Organizational Analysis: PCCW Directories

Organizational Analysis: PCCW Directories

 

Introduction

            Organizations today operate in a competitive environment. Different environmental factors have changed the way organizations function. In order to be successful, an organization needs to be able to compete effectively through its resources, capabilities, and strategies. This paper attempts to analyze the organizational processes, design, strategies and structure of PCCW Directories, a subsidiary of PCCW Limited. PCCW is an Asian organization that has a centralized organizational structure. Power and control rests on the top of the corporate hierarchy. Recent developments and changes in the both the company’s internal and external environment has led the company to gradually restructure and adopt ‘western’ style of management. The expansion of the company resulted in the creation of different divisions and businesses.

 

Company Background: PCCW Directories

            PCCW (Pacific Century Cyber Works) Limited is the largest and most comprehensive communications provider in Hong Kong and one of Asia’s leading players in Information and Communications Technologies.

            PCCW Directories is a part of the Advertising and Interactive Services. It offers highly-effective advertising solutions primarily to small and medium-sized businesses via traditional print directories and catalogues. PCCW Directories is a wholly-owned subsidiary of PCCW Limited. PCCW Directories is one of the leading directory market players in Asia.

 

Primary Business of the Organization

            The company specializes in directory services. Advertisers and users are able to connect through the company’s integrated media platform. The company offers print products and online and telephone inquiry directory services. Among the primary businesses of the company are:

• Internet Yellow Pages – attracting 23 million page views per month, Internet Yellow pages (IYP) is one of the most popular portals in Hong Kong and offers customers maximum advertising exposure on the Web (PCCW: Annual Report 2005).


• Online Search Advertising – this provides a one-stop, online search advertising services that covers local, mainland and overseas markets.


• Mobile Yellow Pages – through the mobile yellow pages, consumers are now able to search for, and connect to local services and merchants instantly using their mobile phones (PCCW Directories Ltd. 2008).

Size of the Organization

            Approximately, there are 14,500 employees working in PCCW. The company has a presence in Europe, the Middle East, Africa, the Americas and mainland China, as well as Hong Kong and other parts of Asia.

 

Structure of the Organization: Hierarchy of Authority

            Like many Asian contemporaries, PCCW is a family controlled firm. Historically, Asian firms are highly centralized. PCCW was tightly controlled and managed in hierarchy dominated by the founders and their immediate family members. The hierarchy of authority is considered as centralized. Centralization according to Hendrick (2002) has something to do with where formal decision-making occurs within the organization. In centralized work systems, formal decision-making is concentrated in a relatively few individuals, group, or level, usually high in the organization. The board of directors of the company is responsible for the management of the company. key responsibilities include formulation of the overall strategies of the company and its subsidiaries, the setting of management targets and supervision of management performance (PCCW Annual Report 2005).

            However, because of intense competition, globalization and demands for Asian firms to adopt western style of management, firs such as PCCW are starting to adopt a more flexible corporate structure (Yeung 2005). PCCW is positioning itself as a major telecom player in the Asian Region, with long-term ambition to venture into the established markets in Europe. PCCW is now venturing into the UK’s wireless broadband business while its core business remain in Hong Kong’s fixed lines. This wireless broadband venture is new to the UK market as well as there are currently no operators offering such services.

 

Mintzberg’s Configurations

            Mintzberg (1979) developed a taxonomy of organizational structures in different categories of organizations – the entrepreneurial, bureaucratic (machine and professional), divisional, adhocracy, and matrix. He suggested that, as organizations grow, they undergo structural changes – from the entrepreneurial to bureaucratic, divisional and finally matrix structures. The growth of PCCW has led to the formation of other divisions, which handle different businesses. PCCW Directories is one of the divisions of PCCW. We can say that the organization’s structure is divisional.

