Organisations and behaviour 1

BANKING ACADEMY OF VIETNAM
BTEC HND IN BUSINESS (ACCOUNTING)
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Unit 3: Organisations and Behaviour

Berkshire Hathaway
1 of 2
Mr Zoran Rakovic
19/11/2013

I, Đào Thị Thu Hiền – Sunny hereby confirm that this assignment is my own work and not copied or
plagiarized from any source. I have referenced the sources from which information is obtained by me
for this assignment.

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FOR OFFICIAL USE
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Unit Outcomes
Outcome

Evidence for
the criteria

Feedback

Assessor’s decision
First
attempt

Understan
d the
relationshi
p between
organisatio
nal
structure
and culture
LO1

Understan

d different
approache
s to
manageme
nt
and
leadership
LO2

Compare and
contrast different
organisational
structures and
culture

1.1

Explain how the
relationship
between an
organisation’s
structure and
culture can
impact on the
performance of
the business

1.2

Discuss the

factors which
influence
individual
behaviour at work

1.3

Compare the
effectiveness of
different
leadership styles
in different
organisations

2.1

Explain how
organisational
theory underpins
the practice of
management

2.2

Evaluate the
different
approaches to
management
used by different
organisations

2.3

Merit grades awarded

M1

M2

M3

Distinction grades awarded

D1

D2

D3

Rework

Internal
Verification


Comments by Assessor

Assignment
( ) Well-structured; Reference is done properly / should be done (if any)

Overall, you’ve

Areas for improvement:

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Company: Berkshire Hathaway
Founders: Oliver Chace
Industry: Insurance; Financial Services
History:
Berkshire Hathaway is a company that was initially set up as a textile manufacturer in
1839 by Oliver Chace. During that time, the company was based in Valley Falls,
Rhode Island and operated under the name Valley Falls Company. It eventually
merged with and used the name of another textile manufacturer, Berkshire Fine
Spinning Associates (originally Berkshire Cotton Manufacturing Company, which was
based in Massachusetts).
The Hathaway name became part of the company in 1955, when a merger between
the Hathaway Manufacturing Company and Berkshire was successfully agreed on.
The Hathaway Manufacturing Company was then a textile business that successfully
recovered from the textile decline and the Great Depression. The merger resulted in
the company relocating its headquarters to New Bedford, Massachusetts and
installing 15 factories that employed over 12,000 labourers. However, as the demand


for textile continued to dwindle, seven of these locations eventually closed down with
huge layoffs but not before it surpassed $120 million in revenue.
Warren Buffett, the man who would become Berkshire Hathaway’s CEO, came into
the picture in 1962, when he started purchasing Berkshire Hathaway shares. He was
eventually able to buy enough shares to allow him to change the management and
eventually gain control of the company.
During Warren Buffett’s time, he still kept the company’s textile milling business but
eventually, the company started investing in the insurance industry among other
things. His purchase of the National Indemnity Company marked the company’s first

venture into the insurance market, which proved to be very successful. The last
Berkshire Hathaway plant was closed in 1985. Buffett continued to direct Berkshire
Hathaway into other investments, which led them to owning brands such as Dairy
Queen, Clayton Homes and MidAmerican Energy Holdings.
Currently, Berkshire Hathaway stands as the most respected company (Forbes 2007)
and currently has the world’s richest man as its CEO and largest shareholder.
Berkshire Hathaway is also one of the few companies that have reached the
$100,000 share price.
Note as of 2012:
Berkshire Hathaway (Berkshire or the group) is diversified holding company engaged primarily in the provision
of insurance and reinsurance products and services. Additionally, the group is engaged in non-insurance
businesses including utilities and energy, finance, manufacturing, service and retailing. Berkshire has overall 76
operating businesses. The group primarily operates in the US. It is headquartered in Omaha, Nebraska and
employs 270,858 people. The group recorded revenues of $143,688 million in the financial year ended
December 2011 (FY2011), an increase of 5.5% over FY2010. The operating profit of the group was $15,314
million in FY2011, a decrease of 19.6% over FY2010. The net profit was $10,254 million in FY2011, a decrease
of 20.9% over FY2010.

