Essays on Formosa Plastics Group Analysis Case Study

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Formosa Plastics Group is a chemical organization based in Taipei, Taiwan. The organization produces and distributes a wide variety of commodities that range from high-density polyethylene (HDPE) products, chlorofluorocarbons, finished plastics products, plastic raw materials, polyester products to electronic products. The Group also runs a large medical facility, medical college, nursing school, and a technical college. The organization was formed in 1954 with an estimated capital amounting to NT $ 5 million growing to the largest private firm in Taiwan. Initially, the organization employed a management control system where employees were assessed individually.

In the decision-making process, managers evaluated performance measures and adjusted the factors, which were beyond the control of employees (Stanton, 2000). This means that profits were not crucial aspects of managerial decision making, but rather controllable factors, which drive profits, for instance, inventory control, cost control, and quality. This made the organization grow over the years. In the 1990s, the organization management foresaw difficult times ahead resulting from the shortage of quality labor, increasing wages, and radicalization of the business environment. Poor quality production is a factor associated with personal and organizational culture, whereas increasing wages and business environment politics were national factors (Shih Chiang and Kim, 2005).

This implies that the organization was affected by both cultural and national factors. All these unfoldings came about after the organization had enjoyed profits for thirty years. In management decision making, the organization was split into three distinct corporations, which include Formosa products, Nan Ya Plastics, and Formosa Chemicals & Fibre Corp. Numerous other affiliated companies were established in Taiwan and other nations, such as the United States. The organizations were further subdivided into various divisions, which were organized in a way that managers made decisions suitable for production and marketing.

The organization managers employed were between 40-60 years who were consistently career organizational employees. The organization's administrative managing functions were also centralized in order to utilize the economy of scale. The organization had also established an exclusive feature of the corporate organization comprising 30 personnel (president’ s office) which entailed 15 teams of specialists to help in the management division. Due to the increased management quality, management decisions focused on cooperating with division management.

This was to ensure that the organizational operating system was aligned with corporate standards. FPG also made efforts in investments to improve the quality of existing products and effectiveness. This involved manufacturing of new products comprising lower volume and high value-added, for instance, carbon fiber. In terms of the financial control system, the organizations established bonus plans for the employees. All employees were included in the plan in all the nations that the organizations operated. Some of these plans included end-year bonuses for all employees with regard to the organization’ s performance. The performance bonus program involved a bonus based on the performance and position of employees in their target attainment.

Furthermore, a section of the employee’ s remuneration was also deducted in order to create Management Special Bonus Fund that was used for specific annual awards. This was based on individual performance and general organizational performance.


Shih, H. A., Chiang, Y. H., & Kim, I. S. (2005). Expatriate performance management from MNEs of different national origins. International Journal of Manpower, 26(2), 157-176.

Stanton, J. M. (2000). Reactions to employee performance monitoring: framework, review, and research, directions. Human Performance, 13, 85±113.

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