Đề tài How to gradually perfect management organizational structure at Minh Hong Limited Company

he company has invested another line of machines and modern equipments. Therefore, it makes their labor productivity triple and improves product quality. Stable activities of this line helped the company get profit and open a new orientation about production and business activities in the future. The company actively found out partners for joint venture and linking. Their products were appreciated and trusted. After 10 years of development, Minh Hong Co., Ltd always achieves all objectives at a rapid growth. The market of company also continuous expand, before 2003 the company focused on 2 primary markets: Hoa Binh and Ha Tay. But they are now providing goods for more than 10 the northern and the central provinces. 2. Functions and tasks of the company. According to established business decisions, Minh Hong Limited Company is operated by functions and tasks as follows: * Functions: - Production domestic animal feed - Procession of domestic animal feed supplement. - Distribution goods for wholesale agencies, retailer, large or small farm… * Tasks: MHC is a company specialized in manufacturing of domestic animal feeds. The company’s task is production completion and development for meeting the current raising needs. Company has promoted investment, expanded production, renewed equipment and applied new technology in order to improve productivity, product quality. They have been expanding gradually production scale, developing product and market distribution channels and advertising the company’s brand, which make the company to have a strong brand in the Red river delta region. The company continuously improves quality to protect the reputation with the slogan: “only gold quality” and carry out product development strategies to meet the diverse raising needs. They also ensure safety for workers, protect environment and observe the law, fully implement the rights of employees, and participate the public activities in the business process. 3. Features of the company’s product and the market share. * The company’s product: MHC is a company specialized in manufacturing of domestic animal feeds. They provide feed to pigs, chickens and ducks at each different stage of development. Having feeds for piglet from 5 kg to grow-up, domesticated bird and water bird... Looking at the data in Table 1, we see that Company’s product structure is diverse and rich. The product is manufactured as a condensed powder or tablets which are suitable for characteristics of each species and each stage of their development. There are two types of packaging – bag of 5 kilogram each and 25 kilogram each. Company’s products gained credibility in the market with good quality and reasonable price. Therefore, more and more clients come to the company. Table 1: Name some of the company’s products. Product Name Type Using subjects Type of bag MH 521 Condensed Sow 5kg/25kg MH600 Condensed Yellow Chicken 5kg/25kg MH1810 Condensed Porker from 5 kg to grow-up 25kg V70 Tablet Small Duck 25kg V72 Tablet Duck from 2 weeks old to grow-up 25kg VMH801 Tablet Small Chicken 25kg VNH802 Tablet Grow-up Chicken 25kg MH501 Condensed Porker 5kg/25kg (Resource of sales department) * The market share: Although, the company’s market is narrow and mainly in the North and the Central provinces, the turnover keeps rising because the company has gained more customers. Major clients of the company are wholesale agencies, retailer, small, medium and large farms. Company’s guideline shows that good productions isn’t enough to survival and develop, need to know the sales organization. Company has established a potential sales network which is a bridge between production and consumption. By way advertising, Company has signed many contracts. In 2007, only signed 89 contracts but more than 120 contracts was signed in 2008, 2009 with overall worth about VND 4 billions. But in it, there are a lot of small contracts. Specifically, the projects which provide feed for the mountainous districts of Hoa Binh province, the remote districts of Thanh Hoa province or some small farms in Ha Tay province. Diagram 2: Network of the Company’s product consumption Retailer Wholesaler Agency Retailer Consumer Manufacturer (Resource of sales department) In current years, domestic animal feed industry has developed with fierce competitions. More and more domestic animal feed has been imported from China. Although, company has improved many product designs and product qualities, the company’s product consumption has reduced. Finally, they must improve product quality, cut the good’s price in order to increase the competitiveness of companies in the market. 