the factors affecting the adoption of cost accounting system of selected travel agencies in hanoi, vietnam

THE FACTORS AFFECTING THE ADOPTION OF COST ACCOUNTING SYSTEM OF SELECTED TRAVEL AGENCIES IN HANOI, VIETNAM A RESEARCH PRESENTED TO THE FACULTY OF GRADUATE SCHOOL SOUTHERN LUZON STATE

THE FACTORS AFFECTING THE ADOPTION OF COST ACCOUNTING SYSTEM OF SELECTED TRAVEL

AGENCIES IN HANOI, VIETNAM

A RESEARCH PRESENTED TO THE FACULTY OF GRADUATE SCHOOL

SOUTHERN LUZON STATE UNIVERSITY LUCBAN, QUEZON, PHILIPPINES

THAI NGUYEN UNIVERSITY S.R VIETNAM

IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE DEGREE

DOCTORAL IN BUSINESS ADMINISTRATION

Name of Student : DOAN THI QUYNH ANH

English Name : ANGEL

Date of Birth : 05/01/1981

Course : SLSU-DBA1

ACKNOWLEDGMENT

During the conduct of my thesis, I would like to give my sincere thank to advisors: Prof Dr Pete Ooi; Dr Edwin Bernal The advisors help me with detailed guidance and instruction so that I can complete my research Representatives from Southern Luzon State University, ThaiNguyen University, ICT and academic affairs together with teachers and staffs in ICT office has encouraged and helped from all the members in the class

When conducting the research, I receive the enthusiastic support and participation of directors and staffs of all enterprises that I have research

Beside that, I always receive the encouragement and support form my family

I would like to express my sincere thanks to the advisors, staffs participating in the research and my family for supporting me a lot

Doan Thi Quynh Anh - Angel

Products and service in a travel agency are designed to satisfy special needs of consumers such as understanding the culture, tradition and the historical treasures of one locality, appreciating natural beauty of the place, experiencing the climate, foods, events and festivities of the area, and a lot of activities simply designed for sightseeing and for rest and recreation The demand for travel products and services is not very stable as it easily changes due to instability of the climatic condition, and the economic and political situation of the particular tourism destination It therefore requires that players in the travel business to be more creative and innovative to anticipate changes in the business landscape in order to cushion the impact of slack time in the business

Summarily, determining the cost of products and services in a travel agency poses a great challenge for the firm’s accountants and managers in as

much as the business’ price offerings depend largely on the relevant costs Doubly challenging is the implementation of a firm’s policy on cost allocations because this requires a deal of rationalization so as not to overburden one product/service while others overburdened with unnecessary costs This therefore requires the identification and the use of appropriate cost driver to achieved full rationalization of the system Further, to achieve comparative and competitive advantages, it is necessary that, costs associated with the implementation of activities in major business functions along the value chains should be analyzed as to whether these are value-adding or non-value adding costs Obviously, only value adding activities are client-focused activities and therefore add to the achievement of the value expectations of the clients While cost accounting is a necessary requirement to achieve more in the travel business

in Hanoi, less has been benefiting fully from it To determine the factors that drive the sector to adopt cost accounting system is the major reason why this research was conducted

1.2 Statement of the Problem

This research focused on determining the factors which affect the adoption of the cost accounting system of selected travel enterprises in Hanoi Specifically, it tried

to find answers to the following research questions:

1 What is the profile of the respondents in terms of gender, age, position and field of specialization?

2 What is the accountants’ and the managers’ perception of their level of awareness and understanding, ease of use, and usefulness of cost accounting system?

3 What factors are significantly affecting the attitude of the accountants and the managers of travel agencies in adopting a cost accounting system?

4 Is there any difference in the accountants’ and the managers’ perception of their level of awareness and understanding, ease of use, and usefulness of cost accounting system?

5 Is there any difference between the accountants’ and the managers’ attitude towards adherence to the cost accounting system in the management of costs in travel agencies?

