How to gradually perfect management organizational structure at Minh Hong Limited Company

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INTRODUCTION
As you know, Vietnam has been in transitional period of advancing to
socialism. In building the material facilities for the socialism, the economic
country has been under many fundamental changes for years. The 8
th
Communist Party Congress of Vietnam reaffirmed its goal of advancing to
socialism; carrying out industrialization and modernization. In order to have
a reasonable, powerful and effective economic structure, the internal factors
(other economic factors, types of enterprises) must prove strong and operate
well. If the enterprises want to operate effectively, it will be important to set
up a dynamic and reasonable management apparatus. Beside, it requires us
to have a high level of knowledge and understand important role of
management in each enterprise.
Nowadays, with the requirements of the new era: while the commodity
economy is facing fierce competitions, the enterprises management needs to
be strong and dynamic enough to exist and develop. Therefore, it is
important for the enterprises to establish a management organizational
structure. This main task must be done not only by businesses but also by
the entire society.
In addition, there are different characteristics in an organization, in every
economy and in every type of business. So, building a management
organizational structure, which must to be different to suit the nature and the
production level of each business, is necessary.
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From researching and studying documents on management organizational
structure at Minh Hong Limited Company together with the help from the
teachers of the English Department and specially Lecturer Tran Quang Nha,
I have decided to choose my graduation theme as: “How to gradually perfect
management organizational structure at Minh Hong Limited Company”.

Apart from the introduction and conclusion, the Graduation Assignment
consists of three chapters:
Chapter1: Theoretical background of management organizational structure.
Chapter2: Present situation of management organizational structure at Minh
Hong Co., Ltd.
Chapter3: Solutions suggested to perfecting management organizational
structure at Minh Hong Co., Ltd.
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Chapter 1:
THEORETICAL BACKGROUND OF
MANAGEMENT ORGANIZATIONAL
STRUCTURE
I. Concepts.
1. What is organization?
Organization is a basic function of management and corporate governance
activities in particular. According to broadest sense, organization is a leading
factor in the implementation of any activity, range from three to several
social communities. This is one of the important tools of leadership and
management to transform from the objectives into the reality. Work
organization are understood and implemented by the following two specific
meaning: firstly, organize a process that works (example: business
activities). Secondly, organize a system of control apparatus (leadership,
management). Here, we only mention the second issue, called:
organizational management. There are many different definitions of
organization, it is difficult to identify the most concise and accurate
definition.
Organization is a structure (an apparatus or apparatus system) which is
intentionally constructed of the role and function (to be legalized). In which,
its members carry out their assigned parts with the organic association in

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order to achieve common tasks. This is an organization definition which is
close to the organizational management concept.
2. What is organizational structure?
An organizational structure is a mainly hierarchical concept of subordination
of entities that collaborate and contribute to serve one common aim.
Organizational structure is an organization’s existence form which denotes
the arrangement of parts of the organization and their relationships in that
order.
II. Enterprise’s management organizational structure.
1. Concepts.
* What is management?
The Oxford Dictionary, it is said that “management is the act of running and
controlling a business or similar organization”.
There is a relatively complete definition as follow: management is
manager’s purposeful impact to subject who are managing; by a solutions
system to change the subject’s state, to bring system to approach the final
goal; to serve for human benefits.
According to Peter Drucker’s view on management, a well-known American
business professor and consultant, he suggested that the work of the manager
must be done such as: planning (setting objectives), organizing, integrating
(motivating and communicating), measuring, and developing people.
* Enterprise’s management organizational structure is a combination of parts
which constitutes the management apparatus and the relationships between
those parts.
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2. Requirements for the Enterprise’s management organizational structure.
The rationality of a company which is expressed in these following

requirements:
* Optimality: Must be ensured between the stages and level of management
which are setting a reasonable, dynamic relationship and serve business’
benefits.
* Flexibility: Must be ensured for adaptability to any situation occurring in
the system as well as outside the system.
* Stability: This requirement seems to conflict with the flexibility, but it is
important. Because, sustainability of organizational structures to ensure
effective management and administration in normal situations. When
arbitrary changes happened many times, it will cause negative consequence.
* Reliability: All enterprise’s activities of administrating, coordinating and
inspecting require accurate and timely information. Management
organizational structure must ensure reliable information.
* Economicalness: Management organizational structure for the lowest costs
but the highest efficiency during construction and use process.
3. Meaning of management organizational structure.
Management organizational structure is a form of division of labor in the
fields of management, concerning the operation process and administration
system. Management organizational structure not only reflects the
production structure, but also positive effects of the development of
production.
Organizational structure allows us to organize and use reasonably the
resources. It also allows us to determine the primary relationship among
specific tasks, responsibilities and powers associated with these individual
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who are concerning. If an organizational structure wants to survive, it must
be consistent with business’s economic, technique characteristics, business
environment and be flexible to adapt to changes in Enterprise’s production
and business process. A bulky, less flexible structure will make negative

