Ineffective internal communication of importing process in Srithai Limited Company

UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business NGUYEN THI THUY INEFFECTIVE INTERNAL COMMUNICATION OF IMPORTING PROCESS IN SRITHAI LIMITED COMPANY MASTER OF

UNIVERSITY OF ECONOMICS HO CHI MINH CITY

International School of Business

NGUYEN THI THUY

INEFFECTIVE INTERNAL COMMUNICATION OF IMPORTING PROCESS IN SRITHAI LIMITED

COMPANY

MASTER OF BUSINESS ADMINISTRATION

SUPERVISOR: NGUYEN PHONG NGUYEN

Ho Chi Minh City – Year 2018

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Table of Contents

EXECUTIVE SUMMARY 3

CHAPTER 1: BACKGROUND INFORMATION 4

1.1 Company background 4

1.2 Company symptoms 5

1.2.1 The method of scan symptom 5

1.2.2 Justify the importance of symptoms 5

1.2.3 General symptoms 6

1.2.3.1 The first symptom: Low Customer’s satisfaction 6

1.2.3.2 The second symptom: Gross profit decreases 9

1.2.3.3 The third symptom: High failing projects rate 10

CHAPTER 2: PROBLEM IDENTIFICATION 11

2.1 Methodology 11

2.2 Identifying and Diagnosing Tentative Problems 11

2.2.1 The first tentative problem: Ineffective internal communication 14

2.2.2 The second tentative problem: Weak leadership 18

2.3 The real problem: Ineffective internal communication 22

2.4 Problem definitions of ineffective internal communication 25

2.5 Verifying the importance of ineffective internal communication 26

2.6 Verifying the existence of ineffective internal communication 27

2.7 Causes and Effects chart of real problem: Ineffective internal communication in Srithai Vietnam company 29

CHAPTER 3: ALTERNATIVES ANALYSIS AND POSSIBLE SOLUTIONS 31

3.1 Verify causes of the real problem 31

3.2 Main cause of the problem: weak individual leadership 34

3.3 Possible solutions 37

3.3.1 Solution 1: Applying ROFO principle in office departments in Srithai Vietnam 37 CHAPTER 4: ACTION PLAN FOR SOLUTION 39

CONCLUSION 43

SUPPORTING INFORMATION 44

REFERENCES 75

APPENDIX 77

EXECUTIVE SUMMARY

The thesis writes about improving internal communication of importing process in Srithai Company The essay focuses on main area office departments In specific, there are Plastic sales department, Purchasing department and Finance department The main process is followed during essay is importing process related main products of Material Handling Equipment (MHE) In specific, MHE products have been traded since 2016 and reached high overcome in 2017 However, report of finances about net profit of this group presented to decrease In addition, the analyses later of customers’ satisfaction and failing project rate also showed negative Therefore, the thesis will focus on analyze these issues and figure out what is the main problem of these things through the data from company and from some qualitative research Not only that, this thesis will evaluate and raise the most suitable solution as well as detail actions plan for solving problem And as finding from the research, the main problem leads to decline bottom profit of MHE group is ineffective internal communication This

problem does exit due to low motivation employees, weak teamwork skill, different language and weak individual leadership Those causes have built a bad culture for working in company Hence, it is suggested that company should apply ROFO

principles to encourage internal communication system in company More than that, it helps to build new culture, create facilitate working environment for employees

Srithai has more than 20 year’s experiences in Viet Nam with 46 Injection Machines and 20 Compression Machines The capacity is plastic 2.500 Tons/year, beverage 8.000 Tons/year, household 500 Tons/year

Srithai is one of the leading manufacturers and distributors of three products group below: Industrial Plastic Product, Food & Beverage Packaging and Melamine

Tableware They do business with huge giant in plastic industry such as GS battery, Pinaco, Suntory Pepsi, Sapporo, Jotun, etc…

The business vision of Srithai Vietnam Co Ltd is using quality products and services

to achieve customer's complete satisfaction, thereby ensuring company profitability and sustained market growth

1.2 Company symptoms

1.2.1 The method of scan symptom

The research started from researching KIP of Plastic sales department There are five group of products such as Original Equipment Manufacturer (OEM), Material

Handling Equipment (MHE), Paint Pail, Cinema and Promotion This thesis focus on Material Handling Equipment group The main products in this group are plastic pallet and container Both of them are imported from Srithai Superware Thailand, Mother company Srithai Vietnam started to trade imported products from Mother company from June 2015 However, it reached first customer in half of year 2016 after a year approached MHE group reached target in 2017, however, the data analyses show bottom profit is lost It raised many meetings between Sales, Purchasing and Finance department from early year 2018 for finding reasons, corrective actions and solutions

On the other hands, there is big gap between sales budget and actual revenue in half year 2018 This issue is not only happened with MHE group but also another groups Moreover, sales budget was forecasted based on actual sales 2017 and customer

forecast in 2018 That raised two questions for board of manager First question is why sales forecast in 2018 is too different from actual return Second question is plan of quarter three and four to cover back for decreasing of revenue in first half of year

2018 Thus, the research starts from the history data such as sales report, profit report and customer’s satisfaction survey report, references from sales, finance and ISO department