 

Corporate Mission and Strategy: Differentiation

            The most dominant strategic management paradigm in recent years is known as competitive strategies model. Exemplified by Porter’s (1980, 1985) work, this approach addresses the issue of how firms compete within their product markets. Porter identified two competitive advantages that provide a firm with a defensible position: cost leadership (lower cost) and differentiation. The lower cost advantage is defines as the ability to more efficiently design, manufacture, and distribute a comparable product than the competition. Products with unique and superior value – in terms of quality, features, and after-sales service – are examples of the differentiation competitive advantage.

            PCCW pursues a differentiation strategy. To keep ahead of its competitors, PCCW is adding new services as quickly as possible on all fronts. Differentiation according to Oden (1997) is a strategy with which the organization seeks to distinguish its products or services from those of competitors. The firm may use advertising, distinctive product features, exceptional service, or new technology to achieve a product perceived as unique. In order to fulfill its differentiation strategy, PCCW Directories offer innovative services and technologies to its consumers. For example PCCW Directories has formed partnerships with online giants such as Google, eBay Hong Kong, SINA Hong Kong and Yahoo! Hong Kong. Users are also able to perform keyword searches via Mobile Yellow Pages to find retailers and suppliers, as well as enjoy discounts and privileges from more than 10,000 participating outlets. These are some of the strategies that PCCW Directories is employing to achieve differentiation (Quin and Cameron 1983). The company is able to achieve its mission of providing quality service to its customers. The organizational structure supports the company’s strategy.

 

Life Cycle Stage

            PCCW Directories can be considered as a company that is in the entrepreneurial stage. In the entrepreneurial stage, executive dominance is established through personal, informal management patterns and structure, flexible communication and coordination procedures both within the organization and with its environment. Personal attention and rewards are given for the mobilization of resources and attainment of legitimacy for the organizational domain from the external environments. The creation of the organization’s ideology, and the paternalistic reward system does not rely only on the level of professionalization of the executive, but rather on his or her entrepreneurial skills.

 

Environment

            Every organization faces a different reality in the marketplace depending on its products, customers, technologies, government influences, and so on. To be successful, the organizations need to perform certain activities very well. The environment where the organization operates is an important factor in its success. The external environment is an important factor that affects a company’s goals, objectives, strategies and performance. It is also important in the setting of company missions and corporate culture (Deal and Kennedy 2000). The internal analysis provides an objective understanding of the controllable factors in the organization’s internal environment, identifying those with the greatest long-term impact on the organization’s position. The objective of this analysis is to identify the organization’s major strengths and weaknesses with respect to its overall mission.

            According to Duncan (1979) structure is a pattern of interconnections, interactions, and coordination that links the technology, tasks and human components to ensure that the organization accomplishes its purpose. Duncan categorizes a business structure in terms of two general types: functional and decentralized. Most businesses are one of these two, or some mixture of the two. The functional business structure is divided into departments and groups according to the function they perform, while the decentralized organization makes products or geographical divisions independent. Communication in the functional type is usually vertical, up and down a pyramidal structure. The decentralized structure cuts down on the directions from the top and allows each division to act as an autonomous business. We can say that PCCW, because of different factors, such as globalization and its rapid expansion has moved from functional to a more decentralized organization structure. PCCW Directories as a subsidiary acts as an autonomous business.

 

Dimension of Uncertainty

            Based on how many external factors that affect the organization and the number of competitors, the dimension of uncertainty can be described as simple or complex. The stability of the environment is also important as it affects the company’s operation. PCCW Directories operate in complex environment where environmental factors especially technology are unstable. The level of uncertainty that the organization needs to deal with is high. There are also numerous other factors that affect the organization’s operation. There are different market forces that affect the company’s operation and strategies. The policies and regulations set by the Hong Kong government and regulatory bodies that oversee the telecommunications and media sectors namely the Office of the Telecommunications Authority (OFTA) and the Broadcasting Authority (BA). Hong Kong’s growing economy has a tremendous impact on the growth of the company. Because of the flourishing economy, strong demand for data services is growing. General growth led to more business premises requiring services.  PCCW Limited is committed to maintaining a high standard of corporate governance and strives for transparent, responsible and value-driven management focused on enhancing the value of the company to its shareholders.