impacts to the entire enterprise’s business results. And, it must be replaced
by the more comprehensive and flexible apparatus.
III. Types of management organizational structure.
Along with the development of production that formed many types of
management organizational structure, each one has different characteristics,
advantages and disadvantages and it is applied in specific, certain
conditions.
1. Online structure.
* Basic contents of the online structure are a ladder, which has many stairs.
In which, Superior controls (determine, command, directly check) juniors
and juniors must submit superior’s ideas. This is a mandatory control-
submission relationship.
* Advantages and disadvantages:
- This is a simple and clear structure for the united command. This
structure’s advantages are clear responsibility, and to maintain discipline and
inspection. Leaders must take full responsibility for the junior’s activities, so
can maintain the one-superior-in-charge regime.
- It also has some disadvantages. When business applies this type of
structure, Enterprise’s parts will have the distance and lack coordination. It
makes difficulty to motivate staff’s creativity and attract professionals.
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2. Functional structure.
* The growth will require horizontally expanding. In which, each level of
management must perform management function at each state with more
complicated levels. So, managers need to have good knowledge, understand
the situation and make the right decisions. Junior not only takes the
leadership of a department function, but also takes the leadership of the
business owners and other parts.
* Advantages and disadvantages:

- With relatively complex operation, the functional structure is more
effectively than the online structure. Director himself doesn’t analyze all
issues, monitor every company’s situation. But, it belongs to functional
department’s tasks (experts and staff who has specialized knowledge of
economic, technical, understanding of current institution related to business
activities and have experience of situations).
- However, functional structure makes management apparatus
cumbersomely, bureaucracy prone director and unclear information. It
makes staff lack a comprehensive vision and coordination in order to
accomplish common goals.
3. Incorporate online-function structure.
* Incorporate online-function structure is commonly applied in medium and
large business. This is the combination of two types of relations: control-
submission relationship and coordination-collaboration relationship.
* Advantages and disadvantages:
- This type of structure has exploited the advantages of the online structure
and the functional structure. Before, Company’s director makes a decision
on issues (which relate to the company’s mission); he is staffed by the
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functional department. It helps Director to clearly hold the company’s
situation. Because, all of units in the company are guided directly by the
board of directors, the company’s production and business are united.
- But, this structure has revealed many weaknesses. There are many
functional parts; they usually have to hold many meetings and it makes
everybody to feel tired, stressful, waste of time. In addition, it also causes
the internal conflicts company because of the inconsistent opinion. It doesn’t
make staff. It makes the department unable to promote innovations and
technical improvements and combine different departments.
Diagram 1: Incorporate online-function structure in a product production

enterprise.
Function Staff
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Director
Vice
Director
Vice
Director
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4. Divisional structure.
* This is a kind of new structure which was consistent with the development
of modern economy. It often applies for large corporate combinations to
adapt to threats and opportunities outside. The company’s management
apparatus is structured according to product, market and customer.
* Advantages: - Allowing the company to have flexible adaptations in the
work to meet to the needs of these operating groups outside the central and
realize the changes around the area of operation.
- Creating linkages with depth through specialization in the hierarchy of
management systems.
- Focusing on the success or failure of the products, services, customer or
market specific.
- Creating distinct business units; in which it allows this division to compete
with the others.
* Disadvantages:
- Uneven development between branches can cause difficulties in the
sharing of common resources.
- Solving common problems could be coincidence between branches.
- Slow development of product quality and services compared to
competitors.
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Production
Team
Department Department
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- Although there is priority from the strength and resources of the entire
company, but it is difficult to deal with the challenge of the whole company.
- Not creating a common basis in training of high level and management
experienced staff.
- Having disperse tendency easily (excessive flexibility, weakening the
unified management effectiveness).
5. Matrix structure.
* Type of structure is combined by the functional structure and dividing
sections by product, market. This structure has become increasingly popular
in construction projects, aircraft manufacturing or software computer; in
which, the developing coordination and diverse professional activities are
required to unable resources easily to switch to other projects.
* Advantages:
- Combining the advantages of the functional structure and divisional
structure.
- Emphasizing on technical and market for organizations which are
operating in complex environments.
- Creating management staff that has capability to adapt to the technical
field, marketing and personnel.
* Disadvantages:
- Very expensive because of many managements.
- Each stage under the direction of the two centers. Unified concentrated
operation’s effect is limited.
- Powers and responsibilities of managers may overlap. Create easily
problems and gaps in the department’s efforts, inconsistently.
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6. Mixed type of structures.
In the management practice, people often expect to have source division
that to be able to balance each method’s advantages and disadvantages. It is
necessary especially with the combination of large companies which trade in
many high-technologies in their territories. Management apparatus is divided
into branches. Each branch is organized under different structures for
specific tasks and a separate legal unity, although it is monitored uniformly
at the company.
Chapter 2:
PRESENT SITUATION OF
MANAGEMENT ORGANIZATIONAL
STRUCTURE AT MINH HONG CO., LTD
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I. Overview of Minh Hong Co., Ltd.
1. Establishment and development process of Minh Hong Co., Ltd.
- The name of the company: Minh Hong Limited Company
- Transaction name in brief: MH CO., LTD
- Address: My Duc – Ha Noi
- Tell: 034.3847153
- Tax code: 0100765718
- Fax: 034.3849153
- Year of establishment: April 10
th
, 2000
- Business license No: 052922
- Account number at My Duc Bank of Agriculture and Rural Development:
445071102812
Minh Hong Co., Ltd was set up on April 10