1.2.2 Justify the importance of symptoms

A business runs because of many purposes Goldman et al researched that

“the business organization is a part of society and exists to serve and advance

society”(1) It could be said that the original purposes of business are continuously to produce goods to supply for society; simultaneously, non-stop learning, improving and driving society go advanced On the other hands, Goldman also explored modern theory that the primary purpose of organization is “realizing a sustained long-term profit, thereby maximizing return on investment for shareholders and investors”(1)

of the new development will possess a competitive edge and those who are slow to adapt or oblivious to these changes are doomed to mediocrity or, at the worst,

complete failure

When profit of company reduces, immediately it impacts on whole activities of

enterprise Which reasons lead to decrease profit? If business is not timely to find out and solve it, business may not survive in non-stop changing environment today

Otherwise, it could be said that customers are who bring value to company Without customer company will not survive Therefore, many companies invest very much money to find customers ‘need and their behaviors and make them happier Thus, customer ‘satisfaction rate is significantly vital to company There are many signals to indicate company that where it is position Which are its strengths and weaknesses Most of improvements will base on customers’ behaviors

On the other hands, Dawson also emphasized the importance of organization’s

knowledge capabilities Its ability to process the changing competitive and market environment By stating that “Effective Real-time development and implementation of strategy – which is essential for organizational success – depends completely on the organization’s knowledge capability”(2) Thus, it can be implied that an organization

is only as good as its knowledge capabilities Any improvement should base on

knowing clearly about knowledge capabilities of company

1.2.3 General symptoms

1.2.3.1 The first symptom: Low Customer’s satisfaction

Figure 1: The average customer’s satisfaction in 2017 and 2018 of importing

products group

Source: Customer’s satisfaction index report 2018, ISO department

ISO department will conduct a survey about customers’ satisfaction in middle of year The survey has been concentrated on four main points First point is about quality of products Second point is about service after sales Third point is delivery service Final point is salesman’s knowledge

Srithai has traded import products in two years from 2016 to 2018 The survey has also conducted for two years The chart above shows results that customers are quite

satisfied with quality of products, after delivery service and salesman’s knowledge However, they have been disappointed with delivery service of company with 45% and 50% in 2017, 2018 respectively In specific, Srithai delivered products on time 30 orders in amount 91 ones in 2017, 10 orders in amount 38 ones in first two quarters in

2018 Most of late delivery orders are related to projects

such as project to supply pallet to Suntory Pepsi, MM Mega Market, Nestle, Mondelez Kinh Do and provide container to Big C, Pharmacity and Bach Hoa Xanh, etc

Quality of product Delivery After delivery service Salesman's knowledge

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Moreover, the average late delivery is 7 to 20 days In fact, delivery is late 7 to 20 days

is normal in import field However, lead time of import products is 30 days from releasing PO is included estimated how many days be delayed In addition, Srithai has lead time delivery highest compare with its competitors in this industry

Figure 2: Delivery lead time of Srithai, Dino and Platinum

Source: Internal meeting minutes of Sales department in January 2018

0 5 10 15 20 25 30 35

Delivery Lead time

1.2.3.2 The second symptom: Gross profit decreases

Unit: Million VND

Figure 3: Sales and %Gross Profit of Plastic Business Quarter 1, 2 in 2017, 2018

Source: Finance report in July 15th 2018

The figure 3 shows the big gap between revenue of quarter one and two in 2017 and

2018 Moreover, actual sales in half of 2018 significantly different from forecast in beginning of year 2018 In specific, sales and gross profit of import products group also same trend with sales and gross profit of plastics business in 2018 and very low compare with 2017 (Figure 4)

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Figure 4: Sales and Gross Profit of import products group quarter 1, 2 in 2017,

2018

Source: Finance report in July 15th 2018

1.2.3.3 The third symptom: High failing projects rate

Pallet and container are main product of Material Handling Equipment group They are usually sold as a project There are many failing projects in half of year 2018 The rate of failing project is higher than 2017 We have failed fifty percentage of projects with old customers We lost some main big customers as ABI Bev, MM Mega Market, Suntory Pepsi to competitors NPC Toda and Long Thanh company In addition, some daily customer as Kureha and SABMiller company have stopped ordering because

price is too high compare with price of market Moreover, every month MHE team approach average five new customers and they are seemly got stuck in low pricing

process such as Asia Saigon Foods with volume 10,000 pcs plastic pallet

Speed of sending quotation and lead time of Srithai Superware to too low compare with its competitor such as Platinum, Dino, etc While Srithai Superware has taken a week for making quotation its competitor as Dino just need twenty-five minutes

(sources: meeting minutes of sales department in March 2018) Moreover, about lead time of delivery, Dino has just taken fifteen days while Srithai needs near forty days

In fact, it doesn’t have official commitment import process between Srithai Vietnam and Srithai Thailand Therefore, it is very hard to follow orders and solve problems when they have come

CHAPTER 2: PROBLEM IDENTIFICATION 2.1 Methodology

In order to finding the real problem, there are four researches will be conducted depth interview is suitable for this case because number of employees in sales,

In-purchasing and finance under thirty people Moreover, depth interview with advantage that the interviewer has many times to probe and obtain in-depth responses since

respondents tend to express themselves more freely In addition, it has been selected because interviewer can capture emotions and behaviors of respondents to find down if they are telling the truth or interviewer can change the way they conduct the interview

if the respondent expresses their uncomfortable with the interview

2.2 Identifying and Diagnosing Tentative Problems

Depth interview 1

Purpose: The research focus on MHE group consisted plastic pallet and container those in imported from Thailand There are three specific purposes:

 Which reasons make profit decrease in period 2017 and 2018

 Low customers ‘satisfaction in period 2017 and 2018

 High failing project in in period 2017 and 2018

Method: Qualitative research- In-depth interview

There are three people who are chosen to join interview because they are manager and they are work in Srithai more five years They know very well activities of Srithai Viet

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Nam from its policy, style of boar of director management and employees’ ability Nevertheless, they have many relationships in company and Mother Company in Thailand They have overview knowledge of Srihai Company

The depth interview will be taken from July 27th, 2018 to July 30th, 2018 with three respondents from three departments in Srithai Vietnam as below:

Table 1: The first depth interview arrangement Research findings

How long have you worked with Srithai Company? How do you feel about its working environment? Prompts: support policy of company, style of managers, attitude of employees in working, etc

All respondents have been worked in Srithai for five years Therefore, they have many experiences about Srithai such as relationships, management and its policy Most of people said that Srithai have slow working transaction and weak caution system Ms

Le showed that “workload is quite slow; it has not prevented problem before it

happens” In addition, respondents agree that management of company is weak, “I saw that there is not specific person who responsible for specific problem The faults often belong to group Therefore, the policy of appraisal and punishment is weak It does not support for fair and improvement” Ms Le said Moreover, Mr Puripong Pinanong told that “Srithai company do not empower well to employees Therefore, they do not active in their job Employees tend to finish their job; however, they are not care much about colleagues’ job”

It could be said that there are three main points of working environment of Srithai company First point is low working load so that it does not much pressure on

employees Second point is weak leadership of board of manager Therefore,

employees are not empowered then they are not active in their job Third point is low spirit supporting between employees Three points show a working environment in Srithai company is not healthy Arguably, the working environment within an

organization is a fruit of the organization culture, so it can be said that organization culture is a key in ensuring the successful implementation and maintaining of a

learning organization, among other strategies It constrains development of company According to report of half year 2018, Company is reducing profit in 2017 and half of year 2018, especially, importing plastic group In your opinion, what are the reasons that make importing plastic group get loss in a year and half?

Most of candidates indicated that Srithai company got lost because it did not control cost effectively Mr Puripong Pinanong and Mr Thanh agreed that company got lost

in period 2017 and first half 2018 because “in-put is too high and cost of transportation also high” Ms Le also said “salesman sold price lower than break-even”

Sales and purchasing department did not cooperate well then, they did not update information together timely Therefore, there are many times salesmen sell products under break-even The jobs of purchasing and sales department is overlapped

together Mr Puripong presents that “importing process runs too low so that they do not get earlier in-put price to make selling price to customers in Vietnam market Therefore, most of cases salesman based on historical data to make quotation to

customers However, in-put price may change because of price of raw material

change”

On the other hand, purchasing department did not provide enough and timely in-put information to sales department Finance department also supplied analysis after any deals has done Finance departments, they did not join in making quotation and raise caution for sales department There are many points show that the communication between departments are not fluent

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According to customer’s satisfaction report 2018 of ISO department, it is not good, especially delivery on-time rate is just fifty percentages It is too low Do you think that and what is your opinion about reasons lead to this problem?

Sales manager and purchasing manager both agreed that delivery on-time rate is just fifty percentages is very low and the main reason lead to this issue is “complicated import process” There is very low transaction between Srithai Vietnam and Mother Company Mr Puripong shared that besides external reason such as trading pallet and container depend on season The need is high in end of year So, it makes to capacity

in Mother company’ factory so tight He also indicated that “process importing is complicated and take time It wastes of us much time to get in-put price, delivery Consequences, it impacts seriously to our advantages competitive in the market” There are also three characteristics of importing process in Srithai Vietnam Firstly, in-put information as price, cost between Srithai Vietnam and Mother company is

unclear Mr Puripong said that “Mother company do not have frame of price to us” It

is hard to have constant frame of price because price depends on price of raw material, resin, in plastic industry Secondly, salesmen make quotation based on historical data instead of based on current data Therefore, in-put price may wrong That becomes risk

of in-put logistics lead to lose profit Moreover, it also puts salesmen in dilemma situation between demand of customers and company Thirdly, cooperating between sales department, purchasing department and finance department is not fluent

Consequences, each link of importing chain is not controlled effective

2.2.1 The first tentative problem: Ineffective internal communication

Initial cause-effect

Initial cause-effect map was draw base on face-to-face interview three people, sales plastic manager, finance manager and purchasing manager

Complicated quotation In fact, importing process begins with asking quotation from

Mother Company However, it has taken long days to get it Moreover, salesman need information to send to customers Therefore, they often use historical data Otherwise, buying price may increase or decrease follow resin price, currency exchange rate and

policy of Mother Company In addition, the approval buying price has come from higher bosses in Mother Company and the person in charged did not know information

to follow The selling price fitted when Srithai Vietnam get success projects and the buying price also fitted when the boss approved However, buying price has come in importing process is different, often higher than approved price Consequences, first step in importing process meets vague information lead to loss profit and unclear who

is in charged and responsible for this job that is also unclear job description

Slow transaction Slow transaction is the weakest in importing process The cause leads to slow transaction is employees unclear process Job of sales department and

purchasing department often overlap together That is a main reason make lead time delivery last longer around ten to twenty days Srithai has paid more money for

breaking delivery term condition in contract with customers Moreover, company lost much money because of customer’s services In specific, when products came late, company had to borrow wooden pallet for customers keep their raw material or goods

