Background and Rational
The garment and textile industry is a vital sector in Vietnam, significantly contributing to economic development and reducing unemployment in impoverished areas As Vietnam rapidly integrates with regional and global economies, the government prioritizes this industry to help mitigate trade deficits Numerous public resources, including newspapers and television, highlight the substantial contributions of the garment and textile sector to the nation’s GDP and its role in job creation.
The garment and textile industry is currently grappling with significant challenges stemming from both internal and external factors Internally, issues arise from a workforce characterized by low skill levels and outdated manufacturing technologies Externally, the industry faces intense competition from formidable players like China, India, Indonesia, Pakistan, and Korea.
Many enterprises in the garment and textile industry overlook the importance of strategic business planning, which is essential for ongoing development To effectively respond to market changes, companies must adopt strategies based on a thorough analysis of their strengths, weaknesses, opportunities, and threats A well-structured business strategy provides insights into both the external environment and internal resources, allowing companies to set strategic objectives and choose the most effective policies to achieve them This proactive approach ensures businesses remain competitive and ready to adapt to changes rather than becoming defensive GATEXCO20 exemplifies this issue, as its current strategy focuses on short-term planning without a long-term vision, leading to a passive response to market fluctuations Thus, establishing and executing a long-term business strategy is crucial for the company's survival and growth.
Recognizing the vital importance of strategic business planning for the growth and development of Vietnam's garment and textile industry, as well as the long-term success of GATEXCO20, the author has chosen to focus on this topic.
The research titled “Business Strategy for GATEXCO20, period 2013 - 2018” focuses on macro-economic factors and business strategy formulation tools It aims to assist top managers at GATEXCO20 in understanding and implementing comprehensive long-term strategies that promote sustainable development.
Objectives
The objectives of the research are stated as follows:
Provide the analyses on the production and business operation of GATEXCO20 and the potential of Vietnam garment and textile industry
Find out the advantages, weaknesses, opportunities and threats which will be used to formulate a development strategy for GATEXCO20
Assess the garment and textile market by collecting the Expert Advises from The Ministry of Trade and Vietnam Textile Association
Provide the formulation and solution for business strategies for GATEXCO20 as well as program of action and contingency plans
Scope and Limitation
This research analyzes GATEXCO20's activities from a business strategic planning perspective, utilizing secondary data sourced from the company's annual reports, books, journals, and news articles, along with expert insights from the Ministry of Industry & Trade and the Vietnam Textile Association The study focuses exclusively on GATEXCO20, which presents certain limitations, including potential biases from relying heavily on the company's own data Additionally, the findings may not fully reflect the broader perspectives within the industry, and language barriers posed challenges for the author.
The strategy for GATEXCO 20 is built for the period 2013-2018 and if the implementation process will be success, this strategy will be extended for the long term.
FOUNDATION THEORY FOR STRATEGIC
The definition of business strategy
Business strategy is defined as the integration of goals, objectives, missions, and action plans to ensure a firm's successful operations (Rumelt, 1980) It serves as a comprehensive plan to align all business activities with the firm's developmental objectives (Quinn, 1998) Additionally, firms offering multiple products and services often adopt various business strategies, each with distinct scopes and applications (Mathur & Kenyon, 1997) Ultimately, a business strategy is a selection process aimed at maximizing the long-term value of the firm (Favaro, 2012).
(2012) advised firm management should takes into account the value in short term as well as risk factors existed in the market.
The definition of business strategic planning
Strategic planning serves as a roadmap for firms to achieve their goals, as noted in the Strategic Planning Handbook (2001) Tapinos (2005) emphasizes that effective business strategic planning involves key steps to formulate strategies, considering factors such as long-term horizons, the use of planning tools, formality, and regular monitoring Hodgetts and Kuratko (2001) highlight that strategic planning can significantly reduce uncertainty and the risk of failure in business strategies Furthermore, Gibb and Scoot (1985) point out that it enhances awareness of strategic importance among executive managers and employees However, risks are inherent in business strategic planning; market changes and customer behavior may lead to unmet expectations, and a weak planning process can result in unsatisfactory outcomes for management (Strategic Planning Handbook, 2001).
Evans highlighted that business strategic planning primarily addresses major issues while overlooking other critical factors This oversight occurs because upper management, responsible for strategic planning, often lacks the time to delve into every detail Additionally, the process is time-consuming and demands significant involvement from personnel, which can strain the organization, particularly when resources are limited.
