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Itm Final
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Itm Final
Executive summary
This report includes three main parts. The first part analyzes the specific environment,
about the new entrants, competitive rival, bargaining power of buyers and suppliers. The
second part focuses on six factors in general environment namely politic, economy,
technology and legality. The remains of this paper discuss about the opportunities and
threats of Trung Tin Company. To understand the way that these factors impact the
company, an interview to the foundation of Trung Tin Development Company Limited
had been made. With the results obtained from the interview and the information
collected from Internet, Trung Tin Company can get many opportunities to develop and
expand further in the future as the support of government to accounting service company.
As well as the opportunities, Trung Tin Company also has to face with many threats from
rival and new entrants. Thereby, some recommendations are given to help company make
use of the opportunities and reduce these threats.
With limited knowledge, conditions and abilities, shortcoming in the report cannot be
avoided. However, the external environment, which has been studied, will be made use of
in this report and the recommendations may be helpful for the company in the future.
1. Introduction
In the open economy and international integration, accounting and auditing are not only
important tools to manage the financing and economy but also become a service that
supports the business management. Alex Katz – financial director of Venture Capital said
that “In my opinion, building an open and honest relationship with accountants to provide
accurate analysis and feedback for your business is one of the key components of success
for enterprise.” Recognized this, accounting services were officially recognized by
Vietnamese law in 2003 and registered under the management and support of Vietnam
Association of Accountants and Auditors since 2007.
2. Literature review
The book Eleventh Edition Management stated that “the external environment “refers to
factors and forces outside the organization that affects its performance”. An
organization’s external environment can be divided into two types: general and specific
environment. General environment “only refers to the broad trends and conditions and
conditions in the societies within which organizations operates.” (MBA lectures
homepage). The general environment in this report will be analyzed by using PESTLE
analysis which are standing for political, economy, technological, legal and
environmental. The PESTLE analysis is said to be invented by Harvard Professor Francis
Aguilar as in his 1967 book “Scanning the Business Environment” mentioned a tool
called ETPS which also is standing for Environment, Technological, Political and
Society. The PESTLE analysis is used to help Trung Tin company have a whole picture
of environment and define the market, business position and the way to develop and
achieve the goals.
Another type of external environment is specific environment which “refers to the forces
that have direct impact on managers’ decisions and actions and are directly relevant to the
achievement of an organization’s goal” (MBA lectures homepage). Five-force analysis by
Michael Porter will be used to analyze the specific environment. On the book “How
Competitive Forces Shape Strategy” which was published in 1 979, Michael Porter
stated that there were five forces which includes threats of new entrants, threats of
substitutes, current rivalry, bargaining power of buyers and bargaining power of
suppliers. He also wrote in Harvard Business Review “Understanding the competitive
forces, and their underlying causes, reveals the roots of an industry's current profitability
while providing a framework for anticipating and influencing competition and
profitability over time”. Using the five-force analysis may help Trung Tin Company have
potential profitability and understand the competition of business.
From 1960s to 1970s, a group of economists included Marion Dosher, Ts. Otis Benepe,
Albert Humphrey, Robert F. Stewart and Birger Lie using the data of Fortune 500
companies to create SWOT analysis model. “SWOT analysis is a strategic planning
technique used to help a person or organization identify strengths, weaknesses,
opportunities, and threats related to business competition or project planning” (SWOT
Analysis: Discover New Opportunities, Manage and Eliminate Threats). One part of
SWOT analysis which are Opportunities and Threats will also be used in analyzing the
external environment. Opportunities are the positive trends and in contrast threats are
negative trends. When company makes a decision, certainly, it will take the advantages of
opportunities and try to reduce or avoid the threats and then when combined to the rest of
SWOT (Strengths and Weakness), the company can make a decision that helps company
achieve the goal easier.
1. Specific environment
1.2. Rival
According to Mrs. Huong, Vice President of Trung Tin, before 2015, the number of
competitors of Trung Tin Company is not too much. As the enactment of The Revised
Accounting Act in 2015 and the increase in the demand for accounting and auditing
services, establishing these firms tends to be more and more popular, which leads to
intense competitive rivalry among those firms. According to Dien Dan Doanh Nghiep
(2018), many firms are operating illegally without registering business license and
providing poor quality of services. At present, there are dozens of unofficial accountants
in many localities providing services to businesses by their own efforts and human
resources in the family. They are willing to do all the accounting work required by the
entrepreneurs with very low cost, because they have not to pay for cost of establishment
of enterprises, registration fee, management fee, said by Mr. Pham Hoang Thanh,
Chairman of Vietnam Accountants' Association (Dien Dan Doanh Nghiep, 2018) .
