Case Study
Kupfer, Andrew.
"A YANK Takes Over At Cable & Wireless."
Fortune August 5, 1996:
18 - 19 Management 303
David A. Holding
2 November, 1997
"A lot of people signed up just for the free service. Getting a line became difficult, and Mercury had to build up its network to handle peak demand at a time of day when revenues were zero."
A major increase in the number of customers and demand for services would normally be a good thing for any business. However, when all your new customers are only signing up for free goods and services, the cost of supplying those goods and services cuts profits into the red -- dangerously close to going bankrupt!
C&W "contemplates the uncertain future of its most lucrative market, Hong Kong, with a mixture of fear and lust."
Multinational companies with large overseas investments must keep a keen awareness of changes in foreign political environments and the associated risks. Technological investments are an attractive item for any governments to seize. However, those same governments may require foreign assistance in the maintenance and management of those technological systems.
"Brown has a good track record of making things happen."
The ability to take charge and continually produce profitable results whenever and wherever needed is a necessary skill for top executives: a category in which Dick Brown has proven time and time again to be.
"After Hong Kong is absorbed, Cable & Wireless will be the most modern and efficient telecom company within the People’s Republic, well situated to help China upgrade its telecommunication network system."
An advantage of having an established telecommunications jewel, "world’s first fully fiber-optic network" (Kupfer, 19) in place when a country is absorbed by a underdeveloped and extensive government, is the strong foothold in the door for a major sale of technology and experience. Hong Kong’s absorption will makes it China’s techno-port to a 1.1 billion plus consumer market hungry for first-class technologies.
Graphic 1: Current situation of telecom technologies in relation to Hong Kong and China.
"After Hong Kong is absorbed, Cable & Wireless will be the most modern and efficient telecom company within the People’s Republic, well situated to help China upgrade its telecommunication network system." An advantage of having an established telecommunications jewel, "world’s first fully fiber-optic network" (Kupfer, 19) in place when a country is absorbed by a underdeveloped and extensive government, is the strong foothold in the door for a major sale of technology and experience. Hong Kong’s absorption will makes it China’s techno-port to a 1.1 billion plus consumer market hungry for first-class technologies.
The economic situation can be compared and contrasted to that of ussia’s, in that there is a shifting of the political influence or environment that has the potential to become a loss to foreign investors or an advantageous foothold. Hong Kong will be absorb into China by contract from a free market society to a communistic market society. However, Russia is moving by political choice from a communistic market to a free market. Both countries represent a major economic and political influence in the world and both markets are potentially heavy consumers of modern technology, especially on the telecommunications front.
Both China and Russia are vast countries that require a modern effective and efficient telecommunication network system to manage their overall economic resources. China will gain sovereignty over the Hong Kong telecommunication jewel and will need a pool of telecom managers to assimilate this new technology into their society. As Russia transitions into a free market economy, they will have an increasing need for telecom managers to restructure their telecommunication systems to promote their society’s move to openness (Glasnost) and restructuring (Perestroika).
Both countries have a desire for the most modern technology, but can fulfill their need for a more modern telecommunication system with the surplus technology those first world countries and their businesses are discarding. Recycling of our first world surplus will provide such countries as China and Russia with an overall system upgrade while producing an economical benefit to first world countries. First world technologies don’t die, they just become global hand-me-downs.
As first world country governments, business, and citizens upgrade to the latest whims and products of a rapidly growing and changing technology, their surplus can be recycled to the benefit of third world countries. This "trickle-down" strategy will help bring third world countries into better connectivity with the rest of the electronic global community. In today’s global economics, better connected world neighbors promotes more efficient and effective trade and learning.
As first world countries’ economies move more dominantly towards information based industries, telecommunication managers become the valuable resources. Enterprise networking managers, LAN/WAN administrators and engineers will be among the telecom managers that will be in global demand in every economic level (government, business and civilian).
| Evaluate what is available now and in the long term to meet needs and its scalability and reliability. |
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Imagine and consider future possibilities that relate to your reevaluation. Telecommunication managers become the valuable resources. Enterprise networking managers, LAN/WAN administrators and engineers will be among the telecom managers that will be in global demand in every economic level (government, business and civilian) as developing countries install modern telecom and computer network systems.