The business strategic planning process
Grunig (2011) outlines a seven-step strategic planning process for businesses The first step involves a comprehensive analysis, including SWOT analysis and Porter’s Five Forces Model, to evaluate the internal and external business environment This analysis helps identify the interplay between external opportunities and risks with the company’s strengths and weaknesses, forming the foundation for strategic planning Next, the company articulates its business mission In the third and fourth steps, business and corporate strategies are selected based on the previous analyses The fifth step focuses on implementing these business strategies, followed by the sixth step, which involves regular reviews of the strategies Finally, the process concludes with the preparation and approval of the strategic documents by the board of management.
Figure 1: Business strategic planning process – sample 1
(Source: Grunig, 2011) Chetthamrongchai (2009) provided the business strategic planning process that takes into consideration seven steps, including: business mission, SWOT analysis, goal formulation, strategy formulation, program formulation, implementation, and feedbacks
Figure 2: Business strategic planning process - sample 2
According to Hax (2003), the business strategic planning process consists of five key steps: defining the mission of the business, analyzing both internal and external environments, formulating business strategies, strategic programming, and budgeting Additionally, the Strategic Planning Handbook (2001) emphasizes the importance of distinct steps within the strategic planning process, which include crafting a mission statement, establishing objectives, determining goals, and developing an action plan.
Figure 3: Business strategic planning process - sample 3
Tools used in business strategic planning
The SWOT matrix, as outlined by Bradford et al (2000), is a valuable tool for formulating business strategies by assessing both internal and external factors affecting enterprises Strengths (S) and Weaknesses (W) pertain to the internal capabilities of a business, while Opportunities (O) and Threats (T) reflect external market conditions According to Chaffey et al (2006), conducting a SWOT analysis enables companies to evaluate their strengths and weaknesses in relation to market opportunities and threats The accompanying figure illustrates the SWOT matrix and the strategic options derived from these four critical factors.
How can our strengths be employed to take advantage of our opportunities?
How can our strengths be used to prevent threats from hindering goal achievement?
What should we do to shore up our weaknesses to take advantage of our opportunities?
What should we do to shore up our weakness to prevent the threats from slowing us down?
(Source: Adopted from Bradford et al, 2000)
Porter's Five Forces Model, introduced in 1980, identifies five key elements that shape industry competition: the power of buyers, the power of suppliers, the threat of substitute products, the threat of new entrants, and the rivalry among existing competitors According to Ehnke et al (2004), this model is crucial for firms to assess the potential profitability of their industry and to identify the critical factors that contribute to competitive advantage.
Figure 5: Porter's Five Forces Model
The suppliers are more powerful when firm has to purchase the raw materials necessarily for manufacturing products from the small number of suppliers
In this industry, the limited number of suppliers grants them significant power to influence pricing and dictate the quantity of raw materials available to firms.
Buyers hold significant power, especially when firms encounter high switching costs for suppliers or when they purchase raw materials in small quantities, allowing suppliers to control prices This buyer power escalates in non-transparent markets or when firms lack sufficient knowledge about the supplier landscape.
Buyers hold significant power when they possess in-depth knowledge of the industry and a thorough understanding of a firm's business processes, limiting the firm's negotiation leverage Additionally, the abundance of suppliers within the industry allows customers to easily access alternative suppliers or products, further enhancing their bargaining power.
Substitute products play a crucial role for companies, particularly when their offerings lack differentiation According to Ehnke (2004), firms employing a low-cost strategy are more vulnerable to the threat of substitutes compared to those using a differentiation strategy This heightened risk is further exacerbated by factors such as low brand loyalty among customers and minimal switching costs, making it easier for consumers to choose alternative products.
The new entrants are becoming real threats for firms in the industry when the business law encourages the new entrants to enter the market without barriers
Customer loyalty to brands is declining, allowing consumers to easily switch to competing products and services The threat of new entrants in the market is rising, particularly when production processes are easy to replicate and economies of scale are limited When companies produce goods in large quantities without significant cost advantages, they become vulnerable to increased competition from new market players.
In slow-growing markets, intense competition arises as firms leverage economies of scale to manage operating costs and lower prices for customers A significant factor contributing to this rivalry is the lack of product differentiation, allowing competitors to easily replicate each other's offerings Moreover, the high costs associated with exiting the industry further intensify the competitive landscape.
PEST analysis, as outlined by Doole and Lowe (2008), is a crucial tool for businesses to assess the effects of external environments This analytical framework evaluates four key aspects: the political environment, economic environment, social environment, and technological environment.
