Culture comparison and culture change case study of ABB vietnam and ABB singapore

Different dominant cultures but same major culture types 2.2.2.. The current dominant culture gains cultural congruence in both countries 2.2.3.. Less cultural congruence for the expecte

VIETNAM NATIONAL UNIVERSITY, HANOI

HANOI SCHOOL OF BUSINESS

HOANG PHUONG NGA

SERVICE RECOVERY FOR VIETINBANK TRADE

FINANCE OPERATION:

SITUATION AND SOLUTION FOR IMPROVEMENT

Major: Business Administration

Code: 60 34 05

MASTER OF BUSINESS ADMINISTRATION THESIS

SUPERVISOR: DR NGUYEN THI PHI NGA

HANOI - 2012

1.2 Cultural layers & cultural diversity

1.2.1 The out layer (Explicit Products/Artifacts)

1.2.2 The middle layer (Norms and Beliefs/Espoused Beliefs and Values) 1.2.3 The core (Basic Assumptions/Underlying Assumptions) 1.3 Sub-culture

1.4 The importance of organizational culture

1.4.1 Coordination

1.4.2 Integration

1.4.3 Motivation

1.4.4 How well can organizational culture do its functions?

1.5 Culture analysis – OCAI method

1.5.1 General about culture analysis methods

1.5.2 Advantages of OCAI method

1.5.3 Dimensions in OCAI

1.5.4 Questionnaire applied in OCAI

1.5.5 Scoring the OCAI

1.5.6 What can be found from OCAI result

1.6 Methodology applied in the thesis

2.1 Introduction about ABB Singapore and ABB Vietnam

2.1.1 Introduction about ABB Group

2.1.2 Introduction about ABB Vietnam (VNABB) and ABB Singapore (SGABB)

2.2 Organizational culture comparison between SGABB‟s and VNABB‟s PP Division

2.2.1 Different dominant cultures but same major culture types

2.2.2 The current dominant culture gains cultural congruence in both countries

2.2.3 Differences in expected dominant culture types

2.2.4 Less cultural congruence for the expected dominant cultures & the inevitable emergence of Clan and Adhocracy

2.2.5 Diversity in expectation of employee groups

2.3 Factors influencing organizational cultures in the two Divisions

2.3.1 The vital role of standardization in ABB‟s operation

2.3.2 Market situation and market orientation in ABB Group

2.3.3 Asian culture – a strong factor supporting for Clan Culture

2.3.4 Adhocracy Culture – an answer to the dilemmas

2.3.5 Business nature & the major sub-groups

CHAPTER 3: RECOMMENDATIONS

3.1 The importance of defining culture profile

3.2 Culture incongruence requires leadership involvement

3.2.1 Leaders are to listen and respect the needs of employees

3.2.2 Vision the future culture to pursuit

3.2.3 Define the culture transformation process

3.3 Visioning the transformation

3.3.1 ABB Vietnam – PP Division

3.3.2 ABB Singapore – PP Division

3.4 Operational change for the cultural change

3.4.1 In ABB Vietnam – PP Division

3.4.2 In ABB Singapore – PP Division

3.5 International cooperation and global resource utilization

CONCLUSION

REFERENCE

APPENDIX 1: VARIOUS CATEGORIES USED TO DESCRIBE CULTURE

APPENDIX 2: ENVIRONMENTAL VARIABLES AFFECTING MANAGEMENT FUCTIONS

APPENDIX 3: DENISON ORGANIZATIONAL CULTURE SURVEY

APPENDIX 4: QUESTIONAIRE SAMPLE

APPENDIX 5: CULTURE PROFILE COMPARISION VIETNAM VS SINGAPORE

CULTURE COMPARISON AND CULTURE CHANGE – CASE STUDY OF ABB VIETNAM AND ABB SINGAPORE

Nguyen Thi Hong Lien MBA Candidate, 2008 – 2010 School of business Vietnam National University, Hanoi Supervisors: Dr Dao Thi Thanh Lam

Hà Nguyên, MBA

INTRODUCTION

Purpose

The thesis focuses on the following points:

- Base on Organizational Culture Assessment Instrument to find out the cultural similarities and differences in the two Divisions in ABB Vietnam and ABB Singapore in terms of dominant cultures, culture congruence, expected dominant culture and factors that drives the needs for culture change

- Define predominant factors that should be taken into consideration for culture change so as to increase business performance

