Research Topics: PCCW Management Sample Papers

Pay TV Industry

If someone is asked if what is one of the things you cannot live without, television is among the most popular and expected answer. In today’s fast-paced, globalize, and technologically dependent period of living, people are no longer used to the traditional means of survival. As response to the emerging culture of convenience brought about by the mighty inventions and technology itself, it is apparent that people in general rely to the advantages that these things have to offer. In particular, the indispensable uses of television are extensive Television became a public good due to the fact that there was no charge for its usage (Noam, 1991). The television and its related industry as a medium for communication, learning, as well as entertainment is something which is not new. As a matter of fact, the application of the television and its related aspects is not just bounded on mere watching. Through this medium, aside from the countless of shows we have seen that informed, amused, educated, and entertained us, TV introduced us to the wider horizons and perspectives. In critical media studies, television has traditionally been conceived as carrying dominant ideologies in service of the status quo. But this conception, in both its crudest and most refined forms, has been strongly contested by the recent emphasis on textual fragmentation and audience reception (Kit-Wai Ma, 1999). The perfect combination of the spoken word and the visual presentation of stories, as opposed to listening to the radio and reading a book, have been most intriguing and alluring to the majority of viewers. The extension of color television and the further usage of ultra-high frequency program transmission and reception added to the stature of television as an inclusive medium. Furthermore, the introduction of the cable television and satellite broadcasting allows for transmission of shows that viewers from other parts of the globe can see in their television set at the comfort of their homes.             The television and related aspects paved way to different areas in which the target audience is not just limited to what is offered right in their tangential visions. The concept of pay television or pay-TV was introduced. Generally, pay-TV is the kind of television service that allows viewing with the intention of collecting a certain fee in order to avail several and specific TV services. Thus, this paper aims to present the overview of pay television or pay-TV industry.   The Pay Television or Pay-TV Industry             In the lexical definition, pay television or simply pay-TV refers to the subscription of television services with the presence of specified amount of fee – monthly or per program basis. Such commercial services are provided by both analogue and digital and satellite applications in which viewers will have only access if they had acquired or enrolled in the service. In relation to such umbrella service, the concept of pay-per-view (PPV) was made known.   Brief History and Development As a result of the internationalization and opening of the free trading mechanism, Hong Kong rapidly achieve significant boundaries in several aspects of the society. From traditional to contemporary, manual to “push-the-button” processes, and long-standing to instant ways in the present day, the development in the country and in the modes of people’s lives has been gargantuan in nature and effects. Truly, the country’s technological status is at the dawn of the era. The presence of technology-driven systems like digital channels, multi-platform programming, new formats, niche channels, and SMS interactivity (Keane, 2005) are obvious manifestation that Hong Kong and its whole populace reached a jurisdiction in terms of 21st century governance. In the mass media and broadcasting or telecommunication as a whole, there are various changes and innovations that took place and introduced. For instance, the worldwide television industry before is settling in a black and white and soundless reception, but with the introduction of advance equipments that paved way to the invention of the colored television, the worldwide viewers are now enjoying the fun and pleasure of “colored and sounded”  viewing. But still, such example could be considered as ancient nowadays. The presence of “larger than life”, flat screen, or plasma TV screens and monitors offered to the sophisticated and better-off audiences is booming. Furthermore, the local television networks that are basically based in the slow-paced sound and light waves before are now modified into fast-paced and technologically-motivated systems and equipment the introduced the world into live coverage of happenings and current events the interest majority of the people. Among the most influential inventions that were introduced to the world are the satellite, cable and digital television. With these mechanisms, the changes in the conventional viewing experiences and habits of the common audience occurred and evolved into something interactive and inclusive. The audiences seek for further satisfaction and this made the television industry workforce to toil into something new that will still held the appetite of viewers into television watching. Then, the concept of pay television was introduced. In Hong Kong, data from the country’s Annual Reports in the year 2003 show that there are five legitimate and domestic pay-TV programmes service licensees (see Table 1). As a result of the emerging market competition and diverse changes in the viewing habits of the targeted audience, a total of 130 pay-TV channels existed all over the country. In connection to the growing figure of services, the total number of subscribers reached a significant sum of over 860,000. Table 1 Pay-TV Services in Hong Kong     Company No. of Free Channels No. of Pay Channels Languages Used in Broadcast   Hong Kong Cable Television Ltd (CableTV) – controlled by Wharf Holdings   - over one hundred (100) channels - English, Cantonese, Putonghua and other languages PCCW-HKT Interactive Multimedia Services Ltd (NOW TV)   - sixteen free channels - over eighty pay channels - English language, Cantonese and Putonghua Hong Kong Broadband Network Ltd (HKBN- Digital TV)   - - over thirty pay channels - English and other languages TVB Pay Vision Ltd (TVB Pay Vision) - over thirty pay channels including eight (8) TVB channels and Celestial Movies – a movie channel which screen movies produced by Shaw Brothers (HK) Ltd. – the parent company of TVB   - English, Cantonese and other languages i-Cable Communications Limited (branded as “CableTV”) – the only one traditional cable provider that operates in Hong Kong   - - English and Chinese, other languages               In addition to the aforementioned information, a significant number of Hong Kong audiences watch subscription TV through satellite system like STAR TV and Asian Television Limited (ATV). The introduction of the cable and satellite television ignited the building of a new popular culture in television viewing. According to Kat-Wai Ma (1999), satellite television service was launched in 1991 by STAR. The Hong Kong-based station was acquired by Rupert Murdoch. STAR provides programmes for a pan-Asian audience and receives impressive ratings in countries like India, Taiwan, and China. STAR achieved quick penetration in Hong Kong in terms of the number of households installed for satellite reception, but actual audience share is below 5 per cent (as of 1994). The low viewership is largely due to the license restriction on STAR to air Cantonese programmes. Today, STAR programmes are now in English and Chinese (Mandarin). On the other hand, the cable television was started by cable operator WHARF. It aims provide its multi-channel programmes to subscribers in October 1993. Besides movies and acquired programmes, WHARF promises to provide original programming to the domestic audience. News programmes are produced in-house, while many entertainment programmes are contracted out. In contrast to the situation during the 1980s, when the majority of television viewers watched TVB Jade’s prime-time programmes, Hong Kong viewers are now offered programmes from the more competitive ATV as well as various new television broadcasters, including satellite television STAR, cable television Wharf Cable, new regional television services, and the video-on-demand (VOD) operators (Ma, 1996). Since the early 1990s, the introduction of satellite and cable television has made the operations environment even more aggressive. In a report published in Telecom Asia September of 2003, i-Cable Communications – one of Hong Kong’s pay TV operators reported a significant decrease of profit in the first-half operations. A total of more than seven percent (7%) to HKS.3 million or .2 million was lost. It is attributed to the stiff competition present in the whole operating industry. In this competitive scene, the Hong Kong television industry has been forced to institutionalise its operation by controlling costs and expanding its distribution networks and regional services (Kit-Wai Ma, 1999). Competition may add to the pressure to innovate, but can also lead to more restrictive resources and creative controls.             The Hong Kong television viewers are basically utilizing the comfort of pay-TV programming (Groves, 1993). Meanwhile, the benefits being enjoyed by the subscribers bring about potential threats in the overall stature not only of the pay-TV industry but the media as whole.   Issues/Problems The expectations of the general audiences towards television entertainment have evolved along with the broadening of viewing choices, changes in lifestyle, and reception of foreign forms of culture (Keane, 2005). Viewing television is by far the single most time-consuming home activity. It is also the dominant leisure activity of most individuals. Television has much impact on the lives of the viewers. At worst, viewers even imagine themselves as the characters of the show. With this fact, there are many issues and controversies that were brought up in connection to the pay-TV industry. The most popular is the issue of piracy and copyright. Others vary from the kinds of shows being offered, competitive pricing and strategies, behavioral or cultural effects to the viewers, and the likes. The problem of piracy and copyright infringement is among the consequences and issues that the pay TV industry is now facing (Biggs, 2005). To quote Tanner (2004), “Pay-TV piracy is as old as pay-TV itself, particularly in Asia, where in many markets cable TV operations themselves were either unlicensed or downlinking satellite video channels illegally – practices that still go on today.” In 2003, pay-TV piracy in the Asia-Pacific region reached a “conservative estimate of 4 million” and 0 million – up 11% in October of 2004 (Tanner, 2004). In an interview to Cable and Satellite Broadcasting Association of Asia (CASBAA) chief executive Simon Twiston David, he stated that Hong Kong’s increasing piracy problem have risked and damaged not only the domestic industry but the general reputation of the country in relation to intellectual property rights (Biggs, 2005). The CASBAA suggested the building up and improvement of copyright laws and enforcement within the territory in order to suppress the emerging ill effects of the said practice. Furthermore, the kinds of show and the impact on the viewers has become an alarming issue. The proliferation of highly questionable, demoralizing, scandalous, and morally objected shows like pornography, violence, and taboo related shows touched the sensitivity of the conservative and value-oriented viewers. Thus, the television regulatory boards are created. Shows that are being aired on television are being regulated by such authorized boards that are working on prescribe and legally based legislations and policies. But sometimes these regulatory boards are not sufficient by themselves alone. That is why some shows have to have parental guidance that elicits the responsibility of the parent in the younger age range of viewers. With the many shows to choose from in networks, parents also have to be aware and be responsible of the shows that their children watch. The competition faced by the pay-TV providers also affects the subscribers. This may lead to several changes in beliefs, opinions, and practices that will eventually result to consumerism or worst, rebellious principles and unjustifiable ideologies. The mere fact that television networks and stations in developing countries buy a lot of imported programs, for example, often has more to do with the fact that they are cheap, instances of cultural dumping, than that audiences are necessarily enthralled with them (Hannerz, 1992).   