Business Management : Internal Management of Vina Milk

Running head: BUSINESS MANAGEMENT
Business management
Name of the student
Name of the student
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Table of Contents
Introduction......................................................................................................................................2
Determination of the organizational design.....................................................................................2
Determination of the people management system...........................................................................4
Determination of the marketing activities.......................................................................................6
Determination of financial activities...............................................................................................7
Financial plan...............................................................................................................................8
Cash flow statement.....................................................................................................................9
Conclusion.....................................................................................................................................11
Reference.......................................................................................................................................12

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Introduction
The internal management process and practices are much different in the contemporary
business entities to that of the organizations from the past. In the current business scenario, there
are different and various factors to be considered by the business entities to match up with the
current business complexities. Moreover, it should also be ensured that each of the elements
considered is integrated in effective manner (Jeston 2014). Proper integration will help in having
the maximum return from the internal management. Vina Milk is the leading dairy brand based
in Vietnam. Hey are having extensive presence across the South East Asian regions and having
stake in the Miraka New Zealand (Vinamilk.com.vn 2019). In the international market, Vina
Milk is operating in intense competitive market with the presence of number of other leading
brands and in this case, it is their effective internal management that will be beneficial in dealing
with the competition.
The report will discuss about the extent to which the internal management of Vina Milk
is effective as well as integrated. In doing so, the people management, organizational design,
marketing practices and financial practices followed in the company will be discussed. Different
theories and models will be used to review their effectiveness.
Determination of the organizational design
Organizational design refers to the process of how the particular organization is internally
designed along with the placement of each of the roles. Structure of the organization refers to the
process of placement of the hierarchy levels in the organization along with their span of control
(Bovée and Thill 2015). Thus, the effectiveness of the organizational structure will determine the

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extent to which the organizational affairs are well controlled. In the case of Vina Milk, it is
identified that even they are having vertical hierarchy levels, but still they are following
horizontal or flat organizational structure. This is due to the reason that according to their official
website, there are number of executive managers classified on the basis of functions who are
working under the leadership of the chief executive officer. For instance, the executive directors
are allocated for international business, dairy development, supply chain, human resource
management and finance. Thus, each of the departments is being headed by the single directors
and only the chief executive officer is above them in the hierarchy level. With the help of the flat
organizational structure in the company, the major advantage being gained by Vina Milk is the
effective communication process (Colombo, Croce and Murtinu 2014).
This is due to the reason that in the case of the horizontal organizational structure,
number of intermediaries is less in the hierarchy level and thus fewer barriers to be crossed in
communicating with the superiors. In Vina Milk, employees from each of the departments are
working under the directorship of the respective directors and they are accessible due to the lack
of middle level managers in between. On the other hand, it is also beneficial for the chief
executive officer to have the knowledge and understanding about the lower level factors due to
the fewer intermediaries in between.

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Fig: 1 Organizational structure of Vina Milk
Source:
Determination of the people management system
According to the Frederick Taylor’ scientific management theory, enhancement of the
economic viability of the company should be the core business objective and in doing so, the
performance of the employees should also be maxed. The theory also states that by rewarding the
employees, their performance can be increased and this will contribute in the organizational

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productivity. It also states that the better will be the performance management system; the more
will be the employee performance (Ferguson 2018). Thus, in the case of Vina Milk, it is
important to review their performance management and how they are integrated with the holistic
organizational affairs. On the other hand, it is identified in the Hawthorne studies that social
factors are having equal impacts on the employees similar to the financial factors. This is due to
the reason that employees tend to react positively when the social issues such as the interest of
the managers are in place. Thus, in the case of Vina Milk, the effectiveness of the managers is
determining the extent to which the employees are contributing in the favorable manner.
It is identified from the annual reports of Vina Milk that people management process is
very much integrated and is based on different steps. The first step starts from the recruitment
and selection of the new employees. It is reported that Vina Milk organizes talent hunt drive
every year across the country to offer the opportunities to the eligible ones and make them
contribute successfully towards the organizational success. Vina Milk is having number of
partnered consulting firms from the international dairy industry to train and manage the
employees (Vinamilk.com.vn 2019). Thus, the employees of Vina Milk are trained as per the
global standard and are productive at par the desired level. This should also be noted that the first
two levels of the hierarchy of Vina Milk are women and this is reflecting in the women
empowerment and gender diversity followed in the workplace. This also denotes that human
resource management is having strong influence on the leadership due to the reason that their
approach to the gender equality is reflected in their leadership roles (Jung and Lee 2015).
In Vina Milk, employees are having the opportunity to get represented in the decision
making process and is achieving the positive relationships between the employee and the
managers It is reported that Vina Milk is certified with the Global GAP Standard and they are the

