This assignment explores Weiyuan clothing Manufactory’s organisational structure and the course of structural changing. The main reason I choose this manufactory is I had worked in it. I had my own experience and my subjective opinion about it. Because of the foreign investment into the company, it has changed in several ways including its organisational structure. Foreign capital is emerging into Chinese market and has become one of the important components in the booming economy. In addition, it has separated from Chinese traditional management system and is moving towards the western total quality management. It is the trend of the most of Chinese industry, so I write the essay to discuss the organisation changing in China.
In this assignment I try to discuss the former and current orgnisation, how did it complete the curse of change and what are the outcomes of change. Among the three questions, this report emphasizes on the change of the organisation. However, there are many other aspects relating to the organisation changing except organisational structure, such as the changes of leadership, power, conflict, individual’s perceptions, control and organisational culture. Even though they are of the common importance, only the structure and its change can be analysed in this assignment, to in comply with the word length limitation of the report.
Paradigm of the author Paradigm is the name given to the conceptual framework(s) within which knowledge is produced. It is constituted in part by the rules which are generally accepted as necessary to follow in order to produce ‘good’ knowledge (Sharon Mavin, 2000). As Burrell and Morgan (1979) described, a paradigm is the very basic meta-theoretical assumptions a person makes about life and how it is best explored. They proposed that social theory is conceived via 4 paradigms, which are based on sets of assumptions about the social world.
Among the four paradigms, each of them represents different views certain people hold toward the social world. At the same time, every individual’s assumptions to the organisations are restricted by their paradigm. Basing on the psychological test, the author’s paradigm is belonged to the third one, which is Radical Humanist Paradigm. According to Burrell and Morgan (1979), people in this paradigm intend to hold the views as follows:
On all these bases, the author views the organisation from the Radical Humanist’s view when analysing in this report. And it explains the reason why certain models and theories used in this report have more appeal to me. All the opinions in the report only represent the author’s own view from the specific Paradigm’s perspective. A different person in other paradigms may see the same situation from a different angle. There must be some limitations due to the weaknesses of this paradigm.
Background of the company State-own enterprise is China’s particular and unique form. The government is both the owner and the tax authority of enterprises. Government interferes in day-by-day management. The enterprises depend heavily on the government for access to bank credit and still some crucial inputs. Have traditional employee contract, which is all employees are permanent and they have the right to occupy the same jobs for life even though they do not perform well on the job. As a result, there was not a competitive environment; employees have low commitment.
Weiyuan clothing Manufactory (abbreviated as WCM) was established in 1958, used to be one of the main state-own enterprises in Panyu (city of Guangdong Provinces, south-west of China). However, from the early 1980’s, Chinese government carried out the policy which encourages foreign investment coming into China. As a result, there have been three main formats for foreign investment: equity joint ventures; contractual/cooperative joint ventures; and wholly-owned subsidiaries (Kamall et al, 1998). More and more foreign companies began to recognize the strategic importance of the Chinese market and improvement in the business environment. In 1997, an Hong Kong company went to Panyu and invested to form the cooperative joint ventures with the WCM. From then on, a new western managerial system was set up, a serious of changes took place. All these changes happened on the basis of structural change.
Former orgnisation structure-Bureaucracy According to Rollionson, Organisational structure is the fundamental and relatively unchanging features of an organisation which are officially sanctioned by those who control it and consist of the way activities and component parts are grouped, controlled and coordinated in order to achieve specific aims and outcomes.(Rollionson, 1998) Or, simply as Mullins (1999: 520) says, it is the ‘pattern of relations among positions in the organisation.’ The former organisational structure in WCM was the combination of Functional grouping and Process grouping, which represents the main characteristics of manufacturing.
Since WCM was a state enterprise, all the employees within the factory worked for the right of government. They did not have the concept that every one is one part of the group or company’s development is every individual’s development as well. The organisation was a very bureaucratic one, with many layers of departments, some of which are of no function at all. Like Morgan (1997) describes organisation as a machine, the communication and command is hierarchical. Under this situation, it was difficult for employees to go to see or talk to their director even managers. Communication was not effective in the organisation.
All labour is divided clearly. It can be seen from the structure chart of the factory that different department linked and co-operate together. The most evident character of the bureaucratic is the centralization of authority. Therefore, the span of control is clear and limited. It refers to the relationship between peers, but for vertical span of control, it was still strong. The staff of the bureaucratic organisation has high security.
However, there are a number of criticisms of this Bureaucratic organisation (Hislop, 2001). Firstly, people who work in the bureaucratic organisation do not always passively follow rules. As a result, rules are interpreted, bent, ignored or challenged. Secondly, rules can not cover all situations. Thirdly, bureaucratic stifles creativity or innovation within the organisation. Fourthly, the bureaucratic organisation is inflexible, it is poor at responding to change. Finally, it is poor horizontal communication.
Changes within the organisation Due to the characteristic of state-own enterprise, managers were not those who have the managerial competences and were appointed to the managerial position instead of being selected. As a result, there was not an effective leadership at the first stage. In addition, almost all of the workers were permanent employees and they had worked in this factory since they were young. Because of the high job security, employees were reluctant to commit more to the organisation even they were not suitable for their job. Meanwhile, there was not a competitive reward system or motivation system to stimulate or motivate them. As employees always complained, the outcomes are always the same, even though you do more than others.
In the late 1990’s, it was a booming period that more and more foreign investors emerging into China. Chinese officials wanted assistance in bypassing agents to directly purchase products and raw materials from foreign suppliers. They also wanted assistance in training their mid-and upper-level staff in specific areas such as finance, marketing, and human resource management. On the other hand, foreign companies wanted information and assistance on strategies for entering the Chinese market and solving a variety of problems from establishing distribution channels to fighting through the maze of regulations and approvals necessary to conduct business in China. These needs of both parties seem to be readily available and they meet their own goals which as a result, the changing period emerged.
Before Chinese government decided to open its economy to foreign investor, customers have no choice in the market, because of absence of merchandise. It is seller-oriented market. Accompany with innovation and open policy, the abundance of merchandise led seller-oriented market to buyer-oriented market. Manufactory had to face the ruthless competition. However, customers could get more from their competitions, they could choose different kind of colors or patterns they expected. Their demands were considered by enterprise. This trend forced the manufactures to try their best to promote its product to meet the need of customers.
As Strange and Kammall pointed, the organisation which did not marke any change seemed was waiting for a suicide (Strange and Kamall, 1998). With the emergence of foreign managerial system and models, the effectiveness of Information Technology was seen as playing important role in daily life and work step by step. From 1998, all the offices and departments within WCM were equipped with computers; it improved the way and quality of communications.