UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business -------------------------------- Tran Le Hoang Yen SOLUTION FOR INEFFECTIVE LEADERSHIP IN CUBES ASIA MASTER OF BUSINESS ADMINISTRATION Ho Chi Minh City – Year 2018 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business -------------------------------- Tran Le Hoang Yen SOLUTION FOR INEFFECTIVE LEADERSHIP IN CUBES ASIA MASTER OF BUSINESS ADMINISTRATION SUPERVISOR: DR. PHAN THI MINH THU Ho Chi Minh City – Year 2018 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com SOLUTION FOR INEFFECTIVE LEADERSHIP IN CUBES ASIA 1 TABLE OF CONTENT Executive summary .1 Cubes Asia history and organizational structure .2 Cubes Asia customer and proportion of sales by channels .1 The first symptoms: High employee turnover .2 The second symptom: Increasing employee complaints.3 The third symptom: Increasing customer complaints .1 The first potential problem: Poor employee training .2 The second potential problem: Ineffective leadership from managers .2 Verify causes of central problem. Alternatives analysis and possible solutions .3 Alternative solution sets. 62 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com SOLUTION FOR INEFFECTIVE LEADERSHIP IN CUBES ASIA 2 3.2 Time line and cost estimation .2: Implement dedicated communication skill training programs 63 3.2 Solution S2: Implement strategic planning .3 Solution S3: Apply performance management and control framework .1 Appendix 1: Samples of customer complaints .2 Appendix 2: Company documents .3 Appendix 3: Interview transcriptions .4 Interview guide of interview ground 1.
114 LIST OF DIAGRAMS Diagram 1 - Initial cause effect map. 16 Diagram 2 - Updated cause effect map. 30 Diagram 3 - Final cause-effect map. 49 Diagram 4 – Proposed solutions for Cubes Asia’s central problem.
60 Diagram 5 – Solution set 1 components. 61 Diagram 6 – Solution set 2 components. 61 LIST OF CHARTS Chart 1 - Cubes Asia Organization chart, Feb 2018. 6 Chart 2 - Total sales by channel 2016.
7 Chart 3 - Total sales by channel 2017. 8 Chart 4 - Total sales by channel quarter 1, 2018. 8 Chart 5 - Total sales by channel quarter 2, 2018. 9 LIST OF TABLES LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com SOLUTION FOR INEFFECTIVE LEADERSHIP IN CUBES ASIA 3 Table 1 - Annual employee turnover 2014 - 2018.
10 Table 2 – Comparison of high and low performing managers. 34 Table 3 – Top five characteristics contribute to leadership inefficacy. 39 Table 4 – Top five indicators to evaluate leader effectiveness. 40 LIST OF FIGURES Figure 1 - Dimensions and categories of negative leadership and its consequences.
42 Figure 2 - Dimensions and categories of leadership and its antecedents. 45 Figure 3 – Stages of strategic planning process. 54 Figure 4 – Performance management and control framework. 56 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com SOLUTION FOR INEFFECTIVE LEADERSHIP IN CUBES ASIA 4 Executive summary Cubes Asia is a young company who develops quickly in recent years.
However, due to spending time to focus on sales and marketing, it is facing with several issues relating to personnel, customers, management system. The research includes three important parts. Firstly, it comes with the company background for readers to understand the company history, its customers, staffing, sales as well as the industry, the market Cubes Asia is in. Secondly, the researcher identified problem through interviews and theories, it is found that the company is facing with poor employee training and ineffective leadership.
However, ineffective leadership has significant influences through most of variables. Furthermore, the research presented the valid causes leading ineffectiveness leadership including personal traits of the boss, misuse of power from managers, poor communication between managers and employees, lack of financial and human resources, lack of strategic business plans, lack of internal and external control with the company context to contribute in later solutions. Thirdly, there are solutions proposed and confirmed by employees through quick survey. The alternatives plan are analyzed and presented which is a combination of developing communication strategy, implementing strategic planning and applying performance management and control framework.