th
, 2000. The company has been an
enterprise with legal status since the establishment. Company may use its own
seal as prescribed by the State and organize business activities in accordance
with regulations of the Socialist Republic of Vietnam. With the best effort, the
company has existed and developed for many years. The development process
of Minh Hong Co., Ltd may be divided into 2 periods as follows:
 The developmental process from 2000 to 2003.
Minh Hong Company Limited was established in 2000 with legal capital of
VND 1.5 billion. The company has met a lot of difficult things in the first
period, such as: capital, labors, technology. About capital, which were loans
from My Duc Bank of Agriculture and Rural Development and somewhere?
At the beginning, they only had 25 employees and they had to recruit and
train all new employees. Now, number of employee is continuously
enhancing - 35 persons in 2002 and 50 persons in 2003. Although facing
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many difficulties, the company has turnover of VND 500 million in 2000,
VND 670 million in 2001 and doubling in 2003 - VND 1.3 billion.
 The developmental process from 2003 to present .
The company has invested another line of machines and modern
equipments. Therefore, it makes their labor productivity triple and improves
product quality. Stable activities of this line helped the company get profit
and open a new orientation about production and business activities in the
future.
The company actively found out partners for joint venture and linking.
Their products were appreciated and trusted. After 10 years of development,
Minh Hong Co., Ltd always achieves all objectives at a rapid growth. The
market of company also continuous expand, before 2003 the company
focused on 2 primary markets: Hoa Binh and Ha Tay. But they are now

providing goods for more than 10 the northern and the central provinces.
2. Functions and tasks of the company.
According to established business decisions, Minh Hong Limited Company
is operated by functions and tasks as follows:
* Functions:
- Production domestic animal feed
- Procession of domestic animal feed supplement.
- Distribution goods for wholesale agencies, retailer, large or small farm…
* Tasks: MHC is a company specialized in manufacturing of domestic
animal feeds. The company’s task is production completion and
development for meeting the current raising needs. Company has promoted
investment, expanded production, renewed equipment and applied new
technology in order to improve productivity, product quality. They have
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been expanding gradually production scale, developing product and market
distribution channels and advertising the company’s brand, which make the
company to have a strong brand in the Red river delta region. The company
continuously improves quality to protect the reputation with the slogan:
“only gold quality” and carry out product development strategies to meet the
diverse raising needs.
They also ensure safety for workers, protect environment and observe the
law, fully implement the rights of employees, and participate the public
activities in the business process.
3. Features of the company’s product and the market share.
* The company’s product:
MHC is a company specialized in manufacturing of domestic animal feeds.
They provide feed to pigs, chickens and ducks at each different stage of
development. Having feeds for piglet from 5 kg to grow-up, domesticated
bird and water bird... Looking at the data in Table 1, we see that Company’s