or we paid fee for keeping them in container in the port because it could not unload without plastic pallet with hygiene customers Another experience is we had to ship

by trucking from Amata industrial park in Norkon to Hung Yen province in Vietnam because of late delivery It costed three-thousand-dollar compare with one hundred fifty-dollar ship by sea That became legend lesson in company in 2017 That is reason most customers are not satisfied with Srithai Company Finally, slow

transaction lead to last importing process, therefore, increasing cost very much suffer

seriously bottom profit

Ineffective control cost The management in company is quite weak First thing is

finance raise caution that company get loss when it has already happened Second thing is purchasing department in Srithai Vietnam could not communicate well with exporting department in Mother Company Third thing is sales department does

process from asking quotation and negotiate price by themselves without support from purchasing and finance department Thus, three departments work separately lead to failing project rate is high in 2017 and half year in 2018

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Relationships between departments are not good It could be seen that

communication system in Srithai is ineffective both sides internal and with Mother company Firstly, the main route contact stuck between purchasing department and exporting Thailand Thus, they have gotten information slowly such as quotation, booking vessel, importing document, estimate delivery date, etc That leads many mistakes in making selling price, confirming delivery date with customers in Vietnam Therefore, it suffers strongly commitment between sales and customers More than that, it affects really to company reliable Secondly, communication in company is too low The departments work separately, therefore, lead to shortage useful information

in controlling cost They will finger point when problems come and no single

responsibility for specific job that exist long time in Srithai culture

Ineffective

internal

communication

Complicated quotation process

Slow transactions

slow importing process

Ineffective control cost

Relationships between departments are not good

Unclear process

Failing project rate is high

Gross profit decreases

Low customer’s satisfaction

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2.2.2 The second tentative problem: Weak leadership

Updated cause-effect map

There are many previous studies present that effective internal communication

impacts strongly to enterprises (3) Internal communication is seen blood of

organization In specific, it connects and guides each member in enterprises follow one goal that is maximum profit and success Moreover, it creates good working environment for all employees Therefore, ineffective internal communication affects significantly to successes of business

It could be said that ineffective internal communication has closely relationship with weak leader According Holá, J “the comprehensive content of internal

communication is realized within leadership” (4) Moreover, Bucata, G., & Rizescu,

A M presented that managers play a role as leaders in company, they spend 45% of time for communication with teammates, 45% of time for contact other colleagues in company, rest of 10% of time for connect with their boss (5) Thus, it could be said that roles of leaders are very vital in communication chain in organization They can take initiative in creating information that is impact directly to business

In many previous researches show that employees are the most important asset of company No matter what you have the best strategy, rich capital, you could not be successful with weak human resource Zondi et al., described that the office life today

is very contrasting of before (6) Company work with less employees, longer working time, and more workload Moreover, the performance gets more attention for appraisal than before Thus, employees’ life meets more pressure On the other hand, Zondi showed more information that lack of trust among employees within business often happens (6) It comes from mistakes of management Therefore, they could not find believable channels to share information Consequences, the right information cannot come to right people Effective outcome of internal communication is not good that impacts seriously to working of organization as well as its success

The research of Garg, A K., & Ramjee, D showed correlation of transformative

leadership and organizational commitment (7) It could be said that type of leadership affects strongly to company success in general and to each its activities in specific Leadership’s impact is large and totally in business Gard and Ramjee also discussed more about dimensions of transformational leadership such as “idealized influence attributes, idealized influence behaviors, inspirational motivation, intellectual

stimulation and individualized consideration” (7) Employees always look leader as sample to follow Therefore, any leadership behaviors will influence on employees’ behaviors such as their feeling, trust, loyalty, respect and how they try their best to contribute to company Finally, internal communication is the important tool to

transfer messages from top management to employees and reverse

Abugre, J B indicated that “quality communication in organization (e.g timely,

accurate, useful, complete), productivity (e.g quantity and quality of work, time to get job done), and reduced absenteeism” (8) Business is never existence a single job In specific, there are many single jobs connect together as a chain in logistic In order to get good results, each department has to interact together well Therefore, low cross departmental communication will lead to shortage information between of them and make business worse

As previous part, low cross departmental communication lead to vague or shortage information Moreover, the most vital factor in making decision is relevance

information According to Holá, J inadequate communication will impact on “team and each members’ activities and behaviors” such as “decrease of motivation”,

“indecision – decrease of making decision ability”, “passivity”, and “frustration” (4)

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department and main account for sales figures Therefore, they contact to a lot of current and potential customers Thus, they know quite well about this market in Viet Nam On the other hand, they are in process of import products so they know detail difficulties of it Nevertheless, Ms Thuy Phuong is person in charge of importing product from Thailand Therefore, she knows well how process works

The depth interview will be taken from August 6th, 2018 to August 9th, 2018 with three respondents from two departments in Srithai Vietnam as below:

Bang

Sales supervisor August 6th, 2018

Phuong

Purchasing supervisor August 8th, 2018

Table 2: The second depth interview arrangement

Research findings

Complicated process Most of respondents agree that importing products process is

complicated Mr Hai says that “quotation process between Srithai Vietnam and

Thailand is complicated and unclear, not have official approval document, just

approval by mouth Thus, we still cannot control cost” Another reason is gadget communication between Srithai Vietnam and Mother company meeting huge problem