The organisational chart is as follows:



Company: Viet Tien Garment Joint Stock Corporation Vtec (Vietnam)
Founders: Sam Bao Tai
Industry: Garment
History:
Originally, the company was a private garment factory for ‘Thai Binduong Engineering
Company@ - trading as Pacific Enterprise. There are 8 shareholder capital
contributions by Mr. Bao Tai Ginseng - a Chinese businessman who acts as director.
The factory area of 1,513 meter square with 65 sewing machines and about 100

workers.
After the complete liberation of the south, the state takeover, nationalised and then
assigned the Ministry of Light Industry (now the Ministry of Industry) to manage. In
1977, the Ministry of Industry recognized as state-owned enterprises and renamed
the Viet Tien Garment Factory.
In 1979, the factory burn and was a total loss. Getting help from other units,
enthusiasm attached to workers and with the leadership of Viet Tien, the business
was put back into operation and increasingly asserted its position on the market.
Thanks to great efforts, the 103/CNN/TCLD discretion was given by the Ministry of
Industry Enterprise. The Ministry of Industry Enterprise accepted and upgraded Tien
garment company statues. In 1991, the Ministry of foreign economic relations of
import and export license directly with foreign name is VIET TIEN GARMENT
IMPORT-EXPORT COMPANY, abbreviated as VTEC (by license number on 102570
05/02/1991). In 1993, the company establishment licensing number 214/CNN-TCLD
was given.
Before 1995, the direct management the company is producing the nation’s
garments. In May 1977, it was rename Viet Tien Garment Enterprise. With the
development of the garment sector, the enterprise was change into a company and
later a corporation. The name Viet Tien (Vietnam advancing forward) was kept under
the wishes of the staff.
At the request of the Vietnam Textile and Garment Group in Report No. 01 28/TDDMTCLD in 2007 and the scheme of establishment of the company's proposed May
Vietnam Tien.Theo Organization Department - Personnel decisions to: Establish
Vietnam Tien Garment Corporation on the basis of reorganisation Vietnam Tien
Garment Company under the Vietnam Textile and Garment Group.
Vietnam Tien Garment Corporation operating as a parent company - subsidiary
located in the structure of the Vietnam Textile and Garment Group. The Vietnamese


name given as Corporations Vietnam Tien Garment Joint Stock and the International
Trade name: Viettien Garment Corporation (VTEC).

At present VTEC has six enterprise and 14 affiliates over 20,000 workers. It
specialises in the manufacturing of garments and the trading of maters and
accessories for the garment sector, equipment and components, and import-export
services. Its products are diverse and are sold at over 20 shops and 300 agents
throughout the country.
Note: As of 2012:
Viet Tien garment Joint Stock Company established since 1976, is presently a production
and trade company belonging to VINATEX, specialising in garment manufacture, trade of
equipment, materials & accessories for garment industry. The company presently carries out
business transactions with more than 60 customers in 20 countries over the world: Asia,
Europe, USA, Australia and North America, etc.
Specialises in shirts, trousers, suit, blouses, jackets, denim suits, coats, sweaters, trading in
industrial garment Trading in electric, audio, light equipment, Forwarding, Shipping agency.

KEY Employees

Sources:

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07E69A79-DC43-4A40-B015C2C489E9E28F
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With reference to the above case (you are strongly advice to research into the above
company), you are to research and correlate to Viet Tien Garment. Prepare a brief
report, citing relevant research, which addresses the following tasks:
Task 1
• Compare and contrast the different organisational structures and culture
between Berkshire Hathaway and Viet Tien Garment
1.1

•

Explain how the relationship between Berkshire Hathaway structure and
culture can impact on the performance of the business
1.2

•

Discuss the factors which influence individual behaviour at Berkshire
Hathaway
1.3

This part of your report should not exceed more than 1,000 words. Diagrams, charts,
tables and appendixes are not to be included in the word count.
Task 2
Using research and the facts presented in the case:
•

Compare the effectiveness of different leadership styles with Berkshire
Hathaway and to Viet Tien Garment
2.1

•

Explain how organisational theory underpins the practice of management for
with Berkshire Hathaway
2.2

•

Evaluate the different approaches to management used by two organizations
(Berkshire Hathaway and to Viet Tien Garment).
2.3

This part of your report should not exceed more than 1,500 words. Diagrams, charts,
tables and appendixes are not to be included in the word count.


