Topic: Control method in Vinamilk môn Principles of Management | Trường Đại học Quốc tế, Đại học Quốc gia Thành phố Hồ Chí Minh

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VIETNAM NATIONAL UNIVERSITY – HO CHI MINH CITY
INTERNATIONAL UNIVERSITY
SCHOOL OF BUSINESS ADMINISTRATION REPORT
PRINCIPLES OF MANAGEMENT SEM II (2022)
Topic: Control method in Vinamilk
HO CHI MINH CITY, VIET NAM 2022 2
In today's fiercely competitive market economy, the management of the system of
policies and human resource plans at an enterprise is particularly important, decisive to
the existence and development of the business. Every company or organization always
needs to have at least one way to control employees to be able to survive and operate,
especially in large companies and corporations, there are always a variety of ways to
control the production process. As one of the largest companies in Vietnam and a leader
in creating an effective working environment, Vinamilk always creates opportunities and
conditions for employees to develop themselves and train necessary skills through
various annual activities. Along with excellent human resource management by
appropriate employee control methods, Vinamilk has now become an ideal workplace for
different audiences. Not only in the aspect of employee control, but Vinamilk also
performs well in the working process. Goals are set appropriately for working conditions,
intelligently, and accomplished with excellence and efficiency. That is one of the
important contributing reasons for the company's rapid growth.
Depending on how the company operates, there are two main ways of controlling:
based on the working process and based on the whole company. First, control can focus
on events before, during, or after a process– which is formally called feedforward
controls, concurrent controls, and feedback controls. This control method forces the
company or the manager to make quick decisions in the right way and effectively.
Secondly, based on the whole company, there are two other controls: internal and
external control. These are two expansive options to expand for managers to work with
control systems. Either they can control their own or workers' behavior – internal control,
or they can rely on external circumstances to control the process – external control. A
company that wants to have high efficiency in control needs a combination of both
internal and external options. Vinamilk, as a leader in the dairy processing industry,
employs these methods to manage employees and the process. 3 TABLE OF CONTENTS
Introduction.....................................................................................................................2
About Vinamilk...............................................................................................................4
Control.............................................................................................................................4
Controlling process..........................................................................................................5
Feedforward control.........................................................................................................6
Concurrent control...........................................................................................................7
Feedback control..............................................................................................................8
Internal control.................................................................................................................8
External control...............................................................................................................8
Bureaucratic control.........................................................................................................9
Market control.................................................................................................................9
Clan control.....................................................................................................................10
Conclusion.......................................................................................................................10
Reference.........................................................................................................................11 4
Vietnam Dairy Products Joint Stock Company (or Vinamilk) was established on
August 20, 1976, headquartered was place in Ho Chi Minh City, Vietnam, and became
successful after went public on the Hochiminh Stock Exchange in 2006. Up till now,
more than 40 years since its establishment, Vinamilk has about 220,000 sale points
covering 63 provinces and cities, well received in many other major markets such as the
US, Japan, South Korea, Singapore,… Vinamilk has become the leading enterprise in the
dairy processing industry. In 2016, Vinamilk was listed in the top 300 most dynamic
companies in Asia in Nikkei Newspaper – the world’s largest financial newspaper, and
the company was also listed in the top 3 best places to work Vietnam for 3 consecutive
years (2014 – 2016). With core values set forth - integrity, respect, fairness, ethics, and
compliance, Vinamilk has become “the leading symbol of trust in Vietnam about
nutrition and health products serving human life”- said the Vinamilk representative.
In the past, the competition between production and business enterprises was due to
technological factors and capital scale, but with the current trend of globalization, the
fiercest competition is decisive for enterprises. Business is competition for people. People
are the decisive factor, the foundation for the development of enterprises. With the
economy on the rise and the competition between companies becoming increasingly
fierce, the first and most indispensable condition for business success. For a company to
thrive and achieve peak performance, managers must perform well the four functions of
management – planning, leading, controlling, and organizing, especially in controlling.
These functions refer to all processes that keep a manager up to date on key areas of the
organization's activities and facilitate any necessary organizational changes. If this
feature is not implemented correctly, confusion can quickly arise. The phrase "out of
control" indicates a failure in management.
Control is a key issue in how well plans are implemented is how well the
organization adapts to rapid change. In this era of rapid change, things don't always go as
expected, so plans must be revised and redefined from time to time. The management
function of control is the process of measuring performance, comparing results with 5
objectives, and taking corrective action when necessary. Through controls, managers
maintain active communication with people during their work, collect and interpret
performance reports, and use this information to plan actions and constructive change.
With measurement management, progress can be tracked against goals. Control helps the
organization fulfill its goal in several ways. Firstly, controls help managers monitor
changing conditions. The organization needs control systems to monitor and respond to
changes in conditions. Companies that do not adapt to the changing environmental
consciousness in the market will face difficulties and can lead to bankruptcy. Secondly,
controls will help the organization avoid double error – which occurs when small errors
go unattended and multiply their effects (for example, when a small measurement error
renders an entire object unused). Moreover, through control, organizations can ensure
quality and productivity and reduce costs. This can be achieved through a control system
that eliminates waste, lowers labor costs, and improves output per unit of time.
