Luận văn tiếng anh improving the effectiveness of enterprise financial cosultancy activities in

1

INTRODUCTION

1. Rationale

Recently, in front of the background of not only the focus of the government

on developing the national economy and increasing industrialization -

modernization but also the trend of rapidly developing and integrating economy,

Vietnamese conglomerates are both having abundant opportunities and facing with

numerous challenges.

Specifically, the national economy has innumerable difficulties because of

the instability of international economy and politics. In addition, the manufacturing

and business of conglomerates also face many challenges. Vietnamese enterprises

not only must focus on innovating manufacturing, developing administering skills

and improving cutting-edge technologies but also have to address financial

problems which are one of factors contributing to addressing their difficulties.

Companies providing the services of financial consultancy have been born

with the aim of supporting enterprises to tackle financial issues. However, financial

consultancy in Vietnam in recent years has still not met the demands and the needs

of enterprises, the challenges of the contemporary economy as well as not satisfy

the expectation of the leaders and owners of consulting firms. This reality requires

us to have to have solutions to improve and develop financial consultancy for

conglomerates and corporations in the period of expansion and integration with

international economies.

Through evaluating the possibility of catering for the services of financial

consultancy in the professional and comprehensive way, in comparison with other

types, we find that stock companies are the type which has the most significant

capacities for accessing and addressing issues which enterprises are facing with.

At the present time, Vietnamese stock firms are having an abundance of

intractable difficulties in applying the financial consultancy for their own firms. The

first rationale is the swift rocketing of the number of stock corporations besides the

2

rapid development of Vietnamese stock market. Up to the day December 31st 2014,

stock capital in all Vietnamese market was 1,128 thousand billion dong, accounting

for 31.5% of GDP. The number of stock companies in Vietnamese market were 4 in

the year 2000, soaring to 105 firms established in 2009 and then declining to 83

firms through the re-structure progress. The increasing number of stock companies

had a part in making the stock market more dynamically, consolidating the stock

market more strongly and bringing about more products and choices of inventors.

However, increasing the number of stock companies is one of root causes making a

contribution to raise difficulties for stock firms through narrowing market share.

Secondly, following the route of joining WHO, since January 11st 2012, stock

companies having 100% capital from foreign countries have been established in

Vietnam. Although domestic stock companies have had a long period to build their

trade names, expand the customer net and improve the quality of human resources,

they still have to face numerous challenges because foreign conglomerates possess

copious advantages about experience and funds. Compare to the achievement of

international stock companies, the results which domestic stock companies achieved

are still negligible.

To be one of seven stock companies established earliest in Vietnam,

VietinBankSc have affirmed their positon in the field of financial consultancy more

sustainably with every passing day. In recent years, VietinBankSc have focused on

the financial consultancy of enterprises and consider that this activity is their core

activity and top-ranking advantage. Nevertheless, in front of many difficulties of

business environment, VietinBankSc really need solutions in order to develop the

activities of enterprise financial consultancy. Therefore, I chose this topic to

conduct my research for my master degree with the name: “ Improving the

effectiveness of enterprise financial cosultancy activities in Vietinbank Securities

Company ”.

2. Research objectives

- To systematize theoretical matters about the enterprise financial

consultancy of stock companies.

3

- To evaluate the reality of enterprise financial consultancy in

VietinBankSc and bring about a comprehensive view of enterprise financial

consultancy in recent years.

- To propose several solutions and recommendations in order to develop

activities about enterprise financial consultancy in VietinBankSc.

3. The scope of research

- The object of this research is the activities of enterprise financial

consultancy of stock companies.

- The scale of this research is the reality of enterprise financial consultancy in

VietinBankSc during the period 2014 – 2016.

4. Research methodology

This research utilized the method of dialectical materialism, combining with

others including analyzing method, statistics, summary and comparison. In addition,

illustrational model was made use of with the aim of bringing about some

reasonable analysis and suggestions, guaranteeing the scientific quality, reality and

objectiveness of topics of this research.

5. The structure of this research

Besides some parts including the beginning, the conclusion, contents, tables

of abbreviating letters, this thesis embrace 3 chapters:

Chapter1:Overall theory about the activities of enterprise financial

consultancy of stock companies.

Chapter2:The reality of activities of enterprise financial consultancy in

VietinBankSc.

Chapter 3: Solutions and recommendations in order to developing the

activity of enterprise financial consultancy in VietinBankSc.