GRADING
Pass is achieved by meeting all the requirements defined in the assessment criteria. (Refer
page 2 of the assignment brief)
Merit Identify and apply strategies to find appropriate solutions.

(M1)

Characteristics / Possible Evidence – Use of comparative charts and sufficiently
detailed to show that an effective approach to study and research has been applied
to Berkshire Hathaway.
Select and apply appropriate methods.

(M2)

Characteristics / Possible Evidence – relevant theories and techniques have been applied in
leadership style and approaches to management especially related to Berkshire Hathaway
sources sources are justified.
Distinction
(D1)

Use critical reflection to evaluate own work and justify valid conclusions

Characteristics / Possible Evidence – creation has been used to generate and justify
valid comments on approaches to different management and style of leadership of
Berkshire Hathaway.
Demonstrate convergent, lateral and creative thinking

(D3)

Characteristics / Possible Evidence – report has been prepared with
care and clearly demonstrates the learners thinking, innovation and
creative thought used.


PRESENTATION
1. The assignment should have a cover page that includes the assignment title,
assignment number, course title, module title, Lecturer/tutor name and
student’s name. Attach all the pages of assignment brief/cover sheet with your
report and leave them blank for official use.
2. Ensure that authenticity declaration has been signed.
3. This is an individual assignment.
4. Content sheet with a list of all headings and page numbers.
5. A fully typed up professionally presented report document. Use 12 point Arial
or Times New Roman script.
6. Your assignment should be word-processed and should not exceed from
2,500 to 3,000 words in length.
7. Use the Harvard referencing system.
8. Exhibits/appendices are outside this limit.
9. The assignment should be not contain a bibliography – but should contain a
list of any references used in the assignment.

NOTES TO STUDENTS FOR SUMMISSION

•

Check carefully the submission date and the instructions given with the
assignment. Late assignments will not be accepted.

•

Ensure that you give yourself enough time to complete the assignment by the
due date.

•

Do not leave things such as printing to the last minute – excuses of this nature
will not be accepted for failure to hand-in the work on time.

•

You must take responsibility for managing your own time effectively.

•

If you are unable to hand in your assignment on time and have valid reasons
such as illness, you may apply (in writing) for an extension.

•

Failure to achieve a PASS grade will results in a REFERRAL grade being
given.

•

Take great care that if you use other people’s work or ideas in your
assignment, you properly reference them in your text and any bibliography.


•

NOTE: If you are caught plagiarizing, the University policies and
procedures will apply.

Prepared for
Lecturer Mrs Lê Thị Hạnh
Unit 3: Organisations and Behaviour
Banking Academy,Hanoi
BTEC HND in business(Finance)


Prepared by:
Đào Thị Thu Hiền – Sunny
Registration No: F06–042. Class: F06A
No of world: 3,000
Submission Date: 9th December

Table of contents
Introduction.......................................................................................................2
TASK 1: Understand the relationship between organisational structure and
culture............................................................................................................3
1.1. Compare and contrast different organisational structures and culture
...................................................................................................................3
1.1.1. Berkshire Hathaway....................................................................3

1.1.2. VietTien Garment Joint Stock Corporation Vtec ( Vietnam ).....4
1.2 Explain how the relationship between an organisation ‘s structure
and culture can impact on the performance of the business......................7
1.2.1 Relationships between structure and culture :..............................7
1.2.2 How that can impact business performance.................................7
1.3. Discuss the factors which influence individual behavio..................11
1.3.1. Internal factor............................................................................11
1.3.2 External factor:...........................................................................11
Task 2: Understand different approaches to management and leadership. .13
2.1 Compare the effectiveness of different leadership styles in different
organisation.............................................................................................13
2.1.1 Berkshire Hathaway...................................................................13
2.1.2 Viet Tien Garment:.....................................................................14
2.2 Explain how organisational theory underpins the practice of
management.............................................................................................14
2.3. Evaluate the different approaches to management used by different
organisations............................................................................................15
Conclusion.......................................................................................................17


Summary
Berkshire Hathaway is diversified holding company engaged primarily in the provision of
insurance and reinsurance product and services. Additionally, the group is engaged in noninsurance businesses including utilities and energy, finance, manufacturing, service and
retailing. Berkshire has overall 76 operating businesses.
Viet Tien garment Joint Stock Company established since 1976, is presently a production
and trade company belonging to VINATEX, specialising in garment manufacture, trade of
equipment, materials & accessories for garment industry. The company presently carries out
business transations with more than 60 customers in 20 countries over the world.

