Question 1 How Hutchison Whampoa is organized


The business empire of Li Ka-shing, one of the world’s richest men, is founded on special relationships. Li’s powerful web of contacts has granted him early access to restricted opportunities in fast-growing infrastructure businesses. His flagship company Hutchison Whampoa has moved rapidly from container terminals into electricity generation, retailing, and telecommunications, expanding from its Hong Kong base into China, the United Kingdom, and Canada. Through joint ventures, it now operates three of China’s largest container ports. Li’s access to deals comes through a network of relationships he has been cultivating in Hong Kong and China since the late 1970s. It includes close ties with governments, state-owned enterprises, financial institutions, overseas Chinese entrepreneurs, and Western multinationals. Li has nurtured these relationships in dozens of ways. He sits on the board of the Hong Kong Shanghai Bank, well situated within the Asian deal flow. He sent early signals of his commitment by building the China Hotel in Guangdong in 1980, well before China opened up (Baghai, Coley & White 2000).


 


Li Ka shing’s Hutchison Whampoa showed that the growth of a company can be acquired through the pace of replenishment having a faster transition than the pace, of decline. The growth can also be acquired to proper relationships with internal and external factors. As the years pass Hutchison Whampoa continues to grow. The continued growth of Hutchison Whampoa is attributed to its organization and use of the proper management strategies.In their early days of overseas operations Transnational Corporations (TNCs) were typically engaged in foreign direct investment (FDI) as the main form of international involvement. Subsidiaries were largely wholly or majority-owned by parent companies in home countries. These overseas subsidiaries were oriented towards producing for local markets because one of the main reasons for their establishment was to circumvent import restrictions and protective tariffs. Although their emergence can be dated back to the turn of this century, TNCs from developing countries have rapidly proliferated only since the late 1970s. Today, a large proportion of these developing country TNCs originate from the four Asian Newly Industrialized Economies (NIEs) Hong Kong, Singapore, South Korea and Taiwan. With the exception of the Korean conglomerates, almost all these TNCs from Asian NIEs are controlled by the overseas Chinese. Among the top fifty TNCs based in developing countries in 1994, some twenty-three originated from these four Asian NIEs (Wai-Chung Yeung 1998).


 


 The others in the league came from either China or other NIEs in Latin America and South-east Asia. At the top of the list are Daewoo and Hutchison Whampoa. These Asian NIE TNCs are increasingly making a significant impact on the regional and global economy. The overseas Chinese and their mostly family-controlled TNCs have contributed to the formation of a large regional economy based in Asia (Wai-Chung Yeung 1998).Hutchison was formerly one of the largest British trading houses in Hong Kong. It is at present controlled by Li Ka-shing and his Cheung Kong Holding. In recent years, Hutchison has also expanded aggressively into the telecommunications markets in Malaysia and Thailand through joint ventures with established local partners, following the increasing liberalization of these ASEAN markets and the privatization of formerly state-owned telecommunications enterprises. In doing so, Hutchison wants to boost the proportion of its assets outside Hong Kong. Another diversification strategy that the company uses is to sell off some existing portfolios in Hong Kong. Getting to know the colony’s future masters and, more important, giving them a seductive taste of Hong Kong’s riches may be Hutchison’s best hope of riding out the coming storms (Wai-Chung Yeung 1998).


 


Hutchison Whampoa’s management consists of professional managers who have been around in Hong Kong for a long time, although the Chinese tycoon and his son chair the board (Wai-Chung Yeung 1998).   Hutchison Whampoa has been successful in most businesses they have engaged transaction in. It is due to the company making sure that it hires the best managers that focuses on a single business. The company has no single strategy but it tries to communicate and assist with other subsidiaries to make sure that the best service can be given. Although the company has a paternalistic style that reduces the right of the employees to discuss what they want, in a way such style contributes to the strong organization of the company wherein there are lesser problems with the human resources.  The company is well organized because it is guided by Li Ka shing and the members of his family. Hutchison Whampoa has many divisions two of which is AS Watson and 3 Group. AS Watson is the retail business of Hutchison Whampoa and it offers various products ranging from health & beauty chains, perfumeries & cosmetics, grocery, consumer electronics, wine, and duty-free items.  This company has markets in various areas and employs around 100,000 staff.   AS Watson is a big part of culture of many countries and it is an alternative to retail businesses that have been operating. AS Watson is owned and controlled by Hutchison Whampoa, thus all decisions were based on the mother company’s decisions. The company AS Watson operates in areas that includes Hong Kong, China, Asia and in some countries in Europe. 


 


3 Group operates various mobile networks; it provides 3G technology for mobile phones and internet connections. 3G is the hottest and most reliable communications technology that offers a highly personalized and interactive multimedia system. Such communication technology can be accessed anywhere, anytime. 3 Group makes sure that it merges the internet and mobile telephony.   Hutchison Whampoa believes that 3 Group can alter the way mobile users communicate and the way they access information and entertainment. 3 Group makes sure that it markets its 3G and other mobile services under Hutchison Whampoa’s global brand.. 3 Group is controlled by Hutchison Whampoa and all actions done by the company are based from Hutchison Whampoa’s principles and strategies. 3 Group had its first license in the UK, it soon branched out to other territories that include Australia, Austria, Denmark, Hong Kong, Ireland, Israel, Italy, Macau and Sweden.