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first South East dairy farm to do so (Vinamilk.com.vn 2019). This also denotes that the extent to
which the employees are contributing in the organizational success and how the company is
getting benefitted from them. The people management approach of Vina Milk is well integrated
with their vision because according to the vision of Vina Milk, they aim to achieve the most
sustainable dairy farm in the world (Büschgens, Bausch and Balkin 2013). In view to the
achievement of the sustainability, people management strategies are designed accordingly.
Lastly, it is identified that clan culture is followed in the workplace of Vina Milk where the
power distance is kept as low as possible. Thus, the strong relationships and connections between
the internal stakeholders are getting maintained.
Determination of the marketing activities
According to classic theories of product and sales orientation, needs and requirements of
the customers are less considered and the core objective is to sell the manufactured products by
any means. However, this is unsustainable and non viable in nature due to the reason that the
probability of customers getting dissatisfied is more. Moreover, in the current era of customer
oriented approach, it is getting more important for the businesses to design their marketing
activities according to the needs of the customers and their current trends (Urde, Baumgarth and
Merrilees 2013). In the case of Vina Milk, it is well reflected in the rapid and continuous
development of their product portfolio. For example, Vina Milk is the first dairy brand in
Vietnam, which produced A2 milk for the customers (Vinamilk.com.vn 2019). This is done in
line to the growing health consciousness among the customers. This also reflects the fact that
marketing activities of Vina Milk are well integrated in their organizational affairs. This is due to
the reason that research and development activities of the new products are based on the market

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trends and accordingly, new products are getting introduced in the market. In this case also, Vina
Milk is getting benefitted from the maximum integration in their organizational affairs.
Social responsibilities are also a major approach of Vina Milk in enhancing their
relationship and value based marketing. They are following triple bottom line approach in
initiating their sustainable practices where the customers, employees, communities and
environment are being given the equal consideration (Kolk 2016). For instance, the end products
are being tested by different steps to ensure the right quality for the customers, employee rights
are properly considered and solar energy is extensively used as energy sources. All these
activities are helping them in gaining the tag of green farm and sustainable economic
development (Baumann-Pauly et al. 2013). All of these activities of Vina Milk are well
integrated and designed in achieving the vision of most sustainable dairy farm.
Determination of financial activities
Balancing between short-term and long-term strategic needs
There is significant need to balance between long-term and short-term needs of any
organisation to meet the goals. The short term strategic needs led to the development of long
term needs. The company aimed to achieve 3 billion USD target revenue by the end of 2017 and
to make steady dividend payments with dividend rate of 30% annually. In this scenario, the
dividend is the short term goal and target revenue is the long term goal. In order to achieve both,
initially short term strategies have to be implemented to achieve the short term needs. In order to
achieve this short term goal, the organisation has been using innovation, change management
and knowledge management to maintain annual growth. Moreover, the organisation also uses
strategic human resource management to improve the workforce efficiency. These strategies are

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aligned to the long term strategy and goal of increasing revenue and the organisation has been
successful in achieving it.
Balancing between potential risks and potential rewards
It has always been said that higher the risk, then higher the return. The company use a
mixed portfolio in order to balance between risk and reward. The company has developed a risk
management plan to identify the possible risk factors which developing, processing and selling
of products. The company has implemented strategies such as low debt equity ratio and
implementation of innovation and technology for change management. This resulted in
mitigating the fluctuation in milk prices and development of product at affordable price.
Implications for an organization's flexibility and resilience
Financial plan
5-Year Financial Plan
Balance sheet projections
Assets Initial balance Year 1 Year 2 Year 3 Year 4 Year 5
Cash and short-term investments $10,000 $7,86,
853
$15,77,
185
$23,97,
188
$32,64,
533
$42,11,
563
Accounts receivable $1,00,000 $1,02,
000
$1,06,0
80
$1,12,4
45
$1,21,4
40
$1,21,4
40
Total inventory $0.00 $0.00 $0.00 $0.00 $0.00 $0
Prepaid expenses 0 0 0 0 0 $0
Deferred income tax 0 0 0 0 0 $0
Other current assets 0 0 0 0 0 $0
Total current assets $1,10,000 $8,88,
853
$16,83,
265
$25,09,
633
$33,85,
973
$43,33,
003
Buildings $0 $0 $0 $0 $0 $0
Land 0 0 0 0 0 0
Capital improvements $
-
0 0 0 0 0
Machinery and equipment $
-
0 0 0 0 0
Less: Accumulated depreciation 0 0 0 0 0 0