1.3 Statement of Objectives

The general objective of this research was to determine the significant factors affecting the adoption of cost accounting system for Hanoi-based travel agencies

It seek to meet the requirements of the following specific objectives:

1 To determine the profile of the respondents in terms of gender, age, position and field of specialization

2 To describe the accountants’ and the managers’ perception of their level of awareness and understanding, ease of use, and usefulness of cost accounting system

3 To identify the factors which significantly affect the attitude of the accountants and the managers of travel agencies in adopting a cost accounting system

4 To statistically test the difference in the accountants’ and the managers’ perception of their level of awareness and understanding, ease of use, and usefulness of cost accounting system

5 To statistically test the difference between the accountants’ and the managers’ attitude towards adherence to the cost accounting system in the management of costs in travel agencies?

1.4 Hypotheses

The following hypotheses were tested using inferential statistical tools:

Hypothesis 1: There is no relationship between the accountants’ and the

managers’ perception of their level of awareness and understanding, ease of use, and usefulness of cost accounting system and their attitude towards adoption of the same cost accounting system in travel agencies

Hypothesis 2: There is no difference in the accountants’ and the managers’

perception of their level of awareness and understanding, ease of use, and usefulness of cost accounting system

Hypothesis 3: There is no difference between the accountants’ and the managers’

attitude towards adherence to the cost accounting system in the management of costs in travel agencies

1.5 Significance of the study

This research conduct to analyze relationship between factors affecting the cost accounting system in selected travel agencies This study will be significant

to the following individuals and organizations:

For travel agencies and its key officers, this research indicates help finding

the key factors to apply the cost accounting system, they can use the results of this research to find the factors affecting to the adoption of cost accounting system in their enterprise

Based on the results of this dissertation, managers and accountants in travels agencies can making a plan to adopt the cost accounting management in their enterprise with the target such as managial cost, , saving cost, decision making

1.6 Scope and Limitation of the Study

Along with the system of the general theory of cost accounting system for internal management, the thesis will analyze and assess the current perception of cost accounting systems at some business travel company in Hanoi from which to finding the factors affecting of adoption of cost accounting sytem for travel

agencies in the direction of modern cost accounting management system, which help the cost management and providing useful information for the decision of the administrator

With the aim of improving accounting system in travel company in Hanoi, and the number of enterprises tourism in Hanoil multiple, complex components business in different fields, so the authors concentrate on research of the cost accounting system of 7 business describe the model tour travel service in Hanoi, including: A state-owned enterprise specialized in the field of business travel, business travel in all four areas received international, send international visitors, receives domestic tourists and domestic tourists on Hanoi recent years that is Vietnam Travel and Marketing transports Company Two enterprises belong to VietNam national Administration of Tourism are the State of Investment and Tourism Thang Loi and HaNoi Tourism company Three enterprises represent non-state enterprises as AsiaLink travel joint stock Company; New Horizons travel joint stock company, SaoMai travel company Besides, the authors also conducted to survey 25 travel companies in the area of Hanoi

1.7 Operational Definition of Terms

The following terms has been operationally defined:

Cost accounting system

Cost

REVIEW OF RELATED LITERATURE AND STUDIES

This chapter authors reviews the related literature and studies on travel industry in Vietnam in general, Hanoi travel in particular This chapter provides the reader with sufficient theory about cost accounting, the usefulness of cost accounting system It will discuss theories framework and concepture framework , which is going to be evaluated in following chapters

2.1 Review of Related Literature

2.1.1 The tourism industry and the travel sector

During the 53 years of establishment and development, travel industry has always been interested in each period are determined location of tourism in the economic development strategy of the country's socio-suit bridge revolution In 53 years of development , not a long time for the development of an industry , but can also see the strong upturn in both quantity and quality of Vietnam Tourism , is

a in important aggregate economic sectors, bringing profound cultural content that

is interdisciplinary, inter-regional and socialize high growth rate in recent times , including in crisis conditions Asian economic and natural disasters, widespread epidemics, global conflicts and local wars and terrorism in many parts of the world in recent years