The purpose of the control process is to help an organization or managers allocate
time and other resources most reasonable and effective, evaluate work progress, and
adjust worker behavior. The control process begins with a plan that establishes
performance goals and metrics. The focus of the plan should be to describe the "crucial"
or "integral" deliverables that will have a significant impact on the success of the
organization. As key results are identified, the standards or measures that will be taken to
indicate success or failure in the accomplishment must be specified. There are 2 types of
standards are common to the organizational control process: output standards - measure
performance results in terms of outcomes like quantity, quality (the number of units
produced, or customers served in a period) and input standards - measure effort in terms
of the amount of work expended in task performance. Measuring actual performance
is the following step in the control process. This step plays an important role in the
production process because the company needs to find and detect the difference between
the planned plan and the actual one. Without measurement, effective control is not
possible. The next step is to compare measured performance with objectives and 6
standards to establish the need for action. There is a formula that shows the essence of
this step is Need for action = Desired Performance - Actual Performance. The above
equation shows a relationship between desired and actual performance, the more they
differ, the more operational needs are needed to perform. Finally, after identifying the
difference, the company or organization needs to take action to correct and improve the production process.
As stated above, there are two main ways of controlling: based on the working
process and based on the whole company. As a leader of the enterprise in the dairy
processing industry, Vinamilk also uses these ways to control employees and the process.
First of all, in the working process, Vinamilk starts with feedforward control – a
management and communication term that refers to giving a controlled impact to an
employee or an organization from which you are expecting an output. The essence of
feedforward control is to see the problems coming in time to do something about them
and focus on human, material, and financial resources within the organization. In
Vinamilk, to be more specific, this type of control is evident in the selection, hiring, and
training for new employees at the beginning. They have more than 10,000 employees
over the country so they have to be stricter in this. Vinamilk also has its own training and
recruitment policy such as Management Trainee - a fairly common and organized
program to select, train and develop qualified staff to meet the Company's business and
operation strategy. Moreover, after joining the program, employees can accumulate
professional knowledge that will be trained in management skills and organizational
capacity, especially in developing thinking and vision in order to fully equip the capacity
and bravery to become financial managers. By organizing such programs, the company
can ensure that all production processes can go on as smoothly as possible and avoid
unnecessary mistakes in production. Furthermore, in order to be able to find and recruit
talented people, the company has supported the scholarship scholarships to study in
Russia for excellent students”, which was made in 2002 and is still being done up to 7
now. In addition, to prepare for the final step in production and also a part of the success
of this management is the application of customer relationship management by Vinamilk.
Previously, the collection of customer information of Vietnam Dairy Products Joint Stock
Company was only done manually by their customers, mainly longtime consumers.
However, it is no longer relevant to the current situation, the number of customers has
increased significantly due to widespread coverage and Customer Relationship
Management – CRM, has been introduced. By using CRM, Vinamilk can more easily
arrange personnel related to customers. Through this way, customers will be constantly
updated on products, prices, discounts, bringing high efficiency and thanks to that can improve customer service
During the work process, there is always a process to monitor project execution to
discover and solve problems or potential problems promptly and it is called concurrent
control. Vinamilk always has to strictly control the production line because once there is
a problem, it will directly affect consumers. There are various steps during the process, so
concurrent control can help the company detect errors in time and solve them quickly.
That is the reason why at both before and after each stage, the company always sends
personnel to check to ensure product quality. For another specific example, to ensure that
milk is fully delivered to the consumer, Vinamilk has cooperated with two packaging
suppliers - Tetra Pak and Combibloc. Thanks to the meticulousness in each stage of
production, the company has grown and created a great reputation both domestically and
internationally. However, in 2017, Vinamilk encountered a new barrier, the new product
at that time was Vinamilk ADM gold, which contravened the regulations on food safety
norms of the Ministry of Health. This problem has caused difficulties for Vinamilk for a
long time and has partly reduced customers' confidence in the company. However, with
the efforts and quality improvement in the following products, Vinamilk has returned to
its original position. Not only on the customers’ side, but Vinamilk also has evaluation
sessions for employees on productivity and working attitude after each batch to be able to
overcome shortcomings and improve employee quality. 8
After the product is put on the market, feedback control, especially feedback from
customers, will be a necessary step to improve product quality and increase company
value. Feedback control focuses on output quality, but mainly responses, in order to solve
problems as soon as they occur and prevent similar problems in the future. This type of
control is always present in any company or business. As mentioned at the beginning of
the report, business is competition for people and people are the decisive factor, the
foundation for the development of enterprises. Vinamilk usually contacts directly or
calling, sending letters, emails to customers, organizations thanks to the customer
management system, in order to synthesize feedback on products. For individual
customers, the interactions will be done via the internet, the company's website with
FPT's phone technical support. Every feedback from the customers about the products or
the problems that may make customers unsatisfied is received and absorbed by the
company. Due to a good grasp of the target customers, the company usually has good
feedback when launching new products.
