Table of Contents


 


Executive Summary                                                                                  p. 2


 


Introduction


A. Background of PCCW Limited                                              p. 3


B. General Issues                                                                           p. 5


 


Environmental and Drivers of Change


A. General Environment Analysis                                              p. 7


B. External Environment Analysis                                                                    


            PEST Analysis                                                                    p. 7


            Porter’s 5 Forces Model                                                   p. 9


C. Internal Environment Analysis                                              p. 10


 


Identification of Issues                                                                             p. 11


 


Executive Summary


            During the turn of the century, the world experiences more drastic changes than before, which include changes in the environment, culture, education, knowledge, the society, and technology. The world has evolved into a massive ball of information and technology that led to the expansion and the development of the society in several aspects. However, despite the improvement of the performance of many companies, these changes also contributed to the distress of some, which are not apt for these changes. From this, it can be understood that, existing and persisting in the business industry is not as easy as it seems. Because of these, many business organizations and companies are encountering a variety of problems and issues that determine their success or failure in the market and in the industry. These problems and issues arise from the external and internal changes that the company encounters.


            From these, this assignment discusses a specific company in Hong Kong, which encountered a number of problems, in relation to the changes that happened in its internal and external environments. The profile of the company, including the general issues and problems that the company faces will be evaluated and discussed, using the different tools of analysis. Moreover, the issues identified will be tackled in relation to the scope of its change.


 



 


Introduction


 


A. Background of Company: PCCW Limited


            It has been reported that PCCW Limited is the largest telecommunication enterprise in Hong Kong, and have been listed on Hong Kong Stock Exchange since October 18, 1994 (2006). The company is also one of Asia’s leading competitors in Information and Communication Technologies or ICT ( 2007).


            The business was formed by Li Tzar Kai, Richard, the younger son of Hong Kong tycoon and billionaire Li Ka Shing, and is formerly called the Pacific Century Development, and investment holding company. Its English name became Pacific Century Cyber Works Limited on August 9, 2002.


            The company contributes in enhancing the image of Hong Kong as a center of technology and business superiority, with its outstanding innovation, especially in terms of IP-based business services, New Generation Fixed Line services, broadband pay-TV, Internet access, media content, large-scale IT solutions, mobility, and wireless innovations (2007). It also facilitates and encourages international, most especially Western organizations to bring their businesses to Asia, run operations across the region, and bring Asian businesses to other parts of the world.


            Currently, it has approximately 17,000 employees, located in different parts of the globe, including mainland China, South America, Japan, Korea, Thailand, Malaysia, Singapore, Taiwan, Europe, the United States, India, and the Middle East (2007), and form the technology flagship of the Pacific Century Group ( 2000).


            In addition to the mentioned services, PCCW also provides solutions for port management, security and CCTV systems, audio and visual solutions, and technical support and maintenance services to various sectors in the industry, such as governments, public services, aviation, and broadcast engineering operations (2007).            


Furthermore, the number of the company’s employees and the extent of its services enable it to achieve its mission and vision, which is to provide innovative and practical technological and communication solutions and services to its market. It also seeks to maintain and sustain a global corporate identity, which is needed to represent the company’s new leadership position in the satellite, telephony and Internet service industries (2007). In addition, with the contribution of its large team of professionals, experiences and knowledge in the IT industry, the company integrates and influences both the Hong Kong and Chinese resources in providing excellent ICT solutions that would help consumers develop innovative and challenging business opportunities that would attain operation efficiency ( 2007). The company also seeks to create an identity, including strategy, naming and complete visuals, which will enable it to communicate all of its service offerings, while expressing a unique blend of agility and stability (2007) that will enable its consumers to recognize its contribution in the market and in the industry.


 


B. General Issues: Changes, Concerns, Problems


            The start of its problems occurred when it offered Cable and Wireless PCCW stock and US billion in bank loans (‘PCCW’ 2006). It has been the subject of much ridicule, since many residents are PCCW stockholders, and with the purchase, the company’s stock price was reduced by 96% in 2003, from its peak in 2000. In 2003, Cable and Wireless finished paying in all the stock from the 14.7% stake it had, which amounted to US billion at the time, and yielded only .9 billion of sales in the end. Because of this, Richard Li resigned as the company’s chief executive officer and agreed to sell his indirectly held 22.66% stake in the company for a total of HK.16 billion (2006).