Advantages/Disadvantages Television viewing can generally and potentially affect the lives of the viewers and shape their everyday experiences and outlooks in life. People use television to entertain themselves everyday. With the particular effective and proper usage of pay-TV, the advantages of pay-TV technology range from self-fulfillment to consumer satisfaction, accuracy to immediacy, selectiveness to privacy, and other comforts of the business. Through pay-TV, sports enthusiasts can watch the ongoing game of football or any other sports for that matter (Horrie, 2000). In the same manner and although television does have its strong points, it also has some setbacks. The first is the very high cost of pay-TV subscription. It is very costly indeed to subscribe in a particular pay television provider. The second is the uncertainty of a reliable pattern of consumer use of television receiving sets. Unlike radio, which requires only part of the listeners’ attention, television demands that viewers concentrate solely upon it; they must cease all other activities at the same time. Practically, evidence suggests that viewers will scan pay television service policies. The varying changes in the lifestyle of the viewing public affect the decision-making and taking of the service provider. Undermining the growing competition as well as the rapid development of the telecommunication sector of the nation, the presentation of guides/announcements to programs are reasonably and carefully selected indicating that only those programs that appeal to them will be asked, leaving the others behind. This is generally true for high-end subscribers who prefer to watch international current news on politics, economy and business, sports and leisure, and even lifestyle.   Synthesis             The convenience of pay-TV industry not only in Hong Kong but to some parts of the world is measured in its applicability and audience satisfaction. Since it is a paid service, the consumer satisfaction in providing the best array of shows is a major consideration. Tangible application of the process is seen in the increasing amount of pay-TV subscribers. In the same manner, the issue on reliability with regards to different areas of programming is dealt in manner that only the service provider and the consumer feedback system can indicate. But with the personal motives and media gratification purposes of the individual viewer, the measurement of reliability is based on factual and comprehensive presentation of programmes. The responsiveness of pay-TV is immediate as manifested in the constant presentation of favored and requested as well as timely and exclusive shows made available within the subscriber’s reach. However, the issues on some shows’ copyright as well as nature (e.g. pornographic shows) are under probation and hot and contentious subject of scrutiny and debate. Nevertheless, the assurance of the pay-TV industry and its service providers in service of the consumer’s welfare and satisfaction is highly appreciated. But in the dawn of continuous struggle of dominance through competition, the pay-TV industry will still grow and take its potential to higher and wider bounds, breaking other barriers present in the eventual achievement of technological control.  And lastly, the empathy among the viewer’s preferences and changing lifestyle will generally define the future of the said business.             All in all, the pay-TV industry in Hong Kong or even in the whole world per se is a thriving and influential determinant of the economic as well as social conditions of growth. If directed in the real purposes and responsibility of broadcast media in particular the TV as a medium, pay-TV will not just add to the comfort of contemporary living but will serve as a vital technology in achieving perennial and sustainable development.   Credit:ivythesis.typepad.com

Pay TV Industry

If someone is asked if what is one of the things you cannot live without, television is among the most popular and expected answer. In to...

Coursework Assignment

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 (‘PCCW’ 2006). The company is also one of Asia’s leading competitors in Information and Communication Technologies or ICT (‘Company Profile of PCCW-HKT Limited’ 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 (‘Company Profile of PCCW-HKT Limited’ 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 (‘Company Profile of PCCW-HKT Limited’ 2007), and form the technology flagship of the Pacific Century Group (Darlington and Cooke 2000). With this, the company becomes an exclusive center for high-quality talents and Information Technology professionals, which presents outstanding IT consulting services, infrastructure solutions, and industry-focused IT solutions, with a key focus on areas, including financial services, the public sector, telecommunications, and enterprises (‘Corporate Profile’ 2007). The combination and collaboration of the company’s workforce, having a variety of expertise and located in different parts of the world, helped the company generate revenues of .9 billion or HK,550 million during the end of December 2003, with an increase of 12.6% over the revenues of .5 billion in 2002 (‘PCCW Limited’ 2007).             In addition to the mentioned services, PCCW also IT 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 government departments, public utilities, aviation, and broadcast engineering operations (‘Corporate Profile’ 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 (‘PCCW, Taking the Brand Forward’ 2007). In addition, with the contribution of its large team of IT professionals, experiences and industry knowledge, the company integrates and influences both the resources of Hong Kong and China in providing excellent ICT solutions that would help consumers develop new and challenging business opportunities and attain operation efficiency (‘Corporate Profile’ 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 (‘PCCW, Taking the Brand Forward’ 2007) that will enable its consumers to recognize its contribution in the market and in the industry. These help contribute to the overall image of PCCW, as the leading provider of telecommunications and innovative technology in Hong Kong, and in other parts of the world.   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 (‘PCCW’ 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 (Darlington and Cooke 2000). 