The plan comes with total budget of 228.000VND in the duration of 3 months for training programs, 1 month for strategic planning and nearly 1 month for applying performance management and control framework in Cubes Asia. This total cost is feasible with the company who gained turnover of 54 billion and profit margin of approximately 30% in 2017. Furthermore, the ineffective leadership causes losing 3 key customers which contribute 2 – 3 billion per year, losing money, business information and low productivity due to high employee turnover rate (over 25% through years). The presentation above support the readers have an overview on contents of this research.
From the work has been contributed, the full name of the study is "Solution for ineffective leadership in Cubes Asia". LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com SOLUTION FOR INEFFECTIVE LEADERSHIP IN CUBES ASIA 5 Chapter 1.1 Cubes Asia history and organizational structure Cubes Asia was established in 2013 who specializes in distributing the top well- known European coffee machines and grinders such as Melitta, Nuova Simonelli, Victoria Arduino, Animo, Cunill, Schaerer, Lelit etc. Besides, the company also provides other related products such as coffee, blenders, juicers, water systems, milk frothers, etc. to make a coffee competence that meets all customer demand.
The company is the pioneer in the field of trading professional coffee machines in Vietnam. Its mission is to provide excellent products to enhance the quality of living, and we pride ourselves in customer satisfaction and faith. Cubes Asia has built up a head office in Hochiminh (2013) then its three showrooms in Hochiminh (2016), Danang (2017) and Hanoi (2017) until now and it is expected to expand to other regions such as Nha Trang, Phu Quoc – all are potential markets to trade its main product line. However, Cubes Asia is a small company that has over 40 employees in total until now.
The head office is responsible for all decision of the company as well as the main venue to take place most of training courses, official events, monthly meeting etc. The company’s competitors who are also coffee machine distributors but from other manufacturers are Perfetto, Epicure, Quang Tan Hoa, Charles Wembley etc. Among its competitors, Cubes Asia is considered as the leader of coffee machine distributor in Vietnam due to be pioneer and its high quality products. Cubes Asia has a national presence, being in many areas around Vietnam by distribution system through dealers and agents: roasters (Shin Coffee, LaViet, Laha Coffee, Trung Nguyen, Cau Dat Farm, etc.), dealers (Phuong Binh, Tam Long, Meta etc.), Modern trade (Thien Hoa, Nam An etc.), Ecommerce (Yes24, Tiki, Sendo, Lazada etc.), Private agents (Barista, individuals, etc.
At Cubes Asia, most of decision is made by top managers who are founder, business development manager and company development manager. In fact, the founder (boss) is always the person to make final decisions which are managerial, operational and business and other managers are those who implement and execute the boss’ decision. In near future, the company expects to have complete organizational chart indicated as below: LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com SOLUTION FOR INEFFECTIVE LEADERSHIP IN CUBES ASIA 6 Chart 1 - Cubes Asia Organization chart, Feb 2018 *(NN) means not yet available. LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com SOLUTION FOR INEFFECTIVE LEADERSHIP IN CUBES ASIA 7 1.2 Cubes Asia customer and proportion of sales by channels Cubes Asia target to both B2B and B2C customers who are resellers, agents, corporates, hotels, resorts, restaurants, coffee chains, coffee shops, households, individuals.
Among the company’s customers, it can be counted the most important coffee chains, hotel and restaurants as well as many other customers the company served around Vietnam such as The Coffee House, Trung Nguyen, Twitter Bean Coffee, Laha Coffee, Aha Coffee, Heritage Line, Khanhcasa, Caudatfarm, Hella, Piza 4P, Golden Gate, Novotel, Sol Beach, Part Hyatt, etc. In general, B2B customers account for the overwhelming proportion of B2C customers. The data of sales by channel from 2016 – 2018 is described below showing that B2B customers (Dealers, Roasters, Chains, HoReCa etc.) place extremely important role in the company turnover than B2C customers (Coporate, retails, showrooms, individuals). There are differences in the name and the way in dividing channels because the demands of splitting or merging sub channels by the time.