4. Results of the company’s business production activities from 2007 to 2009. Basis norms of the company’s business activities at table 2 are considered encouraging. They reflect a strong, stable and advanced growth. The company’s position has been strengthened. The turnover was worth VND 3.306 million in 2007 to VND 3.518 million in 2008, VND 212 million increase - equal to 6.41%. This is a good signal for the company. With increasing turnover, the company also must enhance more total capital. But, we can see that turnover’s annual growth rate is greater than total capital’s annual growth rate. In 2008 as compared to 2007, total capital increase is 5.68% which is lower than turnover by 6.41%. And it continuously increases when we compare the data in 2008 with that in 2009. Total capital only raises by 6.61% but turnover raises by 13.18%. It seems that the company has invested in the right direction and managed resources efficiently. Table 2: Results of the company’s business production activities from 2007 to2009 Year Norms Unit 2007 2008 2009 2008/2007 Comparison 2009/2008 Comparison Absolute number % Absolute number % Turnover Dong million 3306 3518 3982 212 6.41 464 13.18 Total capital Dong million 5542 5827 6212 315 5.68 385 6.61 Profit Dong million 315 340 420 25 7.9 80 23.5 Average Income Dong million 0.9 1.0 1.2 0.1 11.1 0.2 20 Number of employees person 46 53 70 7 15.2 17 32.1 (Resource of sales department) In 2007, the company’s profit is VND 315 million, VND 340 million in 2008. In 2009, growth rate increased by about 23.5% as compared with that in 2008. The company’s annual profits are re-invested. When the re-investment is efficient, the company’s profit is not only in these numbers. Number of the company’s employees is continuously growing year by year. Total workforce of the company - in 2008 as compared to 2007- increases by 7 people - equal to 15.2%. 2009 as compared to 2008, the company added more 17 people equal to 32.1%. In 2008 and 2009, the company has recruited more workers to positions at the offices and workshop. The number of the employees is increasing; each employee’s average income is also rising. An employee’s average income is VND 0.9 million in 2007, VND 1 million in 2008 and VND 1.2 million in 2009. Every year, the worker’s salary always rises timely in order to help them to meet with the increase of consumer price. II. Real situation of management organizational structure at Minh Hong Co., Ltd. 1. Management organizational structure at Minh Hong Co., Ltd. 1.1. Overview of Company’s management apparatus. Looking at the organizational chart of the company’s management, the company’s organizational structure was organized according to the online-function style. Director is the highest person at the company and he is assisted by two vice directors and the functional departments. The production part is workshop. Every part undertakes the different tasks and functions at the company. a. Management people. The company’s leadership includes 3 positions as follows: - Director: Director, who has the right to make decisions, is the highest executive in the company, the company’s legal representative and takes responsibility before the law for the company’s entire production business activities. He establishes business co-operation and production plans, development strategy, annual business plans. He builds and organizes appropriate management apparatus to deal with the needs of the company’s production business. Diagram 3: Structure of management organization at MHC Director Vice-director of technique Vice-director of business Planning Department Sales Dept. Administrative Department Technology Department Accounting-Finance Department Workshops - Vice director of business: Helping director to operate the company’s field of business, such as: consumer products, search market, business strategic planning…and responsible to report the Director the task performance which he is assigned. - Vice director of technique: managing and operating a number of areas of technique, science, technology and environment, labor protection, industrial hygiene, quality assurance. Helping the director carry out plans and directly supervises business activities at workshop. b. Functional Departments. There are 5 functional departments at the company: * Technology Department: - Organizational structure: including 2 persons. There are a senior clerk who is responsible for the material, labors productivity and product quality assurance. An employee who is a technician at the production teams, monitors supplies, machinery. - Functions and Tasks: Giving advices to Director, managing technical field, recommending the director technical solutions, regularly repair and assess product quality. Researching and creating new techniques and the optimal production process to enhance the production efficiency. They are responsible to guide workers about improvement and apply science to production. - The use of staff: There are 2 employees who are graduates from specialized technique course; suitable for its function. Number