Introduction
1. Aims/ Purpose/ Scope:
The ultimate purpose of the report is bring relationship between structure and culture of
Berkshire Hathaway and Viet Tien Company, the difference approaches to managerment
and leadership of them. The scope of the report includes:
• The nature of and influences on both formal and informal organization.
• Different organization structures and networks, organization charts.
• Organization culture.
• The features of power, role, task and person cultures.
• The development of culture and how it can be managed in the interest of
•
•
•

organization performance.
Basic theories of personality, perception, attitude.
The different between manager and leader
Management style

2. Source of Information
• Internet
• Course Books
• Library
• Lectures
• Researching documents
3. Limitations of Report
In researching process, I meet some difficulties such as it was hard to find related
information about Berkshire Hathaway and Viet Tien, conflicting in teamwork so this
report still has some limitations.

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TASK 1: Understand the relationship between organisational
structure and culture
1.1. Compare and contrast different organisational structures and culture
Berkshire Hathaway
Organizational

a) Span of control

structure
b) Departmentatio

Flat structure

Viet Tien
Garment
Tall structure

(Wide span of control)

(Narrow span of

Multidivisional

control)
Matrix

Role culture

Task culture

Person culture

Power culture

n
Organizational

c) Culture

culture

1.1.1. Berkshire Hathaway
a) Berkshire has overall 76 operating businesses. The group primarily operates in the
US. It is headquartered in Omaha, Nebraska and employs 270,858 people. Berkshire
Hathaway is a company that was initially set up as a textile manufacturer. Warrent Buffet
becomes Berkshire Hathaway ‘s CEO and keep eventually gain control of company. Firstly,
he still kept the company ‘s textile milling business but then the company started investing in
the insurance industry and provided seccessful. Buffett directed Berkshire Hathaway into
other investments.
This is a flat organisation having few levels of hierarchy and a wider span of control
where managers will be responsible for many subordinates and many management functions
will be delegated.

3


Table 1: Organisation chart of Berkshire Hathaway

b) Multidivisional structure is an organizational structure in which each product line
can have different units or division. Berkshire Hathaway is currently operating in 2 industries
like insurance and financial services (Scenario,2013) so it means that Berkshire Hathaway
has 2 product lines so the ways BH employs the organizational structure in each product line
are variance.
c)The culture of Berkshire Hathaway is Role. BH has divided into groups to
implementation their specific functions such as insurance group, finance and financial group,
manufacturing, service, retailing and so on. (Scenario,2013)
Berkshire Hathaway is a company which has person culture. BH has really focused
on person and it led to the success or failure of the company. Berkshire Hathaway listens to
the operation of the company, it has a large influence from the personal opinion. Berkshire
Hathaway and CEO Buffet realize that person is the key factors and they cannot race with
other companies without people deciding factor. BH cares and serves the employee ‘s interest.
(Mihaljevic, 2013)

1.1.2. VietTien Garment Joint Stock Corporation Vtec ( Vietnam )
a) VietTien is tall structure because it has large amount of management levels with
big number of management staff as 1,000 people (Viet Tien,2013). With this structure Viet

4


Tien has more middle managers to transfer the information such as they can switch the
complex vision from the top into the comprehensible term to the lower levels. In each
management level has small number of member to join the making decision process.

Table 2: Organisation chart of Viet Tien garment Joint Stock company

b) Viet Tien is a Matrix organization because Viet Tien has created specialist teams
to complete a particular job. VT has some functional departments such as: Planning and

Import- Export

Department, Trading and job Department, Finance – Accounting

Department, Technical Technology Department and so on (Viet Tien, 2013). Each functional
department will have responsibility to their own activities and staffs. Company has different
roles to achieve Viet Tien ‘s objectives.
c)Viet Tien has task culture. Since some department are formed to do some particular
job especially when the task has many steps.
Viet Tien has power culture. GMOS is responsible for ensuring the operation of the
Corporation compliance with the law and the Charter of the Company (Viet Tien, 2013).