There is such a result , the entire tourism industry has actively implemented seriously and synchronization solutions, both at work perfecting the policy, state management, broadcast promotion, link and coordinate local businesses, enhance the quality of services By the end of 2012, Vietnam had

1120 international tour operators; 11,840 tourist guides have been issued cards, including cards 4,809 instructors and 7,031 local tourist guide card international travel and the total number of tourist accommodation establishments all over the country is estimated at 13,500 to 285,000 chamber, in which: 57 hotels 5 star 147 hotels 4 star,335 hotels 3 star

Vietnam Tourism to identify some key tasks in 2013 include : Continue to implement the development strategy of Vietnam's tourism in 2020, with a vision

to 2030, deployment of the planning scheme, other resorts according to the master plan on development of Vietnam Tourism 2020 vision 2030 after being approved

by continued deployment tasks improve the quality and efficiency of tourism statistics; promote activities E - tourism marketing and branding Vietnam tourism logo and slogan associated with the new deployment scheme to attract tourists from 8 key tourism markets of China , Japan , Korea , Malaysia , Thailand ,

Australia , France , Russia , to exploit tourism development Ha Long Bay and a number of other prominent points to ensure the sustainability and high economic efficiency, image building heritage tourism Vietnam, Ha Long Bay

2.1.2 Travel business in Hanoi

Hanoi is located and beautiful location, conveniently, is the capital, the center of politics, economy, culture scientific, and important traffic of the country

As one of the largest tourist centers of the country, Hanoi plays a very important role in the tourism development of the country in general and in particular of Tonkin International tourist arrivals to Hanoi for about 30 % of visitors to Vietnam With the advantage of historical, cultural capital , domestic tourists to Hanoi at the forefront of the country Hanoi is also a center for receiving and distribution of tourists travel to the northern region and the other regions in the territory of Vietnam as well as to countries in the region

Since several years , Hanoi has always been a number of prestigious travel magazine as the World 's leading Travel and Leisure ( U.S ) , Smart Travel Asia ( HKG ) held a vote and won the title of Top 10 tourist destinations most of Asia

International visitors to Hanoi increasing number of customers rose by an average of 18-20 % In 2008, Ha Noi welcomes 1.3 million , in 2009 due to the global economic crisis and the disease is 1.02 million visitors ; 2010 with a celebration event in 1000 thousand years of Thang Long - Hanoi Cabinet and the National Tourism Year, Hanoi arrivals increased, the total number of 1.7 million;

2011 welcomed 1.84 million international passengers; 2012 Hanoi welcomes over

2 million international tourist arrivals

Markets domestic tourists to Hanoi large proportion of the country 's leading , with an average annual passenger traffic accounted for over 20 % of domestic tourists in Vietnam In 2002, Hanoi welcomes 2.8 million , by 2009 had brought 9.2 million , in 2010 to reach 10.6 million; in 2011 to reach 11.6 million;

in 2012 to reach over 12 million passengers

Domestic Tourists to Hanoi with many different purposes and from all provinces of the country , in which visitors to Hanoi for tourism purposes traveling, visiting relatives and healing Visitors to in Hanoi , stay at hotels 38.6

% , 24.4 % Guest House , Lodging and 21.8 % in the friends and relatives about 15.2 % ( by relatives and visitors rate Hanoi to therapy rather large ) Shopping is

a pastime of tourists , especially domestic tourists Spending on shopping accounted for the highest proportion , 27.7 % of the total expenditure , followed

by eating 22.5 % , 22.1 % accommodation , transport and entertainment respectively 10 , 2 and 9.4 %

On Hanoi now has nearly 500 International travel agencies and nearly 500 domestic travel agencies, has about 50 companies and individual business households transporting tourists Hanoi focused cultural institutions of the country such as the Opera House , the National Cinema Center, the major museums, the

performing arts theater folk as rowing, water puppetry very attractive with international travelers and domestic

