Management Style

Formosa Plastics Group's Management Structure

To achieve rationalized management, FPG has established professional managerial units, such as the main management department, to provide advice and services for all the subsidiaries in the attempt to coordinate resources and give full play to the overall strengths of the company. Thus, apart from management and improvement projects, they are also responsible for devising the company-wide operating framework, planning and promoting digitalization, internal audits, procuring raw materials, capital management, constructions, legal affairs, and public relations. In addition, every subsidiary is equipped with a "(General) Manager's Office," a "Manager's Office of Business Unit," and a "Factory Office," which are a comprehensive managerial line Organication. In addition, each subsidiary also has an accounting department, a management department, a storage and transportation department, a technical services department, and an occupational safety and health office. In order to give full scope to the functions of each department/office and enhance the overall operating performance, FPG's Management Operating System is as follows:

1. Business Units

In order to prevent lower efficiency due to its continuous growth, FPG has thoroughly set up business units in accordance with the principle of centralizing marketing and sales and responsible management. Each of FPG's subsidiaries is equipped with several business units according to its classification. The purpose is to allow each business unit to coordinate the overall marketing and sales operations and plan operational goals comprehensively based on its own needs in terms of Organicational structure, production processes, and product structure. At the same time, a "profit center" system is in place to separately calculate the gains/losses by factory or product. Through the accounting analysis reports, it is possible to evaluate the operating performance based on costs and product income and to attribute the operating responsibilities for more rationalized operations.

2. System of Management by Objectives

To fully keep track of the operating performance of each unit, FPG especially focuses on the management of performance and costs. Through setting objectives and analyzing the differences between objectives and actual performance, FPG examine and explore the abnormalities and adopt improvement measures to control costs and strengthen performance. The system mainly relies on "unit cost analysis," and carries out an in-depth analysis on the original components of each cost based on each product category; the analysis is then used to set cost objectives. Through management by exception, the system carries out an analysis on the differences between actual and standard costs for improvement. In the meantime, new objectives are set according to the effectiveness of the improvements. After repetitive implementation of these measures, every benefit and cost can be optimized.

3. Personal Performance

To ensure more reasonable employee remuneration and combine the interests of the employees with those of the company, FPG has a personal performance system to stimulate the employees' motivation to explore and resolve problems. Through drawing up rules on the monetary reward system and assessment of the employees' actual performance, the employees are given monetary rewards. At the same time, their performance is used as the basis of the annual performance appraisal in order to enhance the employees' work quality, production efficiency, and salaries.

To achieve sustainable development and substantial growth, FPG dedicates itself to diversification and multilateral development. Apart from continuous research, enhanced product quality, and reduced costs, FPG features quality and inexpensive products to provide best services for society. In addition, in order to rationalize management and pursue greater performance, FPG has digitalized all the management systems, such as logistics, production, operations, construction, HR, finance, performance analysis, and healthcare affairs. Also real-time online systems are also adopted. FPG deeply realizes that only with a solid foundation for management can its operations become stabilized without being fundamentally affected due to changes in objective circumstances. FPG can thus cement the foundation of its operations and enhance its management standards.

(FPG, Dec. 31, 2022)

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