The political environment encompasses the risks associated with a country's governance that directly affect business operations According to Doole and Lowe (2008), politics involves the actions of local governments and international organizations like the World Trade Organization, World Bank, and International Monetary Fund in shaping the business landscape and legal frameworks for companies Typically, the legal structures in developing and emerging markets are less comprehensive than those in developed countries Furthermore, local governments in developed nations possess greater expertise, enabling them to create more effective policies that foster fair competition in the marketplace.
The economic environment encompasses both macro and microeconomic factors that directly or indirectly influence businesses For instance, macroeconomic imbalances, such as high inflation and elevated lending interest rates, can diminish consumer purchasing power, thereby affecting firms' pricing strategies When inflation rises, operational costs for businesses also increase, prompting them to raise product prices However, this price hike may lead to a loss of customers and market share to competitors offering lower prices.
The social environment refers to societal changes resulting from population growth and movement, both nationally and globally (Doole and Lowe, 2008) Recent studies highlight the emerging trend that businesses must align their products and services with urban lifestyles Specifically, offerings should be conveniently packaged and easy to carry Today's consumers are more accessible and can be engaged through supermarkets, malls, and various mass media channels, including television and online advertisements.
The technology environment encompasses the use of information technology and equipment to enhance business operations and streamline customer purchasing experiences (Doole and Lowe, 2008) Today, computer-based technologies are increasingly adopted not only in developed nations but also in emerging and developing countries The implementation of advanced information technology is crucial for multinational companies, as it enables them to create comprehensive IT solutions that support timely business decision-making (SAS, 2012).
In 1980, Michael Porter introduced value chain analysis, a framework used to develop effective business strategies by examining two key components: primary activities and support activities Primary activities encompass inbound logistics, operations, outbound logistics, marketing and sales, and service, while support activities include firm infrastructure, human resource management, technology development, and procurement According to Gregorio, primary activities involve the processes of acquiring raw materials, manufacturing products, and selling them to customers, along with after-sale services and customer care Support activities are defined as those that facilitate and enhance the effectiveness of primary activities.
Figure 6: Value chain analysis model of Porter (1980)
Porter (1980) emphasized the critical connection between primary and support activities within a firm's value chain, illustrating how each activity can influence others For instance, delays in the procurement process can disrupt inbound logistics, leading to insufficient resources that hinder a firm's ability to meet customer commitments and ultimately result in lost market share to competitors with more efficient procurement Additionally, Porter pointed out that firms often struggle to accurately anticipate the synchronization required between their value chain activities, a challenge exacerbated by ineffective management or fluctuations in market and customer demands.
INTERNAL ANALYSIS
Value chain analysis, introduced by Michael Porter in 1980, is a strategic tool designed to enhance competitive advantage It emphasizes two crucial elements: the sharing of value chain activities across business units and the application of value chain analysis to formulate either low-cost or differentiation strategies.
Analysis on sharing value chain activities among business units requires the clarification on the interrelation within value chains activities and interrelation within business unit
7 Porter, M.E (1980) Competitive Strategy, Free Press, New York
Analyzing the interconnections between value chain activities is essential, as these activities are interdependent and can influence each other's costs and performance For instance, reducing costs in one area, such as product design, can lead to decreased manufacturing and service costs Such strategic improvements not only enhance efficiency but also provide the company with the potential to establish a competitive advantage in the market.
Horizontal strategies in business rely on the interrelationships among different units, particularly through tangible connections that facilitate collaboration For instance, when multiple business units utilize the same raw material, they can streamline procurement processes, resulting in cost savings However, pursuing synergy from these interrelationships can present challenges, including unforeseen drawbacks such as coordination costs, decreased flexibility, and the complexities of the value chain structure Therefore, a thorough analysis of these factors is essential for effectively integrating business strategies and maximizing the advantages of interrelations.
To implement a low-cost strategy, the company can achieve cost reductions in its value chain through restructuring efforts This process starts with clearly defining the company's value chain and identifying its primary activities, which typically include essential operations that drive efficiency and effectiveness.
Figure 8: Value chain analysis model
Michael Porter (1980) emphasizes the importance of conducting a cost analysis after defining the value chain by allocating costs to its activities He identifies ten key cost drivers that influence value chain activities, including economies of scale, learning effects, capacity utilization, and the linkages among activities Additionally, interrelationships among business units, the degree of vertical integration, market entry timing, the firm's cost policy, geographic location, and institutional factors such as taxes and country laws also play a critical role in shaping costs.