product structure is diverse and rich. The product is manufactured as a
condensed powder or tablets which are suitable for characteristics of each
species and each stage of their development. There are two types of
packaging – bag of 5 kilogram each and 25 kilogram each. Company’s
products gained credibility in the market with good quality and reasonable
price. Therefore, more and more clients come to the company.
Table 1: Name some of the company’s products.
Product Name Type Using subjects Type of bag
MH 521 Condensed Sow 5kg/25kg
MH600 Condensed Yellow Chicken 5kg/25kg
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MH1810 Condensed Porker from 5 kg to grow-up 25kg
V70 Tablet Small Duck 25kg
V72 Tablet Duck from 2 weeks old to grow-up 25kg
VMH801 Tablet Small Chicken 25kg
VNH802 Tablet Grow-up Chicken 25kg
MH501 Condensed Porker 5kg/25kg
(Resource of sales department)
* The market share:
Although, the company’s market is narrow and mainly in the North and the
Central provinces, the turnover keeps rising because the company has gained
more customers. Major clients of the company are wholesale agencies,
retailer, small, medium and large farms. Company’s guideline shows that
good productions isn’t enough to survival and develop, need to know the
sales organization. Company has established a potential sales network which
is a bridge between production and consumption.
By way advertising, Company has signed many contracts. In 2007, only
signed 89 contracts but more than 120 contracts was signed in 2008, 2009
with overall worth about VND 4 billions. But in it, there are a lot of small

contracts. Specifically, the projects which provide feed for the mountainous
districts of Hoa Binh province, the remote districts of Thanh Hoa province
or some small farms in Ha Tay province.
Diagram 2: Network of the Company’s product consumption
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(Resource of sales department)
In current years, domestic animal feed industry has developed with fierce
competitions. More and more domestic animal feed has been imported from
China. Although, company has improved many product designs and product
qualities, the company’s product consumption has reduced. Finally, they
must improve product quality, cut the good’s price in order to increase the
competitiveness of companies in the market.
4. Results of the company’s business production activities from 2007 to
2009.
Basis norms of the company’s business activities at table 2 are considered
encouraging. They reflect a strong, stable and advanced growth. The
company’s position has been strengthened. The turnover was worth VND
3.306 million in 2007 to VND 3.518 million in 2008, VND 212 million
increase - equal to 6.41%. This is a good signal for the company. With
increasing turnover, the company also must enhance more total capital. But,
we can see that turnover’s annual growth rate is greater than total capital’s
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Agency
Retailer
Consumer
Manufacturer
Wholesaler Retailer
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annual growth rate. In 2008 as compared to 2007, total capital increase is

5.68% which is lower than turnover by 6.41%. And it continuously
increases when we compare the data in 2008 with that in 2009. Total capital
only raises by 6.61% but turnover raises by 13.18%. It seems that the
company has invested in the right direction and managed resources
efficiently.
Table 2: Results of the company’s business production activities from 2007
to2009

Year
Norms
Unit
2007 2008 2009
2008/2007
Comparison
2009/2008
Comparison
Absolute
number
%
Absolute
number
%
Turnover
Dong
million
3306 3518 3982 212 6.41 464 13.18
Total capital
Dong
million
5542 5827 6212 315

5.6
8
385 6.61
Profit
Dong
million
315 340 420 25 7.9 80 23.5
Average Income
Dong
million
0.9 1.0 1.2 0.1 11.1 0.2 20
Number of employees person 46 53 70 7 15.2 17 32.1
(Resource of sales department)
In 2007, the company’s profit is VND 315 million, VND 340 million in
2008. In 2009, growth rate increased by about 23.5% as compared with that
in 2008. The company’s annual profits are re-invested. When the re-
investment is efficient, the company’s profit is not only in these numbers.
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Number of the company’s employees is continuously growing year by year.
Total workforce of the company - in 2008 as compared to 2007- increases by
7 people - equal to 15.2%. 2009 as compared to 2008, the company added
more 17 people equal to 32.1%. In 2008 and 2009, the company has
recruited more workers to positions at the offices and workshop. The
number of the employees is increasing; each employee’s average income is
also rising. An employee’s average income is VND 0.9 million in 2007,
VND 1 million in 2008 and VND 1.2 million in 2009. Every year, the
worker’s salary always rises timely in order to help them to meet with the
increase of consumer price.
II. Real situation of management organizational structure at Minh

Hong Co., Ltd.
1. Management organizational structure at Minh Hong Co., Ltd.
1.1. Overview of Company’s management apparatus.
Looking at the organizational chart of the company’s management, the
company’s organizational structure was organized according to the online-
function style. Director is the highest person at the company and he is
assisted by two vice directors and the functional departments. The
production part is workshop. Every part undertakes the different tasks and
functions at the company.
a. Management people.
The company’s leadership includes 3 positions as follows:
- Director: Director, who has the right to make decisions, is the highest
executive in the company, the company’s legal representative and takes
responsibility before the law for the company’s entire production business
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