REVIEWING CORPORATE DIAGNOSTIC MODELS AND APPLYING FOR FINANCE & PLANNING DEPARTMENT- VINACONEX

REVIEWING CORPORATE DIAGNOSTIC MODELS

 

REVIEWING 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

 

ACKNOWLEDGEMENT i
ABSTRACT ii
LIST OF FIGURES xii
LIST OF ABBREVIATIONS xiii
INTRODUCTION 1
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
1.1.2 Why a corporate diagnostic is so important 7
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:  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
CONCLUSION 94
APPENDIX 97
REFERENCES 99

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 1.5: Organization intelligence model of Falletta 17
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 2.7: Investment procedures 43
Figure 2.8: Divestment procedure 44
Figure 2.9: Capital Contribution and Financial Ratios Report 45
Figure 2.10: Project management process 47
Figure 2.11: Fund sourcing process 48
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
10 IFRS: International Financial Reporting Standard 11 KPI: Key Performance Indicator
12 L&B: Lending and borrowing
13 PMO: Project management office 14 PMU: Project management unit
15 VAS: Vietnamese Accounting Standards

REVIEWING CORPORATE DIAGNOSTIC MODELS

INTRODUCTION

1. Necessity of the thesis

 On the other hand, Vinaconex management should always beware of the characteristics which are no longer suitable in the new business context and need to be replaced gradually to allow stronger development.
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.
Foreign enterprises is increasing, it is essential that Vietnamese enterprises have to raise their performance to boost competitiveness. However, it is the fact that many Vietnamese companies are operating inefficiently; process and weak capacity or the business are developing too fast which leads. In addition, Vietnamese firms have little experience in diagnostic assessment; this thesis would be a good practice for other businesses to apply for improving their performance.

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

• Major research questions:
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 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.  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. Besides, by providing the methodology of the famous consulting firms has brought the real insight and to make the thesis be more practical to real business world. As well, this is a very new topic for Vietnamese. By conducting a diagnostic assessment, F&P’s leaders can see the gaps and solutions to improve these issues.
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..
Chapter 2: Analysis on F&P Department’s operation of Vinaconex. This chapter conducts a fact-finding about strategy, structure, processes and personnel. Find out the weakness point and root cause of the limitation.
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

1.1.1 Corporate diagnostic definition
Collecting valid data about human experiences with that system. Widely shared understanding of a system and, based on that understanding, to determine. Inevitably, the organizational diagnosis has a tendency to provoke change in a human system, but the perspective presented here distinguishes the aims of diagnosis from those of planned change. According to the present view, diagnosticians attempt to change an organization only as far as is necessary to accomplish the purpose of diagnosis. 
This stance regarding change during diagnosis combines an understanding of organizational behavior with a 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.

REVIEWING CORPORATE DIAGNOSTIC MODELS

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