- Give recommendation for cultural change including action plan for each Division

The research scope

There are two defined research scope dimensions in this thesis to distribute a solid analysis and practical recommendation

- The factors to compare between the two Divisions are concentrated on six categories: (1) Dominant Characteristic, (2) Leadership Style, (3) Management of Employees, (4) Organizational Glue, (5) Strategy Emphases and (6) Criteria of Success

- The cultural comparison units are ABB Singapore‟s and ABB Vietnam‟s Power Product Division

Methodology

- The thesis use both quantitative and qualitative analysis, mainly based on OCAI method

- The information is collected from diverse sources: survey, interview, observation, secondary data…

- Details are mentioned in 2.2 Applied method in the thesis

Structure of the thesis

Literature

Review

Culture analysis

in ABB PP Divisions

ABB Vietnam

Applied methods in the thesis

Organizational Culture comparison

Factors influencing the organizational cultures

The importance of defining culture profile

As culture incongruence occurs, leadership involves

Visioning the transformation

Operational change for the culture change

International cooperation and global resource utilization Sub-culture

CHAPTER 1: LITERATURE REVIEW 1.1 Definitions

1.1.1 Culture

According to Geert Hosftede definition, “Culture is the collective programming of the human mind that distinguishes the members of one human group from those of another Culture in this sense is a system of collectively held values.”

1.2 Cultural layers & cultural diversity

Cultures differ from each other in many levels, from absolutely visible points to deeply profound factors Researchers categories cultures into many levels For examples, Fons Trompenaars divides culture into 3 levels which are the out layer - Explicit Products, the middle layer - Norms and Values, the core - Basis Assumptions while Schein categorizes culture into 3 level: Artifacts, Espoused Beliefs and Values, Underlying Assumptions While the two researchers used different terms to categorize layers of culture, there are critical common points in their view

First, about the influences and how easy to realize one layer, the out layer of culture is easy to realize

but difficult to decipher as it is the outcome of deeper layers The deeper of the layer, the stronger influence it has but it is more difficult to be realized When it comes to the core layer, there are few profound assumptions which are taken for granted and decode all the factors in remaining layers

Second, in term of cultural diversity and how can people accept culture differences, the level of

diversity and acceptance varies through cultural layers The diversity in every single layer, then the combination of all the differences in all layers leads to cultural diversity and cultural conflicts also In the out layer, with its apparentness, the layer shows numerous obvious and incoherent differences between cultures and can make a new comer easily feel overwhelmed Luckily, to a certain level, people still can accept these differences when they are aware of that However, to deeper level, even when the differences are figured out

or verbalized, they are still difficult to be accepted as they already became “philosophy”, “rules”, “correct or wrong” in mindset of people This difference in the level is indeed the factor lead to cultural conflicts

1.3 Sub-culture

Many organizations or communities comprise diverse subcultures whose constituents conform only in varying degrees to the community‟s character Therefore, it should be taken into consideration that generalizations in culture profiles will produce only an approximation, or stereotype of community or organization character To have a deeper understanding about an organizational culture, it is necessary to have

an insight about its subcultures as well as their attribution to the organization‟s culture

1.4 The importance of organizational culture

1.4.1 Coordination

A major complementary instrument of coordination is found in organizational culture Two concepts of non-structural coordination mechanism: markets and clans Thereby, markets function through negotiations between demand- and supply-side parties without the need for extensive structural coordination, and clans solve coordination problems by creating an orientation for organizational members through shared values and norms Research into the transformation towards new forms of organizing indicates that cultural programs have the potential to replace the previously existing vertical command and control systems

1.4.2 Integration

Organizational culture can act as a “social glue” to keep the corporation together Organizational culture reminds employees of corporate higher goals, of the big picture In view of the tendency to delegate, decentralize, internationalize, empower, and to rely on trust, this glue that organizational culture represents will assume an even more crucial role in the future

1.4.3 Motivation

A strong system of clear values can endow employees with an appreciation of the value of their work that may often otherwise be lacking due to the extensive separation and specialization of tasks in addition to automation For example, some organizational cultures allow and foster self-actualization through entrepreneurship in profit center structures or implementation of an employee‟s own ideas by providing either additional time or financial resources for their own research efforts beyond the set research plan