Question 2: The future and Hutchison Whampoa’s organization


A firm’s success depends on its competence. The concept of organizational competence is a key element in the approach to the development and leadership of organizations. It derives from recognition that one of the most critical factors in the effectiveness of any organization is its ability to sense impacting events in its external and internal environments, to process the information sensed, and to adapt its operations to cope with the sensed changes. Organizational competence is a concept. It is a way of classifying and systematizing organizational functions that must be performed and of making them more meaningful for everyday application. In order for an organization to cope with its environments, it must be sufficiently flexible in its internal processes or functions to enable it to modify operations to meet the demands of new problems arising in its environments, both internal and external (Olmstead 2002). This is especially important for organizations operating in high-stress situations, where rigidity can be fatal. The effective organization requires adequate reality assessment techniques if it is to cope with events in its critical environments (Olmstead 2002).


 


 Adequate reality assessment refers to search and sensing processes sufficiently effective to provide the organization with information that permits it to develop accurate perceptions of the environments within which it must function. An effective organization is a unified system equipped with the knowledge, skills, and resources to control its environment, while an ineffective organization, for the lack of such capabilities, remains subject to forces over which it can exert little control (Olmstead 2002). Control theory has been only partially successful in integrating hierarchy with participative management. The difficulties have been in handling participation. In spite of its failures in dealing with the concept of participation, control theory has made a sizable contribution to the understanding of organizational functioning. The finding that satisfaction tends to be greater in areas where the individual experiences greater control provides new insights into job enrichment research (Miner 2002). The most important contribution of control theory is the idea that a greater amount of control overall contributes to a more effective organization. Control theory has not generated any applications that are uniquely its own. However, the theory clearly implies that anything that can be done to increase the amount of organizational control and/or the perception of it will contribute to a more effective organization (Miner 2002).


 


Hutchison Whampoa’s organization is appropriate for the medium to longer term future with the way the company is earning revenues, employing the best personnel, gaining the best market shares and being recognized as one of the best multinational corporation there is no need for the organization to change.  Hutchison Whampoa is run and organized well and the longer term future will not cause much problems for the firm. Together with effective management and control systems Hutchison Whampoa can continue to survive in the fields it operates in and through it Hutchison Whampoa can continue to grow and branch out to more industries not only in Hong Kong but in other parts of the world.


Question 3: What needs to change?


The organization of the company is already working for the betterment of Hutchison Whampoa but if one change should be made this should focus on the integration of Hutchison Whampoa’s organization with information systems. Systems developers tend to view methods as precise directions to be followed rather than guidelines to be adapted to the situation. When methods must be adjusted or cannot be applied, common reactions are often that the method is inadequate, or that failure occurred because the method was not followed closely enough. Although systems developers in their daily work often adapt methods according to their needs, such adaptations are usually talked about with an air of apology; people feel they did not do things right, and thus, adaptations are conceived of as faults or deviations. It takes a fair amount of project experience, reflection, and self-confidence to be able to distinguish between the methods itself and the practical use of the method. Systems developers’ attitudes to the use of methods are related to questions of participatory design in several ways. When people are faced with new dimensions in their practical work, they tend to deal with them in the same way as they deal with other aspects of their work (Namioka & Schuler 1993).


 


 Their preconceptions of what systems development is about may shape the way they understand what participatory design is about. If they look upon methods as rules to be followed, it is likely that much effort will go into formulating rules for participation too and less effort into finding out how to make participation successful. Also, if the rules are used ritualistically, the mutual benefits from participation may be reduced. This will undoubtedly confirm the belief of many systems developers that user participation is merely a nuisance and should be kept to a minimum (Namioka & Schuler 1993). The early stage of development of an information system is called systems analysis. An information system development project is divided up into a number of different stages. This is called the system life cycle. There are a number of different approaches to the development of computer-based information systems, but the principles behind each are similar (Tansey 2002).


 


Information systems are used by business to process different records, data and information used by the company in making decisions and strategies. Information systems evolved into technologies that made business grow faster. It helped in improving an economy through introducing changes needed by local businesses. Information systems relate to different business processes. One process related to information system is knowledge management. If Hutchison Whampoa will integrate information systems in their organization the result will be higher accuracy for correct management decisions. The use of information systems will reduce the time spent in gathering data to make decisions. Information systems can be customized in a way that it can assist in determining the best person that should be put in a certain management position.  Hutchison Whampoa and its organization’s use of information system will provide a brighter future for the company.


 


References


Baghai, M, Coley, S & White, D 2000, The alchemy of growth:


Practical insights for building the enduring enterprise,


Perseus Books, Cambridge, MA.


 


Gomez, E & Hsiao, H 2003, Chinese enterprise,


Tran nationalism and identity, New York, Routledge.


 


Hutchison Whampoa Limited 2003, Company profile, viewed 09 July, 2008, < www.hutchison-whampoa.com >.


 


Miner, JB 2002, Organizational behavior: Foundations,


theories, and analyses, Oxford University Press, New York.


 


Namioka, A & Schuler, D (eds.) 1993, Participatory design:


principles and practices, Lawrence Erlbaum Associates,


Hillsdale, NJ.


 


Olmstead, JA 2002, Creating the functionally competent


organization: An open systems approach, Quorum Books,


Westport, CT.


 


Tansey, SD 2002, Business, information technology and


society, Routledge, New York.


 


Wai-Chung Yeung, H 1998, Transnational corporations and


business networks: Hong Kong firms in the ASEAN region,


Routledge, London.



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