of employees is reasonable, but no one has university degree. - Department’s relationship: Coordinating with accounting department to set up prices, norms for consumable materials and liquidate material in excess. They must report to Technical Director and Director about the problems to be solved timely. This is a good management method to save fuel, reduce production cost. It helps to reduce cost to enhance company’s competition. * Planning Department - Organizational structure: including 3 persons. There is a senior clerk, a staff who is in charge of statistic and production temperate, a staff who will supply materials, entry raw materials into the warehouse to serve production process and also export raw materials for workshops. - Functions and Tasks: They work on designs, material reserve, cost estimates, the main and auxiliary material, purchase supplies, open management and monitoring book. General reports on production progress and implementation monthly, quarterly, six months, even years plan. - The use of staff: There are only 3 persons who have college degree. When the workload is too much, staff must work very hard and overtime. * Finance and Accounting Department - Organizational structure: including 3 persons who are arranged as follows: a senior clerk, a staff who gets the blame for price, wage payment, social insurance, payment materials and a staff who will pay Bank debts, hold cashier. - Functions and Tasks: They are in charge of the cash flow flexibility, timely, accurate. They are responsible for all things which are related to the bank: bank credit, periodic reports preparation, working with tax authorities, statistic, social insurance, and bank debt and the employee’s salary. - The use of staff: On the whole, the sort of staff position relatively fit to the department’s function and task. One staff has a university degree, and two staff who are graduates from a college. - Department’s relationship: On the basis of labor norms of the technical department, planning department, sales department, financial department to determine product prices, cost of raw materials, employee’s salary. They analyze profits and loss, and then they frequently report to the director. It makes the company to allocate production cost more reasonably. * Administrative Department - Organizational structure: There are 2 persons, a senior clerk and a staff. - Functions and Tasks: giving an advice to the Director on the company’s administrative organization, making proposals for arranging, organizing management apparatus, production organization, making inventory, handling internal, investigating and solving the employee’s complaints and letters of denunciations, doing paper work, office service. - The use of staff at the administrative department is reasonable. * Sales Department - Organizational structure: There are 5 persons, including: a senior clerk, two staffs who make short and long term business plans, sign business contracts, and carry out accounting business regime. Two staffs are business agents who search for new markets to sell the company’s product. - Functions and Tasks: to be in charge of setting up short - and - long - term business plans. They must report to director about turnover, cost, and transactions performed, purchasing negotiations and supply of raw materials, product consumption. Director will approve, monitor, check and evaluate the implementation results. Managing product which is sold through wholesale agencies and retailers - The use of staff: Sales department are run by 5 people, 2 people have graduated from university, 2 others have had college degrees, and one has graduated from vocational school. Arrangement of employees is not reasonable because of not much work to be done. They should transfer an employee to make clerical staff. c. Workshop. Foreman is responsible to director for all activities of the company’s production unit. There are 3 management staffs in the workshop. Including: Diagram 4: Management apparatus of the company's workshop Foreman Technician Statistic staff Taskmaster Production team No 2 Production team No 3 Production team No 1 - A foreman will base on the company’s production plan and co-ordinate with other departments in order to prepare the manufacturing conditions, such as: full materials and working clothes. Then, he needs to re-check to ensure facile work. - A taskmaster will co-ordinate all technicians operations to directly inspect and guide technically at the production and management of machinery, supply process. - A statistic staff helps foreman monitor number of daily labor and each labor’s productivity. This is the basis for pay salary and insurance for worker at the end of the month. 