vietnam national university, HANOI hanoi school of business Pham Vu Duc Structuring an advertising business in Vietnam (an example of fpt media – the corporation for financing and promoting technology) master of business administration thesis Hanoi - 2007 TIEU LUAN MOI download : skknchat@gmail.com vietnam national university, HANOI hanoi school of business Pham Vu Duc Structuring an advertising business in Vietnam (an example of fpt media – the corporation for financing and promoting technology) Major: Business Administration Code: 60 34 05 Master of business administration thesis Supervisors: 1.Ta ngoc cau 2. ha nguyen, mba Hanoi – 2007 TIEU LUAN MOI download : skknchat@gmail.com TABLE OF CONTENTS ABSTRACT. V TABLE OF CONTENTS. 1 3 KEY RESEARCH AREAS.
3 5 CONTRIBUTIONS OF THE THESIS. 4 CHAPTER 1: A LITERATURE REVIEW OF THE ORGANIZATIONAL STRUCTURE .1 BASIC CHALLENGES OF ORGANIZATIONAL DESIGN.1 Four basic organizational design challenges confronting managers and consultants.2 Using contingency theory to design a structure that fits an organization’s environment 8 1.2 AUTHORITY AND CONTROL IN DESIGNING ORGANIZATIONAL STRUCTURE .3 DESIGNING ORGANIZATIONAL STRUCTURE .14 CHAPTER 2: ORGANIZATIONAL STRUCTURE IN ADVERTISING INDUSTRY .1 OVERVIEW OF ADVERTISING INDUSTRY .2 What is media? .4 Future of Advertising industry .2 ORGANIZATION STRUCTURE OF WORLD ADVERTISING INDUSTRY .1 Types of Ad Agencies .2 Other Types of Agencies and Services .5 Organization Structure of World Advertising Industry .3 THE ADVERTISING INDUSTRY IN VIETNAM .1 A Decade of Change for Advertising in Vietnam .2 Foreign Advertising Agencies in Vietnam .3 Local Advertising Agencies in Vietnam .4 Future of advertising industry in Vietnam .4 ORGANIZATIONAL STRUCTURE IN VIETNAM ADVERTISING COMPANY .54 CHAPTER 3: FPT CORPORATION AND FPT MEDIA INTRODUCTION .1 OVERVIEW OF FPT CORPORATION .58 vi TIEU LUAN MOI download : skknchat@gmail.2 Products and Services.2 FPT MEDIA INTRODUCTION .66 CHAPTER 4: SITUATION ANALYSIS AND RECOMMENDATION .2 SUITABLE TIME FOR CHOOSING NEW ORGANIZATIONAL STRUCTURE .3 NEW ORGANIZATIONAL STRUCTURE’S SWOT ANALYST: .1 When will we move to functional organizational structure? .2 Which model will be choosing to implement at this time? .86 APPENDIX A WHAT IS ADVERTISING? .88 APPENDIX B LIST OF SOME BIG ADVERTISING AGENCY IN VIETNAM .90 APPENDIX C SOMETHING ABOUT ADVERTISING INDUSTRY IN VIETNAM .92 APPENDIX D TECHNIQUES IN ADVERTISING INDUSTRY .94 APPENDIX E LIST OF INTERVIEWEES .98 APPENDIX F AN EXAMPLE OF ORGANIZATIONAL STRUCTURE IN FPT CORPORATION .100 vii TIEU LUAN MOI download : skknchat@gmail.com INTRODUCTION 1 BACKROUND Within scope of this thesis, I would like to study the organizational structure applying into the advertising industry and especially Vietnam advertising company – FPT Media, a part of FPT Corporation. Purpose of the thesis will be presented in the next section. 2 PURPOSE From the theory, we may found a lot of models that are studied, analyzed and applied.
Each model is designed for certain types of company with its own particulars: number of employees, business scale and business style. After each development stage, depending on the situation, managers will decide which model will be chosen. In some situation, managers may skip certain periods of development. They are not always successful.