In terms of differentiation strategy, Porter's (1980) value chain analysis advocates for forward integration to take on functions previously handled by customers, while also emphasizing backward integration to gain control over inputs To achieve uniqueness, the company should focus on several key drivers that customize the value chain, including policies and decisions, activity linkages, timing, location, interrelationships, learning, integration, scale, institutional factors, and creativity.
In the following sections, the author will analyze each component of the value chain of Gatexco20 Based on these analyses, the author will formulate low-cost and differentiation strategies that leverage outsourcing for value chain activities To determine which business functions to outsource, company management must assess the current strengths and limitations of the organization.
2.2.1 Primary activities 2.2.1.1 Inbound logistics a Receiving Input Materials
The garment and textile manufacturing sector relies on various input materials, including fiber, cotton, chemicals, oil, and electricity While oil and electricity prices are regulated by the State, fabric, cotton, and chemical costs are influenced by the global commodity market In Vietnam, garment companies depend significantly on fabric imports due to the domestic textile industry's inability to provide high-quality fabric Currently, Vietnam imports 75% of its fabric, 90% of its cotton, and all of its polyester filament and fiber requirements, highlighting the country's reliance on foreign materials for garment production.
GATEXCO20 utilizes two primary methods for sourcing raw materials in its production chain: domestic suppliers and imports Internal reports indicate that only 15% of GATEXCO20's total raw material demands are met by domestic sources, which are primarily transported to manufacturing facilities by truck In contrast, imported raw materials arrive via sea freight to local ports, after which GATEXCO20 relies on local transportation providers to deliver these materials to its factories.
Figure 9: The process of receiving input materials b Warehousing for Input Materials
Once raw materials arrive at GATEXCO20's manufacturing facilities, they are stored in the company's well-equipped warehouses GATEXCO20 employs various handling and storage solutions, such as very narrow aisle (VNA), drive-in, and standard pallet access, all within a fulfillment and rework area spanning approximately 3,000 square meters Effective inventory control is a key aspect of their operational standards.
GATEXCO20 utilizes advanced WMS technology from Chess Logistics in its warehouses, providing a real-time environment that maximizes efficiency and offers a comprehensive audit trail for all production chain activities This innovative system grants Inventory Managers complete visibility of inventory status via a convenient web-based portal.
The operation of garment and textile manufacturing at GATEXCO20 is depicted in the accompanying figure As outlined by e-textile.org, yarn fabrication involves transforming raw fibers into yarn or thread, a crucial step in the textile production process.
GATEXCO20‟s warehouses prepared and then drawn out and twisted to form the yarn, which is then wound onto a bobbin or cone
Figure 10: The operation process of GATEXCO20
Outbound logistics involves the packaging of finished products, transferring them to warehouses, and shipping them to retail and wholesale buyers GATEXCO20 utilizes SAP Business One, which supports three types of production orders to enhance this process.
The standard production order system utilizes the Bill of Materials to facilitate the production of regular items, efficiently managing material transactions throughout the production process This system allows users to modify components during production, and when a new standard production order is initiated, all necessary components are automatically populated.
The Special Production Order system is designed for the production and repair of items that may not be included in the Bill of Materials This includes activities such as repairing customer equipment cards and addressing rejected assemblies Components within this system are handled manually to ensure precision and quality in the production process.
SELECTED STRATEGIES FOR GATEXCO 20 AND
Choosing functional strategies
Table 7: SWOT matrix for functional strategies
- GATEXCO20 has strong inbound and outbound logistics with the application of new technology in warehousing and inventory control
- GATEXCO20 has the exchange services for its customers within 07 days from the purchase date
- GATEXCO20 has strong human resource that helps the company to meet finish the order in
- Still depending on the imported raw materials
- GATEXCO20‟s distribution system is smaller than other competitors
- There are no customer support standards in GATEXCO20
- The procurement of GATEXCO20 is still facing a problem of which one order has to take a lot of time to finish time
- The company has adopted high technology
- GATEXCO20 is applying the Total Quality Management
Government to grow up raw materials
Government encouraging Vietnamese people to use the local- made products
- The advantage of WTO accession
- Vietnam macro economy is more and more stable
- The living style of people change in the
- Advertisement strategies through quality (FS5)
- Build up the raw material system (FS1)
- Distribution system through diversified channels (FS4) positive way and the increase of using internet
- Not adequate raw material from local supplier in term of quality and quantity
- The prices of imported raw material are being affected by the global economic downturn
- Rush competition between local enterprises
- WTO accession means Vietnam has to open the economy for the foreign enterprises
- The customer demands are more and more diversified
- Merge and Acquisition with foreign partners (FS6)
- Procurement process enhancement (FS9) technology between big and smaller enterprises
In today's market, consumers are increasingly selective about their garment and textile choices, driven by the abundance of information available To address this shift, GATEXCO20 has developed nine functional strategies outlined in the SWOT matrix: enhancing the raw material system, diversifying product offerings, implementing rigorous product quality management, establishing a distribution network through various channels, focusing on quality-driven advertising strategies, pursuing mergers and acquisitions with foreign partners, expanding market share, improving internal training programs, and optimizing the procurement process.