It shows language is serious issue

Slow transaction All candidates agree there is slow transaction in working between

Srithai Vietnam and Thailand Mr Hai indicates that “first reason is to take long time

to make quotation for customer” Salesman get in-put price is too late, therefore, they cannot make quotation accuracy and effective He also shared that “the lead-time of delivery is too long, forty-five days, compare with our competitor such as Platinum, Dino, their lead-time is fifteen to twenty days, moreover, and Long Thanh just takes 7

days to delivery” In addition, Mr Bang added more opinion that “I often get

information not timely about price, delivery schedule, quality, etc that make me super pressure when customer call” The main reasons that make to fail many projects is complicated importing process, different language and slow transaction in internal process

Low cross departmental communication All respondents agree that lack of

effective communication in work organization would affect very much on employees’ productivity Mr Bang shares that “the in-put price that salesman gets directly from Mother Company is different from purchasing department” In addition, Mr Hai indicated that “We don’t have clear process in internal and external” It proves that importing process is not only unclear but also low cross departmental communication

is low and not exact Salesmen and purchasing person will base on two different put prices in working and it leads to confused process and information Consequences, losing profit is issue that company cannot avoid

in-Low employees’ commitment and passionate with job As Ms Le shares in first

interview that “The employees are not empowered so that they often wait for their bosses solving problems, they are not initiative to deal with their issues” Moreover, she also indicates “there is not specific person who responsible for specific problem The faults often belong to group” It proves that employees have low commitment with their job and company In addition, they are not empowered combine with shortage information, they meet hard to make decision by their own job Thus, they are less passionate with job

Lack of trust amongst employees The employees show low commitment in their

job According Ms Le says in previous interview that “there is not specific person who responsible for specific problem” It will lead to lack of trust amongst employees

Low motivated employees Mr Hai says that he cannot be initiative making decision

because of shortage in-put price and he gets much pressure because slow process importing He also shares that “the policy of company is not motivation salesman” In previous interview, Mr Puripong Pinanong shared his experiences that “the policy of company does not provide to them enough information about their career path

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Moreover, Srithai company does not empower well to employees Therefore, they do not active in their job Employees tend to finish their job; however, they are not care much about colleagues’ job”

2.3 The real problem: Ineffective internal communication

The updated map shows two potential problems during interviewing face-to-face in three departments sales plastic, purchasing and finance; then reviewing literature First problem is ineffective communication Second one is weak leadership Two problems have close relationship together and also lead to many variables

According Hunjet et all, “Communication is crucial in all segments of company operations, as well as in everyday life” (3) Moreover, internal communication system significantly vital for company competitive advantages and performances However, internal communication system in Srithai Company is ineffective Therefore, it

impacts on most of its daily activities, included activities of importing products group The process of importing is not official commitment Thus, employees in loop of importing process can take advantage of avoiding their responsibility On the other hand, low effective communication reduces trust between employees, therefore, they will not corporate well together That makes logistics of company will not be

controlled well Thus, company cannot control well cost and take opportunity to get loss

The research of Hola, J shows that internal communication and loyalty have closely relationship (4) An effective communication will combine all employees in company focus one objective that create more competitive advantage and persuade them of meaningful job

On the other hand, leadership is extremely importance for company However, it is very large impact on company and structure of organization in Srithai Company Leadership is not only theory, but also it is practice in real life All members of board

of management are Thai people The structure of organization is set up by Mother Company More than that leadership style is to depend on knowledge, experiences and characteristic of board of management of company Thus, leadership of Thai board of managers is external factor and Srithai Vietnam cannot control However, another

concept of individual leadership is identified internal potential cause that influences

on all current employees in Srithai Vietnam

24 Organization’s symptoms Potential central

problem

Ineffective internal

communication

Weak leadership of BOD

Lack of trust amongst employees

Low motivated employee

Low customer’s satisfaction

High Failing project rate

Figure 6: The updated cause effect map

2.4 Problem definitions of ineffective internal communication

There are many definitions of communication term As Manoela defined that speaker and listener join in a dialogue with purposes notify or convince together through exchanging signals(9) Hunjet et al research shows that “communication is an

exchange of information, ideas and feelings through verbal and non-verbal means” (3) According Zondi et al presents that “internal communication is communication within an organisation and it is the lifeblood of all organisations” (6) Consequences, internal communication in busniess is exchange of information between employees in business in order to improve performances of employee-self and organization

Figure 7: The internal corporate communications process

Sources: Miller, 2012

Miller demonstrates a process of internal communication in a business clearly through three part such as informing employees, engaging staff in dialogue and obtaining feedback(10) The internal communication system in Srithai Vietnam is not efficient The influence of three parts in the circle of the map above is suitable for Srithai

situation The first reason is low cross departmental communication, policy is poor so

together and their opinions may be not listened

According to Hunjet et al (3), there are four part of internal communication in

business:

 “Verbal business communications,

 Written business communication,

 Non-verbal business communication,

 Electronic business communication”(3)

Otherwise, there is easy to misunderstand and misuse the term “communication” Many managers go into the trap when they try to identify problem related to

communication(12) When the real problem is mislabeled, it easily creates an

environment to managers make wrong decision on solving- problem Minter

researched that there are four part of communication term as Communication

channels(12)

 “Communication channels

 Communication attitudes,

 Interpersonal communication behavior and

 Overall communication culture/subcultures within hierarchical structures”(12) Basing on theory, the real problem ineffective internal communication in Srithai related three aspects communication attitudes, interpersonal communication behavior and overall communication culture

