Structuring an advertising business in vietnam (an example of FPT media the corporation for financing and promoting technology)

vietnam national university, HANOI hanoi school of business Pham Vu Duc Structuring an advertising business in Vietnam (an example of fpt media – the corporation for financing and promoting technology) master of business administration thesis Hanoi - 2007 vietnam national university, HANOI hanoi school of business Pham Vu Duc Structuring an advertising business in Vietnam (an example of fpt media – the corporation for financing and promoting technology) Major: Business Administration Code: 60 34 05 Master of business administration thesis Supervisors: Dr.Ta ngoc cau nguyen, mba Hanoi – 2007 TABLE OF CONTEN ABSTRACT ACKNOWLEDGEMENTS TABLE OF CONTENTS INTRODUCTION BACKROUND PURPOSE KEY RESEARCH AREAS METHODOLOGY 5CONTRIBUTIONS OF THE THESIS OUTLINE CHAPTER 1: A LITERATURE REVIEW OF THE ORGANIZATIONAL STRUCTURE 1.1 BASIC CHALLENGES OF O 1.1.1Four basic organizational de 1.1.2 Using contingency theory 1.2 AUTHORITY AND CONTR 1.3 DESIGNING ORGANIZATI CHAPTER 2: ORGANIZATIONAL STRUCTURE IN ADVERTISING INDUSTRY 2.1 OVERVIEW OF ADVERTISING INDUSTRY 2.1.1History 2.1.2What is media? 2.1.3Objectives 2.1.4Future of Advertising industr 2.2 ORGANIZATION STRUCTURE O 2.2.1Types of Ad Agencies 2.2.2Other Types of Agencies and 2.2.3Specialized Services 2.2.4Collateral Services 2.2.5Organization Structure of Wo 2.3 THE ADVERTISING INDUSTRY 2.3.1A Decade of Change for Adve 2.3.2Foreign Advertising Agencies 2.3.3Local Advertising Agencies in 2.3.4Future of advertising industr 2.4 ORGANIZATIONAL STRUCTUR CHAPTER 3: FPT CORPORATION AND FPT MEDIA INTRODUCTION 3.1 OVERVIEW OF FPT CORPORATION v i 3.1.1 Business .58 3.1.2 Products and Services .59 3.1.3 Organizational Chart 60 3.1.4 Human Resource 61 3.1.5 Organization structure 62 3.2 FPT MEDIA INTRODUCTION 63 3.2.1 Introduction .63 3.3.2 Experience 64 3.3.3 Operations .64 3.3.4 SWOT analysis 65 3.3.5 Current structure 66 CHAPTER 4: SITUATION ANALYSIS AND RECOMMENDATION 70 4.1 SITUATION ANALYSIS 70 4.2 SUITABLE TIME FOR CHOOSING NEW ORGANIZATIONAL STRUCTURE 71 4.3 NEW ORGANIZATIONAL STRUCTURE’S SWOT ANALYST: 79 4.4 IMPLEMENTATION PLAN 81 4.4.1 When will we move to functional organizational structure? 81 4.4.2 Which model will be choosing to implement at this time? 83 CONCLUSION 85 REFERENCES 86 APPENDIX A WHAT IS ADVERTISING? .88 APPENDIX B LIST OF SOME BIG ADVERTISING AGENCY IN VIETNAM .90 APPENDIX C SOMETHING ABOUT ADVERTISING INDUSTRY IN VIETNAM 92 APPENDIX D TECHNIQUES IN ADVERTISING INDUSTRY 94 APPENDIX E LIST OF INTERVIEWEES .98 APPENDIX F AN EXAMPLE OF ORGANIZATIONAL STRUCTURE IN FPT CORPORATION 100 vii INTRODUCTION BACKROUND Within scope of this thesis, I would like to study the organizational structure applying into the advertising industry and especially Vietnam advertising company – FPT Media, a part of FPT Corporation Purpose of the thesis will be presented in the next section PURPOSE From the theory, we may found a lot of models that are studied, analyzed and applied Each model is designed for certain types of company with its own particulars: number of employees, business scale and business style After each development stage, depending on the situation, managers will decide which model will be chosen In some situation, managers may skip certain periods of development They are not always successful The advertising industry is a partial of every industry Naturally, it has some its own particulars which differ from all other fields Basically, the organizational structure in advertising firms not have big different with others but in fact, there are some their own customizations After month in FPT Media, I found that, with a startup company, capital, business strategy, human resource are important factors But the organizational structure is also crucial An organizational structure has direct impacts on the business FPT Media, a startup firm, belongs to a big IT corporation in Vietnam, cannot be outside of the intersection point between organizational structure in theory (which were designed for all kind of companies); advertising industry (so many kind of services) and a Vietnam company (with its own characteristics) What is current organizational structure of FPT Media? Has is got any problem? If yes, how to repair it? How to make it better? The purpose of this thesis is to:  First, give out a systematical approach organizational structure theory;  Second, discover the advertising industry;  Third, apply this theory into practical case of FPT Media – FPT corporation to recommend the best solutions, which will help FPT Media managers have a guide on how to manage organizational structure effectively;  Fourth, identify some theoretical issue of organizational structure, which can apply in advertising companies in specific environment of Vietnam KEY RESEARCH AREAS The thesis studies organizational structure theories, history and structure of advertising industry and finally analyzes organizational structure in this industry Three first chapters of the thesis are researches on advertising industry and a local firm with main objectives:  To access organizational structure theories  To assess advertising industry and organizational structure in this industry  To assess a Vietnam firm: their organizational structure – advantage and disadvantage METHODOLOGY A lot of related documents on organizational structure theory were gathered, analyzed, compared and customized for suitable with Vietnam advertising industry Sources of information were combined for use includes: books, internet, media, and dialogues with experts Population and Sample With the first survey (survey A), the author assesses organizational structure in advertising industry and especially in Vietnam market There are about nearly 4.000 advertising companies in Vietnam now As most companies are based in Ho Chi Minh City (HCMC) – most of big firms and Hanoi, we took the sample of companies in Hanoi and others in HCMC These 17 companies are big firms (in total of 40 biggest advertising firms in Vietnam); they cover most of the adverting market and they provide most of service in adverting industry This sample is typical enough to withdraw conclusions about advertising industry and Vietnam advertising industry The questionnaires are delivered to one or two key persons in each company The survey B is to identify how FPT Media staff think and satisfy with their organization Because FPT Media is a young firm so there are only more than 10 people so author has taken a sample of all of these 10 From this survey, we may found real situation of FPT Media and their real expectation (See appendix E) Data collections methods A lot of data collection methods were considered Because of constraints in terms of time, costs and human resources, a random sample from the whole population of advertising companies could not be obtained in this research Author has approached 17 big advertising companies in Hanoi and HCMC for the survey For survey A, a total of 11 questionnaires were sent via email and questionnaires were sent by post Notice phone calls were made in prior and follow up in total of 11 questionnaires via email were answer and usable With questionnaires by post, all completed usable questionnaires were collected Author collected 14 usable questionnaires over 17 in total CONTRIBUTIONS OF THE THESIS The thesis would systematically help Vietnam advertising companies – especially FPT Media – see what organizational structure is, the benefits and principles to effectively build organizational structure Most importantly, the thesis has developed specific activities, guidelines for Vietnamese advertising firms in understanding and building an effective organizational structure OUTLINE The thesis is divided into four chapters  Chapter One will review basic organizational structure theories  Chapter Two and Chapter Three are findings of the relevant issues for the advertising industry and the company in point – FPT Media  Chapter Four will show recommendations from the case CHAPTER A LITERATURE REVIEW OF THE ORGANIZATIONAL STRUCTURE 1.1 BASIC CHALLENGES OF ORGANIZATIONAL DESIGN If an organization is to remain effective as it changes and grows with its environment, managers must continuously evaluate they way their organizations are design: for example, they way work is divided among people and departments, and the way it controls its human, financial, and physical resources Organization design involves difficult choices about how to control – that is, coordinate organizational tasks and motivate the people who perform them – to maximize an organization’s ability to create value 1.1.1 Four basic organizational design challenges confronting managers and consultants People in organization take on new tasks as the need arises and it’s very unclear who is responsible for what, and who is supposed to report to whom This makes it difficult to know on whom to call when the need arises and difficult to coordinate people’s activities so they work together as a team As organizations grow, manager must decide how to control and coordinate the activities that are required for the organization to create value The principal design challenge is how to manage differentiation to achieve organization goals Differentiation is the process by which an organization allocates people and 1Whirlpool, 2002 www.whirlpool.com 16 Vietnam Economy News website, 2005 www.vneconomy.com.vn 17 Vietnam advertising association yearbook 2003, 2004 Vietnam advertising association yearbook 2003, 2004 18 Vietnam statistic yearbook 2002, 2003, 2004 Vietnam statistic yearbook 2002, 2003, 2004 19 New York Times, 2004 Preparing the Company Organization manual New York: New York Times 20 W Baker, 2001 The Network Organization in Theory and Practice Harvard Business Review 21 Adarco Limited, 2000 The authority on Asia’s advertising and marketing services industry London: n.p 22 MSU Extension Service, 2000 Selecting an Organizational Structure for Your Business London: n.p 23 William D Wells, Sandra Moriarty and John Burnett, 2000 Advertising : Principles and Practice (3rd Edition) New Jersey: Prentice Hall 24 Jon Steel, 1998 Truth, Lies and Advertising: The Art of Account Planning New Jersey: Prentice Hall 25 Eugene J Hameroff, 1998 The Advertising Agency Business: The Complete Manual for Management & Operation New York: McGraw-Hill 26 Mario Pricken, 2000 Creative Advertising: Ideas and Techniques from the World's Best Campaigns New Jersey: Prentice Hall APPENDIX Appendix A: What is advertising? Franklin D Roosevelt reputedly once said, "If I were starting life over again, I am inclined to think that I would go into the advertising business in preference to almost any other The general raising of the standards of modern civilization among all groups of people during the past half century would have been impossible without the spreading of the knowledge of higher standards by means of advertising." Advertising and public relations work has been seen in recent decades as glamorous, and many students of marketing are attracted to these fields in the communications business But advertising work isn't for everyone It's a tough, competitive field that demands dedication and hard work and can involve many pressure-filled days and nights To make it (to succeed), you need more than a degree  You need a sense of creativity, a sense of humor, a sense of curiosity, a sense of adventure  You should have an understanding of people and what motivates them an understanding of the marketplace  You'd better have a lot of enthusiasm and a lot of common sense  You should be willing to work hard and learn constantly  You've got to be intelligent  And most important, you've got to be flexible Advertising isn't a 9-to-5 job, with day-to-day work neatly planned It changes constantly, and you've got to be able to change with it, to adjust to changing deadlines, new directions Most companies make an individual or department responsible for advertising and then hire advertising agencies to produce advertising campaigns Within the client company, the advertising manager typically recommends how much to spend on advertising and defines what the advertising campaign strategy is expected to accomplish Advertising managers work closely with advertising agencies Relatively few people in the field of marketing are employed by advertising agencies Of those who are, many work in smaller cities and towns, doing local or regional ads for small advertising agencies Some are employed by local newspapers 8 and TV or radio stations, composing ads for paint stores and dry cleaners Others sell advertising broadcast time or space in newspapers or on billboards Jobs handling advertising for large media users such as Procter & Gamble, the Ford Motor Company, and the U.S government are relatively few, but if you land one you are bound to have an exciting career Within an advertising agency, there are several types of positions The account executive is both the agency's representative to the client and the client's representative at the agency Effective account managers develop a thorough knowledge of the client's business, the consumer, the marketplace, and all aspects of advertising They must communicate information about the client and the client's needs clearly to the agency team, plan effectively to maximize staff time and energy, and present the agency's recommendations to the client It is an advertising account manager's job to make sure the client company gets its money's worth (but at a profitable return for the agency) The creative department of an advertising agency is responsible for developing the ideas, images, and words that make up commercials and ads Copywriters (who write the text of advertisements) and art directors (who are responsible for the visual appearance of ads) play the major roles here In developing an advertisement, these agency personnel must work closely with the account manager and with the media and research departments to find out all they can about the client, the product, the marketing strategy to be used, the production budget, and so on The agency's media department is responsible for developing a plan that answers the question "How can we, at the lowest possible cost, reach the greatest number of people in the target group often enough that they see and remember the advertising message?" Media planners suggest which media can be used most effectively to reach the target audience Media buyers buy space or time for the advertising, negotiating for the best possible price The basic role of an advertising agency's marketing research department is to understand consumer behavior Researchers may investigate secondary information, conduct focus groups or one-on-one interviews, test people's reactions to new advertising copy, track sales volume, or perform other research tasks While most researchers are assigned to specific accounts, some specialize in broad areas of consumer behavior such as consumer trends or lifestyles Appendix B List of some big advertising agency in Vietnam No Representative Offices Ammirati Puris Lintas Asatsu - DK Asian Advertising, Inc BBDO Asia/Pacific Bates Worldwide Chuo Senko Vietnam Daiko Advertising Inc Dentsu Inc Dentsu, Young & Rubicam 10 Hakuhodo Inc 11 Lotus Communications 12 J.Walter Thompson 13 Leo Burnett/M & Vietnam 14 McCann-Erickson 15 Ogilvy & Mather Advertising 16 Prakit & FCB Public Co Ltd 17 Saatchi & Saatchi 18 ANDU Advertising & Services Co., Ltd Advertising & Exihibition Construction 19 Co (AE) 20 An Tiem Advertising Co., Ltd 21 Do-Ad Group 22 Goldsun Advertising 23 Ha Thai Trade & Advertising Co., Ltd 24 Hanoi Marketing Design 25 KCD Advertising & Trading Co., Ltd 26 Nam Viet Advertising Company 28 Saigon Advertising Co 90 No 29 Representative Offices StormEye Creative Communication Thai Duong Advertising & Trading 30 Service Co 31 Tien Phong Joint Stock Co 32 Tinh Viet Advertising Agency (MBA) 33 Venus Advertising Co., Ltd 34 Vietnam Advertising Co., Ltd 35 Vietnam Marketing center Vietnam Trade fair & Advertising 36 37 national Co Vinexad 38 Youth Advertising 91 Appendix C Something about advertising industry in Vietnam Vietnam Advertising Regulations There have been no new regulations announced that affect the advertising industry over the last few months However, work is at hand to review and revise the current regulations, which were discussed in an open seminar between government and industry professionals at the end of last year As part of the government’s nationwide objective to cut down on unnecessary red tape and abolish sub-licenses, it is now easier to apply for outdoor advertising and billboards licenses via a one-stop procedure As well as restrictions, the government is looking at reviewing advertising regulations and censorship procedures At the end of February 2000, a delegation visited Thailand and Malaysia to review how advertising is controlled in those countries Circular 85/1999/TT-BHVTT was annulled as it was inconsistent with the open policy announced in Decree No 32/1999/ND-CP Media Choice In the two main urban centers, TV is the media that has the highest penetration and ownership of color TV’s in the high 90’s in Ho Chi Minh and Hanoi Vietnam’s national TV station, VTV claims to have reached 71.3% of the population in 1997, compared to 69% in 1996 In 2004, VTV have reached about 75% of the population It now broadcasts for 19 hours a day The number of Internet subscribers in Vietnam reached 45,000 in 1999 This compares with 11,000 at the end of 1998 A reduction in the access charges for the Internet from VND400 per minute to VND290 per minute, which came in to force at the beginning of 1999, fuelled this growth But at this time, there are a lot of Internet services in Vietnam: dial up; ADSL, etc Access charge was reduced to about 100.000 VND per month for a fully using day Number of people using internet increases about 28% per year Vietnam has four Internet service providers Beside all, Vietnam has about 350 newspapers and magazine and 64 local televisions The biggest local television is Hochiminh City Television – HTV In 2005, government has just allowed VTC – a company of Ministry of Posts and Telematics broadcast all nationwide This is one of biggest competitor in television industry with VTV in the near future Appendix D Techniques in advertising industry Advertisers use several recognizable techniques in order to better convince the public to buy a product and shape the public's attitude towards their product These may include: Repetition: Some advertisers concentrate on making sure their product is widely recognized To that end, they simply attempt to make the name remembered through repetition Bandwagon: By implying that the product is widely used, advertisers hope to convince potential buyers to "get on the bandwagon." Testimonials: Advertisers often attempt to promote the superior quality of their product through the testimony of ordinary users, experts, or both "Three out of four dentists recommend " This approach often involves an appeal to authority Pressure: By attempting to make people choose quickly and without long consideration, some advertisers hope to make rapid sales: "Buy now, before they're all gone!" Appeal to emotion: Various techniques relating to manipulating emotion are used to get people to buy a product Apart from artistic expression intended to provoke an emotional reaction (which are usually for associative purposes, or to relax or excite the viewer), three common argumentative appeals to emotion in product advertising are wishful thinking, appeal to flattery, and appeal to ridicule Appeals to pity are often used by charitable organizations and appeals to fear are often used in public service messages and products, such as alarm systems or anti-bacterial spray, which claim protection from an outside source Emotional appeals are becoming increasingly popular in the health industry, with large companies like 24 Hour Fitness becoming increasingly adept at utilizing a potential customers fear to sell memberships; selling not necessarily the actual gym, but the dream of a new body Finally, appeals to spite are often used in advertising aimed at younger demographics Association: Advertisers often attempt to associate their product with desirable imagery to make it seem equally desirable The use of attractive models, a practice known as sex in advertising, picturesque landscapes and other alluring images is common Also used are "buzzwords" with desired associations On a large scale, this is called branding Advertising slogans: These can employ a variety of techniques; even a short phrase can have extremely heavy-handed technique Controversy, as in the Benetton publicity campaign Guerilla advertising: Advertising by association Done in such a way so the target audience does not know that they have been advertised to, but their impression of the product is increased (or decreased) if that is the intent of the advertiser Subliminal messages: It was feared that some advertisements would present hidden messages, for example through brief flashed messages or the soundtrack that would have a hypnotic effect on viewers ('Must buy car Must buy car.') The notion that techniques of hypnosis are used by advertisers is now generally discredited, though subliminal sexual messages are extremely common, ranging from car models with SX prefixes to suggestive positioning of objects in magazine ads and billboards During the 1990s, advertisers have increasingly employed the device of irony Aware that today's media-savvy viewers are familiar with and thus cynical about the traditional methods listed above, advertisers have turned to poking fun at those very methods This "wink-wink" approach is intended to tell viewers, "We know that YOU know we're trying to sell you something, so bear with us and let's have fun." The ultimate goal of such advertising is to convey a sense of trust and confidence with viewers, by essentially saying, "We respect your intelligence, and you should respect us because we're not trying to fool you." Common television examples include most beer advertising and the commercials of the Geico insurance company Public service advertising The same advertising techniques used to promote commercial goods and services can be used to inform, educate and motivate the public about non-commercial issues, such as AIDS, political ideology, energy conservation, religious recruitment, and deforestation Advertising, in its non-commercial guise, is a powerful educational tool capable of reaching and motivating large audiences "Advertising justifies its existence when used in the public interest - it is much too powerful a tool to use solely for commercial purposes." - Attributed to Howard Gossage by David Ogilvy Public service advertising, non-commercial advertising, public interest advertising, cause marketing, and social marketing are different terms for (or aspects of) the use of sophisticated advertising and marketing communications techniques (generally associated with commercial enterprise) on behalf of non-commercial, public interest issues and initiatives In the United States, the granting of television and radio licenses by the FCC is contingent upon the station broadcasting a certain amount of public service advertising Public service advertising reached its height during World Wars I and II under the direction of several U.S government agencies Appendix EList of interviewees No Interviewee Vu Tieu Ngoc Nguyen Thi To Uyen Hoang Thi Thuy Giang Pham Thi Dung, MBA Tran Thanh Huyen Luong Anh Hoa Nguyen Thi Hai Yen Tran Duc Thang Trinh Van Hao 10 Nguyen Mai Khanh 11 Nguyen Thu Thuy 12 Truong Tan Loc 13 Van Minh Thuong 14 Truong Duy Khanh 15 Nguyen Thi Thanh Thuy 16 Nguyen Thanh Nghia 17 Tran Tuan Viet 18 Pham Thi Hong Trang 19 Luu Thanh Huong 20 Pham Xuan Hoa 21 Tran Minh Duc 22 Tran Kien 23 Do Thi Van Ha 24 Nguyen Thi Thu Hien 25 Nguyen Kim Chi 26 Nguyen Uyen Phuong 27 Tran Lan Phuong 28 Nguyen Minh Hau 29 Pham Van Ha 30 Pham Thi Mai Hoa 31 Nguyen Le Hai 32 Nguyen Van Khanh 33 Ho Huong Lan 34 Nguyen Hong Phuong 99 Appendix F An example of organizational structure in FPT Corporation (FPT Software Company Ltd.) 10 .. .vietnam national university, HANOI hanoi school of business Pham Vu Duc Structuring an advertising business in Vietnam (an example of fpt media – the corporation for financing and promoting technology). .. structure has advantages and disadvantages, and managers have to be ready and willing to redesign the organization in order to obtain the advantages and anticipate and minimize the problems of whichever... applying into the advertising industry and especially Vietnam advertising company – FPT Media, a part of FPT Corporation Purpose of the thesis will be presented in the next section PURPOSE From the theory,