of authority Therefore, to consider the compatibility of innovation, i.e., the suitability of PBB with the author's institution is only through two contents: institutional applicability and applicability Thus, institutional PBB applicability is defined as an institution's ability to complete the adoption of the PBB model, referring to three aspects, namely the ability to evaluate the PBB, personnel capabilities and technical capabilities.

Summary

In summary, the literature review so a model of factors affecting PBB as follow

Degree of Application of Performance-based Budgeting Budgetary control

Customer behaivor shift to buying online

Technology Lazada, Tiki, Sendo, tiktokshop app, net, 4G

METHODOLOGY AND DATA

Research stages

The methodology used in this dissertation is a mixed method

Step 1: General research of the material: related to the problem of planning according to the PBB model, identify gaps in the previous research Then summarize related researches, and from background theories propose pathway models to show impact relationships between concepts, and help synthesize materials to build draft scales

Step 2: Build the first draft scale: the draft scale is built based on the background theory along with the synthesis of previous research

Step 3: Preliminary qualitative and quantitative research

Preliminary qualitative research: by discussing with experts to confirm the impact factors and evaluate the scale that has been verified by previous researches, and adapt it to the research environment in Vietnam Because research is private in relation to budgetary issues, and research subjects are difficult to contact, face-to-face discussion is an appropriate technique, especially commonly used in academic research (Nguyen Dinh Tho, 2013) Using in-depth interviews with each accounting and finance expert who is knowledgeable about budgeting methods at the unit to serve to collect expert assessments on factors that affect the transition to planning techniques, At the same time, it helps to affirm the meaning, relevance and completeness of the content of the concepts drawn from the deductive process

Step 4: Formal quantitative research: After the formal scale is developed, conduct formal quantification to evaluate the measurement model (showing the relationship between the latent variable with the scale) and the structural model (showing the relationship between the latent variables)

Step 5 Presenting the results of the research: Based on the results of step 4, this thesis will draw implications to influence the adoption of PBB model in retail industries in Vietnam.

Model and analytical framework

3.2.1 Performance indicators in the Retail sector

To measure the performance of firms in the Retail sector, my study will use the indicators below:

The approach is to (i) Sort companies‟ indicators; (ii) Take the average as a performance threshold; (iii) Assess that firms having values higher than threshold are performing firms Firms having figures lower than the thresholds are considered poor performance

3.2.2 Factor application of Performance-based budgeting

The literature review shows that there are driving and barrier factors

Table 3-1: Model of factors affecting PBB

Days of inventory on hand

Planning and control cycle Frequency of revision Barriers

Behavioral implications Budget objective changes Participation of units receiving budget Perception of users on difficulty and benefits of PBB adoption Budgetary system

Planning and control cycle Frequency of revision Customer Demands Changes Customer Demand Shifts Context

Political Changes National Economy Status Social Changes

The model below show the factors affecting the budgeting performance based on that the thesis will investigate the application and applicability of PBB

The test will be in the regression model:

Degree of Application of Performance-Based Budgeting = Intercept + a*Internal

Factor+ b* Budgetary system Factor + c*Customer-related Factor + d*Context Factor + error

Customer behaivor shift to buying online

Technology Lazada, Tiki, Sendo, tiktokshop app, net, 4G

The hypothesis is straight forward: All factors have positive impact on the Degree of Application of Performance-Based Budgeting in a retailer This would be proven if the coefficients of these factors are positive The positive sign of a factor‟s coefficient means that factor has promoting impact, while the negative sign of a factor‟s coefficient means that that factor is a barrier to the application of PBB.

Survey questionnaire design and target respondent

The target respondents are users of PBB To collect the perception of PBB users, I design a questionnaire as illustrated in the Figure 3-3, Figure 3-4, Figure 3-5 in the page 34

Budget objective changes Planning and control cycle

Participation of units receiving budget

Perception of users on difficulty and benefits of PBB adoption

Customer Demand Shifts Political Economy Social Life standard

Customer behaivor shift to buying online

The survey questionnaire asks respondents to rate the degree each of 14 factors impacting the application of performance-based budgeting in his/her retail firm

1.1 Budgetary control (Budget objectives; Planning and control cycle; Frequency of revision; Behavioral implications; Participation)

1.3 (Customer Demands; Customer Demand Shifts)

1.4 Business context (Political; Economy; Social; Technology; Environment; Legislation

Data collection and sources

The data for this thesis study includes primary and secondary data

Regarding the perception of users of PBB, I design a questionnaire to collect data

Regarding the comparative performance of firms in the Retail Sector, I collected data from the open source of vietstock.vn This source provide data of 18 retail firms that have financial reports published in the market They are PNJ, SFC, MWG, HAX, HTC, COM,

CCI, SVC, BTT, GMA, TMC, PNC, AMD, FRT, CTF, AST, VTL, VTJ.