Secondly, based on the whole company, there are two other controls: internal and
external control. Vinamilk, as a leader in the dairy processing industry, also employs
these methods to manage employees and the process.
Internal or self-control is exercised by people who are motivated to take charge of
their behavior on the job - employees, and who are given the chance to do so - managers.
Mc Gregor's Theory Y perspective recognizes the willingness of people to exercise self-
control in their work. He also recognized that people are most likely to do this when they
participate in setting performance objectives and standards. This strategy allows
motivated individuals and groups to exercise self-discipline in fulfilling job expectations.
People's self-control will increase when they are aware of their abilities, tasks, and
goals. It is also increased based on the culture of the organization, where there is an
expectation of respect, equality between people, allowed to express personal opinions,
and opportunities at work. Understanding that, Vinamilk always respects and appreciates
the contributions and opinions of employees. Vinamilk does not have a leadership style 9
that imposes and forces employees to follow a rut, always creating opportunities for
employees to freely give their initiatives and contributions to make the company more perfect.
The other control that is based on the whole company is external control, which
includes bureaucratic control, market control, and clan control. The external control of
organizations explores how external constraints affect organizations and provides insights
for designing and managing organizations to mitigate these constraints. All organizations
are dependent on the environment for their survival.
The first form of external control is bureaucratic control – control through
authority, policies, procedures, job descriptions, budgets, and day-to-day supervision to
make sure that people act in harmony with organizational interests. In order to ensure the
interests of the company and to improve the working environment, Vinamilk has issued a
code of conduct within the company. The company has committed to integrity, respect,
fairness, and values ethics. All those rules are like a guideline for Vinamilk's production
activities to achieve future development. In addition, on April 26, 2022, Vinamilk
changed a few of the operating regulations of the company, resolving all issues of
governance and management principles in the company as well as the relationships of
departments and corporate governance within the company.
The following form of external control is market control. This type of control is
based on the influence of customers and competition on the behavior of organizations and
their members. Business firms show the influence of market control in the way that they
adjust products, pricing, promotions, and other practices in response to customer
feedback and what competitors are doing. Vinamilk has always faced many other
potential competitors both in the domestic markets and international markets, such as TH
True Milk, Ductch Lady, and Nutrifood. The battle between domestic milk brands began
to explode when TH True Milk asserted itself as "clean milk" and "unrivaled". The birth
of a giant project - TH True milk has caused Vinamilk many difficulties. Right from the 10
launch, TH True Milk has affirmed that this is the largest-scale project in the dairy
industry in Vietnam as well as in Southeast Asia. In the situation where the leading
position is threatened, Vinamilk has decided to invest in processing technology to ensure
milk quality. Moreover, in 2010, world milk raw material prices are falling sharply, but
many milk companies have increased their selling prices many times over. However,
contrary to the majority, only Vinamilk and Nutrifood kept the same prices and that
increased the revenue of these two companies and gained trust from consumers.
The final type of external control is clan control. Different from market control and
bureaucratic control, clan control influences behavior through norms and expectations set
by the organization’s culture. Knowing that Vietnam had nearly the highest collectivism,
Vinamilk always creates a professional, friendly, and open working environment.
Furthermore, the company also organizes some meetings between employees and bosses
to learn and absorb knowledge from each other. This will break the gap between
employees and leaders, employees with employees, and new people with old people to
promote the development of the company.
In conclusion, the rigour in management, especially in controlling activities
throughout the company, has contributed to the great and solid success of Vinamilk. The
company is always quick to solve problems before, after and during the process. To do
that, the company must prepare carefully for input - recruit and train employees through
annual training programs and prepare materials from suppliers. prestige, and accuracy
throughout the production process - always under the close supervision of a controller at
each stage. After the product is out in the market, the company always keeps an eye on
the feedback from consumers and based on that, improves product quality and develops
the company. At the same time, besides being famous for product quality, Vinamilk is
also famous for its effective and positive working environment. The company has
emphasized the desire to create the best opportunities and conditions for its employees to
improve their knowledge, develop themselves, and contribute to the development of the
company and the community. Vinamilk does not have a leadership style that imposes and 11
forces employees to follow a rut, always creating opportunities for employees to freely
give their initiatives and contributions to make the company more perfect. In order to
ensure the harmony of everyone in the working process, the company also makes
necessary regulations. Not stopping there, Vinamilk's success is also in its ingenious
competition strategy. By increasing product quality and keeping prices unchanged for
many years, Vinamilk has almost left its peers in the domestic market and extended further to foreign markets. REFERENCES
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