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’ 2006).             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 (Darlington and Cooke 2000). 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).   Environmental and Drivers of Change A. Environmental Analysis 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. The external environment of PCCW is one dynamic environment, which are subject to continuous changes in different aspects, including technology, communication, marketing, and management. The changes happening in the society and economy of Hong Kong can be attributed to its characteristics, such as retaining a distinct superiority over human resources, the legal system, languages, currency and general infrastructure, 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 hailing from every corner of the world, 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, using the English language, which has long been integrated into its socioeconomic fabric, and the Hong Kong dollar that is convertible to participate in capital transactions (Kwan 2002). Changes also include the arising problems in its society and economy, such as the collapse of asset prices, slow economic growth, rising unemployment, and unending deflation in Hong Kong (Wong 2002). In addition to this, the external environment of PCCW is considered dynamic due to the existence of competition and rivalry. Because of the continuous improvement and development in relation to technology and communications, competition in the market increases, thus, becomes one of the factors that must be given importance by companies to be able to adapt to changes in its environment.             Moreover, aside from being dynamic, the external environment of PCCW is also complex. One can readily observe and conclude that the environment of Hong Kong is one complex environment, for with its characteristics mentioned above, it will be able to accommodate a variety of changes in technology and communication to adapt to globalization and international trade. 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 (Heller 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 (Heller 2006). Because the use of the Internet is one of the most useful tool in closing negotiations in Hong Kong and in establishing communications, it has largely contributed to the complexity of PCCW’s external environment.   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. <ul style="margin-top: 0in; margin-bottom: 0in" type="square"> <li class="MsoNormal" style="text-align: justify; line-height: 200%"> 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</li> <li class="MsoNormal" style="text-align: justify; line-height: 200%"> 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</li> <li class="MsoNormal" style="text-align: justify; line-height: 200%"> Sociological – conflict with consumers that are major stockholders of the company; unemployment</li> <li class="MsoNormal" style="text-align: justify; line-height: 200%"> Technological – impacts of e-commerce to the company; development and improvement of its website</li> </ul>   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 (‘Porter’s Five Forces’ 2006).  <ul style="margin-top: 0in; margin-bottom: 0in" type="square"> <li class="MsoNormal" style="text-align: justify; line-height: 200%"> 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 (‘Porter’s Five Forces’ 2006). </li> <li class="MsoNormal" style="text-align: justify; line-height: 200%"> Threat of Substitutes – Substitute products refer to products in other industries (‘Porter’s Five Forces’ 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. </li> <li class="MsoNormal" style="text-align: justify; line-height: 200%"> Buyer Power – This refers to the impact that customers have on a producing industry (‘Porter’s Five Forces’ 2006). In Hong Kong, buyer power is strong, such that this could provide PCCW’s rivals with a strong and efficient business. </li> <li class="MsoNormal" style="text-align: justify; line-height: 200%"> 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. </li> <li class="MsoNormal" style="text-align: justify; line-height: 200%"> 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. </li> </ul>   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. Organizational cultures evolve slowly, imperceptible, over years, if not decades, and refer to the company’s collections of unspoken rules and traditions (Bennis 2003). With the problems encountered by PCCW, it can be understood that the although the company has its own culture in its internal environment, this has not fully contributed to the success of the company as a whole. In addition, although this culture has helped the company gain from its business, it is still not enough to support the growing demand of the company’s consumers and the growing competition in the industry. This culture was even lessened or altered with the reduction of the company’s workforce. Changes in the company’s organizational culture, thus, determine the company’s success and failure in implementing and adopting strategies.   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 management style of the company’s managers must then be given enough attention to ensure the organization and control of the company’s 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 (De Bono 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 (De Bono 2005). In short, the scope in the change of management entails the refreshing and reinforcing of the tasks and responsibilities of the manager of chief executive officer of the company.             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 the development of employees as a whole, to be able to contribute to the operations of the company. Changes are needed in the managing staffs or employees for based on the problems encountered by the company some of the members of the workforce of the company lack the capacity to perform well and take the pressure of the responsibilities assigned to them. For this reason, some of them were laid off. In addition, laying off employees is not always an answer to reduction of costs, for sometimes, the debt of the company can be repaid through the efficiency of the operation and the increase in production.    Credit:ivythesis.typepad.com

Coursework Assignment

Executive Summary During the turn of the century, the world experiences more drastic changes than before, which include chang...