2.5 Verifying the importance of ineffective internal communication

During two interviews, it could be said that ineffective internal communication is happening in Srithai Company First evidence is control in-put price of importing

products to miss between sales department and purchasing department Mr Puripong Pinanong, sales manager, indicates that asking quotation from Srithai Thailand is job

of purchasing department However, sales department often asks directly by

themselves because Vietnamese customer cannot wait long time for getting price Salesmen do not get timely selling price lead to reduce company competitive

advantages He also shared that the process of competitors is faster and more facility Second evidence is weak to control cost lead to decrease bottom profit of importing products group Sales, purchasing and finance department work quite separately Ms

Le presents that “There is a few meetings among departments to cooperate together I see the meetings are hold when problems actually come and they are really big” Each department does not provide relevance information together so that it makes process

of importing longer and ineffective

2.6 Verifying the existence of ineffective internal communication

Reducing enterprise’s reputation The research of Holá, J shows that internal

communication is used a powerful tool that connect employees and company (4) Moreover, the study also indicates that it strongly develops “company’s reputation”

In general, word-by-mouth is more effective than other marketing tool When internal communication is not good it will influence badly on working environment in

company The relevance information will not come to right person and timely,

therefore, it makes process of work lower and ineffective In addition, it also impacts

on employees’ relationship and their satisfaction Thus, it affects seriously on

communication in external of company Finally, it will not only influence on internal organization but also external its performance as its reputation

Declining employees ‘satisfaction and employees’ productivity Many studies show

that internal communication has positive relationship with employees’ satisfaction The study of Abugre, J B describes that “if the organizational communication pattern

is weak, it would result in a low commitment as a result of diminished satisfaction of the workforce, greater employee turnover, and less productivity” (8) Another research shows positive relationship between employees’ satisfaction and organizational

profitability and productivity Fletcher, M (13) The ineffective internal

 “High rate of employee turnover (fluctuation);

 Ineffective coordination of all activities of the company;

 Failing to reach the company’s target;

 Ineffective target and strategy;

 Ineffectiveness in marketing;

 Inability to compete”(4)

Depth interview 3

Purpose: Finding evidences for proving importance of existence problem

Method: In-depth interview

Mr Puripong Pinanong and Ms Tran Thi Tuyet both are chosen to join interview because they are manager and have worked in Srithai for 5 years so that they have knowledge of management and Srithai business There are few consequences such as high turnover rate, low employee’s satisfaction and low company’s productivity which related to human resources management In addition, Mr Puripong Pinanong is suitable candidate for this interview because some point such as company’s

performance and reputation Thus, his opinions will be useful for this research The depth interview will be taken from August 15th, 2018 to August 18th, 2018 with two respondents from two departments in Srithai Vietnam as below:

1 Tran Thi Tuyet HR department manager August 15th, 2018

Table 3: The third depth interview arrangement

Research findings

Reducing company’s reputation It could be said that profit of importing group has

been influenced seriously for 2 years In specific, actual amount of sales is decreasing

in quarter one and two in 2018 and the trend is keep going The budget of 2018 is quite different from actual sales That impacts strongly to Srithai Vietnam’s

performance in general and Material Handling Equipment group especially in Srithai Group in the world, Mr Puripong Pinanong said He also indicates that reducing company’s performance will affect negative on company’s reputation Therefore, it makes investment capital from equities reduce

A bad working environment On the other hands, Ms Tuyet shows that ineffective

internal communication involves many negative results for company Firstly, it

impacts directly on new comers The relevance information such as policy, history, strategy, description and guideline of job, etc These documents provide enough

essential basic information to them New comers will adapt their job better and faster

In addition, the factors influence much on new comer is support of her or his

colleagues They will coach and support to her The spirit of supporting of employees

in company will create atmosphere working environment If atmosphere working environment is good, it will create extraordinary performances of company through employees’ performance Otherwise, if atmosphere working environment is not good,

it will disturb every activity in organization

Reducing productivity of employees, employees’ satisfaction and increasing rate turnover Secondly, internal communication in Srithai Viet Nam is not fluent

Specially, there is no single responsibility in Srithai, the mistakes are belonging to group and employees often finger-point together This environment is not good for create working spirit and employees’ spirit Thus, productivity of employees reduces, therefore, impacts directly negative on employees’ satisfaction Finally, the rate

turnover also increases

2.7 Causes and Effects chart of real problem: Ineffective internal communication in Srithai Vietnam company

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Different language Nowadays, economic integration is a trend of economic global

Many giant companies have subsidiaries in many countries such as Pepsi, Cocacola, Apple, Samsung, SCG, etc Besides many advantages of saving cost of labor, tax, distributions network, etc., there are also many disadvantages as conflicts of culture, communication, legal, spread of knowledge, etc Number of researches presented that various language in company influences on most of management decision of

international enterprises(14) In multinational organization the process knowledge transfer and knowledge sharing are emphasized to apply and attention Moreover, internal communication is a key tool of process knowledge transfer and knowledge sharing(11) Therefore, language is key factor to transfer knowledge and strategies from Mother company to subsidiaries Another study showed that different language

is huge barrier on creating trust in diversity teams(15) This point is impacting in

Srithai Vietnam context about transfer strategy from Mother company and relationship between Thai bosses and subordinates