Chart 2 - Total sales by channel 2016 SR Retail 8% Dealer 16% 31% Corporate 14% Horeca 31% LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com SOLUTION FOR INEFFECTIVE LEADERSHIP IN CUBES ASIA 8 Chart 3 - Total sales by channel 2017 Own SR 13% Retail 12% Dealers E-com/Mo. 40% 0% Coffee Client 3% Corp.Ca 17% Chain Stores 5% Dealers Ho.Ca Chain Stores Corp. Roaster E-com/Mo. Coffee Clients Retail Own SR Chart 4 - Total sales by channel quarter 1, 2018 Co.Clients Retail 5% 3% Own SR Ecommerce 14% /Modern… Dealers Roaster 46% 6% Corporate 1% HoReCa 17% Chains 8% Dealers HoReCa Chains Corporate Roaster Ecommerce/Modern trade Co.Clients Retail Own SR LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com SOLUTION FOR INEFFECTIVE LEADERSHIP IN CUBES ASIA 9 Chart 5 - Total sales by channel quarter 2, 2018 Modern trade Ecommerce Offices 0% 0% 2% Individuals Convenient Stores 14% 1% Pro kitchen supplier 0% HoReCa Dealers/Roasters 17% 52% Coffee chains 12% Hotel Chains 1% Hotel Appliance Dealers 1% Dealers/Roasters Hotel Appliance Dealers Coffee chains Hotel Chains HoReCa Pro kitchen supplier Convenient Stores Offices Modern trade Ecommerce Individuals LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com SOLUTION FOR INEFFECTIVE LEADERSHIP IN CUBES ASIA 10 Chapter 2.1 General symptoms Several in depth interviews were taken place to have ideas about what the company is facing and need to be improved.
The information is collected from both current employees and former employees who are: Ms. Sam Duong – Current Marketing Executive Mr. Duy Nguyen – Current Marketing Executive Ms. Loi Nguyen – Current Accountant Ms.
Tien Le – Former Senior Sales Executive Ms. Nhi Nguyen – Sales Executive Mr. Duong Nguyen – Former Head of Central Retail Office Ms. Trang Nguyen – Current Sales Admin Ms.
Vy Do – Current Sales Admin There are several key performance indicators (KPIs) which cover financial, customer, process and people metrics (1). In this research, author focus on 3 KPIs including Employee Turnover Rate (ETR), Employee Satisfaction, Customer Satisfaction and Retention.1 The first symptoms: High employee turnover There is a clear and impressive symptom that Cubes Asia is dealing with significantly high employee turnover rate. It is always at much higher level compared with the industry (about 11.9% in trading industry (2)) or even other closet competitors (15 – 20%), (acquire from available relationships in competitor’s company). Below table shows the employee turnover from establishment until now: Table 1 - Annual employee turnover 2014 - 2018 Up to Year 2014 2015 2016 2017 July 2018 CEO/ Director level People end of period 1 1 3 3 3 People left through period 0 0 1 1 1 Middle level People end of period 1 2 3 6 4 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com SOLUTION FOR INEFFECTIVE LEADERSHIP IN CUBES ASIA 11 People left through period 1 1 1 4 1 Staff level People end of period 6 6 14 22 36 People left through period 1 1 4 4 8 Total people end of period 8 9 20 31 43 Total people of period (Average) 8 8.5 37 Total people left through period 2 2 6 9 10 Employee turnover rate 25% 24% 41% 35% 27% Why is employee turnover important? “It’s not who you hire that counts, it’s who you keep” (3).
Employee contributes in success of a business because they create long-term competitive advantage. Employee turnover cost can range from monitoring, evaluating factors that impact it, managing its probable costs in term of human and capital resources.