Strategic Management
Coursework Assignment
Strategic Analysis of PCCW Hong Kong
(Name of Student)
(University)
(DATE)
Executive Summary
This assignment discusses and analyzes a specific company, which provides adequate information regarding one of its essential aspects, its human resource. A brief profile of the company is provided, including the company objectives, operating industry, and competitive position or environment. The evaluation and analysis of the organizational change process of the company is done by using different tools of analysis, in relation to strategic development.
The company chosen for this analysis is PCCW Limited, which is regarded as the leading company in Hong Kong and in all of Asia that provides communications services and information technologies. Findings of the report include possibly adopting both resource-led and market-led strategic development business models, particularly the Core Competence strategic option in order to improve the productivity and performance of PCCW’s human resource. However, major recommendation for the organization includes implementing additional trainings and seminars for the benefit of the employees and the organization as well. Another recommendation is using an appropriate Information System that would contribute to the improvement of the communication between the organization and its shareholders or suppliers.
Table of Content
Cover Page 1
Executive Summary 2
Table of Content 3
Introduction to the Report 4
Brief for the Case Object 4
Strategic Analysis 6
Strategic Formulation 8
Strategic Option 13
Evaluation of Strategic Option 15
Strategic Implementation 16
Conclusion 18
References 20
Introduction to the Report
This assignment discusses the strategic development of PCCW, Hong Kong’s leading Telecommunications Company. One of its important aspects, its human resource are given emphasis and importance, being responsible for the success of the company in terms of providing effective products and services. A strategic analysis through identification of SWOT (strengths, weaknesses, opportunities, threats) is provided. In relation to this, identification of strategic options is also done, along with its evaluation in terms of its implementation. With its implementation, the factors that must be taken note of, such as problems, success factors, advantages, and performance indicators are determined.
Brief for the Case Object
PCCW Limited is the largest telecommunication company in Hong Kong and considered one of Asia’ leading competitors in terms of Information and Communication Technology or ICT. It contributes in enhancing Hong Kong ‘s image as a center of technology and business superiority, with its outstanding innovation, particularly with its IP-based business services, New Generation Fixed Line services, broadband pay-TV, Internet access, media content, large-scale IT solutions, mobility, and wireless innovations (Company Profile PCCW 2008). PCCW defeats its powerful rival, Singapore Telecomm, with its purchase of Hong Kong Telecomm Corporation, and thus, signed an agreement with British Cable and Wireless Limited on the acquisition of Hong Kong Telecomm. After its merger, the market value of the new and bigger corporation would exceed US billion (Current Situation and Characteristics of the Asian Telecomm Operating Industry Development 2008). Being formerly known as Pacific Century CyberWorks, PCCW is now the leader in telecommunications services in Hong Kong and the city’s dominant carrier, operating 2.5 million local-exchange lines and about 1 million broadband access lines through subsidiary Cable & Wireless HKT (PCCW Limited Overview 2008), leading the company to efficiently provide its services to the citizens of Hong Kong.
The corporate business objectives of PCCW include maintaining its competitive positioning in the industry through providing support to the community and the environment and by sustaining its high-quality products and services that cannot be matched by its competitors. It supports services and products that would help make Hong Kong an IT hub, develop computer literacy and familiarity with the Internet of the community through education, and uphold environmental best practices (Community and Environment 2008) for the benefit of the whole community or society. Such objectives are being met by PCCW given the competitive environment it is in. It has been indicated that being one of Asia’s key telecommunications centers, Hong Kong’s environment is characterized with ‘great connectivity and services, and a high concentration of fiber optic cables connecting throughout the region and the rest of the world’ (James 2002). At present, ‘Hong Kong is probably the most competitive wireless environment in the world, with 71% of the wireless world that is served by GSM technologies in over 180 countries’ (James 2002). This leads to the discussion of the most crucial aspect of the organization, its human resources, being the key contributor to the success of the business organization. As such, the contribution of the organization’s human resource will be discussed, being essential in its strategic development and management.