Establishing an efficient telecommunication system for a developing country with nearly 3.7 million square miles and a population of over 1.1 billion dispersed by mountains, deserts and sheer distance could be effectively accomplished in five to seven years. Such a project requires a pool of talented and experienced telecom managers. Assisting China in upgrading and maintaining their own systems requires a pool of experienced telecom educators. A pool of telecom professional and workers should be exported to China as soon as possible to assist in networking setup and educational material design. Effective rural communications can be accomplished by maximum utilization of developed countries surplus equipment to establish local loops where basic analog communications will meet needs. This will limit overall costs on technology. An effective and flexible enterprise networking plan with maximum use of surplus equipment and efficient key use of high-tech networking systems will provide the scalability and connectivity for needs ranging from basic communications to tele-working and tele-education.
The overall cost of establishing a fully modern enterprising telecommunication network system on such a grand scale would easily run into the billion dollar range; however, the use of surplus equipment could reduce the overall costs by one third to one half, even with inflation. Recently, the American government has encouraged the recycling and utilization of "old technologies," especially in the area of computers and telecommunication systems. Countries that are installing their first and basic telecommunication systems are wisest to build the platforms with the most modern technologies that meet their present and long-term future needs. As developed countries upgrade to new processors and fiber optic systems, a surplus of very useful equipment is produced.
Telecom managers may find the China challenge too enormous and at an unacceptable pay rate for work in a foreign country. However, developed country’s corporations can offer additional fringe benefits in conjunction with China to attract and maintain the necessary telecom talent pool. Underdeveloped countries comprise over 77 percent of the worlds’ population; thus, 77 percent of the future telecom market rests with these countries. Developed countries can not continue to employ all the telecom managers that they produce. The economic law of supply and demand implies that exporting this talent pool will be a necessity as developing countries upgrade their basic technological assets and add to their modern networking levels.
Successful management would establish expertise to a global market with skills and abilities to:
Unsuccessful management could cause or reinforce major hostilities between foreign governments and national businesses as well as lose any foothold on additional sales to other countries. This is major career risk that tests your ability of technological foresight and planning, political and cultural awareness, project and cost management.
The major supporting strengths of this project are the desire for China to upgrade their telecommunication system and the equal desire of foreign businesses to provide their services and resources. A major weakness arises in the ability of foreign businesses to communicate with Chinese culture and values while doing business through international political channels. Telecommunication is a child of the Free-Enterprise-World, specifically, America. Most telecommunications managers have little to no experience in dealing with foreign governments and cultures with strange values and dogmas. The ability to quickly and effectively setup a large scale national telecommunication enterprise network could be over shadowed by the inability to effectively communicate and understand cultural diversities in the Chinese social system and the effects of "instant" telecom technologies on that society.
Communist style governments desire to exert an extreme amount of control over those under their thumb -- the big brother is watching scenario. Telecommunication tends to weaken such control, as was demonstrated by the failed Russian Communist coup d’ tat (news of the coup d’ tat was dispersed through the Internet, making the world aware of the event and ultimately failing the attempt). While most countries desire to upgrade their internal communications channels for their own use and control, communist regimes may find such open and public systems threatening to their sovereignty.
Societies that have endured without extensive modern telecommunication systems may find it difficult to accept or assimilate such technologies and its use into their lives. Therefore, it may be wise to meet only the necessary telecommunication needs of the rural communities while incorporating high end technologies at the city and government levels. This does not mean to exclude the installation of the most modern fiber optic systems to every house -- if that is what is required to meet the needs. This means you must provide for an easy-to-use communication system for the rural end-user as well as the high speed data communication system needed at the industrial and governmental levels. The over all system should be easily upgradable as rural users become more comfortable with telecommunication technologies in their lives and their end user demands increase.
The main difficulty is matching the need-analysis to an effective implementation plan that does not offend the social norms or taboos of that society. The system must meet current and future needs in reliability, scalability and upgradability with a minimum of long term costs.
Society: China is the world’s oldest continuous civilization; thus, it has well-established social values and behaviors. The introduction of a modern telecommunication network system can have the effect of increasing the internal communications of a society; while at the same time, expose it to the external influences of other societies. While enhanced internal communications can strengthen the internal cohesion of a society’s values and dogmas, external communications can expose and import contra values and concepts into a once homogeneous society. Should a society desire to expand both its internal awareness and global consciences, a telecommunications network with national Internet and World Wide Web (www) connections and access is the best route to enter the Information Society.