1.4.4 How well can organizational culture do its functions?

Culture can be either a vital contributor or a deadly constraint for the organization on the way to

aim at its goals Culture is beneath awareness in the sense that no one bothers to verbalize it, yet it forms the

roots of action This made one anthropologist liken it to an iceberg, with its largest implicit part beneath the water”

Similarly, in an organization, it is easy to see plans, strategies, structure, goals… but they are just the floating part which is quickly changeable However, the sunk part including norms, values, underlying assumptions…which has a total impact on the organization is visible as well as difficult to change Therefore,

a complete change requires both culture and strategy, goals to have correlation with each other

1.5 Culture analysis – OCAI method

1.5.1 General about culture analysis methods

There are various methods to categorize culture because it comprises a complex, interrelated, comprehensive and ambiguous set of factors For examples, Deal & Kennedy proposed a dimension based on Speed of Feedback (high speed to low speed) and a Degree of Risk dimension (high risk to low risk), Ernst argued for People Orientation (participative versus non-participative) and Response to the Environment (reactive versus proactive) while Hofstede focused on Power Distance, Uncertainty Avoidance, Individualism, and Masculinity, then broaden to Long-term orientation

1.5.2 Advantages of OCAI method

TABLE 0-1: COMPARISION BETWEEN OCAI METHOD AND OTHER METHODS

 Focus on organizational culture  Focus on national culture  Focus on organizational

culture

 The first intervention to initiate

change

 Base on competing values

framework that argues each

company can pick up a proportion

among 4 categories as their

strength to deal with internal

integration and external adaptation

 Not mentioned  To explain how

organisations deal with seemingly contradictory or paradoxical goals and demands

 Not only point out the current

culture profile but also focus on

culture change by defining

preferred culture in an

organization

 People become aware of the

current and of the preferred

culture “Where are we now and

where do we want to or have to

go?” This can generate momentum

for change

 Focus on defining only the current culture but not preferred culture

 Point out the current culture profile

 Based on 6 specific categories, it is

easier to predict which measures of

change will turn out to be

effective Management will get

more grips on change

 Resistance to change can be

anticipated, it will not happen

completely unexpected

 Categories are not pointed out specifically to define where the effects come



 It offers starting points to

encourage employees and thus use

their energy and creativity that

leads to more support for change

 It is the basis for a step-by-step,

systematic change plan

 Culture changes are also mentioned but in a form of ideas, not step-by-step

 Not mentioned

 Easy & user friendly form to

survey for a large sample

  More complicated survey to

be implemented

1.5.3 Dimensions in OCAI

Following is the two major dimensions forming the Competing Value Framework:

1 Internal Focus and Integration versus External Focus and Differentiation

2 Stability and Control versus Flexibility and Discretion

The two dimensions create four quadrants each of them represents a distinct set of organizational effectiveness indicators These indicators of effectiveness represent what people value about an organization‟s performance They define what is seen as good and right and appropriate The four clusters of criteria, in other words, define the core values on which judgments about organizations are made What is notable about these four core values is that they represent opposite or competing assumptions Each continuum highlights a core value that is opposite from the value on the other end of the continuum – flexibility versus stability, internal versus external

1.5.4 Questionnaire applied in OCAI

In OCAI method, Cameron and Quinn based on a questionnaire with six categories to capture an organization‟s culture profile The purpose of OCAI is to assess six key categories of organizational culture which are: (1) Dominant Characteristic, (2) Leadership Style, (3) Management of Employees, (4) Organizational Glue, (5) Strategy Emphases, (6) Criteria of Success

The response will produce two independence ratings of the organization‟s culture – one as it currently exists and one as it is wished to be in the future

1.5.5 Scoring the OCAI

Scoring the OCAI based on simple arithmetic calculations As each alternative name A, B, C, D represents each culture type through 6 categories, it is to take the average of each alternative (A, B, C, D) in NOW and PRESENT to capture the organization‟s culture

1.5.6 What can be found from OCAI result

1.5.6.1 Four culture types based on the OCAI method

(1) THE HIERARCHY CULTURE

The significant point in the Hierarchy Culture is a very formalized and structured place to work Procedures govern what people do The leaders pride themselves on being good coordinators and organizers who are efficiency-minded Maintaining a smooth-running organization is most critical Formal rules and policies hold the organization together The long-term concern is stability and performance with efficient, smooth operations Success is defined in terms of dependable delivery, smooth scheduling and low cost The management of employees is concerned with secure employment and predictability