Nevertheless, because of their unofficial performance, clients cannot make sure about the
reliability, prestige and quality of those firms. Moreover, Trung Tin Company ensures
that with their long experiences and professionalism, they have enough abilities to
participating in this fierce rivalry. Therefore, the rivalry is not too harsh.
Trung Tin is not strongly influenced by bargaining power of buyers. The clients always
expect to get efficient work, professional attitude and prestige when they cooperate with
service providers. Information provided on Vietnam Association of Accounting and
Auditing (2017) shows that on current market, there is only a small number of firms can
meet client’s criteria. If the customer do not satisfy with the price provided, they can
choose the service of other company. However, the range of choices is narrower due to
the quality. Because the most important goal of every client is the result, they are willing
to pay a little bit more to reach their target.
The bargaining power of supplier is quite high. Owing to the increase in demand for
accounting and auditing services, the number of customers also increase. Because there
are many customers need their services and are willing to pay for it at the price provided,
suppliers have a strong power in bargaining. Trung Tin Company always adjusts the price
of their services that affordable to every client depended on the enterprise’s revenue.
2. General environment
2.1. Economy
According to Vnexpress (2018), GDP of Vietnam increase stably, from 2,215 USD in
2016 to 2,389 USD in 2017 and reaches 2,540 USD in 2018. Although this number is
quite low in comparison with that of others, it still reveals that there is a continuous
increase in the economy of Vietnam, which can be a good environment for all firms to
develop.
2.2. Technology
The fourth industrial revolution however affect negatively on the company. Accounting
activities depends much on machinery and technology, so it may lead to the neglect on
the influence of employees on the company. Therefore, employees are required to learn
more and more to adapt quickly to any changes in the market.
2.3. Legality
In 2015, the government imposed new law on accounting business that narrow the
condition to do business in this type of service. In particular, article 58 of the Accounting
Act 2015 stipulates: “Persons who possess accountancy certificates or auditor's
certificates according to the provisions of the Law on Independent Auditing may register
their practice of accounting services through accounting service-providing enterprises or
accounting service households.”, in accordance with “Thời báo Tài chính” (2018).
Through the law, any company where their employees has no accountancy diploma will
be stopped working. Enforcing this law help the company reduce potential competitors in
the accounting market.
III - Analysis SWOT
1. Opportunities
Firstly, through Internet becoming more and more popular the company can use it to
extend brand name by social media like Facebook, Website, and Youtube that bring the
company’s reputation closer to more people.
Addition to “Đầu tư Chứng khoán” (2018), large data technology enables fast and simple
processing of mathematical operations, quick access to data in a short time. Thanks to the
advance in modern technology and digital application, the results of processing
accounting information can be integrated with many other kind of information to serve
variable requirement of entrepreneurs, managers and social needs.
On the other hand, it is stated in Baomoi.com that Vietnam's participation in the Trans-
Pacific Partnership (TPP) and the ASEAN Economic Community (AEC) is opening up
many opportunities for accounting services. Currently, the trend of integration together
with the needs of domestic enterprises makes the market of accounting services in
Vietnam become a very potential environment. In fact, as reported by Baomoi.com
(2018), some big companies in the accounting and audit field have been operating in
Vietnam, creating competition among accounting service providers, significantly
contributing to the development of accounting and auditing services market in Vietnam.
Besides, with the enactment of The Revised Accounting Act in 2015 and the dedicated
chapter on accounting services, the government is making every effort to create a clear
and healthy accounting and financial services environment, which makes a premise for
the industry to develop stronger in the future.
2. Threats
II. Recommendation
In general, Trung Tin Development Company Limited makes use of many available
opportunities to enhance the future strategies. Although the market of accounting services
is quite new, it is getting more and more developing. It leads to appear a lot of company
that provide accounting services at present. Thus, it is required that Trung Tin Company
needs to have a long term strategic vision to develop organization’s business operations
sustainably.
Firstly, the company has to build its own prestige. It is necessary for the enterprise to
make up reliability for customers about its services in order that Trung Tin Company can
survive and develop in today market. To do that, the organization should promote and
improve employees’ skill through training course so as to increase the quality of company
about its fields and keep pace with level in the world. Besides, the enterprise also needs to
diversify the types of accounting services provided. It is indispensable that this company
build a strong brand and modernize the method of management so that Trung Tin
Company has a certain influence in a competitive market as today economy.
Secondly, through SWOT analysis, the company should take advantage of their
opportunities to develop in the long term. It would be essential for the whole company to
make use of social media to advertise and expand the image of enterprise widely into the
market. With the development of technology, there are some changes in the
implementation methods of accounting. Thus, Trung Tin Company is able to apply 4.0
technology for training their employees to adapt to the methods in the world. However, it
depends on the vision of the directors in Trung Tin Company, whether they see and
optimize the opportunities they can achieve or not. Conducting all these recommendations
above can be not enough but can ensure a competent future of the whole firm.