Build-up the raw material system (FS1)
The first functional strategy for GATEXCO20 focuses on establishing a robust raw material system, which consists of two key components: creating purchasing centers and developing self-cultivation for raw materials To effectively build the purchasing centers, GATEXCO20 must implement a mechanism that ensures raw materials are sourced from domestic suppliers at competitive prices compared to rivals This involves conducting market research to gather pricing information from competitors and determining competitive price levels that still allow for profitability.
The second part is to develop the self-cultivations The self-cultivation should be diversified by various types of raw materials such as cotton, synthetic fibers and natural fibers
GATEXCO20 prioritizes the establishment of purchasing centers and self-cultivation to address the raw material shortages facing the Vietnamese garment and textile industry.
(2009) 8 , building-up the raw material system will be classified into five periods, as described in the figure below
Figure 14: Five stage of building-up the raw material system Product diversification (FS2)
To enhance its market presence, GATEXCO20 should implement a product diversification strategy Current analyses of inbound logistics reveal that the company primarily focuses on three main product lines: garments, which include military clothing, jackets, sports uniforms, and vests; textiles, such as socks and face towels; and fabric products Expanding its product offerings will enable GATEXCO20 to better meet customer needs and capture a larger market share.
GATEXCO20 should prioritize market research to understand customer demands and future opportunities Additionally, it is essential for the company to transition from the Cut-Make-Trim (CMT) production model to the Free-On-Board (FOB) model While CMT relies on foreign buyers for designs and materials, FOB empowers Vietnamese garment and textile enterprises to take charge of production Continuing with the CMT process may hinder GATEXCO20's ability to innovate in product design, making the shift to FOB crucial for fostering creativity and growth.
8 Machin processes, Spinning the Web (Manchester City Council: Libraries), retrieved 2009-01-29
GATEXCO20 approaching quality designers, thus improving the designs and diversification of products
The Vietnamese garment and textile industry faces significant challenges due to the inferior quality of its products compared to foreign alternatives To enhance competitiveness, it is crucial for these enterprises to adopt effective quality management systems, as highlighted by Purushothama (2010) Implementing such systems can lead to long-term improvements in product quality and market position.
GATEXCO20 has implemented a Total Quality Management (TQM) system designed to enhance product and service quality This initiative encourages active participation from all company members and aims for sustainable development by prioritizing customer satisfaction (Reed, 1996).
(2010) provides 8 key successful factors for TQM as described in the figure below, including (i) ethic, (ii) integrity, (iii) trust, (iv) training, (v) teamwork, (vi) leadership, (vii) recognition, (viii) communication
Figure 15: 8 key successful factors for TQM
The author recommends that GATEXCO20 implement the Six Sigma system to enhance product quality Six Sigma is applicable across various sectors, including manufacturing and service industries According to Jacowski (2007), Six Sigma is a process quality improvement program aimed at achieving near perfection by minimizing defects to 3.4 per million opportunities, ultimately leading to increased efficiency and cost savings for companies In contrast, Total Quality Management (TQM) emphasizes quality improvement through adherence to internal standards.
TQM initiatives emphasize enhancing individual operations across various unrelated business processes, while Six Sigma programs concentrate on optimizing all operations within a single business process (Jacowski, 2007).
Distribution system through diversified channels (FS4)
The 4P marketing theory emphasizes the significance of 'place' in the sales process, referring to the distribution channels through which a business delivers its products and services to customers GATEXCO20 should leverage various distribution channels to effectively reach its target market.