RESEARCH RESULTS ON PERFORMANCE-BASED

An overview of Vietnam's retail industry

4.1.1 Overview of the retail market in Vietnam

Vietnam is a country with a young population structure, the proportion of people using smart devices is high, so the retail sector in Vietnam has developed quite vibrantly with multi-channel deployments, especially with the growth of e-commerce has promoted the excitement of the retail market in recent times, highlights such as: Vincom, Phamacity, Mobile World, Miniso, Blue Exchange, Dien May Xanh, Viet Tien, The Coffee House, Biti's, Highland In 2020, under the influence of the Covid-19 epidemic, Vietnam's retail picture has changed a lot, especially the shopping habits of consumers and this is forecasted to continue to take place more strongly until 2025

According to data from the Ministry of Sector and Trade, out of the total revenue of more than VND 5,000 billion in retail sales of consumer goods and services in 2020, retail sales of goods reached approximately VND 4,000 billion, accounting for 79% and up 6.8% over the same period last year In addition, the Free Trade Agreements (FTAs) signed in recent years also make the domestic retail market exciting Economists Intelligence predicts that the number of users will reach 58,000 by 2023, with an average growth rate of 5.2% per year

The number of retail enterprises in the country has excelled in the number of retail points, businesses are constantly expanding the market and are gradually dominating the retail market According to the Ministry of Sector and Trade, Vietnam has about 1,085 supermarkets, 240 commercial centers and nearly 2,000 convenience stores In particular, Vietnamese retail enterprises are accounting for about 70% to 80% of points of sale across the country Domestic retail businesses have shown their ingenuity when expanding their scale by both consolidating market share in major provinces and cities, while targeting niche and rural markets In order to meet the trend of quick and convenient purchases of consumers

In addition, there have been many changes in the vision of investors, housing trends, behavior and shopping habits of residents At the same time, in the current epidemic context, consumers are also gradually turning to online shopping more According to the Department of E-Commerce and Digital Economy (Ministry of Sector and Trade), the online retail segment in 2020 alone has reached a total revenue of nearly 12 billion USD (up 18%), estimated at 5.5% of the total retail sales of consumer goods and services nationwide In the first four months of 2021, retail sales of goods were estimated at VND 1,352.7 trillion, accounting for 79.8% of total retail sales of consumer goods and services, continuing to increase by 9.8% over the same period in 2020 That shows that the development prospects of this sector are very bright thanks to the e-commerce platform The presence of foreign retail businesses also makes the retail market more exciting Over the past time, foreign direct investment (FDI) has continued to "pour" into Vietnam's retail sector Notably, the market has emerged a number of retail distributors including both domestic and foreign enterprises holding the main market share and leading in new retail trends Thai investor Central Retail expects to invest about 35 billion baht (about 1.1 billion USD) in the next 5 years to expand its business in 55 provinces of Vietnam In 2021, this investor from Thailand is expected to disburse about 211 million USD to open 4 commercial centers in some provinces and cities: Thai Nguyen, Ba Ria- Vung Tau, Thai Binh and Lao Cai and 1 mini supermarket in Tay Ninh In addition, large foreign retail business groups such as Family Mart, K Mart, Lotte, Central Group, Aeon, Circle K continuously promote the strategy of penetrating and expanding the retail market in Vietnam

4.1.2 Some trends in the development of Vietnam's retail industry

The trend of cooperation for mutual development Vietnam's retail market is forecasted to maintain a good and stable growth momentum This shows that the retail market is full of potential with a lot of room for development Along with that, Vietnam has successively successfully negotiated and signed recent Free Trade Agreements (FTAs), showing many great opportunities ahead, in which retail is expected to have an impact on market size, investment flows, etc transforming business methods

Merger trends Vietnam's retail market over the past several years has also witnessed many changes in market share and brands through mergers and acquisitions Most recently, Big C brand of Central Retail Group (Thailand) was officially wiped out by Central Retail, replaced by Go! and Tops Market to reposition their brand At the end of

2020, E-Mart Group (Korea) owning the E-Mart hypermarket announced that it wanted to withdraw from the Vietnamese market due to 5 years of efforts, but still could not open a new point of sale outside the only hypermarket in Ho Chi Minh City

The trend shifts to online sales Vietnam's retail market is gradually changing from traditional and modern sales channels to online sales channels This is a market that is considered to have a lot of potential, rich in development, even faster promoting digital business methods Vietnam is still forecast by the Asian Development Bank (ADB) as a rare economy to maintain positive growth of 1.8% in 2020 In the second quarter of 2022, total retail sales of consumer goods and services are estimated at VND 1.59 million billion Vietnam's traditional retail channel is under a lot of competitive pressure from modern retail channels and a range of stores belonging to foreign enterprises

Despite achieving many results and development potential, the development of Vietnam's retail market still has many limitations Concrete:

