Chapter 1: Theoretical basis for import and export goods delivery by air
1.3. The criteria for evaluating the results of business activities of import and export freight
1.3.1. Business evaluation criteria
1.3.1.1. Revenue, Profit - Revenue growth rate
➢ Revenues
A business's revenue is the entire amount that will be earned from the sale of products, provision of services, financial operations and other activities of the business. In economics, revenue is usually determined by selling price times output. This indicator allows enterprises to directly compare the competitiveness of their enterprises with other enterprises in order to evaluate the results of their production and business activities.
Enterprises have high turnover compared to competitors in business activities, which shows that a business has good and stable operation. If the above criterion forces the enterprise to fully investigate the market of competitors of the same product, then this criterion allows the enterprise to choose the strongest or most suitable competitor in terms of production
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21 process, structural model, compare, draw strengths and shortcomings to overcome in the coming time. This indicator is simpler and easier to calculate, the market shares held by strong enterprises are often highly profitable and most likely businesses need to dominate this market area. This is also an opportunity for businesses to learn more about key competitors.
➢ Profits
Profit is the highest economic goal, a condition for the existence and development of enterprises. This is a composite indicator that reflects the entire result and efficiency of the production and business process from the time of searching for market demand, preparation and production and business process until the organization is organized sales and service to the market. It reflects both the quality and quantity of business competition.
If this indicator is low, the level of competition in the market is very fierce, there are too many enterprises in this market and enterprises must constantly improve their competitiveness in order to improve their profit margins. On the other hand, if this indicator is high, the competitiveness of the enterprise is strong. Enterprises can take advantage of this advantage and constantly watch out for competitors who can enter the market at any time due to the attraction of high profits.
➢ Revenue growth rate
Revenue growth is the goal that all businesses today set and aim for. The revenue growth rate is the percentage change in a business's revenue over a specific period of time and given in a given context. The rate of growth depends on two processes: the accumulation of assets such as capital, labor, and facilities and the investment of more productive assets. Although saving and investment are both central to growth, investment must be effective to boost revenue growth.The growth rate of the business shows the future development prospects of the business. The fluctuation in sustainable growth rate not only reflects the change in the scale of operating results, but also reflects the stability, development situation and solid development level of the enterprise. Sustainable revenue growth rate of enterprises depends mainly on revenue growth rate and profit growth rate.
✓ Net sales growth rate
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22 Net revenue growth rate reflects the increase in net revenue of a business over time is high or low.
Figure 1. 3: Method of net sales growth rate
By looking at the variation over time in the growth rate of net sales, the user of the information can assess the stability of the size and market of consumption, the state of the business (favorable, difficulties), business scale (expansion, income) as well as the development trend of the business.
✓ Profit growth rate:
Figure 1. 4: Method of Profit growth rate
Profit growth rate reflects the increase in profits over time. By looking at the profit growth rate, information users can recognize the quality of business activities, quality of cost management, current business status, etc. of the enterprise.
1.3.1.2. Service quality
Service quality is customer satisfaction when service providers meet customer needs. Customer satisfaction with a service is determined through a comparison between
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23 the expected service and the service perceived by the customer. Service quality is evaluated based on a number of criteria such as:
Tangible: is the company's facilities, equipment, employees, and means of transportation.
Timeliness: ensuring that raw materials and goods are supplied in a timely manner.
Flexibility: refers to the ability of the company to coordinate resources to meet the special requirements of customers.
Level of safety and accuracy: the ability to ensure customer safety, expressed through physical, financial, and information security.
Reliability level: is the trust and reputation of the service and the business to customers.
Enterprises providing freight forwarding services by air always have an Agent department to contact foreign agents so that they can look up international shipping prices accurately, ensure balance and delivery. in accordance with the requirements, providing customers with the highest quality and most convenient service. In most countries, businesses providing forwarding services build agency relationships to ensure the most convenient and effective delivery and delivery.…
1.3.1.3. Market Share
Market Share is the share of sales that a certain business has captured in a given market. Market share is used to measure the concentration of sellers in a market. When you know how much market share the business holds, locate where the business is standing in the market, is the business line saturated, is there still room for growth, at this point the business can decide whether to continue trying to dominate the market or withdraw from this market. And one of the methods to properly assess their growth market share, businesses often use the Boston Matrix.
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24 1.3.1.4. The level and speed of business growth
In order to accurately assess the level of development of an enterprise, we need to rely on different level factors to determine the growth rate of an enterprise depending on its business type. For large forwarding companies in Vietnam, freight activities need to have a strict and disciplined working process and are divided into different levels, including 4 main levels:
✓ Level 1: traditional forwarding agents only provide services requested by customers such as transporting goods by road, performing customs procedures on behalf of goods owners, making documents, storing and storing goods. , delivery.
✓ Level 2: forwarding agents act as consolidators and issue home bills of lading. The operating principle of these companies is to have exclusive agents at major ports to carry out the withdrawal/packing of import and export goods.
✓ Level 3: Forwarding agent acts as multimodal carrier. In this role, some companies have coordinated with the foreign company at the port of discharge with a sub- contract to automatically arrange the transportation of goods to the final destination according to the bill of lading.
✓ Level 4: this is a forwarding agent that becomes a logistics service provider. This is the inevitable result of the integration process.
1.3.2. Business performance metrics 1.3.2.1. ROA – ROE Coefficient
❖ ROA
ROA (Return of Assets) - known as the return on assets ratio, is an indicator that shows the correlation between a company's profitability compared to its assets. ROA will tell us the efficiency of the company in using assets to make a profit.
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Figure 1. 5: Method of ROA
ROA shows the efficiency of using assets of the Enterprise. The higher the ROA, the better the asset utilization of the Enterprise. ROA for joint stock companies varies greatly and depends on the industry. That's why it's a good idea to compare ROA between similar companies, and when assessing ROA each company should not consider a single year but should be many years, at least 3 years. Investors should also pay attention to the interest rate the company pays on its debt. If a company doesn't earn more than it spends on investing activities, that's not a good sign. Conversely, if the ROA is better than the cost of borrowing, it means the company is pocketing a bargain.
❖ ROE
ROE (Return of Equity) - Return on equity is an indicator that measures the efficiency of the use of equity in a business.
Figure 1. 6: Method of ROE
The ROE ratio reflects both profitability, which is shown on the income statement, and average equity, on the balance sheet. The higher the ROE ratio, the more effectively the company uses shareholders' capital, which means that the company has harmoniously balanced between shareholder capital and borrowed capital to exploit its competitive
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26 advantage in the future. Capital raising process, scale expansion. Therefore, the higher the ROE ratio, the more attractive the stocks are to investors.
1.3.2.2. Customer satisfaction
This is one of the indicators used to evaluate business performance that any business should focus on. Because the products/services provided by enterprises can properly and sufficiently meet the needs of customers and make them satisfied, then those products/services have a great chance to continue being provided in the coming years. The next year. Moreover, if you focus on customer satisfaction, it will help businesses get a source of loyal customers, thereby increasing profits for businesses without having to have a headache to find new customers. Therefore, in the process of doing business, businesses should listen to customer feedback about their products/services. From there, it is possible to make appropriate adjustments.
1.3.2.3. An increase in the number of new customers
Maintaining the number of old customers to ensure that the profit of the business does not decrease, but if you want to increase profits, you need to have a marketing strategy to attract new customers. Enterprises can completely know the average week/month/year...how many new customers their business has, by controlling the list of old customers. The number of customers who are not on the list of old customers is the number of new customers that businesses can reach.