Strategic Analysis – SWOT Analysis
One of the important strengths of PCCW is its clearly defined goals and objectives, which help drive the success of the organization in terms of how they provide efficient products and services to consumers. Not only does the organization focus on the competitive position of its organization, but also on the welfare of its human resources, the society, and the environment as a whole. PCCW also maintains the leading position in terms of its products and services, which include IP-based business services, New Generation Fixed Line services, broadband pay-TV, Internet access, media content, large-scale IT solutions, mobility, and wireless innovations (Company Profile PCCW 2008), enabling the company to maintain its leading position in the market. The company also has different business strategies for multiple level market entry, such as providing solutions for port management, security and CCTV systems, audio and visual solutions, and technical support and maintenance services to various sectors in the industry, including governments, public services, aviation, and broadcast engineering operations. It also re-entered the mobile market, collaborated with real estate and broadband companies, and improved its telephone directories. In terms of structure, the contribution of its large team of professionals, experiences and knowledge in the IT industry provide excellent ICT solutions that would help customers develop innovative and challenging business opportunities. However, the highly diverse and mobile workforce of the company serves as its primary weakness, as the lack of their synchronization may contribute to the increase of internal crises and problems in the company. Nevertheless, important opportunities for PCCW include the changing needs of their consumers, which can further drive their innovation in terms of services and technologies. This then further increases the demand of the company’s consumers for their services and products, which consequently drives the sales, competitive position, and success of the organization. The continuous growth of the organization can also drive its capacity expansion, which can help increase its workforce and its innovation strategies. In addition, a good opportunity for PCCW is also its affiliations, which may further provide the organization with new ideas and strategies that would propel its success and development in its industry. Aside from opportunities, threats also hinder the smooth operations of PCCW. Changing needs of consumers may serve as its vital threat, serving to make their prior products and services useless, particularly when new technologies are in line. Another vital threat are the external drivers of the organization, namely, politics, economics, society, and technology, as PCCW has no direct control over the many possible changes that may happen to them. Such uncontrollable changes must then drive the organization to adapt itself in order to function effectively in the industry. Threat also includes the internal conflicts and problems brought about by workforce conflict, communication conflict, and culture conflict in the organization.
Strategic Formulation
The concept of strategic development is defined as the identification or determination of the short- and long-term strategies that will be employed by an organization in order to achieve each of its goals (Social Entrepreneurs Inc. 2007). It is one of the important elements of strategic planning, which involves organizing, directing, managing, and controlling all the necessary strategies and plans involved in obtaining the goals and objectives of a particular organization. Another term essential involved in the concept of strategic development is the term ‘development’, which is said to occur when a gain in experience is effectively combined wit the conceptual understanding that can illuminate it, given increased confidence both to act and to perceive how such action relates to its context (Wilson 2001, 7). It then happens through experience or by learning from mistakes and successes (Joy-Matthews et al. 2004, 9). In this sense, understanding the concept of strategic development also involves understanding other concepts, such as learning, development, and strategic planning, which enable an organization facilitate and sustain changes that lead to its success in its industry. Both resource-led and market-led development strategies are being observed, wherein resource-led development strategy involves facilitating change in the organization due to changes in its resources, while market-led development strategy involves determining the different aspects or elements present in the market such as product, customer, strategy, planning, and other marketing concepts.
As mentioned, resource-led strategic development involves facilitating change and development on the part of the organization’s resources, and for this particular organization, PCCW, resource-led strategic development is addressed through its human resources. In this regard, business models that can be effectively used for resource-led strategic development include both BCG Matrix and Core Competences. The BCG Matrix is the business portfolio or growth-share matrix, which is used in order to analyze the flow of funds or the proper allocation of resources in an organization. In addition, it is based on the product life cycle theory, which can be used to identify the priorities that must be provided in the product portfolio of a business unit. This is because in order to guarantee the long-term value creation of a business, the organization must have a portfolio of products that contains both high-growth products in need of cash inputs and low-growth products that produce a lot of cash (The BCG Matrix Product Portfolio Method 2008). Thus, with PCCW, it can be perceived that it is considered a Star. This is because a Star produces large amounts of cash due to its strong relative market share, but also consumes large amounts of cash due to their high growth rate (The BCG Matrix Product Portfolio Method 2008). From this analysis, it can be understood that PCCW has a high market share in Hong Kong, and at the same time, produces more than enough sales and profit that it can consume. In this sense, the company’s industry performance is attractive, thus, generating the company’s competitive advantage over its competitors. Another business model that can be used for resource-led strategic development is Core Competences. It has been indicated that a core competence is the result of a specific unique set of skills or production techniques that deliver value to the consumers. Such core competences take a product or production orientation rather than a market orientation. It emphasizes that thresholds, which can be in the form of resources and competences must be achieved by an organization in order to remain competitive. In addition, in order to remain competitive, an organization must be able to sustain three important resources, namely, Material, Human, and Intangible, with adequate and appropriate maintenance of Intangible Resources making the state of the organization most difficult to achieve (Core Competences Marketing and Core Competences 2008). Such Intangible Resources include activities that use resources of the organization, such as reducing cost, identifying relevant markets, and adding value. Using this business model, it can be understood that PCCW has already achieved Core Competences that cannot be matched or achieved by other organizations in Hong Kong. Because the company has already achieved the sustenance of its Intangible Resources, its competitors would be having a hard time to achieve the same reputation and competitive positioning it has.