Domestic trade in goods and the number of people doing business in trading and services increased rapidly, but were spontaneous, dispersed, small-scale, trading through many layers of intermediaries; Commercial infrastructure has developed but in some areas is still weak and backward, unevenly distributed, mainly concentrated and thriving in cities, towns and towns The withdrawal of big brands from the market such as Auchan, or the downsizing of Parkson's network or the fact that a series of foreign convenience store brands struggle to gain market share or have to transfer shows that this is not an easy playing field Despite maintaining a good growth rate, supermarkets and convenience stores still occupy a relatively modest position in the structure of Vietnam's retail sector Traditional retail markets include manufacturers, distributors, grocery stores and traditional markets This is a sales channel that contributes significantly to Vietnam's economic revenue every year This rate has always remained high due to the daily shopping habits of Vietnamese people and the view of choosing markets and small groceries because of convenience and reasonable prices

Market management measures through standards, regulations and business conditions have not been effectively implemented, causing disadvantages to other market participants and disadvantages to consumers In addition, enterprises operating in the retail sector are small and medium-sized enterprises, with poor governance capacity and competitiveness, with large capital needs Many businesses are willing to link with partners in the same sector to access investment capital and advanced management technology from European Union countries In addition, there are many other forms of retail such as chain stores, convenience stores, vending goods The processes of management, transportation, preservation and control of goods are not uniform or have not been optimized costs and solutions Many traditional businesses face the same difficulties, and it is difficult to find appropriate solutions

Enterprises operating in the retail sector face difficulties in business capital The survey results of Vietnam Report Joint Stock Company (Vietnam Report) for businesses in the retail sector group showed that nearly 42% of businesses were seriously affected by the Covid-19 pandemic; 50% of enterprises assessed the impact as moderately severe and more than 8% of businesses suffered little or negligible impact The spending cuts of the majority of workers when they have to quit their jobs due to the outbreak of the epidemic, leading to a decrease in income, is the cause of the impact and impact on the retail sector

In addition, the internal difficulties of each enterprise such as lack of business capital, supply chain disruption when most of the sources of goods and raw materials for production originate from China, causing many retail businesses to fall into a difficult situation.

Comparative performance of firms in the Retail industry

Regarding Return on Assets (ROA), the average ROA across all the companies for the five years is 3.37% This suggests that on average, the companies were able to generate a profit of $3.37 for every $100 of assets they hold

Top performers: MWG has the highest average ROA at 9.42%, followed by COM at 8.24% This indicates that these companies were able to generate a significantly higher return on their assets compared to the other companies

Bottom performers: VTL and VTJ have the lowest ROA with an average of -3.76% and - 3.96% respectively This suggests that these companies were destroying value, meaning they were losing money on the assets they hold In the retail sector, performing firms have ROA above 5% Some poor performing firms have ROA even below 0

Table 4-1: Comparative profitability of firms in the Retail sector

(Source: author calculation from Vietstock.vn)

Fixed Asset turnover is an indicator showing how the investments in Vehicles, equipment, offices, etc have contributed to the performance of the firm The Table below shows that for firms in Retail sector, the average of 2022 was 55.98 Firms having figures under that average could be considered as poorer performing firms

Within a firm, COM saw deteriorating performance, decreasing from 432 in 2018 down to

Table 4-2: Sector comparative performance regarding Fixed Asset turnover

(Source: author calculation from Vietstock.vn)

Regarding the Asset Turnover is an indicator that showing how the investments in asset have contributed in to the performance of the firms; This shows how efficient a firm is generating sales from their assets The average total asset turnover ratio across all the companies for the five years is 4.1 This suggests that on average, the companies were able to generate $4 of sales for every $1 of assets they hold TMC has the highest average total asset turnover ratio at 11.1, followed by COM at 9.8 AST and VTJ have the lowest total asset turnover ratio with an average of 1.2 and 0.8 respectively This suggests that these companies are not very effective at generating sales from their assets

Table 4-3: Sector comparative performance regarding Total Asset Turnover

(Source: author calculation from Vietstock.vn)

Table 4-4: Sector comparative performance regarding Days of inventory on hand

(Source: author calculation from Vietstock.vn)

Table 4-5: Sector comparative performance regarding Receivables turnover

(Source: author calculation from Vietstock.vn)

Table 4-6: Sector comparative performance regarding Payables turnover

(Source: author calculation from Vietstock.vn)

Comparing to the other industries in the economy, retail s‟ ranks 5/16 in 2022, which is an improvement from number 8 in 2021

Table 4-7: Cross-Sector comparative performance regarding Return on Assets

(Source: author calculation from Vietstock.vn)

Compare within the retail industry, the ROA of retailors saw downturn tendency, possibly due to COVID Approximately 1/3 of retailers have negative ROA

Table 4-8: Sector comparative performance regarding ROA

(Source: author calculation from Vietstock.vn)

The average Net Revenue saw recovery in 2022 The average net revenue growth of sector was from 15% - 46% during 2021 – 2022 Good performers include AST, VTL and FRT The firms have concerned growth are AMD and VTJ