4

CHAPTER 1.OVERALL THEORY ABOUT THE ACTIVITIES OF

ENTERPRISE FINANCIAL CONSULTANCY OF STOCK COMPANIES

1.1. The overview of stock companies

1.1.1. The definition of stock companies

Stock markets is the places where stock is traded and switched. There are

abundant objects involving stock markets but there are negligible individuals having

capacity of analyzing and specifying the price of stock. Hence, during the process of

taking shape and developing of stock markets, intermediary has become the specific

and basic operating principle in stock markets and step by step, all trade in stock

markets is conducted through intermediary financial organizations, most through

stock companies.

Following The Stock Law number 70/2006/QH11 (reforming from The law

number 62/2012/QH12), stock companies are joint-stock companies, limited

liability companies which are established basing on the Vietnamese rules in order to

conduct trade following licenses issued by the State Security Commission of

Vietnam. Stock companies have permission to do some following trade:

- To mediate stock

- Privately trading stock

- To issue stock

- To advise stock investment

1.1.2. The roles of stock companies

Up to date, the taking shape and development of Vietnamese stock market

have made a significant contribution to perfecting the system of financial market in

Vietnam. These achievements are obtained thanks to the considerable contributions

of stock companies in supporting stock market to develop sustainably, becoming an

effective channel in mobilizing capital and aid to trade stock more quickly and

easily. To comprehend the essence of stock companies for stock markets, we have

to understand the roles of stock company with respect to each individual subject in

stock markets.

5

1.1.3.1. For stock markets

To contribute to take shape and regulate markets

The price of stock is built by markets. However, to have the final price, the

purchasers and sellers must trade through stock companies because both of them do

not involve the stock trade. Furthermore, stock companies also play a role in

advising investment, therefore they always have a capacity for purveying

information about markets and stock price to investors. Specifically, in respect of

the activities of stock trade, stock companies are consultative organizations playing

a role in advancing the beginning price for investors to make bid, thereby

supporting them to make decisions to trade stock.

To contribute to increasethe mobility of financial property

Stock markets play a role in increasing the mobility of financial property and

this role of stock markets can be performed through stock companies. In primary

market, by means of doing activities like consultancy to releasing and bidding,

stock companies not only assist organizations to mobilize capital to expand

manufacturing and trading activities but also increase the mobility of financial

property of investors through mediating trade in OTC markets.

In secondary markets, stock companies aid investors to conduct trade,

thereby assisting them to change stock into money back and forth in an easy way.

Therefore, all aforementioned activities of stock companies help to increase the

mobility of financial property.

1.1.3.2. For releasing organizations

Releasing organizations participate in stock markets with a view to

mobilizing capital through release stock. Accordingly, through several activities like

consultancy to releasing, releasing agents, stock companies play a role in aiding

releasing organizations to mobilize capital successfully in stock markets. Stock

companies is the intermediary organizations supporting to rotate capital from

people/companies possessing capital (investors) to those demanding capital

(releasing organizations).

6

1.1.3.3. For investors

Through activities like mediating, investing consultancy, managing investing

lists, stock companies play a role in decreasing the price and time of trade, thereby

improving the effectiveness of investing capital. For common merchandise,

purchasing and selling through intermediaries are able to increase the expenditure

for purchasers and sellers. Nevertheless, for stock markets, the flexibility of stock

price, as well as high risk can be able to make investors to pay more expense, effort

and time to cull information before making an investing decision. Nonetheless,

through stock companies, highly professional ability can help investors to invest

their capital in an effective way.

1.1.3.4. For market managing agencies

Stock companies make a contribution towards purveying information about

stock markets to market managing agencies and this role is showed through the

fact that stock companies build impressions or papers of announcing information,

handbills when they perform activities like releasing consultancy, bidding

consultancy for releasing organizations. As a result, investors and managing

agencies can have accurate and trustful information and comments about stock

reality and manufacturing activities of releasing organizations, thereby being able

to make decisions. In addition, stock companies are the intermediaries performing

stock trade in stock market, hence stock companies are the organizations

providing information about investors and their business. Owing to this

information, market managing agencies can be able to control and suppress the

sway and monopoly of markets.

It seems that for subjects in stock markets, stock companies have a

significant part in creating the mechanism of capital mobilization, being market

building organizations, making the mobility of stock and contributing to controlling

the stabilization of markets, thereby having a part in promoting the development of

stock markets in particular and the economy in general.