Direct sale: sale team, internets, catalogs;
Wholesaler or Distributor: a wholesalers are companies who buy the products in bulk then sell them in smaller quantity to resellers or retailers;
Value-added seller: who work with end-user to sell custom products and services from one or different manufacturers;
Dealer: who buys inventory from a manufacturer or distributor then resell to end-user;
Retails: who sell products and services directly to end-user through physical stores, website, catalogs, etc
Local authorities: this channel is very useful for products which are used serving national programs and non-profit activities
The author suggests that GATEXCO20 should establish an incentive mechanism for all distribution channels to enhance their effectiveness This sales incentive aims to reward channels that exceed sales volume requirements with higher bonuses, encouraging them to maintain strong performance Conversely, distribution channels that fall short of the required sales volume will not receive any incentives.
Advertisement strategies through quality (FS5)
Advertisement plays a crucial role in the marketing mix, specifically within the promotion aspect The author suggests that GATEXCO20 should focus on advertising strategies that emphasize product quality and diversification Currently, GATEXCO20 implements the Total Quality Management (TQM) system, and it is recommended that they also adopt the Six Sigma methodology to minimize defects and improve overall product quality.
Implementing TQM or Six Sigma will enhance GATEXCO20's reputation and trust among local consumers, who increasingly prioritize product quality and fashionable clothing By leveraging a robust product quality management system, GATEXCO20 can effectively promote its high-quality offerings through mass media channels such as television and the internet Additionally, the company could initiate a promotional program that allows consumers to participate in the manufacturing process, from raw material selection to product finishing, further engaging them and reinforcing brand loyalty.
Merge and Acquisition with foreign partners (FS6)
GATEXCO20 aims to expand its market by seeking new foreign partners through mergers and acquisitions, which can enhance the company's professionalism, expertise, and technology It is advisable to target partners from developed nations like the USA and Germany, known for their strong consulting services in the power sector To assess the effectiveness of this strategy, GATEXCO20 can analyze the average coordination time for each contract with foreign partners and evaluate the contract values to gauge its standing in the eyes of these partners.
Merging and acquiring foreign partners allows companies to mitigate the challenges posed by WTO accession, as trade liberalization increases competition in the garment and textile industry This collaboration enhances marketing capabilities and improves product quality, positioning the company to thrive in a more competitive landscape.
Performing components of strategy implementation
In this section, the author discusses the importance of the Seven-S Framework by McKinsey for effective strategy implementation Central to this model are the superordinate goals and shared values among stakeholders, which encompass six key components: strategy, systems, staff, style, skills, and structure.
As mentioned in the previous section, GATEXCO20 will focus on Top 03 suitable strategies for GATEXCO20 are Product quality management, and Build-up the raw material system, and product diversification
GATEXCO20 must establish a supportive system and structure aligned with its functional strategies Each functional strategy should have designated responsibilities assigned to specific departments to ensure dedicated implementation and effectiveness.
The leadership styles at GATEXCO20 play a crucial role in achieving the company's functional strategies Currently, leaders employ various styles, including coercive leadership, which demands immediate compliance from followers but can negatively impact the organization's culture Another prevalent style is pacesetting, where leaders expect followers to match their high-performance standards While this approach works well with motivated and talented teams, it may overwhelm others who are not equipped to meet such expectations.
Coaching leadership, characterized by a "try this" approach, emphasizes the development of individuals for future success and effective delegation, positively influencing organizational culture Similarly, the democratic leadership style, or "what do you think," seeks to achieve consensus through participation, fostering trust and also contributing positively to the organization's culture, akin to the coaching style.
The article discusses various leadership styles, highlighting the affiliate style, which prioritizes people and fosters harmony and emotional connections, making it effective for motivation Additionally, it mentions the authoritative style, where visionary leaders encourage innovation and calculated risks, particularly beneficial during shifts in organizational direction However, this approach may falter if employees possess more expertise than the leader or if the leadership becomes overly dominant.
Successful strategy implementation relies on employees receiving appropriate knowledge sharing and assessments, which are essential for their personal development plans and for addressing performance issues within the organization.
To effectively integrate assessment results from projects into future personal development plans and organizational procedures for addressing performance issues, organizations can utilize four key approaches: coaching, mentoring, counseling, and disciplinary action.
Coaching is an interactive and results-driven process that facilitates meaningful change, enhancing individuals' current job performance while unlocking their future potential.