Sample Literature Review on Concept of between New Public Management and Outsourcing

LITERATURE REVIEW   2.1       Introduction   In this chapter, I will first introduce the concept of between New Public Management and Outsourcing. Then the details of outsourcing will be discussed in the second part of this chapter. There are many scholars working in the field of outsourcing. Some of them are focus on the pros and cons of outsourcing and some of them are focus on the conditions required for successful outsourcing. In this dissertation, I will not focus on the pros and cons of outsourcing but will analyze the conditions required for successful outsourcing.                                  Although this dissertation if focus on the conditions required for successful outsourcing, there are still many scholars doing research in this field. In this chapter, I will discuss the theory from two scholars i.e. Simon Domberger and Paul Seidenstat. At the end, I will identify the gap between the theories and indicate which theory I will adopt as the theoretical framework of the dissertation.   2.2       The Concept of New Public Management and the Objective of Outsourcing   Over the last decade, the term of New Public Management (NPM) is widely used in academic, governmental and organizational discussion and the debate over the nature of the NPM also becomes more and more serious. The idea of NPM is origin from a set of public sector reform in the 80s and 90s.At that period of time, the public services were neither efficiency nor effective. As a result, either cost containment or quality improvement was requested from the community. On the basis of these beliefs a trio goals, cost containment, public support and performance improvement, emerged as central drivers for reform[1] . In order to achieve the above trio goals, public managers tried to adopt the private sector mode of organizing and managing.   One of the most critical aspects for the reform is to use contact as the dominant means of control instead of the hierarchies. Other aspects followed, including the introduction of what were seen to be ‘business-like’ management practices in human resource management (appraisal, performance management and seeking to recruit senior managers from the private sector) and a requirement to account, and to pay, for capital utilization.[2] One of the leading scholars in the field of NPM is Christopher Hood and his article ‘A public management for all seasons?’ is still the most widely used concept of the idea of NPM. He describes NPM as a doctrine, or at least as a label for a set of administrative doctrine which he and other identified as ‘New’. Before the concept of NPM, public administration was always focus on institutions, politics and value system. On the other hand, NPM referred to private sector management practices, including performance incentives, and to markets. According to Sandra Dawson and Charlotte Dargie. “NPM drew on two competing conceptual frameworks. One, skin to managerialism, supported the introduction of private sector practices, which included attempts to manage professionals, introduce performance measures and incentive reward system. The other, with us its emphasis on markets, derived from variants of public choice, rational choice and ‘New institutional economics’, and led to an emphasis on decentralization and competition that is at odds with the centralizing tendencies of the other[3]. Christopher Hood defines the nature of NPM and states it comprises seven doctrines:-   ·                    A focus on hands-on and entrepreneurial management, as opposed to the traditional bureaucratic focus of the public administrator; ·                    Explicit standards and measurers of performance; ·                    An emphasis on output controls; ·                    The importance of the disaggregation and decentralization of public services; ·                    A shift to the promotion of competition in the provision of public services ·                    A stress on private sector styles of management and their superiority: and the promotion of discipline and parsimony in resource allocation.[4]   The concept of privatization definitely falls into the doctrine of disaggregation and decentralization of public services, and the promotion of competition in the provision of public services.[5] According to Ascher, he defines privatization as ‘an umbrella term that has come to describe a multitude of government initiatives designed to increase the role of the private sector. [6]. Privatization includes different forms of alternative service production and delivery schemes. In general, there are nine forms of privatization and they are service shedding, asset sales, franchising, vouchers, grants, subsidies, public-private partnership, volunteer activities, contracting in, contracting our and competitive contracting. Among the above privatization options, contracting out or outsourcing is the most commonly used privatization option. Outsourcing involves a binding agreement by which a government pays a private firm or outside entity to provide all of part of a specific service. It is because, on one hand, the government retains the ownership and overall control of the outsourced services or goods, on the other hand, the government employ the private company to provide the services or goods that delivered in-house previously. According to Ascher, she describes outsourcing as the situation where one organization contracts with another for the provision of a particular good or service. It is an essential form of procurement, in the sense that contractors may be considered supplies, but in common usage it has come to refer more specifically to the purchase of an end product which could otherwise be provided in-house by the purchaser. [7] To conclude, the terms of New Public Management, Privatization and Outsourcing are interlinked. By using the concept of NPM defines by Christopher Wood, privatization is one of the administrative tools for the public managers to implement the concept of NPM in the public sectors. The terms of outsourcing is one the administrative tools under the umbrella of privatization.   According to John A. O’Looney, there are three main objectives to outsource a government service and they are to reduce, make more efficient, and to reform government services.[8] , To reduce means many things which includes to reduce the services by allocating less resources to contractor and to reduce the size of the government.   Another objective is to enhance the efficiency of the government. ‘This can occur through a number of mechanisms, including (1) restoring competition, (2) tapping economies of scale, and (3) discovering the most efficient production techniques. [9] The last objective is to reform the government by introducing competition and to manage contracts rather than manage programs.         