1.2. General Assessment: Relationship between levels in this system is the vertical relationship and this arrangement has advantages as follow: - Helping director understand the company’s activities - All departments of the company are directed by the Director, the company’s business production activities is united. - The board of management controls all company’s activities. Therefore, work quality’s assessment and inspection must take place clearly, equitable. - Enhancing the responsiblity of individuals because each level only performs the superior’s order. - The orders are implemented faster; it is easily to perform the one-superior-in-charge regime - This type of structure allows senior clerk may issue orders (which related professional) to the workshop, production teams. However, this structure has exposed some weaknesses as follows: Firstly, Director must handle too many tasks and manage all units at the company. So, director’s assignment is too heavy while the other departments’ assignment is too simple; it makes the department not proactive when they carry out their task. Secondly, it takes departments a lot of time to deal with information. It is unable to promote initiatives and improve technology. Finally, the company doesn’t organize well the management apparatus. They don’t assign responsibilities and powers between the parts of the management apparatus clearly, accurately. 2. Present situation of business activities. 2.1. Machinery and Equipment: From the start of operation until 2003, the company’s good were produced by an obsolete, low productivity machines line. Company had to spend more money to repair and maintain machinery. Table 3: Machinery and Equipment No Name of machinery and equipment Quantity Value (dong million) Origin 1 Condensed bran production machinery 2 (line) 1400 China 2 Material drying system 1 200 Vietnam 3 Conveyor 2 40 Vietnam 4 Rounding bran line 1 (line) 1300 Denmark 5 Product packaging line 1 (line) 460 Germany 6 Truck(1.25 ton) 4 866 Korea In 2008, the company buys a model condensed bran production machinery and a truck (1.25 ton). It makes capacity to increase 3 times and increase labor productivity. 2.2. Raw material: Minh Hong Co., Ltd is a domestic animal feed manufacturer; the company’s major material which the company use in the business production activities is a product of the domestic agriculture. The company’s raw material is very diverse, such as: corn, sweet potato, cassava, rice, fishmeal, meat powder, bone meal, organic mineral, enzyme, acidamin, and vitamin, antioxidant…The raw materials don’t bring high value, about 50% as compared to finished product value. Companies should have a plan to built raw material areas, agree and sign with the districts on that plan. Companies will buy their raw material and they will also use the company’s domestic animal feed. 2.3. Features of Capital. Table 4: The capital structure of MHC from 2007 to 2009 Unit: Dong million Years Norms 2007 2008 2009 2008/2007 Comparison 2009/2008 Comparison Quantity % Quantity % Quantity % Absolute number % Absolute number % Total capital 5542 100 5827 100 6212 100 315 5.68 385 6.61 Divide on the ownership Owner capital 3765 68 3829 66 3902 63 64 1.7 73 1.87 Loan 1777 32 1998 34 2310 37 221 12.4 312 15.6 Divide on the natural Fixed capital 3954 72 4053 69 4158 67 99 2.50 105 9.97 Liquid capital 1588 28 1774 31 2.054 33 186 11.7 280 15.8 (Resource of sales department) Looking at the table 5, it showed that the company’s business production activities have been efficiency for 3 years. Especially, amount of capital which has been invested in business production activities tend to increase every year. Amount of capital is VND 5542 million in 2007 but in 2009 this number has increased about VND 6212 million. This is a good signal; it shows that the company actually has the expansion in production. Invested capital rate continuously increased 3 years ago. In 2008 compare to 2007, invested capital rate raised 5.68% about VND 315 million. But, invested capital rate in 2009 compare to 2008 increased VND 385 million approximate 6.61%. We can assert that the company had a major step in the competitive economy market. Basing on the capital structure which is shared by the owner, we can clearly see that the company has a good managing and mobilizing capital ability. Amount of annual owner capital tends to reduce; while amount of annual loan increases. However, the loan rate only occupies more than 35% of the company’s total spending capital. It is also said that the Enterprise’s capital management and using are quite efficient. The company has known taking full advantage of external resources. They increased the amount of loan to invest in production and business. But, if they abuse excessively loans, it would sometimes be counterproductive. In addition, if amount of loan’s density is too large in the capital structure, it will make the company remain passive in the use of capital. And when they borrow too much money outside, they will not be able to repay. Therefore, companies need to research these two funds reasonably. When capital is divided on the nature, it means that there are two types of capital: Fixed capital and liquid capital. Generally, both types of capital have increased year by year. In 2007, fixed capital is VND 3954 million, in 2008 fixed capital increases by 2.5% about VND 4053 million, in 2009 fixed capital continuously increases about VND 4158 million and make up more than 65%. Liquid capital rate increases in 2008 higher than that in 2007, and in 2009 about VND 2054 million, approximately 33% as compared to the total capital. 