            In order to effectively deal with the external environment, the organization pursues different strategies like investments in research and development, cooperation with other organizations, coordination with the government and other regulation bodies and active marketing and promotion.

Organizational Culture

            Organizational culture includes the values, norms, rites, rituals, ceremonies, heroes, and scoundrels in the history of the organization. organization defines what a new employee needs to learn to be accepted as a member of the organization. Each organizational culture divides into multiple subcultures. An organization’s structural design creates varying subcultures and processes within the organization. Subcultures grow readily within these differentiated parts of the total organization. They also grow readily within departments, divisions, and different operating locations of an organization. Organizational culture plays several important roles in organizations. The two major roles of culture are (1) adaptation to the organization’s external environment, and (2) coordination of internal systems and processes (Sims 2002).

           

Power and Control

            Power is a process by which a person induces change in another’s behavior or attitudes. Power is considered as the basis of all organized action. As a social structure of human interrelationships, the organization controls the action of individuals; and control over others in power. Control in the organization rests on power. Organizationally, power is described as the ability to make something happen – the essence of the causal relationship. Authority is a manifestation of power characterized by position and relationship within the formal, hierarchical system. Authority connotes the legitimate right of the holder to command, decide or determine the way the organization will go (Fairholm 1993).

            When it comes to control, the corporate governance principles of the company place emphasis on upholding a high standard of ethics and integrity in all aspects of its business, and on ensuring that affairs are conducted in accordance with applicable laws and regulations.  The Chairman of PCCW is LI Tzar Kai, Richard and the Group Managing Director is So Chak Kwoong, Jack. The role of the Chairman is separate form that of the Group Managing Director. The Chairman is separate for overseeing the functioning of the Board while the Group Managing Director is responsible for managing the Group’s business.

 

Evaluation of Organizational Effectiveness: Balanced Scorecard Approach

            The balanced scorecard according to Neely (2002) identifies and integrates four different ways of looking at performance (financial, customer, internal business, and innovation and learning perspectives). The balanced scorecard reflects many of the attributes of other measurement frameworks but more explicitly links measurement to the organizations strategy. The balanced scorecard approach according to Neely (2002), has a number of features which make it a good vehicle for structuring an array of performance measures. First, it makes a clear link between the advocated strategies of an organization and the performance measures it uses to monitor and control strategy implementation. Second, the four major areas in which performance measures are to be devised (financial, customer, business process, and innovation and learning) closely match the main stakeholders of the organization. Third, there is a clear attempt to model the main drivers of future performance.

 

Conclusion

            PCCW Directories is one of the leading directory market players in Asia. The company’s primary businesses include internet yellow pages, online search advertising, and mobile yellow pages. Like many Asian companies, PCCW’s organizational structure is centralized with power and control at the top of the organizational hierarchy. However, because of different environmental factors, the company is gradually adopting a more flexible corporate structure. PCCW Directories is a wholly-owned subsidiary of PCCW Limited. PCCW Limited’s success and growth has led it to adopt a divisional structure. Based of Porter’s competitive advantage model, we can say the PCCW pursues differentiation as its corporate mission and strategy. Differentiation is a strategy with which the organization seeks to distinguish its products or services from those of competitors. PCCW Directories as a subsidiary is still in the entrepreneurial stage. PCCW is moving from functional to a more decentralized organizational structure wherein different processes are handled by different divisions or business units. PCCW operates in a complex environment where the level of uncertainty is high. In order to deal with uncertainty the company strategically invests in different activities such as research and development. The company also builds relationships with other organizations through coordination, joint ventures and acquisitions. The power and control in the company, primarily lies in the top management. Only a small group of people decides on the company’s affairs.

 

References

 

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