2.3       Conditions required for successful outsourcing laid down by Simon Domberger   Regarding the conditions required for successful outsourcing. Simon Domberger lays down four keywords for successful outsourcing and they are Specialization, Market Discipline, Flexibility and Cost Saving. In the following, I will discuss the details of each keyword separately.   Specialization   The first condition for successful outsourcing is that organization should know the importance of specialization and also intends to focus on specialization. Simon Domberger defines ‘Specialization’ as ‘Concentrating on those activities in which the organization has established a distinctive capability, letting other produce supporting goods and services.’[10]   Regarding specialization, Simon Domberger introduces the concept of core activities and core competencies. According to Alexander and Young (1996). ‘they suggest that there are four meanings associated with core competencies or core activities. They are 1) activities traditionally performed in –house; 2) activities critical to business performance; 3) activities creating current or potential competitive advantage; 4) activities that will drive future growth, innovation, or rejuvenation. Among the above four meanings, the first one is relatively meaningless as everything produces in-house is core activities or core competencies.’[11]   After knowing the meaning of core competencies, organization needs to identify them among the goods and services produced in-house. Two aspects of core competencies need to be known. According to Prahalad and Hamel (1990), they suggest that ‘organizations should not simply think they are producing products only. Organizations should rather to cultivate the competencies which will be more enduring than the products they currently produce, will not diminish with use, and will be the platform form which they will launch new and successful products in the future.’[12] One of the examples quoted by them is Sony’s capacity to miniaturize components and audio-visual products.   Prahalad and Hamel also states that ‘Outsourcing can provide a shortcut to a more competitive products, but is typically contributes little to building the people-embodies skills that are needed to sustain product leadership’ [13] which means outsourcing the provision of key parts and components can lose and organization its core competence, or the opportunity to create one. They warn that before surrender economic activities to an outside supplier, organization must think very careful and thoroughly the potential gain as well as the loss. Simon Domberger further adds one point that organization should consider the losing of technological competence to potential competitor. The concept is especially valid in the high-tech industries including computer, telecommunication and the like. The knowledge of high-tech not only is risky and costly to acquire but also can keep the organization ahead in front of the other competitors in the market.     To sum up, specialization can make economic benefits by concentrating on activities in which an organization is relatively more efficient, total value added is maximized.   Market Discipline     According to Simon Domberger, another condition for successful outsourcing is market discipline. He defines market discipline as ‘the process of identifying conditions in which the purchaser is separated from the provider and a formal transaction takes place under contract. [14] Simon Domberger states that market discipline provides a couple of advantages. They are 1) separation of purchaser from provider; 2) focus on performance; 3) effective interface between purchaser and provider:; and 4) competition.     The separation of purchaser from provider means one party concentrates on consumption and another on production. Simon Domberger states that ‘the implications of the separation of market participants are far-reaching: there are not two organizations where previously there was on: the financial impact of the activities each becomes transparent through the splitting of the organization accounts: and the cost of resources used in providing services across organization boundaries comes into much sharper focus. The separation also enhances incentives to perform and to delivery services that meet client needs. Once the separation of purchaser from provider, purchaser can select another contractor who performs better or provides better terms.[15]     The focus on performance has impact on both the purchaser and provider. Before entering into any contracts, the purchaser must think very carefully the nature of goods or services required from the provider. According to Simon Domberger, ‘prior to contracting many public sector organizations did not specify the goods or services provided in-house. [16]  By outsourcing, purchaser not only needs to specify the details of goods or services required but also to monitor the goods or services provided by the provider. Thus, the focus on performance has a positive effect on service quality.     The effective interface between the purchaser and the provider starts with the contract. Generally, the service contracts are relationship contracts rather than spot contracts. The relationship contracts require exchange of information and data between both parties to evaluate the contract. One of the options to deal with under-performed provider will be the contract termination. However, it will impose cost on both parties. Therefore, the relationship contracts provide a basis for both parties to start a constructive dialogue to discuss the strengths and weaknesses of the provider and the nature of their relationship.   Simon Domberger also mentions that the market discipline introduces competition to the purchaser and provider. Simon Domberger states that introducing competition has significant and positive effect in working practices, innovative approaches to work redesign, and, as a consequence, significant cost saving. The force of competition will be discussed more thoroughly in the part of cost savings.   Flexibility   According to Simon Domberger the third condition is that organization should know the importance of flexibility. He defines flexibility as ‘the ability to adjust the scale and scope of production upwards or downwards at low cost and rapid rate.[17]   In order words, flexibility means the speed and cost of an adjustment to changes in demand or supply situations. And a flexible system means the cost and speed of adjustment to external stimulus is lower than the other system.     It is common that output adjustment is less costly and more rapid in small organization. It is because output adjustment often requires dismissal of staff and disruption of internal relationship. Therefore, by outsourcing to numerous small organization, the output adjustment can be made more quickly and easily.   