To establish effective team coaching for Safety Chat, the team leader must define clear missions and objectives, aligning them from the team level down to individual members It's essential for the leader to organize team members by providing necessary information and ensuring everyone stays on track Creating a supportive work environment that fosters open communication and the sharing of ideas without fear of criticism is crucial Additionally, the leader should promote a culture of mutual development and coaching, enabling team members to learn from one another Finally, implementing a system of two-way feedback is vital, allowing team members to share their insights on both the leader's performance and their peers.
Mentoring involves providing guidance and support to individuals over time, helping them develop their skills and roles (International Institute of Coaching) This approach is essential for retaining talented team members, as it enables leaders to nurture their growth and transform them into valuable assets for the organization Failing to invest in talented individuals may lead them to seek opportunities with competitors who recognize their worth.
Rodney Carte emphasizes that effective mentoring involves mentees observing potential mentors in various interactive settings, such as social functions and faculty meetings This approach allows mentees to assess the mentoring style and interpersonal skills of their mentors To foster strong mentoring relationships, GATEXCO20 managers must create an environment that encourages the sharing of skills, knowledge, and experiences.
Counseling involves providing guidance, advice, and instruction to help individuals navigate their judgments and behaviors While it shares similarities with coaching, counseling primarily targets performance-related issues, offering a more focused approach to problem-solving.
To create effective counseling, the GATEXCO20 team leader must foster an environment that encourages team members to engage openly The counselor should then focus on addressing the specific performance issues faced by the counselee, ensuring ample time is dedicated to reviewing their performance, interpersonal conflicts, and personal challenges.
Disciplinary action addresses job-related behaviors that fall short of established performance standards It encompasses various measures, such as informal discussions, verbal warnings, written warnings, suspensions, demotions, and termination While a verbal warning is typically the least severe form of discipline, termination represents the most extreme consequence However, it is essential to consider that disciplinary actions should ideally remain below the level of a written warning, especially during initial team-building phases, as harsher measures like suspension, demotion, or termination can negatively impact team morale and member attitudes.
Gardner and Zaccaro highlight that various characteristics of skills encompass personal behaviors, emotional intelligence, and cognitive abilities, which leaders can utilize to assess skill effectiveness However, the extensive and diverse nature of these models means that few leaders can embody all the traits Additionally, the correlation between traits and leadership effectiveness is not always consistent Peter Wright (1996) noted that some studies found no significant differences between leaders and followers regarding these characteristics, and in some cases, individuals possessing these traits were less likely to assume leadership roles.
Table 9: Trait models by John Gardner (1989) and Zaccaro (2004) John Gardner (1989)’s Trait Model Zaccaro (2004)’s Trait Model
Intelligence and action-oriented judgment
Understanding the followers and their needs
Skill in dealing with people
Action Plans
3.3.1.1 Improve the Total Quality Management (TQM) system
GATEXCO20's Total Quality Management (TQM) system aims to enhance product quality while prioritizing customer satisfaction To strengthen its TQM framework, GATEXCO20 should implement various strategic activities focused on continuous improvement and customer engagement.
Identify all the factors involved in the garment and textile manufacturing in order to provide a specific process
Develop the seminar and meetings to make sure all the designers and manufacturing employees understand what the requirement of products to meet the customer needs
Establish the tracking system in order to capture all fault activities or sewing deflects, colour deflects, sizing deflects, garment deflects
Take into account the seam problems and prevention
A handle sample must be produced as well as working sample
The manufacturing flows should be clearly defined with suitable time factors and all the employees inform their duty and time consuming of their participation in this process
Making the newcomer aware of specifications and tolerances, faults themselves, their effect and the appropriate action to take
3.3.1.2 Adopt the Six Sigma system
The research highlights the prominent application of the Six Sigma model, which, similar to Total Quality Management (TQM), is versatile enough to be utilized across diverse business environments, including both manufacturing and service sectors A key focus of the study is to explore the differences between these two quality management models.
According to Jacowski (2007), Six Sigma is a process quality improvement program aimed at achieving near perfection by reducing the defect rate to 3.4 defects per million opportunities This methodology enables companies to enhance efficiency and reduce costs In contrast, Total Quality Management (TQM) emphasizes quality improvement by ensuring adherence to internal standards and requirements.
TQM initiatives aim to enhance individual operations across unrelated business processes, while Six Sigma programs concentrate on optimizing all operations within a specific business process (Jacowski, 2007) The following table outlines two systems with distinct characteristics that GATEXCO20 can consider when developing its Six Sigma system.