7

1.1.3. Operating models of stock companies

There are two kinds of models of stock companies, including multifunctional

bank company model and specialized stock company model

1.1.3.1. Multifunctional bank company model

Commercial banks operate like subjects trading stock, insurance and money.

This model is showed through 2 forms:

- Total multifunctional model: one bank can directly participate in all

activities of trading money, stock, insurance as well as other financial services

without any individuals. It is also called Germanic-like bank model.

+ One of the advantages of this model is that banks can combine with others in

abundant fields of business, thereby declining the risks in trade activities by

diversifying investment. Furthermore, increasing the withstanding ability of banks in

front of the volatility of stock markets is another advantage of this model. Moreover,

banks can exploit their advantages in trading money with large capital, cutting-edged

facilities, thereby comprehending their customers as well as enterprises when they do

their professionals of granting credit and sponsoring projects.

+ On the other hand, this model has some drawbacks. Firstly, one

disadvantage is that banks bear responsibilities for both arranging credit and

arranging business, therefore the ability of specialization is not as deep as

specialized stock companies. In addition, because there are difficulties in

distinguishing between bank activities and stock trade activities in the

unhealthy law environment, banks easily engender the situation of capturing

markets and then the varies of stock markets have substantial effects on money

trade and the economy.

Because aforesaid drawbacks, after the slump of stock market in the 1929 –

1933 period, most countries utilize specialized stock company model, negligible

countries still apply this model.

8

- Partial multifunctional model: banks having requirementsof stock trade and

insurance have to establish subsidiaries operating apart from money trade. This

model is called British-like bank model.

1.1.3.2. Specialized stock company model

Activities of stock trade are the responsibilities of specialized independent

companies in stock field and banks do not involve in stock trade.

The benefit of this model is to be able to constrain the risks for bank system,

bringing about advantages for stock companies to specialize in the stock field to

enhance the development of stock markets. This model is applied quite ubiquitously

in the United States, Japan, Korea, Thailand and so on.

Nonetheless, because of the growing tendency of establishment of financial

octopuses, some markets allow companies to not only trade currency, stock,

insurance but also establish both conglomerates and subsidiary companies. They

closely manage each other and also operate independently.

1.1.4. Specialist skills of stock companies

Depending on specialist skills of stock companies possessing different levels

of capital, the Decree 58/2012/NĐ-CP stipulated the capital for trading specialist

skills of stock companies in Vietnam, including:

- Mediating stock: 25 billion vietnamdong;

- Privately trading stock: 100 billion vietnamdong;

- Guaranteeing to releasestock: 165 billion vietnamdong;

- Advisingstock investment: 10 billion vietnamdong.

If organizations want to have licenses for many trading specialist skills, the

total capital is the summary of capital.

1.1.4.1. Mediating stock

Mediating stock is the intermediary activity of selling and buying stock for

customers.

9

Mediating stock is the direct activity which creates the image and trade

name for companies, therefore stock companies extremely focus on this activity.

This is an activity of trading stock which stock companies are intermediaries for

selling and buying stock. Stock companies represent customers in the process of

commercial transaction.

Through mediating stock, stock companies purvey many services like

consulting investment, loans with the aim of supporting investors to conduct trade

easily with the lowest expenditure.

1.1.4.2. Privately trading stock

Privately trading stock is an activity of selling and buying stock for

themselves. This activity of stock companies is done through the trading mechanism

in trading floor or OTC markets. The aim of this activity is to have profits for self￾stock companies through trading stock in the markets.

This skill of stock company parallels the skill of mediating, therefore in the

process of doing this skill, there is conflicts about benefits between customers and

stock companies. Accordingly, the rules of countries stipulate that there

arerequirements about discriminating between mediating stock and privately trading

stock. When doing privately trading stock, stock companies have permission to do

this skill through one stock account which was registered with Trading Stock

Department and this department will supervisor the trading activities in a strict way.

Moreover, stock companies must prioritize the requirements of customers over

privately trading stock.

With respect to the skill of mediating stock, stock companies only play an

intermediary role in trading stock for customers with the aim of receiving the

expenditure of mediating stock. By contrast, in respect of privately trading stock,

stock companies utilize huge capital in order to build up the market. Hence, in order

to perform the skill of privately trading stock demands effectively, stock companies

have to possess high-quality personnel to make appropriate decisions in investment.