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expense
Net property/equipment $0 $0 $0 $0 $0 $0
Goodwill $0 $0 $0 $0 $0 $0
Deferred income tax 0 0 0 0 0 0
Long-term investments 0 0 0 0 0 0
Deposits 0 0 0 0 0 0
Other long-term assets 0 0 0 0 0 0
Total assets $1,10,000 $8,88,
853
$16,83,
265
$25,09,
633
$33,85,
973
$43,33,
003
Liabilities Initial balance Year 1 Year 2 Year 3 Year 4 Year 5
Accounts payable $200 $204 $212 $225 $243 $243
Accrued expenses 0 0 0 0 0 0
Notes payable/short-term debt 0 0 0 0 0 0
Capital leases 0 0 0 0 0 0
Other current liabilities
Total current liabilities $200 $204 $212 $225 $243 $243
Long-term debt from loan
payment calculator
5
0,000
$40,76
9
$31,168 $21,183 $10,799 ($0)
Other long-term debt $0 $0 $0 $0 $0 $0
Total debt $50,200 $40,97
3
$31,380 $21,408 $11,042 $243
Other liabilities 0 0 0 0 0 0
Total liabilities $50,200 $40,97
3
$31,380 $21,408 $11,042 $243
Equi
ty
Initial balance Year 1 Year 2 Year 3 Year 4 Year 5
Owner's equity (common) $
-
$0 $0 $0 $0 $0
Paid-in capital 0 0 0 0 0 0
Preferred equity 0 0 0 0 0 0
Retained earnings 0 0 0 0 0 0
Total equity $0 $0 $0 $0 $0 $0
Total liabilities and equity $50,200 $40,97
3
$31,380 $21,408 $11,042 $243
Cash flow statement
[Company Name]
5-Year Financial Plan
Cash flow

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Year 1 Year 2 Year 3 Year 4 Year 5 Total
Operating activities
Net income $13,79,14
1
$14,07,00
7
$14,63,59
6
$15,51,73
5
$16,76,20
1
$74,77,680
Depreciation $0 $0 $0 $0 $0 $0
Accounts receivable ($2,000) ($4,080) ($6,365) ($8,996) $0 ($21,440)
Inventories $0 $0 $0 $0 $0 $0
Accounts payable $4 $8 $13 $18 $0 $43
Amortization 0 0 $0 $0 $0 $0
Other liabilities 0 0 $0 $0 $0 $0
Other operating cash flow
items
0 0 $0 $0 $0 $0
Total operating activities $13,77,14
5
$14,02,93
5
$14,57,24
4
$15,42,75
8
$16,76,20
1
$74,56,283
$0
Investing activities $0
Capital expenditures $0 $0 $0 $0 $0 $0
Acquisition of business 0 0 0 0 0 $0
Sale of fixed assets ($5,91,06
0)
($6,03,00
3)
($6,27,25
6)
($6,65,02
9)
($7,18,37
2)
($32,04,72
0)
Other investing cash flow
items
0 0 0 0 0 $0
Total investing activities ($5,91,06
0)
($6,03,00
3)
($6,27,25
6)
($6,65,02
9)
($7,18,37
2)
($32,04,72
0)
Financing activities
Long-term debt/financing ($9,231) ($9,601) ($9,985) ($10,384) ($10,799) ($50,000)
Preferred stock 0 0 0 0 0 0
Total cash dividends paid 0 0 0 0 0 0
Common stock 0 0 0 0 0 0
Other financing cash flow
items
0 0 0 0 0 0
Total financing activities ($9,231) ($9,601) ($9,985) ($10,384) ($10,799) ($50,000)
Cumulative cash flow $7,76,853 $7,90,332 $8,20,004 $8,67,344 $9,47,030 $42,01,563
Beginning cash balance $10,000 $7,86,853 $15,77,18
5
$23,97,18
8
$32,64,53
3
Ending cash balance $7,86,853 $15,77,18
5
$23,97,18
8
$32,64,53
3
$42,11,56
3

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Conclusion
This report concludes that each of the business activities of Vina Milk including the
organizational designs, marketing activities, people management approaches and financial
management is well integrated with their vision and it is getting reflected with their business
performance. Moreover, it is also identified that Vina Milk is gaining the goodwill and positive
word of mouth in the market due to their extensive sustainable approach, which is in turn helping
in initiating the relationship based marketing with the customers. This report discussed the
different activities of Vina Milk with the help of the theories and identified the market oriented
business approach. Integration between all the business activities of Vina Milk is also identified
in this report.

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Reference
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Vinamilk.com.vn. Available at: https://www.vinamilk.com.vn/en/vinamilk-huong-toi-su-ben-
vung [Accessed 27 Aug. 2019].
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environment to CSR and sustainable development. Journal of World Business, 51(1), pp.23-34.

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