Economics: Large scale resource management requires an effective and efficient communication system. The sheer vastness of China and its dispersed population in small villages requires a communication system for government to manage and control its resources. Telecommunication not only enhances the internal communications for more effective production and control, but also enhances international communications for foreign trade of raw and finished goods.
Politics: The ability to negotiate, codify, and enforce laws and contracts is relatively easy in a small society. However, in a large society, this process is inhibited by the sheer area over which such authority must be exerted. Telecommunication provides for the ability to rapidly disperse information over vast distances and multiple locations in a minimal amount of time. Effective two-way communication provides audit and evaluation tools for the effective administration of national political policies and systems.
Technology: Currently, technology doubles every four years and data communications is a field of study and industry in a most rapid state of change. Countries that abstain from incorporating modern technologies into their society will find themselves further and further behind those societies that strive to upgrade and incorporate technology. The introduction of technology into "developing societies" generally meets resistance while "developed societies" generally are major consumers of technology. Recent market trends indicate that the processing power of computer based technologies will increase while its selling price decreases. Surplus equipment will decrease in market value in developed societies -- sometimes even before it leaves manufacturer's or retailer's inventories. Keeping pace with the latest trend can be a costly and unnecessary thing. Purchasing to meeting technological needs requires a careful analysis as to when and if to procure the most modern thing.
Environment: Everything depreciates, especially
technology based equipment. Most technology based equipment
require additional technology based equipment for support.
Telecommunication networks require such things as switching and
power stations, maintenance crews and equipment, managers,
operators and programmers. Overall, technologies demand the
incorporation of additional technologies for support and the
development of new classes of workers for the management,
operation and support of the entire system. This means additional
industries that may have adverse environmental potentials and
require a more mobile society. It is impossible to incorporate
any one single aspect technology separate from all the others.
Technological incorporation can be a Pandora’s Box whether
effectively managed or mismanaged.
To: FORTUNE, Time & Life Building
Rockefeller Center
New York, N.Y. 10020
Attention: Andrew Kupfer
From: David Alan Holding
8220 Cherry Street
Kansas City, Missouri 64131-2205
(816) 941-0430 x 381
Subject: Cable & Wireless Telecom Opportunities In China After Absorption.
Date: 2 November, 1997.
Dear Mr. Kupfer:
As the new CEO of England’s Cable & Wireless
PLC, Mr. Dick Brown has a rocky road ahead as he gains
international experience in a tough situation under China’s
absorption of Hong Kong. No doubt, Hongkong Telecom is an
attractive benefit of the absorption for China. The amount of
foreign assistance China will require to assimilate this
technology into their society may be the corner stone to a long
term relationship. C&W’s advantage is the strong
foothold in the door for a major sale of their technology and
experience. Hong Kong can either become the "techno-port"
for C&W to a 1.1 billion plus consumer market, or a major
business loss.
As developed countries’ economies move more dominantly towards an information based industry (figure 1), telecommunication managers will become their most valuable resources. Enterprise networking managers and advisors, LAN/WAN administrators and engineers, will be among the telecom professionals that will be in global demand. Exporting a pool of telecom managers to China as educators and managers is the best means to maintain an open door for the sales of our services and technologies. Just as Deregulation and Divestiture produced the need for private businesses to employ their own telecom managers, global telecom competition will force many countries to develop their own pool of telecom resources. We must take advantage of our supply of talent to meet global demands while we still have the advantage.
Telecom managers may find the China challenge too enormous. Domestic corporations and foreign countries will need to attract and maintain a telecom talent pool for overseas work, because corporations in developed countries will continue to invest in overseas markets of developing countries. The economic law of supply and demand implies that exporting this talent pool will be a necessity as developing countries upgrade their telecom network systems. Assisting these countries is major risk that will tests our abilities of technological foresight and planning, political and cultural awareness, project and cost management. Most telecommunications managers have little to no experience in dealing with foreign governments and cultures with strange values and dogmas. The ability to quickly and effectively setup a large scale national telecommunication network could be over shadowed by the inability to effectively communicate and understand Chinese cultural and social diversities and the effects of telecom technologies on that society.
Sincerely,
David A. Holding