On the other hand, understanding market-led strategic development in terms of its application in PCCW can be achieved based on two business models, namely, Ansoff’s product-market matrix and Generic Strategy. It has been indicated that Ansoff’s product/market growth matrix suggests that an organization attempts to grow depending on whether it markets new or existing products in new or existing markets. It suggests four growth strategies, namely, Market Penetration, in which the organization focuses on selling existing products into existing markets; Market Development, wherein the organization seeks to sell its existing products into new markets; Product Development, wherein organizations aim to introduce new products into existing markets; and Diversification, wherein an organization markets or sells new products to new markets (Ansoff’s Product/Market Matrix 2008). In analysis, it can be understood that two possible growth strategies are able to be applied by PCCW, namely, Market Development and Product Development. This is because the company focuses only on providing both old and new products and services to solely the market of Hong Kong. The other business model that can be used for market-led strategic development is Generic Strategy. According to Michael Porter’s Generic Strategy, the strength of an organization falls into one of two headings, namely, Cost Advantage and Differentiation, and applying such strengths three generic strategies are obtained, Cost Leadership, Differentiation, and Focus. Such are termed generic strategies because they are not firm or industry dependent. The Cost Leadership strategy emphasizes efficiency, requiring considerable market share advantage or preferential access to raw materials, components, labor, and many others, and involves low-cost strategies that could assist the company gain significant market share (Porter’s Generic Strategies 2007). Differentiation Strategy involves the production of a new product, which offers excellent value for the customers’ benefit, and to be able to do so, extensive research, communication and innovation must be done (Generic Strategies – Michael Porter (1980) 2008). Lastly, Focus Strategy emphasizes on specific or particular segments from a larger market (Power and Power 2007). Based on the three strategies, all three strategies can be utilized by PCCW. This is because all three strategies would help PCCW in sustaining and maintaining its competitive position in the market. This is because the wide range of products and services that the company offers its consumers enables PCCW to utilize and maximize the use of the different strategies in order to effectively reach its target consumers.
Strategic Option
In terms of resource-led strategic development, both BCG matrix and Core Competences are suggested. Benefits of using the BCG matrix include enabling PCCW to take note of the increase or decrease of its market share and growth. The use of the BCG matrix would also enable PCCW base the amount of cash it was able to use and the amount of cash it was able to generate. In terms of using the Core Competences business model, its benefits include allowing PCCW to take note of its competences, including the different activities that are essential in sustaining the competitive position of the organization. It also enables the company to identify the needed and still lacking competences in order for it to stay on top of the market and among its competitors.
In terms of market-led strategic development, both Ansoff’s product/market matrix and Porter’s Generic Strategies are suggested. The benefits of using Ansoff’s matrix include allowing PCCW to determine the direction of the organization in terms of its product or service development. It also allows PCCW to take note of the markets available for its expansion. Lastly, it helps PCCW determine the needed strategy in order to sustain its competitive positioning in the market. Similarly, using Porter’s Generic Strategies also allows PCCW to determine the right and appropriate strategies to be used by the organization in order to sustain its competitive position in the market.
Using such business models includes determining the different resources needed by PCCW in order to utilize them. The use of the BCG matrix requires the market share data of the company, particularly the present statistics data and the data that indicate the growth of shares of the company. It also requires PCCW’s sales inventory and profit data. Using the Core Competences business model requires the different resources being utilized by PCCW. It requires the current performance of the company based on the resources. It also requires the increase or the decrease of the resources that affect the overall performance of the company. Using the Ansoff matrix requires the evaluation of the current market targeted by PCCW, including the evaluation of the current products and services it offers. The responses of the customers of PCCW are also crucial, including the evaluation of the strategies currently used by the company. Using Porter’s Generic Strategies requires the evaluation of the current strategies being used by PCCW. It also requires the evaluation of the current performance and skills of its human resources, and the current market, products, and services it offers to its target market.
