CASE STUDY RESULTS

Chapter 5 reported on the survey of ethnic Chinese chief executives in two Hong Kong industries - printing and securities. Consistent with many other studies conducted in Western settings, the objective was to discover the nature of strategic intelligence in the pre-handover Hong Kong environment. The aim was to observe and describe how business leaders in the two industries perceived this environment, and the information sourcing that they undertook.

Many aspects of the environmental perceptions and scanning behaviours of Hong Kong Chinese CEOs were similar to those found previously in the U.S., Canada and Nigeria. However, as reported in Chapter 5, there were some specific and significant differences not only between Hong Kong and other countries, but also between the two industries that were surveyed. The most prominent differences included the rankings of environmental sectors in terms of uncertainty and the relative frequency of information source use. Additional investigation, in the form of case studies, was undertaken in an attempt to better understand and explain how Hong Kong Chinese CEOs in securities firms, printing firms, newspaper firms, and universities acquired and used information about the external environment.

This chapter reports on the case studies. The first section profiles the eight chief executives and their organizations. A second section outlines the 19 strategic issues that these CEOs identified. The strategic issues recalled by the CEOs from each industry are then detailed in a separate section. Relationships between the environmental sectors, the decision roles, and the sources of information about the external environment are then considered. Subsequently, the chief executive's rankings of information sources in terms of frequency of use, perceived accessibility, and perceived quality are presented. Finally, the key results from the case study analysis are summarised.

6■ 1__ Profile of the case studies

Two chief executives in each of the printing, securities, Chinese language newspaper, and higher education (university) industries in Hong Kong were the subjects of case study. As mentioned in Chapter 4, the printing and securities industries in Hong Kong are profiled in the first part of Appendix A while the newspaper and higher education industries are profiled in the second part of the same appendix. Profiles of the organisations and their CEOs appear in Tables 6 .1 and 6 . 2 , respectively.

Table 6.1

Profiles of the Organisations Industry Organisation B usiness Number of Employees Chief Executive Printing Leading Printer e s t a b lis h e d in 1 9 7 9

Periodicals and packaging materials printing

nearly 4 0 0 Mr. Li

Chow Printing

e s t a b lis h e d in 1 9 7 7

Job printing recent growth from 70 to 200

Mr. Chow

Securities

South China Securities

e s t a b lis h e d in 1 9 6 0 s

Institutional and retail securities trading

about 200 Mr. M ak

HL Securities

e s t a b lis h e d in 1 9 8 8

Retail securities trading and financial planning

15 Mr. Chan

Newspapers

Leading Paper

e s t a b lis h e d in 1 9 7 0 s

Daily newspaper 500 Mr. Leung

Apple Daily

e s t a b lis h e d in 1 9 9 4

Daily newspaper 300-400 Mr. Ho

Universities

Univ. o f Hong Kong

e s t a b lis h e d in 1 9 1 1

Higher education about 1500 Prof. Cheng

New University Higher education about 1500 Prof. Tang Note: Pseudonym s are used to protect the anonymity of some CEOs and their organisations

T a b le 6.2

Profile o f the C hief E xecutives

Name Age Tenure w ith O rganisation Tenure as CEO H ighest E du catio n Tim e outside Chinese so cie ty Printing Mr. Li 55-64 10-20 years, (son of the founder) 2-5 years Higher diploma No

Mr. C how 45-54 -2 0 years -2 0 years (founder)

Form 5 (O level)

< 1 year Securities

Mr. Mak 45-54 10-20 years 5-10 years Bachelor's degree

3 years (university) Mr. Chan 45-54 10-20 years 5-10 years Higher

diploma No Newspapers Mr. Leung 55-64 5-10 years (> 25 yrs. in industry) 5-10 years Form 7 (A level) No Mr. Ho 45-54 < 2 years (> 20 yrs. in industry) < 2 years Bachelor's degree No Universities

Prof. Cheng 45-54 < 2 years (over 20 yrs. in academia)

< 2 years Ph.D. in Engineering

13 years

Prof. Tang 45-54 < 2 years (over 20 yrs. in academia)

< 2 years Ph.D. in E ngineer^

17 years

Note: Pseudonyms are used to protect the anonymity of some CEOs and their organisations

The case studied organisations ranged in size from 15 to about 1500 employees. Remarkably, none of them had a formal scanning system. Even their business planning tended to be relatively unsophisticated. In terms of the continuum proposed by Rhyne (1985) , only the New University was about to introduce strategic planning. Formal business plans had also been developed at the University of Hong Kong and South China Securities.

6.2 Strategic issues

The chief executives identified a total of 19 strategic issues. The list that appears in Table 6.3 attempts to preserve their own framing of these issues.