The advertising industry is a partial of every industry. Naturally, it has some its own particulars which differ from all other fields. Basically, the organizational structure in advertising firms do not have big different with others but in fact, there are some their own customizations. After 4 month in FPT Media, I found that, with a startup company, capital, business strategy, human resource are important factors.
But the organizational structure is also crucial. An organizational structure has direct impacts on the business. 1 TIEU LUAN MOI download : skknchat@gmail.com FPT Media, a startup firm, belongs to a big IT corporation in Vietnam, cannot be outside of the intersection point between organizational structure in theory (which were designed for all kind of companies); advertising industry (so many kind of services) and a Vietnam company (with its own characteristics). What is current organizational structure of FPT Media? Has is got any problem? If yes, how to repair it? How to make it better? The purpose of this thesis is to: First, give out a systematical approach organizational structure theory; Second, discover the advertising industry; Third, apply this theory into practical case of FPT Media – FPT corporation to recommend the best solutions, which will help FPT Media managers have a guide on how to manage organizational structure effectively; Fourth, identify some theoretical issue of organizational structure, which can apply in advertising companies in specific environment of Vietnam.
3 KEY RESEARCH AREAS The thesis studies organizational structure theories, history and structure of advertising industry and finally analyzes organizational structure in this industry. Three first chapters of the thesis are researches on advertising industry and a local firm with main objectives: 2 TIEU LUAN MOI download : skknchat@gmail.technology) To access organizational structure theories To assess advertising industry and organizational structure in this industry. To assess a Vietnam firm: their organizational structure – advantage and disadvantage 4 METHODOLOGY A lot of related documents on organizational structure theory were gathered, analyzed, compared and customized for suitable with Vietnam advertising industry. Sources of information were combined for use includes: books, internet, media, and dialogues with experts.
Population and Sample With the first survey (survey A), the author assesses organizational structure in advertising industry and especially in Vietnam market. There are about nearly 4.000 advertising companies in Vietnam now. As most companies are based in Ho Chi Minh City (HCMC) – most of big firms and Hanoi, we took the sample of 8 companies in Hanoi and 9 others in HCMC. These 17 companies are big firms (in total of 40 biggest advertising firms in Vietnam); they cover most of the adverting market and they provide most of service in adverting industry.
This sample is typical enough to withdraw conclusions about advertising industry and Vietnam advertising industry. The questionnaires are delivered to one or two key persons in each company. The survey B is to identify how FPT Media staff think and satisfy with their organization. Because FPT Media is a young firm so there are only more than 10 people so author has taken a sample of all of these 10.
From this survey, we may (LUAN.technology) 3 TIEU LUAN MOI download : skknchat@gmail.technology) found real situation of FPT Media and their real expectation. (See appendix E) Data collections methods A lot of data collection methods were considered. Because of constraints in terms of time, costs and human resources, a random sample from the whole population of advertising companies could not be obtained in this research. Author has approached 17 big advertising companies in Hanoi and HCMC for the survey.
For survey A, a total of 11 questionnaires were sent via email and 6 questionnaires were sent by post. Notice phone calls were made in prior and follow up. 8 in total of 11 questionnaires via email were answer and usable. With questionnaires by post, all 6 completed usable questionnaires were collected.
Author collected 14 usable questionnaires over 17 in total. 5 CONTRIBUTIONS OF THE THESIS The thesis would systematically help Vietnam advertising companies – especially FPT Media – see what organizational structure is, the benefits and principles to effectively build organizational structure. Most importantly, the thesis has developed specific activities, guidelines for Vietnamese advertising firms in understanding and building an effective organizational structure. 6 OUTLINE The thesis is divided into four chapters.