Using such business models have overall positive outcomes for PCCW. Using the BCG matrix would help the company evaluate the input and output of cash flow in PCCW. It would also help the company evaluate its market share. It would help PCCW figure out the appropriate strategies that it can use in order to sustain its position in the market. It would also help identify problems in the company. Using the Core Competence business model would help PCCW identify the problems of the company easily based on the performance of its resources. The business model would also help PCCW figure out the proper solutions to problems. It would also help figure out the impacts of the increase or decrease of resourced it utilizes. Using the Ansoff matrix would yield positive outcomes, such as identifying the need for new products or markets, identifying the need for sustaining old products and markets, and identifying the strategies to be used for maintaining PCCW’s competitive positioning. Lastly, using Porter’s Generic Strategies would help the company identify the skills needed by its resources, help identify the strategies to be used to improve its overall performance, and help identify problems to be encountered in the future.
Evaluation of Strategic Option
Advantages of using both resource-led and market-led strategic development business models involve addressing the many issues and aspects of human resources, such as organizational culture, attitudes, activities, motivation, leadership, and productivity. It also involves the improvement of the quality of products and services of PCCW by eliminating defects. Customer satisfaction and loyalty is also given emphasis through the improvement of the quality of products and services provided by the company. Lastly, its use also emphasizes on different employee interventions that improve overall company performance.
In terms of suitability, such business models are deemed highly suitable because it addresses organizational culture in an organization, and this is particularly needed in a highly-diverse organization, such as PCCW. In terms of feasibility, using this strategic option is highly feasible as PCCW has the necessary background and knowledge regarding their use. Given its rich organizational structure, it is perceived that the employees in the organization have the necessary expertise and experiences needed to evaluate the usefulness and relevance of the models in PCCW. In terms of acceptability, it is perceived that the use of the models is highly acceptable because the welfare of the whole organization and its consumers are given importance.
In addition, advantages also include the focus on the supply and products of PCCW, enhancement of good communication between suppliers and the organization, and addressing the needs of the consumers.
PCCW primarily provides products and services to its consumers, thus, needing the support of its suppliers. The use of such business models is also feasible because given its organizational structure, the expertise and experiences of its employees would be necessary to evaluate its need. In addition, because PCCW is an established IT services company in the market and industry, it would not be difficult for the company to communicate with its suppliers effectively. Lastly, its use is also highly acceptable because this strategic option deals with providing enough supplies and products for the welfare of its consumers and the company as well.
Strategic Implementation
The implementation of all four business models is being adapted as strategic options for PCCW. However, moving one lower level means that more specific strategies are to be implemented. Choosing only one strategic option from the business models, it can be suggested that the Core Competences business model is the most appropriate. This is because based on the overall performance of PCCW, it can be perceived that is able to sustain its threshold, thus, no other company in Hong Kong would be able to match its performance in terms of providing the products and services that it offers. In this regard, it can be suggested that the company was able to utilize all its resources effectively, thus, making the Core Competence business model the appropriate strategic option to be implemented.
However, in terms of its implementation, continued individual employee training and development programs must be assigned. Such programs should be used to ensure and to maintain an appropriate balance between the needs of the organization and the needs of the employees, to maintain and sustain the knowledge and skills that the organization demands. PCCW can also use and implement an Information System or any Internet-based program of communication for more effective and up-to-date transaction and negotiations.
Problems in the implementation of the strategies involve the resistance of the employees or shareholders, miscommunication, lack of appropriate resources or funds, and the delay of the needed IS program or training materials.
Success factors include the attentiveness of the employees and shareholders, the improved quality of the products and services offered by PCCW, more consumers and sales, improved communication, smoother operations, and compliance to policies and regulations.
Performance indicators include the number of consumers retained and added, including their feedbacks, employee turnover, and the balance between the sales made by PCCW with its debt.
Conclusion
This assignment discussed the strategic development of PCCW, Hong Kong’s leading Telecommunications Company, provided its objectives and its competitive environment in relation to its performance in the industry. To emphasize the importance of its human resource a strategic analysis was done through examination of SWOT (strengths, weaknesses, opportunities, threats). Identification of strategic options is also done, along with its evaluation in terms of its implementation. With its implementation, the factors that must be taken note of, such as problems, success factors, advantages, and performance indicators are determined.
References
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Credit:ivythesis.typepad.com
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