Table 4-9: Sector comparative performance regarding Net revenue

- Rank - Rank - Rank - Rank - Rank

- Rank - Rank - Rank - Rank - Rank

(Source: author calculation from Vietstock.vn)

Regarding Gross profit margin, the sector saw recovery from 2021, but the Gross profit margin is still under the pre-covid level

Table 4-10: Sector comparative performance regarding Gross profit margin

Firm - Rank - Rank - Rank - Rank - Rank

(Source: author calculation from Vietstock.vn)

Table 4-11: Sector comparative performance regarding Regarding Net profit margin

(Source: author calculation from Vietstock.vn)

Sector comparative performance regarding Fixed asset turnover, retailers saw decreasing tendency

(Source: author calculation from Vietstock.vn)

(Source: author calculation from Vietstock.vn)

Regarding Days of sales outstanding

Table 4-14: Regarding Days of sales outstanding

(Source: author calculation from Vietstock.vn)

Regarding the sector comparative performance regarding Liquidity Management performance, retailers saw mixed tendency, some seeing increasing while the other seeing decreasing tendency The Liquidity Ratios vary largely

The sales management efficiency can be reflected in the ratios of “Selling expenses/Net revenue” and “Cost management performance”

The cost management performance is not very good Cost management performance is reflected by the two indicators: Selling expenses/Net revenue, and Cost of goods sold/Net revenue

Regarding Cost of goods sold/Net revenue, many retailers have this ratio at very high levels (e.g., AMD, COM, TMC 95%, 95%, 94%), that means they have very low margin Only a few retailors have lower COGS/Net revenue to have higher profit margin (e.g., AST 53.88% and PNC 61.77%)

Table 4-15: Sector comparative performance regarding Cost of goods sold/Net revenue

The sales management efficiency can be reflected in the ratio of Selling expenses/Net revenue The Table below shows the ratio “Selling expenses/Net revenue” of retailers

Table 4-16: Sector comparative performance regarding Selling expenses/Net revenue

The table shows the inventory turnover ratio for 10 firms in the Retail industry over 5 years (2018-2022) Inventory turnover ratio is a measure of how efficiently a company sells and replaces its inventory A higher ratio indicates that a company is selling through its inventory quickly COM, CCI, TMC, and VTJ have consistently higher inventory turnover ratios than the other firms This suggests that these firms are more efficient at selling through their inventory However, it is important to note that a very high inventory turnover ratio can also indicate that a company is not carrying enough inventory to meet customer demand PNC and VTL have consistently lower inventory turnover ratios than the other firms This suggests that these firms may be carrying too much inventory, which can tie up capital and lead to storage costs The inventory turnover ratio for all of the firms has fluctuated over the past five years This could be due to a variety of factors, such as changes in consumer demand, economic conditions, or the company's product mix

Table 4-17: Sector comparative performance regarding Inventory turnover

The analysis of the comparative performance of these firms based on the average inventory turnover across the last row shows that PNJ, SFC, MWG are among the highest performing firms

Firms with Higher Average Inventory Turnover: These firms have an average inventory turnover higher than the overall average This suggests they might be selling their inventory faster than others, potentially indicating:

 Strong demand for their products

Firms with Lower Average Inventory Turnover: These firms have an average inventory turnover lower than the overall average This could mean they're selling their inventory slower than others, which may be due to factors like:

Survey results

The survey was opened online for a week There are 20 responses collected All are valid The sections below show how respondents perceived the impact of different factors on revising the budget objective and control cycle, which can influence budgetary behavior

4.3.2 Perception of the impact of factors relating to the process and design of budgeting

The are 7 factors identified in the literature and explored in the study, including (i) Budget objective changes, (ii) Planning and control cycle, (iii) Frequency of revision, (iv) Behavioral implications, (v) Participation of units receiving budget, and (vi) Budgetary system

 Budget objective changes: A large proportion of respondents (45%) believed that changes to budget objectives have a high or very high effect on revising the budgetary planning cycle This suggests that when budget objectives change significantly, companies are more likely to adapt their budget planning process

 Planning and control cycle revisions: A significant proportion of respondents (30% +

35%) also believed that revisions to the planning and control cycle itself have a high or very high effect on revising budgetary behavior This suggests that companies are more likely to adapt their budgetary behavior when the way they plan and control their budget changes

 Behavioral implications: Interestingly, a smaller proportion of respondents believed that these factors have a high or very high effect on the behavioral implications of the budget (25% + 35%) This suggests that changes to budget objectives and the control cycle may not strongly influence how people behave in relation to the budget

 Budget Objectives: More respondents felt that changes to Budget Objectives (45%) had a high or very high effect on revising the budgetary planning cycle than those who felt planning and control cycle revisions (65%) had the same effect

Table 4-18: Responses of factors affecting performance-based budgeting

Participation of units receiving budget

4.3.3 Impact of social, environmental, and legislative factors on performance-based budgeting

In addition to the internal factors related to the process of designing budgeting based on the performance of units receiving budget, many external factors also affect the application of PBB

