CORPORATE DIAGNOSTIC MODELS AND APPLYING FOR FINANCE & PLANNING DEPARTMENT- VINACONEX
VIETNAM NATIONAL UNIVERSITY, HANOI SCHOOL OF BUSINESS
MASTER OF BUSINESS ADMINISTRATION THESIS
TABLE OF CONTENT
LIST OF FIGURES xii
LIST OF ABBREVIATIONS xiii
1. Necessity of the thesis 1
2. Research aim and objectives 2
3. Research questions 2
4. Research methodology 3
5. Scope of the research 3
6. Significance of the research 4
7. Thesis structure 5
CHAPTER 1: OVERVIEW OF CORPORATE DIAGNOSTIC AND MODELS . 6
1.1 Corporate diagnostic overview 6
1.1.1 Corporate diagnostic definition 6
1.2 Corporate diagnostic process 8
1.3 Corporate diagnostic models 9
1.3.1 Theoretical models 10
1.3.2 Models of consulting firms 19
1.4 Chapter Review 24
CHAPTER 2: ANALYSIS ON F&P DEPARTMENT’S OPERATION OF VINACONEX 27
2.1. Overview of F&P Department-Vinaconex 27
2.1.1 Overview of Vinaconex 27
2.1.2 Overall of Vinaconex F&P 30
2.2. Analysis on F&P’s operations 32
2.2.1 Strategy 32
2.2.2 Organization structure 33
2.2.3 Process 35
2.2.4 Human Resources 64
2.3. Chapter review 72
CHAPTER 3: RECOMMENDATIONS TO IMPROVE F&P’S OPERATIONS 75
3.1. Recommendations of strategy, organization structure, human resources and process 75
3.1.1 Strategy 75
3.1.2 Organization structure 75
3.1.3 Process 76
3.1.4 Human resources 82
3.2. Action Plan 82
3.2.1 Strategy 83
3.2.2 Organization structure 84
3.2.3 Process 84
3.2.4 Human resources 88
3.3. Top 15 Activity Prioritisation 91
3.4. Chapter review 92
LIST OF FIGURES
Figure 1.1: Corporate Diagnostic Process 8
Figure 1.2: Star model of Jay Galbraith 10
Figure 1.3: Organizational performance model of David P. Hanna 15
Figure 1.4: Diamond model of Leavitt 16
Figure 1.6: 7S model of McKinsey 20
Figure 1.7: Governance framework of KPMG 22
Figure 2.2: Vinaconex’s organization chart 31
Figure 2.3: F&P’s organization chart 35
Figure 2.4: Lending procedure 38
Figure 2.5: Prepare principal &interest payment request and report procedure 39
Figure 2.6: Cash payment via Bank 41
Figure 2.7: Investment procedures 43
Figure 2.8: Divestment procedure 44
Figure 2.10: Project management process 47
Figure 2.11: Fund sourcing process 48
Figure 2.13: Financial Report Consolidation process 51
Figure 2.14: Reporting and planning process 53
Figure 2.15: F&P’s staff demographic 67
Figure 2.16: F&P’s staff strength 68
LIST OF ABBREVIATIONS
1 AR/AP: Account receivable/ Account payable
2 BOM: Board of Management
3 CEO: Chief executive officer
4 ERP: Enterprise resource planning
5 F&P: Finance and Planning Department
6 FS: Financial report
7 GD: General director
8 HO: Head office
9 HOD: Head of department
13 PMO: Project management office 14 PMU: Project management unit
15 VAS: Vietnamese Accounting Standards
1. Necessity of the thesis
Vinaconex is one of Vietnam’s leading organizations, in terms of size, brand and quality. Vinaconex governance structure was developed since privatisation of the corporation late 2006. On one hand, this inheritance could be advantageous to maintain stable structure to support growth. F&P’s function is planning, budgeting and managing financial issues of Vinaconex in order to support the decision making procedure. Therefore, a key success factor will be a competent, value-added and proactive F&P function to support Vinaconex’s business objectives. It is noted that F&P department has been changing rapidly in performance and cooperation with both other departments at HO and subsidiaries for the last two years. Therefore, the diagnostic assessment to identify F&P’s areas for operation improvement is essential. By diagnostic reviewing, the thesis will provide recommendations and action plans for increasing F&P effectiveness.
2. Research aim and objectives
The objective of this thesis is reviewing corporate diagnostic models and chooses one model which is appropriate for applying into F&P, Vinaconex. By reviewing its operation, this thesis will show F&P’s gaps and give recommendation to improve F&P’s effectiveness. To achieve this goal, the thesis will (1) research diagnostic process as well as reviewing diagnostic models in both theoretical and practical side and choose one suitable model for applying F&P. (2) give an overview of F&P and its operation in some fields which is shown in the chosen model. In particular, the author presents the findings of weakness and causes of the problem. (3) The author offers recommendations for improvement operation and a proposed an action plan in the short, medium and long term to solve the root cause. Finally, the authors have compiled a list of priority actions.