Simon Domberger quotes Benetton as the example of flexibility. He states that the success of Benetton not only because of its sensibility to customers’ tastes but also of its outsourcing strategy by contracting producing to small organization, which makes Benetton change its product design quickly, easily and less costly. Finally, Simon Domberger states that ‘other things being equal, smaller organizations tend to breed closer-knit working communities, in which commitment to organizational objectives is easier to elicit. This adds to the ability of small-scale enterprise to respond rapidly to external change.[18]     Cost Saving   The last condition is the intention to reduce cost. Simon Domberger defines cost  savings as ‘lower resource costs of service delivery compared to in-house production.[19] Not many people will challenge that competition drives price down. A classical example in Hong Kong is the service fee of mobile phone. Before the Hong Kong Government opened up the telecommunication market, PCCW (previous Known as CSL) enjoyed the monopoly and set the service fee at a very high level. However, after the opening of the market, the power of competition surfaced and the fee decreased tremendously because of the vigorous competition in the market.     Some people may argue that competition drives price down as it also drive the quality of goods or services down too. However, according to Simon Domberger, it is not the case. He uses Fig. 2.1 to illustrate his argument.         Source: Adapted from Domberger et al. (1995). Fig. 2.1. Competition, price, and quality   From Fig. 2.1 shows that the price for non-competitive contracts is 28 while the price for competitive is 16. On the other hand, the cleaning performance indicators for non-competitive contract is 0.56 while the indicator for competitive contracts is 0.63. The figure shows not only competitive contracts reduces price but also increases the quality. Simon Domberger further mentions that the result of one study is not convincing. But the study sows that it is possible that competition can drive down the cost as well as raise the quality.   Simon Domberger further states that public sector purchaser will not follow the concept of ‘lowest price win’ but rather follow the concept of ‘value for money’. The concept of ‘value for money’ further guarantees the quality of goods or services outsourced will not be decreased.   In addition, as mentioned in market discipline, purchaser will pay more attention on performance. Simon Domberger explains that ‘the greater emphasis on performance has resulted in more reliable and accessible information on quality than was available prior to contracting. This increase in information should lead to improvements in quality, since it is now more difficult for vendors to shade quality without being caught our. In sum, it should not be surprising to see in quantitative studies that the introduction of contracting, and the competition that accompanies it, tends to enhance quality irrespective of its influence on prices.’ [20]     2.4 Conditions required for successful outsourcing laid down by Paul Seidenstat   Paul Seidenstat is co-editor of Privatizing Education and Educational Choice, and Privatizing Transportation Systems. He is Associate Professor of Economics at Temple University. His recent research has been in the area of state and local government finance and management. In his book ‘Contracting Out Government Services’, he states that because of the growing fiscal difficulties of state and local government and the increasing opposition to fax increases, outsourcing becomes one of the methods to ease the pressures by cutting cost so as to avoid raising taxes or drastically cutting the level of services provided by the government.   Paul Seidenstat defines ‘outsourcing as a management tool as well as a device to realign the public-private sector mix. The managerial objectives include cutting costs, improving the quality of services produced, or both. Most frequently, the primary aim has been to cut costs in order to relieve budgetary pressures rather than to improve service, especially since assessing the equality of output of many government services can be a complex and time-consuming activity. Outsourcing was also aimed at increasing the flexibility of government operations such that expansion, contraction, or complete elimination of specific services could be accomplished with fewer obstacles and with greater speed. [21]   Paul Seidenstat lies down very clearly that certain environmental factors must be present for successful outsourcing. The factors are 1) political support; 2) managerial/political leadership and 3) a supportive private market structure, in the following, I will discuss those factors in detail.   Political Support     ‘Overcoming the bias toward the status quo protected by the stakeholders who receive monopoly rent is essential. A strong case must be made for change; the case must speak to the benefits to be received with a provision/production arrangement in comparison to the costs that may have to incurred.’[22]  Therefore, voter and legislative support introduces an opportunity for outsourcing and to allow the new structure a chance to show its advantage.     According to Paul Seidenstat, there are two main advantages for outsourcing which are cost containment and quality enhancement. It is no doubt that by introducing competition the operating costs can be reduced. Savas mentions that ‘saving from competitive contracting of public services-the most thoroughly studies form of privatization –average roughly 25 to 30 percent. [23] As mentioned earlier, although reducing operating cost is the main objective of outsourcing, achieving high service quality is also another objective of outsourcing. According to Paul Seidenstat in certain services such as education and prisoner services the quality has improved with impressive results because the nature of the service and the outputs of these services are difficult to define and measure.   Managerial/Political Leadership   ‘The full support of political leaders, especially in the executive branch, greatly enhances the chances the chances of success. Not only is this support required for approval of change, but also enthusiastic and careful backing of the effort often is compelled so sustain it. Well-prepared and ardent political leaders often are needed to overcome the inertia of the status quo.[24]     Paul Seidenstat further states that political leaders should be aware of certain cautions and pitfalls. The first one is there is little competition in the private market. Without any competition, not only saving cannot be achieved but also service quality cannot be maintained. As a result, the process of outsourcing is simply a process of shifting public monopoly. Should there is sufficient competition, the contract should be carefully drafted and monitored. It is because ‘vague contract may lead of less than optimal results, and enforcement may not be effectively practiced.