2.1.3 Accounting as the language of business

Traditionally, accounting has been defined as the process of recording, classifying and reporting the fianancial activities and transactions of a business enterprise The process of recording and classifying business transactions is commonly referred to as bookeeping The bookkeeping function of accounting skill forms the foundation of much accounting activity An accountant is usually defined as “one who is skilled in accounting” Ta the beginning of the twentieth century, however, the role of accountantdid not extend much beyond a bookkeeping function, that is, the keeping od records according to a set of well-defined rules and procedures At this time, accountants were generally reffered to

as “bookkeeper” In the bissiness world of the twenty-first century the activities and responsibilities af accountants extend far beyond mere bookeeping and the keeping records They include the interpretation and analysis of accounting report, the design and operation of computer based system, the planning and conduct of business activities, and the understanding the complex accounting regualtions that have accumulated over many years

Accountants serve a potentially wide variety of user groups The many different users of accounting informarion include the owners or shareholders of a business entity, the people who have lend money to the entity, the entitys’

employees, government agencies and other social and political interrest group, such as environment group anf trade unions In providing information for these users, accountants frequently need to consider more thanjust fianacial factors

Accounting has a wide-ranging fuanction and hence abroad definition of the field of accounting is needed, one that embraces the variety of professional activities engaged in by accountants Serveral years ago a committee og the American Accounting Association defined accounting beyond its mere traditional definition (the recording, classifying and reporting of transaction) This committee defined accounting in a broader and more modern context as the process of identifying, measuring and communicating economic information to permit informed judgements and decisions by users of information

Accounting is called the language of the business in the sense that the responsibility of learning accounting is very similar to the task of erudition a new language ,it is complicated by the fact that heaps words used in accounting mean almost the same but not fairly the same thing as the identical words scrounging in everyday non -accounting usage

2.1.4 Cost accounting and cost accounting system – uses and importance

Cost accounting is a process of collecting, analyzing, summarizing and evaluating various alternative courses of action Its goal is to advise the management on the most appropriate course of action based on the cost efficiency

and capability Cost accounting provides the detailed cost information that management needs to control current operations and plan for the future Since managers are making decisions only for their own organization, there is no need for the information to be comparable to similar information from other organizations Instead, information must be relevant for a particular environment Cost accounting information is commonly used in financial accounting information, but first we are concentrating on its use by managers to make decisions

Unlike the accounting systems that help in the preparation of financial report periodically, the cost accounting systems and reports are not subject to rules and standards like the As a result, there is wide variety in the cost accounting systems of the different companies and sometimes even in different parts of the same company or organization

A method of accounting in which all costs incurred in carrying out

an activity or accomplishing a purpose are collected, classified, and recorded This data is then summarized and analyzed to arrive at a selling price, or to determine where savings are possible.In contrast to financial accounting (which considers money as the measure of economic performance) cost accounting considers money as the economic factor of production

Cost accounting is an approach to evaluating the overall costs that are associated with conducting business Generally based on standard accounting practices, it is one of the tools that managers utilize to determine what type and

how much expenses is involved with maintaining the current business model At the same time, the principles of cost accounting can also be utilized to project changes to these costs in the event that specific changes are implemented

2.1.5 Cost management in travel agency

The implementation of a cost accounting system is an important step for a service business Implementation begins with identification of the correct costing system for the business, moves on to deployment of the system and finishes with post-deployment support to train employees on how to use the system effectively Best practices in cost-system implementation focus on all three parts of the implementation process

There are cost accounting systems designed for the sole proprietorship on

up to the largest multinational corporation It is important remember that bigger isn't necessarily better Service business owners should look to implement a cost accounting system that is matched to the complexity of their business Less-complex companies may be best using an off-the-shelf software system or a system that is integrated into their current accounting software However, companies that have many products or complex manufacturing processes may wish to seek a more customized solution