3. Research questions
To find out the weakness in F&P’s operation, this thesis should answer the following questions:
• Major research questions:
o Which diagnostic models should be used to review F&P?
o How to improve the operation of the F&P?
• Minor research questions:
o What are diagnostic assessment and its process? o What are the weaknesses of F&P’s operation? o What are the root causes of these gaps?
o What actions is needed to improve the operation of F&P
o Which one should be prioritized?
4. Research methodology
The research methodology is used in this thesis is case study and this methodology meets the research’s objective. Data used in the thesis were taken from both realisable secondary data about F&P’s operation collected in the process of working with F&P and primary data collected from interviewing head and staff of F&P about its strategy, structure, processes and human resources and from author’s observation.
There are a number of techniques used to conduct a case study research which including:
• Interviewing staff and expert
• Economic statistic method
• Methods of description and comparison.
5. Scope of the research
The thesis focused on diagnosis assessment for F&P, Vinaconex before 2011 and to propose recommendations to improve its operation’s effectiveness. To conduct this thesis, the author has collected documents about business operation of F&P and researched about diagnostic models in both theory and practice of well known consulting firm as well as best practices in the world. The purpose is to compare and analyze these models to find the one which is suitable and appropriate to apply in this case of F&P, Vinaconex. The thesis focuses on the following main points:
• Find the definition and process of corporate diagnostic. In addition, the thesis reviews six diagnostic models including four commonly used diagnostic models and two models of McKinsey and KPMG- two big firms in consulting industry. After analyze these models, the author choose the most appropriate one to apply for F&P.
• Propose recommendations for improving strategy, structure, processes and personnel. In order to make these recommendations more practical, the authors proposed an action plan with specific time frame for short term (three to six months), medium (less than 12 months) and long-term (one to three years).
6. Significance of the research
This thesis has significant theoretical and practical value. In this thesis, the author has provided a number of well known corporate diagnostic models from 1955 to 2008. Additionally, the author has compared these models to see the difference and change in the perspective of reviewing a business diagnostic after half a century. Management of Vinaconex in general and of F&P in particular. Based on the same business environment and same old style of management, most of Vietnamese enterprises suffer the same issues in operation. Therefore, managers of other businesses can see the case of F&P as an typical case to study and consider to apply a number of recommendations to improve their businesses.• Other researchers such as professionals, MBA’s candidates and students who look for a methodology to improve enterprise’s operation.
7. Thesis structure
Besides the introduction and conclusion, the thesis includes three chapters with the following contents:
Chapter 1: Overview of corporate diagnostic and models. This chapter provides the definition and process of corporate diagnostic as well as reviews six models and choose one to apply for F&P’s diagnostic assessment.
Chapter 2: Analysis on F&P Department’s operation of Vinaconex. This chapter conducts a fact-finding about strategy, structure, processes and personnel.
Chapter 3: Recommendations to improve F&P’s operations. This chapter proposes recommendations for improving strategy, structure, processes and personnel in short, medium and long term.
Chapter 1: Overview of corporate diagnostic and models
Chapter 2: Analysis on F&P Department’s operation of Vinaconex
CHAPTER 1: OVERVIEW OF CORPORATE DIAGNOSTIC AND MODELS
1.1 Corporate diagnostic overview
Otherwise they do not attempt to promote change, no matter how promising are the opportunities that seem to present themselves. This stance regarding change during diagnosis value position regarding effective professional work in applied behavioral science. The work of organizational diagnosis may require the professional to work with the organization as a whole—including organization- environment relations, groups inside and outside the organization, and individuals whose lives are shaped by the organization and who in turn determine the nature of the organization.
1.1.1 Corporate diagnostic definition
Therefore, without skills to effect change, diagnosticians’ capacity to complete the diagnostic mission may be blocked by the very processes they are attempting to understand. On the other hand, normally occurring client resistance cannot become part of the consultants’ justification for acting unilaterally and arbitrarily in the face of that resistance. Consultants who aspire to excellence in their diagnostic work cannot achieve this goal without client cooperation.This approach sets limits on how consultants will use their skills and knowledge during diagnosis and, in general, develops expectations about what consultants and clients can count on from one another during the diagnostic process.
1.1.2 Why a corporate diagnostic is so important
Corporate diagnostic is so important because of these reasons:
• They are usually too caught up in daily challenges to see the ‘forest from the trees’
• They often don’t know (or care!) what’s going on ‘in the trenches’
• They are often too emotionally attached to the status quo to objectively champion corporate change
• They are not equipped to drive efficiency improvements
• Proactive change is less disruptive and costly than continuously
• A proactive approach to organizational change can significantly improve the entrepreneur’s quality of life and peace of mind
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