1 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 TIEU LUAN MOI download : skknchat@gmail.com 2 Table of Contents EXECUTIVE SUMMARY. 3 CHAPTER 1: BACKGROUND INFORMATION .1 The method of scan symptom .2 Justify the importance of symptoms .1 The first symptom: Low Customer’s satisfaction .2 The second symptom: Gross profit decreases .3 The third symptom: High failing projects rate. 10 CHAPTER 2: PROBLEM IDENTIFICATION .2 Identifying and Diagnosing Tentative Problems .1 The first tentative problem: Ineffective internal communication .2 The second tentative problem: Weak leadership .3 The real problem: Ineffective internal communication .4 Problem definitions of ineffective internal communication .5 Verifying the importance of ineffective internal communication .6 Verifying the existence of ineffective internal communication .7 Causes and Effects chart of real problem: Ineffective internal communication in Srithai Vietnam company. 29 CHAPTER 3: ALTERNATIVES ANALYSIS AND POSSIBLE SOLUTIONS .1 Verify causes of the real problem .2 Main cause of the problem: weak individual leadership .1 Solution 1: Applying ROFO principle in office departments in Srithai Vietnam 37 CHAPTER 4: ACTION PLAN FOR SOLUTION.
77 TIEU LUAN MOI download : skknchat@gmail.com 3 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. TIEU LUAN MOI download : skknchat@gmail.com 4 CHAPTER 1: BACKGROUND INFORMATION 1.1 Company background Srithai Superware was established in Thailand in 1963. In 1996, Srithai comes to Vietnam and becomes a joint-venture company under the name of Vietthai Industrial Plastic Co.
located in Ho Chi Minh City. However, it has moved head office and factory to Binh Dương provinces since 2005. Currently, it has 3 factories, 2 ones are in the south and one is in the North Vietnam. 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.
TIEU LUAN MOI download : skknchat@gmail.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.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). TIEU LUAN MOI download : skknchat@gmail.com 6 Nowadays, most of practitioners and normal people both agree that profit is the most importance to ensure survival and development of company.
The need for organization to adapt and re-inventing itself to the forever changing business environment has become more and more apparent in recent years. With fast pace technology changes and disruptive innovation such as smartphones, e-commerce, and Industry 4.0, the business environment now is most dynamic and unpredictable. Then, organizations who can learn about these changes and be the first to re-invent itself to take advantage 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 The first symptom: Low Customer’s satisfaction TIEU LUAN MOI download : skknchat@gmail.com 7 Customer satisfaction of importing products group 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Quality of product Delivery After delivery service Salesman's knowledge 2017 88% 45% 70% 70% 2018 90% 50% 80% 80% 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. TIEU LUAN MOI download : skknchat@gmail.com 8 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. Delivery Lead time 35 30 25 20 Day 15 10 5 0 Srithai Dino Platinum Delivery Lead time 30 15 20 Figure 2: Delivery lead time of Srithai, Dino and Platinum Source: Internal meeting minutes of Sales department in January 2018 TIEU LUAN MOI download : skknchat@gmail.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).
TIEU LUAN MOI download : skknchat@gmail.com 10 Sales & GP of importing products group 3,500 3,000 2,500 2,000 Million VND 1,500 1,000 500 - -500 Jan Feb Mar Apr May June Sales 2018 2,157 1,836 1,660 601 288 841 Sales 2017 730 896 1564 3166 2898 1250 GP 2018 130 105 -12 -65 30 31 GP 2017 30 20 -30 179 187 50 Figure 4: Sales and Gross Profit of import products group quarter 1, 2 in 2017, 2018 Source: Finance report in July 15th 2018 1.3 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.
TIEU LUAN MOI download : skknchat@gmail.com 11 Speed of sending quotation and lead time of Srithai Superware to too low compare with its competitor such as Platinum, Dino, etc.