Chapter One will review basic organizational structure theories. Chapter Two and Chapter Three are findings of the relevant issues for the advertising industry and the company in point – FPT Media.technology) 4 TIEU LUAN MOI download : skknchat@gmail.technology) Chapter Four will show recommendations from the case.technology) 5 TIEU LUAN MOI download : skknchat@gmail.technology) CHAPTER 1 A LITERATURE REVIEW OF THE ORGANIZATIONAL STRUCTURE 1.1 BASIC CHALLENGES OF ORGANIZATIONAL DESIGN If an organization is to remain effective as it changes and grows with its environment, managers must continuously evaluate they way their organizations are design: for example, they way work is divided among people and departments, and the way it controls its human, financial, and physical resources. Organization design involves difficult choices about how to control – that is, coordinate organizational tasks and motivate the people who perform them – to maximize an organization’s ability to create value1.1 Four basic organizational design challenges confronting managers and consultants. People in organization take on new tasks as the need arises and it’s very unclear who is responsible for what, and who is supposed to report to whom.
This makes it difficult to know on whom to call when the need arises and difficult to coordinate people’s activities so they work together as a team. As organizations grow, manager must decide how to control and coordinate the activities that are required for the organization to create value. The principal design challenge is how to manage differentiation to achieve organization goals. Differentiation is the process by which an organization allocates people and 1 Whirlpool, 2002.technology) 6 TIEU LUAN MOI download : skknchat@gmail.technology) resources to organizational task and establishes the task and authority relationships that allow the organization to achieve its goals.
Organizations develop five functions to accomplish their goals and objectives2: support, production, maintenance, adaptive and managerial. - Support function: Functions which facilitate an organization’s control of its relations with its environment and its stakeholders. Support function includes purchasing, sales and marketing, public relations and legal affairs. - Production function: Function which manages and improves the efficiency of an organization’s conversion process so that more value is created.
Production functions include production operations, production control, and quality control. - Maintenance function: Function which enable an organization to keep its departments in operation. Maintenance functions include personnel, engineering and janitorial services - Adaptive function: Functions which allow an organization to adjust to changes in the environment. Adaptive functions include research and development, market research and long-range planning.
- Managerial function: Function which facilitate the control and coordination of activities within and among department. An organizational role is a set of task-related behaviors required of an employee. An organization is composed of interlocking roles that are differentiated by task responsibilities and task authority. Differentiation has a vertical and a horizontal dimension.
Vertical differentiation refers to the way an organization designs it hierarchy of authority. Horizontal differentiation refers to the way organization groups roles into subunits (function and divisions). Managers confront four design challenges as they coordinate organizational activities. The choices they make are interrelated and collectively determine how effectively an organization operates.
2 Ron Ashkenas, Dave Ulrich, Todd Jick and Steve Kerr, 1998. The Boundaryless Organization: Breaking the Chains of Organizational Structure. New York: Jossey-Bass (LUAN.technology) 7 TIEU LUAN MOI download : skknchat@gmail.technology) a) The first challenge is to choose the right extent of vertical and horizontal. b) The second challenge is to strike an appropriate balance between differentiation and integration and use appropriate integrating mechanisms.
c) The third challenge is to strike an appropriate balance between the centralization and decentralization of decision-making authority. d) The fourth challenge is to strike an appropriate balance between standardization and mutual adjustment by using the right amounts of formalization and socialization. Differentiation is the process by which organization evolve into complex systems as they allocate people and resources to organizational task and assign people different levels of authority. Different organizational structures cause individuals to behave in different ways.
Mechanistic structures are designed to cause people to behave in predictable ways. Organic structures promote flexibility and quick response to changing conditions. Successful organizations strike and appropriate balance between mechanistic and organic structures.2 Using contingency theory to design a structure that fits an organization’s environment Contingency approach: A management approach in which the design of an organization’s structure is tailored to the sources of uncertainty facing an organization. Contingency theory argues that in order to manage its environment effectively, an organization should design its structure and control systems to fit with the environment in which the organization operates.