Inadequate motivation to employees The research of Grynko indicated that

well-motivated employees is a key to successful and developed company(16) The

employee motivation is chain of activities of organization external and internal in order to engage and encourage employees to try their best effort to reach KPI and performance for them and company The external motivation consists salary, benefits and bonus The internal company is defined satisfaction, enjoying job, challenges, be appreciated and recognized, etc To Srithai case, inadequate motivation to employee express clearly on internal motivation as satisfaction, enjoying job, appreciated and

recognized

Weak teamwork skill Nowadays, developing rapid of technique makes environment

non-stop changing The huge of work is accomplished by teams(17) Teamwork is combined knowledge, skill and attitude of each member in a particular team to

complete a predetermined goal(18) The competencies of team are presented by

quality of interacts and combination of each member together(18) Therefore, weak teamwork skill means that each member cannot connect well together during three factors as knowledge, skill and attitude Then they cannot present accomplish by team

Weak individual leadership Individual leadership is call personal leadership

Personal leadership is considered as a significant element in management today(19) Freidman defied personal leadership through a person have leadership vision

Leadership vison concentrates three factor as the importance thing, living goal and desire(20) According to Klagge, personal leadership emphasized four aspects such as

“mental, emotional, volitional, physical and spiritual boundaries”(19) In specific, he also demonstrated characteristics of personal leadership behaviors as:

Weak individual leadership in organizational area in Srithai is expressed clearly

during previous analysis They are irresponsibility, finger-point together and

explanation for their faults often

CHAPTER 3: ALTERNATIVES ANALYSIS AND POSSIBLE SOLUTIONS 3.1 Verify causes of the real problem

by him About Mr Tu, he is also suitable for this interview because he has worked in Srithai for twelve years He knows everything and relationship in Srthai Vietnam His experiences are very important and useful for thesis

The depth interview will be taken from August 26th, 2018 to August 27th, 2018 with two respondents from two departments in Srithai Vietnam as below:

Laohakivjtoon

Executive Business Development

August 26th, 2018

Table 4: The fourth depth interview arrangement

Research findings

During of an interview, different language is not a real cause in internal Srithai

Vietnam However, it is a real issue impact seriously on transaction with importing orders Any misunderstanding will lead to produce wrong products Thus, it does not reach customers’ need and their quality It will become a big problem if customer deny to receive products and ask for pay contract fee The issue will be serious when

it influences on company reliable [them theory] Mr Withawin said that “The key person of Mother company who Srithai Vietnam often contact is weak English but whole dialogue is presented by English Therefore, some big misunderstandings have happened” Although this reason is belonging to Mother company but it is impacting

on MHE group seriously It makes the importing process more stressfully

It could be said that employees are weak team work skill; therefore, they don’t have skill to communicate and solve conflicts together [theory about team work skill] Mr Withawin shared that “the quality of each communication is key point to impact on quality of transaction, quality of works The spirit supporting of employees is low Obviously, they have finished their job but they are not put more efforts I see that they are weak team work skill” Mr Tu also presented that “Fifty percentage of

employees have family relationship So, they often avoid together and show their points Most of employees have worked as their description and just that, they do not care much about process”

The interview also showed that Srithai has an inadequate motivation working

environment Firstly, Srithai company has fifty percentage employees have

relationship in family Besides, they know each other well, it creates very good

supportive However, these nesting relationships are becoming barriers of Srithai development They avoid to problems and conflicts that related together Mr Tu said that “The spirit of supporting between employees is low I think the reasons are

motivation Even you work less or more, you just get same salary, not bonus or

complements or prize” In the first interview, Mr Thanh also indicated this point He said that “working environment in Srithai is quite complicated and have many benefit groups”; in addition, ‘Srithai contains many relationships as family Thus, it has

impacted much on working environment here’ Another evidence is Mr Tu said “Fifty percentage of employees have family relationship So, they often avoid together and show their points Most of employees have worked as their description and just that, they do not care much about process”

Final cause is weak leadership Mr Withawin presented that there are two types of weak leadership in Srithai Vietnam company He said that “each department tend to work separately The connect of them in a project is low Therefore, it could be seen that leadership of Thai members in Board of Manager is weak” Most of interviewer agreed that departments of Srithai Vietnam tend to work separately In the second interview, Mr Hai told that “cross communication of department in company is low” Moreover, Mr Withawin and Mr Tu agreed that “Most of Thai members in Board of

of weak leadership is constraining development in Srithai Vietnam Mr Tu described that “The weak leadership both sides connect together creates culture less spirit support, cooperating, working, improving, novating and moving forward in Srithai Vietnam”

3.2 Main cause of the problem: weak individual leadership

During four interviews, most of respondents showed three impressive characteristics

of employees in Srithai Vietnam Besides, they are sympathy, finish their job follow description However, three points are constraining development of Srithai Vietnam seriously First point is no single responsible In the first interview, Ms Le said that

“The employees are not empowered so that they often wait for their bosses solving problems, they are not initiative to deal with their issues” She also mentioned that

“there is not specific person who responsible for specific problem The faults often belong to group”

Most of interviewers agreed that working environment is not good Although working load is normal so that it does not put much pressure on employees However, spirit of supporting, cooperating, working, improving, novating and moving forward in Srithai Vietnam are slow, Mr Tu said On the other hand, Mr Withawin showed two factors express the quality of communication between employees There are frequencies and quality of interacts between employees He indicated that frequencies of interacts between employees is high; otherwise, the quality of them is low