[25] Most importantly, abuse of the public trust and favoritism in awarding contract is another pitfalls. Bidding competition and public watchdog are the useful tools to avoid the undue influence of outsourcing. In sum, the conduct of political favoritism, corruption, and the toleration of poor contractor performance should not be overlooked.           Supportive Private Market Structure     To achieve the maximum benefits of outsourcing, the private sector should be structured such that native suppliers exist to compete in providing the service in the case of load-shedding, can compete for contracts in the care of contracting out or franchising, or can  supply services in the case of vouchers. Without competition, privatization might simply consist of a private monopoly substituting for a government monopoly.[26] With a supportive private market structure, public-private competition is introduced to the government. Outsourcing not only reduces the operating cost and enhance he services quality but also has the effect of weakening the power of public union. Paul Seidenstat quotes the example in the United State, some governors and mayors used the thread of privatization in negotiating with the public servants to persuade them to accept major modifications in their work rules by trading off the idea of privatization. The result was the unions accepted the proposal.   Many people may ask why private sector can produce goods or delivery services with lower cost, at a given level of service when compared with the government. Paul Seidenstat explains that ‘ a competitive market framework will drive unit cost to the minimum level. Only way the private producer accomplishes cost minimization is by limiting labor costs in such ways as using more part-time and lower-skill workers, paying for less time off overtime, establishing clearer job definitions and greater worker accountability, and having more workers per supervisor. Other input  cost can be reduced by holding first-line managers more responsible for equipment maintenance and giving them more authority to hire and fire, shifting toward a higher capital to labor ration, and utilizing more effective purchasing methods. Relating manager pay to profitability can lead to more emphasis on innovative ways to produce, incorporating new technology, dispensing with “red tape”, and making timely decision. On the other hand, changing managers in light of poor performance in a private organization typically can be accomplished with greater speed and with less disruption.[27]   2.5 conclusion   To conclude, Paul Seidenstat’s view on conditions required for successful outsourcing is that should the number of public servants affected is small, specialized services are involved, output can be easily defined and measured, several potential private suppliers exist or entry of others is easy, and the service beneficiaries are numerous, outsourcing goods or services will be implemented successful.       [1] . Sandra dawson and Charlotte Dargie, “New Public management – A discussion with special reference to UK health in Kate McLaughlin, Stephen P.Osborne and Ewan Ferlie,”New Public management Current Trends and Future Prospects’(Routledge,2002),P.35 [2] Sandra dawson and Charlotte Dargie, “New Public management – A discussion with special reference to UK health in Kate McLaughlin, Stephen P.Osborne and Ewan Ferlie,”New Public management Current Trends and Future Prospects’(Routledge,2002),P.35   [3] Sandra Dawson and Charlotte Dargie, “New Public Management –A discussion with special reference to UK health in Kate Mclaughlin, Stephen P.Osborne and Ewan Ferlie, “New Public Management Current Trends and Future Prospects” (Routledge. 2002) P.38   [4] Stephen P.Osborne and Kate McLaughlin, “The New Public Management in Contest” in Kate McLaughlin, Stephen P.Osborne and Ewan Ferlie, “New Public Management Current Trends and Future Prospects”(Routledge, 2002), P.9   [5] Ascher, K. “The Politics of Privatisation” (Macmillan, London, 1987), P.4   [6] Ascher, K. “The Politics of Privatisation” (Macmillan, London, 1987), P.4   [7] Ascher, K. “The Politics of Privatisation” (Macmillan, London, 1987), P7   [8] John A. O’Looney, ”Outsourcing state and local government services: decision-making strategies and management methods”, (London : Quorum, 1998) P. 23   [9] John A. O’Looney, ”Outsourcing state and local government services: decision-making strategies and management methods”, (London : Quorum, 1998) P. 24   [10] Simon Domberger, “The Contracting Organization: A Strategic Guide to Outsourcing”(New York: Oxford University Press, 1998) P. 51   [11] Simon Domberger, “The Contracting Organization: A Strategic Guide to Outsourcing”(New York: Oxford University Press, 1998) P. 35   [12] Prahalad and Hamel, “The core Competence of the Corporation”, (Harvard Business Review, 1990) P. 80   [13] Simon Domberger, “The Contracting Organization: A Strategic Guide to Outsourcing”(New York: Oxford University Press, 1998) P. 36   [14] Simon Domberger, “The Contracting Organization: A Strategic Guide to Outsourcing”(New York: Oxford University Press, 1998) P. 51   [15] Simon Domberger, “The Contracting Organization: A Strategic Guide to Outsourcing”(New York: Oxford University Press, 1998) P. 47   [16] Simon Domberger, “The Contracting Organization: A Strategic Guide to Outsourcing”(New York: Oxford University Press, 1998) P. 47   [17] Simon Domberger, “The Contracting Organization: A Strategic Guide to Outsourcing”(New York: Oxford University Press, 1998) P. 51   [18] Simon Domberger, “The Contracting Organization: A Strategic Guide to Outsourcing”(New York: Oxford University Press, 1998) P. 50 [19] Simon Domberger, “The Contracting Organization: A Strategic Guide to Outsourcing”(New York: Oxford University Press, 1998) P. 51   [20] Simon Domberger, “The Contracting Organization: A Strategic Guide to Outsourcing”(New York: Oxford University Press, 1998) P. 46-47   [21] Paul Seidenstat, “Contracting Government Services”, (London : Praeger, 1999) P. 14   [22] Paul Seidenstat, “Contracting Government Services”, (London : Praeger, 1999) P. 15   [23] Paul Seidenstat, “Contracting Government Services”, (London : Praeger, 1999) P. 14   [24] Paul Seidenstat, “Contracting Government Services”, (London : Praeger, 1999) P. 14 [25] Paul Seidenstat, “Contracting Government Services”, (London : Praeger, 1999) P. 17   [26] Paul Seidenstat, “Contracting Government Services”, (London : Praeger, 1999) P. 15   [27] Paul Seidenstat, “Contracting Government Services”, (London : Praeger, 1999) P. 16-17   Credit:ivythesis.typepad.com

Sample Literature Review on Concept of between New Public Management and Outsourcing

LITERATURE REVIEW 2.1 Introduction In this chapter, I will first introduce the concept of between New Public Manage...