Problems Old methods New methods
Design Product performance Customer base
Analysis Experience base Data based
Manufacturing Trial and error process Robust design process
Inventory level High quantity Low production quantity as needed
People Cost to company Asset to company
Product engineering Small input information and feedbacks from customers
High input information and feedbacks from customers
Quality horizon Short term Long term
Manufacturing cost Continuously rising Stable and decreasing
A crucial factor for successfully implementing Six Sigma at GATEXCO20 is effectively motivating employees to embrace its principles To inspire team members to meet the company's goals, the author suggests several motivational strategies, including offering rewards and incentives, enhancing job roles through enrichment and enlargement, and fostering strong interpersonal relationships within the team.
Rewards and incentives serve distinct purposes in the workplace A reward is a tangible acknowledgment of success or value, while an incentive acts as a motivating promise of future rewards aimed at encouraging team members to achieve specific performance goals Essentially, an incentive is the commitment of a reward that employees can earn by reaching defined levels of performance.
At GATEXCO20, the author suggests implementing a reward system for team members who contribute creative ideas to enhance product functionality, improve quality, and identify potential issues Incentives will be offered to those who actively participate and share valuable insights during meetings, with the possibility of promotions for consistent high performers Additionally, the company should introduce non-cash rewards, such as trophies, plaques, and travel opportunities, to further motivate and recognize employee contributions.
Job enrichment and job enlargement serve distinct purposes in enhancing employee roles Job enrichment emphasizes vertical responsibility by increasing accountability and introducing new tasks and special assignments, while job enlargement involves horizontally expanding duties, which may or may not relate to employees' primary roles Both strategies aim to empower team members and stimulate their curiosity.
In GATEXCO20, the author recommends implementing both job enrichment and job enlargement strategies to enhance team motivation Employees recognized as masters in specific areas can be assigned to different roles for job enlargement, while job enrichment becomes essential in times of intense competition with rivals like VINATEX and Viet Tien During such competitive periods, the company might consider downsizing, leading to increased workloads for existing team members instead of hiring additional staff.
Creating good relationship within the team
Building strong relationships within a team is essential for motivating team members To foster these relationships, a team leader should first engage in self-evaluation to understand and manage their leadership style effectively Additionally, the leader must take the time to know each team member personally; the deeper the understanding of their staff, the easier it becomes to involve them in their work and in reaching both team and organizational objectives.
3.3.1.3 Invest capital on higher technology and high skilled labor
To enhance product quality, GATEXCO20 should invest in advanced technology and skilled labor By acquiring new machinery with updated technology, the company can reduce deflection rates and boost productivity, ultimately meeting customer demands more effectively.
Vietnamese garment and textile enterprises are increasingly shifting from the Cut-Make-Trim (CMT) model to the Free-On-Board (FOB) approach, prompting companies to recruit highly skilled labor This transition necessitates domestic enterprises to improve their capabilities in order to effectively compete with foreign competitors.
3.3.1.4 Establish the quality management unit in each factory
GATEXCO20's final step in its functional strategy is to establish a quality management unit in each factory This unit's primary responsibility is to oversee the manufacturing process and report any faults to the quality management department at headquarters To enhance communication between the factory units and the headquarters, GATEXCO20 plans to invest in software that facilitates real-time communication.
3.3.2 Activities functional strategy 2 – Build-up the raw material system
3.3.2.1 Build-up the purchasing centers
The purchasing center is tasked with sourcing raw materials from local suppliers at competitive prices while also assessing fluctuations in local raw material costs to inform inventory planning Additionally, establishing purchasing centers in Nghe An, Da Nang, and Nha Trang is strategic, as these regions have favorable weather conditions for cultivation.
(http://vietnamnews.vnagency.com.vn)
3.3.2.2 Build-up the areas for self-cultivation
GATEXCO20 faces challenges with local raw material supply, which is insufficient to meet its demand, while imported materials are influenced by global market fluctuations To remain competitive, GATEXCO20 should establish its own cultivation areas, as many rivals have already done For instance, the Ha Noi Textile and Garment Joint Stock Company (Hanosimex) has invested $63 million in the Nam Dan garment and textile cluster project to develop fiber and yarn cultivation in Nghe An Province Similarly, Nha Trang Garment and Textile Joint Stock Co., a subsidiary of Phong Phu Corporation, has initiated a $16.98 million project to cultivate 40,000 hectares of spun yarn.
3.3.3 Activities functional strategy 3 – Product diversification
3.3.3.1 Create partnership with foreign garment and textile enterprises