Final point is they often finger point and explain for their faults Those action are symptoms of avoiding responsibility Three points connect together create bad

organizational culture That does not only constrain sustainable growth for Srithai Vietnam but also threat to ability of survive in non-stop changing and unpredictable environment nowadays

Three characteristics are consequences of main real cause weak individual leadership

in Srithai Vietnam company The thesis focuses on the weak individual leadership In previous part, it is showed that All members of board of management are Thai people The structure of organization is set up by Mother Company More than that leadership style is to depend on knowledge, experiences and characteristic of board of

management of company That is external factor and Srithai Vietnam cannot control However, in other aspect it could be said that board of managers are the key people lead to Srithai Vietnam Each of them is an employee of Srithai Vietnam Leadership contributes to the success of organization through its action and support in bringing about organizational learning If each individual in Srithai has leadership spirit it will create success and sustainable growth for Srithai Vietnam

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Figure 8: The final cause-effect map

Ineffective internal communication

Validated consequences Reducing enterprise’s reputation

Weak individual leadership

Weak teamwork skill

Validated Problem

Inadequate motivation to

employees

High failing project rate

Gross profit decreases

 On-time corrective action

Mr Ah Bee Goh, COO of Schaffner company, emphasized that ROFO is not only a deeply perception of management, but also powerful tool to deal with issues(21) Moreover, it is a useful “guiding principle for the working behavior of the staff”(21)

He also mentioned that “it encourages employees to self-internalize and to self - motivate themselves so as to own the total process until the desired outcome is

achieved”(21) Three factors ownership, focus, and on-time corrective action connect and boost together in continuously circle That process creates cooperation and

learning The continuous cycles of ownership, focus, and on-time corrective action result in cooperation and learning Consequences, Mr Ah Bee Goh indicated that

“outcome is attained with enthusiasm, passion and without blaming others”(21)

Key factors that can be achieved with ROFO in training, applying and reflecting are

 Ownership Mindset

o Once every staffs in the process own the process together Everyone takes their tasks seriously

o There will be no more smart talk, excuses, finger-pointing and etc

 Cooperation and Trust

o Owning the process together means they are on the same team

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o ROFO also emphasize not blaming other people, but fix the problem first and

in a very good-mannered way remind those people not to repeat the same mistake This will introduce trust and future cooperation among staffs

 Willingness to Learn Mindset

o The commitment to come up with on-time corrective action and improvements

in the process is a learning process

o And with the ROFO mindset to ensure that this will be done every day and every time, the learning process will go on continuously

Gino and Staats also mentioned in their article “Why Organizations Don’t Learn?” to overcome the conditions that impede learning, there are actions would help to resolve the issue which includes:

 Increase awareness and engage workers(22)

 Encourage workers to own the problems that affect them(22)

 Give workers different kind of experience(22)

 Empowering workers to use their experience(22)

These actions fit well into the ROFO model proposed by the author’s view by

supporting staffs’ willingness to learn and ownership mindset Once each employee as leadership drives ROFO ROFO will creates the organization culture that support learning with ownership, trust, and the willingness to learn

The solution one is only suitable in Srithai Vietnam case First reason is similar

between Schaffner and Srithai company Schaffner has factory and office around on the world such as in Kecskemét (Hungary), Lamphun (Thailand), Shanghai (China) and in Wytheville (USA) ROFO was the first applying in Thailand factory ROFO is gold lessons which Mr Ah Bee Goh learn through whole his life He sees humans is central of any action People is original of changing The first time Mr Ah Bee Goh came to Schaffner Thailand, its situation is quite same with Srithai Vietnam currently The working environment is worse and constrain employees and company to

performance The worse habit in working environment as finger-point, irresponsibility and explanation became culture in long time of Schaffner in Thailand Schaffner worked slowly and slowly Nowadays, Schaffner Thailand is icon of strongly

changing in Thailand No one does not know about this case after applying ROFO Recognizing the same context between Schaffner Thailand and Srithai Vietnam, ROFO principles should apply in Srithai Vietnam case

CHAPTER 4: ACTION PLAN FOR SOLUTION 4.1 Objective:

The purpose of applying ROFO principle in office depatments in Srithai Vietnam

 ROFO is a set working principles (mindset) and by getting staffs to adopt this mindset as their own is, in effect, to create a new corporate culture

 Leadership committed to Companywide training and learning keep staffs at all levels equipped with the appropriate knowledge required in successfully

implementation of the intended Strategy

4.2 Timeline:

As can be seen in the table 1, timeline for each task will be applied in 2019 as follow:

Action 1: Training ROFO principles

The first step should be training for whole office employees of each department Mr

Ah Bee Goh will be invited to train for Srithai Vietnam employees He is a great father of ROFO principles so that he has extraordinary inspired for whole listeners Moreover, he will also be invited to consultant during applying ROFO principles period in Srithai in 2019 The training will be conducted on December in 2018 in order to prepare for changing of company in 2019 Mr Ah Bee Goh will train in the first time in December 2018 Another training in quarter of 2019 will be conducted by member of board of managers of Srithai Vietnam

Action 2: Evaluating effectiveness of conducting ROFO principles

Evaluating effectiveness of conducting ROFO principles will conducted by three methods First method is to evaluated 360 degree It will carry on in whole department level every three month It will show improvement in whole office department in quarter Two other methods are to evaluate a peer and self-evaluating It will be