(2) THE MARKET CULTURE

It is easy to see that Market Culture has a result-oriented organization whose major concern is getting the job done People are competitive and goal-oriented The leaders are hard drivers, producers, and competitors They are tough and demanding The glue that holds the organization together is an emphasis on winning Reputation and success are common concerns The long-term focus is on competitive actions and achievement

of measurable goals and targets Success is defined in terms of market share and penetration Competitive pricing and market leadership are important The organizational style is hard-driving competitiveness

(3) THE CLAN CULTURE

Clan Culture can be describe as a very pleasant place to work, where people share a lot of personal information, much like an extended family The leaders or heads of the organization are seen as mentors and perhaps even parent figures The organization is held together by loyalty or tradition Commitment is high The organization emphasizes the long-term benefit of human resources development and attaches great importance to cohesion and morale Success is defined in terms of sensitivity to customers and concern for people The organization places a premium on teamwork, participation, and consensus

(4) THE ADHOCRACY CULTURE

In Adhocracy Culture, a dynamic, entrepreneurial, and creative place to work is what expected People stick out their necks and take risks The leaders are considered innovators and risk takers The glue that holds the organization together is commitment to experimentation and innovation The emphasis is on being on the leading edge The organization‟s long term emphasis is on growth and acquiring new resources Success means gaining unique and new products or services Being a product or service leader is important The organization encourages individual initiative and freedom

1.5.6.2 Dominant culture type in an organization

From Quinn and Cameron‟s extensive research it was found that most organizations have developed a dominant culture-style but an organization rarely has only one culture type Research has shown that strong cultures correspond with homogeneity of efforts, a clear sense of direction, an unambiguous environment and services Conflicts within the Competing Values Framework may be caused by the fact that the values and the corresponding organizational cultures compete with each other This is because organizations can spend their money, attention and time only once

1.5.6.3 Which culture type is the most effective?

The „best‟ organizations can handle competition within this framework well Every culture type works best

in the activities domain corresponding to that particular culture type So sometimes there is no ultimate „best‟ organizational culture, although a specific type may be better than others in particular situations

1.5.6.4 Cultural congruence

Congruence means the 6 aspects are based on the same values, and fall into the same cultural quadrant Research shows that successful organizations often have a congruent culture They experience fewer inner conflicts and contradictions Cultural incongruence will often stimulate an awareness of the necessity of change It will take a lot of time and debate; it leads to differences in values, views, targets and strategies Sometimes the incongruence specifically occurs between different departments or people It may be interesting to assess these separately

1.5.6.5 Discrepancies between present and prefer culture and the need for culture change

Differences of over 10 points are especially relevant and should induce the company to take action This discrepancy yields important information about any desired changes; which direction should the organization move in

1.6 Methodology applied in the thesis

1.6.1 OCAI method

In Vietnam PP Division, the survey was done by 89 employees (22% of the total employees in the Division) In the group, there are 25 people in a managerial position (equal to 30%) and the remaining of 60 people is in staff position (equal to 70%)

In Singapore PP Division, the survey went through opinions of 30 employees (40% of the total employees

in this Division) In the group, there are 7 people in managerial position (equal to 23 %) and the remaining of

23 employees is in staff position (equal to 77 %)

1.6.2 Interview method

The interview is conducted for each group of employees to understand their basic assumptions behind their survey result Here are the key questions to mention:

 Your reason/criteria to have your assessment and expectation?

 Which factor you want to change, why?

In addition to that, there are 3 interviews conducted separately with ABB Vietnam PPTR BU Manager, ABB Singapore PPMV BU Manager and ABB Singapore PP Division Controller to gain an overview picture where it can explain for culture profile in each company

 Your reason/criteria to have your assessment and expectation?

 Your opinion about the interrelationship between the four culture types?

 Your opinion about the role of each culture type in the cultural transformation in your unit?