The table shows how respondents perceived the impact of social, environmental, and legislative factors on performance-based budgeting

 Social factors: A significant proportion of respondents (40%) believed that social factors have a high or very high effect on performance-based budgeting This suggests that many respondents believe social factors are important considerations in performance-based budgeting

 Environmental factors: A similar proportion of respondents (45%) believed that environmental factors have a high or very high effect on performance-based budgeting This suggests that environmental factors are also seen as important considerations

 Legislative factors: A smaller proportion of respondents (35%) believed that legislative factors have a high or very high effect on performance-based budgeting This suggests that legislative factors may be seen as less important than social and environmental factors, but are still considered by some respondents to be a significant influence

 All social, environmental, and legislative factors were seen as having a similar impact

Table 4-19: Perceived the impact of social, environmental, and legislative factors on performance-based budgeting

(*) 1 None or very low; 3 Neutral; 5 High impact

4.3.4 The degrees the retails firms using performance-based budgeting

The table shows that 50% of respondents indicated the company uses performance-based budgeting thoroughly or very thoroughly (4 and 5) This suggests that performance-based budgeting is a widely used practice in the firm Only a few of respondents said that performance-based budgeting is not used at all (1) or is used little (2) 30% of respondents indicated a neutral position (3), so it is possible that their understanding of performance- based budgeting may vary

Table 4-20: The degree of using the Performance-based Budgeting in a retailor

Response The degree your company is using performance - based budgeting

(*) 1 None or very low; 3 Neutral; 5 High impact

Regarding the Quality of the performance - based in budgeting applied in a retailer company, the table shows that 45% of respondents indicated the quality of performance- based budgeting was good or very good (4 and 5) Nevertheless, a few of respondents said that performance-based budgeting quality is low (1 or 2) 30% of respondents indicated a neutral position (3), so it is possible that their understanding of performance-based budgeting quality may vary across firm

Table 4-21: Quality of the Performance-based Budgeting

Quality of performance - based in budgeting in your company

(*) 1 None or very low; 3 Neutral; 5 High impact

Results of budget planning based on performance in Vietnam's retail industries 55

4.4.1 Results drawn from qualitative research

The results of interviews with some experts in the retail sector draw some results as follows: The renovation of information systems in the direction of EIA serves budget planning affecting both units and individuals Therefore, PBB adoption behavior should be measured from the budgeter's own behavioral perspective, including perceptions of PBB's relative advantages, barriers, capacity for change, organizational support, authority to adopt and institutional applicability In which, the scales are explained based on previous theories and researches, so this research carries out preliminary qualitative research with experts to supplement and adjust the scale to suit the characteristics of Vietnam

Most units are not aware of the relative advantages of PBB budgeting In the budgeting process, the focus has not been on performance (applicable authority – relevant legal documents focus on performance) Because at present, retail businesses are not aware of the innovation steps and are not used to planning according to performance Businesses that use the PBB model but are not true to the spirit of the PBB model want to aim for because employees only set up based on output without considering the impact of output, or the operational goals of the unit In addition, business leaders have not paid attention to the role and impact of budgeting

The mentality of being afraid to innovate, not wanting to spend a lot of time focusing on budget planning when budget planning has not been taken seriously by business leaders and is only a form to report to competent state agencies (conversion costs and one's own capacity for change) The relative advantage of PBB is not focused on making input control more efficient, but this model focuses on output so the scale should focus only on that advantage In addition, the application of this model has not helped employees see opportunities for personal development

Limited professional qualifications to implement, training costs can be expensive; fear of innovation and anxiety affecting position and income; limitations on information technology proficiency to make the transition In addition, many domestic retail enterprises are still weak in capital, small scale, unprofessional management ability, making the already weak competitiveness even weaker If retail businesses don't continue to innovate, customers will move elsewhere when that place better meets the needs of the shopping experience Along with that, the infrastructure for e-commerce generally lacks synchronization and connectivity, lacking support services for e-commerce such as invoices and electronic documents, payment infrastructure, logistics infrastructure

4.4.1.2 Specific findings on the research framework

On the appropriateness of the research framework After conducting interviews with experts about the factors affecting the application of the PBB model and reaffirming the scale of independent, dependent variables, the results include awareness of the relative advantage of PBB, barriers, one's own capacity for change, organizational support, institutional applicability, and applicable authority The experts all showed that there is an impact relationship between the variables in the research framework and the application of the PBB model The measurements are all consistent, which is a cognitive scale of PBB's relative advantage; barrier scale; scale of one's own capacity for change; scale of organizational support; institutional applicability scale; Authority scale applies

On the relationship between the perception of PBB's relative advantage and the adoption of the PBB model: Experts acknowledge that the perception of PBB „s relative advantage has a positive impact on PBB adoption At the same time, experts also acknowledged the advantages of PBB according to relevant previous researches including: Better control of financial resources, more efficient output control, help budget decisions be more focused, make better reporting, set clearer budget goals, is a useful method to compare the costs and benefits of each planned operation, make budgets more efficient, and improve the quality of planning work However, experts who are chief accountants of retail enterprises also said that communication about PBB adoption has not been promoted, so the awareness of PBB's advantages is not widespread