            In the intention of the PCCW to expand its market, secure its position, and make strategic agreements with other Asian companies, it has borrowed heavily to finance the billion bid for Hong Kong Telecom, which resulted to its debt of US billion ( 2000). Further decline of the company’s performance is brought about by its lack of confidence in the debt repayment plans among shareholders ( 2000), which contributed to the its reputation as the worst performing blue-chip company on the list of the Hong Kong Stock Exchange in 2002 and 2003 ( 2006).


            Such events emphasized the major problems of PCCW, which includes the change in management, the accumulation of debts, and the resignation of Richard Li, thus, losing the companies intact leadership and management abilities. Another problem is the increase in competition in the market. The increase in competition led to another cause of the company’s problems, which is the existence of monopoly for domestic fixed telephony. This includes three companies, namely, Hutchison Communications Limited, New T&T Hong Kong Limited, and New World Telephone Limited. This became a major blow for the company, as many telephone operators no longer need the gateways and local networks provided by PCCW (2000).


            Moreover, the reduction of its staffs and workforce contributed to the decline of its operations. An additional cause is the failure of the bid between the company and China, for at the time, China resisted to make negotiations with a company that is connected to the Singapore government, which also became the cause of the problems of the Sing Tel’s bid in the past. What the company did was to sell Cable and Wireless HKT for about billion to a one-year-old Internet start-up that had no profit and no consumers ( 2006). The problem for the company is the overall failing revenues in Hong Kong, with its failure to make significant progress to the China mainland. With this, heavy investment in infrastructure throughout East Asia must be needed before the full potential of PCCW can be appreciated. In the meantime, the company has focused more on newer target markets, specifically in e-commerce, which contributed to the its revenue of 146%, from the new Internet and Interactive Multimedia Services market (2000).


 


 


Environmental and Drivers of Change


Environmental Analysis


A. General


            The external environment of PCCW must be analyzed to be able to understand its internal environment. Understanding its external environment would enable the company to generate and come up with strategies and responses, which would contribute to its success in the market and in its industry. In addition, knowing its external environment would enable the company adopt to its changes that would determine either its success or failure in the market. 


 


B. External


PEST Analysis


            The PEST Analysis establishes a good analysis of the external effects on a company by breaking them into essential and obvious sorts.



  • Political – restrictions in the policies set by the Chinese government in making negotiations and mergers; choice of China in accommodating a company that is not affiliated with the Singapore government; distinct superiority over its legal system; inheriting the British legal system with its international financial transactions upholding the laws and regulatory standards that apply to the financial markets in London or New York

  • Economic – development of infrastructures of East Asia as a whole; monopoly; debt of PCCW; changes in the inflation-deflation rates of the dollar; financial crises; collapse of asset prices; distinct superiority over currency and general infrastructure; the Hong Kong dollar is convertible to participate in capital transactions; collapse of asset prices, slow economic growth

  • Sociological – conflict with consumers that are major stockholders of the company; unemployment; Dynamic – changes in communication, marketing and management; can be attributed to the changes happening in Hong Kong, such as retaining a distinct superiority over human resources, languages, having an impressive array of human resources that includes not only mainland Chinese who have been educated and trained in the West, but also a standing force of lawyers, accountants and other professionals hailed from every corner of the world; use of the English language, which has long been integrated to into its socioeconomic fabric; competition and rivalry

  • Technological – Complex: impacts of e-commerce to the company; development and improvement of its website, utilization and maximization of the Internet


Being one of the busiest cities in the world, its complexity grows to cope with the changes outside its domain. Part of the environment’s complexity is the use of the Internet, which is continuously reinventing the whole customer process, from information to after-sales care (2006). The use of the Internet in Hong Kong made negotiations faster, developed new high-tech tools, enhanced Research and Development, hastened operation and production, and contributed to the improvement of analysis and decision-making processes in companies (2006). Because the use of the Internet is one of the most useful tools in closing negotiations in Hong Kong and in establishing communications, it has largely contributed to the complexity of PCCW’s external environment.


 


Competition Analysis: Porter’s 5 Forces Model of Competition


            The model of pure competition suggests that risk-adjusted rates of return should be stable across firms and industries. Nevertheless, a number of economic studies have asserted that different industries can sustain varied levels of profitability, through knowledge of the structure of the industry. With this, Porter’s 5-Forces Model is useful for understanding the context of the industry, in which the firm operates ( 2006). 



