Management of Change: Organizational Change Process
1. Executive Summary
This assignment discusses and analyzes a specific company based in Hong Kong, which encountered a variety of problems, in relation to the changes that happened in its internal and external environments. A brief profile of the company would be provided, including the general issues and problems that the company faced. The evaluation and analysis of the organizational change process of the company would be done by using the different tools of analysis.
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. This is because this company plays an important role in the development and improvement of telecommunications in Hong Kong, being regarded as the leading information and communications hub in the Asian Pacific region (“Economic & Trade Information on Hong Kong”, 2007). As such, this paper would prepare a report for senior management of the company, with the researcher acting as a consultant for the management of its organization change process.
2. Introduction
Given the many changes brought about by the environment, technology, economy, politics, and society, changes in the organization must be taken note of in order to cope up with the changing demands of the employees and the consumers. In this output-oriented society and generation, every organization must have the skills, capabilities, endurance, and the strategies to be able to meet the demands and the needs of their market. As such, the continuous changes that organizations must undergo may be considered as their only edge in order to cope with the overall changes observed in the society. Thus, appropriate change management must be done in a company to effectively and efficiently facilitate and govern the changes needed by organizations.
3. Brief Discussion of the Case
As mentioned, PCCW Limited is the largest telecommunication company in Hong Kong and is one of Asia’s leading competitors in Information and Communication Technologies (ICT). 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 (“Company Profile of PCCW-HKT Limited” ). However, it experienced some problems, concerns, and issues lately, which prompted the company to undergo necessary changes that are perceived to be advantageous on its part. Its problems commenced when PCCW Limited offered Cable and Wireless PCCW stock with US billion in bank loans, as many residents in Hong Kong are stockholders in the company, 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 (C&W) 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 (“PCCW”, ).
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. Further decline of the company’s performance is brought about by its lack of confidence in the debt repayment plans among shareholders (Darlington and Cooke, 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 (“PCCW”, ). In addition to the debt and the change in ownership and management of PCCW are the increasing incidences of competition among the industry. It has been reported that in August 2000, there were 165 external telecommunications services operators and 187 Internet market service providers. 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 (Darlington and Cooke, 2000).
Moreover, another cause of its problems is the reduction of its staffs and workforce, which contribute 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 sold Cable and Wireless HKT for about billion to a one-year-old Internet start-up that had no profit and no consumers (Greenlees, 2006).
Furthermore, 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 (Darlington and Cooke, 2000).
4. Diagnosis of the Case
4.1 External Change Driver: PEST Analysis
The PEST Analysis sets up an effective investigation of the external impacts on a specific company by breaking the components into essential and noticeable elements or factors. The noticeable elements under this type of analysis include Political, Economic, Sociological, and Technological elements.
- Political – Political factors include the restrictions in the policies of the Chinese government with regards to company negotiations and mergers; the government’s choice of companies outside the country, with which it would make negotiations with; distinct superiority in China’s legal system; influence of British legal system in Hong Kong’s international financial transactions
- Economic – Economic elements include the development and underdevelopment of infrastructures in East Asia; telecommunications monopoly; debt of PCCW; dollar inflation and deflation rates; financial crises; collapse of asset prices; rate of economic growth
- Sociological – Sociological factors include PCCW’s conflict with consumers that are major stockholders; unemployment; changes in communication, marketing and management; retaining distinct superiority over human resources, language, competition and rivalry
- Technological – effects of e-commerce to PCCW; development and improvement of its website; utilization and maximization of the Internet; faster negotiations, development of new high-tech tools, enhancement of R&D through the Internet
4.2 Internal Change Driver
One of the internal change drivers of PCCW is the change in its ownership, along with the change in its management and its organizational culture. The culture was then changed with the change in the workforce. After the acquisition, most of the staffs working in C&W HKT are now employees 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. Another internal driver is the change in the company’s priority. The quality of service is now the company’s primary concern, and the company has been investing millions of dollars in quality and customer service training. The third internal driver is the change in internal processes. Such changes in internal processes 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”, ).
4.3 Description of Current Scenario
a. Based on the situation of the company, it can be regarded as having a theoretical model of Revolution, as discussed by Greiner (1972). According to the author, the term revolution is used to describe those periods of substantial turmoil in organizational life, or turbulent times, wherein a serious upheaval of management practices can be observed. In addition, traditional management practices, which were appropriate for a smaller size and earlier time, are brought under scrutiny by both top and lower-level managers (Greiner, 1972). In this sense, the changes undergone by PCCW can be considered indicators that the company is undergoing a revolution. As indicated by its internal change drivers, the changes in its internal processes, culture, and priorities were brought about the combination of the two separate companies.
b. In line with the company’s agenda for change, several aspects in the organization can be taken note of, namely, its strategy, structure, processes, and people. In relation to its strategy, PCCW 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. In addition, it 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. In terms of processes, the company facilitates 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. In terms of people, 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 (“Company Profile”, 2008).
Credit:ivythesis.typepad.com
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