FINANCIAL MANAGEMENT EFFICIENCY OF VIETNAM POSTS AND
TELECOMMUNICATIONS GROUP

___________________________

A DISSERTATION
Presented to the Faculty of the Graduate School
Southern Luzon State University, Lucban, Quezon, Philippines
in Collaboration with
Thai Nguyen University, Socialist Republic of Vietnam

___________________________

In Partial Fulfillment
of the Requirements for the Degree
Doctor of Business Administration

___________________________

By
TO THI NGOC LAN (JENNY)
December 2013
i


APPROVAL SHEET

The Dissertation of

NGO THI MAI
entitled

EMPLOYEE TURNOVER AND RETENTION STRATEGIES OF SMALL AND
MEDIUM ENTERPRISE IN SERVICE BUSINESSES IN HANOI
Submitted in Partial Fulfilment of the Requirements for the Degree
DOCTOR OF BUSINESS ADMINISTRATION
A program offered by Southern Luzon State University,
Republic of the Philippines in collaboration with
Thai Nguyen University, Socialist Republic of Vietnam
has been approved by Oral Examination Committee

WALBERTO A. MACARAAN, EdD
Expert

JOANNA PAULA A. ELLAGA, DBA
Expert

NELLY I. MENDOZA, DBA
Expert

EDWIN P. BERNAL, DBA
External Panel

CECILIA N. GASCON, PhD
Chairman
Endorsed by:

Recommended by:

CONRADO L. ABRAHAM, PhD
Adviser


APOLONIA A. ESPINOSA, PhD
Dean

Accepted in Partial Fulfilment of the Requirements for the Degree
Doctor of Business Administration

_____________________
Date

WALBERTO A. MACARAAN, EdD
Vice President for Academic Affairs
ii


CERTIFICATE OF ORIGINALITY

iii


ACKNOWLEDGMENT

She would like to express her gratitude to Dr. Joanna Paula A. Ellaga,
for her being outstanding adviser and excellent professor. Her constant
encouragement, support, and invaluable suggestions made this work
successful. As an adviser, she has already everything that one could want in
an advisor. She also would like to thank her for providing her ideas on the
research methodology and valuable insights on financial management
system.
Also, she is deeply indebted to Dr. Nguyen Thanh Hai and Ms. Trinh
Thi Hieu -International Training Center, Thai Nguyen University of the

Socialist Republic of Vietnam, for their enormous pursuit to provide the
Vietnamese people an opportunity to grow through education.

Also, she

would like to thank all the lecturers of DBA1 course which she have been
there as a student for three years, for helping her to complete this
dissertation.
She also would like to acknowledge my best friends in the DBA 1 class
for reviewing my dissertation and providing valuable feedback. She is also
grateful to Mr. Ngo Anh Cuong and Mr. Nguyen Duy Phuong, for their help
and valuable advice, and for being great friends throughout her stay in the
program.
She is deeply and forever indebted to her family for their love, support,
and encouragement throughout her entire life. She would like to thank her
husband, Nguyen Trung Kien, who has provided a tremendous amount of
iv


love and support throughout this study. Finally, is for her five-year old son, for
being her constant instant inspiration.

v


DEDICATION

I am deeply and forever indebted to my family for their love, support, and
encouragement throughout the conduct of this study.
I would like to thank my husband, Nguyen Trung Kien, who has provided a

tremendous amount of love and support throughout this study.
On a final note with love is for my five-year old son!

TTNL

vi


TABLE OF CONTENTS
PAGE
TITLE PAGE ………………………………………………………………..

i

APPROVAL SHEET ……………………………………………………….

ii

CERTIFICATE OF ORIGINALITY ………………………………………..

iii

ACKNOWLEDGEMENT …………………………………………………..

iv

DEDICATION ………………………………………………………………

vi


TABLE OF CONTENTS …………………………………………………..

vii

LIST OF TABLES ………………………………………………………….

viii

LIST OF FIGURES ………………………………………………………...

ix

LIST OF ABBREVIATIONS ……………………………………………….

xii

LIST OF APPENDICES …………………………………………………...

xiii

ABSTRACT …………………………………………………………………

xiv

CHAPTER
I

II

III


INTRODUCTION ……………………………………………

1

Background of the Study …………………………………..