T a b le 6.3

The Strategic Issues as Fram ed by the Inform a nts

In fo rm a n t Sum m ary o f th e S trategic Issue

Mr. Li 1 Responding to skilled (and semi-skilled) labour shortage Leading Printer 2 Reviewing and revising the product focus

3 Assuring quality standards by pursuing ISO 9000 certification Mr. C how 4 Finding (and grooming) a successor to the current CEO Chow Printing 5 Maintaining com petitiveness despite rising input costs Mr. Mak 6 Responding to the emergence of Internet trading South China Securities 7 Ensuring a high degree of professionalism in the industry Mr. Chan 8 Responding to intensified and internationalised competition HL Securities 9 Considering the computerisation of business processes Mr. Leung

Leading Paper

10 Responding to a potential ban on tobacco advertising 11 Responding to a retail price war initiated by a newcomer Mr. Ho 12 Preserving freedom of the press in Hong Kong

Apple Daily 13 Achieving technology leadership within the local industry Prof. Cheng

Univ. of Hong Kong

14 Maintaining and enhancing reputation and linkages 15 'Riding the w a ve ' of information technology 16 Recruiting and retaining staff

Prof. Tang New University

17 Managing transition from teaching to research focus 18 Implementing a strategic planning process

19 Improving business processes and management systems

The next four sections detail the issues that were identified in the four different industries. Each of the written accounts that follow was reviewed by the relevant informant in order to help ensure its reliability and validity. A brief description of each

organisation and its CEO begins each sub-section.

Each strategic issue is classified in terms of three different dimensions: 1) the environmental sector(s) relevant to the issue, 2) the decisional role(s) in which the informant was acting, and 3) the information source(s) through which the informant became aware of the issue and/or improved his understanding of the issue. This classification or mapping enables a subsequent analysis of the case study data that complements the quantitative analysis of the survey data reported in Chapter 5. The findings from the case studies are discussed, together with the survey results, in Chapter 7.

6 . 3 P r i n t i n g i n d u s t r y

6.3.1 Leading Printer

Leading Printer (LP) was started in 1979 with two employees and one printing press. The founding family moved to Hong Kong decades earlier and, like many others, made the transition from sojourners to settlers (see Chan & Chiang, 1994 or Wong, 1988 for a detailed discussions of this transition). The establishment of their enterprise coincided with the implementation of the Open Door Policy by the PRC. The resumption of China trade created new opportunities for printing and packaging in Hong Kong.

The company's offices were initially located in an Industrial Estate in the New Territories, but in 1995 they were moved to a commercial building in Kowloon. Leading Printer employed nearly 400 people had annual revenues of more than HK$ 500 million

(about £ 40 million) at the time the case study was conducted.

Despite its business growth, LP remained very much a family-owned and family-run operation. Mr. Li, the current CEO, was the son of the company founder. He went to work in the family business immediately after completing his higher diploma at a local college. Although his father had relinquished the top management position several years ago, he retained the ultimate decision­ making authority in his role as the family patriarch.

The family had always relied heavily on its own members to maintain management control. For example, the CEO's wife was responsible for financial control and accounting while his brother, sister and two first cousins each had specific management roles. Even the current production manager joined the business after marrying the chief executive's cousin and, according to the informant, was now treated "like a brother".

The mother of the current chief executive had handled many of the administrative duties in the early years. However, one full-time administrative officer was added in 1983, and a second in 1987. Meanwhile, a full-time accountant had been on staff since 1991, although the CEO's wife was “ultimately responsible for what went on in this area". LP printed a wide range of periodicals as well as different types of books. A progressively larger share of its revenues came from the printing (and sometimes the manufacturing) of packaging materials. Growing numbers of items such as toy packages and video cassette sleeves were being sold to the manufacturing firms throughout the region.

Mr. Li indicated that his strategy was based on four pillars: 1) speed and flexibility in responding to customer needs, 2) cultivating long-term relationships to sustain cashflow even during downturns in the economic cycle, 3) avoiding heavy long­ term commitments to labour, and 4) avoiding a lock-in to any single production technology by heavy capital investment. He had accumulated a deep personal understanding of the periodicals segment of the printing industry, and claimed to know people whose combined information about this segment that “was not available to anybody else".

Mr. Li noted that due to the customer-driven nature of the business, many key design and marketing decisions were removed from the firm. This enabled him to focus on improving production. Mr. Li believed that "the way to keep everyone happy is to deliver a good product while cutting or avoiding costs wherever we can".

Planning was done incrementally and Mr. Li continually assessed the business environment for changes and problems. He had solicited suggestions about several recent issues from his family, business friends, his accountant, and key clients. He also claimed that ideas from his staff could be helpful. They reported regularly to him and many of them mentioned that they had provided inputs on product quality. However, most felt that the "big boss" made all the big decisions by himself, and their ideas and information were not really taken into account.

The key performance measure for the firm had always been sales. Both the current CEO and his father firmly believed that success on this dimension would naturally result in good profits and a strong competitive position in the industry. Although LP did not have an explicit corporate strategy, two industry observers told me that it has effectively pursued a cost leadership strategy within its chosen product range.

New technologies had been periodically introduced into the core production processes, including typesetting, page composition and layout. Most of these innovations appeared to be well-received by the core group of long-term staff, who took pride in the steady productivity improvements that had been achieved over the years. The firm maintained detailed financial and accounting records; Mr. Li said that "we have comprehensive client records and a good follow-up system with loyal customers. We have also made up policy and procedure manuals in some areas as a result of our recent decision to go for ISO 9000 certification".

In contrast, the documentation related to both operational performance and external business environment was limited. There was a prevailing reliance on verbal communication and centralized decision-making. This type of decision-making and a dependence on hierarchical authority, both of which are characteristic of mechanistic organisational structures, had been merged with a high degree of flexibility and low formalization that typified an organic structure (see B u m s & Stalker, 1961) . Nevertheless,

LP had a fairly simple organisational structure with a centralized control system, just like many other firms in its industry and across the Hong Kong economy (see Redding, 1990).