Implementing a cost accounting system is much easier when you only have to implement the system once Managers should be careful to choose a cost accounting system that is scalable to the company For example, even if you only

manufacture a handful of products currently, you may wish to implement a cost accounting system that can handle more products as your offerings grow

As your company implements a cost accounting system, it is important to involve employees in the process Employees who are involved in the process of implementing the system are more likely to have bought in to the transition Not only does this help employees understand the system more quickly, but these employees can serve as ambassadors to other employees who weren't involved in implementation Often, the employees who were involved in implementation are more successful in increasing trust of the new system than management This occurs because other employees view these employees as having less incentive to blindly approve of the implementation

Most service business owners are experts in their fields, but few are experts in the implementation of accounting systems as well Managers and small-business owners should consider consultation with a professional accountant before spending time and resources choosing and implementing a cost accounting system The money that you spend seeking professional help can buy you time to focus on business operations However, service business owners who seek consultants should be mindful and ask the consultants if they receive any commission from the makers of the cost accounting system If so, you may wish

to seek the advice of someone more impartial

2.2 Related Studies

Behavior costs means that these costs will change how business activity

levels change This classification needs planning, cost control and actively

regulate the cost of management According to this classification, the entire cost

of the enterprise are classified into:

Variable costs: Are the expenses related proportional to the level of activity,

variable costs for one unit of product is stable does not change, the total variable

costs change when output changes and variable cost is zero when inactive

- The fixed cost: The cost does not change when the level of activity changes (to

the extent appropriate), but when 1 unit based, the costs vary inversely with the

level of activity However, when the level of development activities beyond the

scope of compliance, cost forced to change to fit in with the development of the

activity level Usually the fees include: equipment depreciation costs, advertising

costs, rent, insurance

- Mixed Cost: Is the cost of which itself includes variable costs and fixed fee

element In particular, the charges reflect the cost basis, at least to maintain the

service and to keep the service always ready to serve the state While the variable

costs reflect the actual service or in excess of the base rate so this section will vary

proportionally with the level of use on the baseline

The focus of management accounting is the field of cost, so the organization of

scientific management accounting and reasonable will ensure information quality,

reliable, and purpose of management accounting more charge is to provide the

appropriate cost information, useful, timely decision making of corporate

governance So, for the cost and management accounting not only aware of the

cost, such as financial accounting, cost is perceived by the method of

decision-identifying information Cost may be the actual cost associated with the daily

business operations while implementing, testing, decision-making, can also cost is

the estimated cost to implement the project, the costs lost when selecting schemes

ignore business opportunities Meanwhile in management accounting need to pay

attention to the choice, comparison purposes, the business environment rather than

focusing on proven by evidence and documents

Fig 1: Classification of cost in travel bussiness

Business processes of the enterprise consists of many processes are closely related

to each other Each different process management requirements also vary, requiring specific target estimate to suit each specific business process In the enterprise business system production estimates include many targets, but estimates of consumption is a major factor affecting the entire line estimation of the business, its impact and driven to the other estimates Consumption estimates

as the basis for estimation of production or purchase to meet the demand for the

production or sale of products Based on production estimates for estimation of

production costs which determine the estimates defined business results

Therefore, in the estimation process to determine the basic estimates as a basis

from which to build a system estimates the scientific production estimates,

reasonable, feasible basis for organizations operating business activities to achieve

the highest efficiency There are two methods of estimation of business is flexible static estimates and

estimates the cost estimates for a proposed activity level, and estimate flexible

cost estimates for a level of activity can occur Data from static estimates are

important in planning but has little effect on the control because the actual level of

activity rarely coincides with the plan In contrast, the estimated useful flexibility

for administrators to control activities by comparing the actual results and

estimates data for the same level of activity

2.4 Conceptual Framework

From the theories and concept above, I suggest the relation of variables to

factors affecting the adoption of cost accounting system in travel agencies as follows: