IBD IC CW1 first class ORGANIZATIONAL CHANGES of Nafoods Group

Innovation and Change IBD IC CW1 Nafoods Group Choose an organization whose operations were affected by this pandemic not necessarily your current employer or choose an affected sector in which you have an interest. 2. Identify the changes that this organisation or sector implemented because of the COVID 19 pandemic, in working practices, customer relationships, and core business models etc. Which changes were mandatory, and which did it implement on its own initiative? 3. Assess which of these changes were temporary, for the duration of the pandemic, and which would be long lasting. 4. Describe the organisational culture of your chosen organisation before and after the COVID19 Pandemic. How the changing organisational culture influences organisational success and performance? 5. Why is the human resource management function critical in this context?

Table of Contents

TASK 1: INTRODUCTION ABOUT NAFOODS GROUP & COVID-19 CONTEXT 3

ABOUT NAFOODS GROUP 3

ABOUT COVID-19 CONTEXT 4

TASK 2: ORGANIZATIONAL CHANGES IN THE COVID CONTEXT 2019 – 2021 4

(1) CHANGE IN ORGANIZATIONAL STRUCTURE 5

(2) CHANGES IN TECHNOLOGY 8

TASK 3: SHORT TERM OR LONG TERM CHANGE OF ORGANIZATION IN COVID-19 CONTEXT 10

TASK 4: ORGANIZATIONAL CULTURE CHANGE IN COVID-19 CONTEXT 10 TASK 5: NAFOODS’ HUMAN RESOURCE MANAGEMENT FUNCTION IN THIS CONTEXT 12

TASK 1: INTRODUCTION ABOUT NAFOODS GROUP & COVID-19 CONTEXTABOUT NAFOODS GROUP

Nafoods Group Joint Stock Company, established in Nghe An province in 1995, is a

conglomerate operating in the Agriculture and Food & Beverage industry Proudly positioned as

one of the leading enterprises in Vietnam specializing in the development of a comprehensive agricultural value chain From seed selection, cultivation, processing to export, Nafoods Group has positioned itself at the forefront of manufacturing and supplying a diverse range of products, including

fruit juices, frozen fruits and vegetables, dried fruits, various seeds, and fresh delicious fruits Main

products of Nafoods Group are juice concentrate, fresh fruits, IQF fruits & vegetables, juice/ NFC/

puree, dried fruits & nuts.

Nafoods Group's vision extends beyond developing a robust agricultural value chain to

embrace digitalization, sustainability, and environmental responsibility

The mission of Nafoods Group is to provide the world with natural, safe agricultural products,

enhancing the quality of life for everyone

Figure 1: Nafoods Group’s Organizational Structure

Source: Annual Report (2023)

ABOUT COVID-19 CONTEXT

Translating as an economist: The current acute respiratory pandemic associated with the Corona virus, now referred to as Corona virus disease 19 (Covid-19; Gorbalenya, Baker, Baric, de Groot, & Drosten, 2020), has significantly claimed the lives of many people worldwide As a side effect, numerous economies have been profoundly impacted The ramifications of lockdowns are causing a global economic downturn, affecting both leading economies and developing nations (Globaldata, 2020; OECD, 2020) Financial scarcity and gaps in specialized knowledge are making it challenging

for them to cope with the challenges posed by the Covid-19 crisis This pandemic is characterized

by its abrupt onset, uncertainty about its nature and duration, and uncertainty about how toaddress it.

The challenges that businesses must address in this crisis include labor shortages, limited management capabilities (in processes, techniques, and tools), restricted capital, and a lack of formal management knowledge (only implicit knowledge exists), with nothing formalized (Garengo, Biazzo, & Bititci, 2005) On the other hand, opportunities may arise from this disruption The current situation is causing changes in customer behavior, market dynamics, and supply chains (Carvalho, Bonzo, & Zenaide, 2020; Ceylan, Ozkan, & Mulazimogullari, 2020), and digital technology can help them leverage these opportunities.

TASK 2: ORGANIZATIONAL CHANGES IN THE COVID CONTEXT 2019 – 2021

The COVID-19 pandemic has profoundly impacted nearly every aspect of global life and the economy, and Nafoods Group is no exception The outbreak of this disease has posed numerous challenges and changes for the conglomerate Below is the SWOT analysis of Nafoods Group.

- Utilizes modern machinery and cutting-edge technology to meet strict quality standards - Experienced, skilled, and passionate leadership - Invests in research and development of

- Vietnam joining free trade agreements and global trade organizations.

- Increasing Vietnamese interest in health issues - Businesses can seize opportunities to enhance

digital processes, shift to online working models, and leverage new technologies to sustain and grow their operations.

- Growing demand for products and services related to health, safety, online education, and life-supporting technologies.

- Businesses can develop and expand online services to meet consumer needs during periods of social distancing.

- Limited capital, unable to meet business demands.

- Products have not been widely promoted on various media channels.

- In the context of COVID-19, with a focus on specialized departments, there may be risks without a specific risk management department to monitor and address them.

- Lack of high specialization among departments.

- Risks of disruptions in the international supply chain, causing difficulties in accessing raw materials and products.

- Transportation and logistics costs may increase due to restricted transport and safety measures - Challenges in accessing financial support from

the government.

(1)Change in Organizational Structure

Figure 2: Nafoods' Organizational Structure in 2019

Source: Annual Report (2019)

Figure 3: Nafoods' Organizational Structure in 2021

Source: Annual Report (2021) Adjusting the management model of Nafoods Group after the COVID-19 pandemic is a crucial step to adapt to the new business environment Before the pandemic, the Control Board was responsible for examining and monitoring finances, while the Board of Directors closely supervised operational activities However, post-COVID-19, the management model has transformed by creating specialized committees such as the Strategy, Human Resources, Compensation, and Audit Committees Eliminating the Control Board may reduce the level of control and supervision, requiring effective coordination between departments to avoid information loss and slow response to rapid challenges To face new challenges and opportunities, Nafoods Group has implemented a solution by establishing an internal control and risk management department This can enhance control and supervision levels within the company.

Crises within a company are often described as unforeseen, unpredictable events that need immediate resolution and pose threats to the organization's values, short-term and long-term goals,

image, and reputation (Okumuş, 2003) As a consequence of crises, the company's management and organization may be disrupted, and the management board may struggle to fulfill its functions Hence, the internal control and risk management department emerged.

This change is a significant step to optimize management in a volatile market The new committees help concentrate functions and enhance supervision in crucial areas Particularly, the Operating Board comprises the CEO, Chief Accountant, and Functional Block Directors, replacing the former Deputy CEO positions, leading to strengthening the functions of the CEO and CFO Additionally, dividing into 11 highly specialized departments demonstrates the company's commitment to improving management efficiency and empowering decision-making for department directors.

Figure 4: Types of organizational change

Source: Nadler et al (1995)

The adjustment of the organizational structure can be considered a reorientation This is a

strategic shift in how the organization and human resource management cope with the prolonged COVID-19 situation It brings not only efficiency in human resource management but also helps Nafoods maximize available resources This is not just a change in proportion but a transformation in how they handle and allocate human resources Instead of making minor adjustments, the company has

undergone a comprehensive transformation, posing fundamental questions about how they organize

work and make decisions This enables them to adapt and revitalize their human resource management approach to reflect new realities and demands Nafoods has posed fundamental questions about how

they organize work and make decisions This is a proactive response to ensure that the management

model not only adapts to the current situation but is also ready to respond and shape the future With a strong focus on enhancing risk management quality, Nafoods not only responds to risks but also devises strategies to minimize the impact of financial and liquidity risks They not only make adjustments after events but also actively predict and prevent risks before they become dangerous.

The change in Nafoods Group's organizational structure in the context of the COVID-19 pandemic can

be understood as a mandatory The pandemic has heightened the need for businesses to swiftly adapt

to a challenging environment, prompting a necessary change in the management model for risk mitigation and operational stability Additionally, the company sees the pandemic as a strategic opportunity to optimize management strategies Through specialization and strengthened functions, the aim is to establish a new management model enhancing performance and flexibility The formation of highly specialized departments and focus on key aspects is an initiative for rapid adaptation to the new market, positioning the company robustly in the dynamic business landscape.

(2)Changes in Technology

In the context of the COVID-19 pandemic, Nafoods Group has implemented Smart Farming technology to optimize farming processes and manage farms safely and efficiently.

Figure 5: Smart Farm Model [Appendix 1: Explain what is Smart Farm?]

The type of change in the agricultural industry, especially through the application of Smart

Farming technology, can be understood as a process of recreation This recreation is not merely about

reducing waste but also involves constructing a new model of intelligent agriculture, optimizing

resource utilization, and altering the way farms are managed At a transformational level, Smart

Farming represents not just a continuation or small improvement in cultivation processes but rather a

revolution in how agriculture is managed and executed Smart technology is not just a tool; it is an integrated system of new methods and processes, from resource management to monitoring crop

health Reactive level in the application of Smart Farming is crucial This stems from urgent situations

caused by the strong impact of the pandemic, forcing businesses to adapt quickly to maintain operations Applying this technology also aims to minimize the impact of global supply chain disruptions, enhancing stability in the agricultural production process Additionally, uncertainty in labor and workforce is a significant challenge, and the use of Smart Farming technology can automate some cultivation tasks, reducing labor requirements Furthermore, the demand for remote information and management has increased due to social distancing measures, and Smart Farming technology provides a digital solution for remote farm management.

In the context of the COVID-19 pandemic, the implementation of Nafoods Group's Smart

Farming technology becomes mandatory for several crucial reasons Firstly, to enhance safety and

social distancing, to avoid disruptions in the supply chain by reduce dependence on labor and workforce, maintaining stability in the supply chain Thirdly, this technology helps optimize resource utilization in a context of limited resources, simultaneously reducing waste and production costs Fourthly, with uncertainty in labor availability, Smart Farming automates farming tasks, minimizing labor requirements, and ensuring efficiency Finally, this technology enables Nafoods to respond quickly and flexibly to market fluctuations and external conditions, creating a robust and adaptable working environment in the agricultural industry.

Performance: The changes have significantly increased the efficiency of the business In 2021, the

consolidated gross revenue reached 1,614.7 billion VND, a 34.3% increase compared to the previous year, surpassing the delegated Annual General Meeting plan by 7.6% After-tax profit reached 77.6 billion VND, a 26.6% increase compared to the previous year, exceeding the planned target by 2.1% Business operations, development of product lines, market expansion, supply chain, and manufacturing operations have been flexible and efficient, ensuring safety and health for all 100% of employees.

The key personnel in the basic agriculture sector have been perfected, ensuring continuity and stability in the system's operation Digitalization efforts and the application of information technology have received substantial investments, and the phase 1 digital transformation process, involving the integration of operational data to support daily decision-making, has been successfully completed This has ensured that processes and operations are not disrupted or suspended under any circumstances.

TASK 3: SHORT TERM OR LONG TERM CHANGE OF ORGANIZATION IN COVID-19 CONTEXT

The adjustment in Nafoods' management model, particularly post the COVID-19 pandemic, is not only considered a short-term measure to cope with the crisis but is also evaluated as a change with

a long-term nature This is attributed to several reasons Firstly, the pandemic has created a

business environment full of challenges and uncertainties, demanding businesses to adapt rapidly to

survive Secondly, the implementation of a new management model aims not only to mitigate risks

and negative impacts from the pandemic but also to enhance the company's efficiency and flexibility.

This transformation involves not only adjusting the staff ratio but also revamping the organization's workflow and decision-making processes It helps Nafoods adapt and rejuvenate its approach to human resource management, reflecting the new realities and requirements Thirdly, while the pandemic has introduced pressures and urgent demands, Nafoods recognizes it as an opportunity to establish a new,

proactive, and sustainable management model By concentrating on specialization and reinforcing

functions, the company aims to construct a model that improves performance and flexibility over the

long term.

The technological change involving Nafoods' application of Smart Farming in the context of the

COVID-19 pandemic is considered a long-term transformation The implementation of smartfarming aims to optimize production, minimize resource wastage, and enhance flexibility in

management, leading to observable improvements in Nafoods' economic efficiency Furthermore,

smart farming technology is part of the strategy to meet the growing demand for food safety, origin

transparency, and sustainability, contributing additional value and strengthening Nafoods' brand

position The integration of sensors and intelligent data aids the company in making effectivedecisions, reducing resource consumption, optimizing production, and mitigating environmentalrisks Additionally, the adoption of Smart Farming technology helps reshape Nafoods' position in the

agricultural industry The company becomes a pioneer, utilizing technology to enhance product quality and production processes, creating a sustainable competitive advantage in the long run This is not merely a temporary measure but a forward-looking strategy, demonstrating Nafoods' commitment to innovation and growth.

TASK 4: ORGANIZATIONAL CULTURE CHANGE IN COVID-19 CONTEXT

[Appendix 2: Analysis the relationship between oganizatio culture and business performance]