5


Therefore the power is focused on few people who are in the top of company and make all the
important decisions.

6


1.2 Explain how the relationship between an organisation ‘s structure and
culture can impact on the performance of the business
1.2.1 Relationships between structure and culture :
Organizational structure and organizational culture have a dependent relationship with one
another. In the business world, management structure determines the behaviors, attitudes,
dispositions and ethics that create the work culture.
If a company's organizational structure is strictly hierarchical, with decision-making power
centralized at the top, the company's culture will likely reflect a lack of freedom and
autonomy at the lower levels. If a company's management structure is decentralized, with

shared power and authority at all levels, the culture is likely to be more independent,
personalized and accountable. (wiseGEEK, 2003-2013)

1.2.2 How that can impact business performance
 Berkshire Hathaway
Berkshire Hathaway has a flat structure so:
•

Advantages:

_ Delegation becomes a relatively important part of managing an organisation - extra
responsibilities for subordinates and, therefore, faster career development.
_

Communication may be improved (it should be faster) overall since there are fewer

layers in the hierarchy.
•

Disadvantages:

_ Making decision in longer time. This is particularly important in rapidly changing
markets.
_ Flat organizational structures feature fewer layers of management, flat organizations
can incur smaller expenses on salaries.

Flat structure affected decision of Warren Buffet . In fact as soon as Warren Buffet has
also decided early mistakes in his career. And he described it as blunders worth $ 200 billion.
In 1960, while searching for investment opportunities, Buffett found textile company
Berkshire Hathaway is gradually sell off their factories. The company sold off a textile mill

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for cash redemption of their shares and the stock value will undergo a corresponding surge in
the months after you down.
Decisions by the leaders themselves and make proposals often done to bring the worst
financial performance. To overcome this, they need to appreciate the importance of the
critical opinions and discussions within the company. Decisions are made but lacks sync
with overall business strategy usually capable of causing revenue loss than expected.
(CafeBiz, 2012)
Berkshire Hathaway has Role culture and Person culture so:
_ The divisions and subsidiaries were autonomous, with little or no oversight by
headquarters, particularly in the areas of auditing, accounting, and internal controls.
Berkshire Hathaway's divisions and subsidiaries are, by Buffett's admission, run with little
or no oversight by Omaha headquarters. Each year he sends the CEOs a general letter
outlining high-level goals and requires very few reports or status updates. One-way
communication of monthly and quarterly financial results is the primary method used by
most of the business units to report to headquarters.
_ Constant pressure was strongly exerted by distant top management on subsidiaries and
divisions to achieve profit goals set unilaterally and arbitrarily by corporate headquarters.
What we have seen, in the Sokol scandal most recently, is that joining the Berkshire family
may give some CEOs the impression they can break rules as long as they deliver expected
results. In fact, they may even be touted as a possible Buffett successor.
Berkshire's operating businesses are managed on an unusually decentralized basis. There
are essentially no centralized or integrated business functions (such as sales, marketing,
purchasing, legal or human resources) and there is minimal involvement by Berkshire's
corporate headquarters in the day-to-day business activities of the operating businesses.
(Francine, 2011)

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The chart 1: show stock chart for 10 year (from 1999 to 2008) of Berkshire Hathaway
(Baker, 2008)
The chart shows a significant increase in revenue from 1999 to 2008 .Since 1998, and at
almost every time period since then, Berkshire has not just done that well, and more
interestingly, it has paled compared to Goldcorp.
 Viet Tien Garment Joint Stock Corporation Vtec (Vietnam)
Viet Tien has Tall culture so:
•

Advantages:

_ The same work passes through too many managers. Decisions can often be made and
carried out more quickly in flat structures
_ Quality of decision is higher due to senior manager ‘s skills and experience.
_ From employee to management shorter so in this structure, employees can be supervised
and their activities monitored closely.
_ Tall structures provides employees a sense of job security.
• Disadvantages:
_ In Viet Tien employees have little control over decisions and must merely do their jobs.
It can create no accountability at employee, an hostility environment
Viet Tien Garment owns a large management team is extremely professional and gave them
a large market. The company ‘s markets include: Japan, the EU and the US so many brands
and different styles. With a management team and strong employees, Viet Tien made many

