Chapter 1: Theoretical basis for import and export goods delivery by air
1.4. Factors affecting business activities of freight forwarding services by air
1.4.1.1. Human Resources
Human resources are a decisive factor in production and business efficiency, thereby affecting the competitiveness of enterprises. Human factor is considered an extremely valuable asset for the successful development of each country and each enterprise. With a good and uniform team of human resources, businesses can do well with the plans and goals they have set. A team of experienced, highly qualified, dynamic, flexible and knowledgeable leaders and managers... will bring businesses not only immediate benefits
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27 such as increased revenue, increased profits but also corporate reputation. They will come up with many creative strategic ideas that are suitable for the development and maturity of the business as well as the changes of the market.
1.4.1.2. Infrastructures
Enterprises doing business in freight forwarding services by air will have the facilities, equipment and infrastructure to serve their service provision. The forwarder's infrastructure and equipment includes department offices, warehouses, transportation facilities, loading and unloading facilities, storage and storage of goods, etc. To participate In the modern delivery and delivery activities like today, forwarding service businesses must invest in a modern and suitable infrastructure to serve the activities of consolidating, loading, unloading and loading goods and inspect the goods. The strong development of technology helps the forwarder manage all business activities and important information of customers through the electronic data transmission system. Besides, the convenient road infrastructure system facilitates the fast transportation of goods, ensuring the safety of goods when they arrive at the importer's warehouse. The investment in modern machinery is also an important factor, with specific items requiring specialized machinery is necessary.
Therefore, factors related to infrastructure, equipment and machinery are very necessary and important for businesses providing import and export freight forwarding services in general and freight forwarding in particular.
1.4.1.3. Financial resource
Investment capital plays a role in import and export freight forwarding activities in general and air freight forwarding in particular. When the amount of investment capital is not enough, the facilities - infrastructure - machines are not improved, leading to the delivery and receipt of goods being interrupted, delaying the progress of the process and affecting the performance of the operation itself. On the contrary, if there is an abundant amount of investment capital, the infrastructure, machinery and equipment are upgraded to be more modern, the free delivery and delivery process can be done quickly, efficiently and efficiently. The yield can exceed 100%. However, the financial resources of the forwarding service business are not always abundant, so when calculating the investment in the system in the forwarding process, it is necessary to clearly define and carefully calculate the
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28 investment to get the most out of it. Businesses can also consider outsourcing or linking with transporters in some cases to reduce delivery costs.
1.4.2. External Business Factors
Every business operating in any field is subject to the impact of the surrounding environment and the impact of the business itself. Therefore, the development ability of an enterprise depends not only on the business itself but also on other objective factors of the environment surrounding the business. External factors are where the business is operating and have a direct influence on the policies, determining the development ability of the business.
1.4.2.1. Economic factor
This is a very important factor that attracts the attention of all businesses. The impact of these environmental factors is more direct and dynamic than some of the other elements of the general environment. The developments of the economic environment always contain different opportunities and threats for each enterprise in different industries and have potential influence on the business strategies of enterprises. A growing economy will bring momentum for all businesses. With economic development, population demand increases, domestic and foreign investment attractiveness will also increase, the competition will also become increasingly fierce. On the contrary, when the economy is in recession and instability, people's purchasing power will decrease. Enterprise services provided to the market will slow down, profits will decrease, companies will have to find ways to retain customers and market competition becomes more and more fierce. The economic environment is the environment that has a profound influence on the competitive policies and decisions of enterprises.
1.4.2.2. International trade agreements
In the process of doing business in logistics services, international customs must be observed, for example, terms of receipt of goods (Incoterms); Rules for implementing documentary credits; Cargo insurance during transportation, loading and unloading, storage, receiving... Vietnam is a member of ASEAN, so Logistics services are also affected
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29 by regional agreements such as: 1999 GMS-CBT Agreement; Facilitation of goods in transit (1968); Agreement on multimodal transport framework SEEN 2005.
Table 1. 1: The legal system governing air freight forwarding and forwarding services in Vietnam
Type Rules Decrees
Decisions, Circulars and other documents
Air freight service
Law on Civil Aviation of Vietnam 2006;
Law amending the Civil Aviation Law
2014
Decree 30/2013/ND-C on air transportation business and aviation
activities.
Decree No.
102/2015/ND-CP of the Government on
management and operation of airports
and airfields.
Circular 81/2014/TT- BGTVT regulating air
transportation and general aviation
activities;
Decision 43/2017/QD-TTG on
regulations on responsibilities for
carrying out procedures for aircraft
on exit, entry and transit through the
national single window mechanism.
Source: Law Library (author's own compilation) 1.4.2.3. Politics and law
Politics and law have a great impact on the development of any business, especially international businesses. Politics and law are the foundation for economic development as well as the legal basis for enterprises to do business in any market, whether domestic or foreign. A stable economy requires stable politics and laws. Policies as well as legal
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30 documents will directly adjust to economic policies, thus affecting business activities.
Especially in countries with political instability, the risk of damage to companies with international trade activities is greater. Clear laws, stable politics is a favorable environment for business activities of each enterprise. In international forwarding activities in general and freight forwarding by air in particular, not only creates favorable conditions for that country's development, but also is one of the factors for strong trade in goods.
1.4.2.4. Social factor
Includes norms and values that are accepted and respected by a particular society or culture. The change of socio-cultural factors is partly a consequence of the effects of other macro factors, so it usually happens more slowly than other factors. Some of the characteristics that businesses need to pay attention to is that the impact of socio-cultural factors is often longer-term and more subtle than other factors, sometimes even difficult to perceive. On the other hand, the range of influence of sociocultural factors is often very wide: "it determines how people live, work, produce, and consume products and services".
Thus, cultural and social understandings will be very important bases for businesses in the process of building business strategies. Aspects that form the socio-cultural environment have a strong influence on business activities such as: conceptions of morality, aesthetics, lifestyle, and profession; customs, practices and traditions; the concerns and priorities of society; the general level of awareness and education of the society.
1.4.2.5. Natural factor
The natural environment greatly affects the delivery, receipt and transportation of goods by air. This is considered a force majeure condition that occurs during the delivery and receipt of goods, affecting the making and speed of delivery. The influence of bad weather during air travel will cause the goods to be affected in terms of goods’s quality and it is the cause of disputes between forwarders and import later. Therefore, grasping the natural situation to be able to avoid and negotiate with customers will be a way for the two sides to support each other and help the air freight forwarding process to be more complete.
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31 1.4.2.6. Technology factor
In the 4.0 era, when businesses all have to go digital to change and develop, this is the factor that has the strongest and most direct influence on businesses. The development of science and technology has a great influence on the international freight forwarding process. At a time when science had not yet developed, most logistics activities still depended on human strength, making the process both slow, costly, and not highly efficient, reducing efficiency, extracting capacity. Today, with the strong development of technological inventions, machines are replaced to perform almost the entire delivery process from the loading and unloading machinery system, the consolidating system, transporting goods, the customs declaration system is also implemented on software, not on paper as before. The development of a new all-natural fuel system reduces the harm caused to the environment, reduces air pollution, and noise pollution. The increasingly modern, high-capacity aircraft manufacturing technology has improved the efficiency of the entire process, creating a new step forward in air transport.
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