On the relationship between barriers and PBB adoption: Experts acknowledge that some barriers have a negative impact on PBB adoption as in previous researches, including: it takes a lot of time and effort to research for the transition to PBB planning, can perform many tasks for the planning process and have spent many years getting used to the old model Specifically: PBBs need many computational techniques, are limited in qualification, and are afraid to innovate

On the relationship between one's own competence for change and adoption of PBB: Most experts acknowledge that it is possible that one's own competencies have a positive impact on PBB adoption However, most experts believe that this factor has little impact

On the relationship between organizational support and PBB model adoption: Experts all said that organizational support has a positive impact on PBB adoption, especially experts emphasized the role and perception of business leaders At the same time, experts agree with previous researches on support organizational support, including managerial support (in terms of necessary support and resources, encouraging adoption, procurement of related software and tools), support in training, and informal support (such as providing guidance, regularly reward, and support information exchange and mutual information sharing between departments, especially business leaders must support through the provision of historical data, outputs, plans , departments in the unit provide information related to planning, and mutual sharing)

On the relationship between institutional applicability and PBB model adoption: Experts all believe that institutional applicability has an impact on PBB adoption In particular, institutions need to achieve PBB applicability, including: on reliable and accurate measurement "performance" data; civil servants must have sufficient experience, be equipped with relevant skills, be able to identify and measure MPAs, and use MPA data to make decisions for budget management; sufficient human resources to plan under PBB; The accounting regime must be on an accrual basis to generate business plan information However, most experts said that the applicability of Vietnamese institutions is not suitable for the conditions for applying PBB (the outputs of each sector are different and different in each type of unit and the level of difficulty is also different, the revised accounting on the basis of accrual is incomplete, has not issued public accounting standards; incompetent, experienced, and insufficient people; There is no integrated software, no legal documents clearly guiding )

On the relationship between the authority to apply and the application of the PBB model: Most experts agree that the authority to apply has a positive impact on the adoption of PBB In which, experts agreed with previous researches that: applicable authorities such as issuing guidance circulars, circulars guiding medium- and long-term budget planning should focus on business management of sectors, policy documents aimed at planning according to PBB for retail enterprises, etc and other relevant legal documents should also contain guidelines that focus on MPI (e.g.: legal framework should be clear; impact on compliance culture, etc.)

4.4.2 Results of the Regression analysis

The regression analysis show that this model can explain 36% changes in the degree of application of performance-based budgeting in a retails firm The other 64% of changes are explained by factors not included in this model For a social study, such a level is moderately high

The coefficients of all factors are positive, meaning that all factors have positive impact on the degree of application of PBB These factors are driving or promoting the application Degree of Application of Performance-Based Budgeting = Intercept + a*Factor 1 + b* Budgetary system + c*Customer-related + d*Context + error

Degree of Application = 0.36*Factor 1 + 0.00*Budgetary system + 0.33*Customer-related + 0.31*Context + 0.09

However, as the p-value of these coefficients are greater than the significance level of 5%, indicating a statistically insignificant result, meaning the observed data does not provide strong evidence supporting hypothesis This suggests the effect under study likely represents a random chance rather than real relationship

Coefficien ts Standard Error t Stat

RECOMMENDATIONS & CONCLUSIONS

Recommendations 60 1 Establishing Performance Benchmark system to rate the firm‟s performance

In order to make a good performance-based budgeting policy, the firms could consider the following:

5.1.1 Establishing Performance Benchmark system to rate the firm’s performance

Inventory turnover ratio is a useful metric for retail businesses Nevertheless, setting a hard threshold to classify performing versus non-performing firms can be tricky because the

Industry standards vary significantly by industry and firms In addition, it very depends on the company strategy Some businesses might choose to carry more inventory to handle fluctuations in demand or avoid stockouts, even if it lowers their inventory turnover ratio Managers should classify units within the firm by their comparative performance The performance indicators should be compared with those of other comparative firms in the same industry

The companies should be classified by 3 performance groups:

 Top Performers: Consistently high inventory turnover ratio compared to the average for the retail industry and their historical performance This suggests efficient inventory management

 Low Performers: Consistently low inventory turnover ratio compared to the average for the retail industry and their historical performance This could indicate excess inventory

 Inconsistent Performers: Inventory turnover ratio fluctuates significantly This might be due to specific business strategies or external factors

The rule of threshold: Top Q1 (25%), Second Quarter (from 26% to 50%), Third Quarter (from 51% to 75%), and the Forth Quarter (above 76%)

This approach considers industry context and acknowledges that companies might have reasons for their inventory turnover ratio

 Profitability: How does the inventory turnover ratio relate to the company's profit margin?