1.6.3 Other analysis methods

Other methods like using secondary information and observation were also applied so as to get the overall ideas and multi-aspects for one issue

1.6.4 Focused points

This thesis is to compare the culture of the two divisions in respect with the following points:

1 What is the dominant culture and major cultures in each division currently?

2 Do the dominant cultures gain cultural congruence to help the division move forward?

3 What is expected dominant culture?

4 What are emerging cultures?

5 How cultural congruence for the expected culture profile?

6 What is the reason for the changes according to employee‟s perception?

7 What is the factor influence the similarities and dissimilarities in culture between two divisions?

CHAPTER 2: CULTURE ANALYSIS IN ABB PP DIVISIONS

2.1 Introduction about ABB Singapore and ABB Vietnam

2.1.1 Introduction about ABB Group

ABB is a global leader in power and automation technologies that enables utility and industry customers

to improve performance while lowering environmental impact With about 124,000 employees and being close to customers in around 100 countries, ABB is one of the largest conglomerates in the world

ABB Group includes 5 Divisions which are the largest levels Divisions are divided based on their nature

of the products and services they serve The Division has the longest history in the Group is Power Product Each Division has high authority and autonomy in their operation and business performance The next level is Business Unit which based on sub-group of products Under Business Unit is Product Group which is categorized based on either customer or product Each Product Group contains many Profit Centers which is the basis business unit in ABB, in charge for profit

2.1.2 Introduction about ABB Vietnam (VNABB) and ABB Singapore (SGABB)

2.1.2.2 Structure

In VNABB, the most major division is Power Product with the longest establishment while the others are very new (with around 3 years of establishment) Besides, with 75% of ABB Vietnam‟s total headcount, this division contributes the highest proportion in Revenues (more than 80%) and Earnings Before Interest and Taxes - EBIT (more than 70%)

In SGABB, Power Product also plays a major role which mainly serves domestic customers both in production and service like installation and commissioning…

2.1.2.3 Activities in PP Divisions

In VNABB PP Division, the main activity is production of transformers, medium voltages and high

voltages products The Division focuses on export sales activity which leans on other ABB in other countries That means when an ABB company in one country wants to export into another country, it does not export directly but through ABB Company in that country, on its turn, ABB in that country plays the role of marketing and sales to seek for customers and orders Accordingly, ABB in a country usually needs sales activities mainly for domestic sales

In SGABB PP Division, it also has production of transformers and medium voltages products However, the major concern here is not only export sales but domestic sales activity; therefore, the activity is not only

production but also services (like commissioning and installation for after sales) With that purpose, sales and

service activity play a major role in operation and business performance

2.1.2.4 Employee groups and group characteristics

In accordance with business activity and nature, there are main differences between VNABB and SGABB

PP Divisions While in Vietnam PP Division, the high concentration is in the Production (workshop) group with 63% of the total Division‟s employees, in Singapore PP Division, the significant weight is in Sales group with 43%

VNABB PP Division has 4.2 times more employees than SGABB PP Division as it contains 3 Business Units while Singapore includes of 2 Business Units Besides, for production purpose, it requires more employees than for sales and service purpose

2.2 Organizational culture comparison between SGABB’s and VNABB’s PP Division 2.2.1 Different dominant cultures but same major culture types

While ABB Vietnam is under the domination of Hierarchy Culture, ABB Singapore has Market Culture as the dominant one However, Hierarchy and Market play the most major roles in both divisions in present The dominant culture shows that Vietnam PP Division focuses on internal focus and integration with stability and control The Division is a very formalized and structure place to work and procedures, regulations govern what people do The prerequisite conditions for the management are to be good coordinators and organizers who are efficiency-minded as the managerial aim here is to maintain a efficient and smooth-running organization Success is defined in terms of dependable delivery, smooth scheduling and low cost The management of employees is concerned with secure employment and predictability

The second runner is Market Culture (24.8 points) The combination between Hierarchy and Market make their proportion becomes to 60.4 points over 100 That also means 60.4% Vietnam PP Division pays for stability and control, the remaining 39.6% is focused on flexibility and discretion

In comparison with Vietnam PP Division, Singapore PP Division also focuses on stability and control but

it pays attention to external focus and differentiation rather than internal focus and integration

Singapore PP Division is indeed a result-oriented organization whose major target is increasing the market share through satisfying customers The leaders are hard drivers, producers, and competitors Besides, people are held together by the emphasis on winning and get things done is what must be kept in mind

In comparison, Vietnam PP Division focuses more on internal and integration while Singapore PP Division pays attention to external and differentiation However, the major concern in both of the Divisions is stability and control

2.2.2 The current dominant culture gains cultural congruence in both countries

The dominant culture gains congruence in both countries, it means the dominant culture surpasses the remaining culture types in every single of the following 6 categories Accordingly the dominant culture has become the momentum for the organization moving forward Similarly, it is also remarkable to see the cultural congruence for the runner-up in each division