1

Objectives of the Study …………………………………….

2

Significance of the Study …………………………………..

3

Scope and Limitation of the Study ……..…………………

4

Definition of Terms ………………………………………….

5

REVIEW OF LITERATURE ……………………………….

9

Review of Literature ………………………….………….…


9

Conceptual Framework ………………………………….…

25

METHODOLOGY …………………………………………..

28

Locale of the Study …………………………………………

28

Research Design..……………………….…………….……

28

Population, Sample Size, and Sampling Technique…….

28

Research Instrument ……………………………………….

29

Data Gathering Procedure …………………………………

29


Statistical Treatment ………………………........…….……

31

vii


IV

RESULTS AND DISCUSSIONS ………………………….

34

Profile of VNPT ………………………..……………………

34

Current Status of Financial Management System of
VNPT from 2010 to 2012 ……………………………..

37

Effects of Financial Management System on Financial
Management Efficiency of the VNPT ………………..

76

Problem Encountered by Financial Management
System of VNPT ……………………………………..


V

78

SUMMARY OF FINDINGS, CONCLUSIONS AND
RECOMMENDATIONS …………………………………..

80

Summary of Findings ………………………………………

80

Conclusions …………………………………………………

84

Recommendations …………………………………………

86

REFERENCES …….…………...……...…………………………………..

92

APPENDICES ……………………………………………………………...

95


CURRICULUM VITAE …………………………………………………….

98

viii


LIST OF TABLES
TABLE

PAGE

1

Distribution of the Respondents ……………………………...

29

2

The Autonomic Level of Capital Mobilization in VNPT …….

41

3

The Safe Level in Mobilizing Capital of VNPT ……...………

41


4

Assets and Equity of VNPT from 2010 to 2012 …………….

42

5

The autonomic Level in Mobilizing Capital of VNPT’s
Subsidiaries …………………………………………………….

43

Clarity and Fulfillment in Harmonizing Capital Mechanism
of VNPT …………………………………………………………

44

Reasonable Level Regulated the Loan Limit at the Rate
Payable on Capital in not more than Three Times …………

44

The Level of Autonomy and Self-Responsibility at VNPT in
Using and Managing Capital ………………………………….

52

9


Level of Capital Preserve in VNPT …………………………..

53

10

The Level of Responsibility in the Management and Use of
the Owner’s Capital of VNPT …………………………………

54

The Effectiveness of Investment Outside the Sector of
VNPT ……………………………………………………………

55

The Transparency of Ownership and the Right of Using
Assets in VNPT ………………………………………………...

67

13

The Level of Conservation of the Assets in VNPT …………

68

14

The Level of Efficiency in the Use of Assets in VNPT ……..


68

15

The Level of Losses and Wastage in the Use of Assets in
VNPT ……………………………………………………………

68

The Clarity and Transparency in Managing Revenues,
Expenses and Profits Distribution in VNPT …………………

73

The Level in Harmonizing between the Interests of the
State, Corporations and Employees in Managing
Revenues, Expenses and Profit Distribution in VNPT ……..

74

6

7

8

11

12


16

17

ix


TABLE

PAGE

18

Revenue of VNPT from 2010 to 2012 ……………………….

74

19

The Clarity of the Regulations on the Distribution of Profits
which Subsidiaries must Contribute to VNPT group ……….

75

20

Profits of VNPT from 2010 to 2012 …………………………..

76


21

The Asset Turnover Ratio of VNPT from 2010 to 2012 ……

76

22

The Debtor Day Ratio of VNPT from 2010 to 2012 ………..

77

23

The Asset Turnover Ratio of VNPT from 2010 to 2012 ……

83

24

The Debtor Day Ratio of VNPT from 2010 to 2012 ………..