2.4. Production process: Companies have many different products to serve for the needs of domestic animal feed. The raw materials must go through 4 main stages to become the finished products. Diagram 5: Production process of the company Raw Material Selected Dried Crushed Mingled Finished Product Process Packaged Stored 2.5 Features of Personnel. In the management, production and business, the staff’s quality and capacity are extremely important. It will affect the success and failure of organizations. So, leaders must have real ability and professional ability. Looking at the table 5, it shows that labor management college degrees have the highest rate at the company (11 people). Number of managerial staff with university degrees only half the one with college degrees. But, managerial staff with university degrees rate was higher than that in previous years. It means that managerial staff’s quality continuously increase year by year. However, the company should reduce the number of employees in some such departments as: sales department, accounting and finance department…in order to avoid unnecessary costs. Number of employees has increased rapidly. With 46 people in 2007, but in 2009it increased nearly doubled - 70 people. Total direct employees (workers in the workshop, the drivers’ team, and guards) have graduated high school. Because, this is a company which produces domestic animal feed, the direct employee rate is often quiet high. Table 5: The personnel structure of the Minh Hong Co., Ltd Years Norms 2007 2008 2009 2008/2007 Comparison 2008/2009 Comparison Quantity % Quantity % Quantity % Absolute number % Absolute number % Total Staff 46 100 53 100 70 100 7 15.2 17 32.1 Direct Labor 37 80.4 42 79.2 52 74.3 5 13.5 10 23.8 Indirect Labor 9 19.6 11 20.08 18 25.7 2 22.2 7 63.6 Sex Male 25 54.4 29 54.7 40 57.1 4 16 10 34.5 Female 21 45.6 24 45.3 30 42.9 3 14.3 7 29.2 (Resource of administrative department) III. Assessing Reality of management organizational structure at MHC 1. Achievements. - The company's Organizational structure has been applied according to style of online-function. So, there are many advantages in the management organization and strong relationships have been created between departments and workshop. This type of structure takes full advantages of the online structure and the functional structure. It created a contact channel in a straight line and relationships between departments and workshop. And, when the leader gives an order, to be able to avoid confusion, mistake. - According to the functional departments, Vice-directors can monitor the business production activities (which were assigned by director) then they must report to the director about results. - The company’s organizational structure has changed gradually and perfected to keep pace with the trend of development of economies for few years. - In recent years, the Company’s leaders have been facing problems in actual situation of the company’s production business activities, motivating the production units on the occasion of major holidays. Companies always meet the consumer’s need, minimize the risk of labor. - The production organization has much progress; company has signed many contracts for quick delivery. Most of contracts have achieved in term of quality and standards. In order to achieve that, the company has worked well as follows: + Changing weekly-reviewing regime to daily-reviewing regime at the board of directors and the important departments. Maintaining daily report regime and continuous appreciate weekly and monthly production plans which are of high quality and close to reality. Detecting and focus on the delay in production to overcome. + Investing to upgrade the accuracy of the production devices by the control system, maintaining regularly to stabilize the quality of the company’s equipment. + Companies also constantly strive and create a strong position in the production of domestic animal feeds market. The company’s annual turnover continuous grow and proportional to the increase of the worker’s average income. So, it makes employees get more involved in the Company and helps the company become more viable in the market. + The functional departments and workshops carry out their function and task very well. They always have a sense of responsibility at work and are appreciated. The equality bet