9

strategis marketing and business. Company also ensures delivery schedules to confirm the
reputation and standing firm on the market. (Viettien, 2013)
Viet Tien gives some decision to solve and improve the problems. The economy of Vietnam
falls into difficult situation, Board of directors has provided many measures to duel with the
recession. Board of directors (B.O.D) has directed executive management broad implement
the restructuring and reorganization of management system that suit the characteristics of the
Corporation. It

eliminates the unnecessary intermediate stages and reduces the cost of

management, gradually promoted overall strength, the capacity of key staff has been raised to
a level; business and manufacturing activities of the Corporation are highly effective, being
more productivity. The revenue and profits are higher year after year. (Anon, 2012)

Culture of VietTien is Task and power:
They have bonus, decision-making authorities, freedom and plentiful of other incentives.
the average income of employees is 6.000.000vnd/ month, an increase of 9% over the same
period. Thus workers feel enthusiastic to work and they did perform well.(Viet Tien , 2012)

Table 3: The revenue of Viet Tien in 2012 (MinhThu, 2012)
6 months of 2012, net revenue VTEC 1861.39 billion, up 22.17% compared with the same
period in 2011. Increase the share capital of the company made a gross profit margin reached
224.28 billion, up slightly from the first 6 months of 2011

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1.3. Discuss the factors which influence individual behavio
1.3.1. Internal factor
•

There are big five factors of personality:
Openness to experience: Berkshire Hathaway is one of the most repected companies with
high competitiveness and 270,858 employees (Scenario,2013) so to survice in such an
intense environment employees should have specialized skills and knowledge to adapt

•

with the transformation of business environment.
Conscientiousness: This factor of employees that can impact on the performance of
Berkshire Hathaway. The effort and willing to the jobs can up the productivity and
effectiveness of task. The sense of duty and dedication of employees supports Berkshire

•

Hathaway grow stable over the long term.
Extraversion: They need to be friendly to create the hamonious in working environment

•

and gregarious to share the experience and skills at work.
Agreeableness: Employees should be modesty to smoothly co-operate among colleagues
to complete their task with highest results. They should have morality to strengthen
Berkshire Hathaway ‘s image to the customers, it support to keep their loyalty toward the

•

company.
Neuroticism or natural reactions: Berkshire Hathawayis a big company and work
pressure for staff is extremely large. Working in such intense environment employees

cannot stay away from stressful circumstances. Too much anxiety and depression can
influence the success in their jobs.

1.3.2 External factor:
•

Discipline:
For Berkshire Hathaway, the two labor laws that would have affected them the most

would have been the fair labor Standards Act of 1938 and the Civil rights Act of 1964. The
Fair Labor standards act of 1938 had major effects on what was being paid to the employees
profits. Berkshire Hathaway was not in existence in 1938, but this law would have had major
implications for them. The Civil Rights act of 1964 had a major effect on everything in
America and the companies of Berkshire Hathaway would not have been excluded.
The Fair Standards Act of 1938 set a minimum wage and overtime for workers. Before this
time workers were paid based on what the companies wanted to pay not a national standard
for the work. Meaning that employee could make a wage base on the area you were living and
the profits and loss of a company.

11


Civil Rights Act of 1964 outlawed discrimination in hiring, firing, compensation based on
race, color, religion, sex, national origin, and later age and disability.
•

Working condition:
Warrent Buffet with Berkshire Hathaway managers has created a work environment

extremely professional. They created their employees a maximum comfort while working.

BH gives them a sense of the environment with less pressure. Employees can complete peace
of mind working in a relaxed environment and professional.
The salary issues also deserve attention of managers. If management want employee long
dedication to the company, they should consider increasing the salary schedule to retain
talented employees.
Berkshire Hathaway provides workers’ compensation benefits, which include the
payment of all appropriate medical treatment for work-related injuries or illnesses. Berkshire
Hathaway Homestate Companies (Cypress Insurance Company, Oak River Insurance
Company and Redwood Fire & Casualty) provides workers’ compensation coverage for you
in the event employee sustain a work-related injury. The Berkshire Hathaway Homestate
Companies MPN accesses medical treatment through selected Blue Cross of California and
Kaiser On-The-Job providers. These doctors, hospitals and other providers respond to the
special requirements of on-the-job injuries or illnesses.
(capslo, n.d.)

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