83

x


LIST OF FIGURE
FIGURE

1

PAGE
Research Paradigm ……………………………………………..

xi

25


LIST OF ABBREVIATIONS

CEO

Chief Executive Officer

CFO

Chief Financial Officer

EGs

Economic Groups

FMS

Financial Management System

SEG


State owed Economic Group

VNPT

Vietnam Posts and Telecommunications Group

xii


LIST OF APPENDICES
APPENDIX
A

PAGE
Survey Questionnaire

96

xiii


ABSTRACT
Title of Research

: FINANCIAL MANAGEMENT EFFICIENCY OF
VIETNAM POSTS AND TELECOMMUNICATIONS
GROUP

Researcher


: TO THI NGOC LAN (JENNY)

Degree Conferred

: DOCTOR OF BUSINESS ADMINISTRATION

Name and Address
of Institution

: Southern Luzon State University Lucban, Quezon,
Philippines and Thai Nguyen University, Socialist
Republic of Vietnam

Adviser

: Dr. Joanna Paula A. Ellaga

Year Written
: 2013
______________________________________________________________
The main objectives of dissertation were to study the current status of
system financial management of VNPT and its effect on financial management
efficiency of company. The specific objectives of this study were: (1) To
identify the profile of the company; (2) To determine the current status of
financial management system of VNPT in terms of the following: Capital
mobilization, Capital management and use, Asset management, Revenue,
expense and profit distribution management; (3) To assess the financial
management efficiency of VNPT in terms of the following financial ratios: the
asset turnover ratio and the debtor days ratio; (4) To determine the effects of
the financial management system to the financial management efficiency of

VNPT; (5) To identify the problems encountered in carrying out the financial
management system of VNPT; (6) To propose actions that will respond to the
problems encountered in carrying out the financial management system of
VNPT.

xiv


In order to obtain objectives of study, the researcher used a descriptive
type of research. Then, to get primary data, the researcher collected it by
sending questionnaires to 169 respondents who were working in VNPT and
its subsidiaries while the secondary data was from the annual financial reports
of VNPT from 2010 to 2012. For assessing the current status of VNPT’s
financial management system, the dissertation focused on VNPT’s regulations
on capital mobilization, management and use of capital and assets,
management of revenues, expenses and profit distribution, thereby assessing
financial

management

system

and

its

effects

on


VNPT’s

financial

management efficiency from 2010 to 2012. Based from the result, the
financial management of VNPT has positive effects to financial management
efficiency of the Group.

xv


1
PChapter I

INTRODUCTION

A number of studies about financial management system in economic
groups under various theories, situation evaluation, and summary of
experiences in the country and abroad were conducted. Pham Quang Trung’s
(2003) research shows that state owned enterprises in Vietnam reflects
theoretical matters about financial management system in economic groups.
Today, with profound changes in economic groups, state owned enterprises
under the changes of state’s policies as well as influences of economic
integration on economic groups, the value of those analysis and evaluation
may not keep intact and need to be updated.

Background of the Study
The issue of financial management system in the economic groups gets
the attention of not only scholars in the country but also many foreign
economists. Brigham (2009) refers to problems in the financial management of

corporations in terms of general theoretical angles about concepts,
characteristics, connotation and methods of management. Generally, about
financial management system in the economic groups in Vietnam, there were
some works under the form of books which mention different angles, but all
were released from 2000 onwards. Nowadays, under the impact of regional
and international economic integration, and the management of the state for
state economic groups inevitably arises many new issues in the financial
management system of economic groups in Vietnam.


2

In recent years, Vietnam economy has gone through a very difficult
period. High inflation and interest rates coupled with global economic financial
crisis and public debt crisis of the European countries have a huge impact on
the business situation of economic groups in Vietnam.
In this economic setting, economic groups that want a firm stand in the
marketplace need to be flexible and ever-innovative. Innovative financial
management system is one of the issues of primary concern that directly
affects the survival of many economic groups in Vietnam.

Thus, the

researcher aims to contribute in improving the system on managing finances
of state-owned economic groups, through conducting this study.