 Stockouts: How often does the firm experience stockouts?

 Inventory holding costs: Are the costs of storing excess inventory outweighing the benefits?

By considering these factors, you can get a better picture of how the firms are performing in terms of inventory management

The ROA benchmark: If a retailer gets an annual ROA higher than Q1 = 6.9% or Q2 3.85%, it is a performer If it gets a ROA under Q3 = 2.94%, it is not a performer

Gross profit margin ROA Quick ratio Inventory turnover COGS/Net revenue

- Rank - Rank - Rank - Rank - Rank

Gross profit margin ROA Quick ratio Inventory turnover COGS/Net revenue

The Gross profit margin performance benchmark: If a retailer gets an annual Gross profit margin higher than Q1 = 23 or Q2 = 8.77, it is a performer If it gets a Gross profit margin under Q3 = 6.4, it is not a performer

The Inventory-turnover performance benchmark: If a retailer gets an annual Inventory- turnover higher than Q1 = 37 or Q2 = 8.75, it is a performer If it gets a Inventory-turnover under Q3 = 3.74, it is not a performer

The Cost of goods sold/Net revenue benchmark: If a retailer gets an annual figure lower than Q1 = 77% or Q2 = 91%, it is a performer If it gets a figure higher Q3 = 94, it is not a performer

The Gross profit margin performance benchmark: If a retailer gets an annual Gross profit margin higher than Q1 = 23 or Q2 = 8.77, it is a performer If it gets a Gross profit margin under Q3 = 6.4, it is not a performer

5.2 General conclusion of the application of the performance-based budgeting model in retail enterprises in Vietnam

The results of this research confirm the appropriateness of applying a theoretical approach to consider the factors influencing budgeter behavior in relation to changing budgeting models under PBBs The application of many other theories provides deeper insights and explanations for the factors that influence acceptance behavior and uses the PBB model in a theoretically convincing way In addition, this research has built a model of factors affecting the application of PBB model in retail enterprises in Vietnam and measured the impact of factors

The research has inherited, adjusted and developed a scale system of impact factors including the application of the PBB model, awareness of PBB's relative advantage, conversion costs, one's own capacity for change, organizational support, authority to apply and institutional applicability This is a scale system that has been evaluated through qualitative and quantitative research to suit the research environment applied at retail enterprises in Vietnam Therefore, future researchers may be able to use it to carry out more extensive researches with a larger scope

This research provides empirical evidence for identifying and measuring the factors affecting the adoption of PBB model in retail enterprises, further contributing to empirical research in identifying and measuring factors affecting the adoption of a new information technology model In particular, the factors as well as the degree of impact of each factor on the application of PBB model will be different in different research contexts, so the case research in the context of retail industries in Vietnam, has provided empirical evidence on the impact of factors including perception of relative advantage of PBB, switching costs, organizational support and applicable authority and there is no intermediary role of switching costs At the same time, the results of this research also contribute to providing an additional theoretical basis for the factors affecting the application of the PBB model.

Recommendations on solutions to promote the application of performance-

First, raising awareness of PBB's relative advantages

In order to increase the adoption of the new PBB model, retail businesses should seek to increase awareness of PBB's relative advantages among both unit heads and budget planners At the same time, retail businesses need strong access to technology and creativity This is an important factor for the domestic retail sector to make a breakthrough in the coming time, especially in the context that we are deeply integrating internationally today In addition, it is necessary to promote the development of domestic trade through trade promotion activities and encourage domestic consumption

Promote communication to employees through periodic budgeting technical refresher classes, to keep up to date with new techniques From there, it helps employees see the advantages and disadvantages of different methods and clearly see that the application of PBB model has benefits such as helping to better control financial resources; helps to control output more effectively; help budget decisions be more focused; help better reporting than traditional budgeting model; helping to set clearer budget goals is a useful way to compare the costs and benefits of each planned operation; make the use of budgets more efficient than traditional models; help improve the quality of budgeting work of enterprises

5.3.2 Minimize barriers and conversion costs

Second, minimize barriers and conversion costs

To increase PBB adoption, business leaders should focus on solutions to reduce switching costs in the mindset of budgeters Those are barriers in the perception of budget planners Specific solutions include: business leaders should integrate the new model into previously implemented activities, slowly transition in stages to reduce the time and effort to learn to the PBB model until enough strength and complete autonomy, then fully convert to PBB,

As well as having an appropriate recruitment policy and human resource utilization policy, it is recommended to recruit an employee who specializes in budgeting, performance evaluation to reduce pressure on other employees to perform a lot of work for the PBB budgeting process

In addition, using software to support analysis, applying modern information technology in analysis, building a separate department of financial analysis, forecast measurement, and business management indicators, to reduce complex detailed calculation techniques for employees, helping employees reduce the psychology of wasting time and effort spent on grasping Firmly plan the budget according to the traditional model, so that there is no fear of innovation