  • Rivalry – This is caused by several factors, such as the presence of a larger number of firms that compete for the same consumers and resources; low switching costs for a consumer can switch from one product to another; strategic stakes are high when a company is losing market position; a diversity of rivals with different histories, cultures, and philosophies; and industry shakeout ( 2006).

  • Threat of Substitutes – Substitute products refer to products in other industries (2006). The threat to PCCW is the price of the materials being used in order to render service to consumers, which include cables, telephone lines, and many others.

  • Buyer Power – This refers to the impact that customers have on a producing industry (2006). In Hong Kong, buyer power is strong, such that this could provide PCCW’s rivals with a strong and efficient business.

  • Supplier Power – The power of suppliers over PCCW is also strong, as it also contributes to the decline of the business of the company. Due to the increase of prices in the market, prices of raw materials also increases, thus, give additional costs for the company.

  • Barriers or Threat to Entry – Threat to the entry of PCCW to the Chinese market is due to China’s preference of being not involved with any company related to the Singapore government. Another barrier to the company’s entry to the Chinese market is also brought about by the lack of development in the entire East Asia, which failed to accommodate the needs of company.


 


C. Internal


            The internal environment of the company must also be evaluated to be able to grasp and understand its potential for developing teamwork, coordination, and employee development. One of the problems of the company is the change in its ownership, and thus, management, which, in turn, will also change its organizational culture. After the acquisition, most of the staffs working in C&W HKT are now working in PCCW. This led to the change in the culture of the company, from a conservative, seniority-based, and non-market driven, it turned to a strongly competitive, performance-based, and customer-focused company. The problems encountered by PCCW can be provided with solutions through Organizational Development initiatives. Through such initiatives, PCCW would be able to effectively provide solutions to their problems through a variety of interventions. The change in the approach of the company can lead to employee conflicts, thus, individual, interpersonal, group, and organizational activities and interventions can be provided. In turn, teamwork, coordination and cooperation can be developed among the employees. Changes also include implementing different quality programs, including quality improvement teams and six sigma programs. These changes in the culture of the company brought about the company’s restructuring process, such as changing the divisions from a cost-center to a profit-center, thus, making all employees motivated to make negotiations and transactions (‘Workplace Survey’ 2003). In addition, the improvement and development of the company’s Human Resource Department is a crucial step in the development of the whole organization. The HR function of PCCW can improve its Recruitment and Selection Process and its Employee Appraisals in order to place and develop employees in the PCCW in a manner that would meet the goals and objectives of the company. As the company is focused on providing quality service to consumers, it can start by developing its employees first.  


 


Identification of Issues


            From the above analysis, several factors can be determined, which need changes. Primarily, the management or style of leadership in the company must be changed, which suits the style and preferences of its employees. The scope of this change must be rooted to all of the functions of the company’s manager or its chief executive officer, whom includes planning that, involves defining goals, establishing strategy, and developing sub-plans to coordinate activities (2005). Function also includes organizing, which determines what needs to be done, how will it be done and who will do it, leading to directing and motivating all parties and resolving conflicts, controlling, and making sure that the organization has achieved its stated purpose (2005). In this sense, the change of management is focused on implementing new styles of leadership and motivation, which can be based on Maslow’s Hierarchy of Needs, on the different kinds of leadership styles, or employing a Matrix form of Organizational Design.  


            Another factor that needs changes is the company’s strategies of taking care of their employees or workers. Workers are the company’s valuable assets, for they are able to hasten the production and operation of the company. Without the company’s workforce, its functions and goals in the industry will never be attained. The scope of the change needed in this aspect must include motivating the employees through job redesign, job rotation, job enrichment and job enlargement initiatives. The implementation of such strategies will be effective for each employee to have a change in perspective in doing new roles and having new responsibilities in the organization. Each employee would be focused in doing new challenging work roles that would allow them to improve in new aspects and become exposed to new kinds of work. In addition, through such strategies, organizational support and resource allocation would be addressed, thus, enabling the whole organization to exhibit effective and efficient teamwork and communication.   


           


 



 



Credit:ivythesis.typepad.com


0 comments:

Post a Comment

 
Top