Objectives of the Study
This study was intended to analyze the financial management system
of VNPT and its effects on financial management efficiency of the group.
Specifically, the specific objectives were as follows:

1. To identify the profile of the company in terms of the following:
1.1. type of the company
1.2. size of the company
2. To determine the current status of financial management system of
VNPT in terms of the following:
2.1. capital mobilization
2.2. capital management and use
2.3. asset management
2.4. management of revenue, expense and profit distribution


3

3. To assess the financial management efficiency of VNPT in terms of
the following financial ratios in terms of:
3.1. asset turnover ratio
3.2. debtor days ratio
4. To determine the effects of the financial management system to the
financial management efficiency of VNPT
5. To identify the problems encountered in carrying out the financial
management system of VNPT
6. To propose actions that will respond to the problems encountered in
carrying out the financial management system of VNPT

Significance of the Study
Analysis of financial management system is very important in providing
information for those benefits related to business activities, in helping the
readers to be able to predict its financial situation in the future as well as risk
assessment and quality of business operations (from which to make financial
decisions) and in deciding the most appropriate management. This research

would be beneficial for the following:
Investors take an interest in information about the financial
management efficiency of VNPT. On the other hand, they want to obtain the
adequate

amount

of

information

needed

for

decision-making

about

investments in the Group. The main attention is paid to the degree of the risk
and return on capital invested. However, owners and investors want to make
sure that invested resources are properly evaluated and optimized.


4

Managers need to know about financial management for current and
long-term decision making. Continuous knowledge of VNPT performance
allows managers to make right decisions in gaining financial resources, in
determining the optimum financial structure, in allocating free finances, in

distributing profits, and in allocating trade credits. The knowledge in
financial management is necessary for both the past and forecasting of
future development. Managers make several proposals for policy makers as
well as managers of VNPT about the improvement of the financial
management system to enhance the financial management efficiency in the
new context.
Employees are naturally interested in prosperity, economic and
financial stability of VNPT. It is concerned with job security, possibilities in
wage and social policy, or other benefits provided by the employer.
For the researcher, the study provides a theoretical knowledge in
financial management system of economic groups in general and VNPT in
particular. This study has contributed to the enhancement of financial
management efficiency and has given some ideas about perfecting financial
management system of State owned economic groups in Vietnam in the new
situation.

Scope and Limitation of the Study
This study was focused on financial management system of state
economic corporations. It specifically concentrated on the current status of the
financial management system in the state economic groups in Vietnam. This
research focused mainly on VNPT. Moreover, the study covered the status of


5

financial management system of VNPT from 2010 to 2012. The financial
management system was described in terms of capital mobilization, capital
management and use, asset management, and the management of revenue,
expense, and profit distribution. On the other hand, the financial management
efficiency was assessed in terms of the asset turnover ratio and the debtor

day ratio.

Definition of Terms
For better understanding, the following terms are conceptually and
operationally defined:
Capital invested by the State in the Parent Company are the capital
directly taken from the state budget for the parent company in the
operation (if any); capital received by the State from other resources as
decisions of the competent authorities; additional capital from profit
after tax; value of land using rights and other capitals considered as
State capital in accordance with the State law.
Capital preservation in the parent company means that capital is kept intact
and not be deficit during the operation of the parent company.
Capital raised by the parent company is the capital that the parent
company raises under the forms of bonds, bills of credit, debentures;
loans from organizations and individuals in the country and foreign
countries; and other capital mobilizing forms that are not prohibited by
law.
Capital's parent company invested in other enterprises is capital of the


6

parent company invested in other businesses apart from the parent
company.
Dependent accounting units are units accounted dependently from the
parent company.
Dividends are payments made by a corporation to its shareholder members.
It is the portion of corporate profits paid out to stockholders. When a
corporation earns a profit or surplus, that money can be put to two

uses: it can either be re-invested in the business (called retained
earnings), or it can be distributed to shareholders. There are two ways
to distribute cash to shareholders: share repurchases or dividends.
Many corporations retain a portion of their earnings and pay the
remainder as a dividend.
Equity is the residual claim or interest of the most junior class of investors in
assets, after all liabilities are paid. If liability exceeds assets, negative
equity exists. In an accounting context, shareholders' equity (or
stockholders' equity, shareholders' funds, shareholders' capital or
similar terms) represents the remaining interest in assets of a
company, spread among individual shareholders of common or
preferred stock.
Financial management efficiency reflects the relationship between the
economic benefits of capital mobilization; capital management and use;
asset

management;

revenue,

expense

and

profit

distribution

management that businesses receive with a cost that businesses have
to spend to obtain economic benefits.