5.3.3 The supplier capacity for change

Third, the endogenous capacity for change

The budget management mechanism according to the MPA requires building a large and highly qualified staff with economic knowledge and other technical sectors to be able to assess the operation of enterprises and industries Therefore, it is necessary to regularly organize more refresher classes, training or expand links with universities in training and developing employees, with the goal of training in accordance with the new situation

Technical training related to in-depth management accounting for managers together with experts to be able to identify and evaluate management indicators Once managers and employees understand the meaning of PBBs and are aware of how the PBB model works, then they will assess what conditions or capabilities are needed to implement the PBB

In addition, it is necessary to improve adaptive capacity to strongly develop e-commerce activities to more effectively exploit the strong development of the digitalization trend of the economy with the strong development of electronic payment methods and new payment tools (electronic money) to actively support e-commerce activities Bronze Retail businesses need to integrate omnichannel sales, both in-person and online, to meet the diverse needs of consumers Therefore, this is the time and opportunity for Vietnamese retail enterprises to make a breakthrough, take advantage of the development of technology, take shortcuts to catch up and compete successfully with foreign retail groups

5.3.4 Increase support from the organization

Fourth, increase support from the organization

Managers who want to further increase PBB adoption in their enterprises focus on increasing organizational support Specifically, in the context of this research, organizational support was measured through two components: managerial support with informal support Thereby showing that in order to increase employees' awareness of the organization's support for PBB implementation, it is necessary to increase employees' awareness of managerial support, along with informal support

Business leaders need to pay more attention to the effectiveness of the transition to the PBB model through regular visits to the budgeting basis of employees, evaluating the completion of assigned estimates, then the budget planning according to the PBB model will be done according to the nature rather than the transformation in a way awake; At the same time, it is necessary to increase the use of MPA information for management, and in the process of making budget decisions, then create motivation for employees to implement PBB In order to motivate employees to switch to PBB budgeting, unit leaders should improve the support and resources needed to change the way PBB is calculated;

Invest in upskilling employees regularly to update the current situation as well as foster new techniques

The PBB model is a new management model, so in order to ensure the legality and relevance requirements, it is necessary to increase the authority to apply the PBB model At that time, management staff as well as estimating staff in native businesses will be bold in implementing PBB

The State should focus on perfecting the institutional and legal system on management of e-commerce activities to manage online buying and selling activities, strengthen the control activities of market management forces; continue to promote the implementation of the program that Vietnamese people give priority to using Vietnamese goods and accelerate the circulation of Vietnamese goods through domestic and foreign distribution systems At the same time, focusing on preventing smuggling, trade fraud, counterfeit goods, counterfeit goods, poor quality goods, contributing to protecting domestic production and business and consumption so that the retail market develops sustainably in the new situation

It is necessary to apply effective PBB as an open, transparent, understandable and accessible information system, it is necessary to identify indicators of business management and develop a measurement system and a system for monitoring the collection, synthesis and processing of high-tech data Along with that, develop criteria for evaluating EIA, align with current policies or strategies, and be simple and easy to use Combined with lessons learned to identify and compile specific EIA indicators according to each criterion

In addition, it is necessary to increase the momentum for the retail market, mainly coming from modern distribution channels The trend of smart shopping will become more and more popular in Vietnam If retail businesses want to prevail in this fierce race, they need to change the way they operate, manage in the direction of modernization, improve customer experience, diversify products and pay more attention to designs Along with state support, businesses also need to research intra-bloc rules to take advantage of the benefits of FTAs At the same time, domestic retail enterprises that want to compete with foreign enterprises need to link up into large retail companies and groups, build their own retail brands, focus on promoting market research and product marketing At the same time, continue to focus on supporting the formation of large corporations and enterprises in the field of distribution (both FDI and domestic enterprises), shifting the distribution system to modern types of distribution, such as supermarkets, commercial centers, convenience stores The Ministry of Sector and Trade also promotes forms and business methods to encourage consumption, such as fairs and exhibitions of goods and services

5.3.7 Promoting stronger Internal Auditing activities to promote performance

Internal auditing provides a valuable motivations that helps improve overall performance of internal units in several ways, such as (i) better Risk Management to take steps to mitigate risks before they turn into costly problems; (ii) Stronger Controls that helps assessing the effectiveness of internal controls to ensure task to be done correctly; (iii) Higher Efficiency and Effectiveness with ways to streamline operations to significantly save cost and improve productivity

Retail companies need to review the following contents periodically

- Ensure the achievement of the organization‟s objectives

- Provide a framework for responsibility accounting

- Motivate employees to improve their performance

- Level of feedback from the budgetary units

The planning and control cycle has seven steps

- Step 4 Choose alternative courses of action

- Step 5 Implement the long-term plan

- Step 6 Measure actual results and compare with the plan

- Step 7 Respond to divergences from the plan

 Customer behaivor shift to buying online

Limitations of study

Due to the nature of the survey and the limited time, this study got only a limited number of responses, thus the results may not representative for the whole sector

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