7

Financial management system is the methodology that an organization
uses to oversee and govern its capital mobilization; Capital
management and use; asset management; revenue, expense and
profit distribution management with the objectives of maximizing profits
and ensuring sustainability.
Governing shares and contributing capital are shares or contributing
capital that company occupies over 50% of the charter capital.
Non-productive units are units providing research, training, healthcare
services under the management of the parent company.
Owner is the State owner of the parent company. The Government unifies the
implementation of rights and obligations of the owner to the parent
company. The Prime Minister directly performs or authorizes Ministries,
the ministerial-level agencies, the agencies attached to the Government
to implement a certain number of rights and obligations of the owner to
the parent company in accordance with the law.
Parent company is a company that controls other companies by owning an
influential amount of voting stock or control. Parent companies will
typically be larger firms that exhibit control over one or more small
subsidiaries in either the same industry or other industries.
Profit is the difference between the purchase and the component costs of
delivered goods and/or services and any operating or other expenses.
Representative is the person who is appointed by the Board of Directors to
represent for capital or to candidate or participate in the Management
Board and management in companies which have capital of the parent
company.



8

Revenue is income that a company receives from its normal business
activities, usually from the sale of goods and services to customers. In
many countries, revenue is referred to as turnover.
Subsidiary is an independent accounting firm of which charter capital is held
100% by the parent company and being a company that the parent
company holds dominant shares, capital or controlling shareholder
through rights of directly or indirectly appointing a majority or all of the
Board members, the general director or manager of that firm or
deciding to modify or supplement the charter of that firm.


9

Chapter II
REVIEW OF LITERATURE

This chapter presents the literature related to this study. It includes
related studies and definition of finance, contents of financial management
system, factors influencing financial management system, criteria for financial
management efficiency evaluation of financial management system and
definition of financial management efficiency.
According to Fabozzi and Peterson (2003), financial management and
analysis is presented in seven parts. The first two parts (Parts One and Two)
cover the basics, including the objective of financial management, valuation
principles, and the relation between risk and return. Financial decision-making
is covered in Parts Three, Four, and Five where the authors present long-term
investment management (commonly referred to as capital budgeting), the

management of long-term sources of funds, and working capital management.
Part Six covers financial statement analysis which includes financial ratio
analysis, earnings analysis, and cash flow analysis. The last part (Part Seven)
covers several specialized topics: international financial management,
borrowing via structured financial transactions (i.e., asset securitization),
project financing, equipment leasing, and financial planning and strategy.
With its exciting introduction of the Harly - Davidson focus company
theme, this book continues to provide a solid, enduring foundation of the tools
of modern theory while at the same time developing the logic behind their use.
The "10 principles of finance" (formerly "Axioms") provide the framework, or


10

"the big picture" of the finance, which ties the major concept of the book
together. A six part organization covers the scope and environment of financial
management, valuation of financial assets, investment in long term assets,
capital structure and dividend policy, working capital management and special
topics in finance. It is for an enduring understanding of the basic tools and
fundamental principles upon which finance is based (Keown, Martin, Petty &
Scott, 2005).
Trung’s (2003) study on “Business Groups and Financial Management
System in Business Groups” shows many basic theoretical matters about
financial management system in economic groups, State owned enterprises
as well as descriptions, summaries, analyses of overall picture of actual
situation of applying financial management system in economic groups, State
owned enterprises in Vietnam in the first period when economic groups, State
owned enterprises started to go into operation.

Nowadays, with profound


changes in economic groups, State owned enterprises under the changes of
State’s policies as well as influences of economic integration on economic
groups, the value of those analyses and evaluations may not keep intact and
need to be updated.
While, Hanh (2009) stated that, although did not directly mention the
words “financial management system in economic groups”, but it has contents
of financial management in modern enterprises under the view of financial
management of enterprises. However, this study has compiled on the
background of studies of American and Australian professors, having color of
a textbook, so being more theoretical.