In what way does the Wang Group exhibit characteristics of a typical Asian firm?
One of the typical characteristics of Asian, especially Chinese firms like Wang Group, is their affiliation with ethnic culture and Confucian philosophy. Researches have revealed that Confucian philosophy has the strongest influence over the values of Chinese family businesses (Yan and Sorenson 236). Wang Group’s business model was guided by the principle that the unit of society and all other social organizations.
For Alfred Wang the hardships that he had faced due to political and economic unrest, his Chinese origin, and the cultural values that shaped his character influenced his decisions and business philosophy (Dieleman and Kit 2). The initial philosophy followed by Alfred Wang was centred on fulfilment of basic human needs such as food, clothing, shelter, and transportation. The business model inclined towards making a sustainable approach to create a harmonious environment and shape the people and society.
When Charles Wang succeeded the business from his father, Alfred Wang, his beliefs too were influenced by the Chinese cultural values with modern ideologies to attune with the globalisation of market. However, he too, like his ancestors believed in the role of business to help build a better society. These ideologies of the Chinese culture ingrained within the management philosophy of Wang Group shows that it was a typical Chinese or Asian firm.
How did Charles change the Wang Group?
Charles Wang after succeeding his father Alfred Wang brought in the following changes to the Wang Group in order to bring about change in the organization:
- Charles Wang changed the business model of the company and thereby changed the business strategy. Therefore, he redesigned the organizational framework in order to infuse a goal to the Wang Group.
- Charles diversified the family business. In 2002, Charles Wang transformed the company into a private limited company and assumed the role to industrialize Asia. It began work with the Chinese government to develop the Chinese infrastructure and society. In seven years (from 2002-09) the company’s share into various businesses were the following – 50% in trading, 20% real estate, 20% in plantation and resources, and 10% in stocks and bonds (Dieleman and Kit 5).
- In order to decentralize the decision-making process and incorporate new structure and process. He appointed a new, professional, corporate management team with a CEO from outside the family and firm. The aim was to bring about organizational change with the group. This process also included a change in leadership in 2006.
What Obstacles did he face when he hired a non-family member as the new CEO?
Charles Wang hired and groomed a professional from a large multinational trading firm to look after the logistics and trading part of the business and assume the role of the CEO when he could concentrate on the business development in the Chinese market. The new CEO’s philosophy of business was based on (a) decentralised, executive team based decision-making process, (b) alignment with the shareholders views, and (c) reducing risks in decision making process.
The first problem faced by the new CEO was the difference between the mind-set of the newly appointed executives and old employees of the company. The old employees were accustomed with the market and habituated in working within a flexible centralised management. However, the new corporate style executive team who believed every portfolio of the organization required an operational and strategic head, overseeing the operations of the department.
Second, the new CEO faced a problem while implementing these leadership changes, as there were aversions towards it within the organization.
Third, the belief of the employees on the family head as the leader, made them want Wang to be a part of the decision-making process of the change management team. This led Wang to participate in many of the decision-making of the executive body. The new executives did not accept this, which they considered as interference.
Fourth, was an external environmental issue in the form of economic crisis, which led to increase in cost structure due to the restructuring of the organization, and leadership, creating extra pressure on the organization. Alfred Wang too participated in the functioning during this time of crisis and advanced certain cost-cutting measures. This increased involvement of the family members in the decision making process led to the ultimate departure of the CEO and many of the new executives.
What further steps should Wang take to ensure the Wang Group remains a sustainable family firm?
In order to make Wang Group a sustainable family firm, Charles Wang himself assumed the role of the business head and took control of the decision-making process of the company. He realigned the family business model with the emerging economic landscape. He brought in his brother and sisters more actively to participate in the family business.
Though Wang took immediate steps to save and sustain the Wang Group, but eventually he intended to create an executive based business model for Wang Group where the leadership and the executive functions could be transferred to non-family members. In order to do this, Charles has to take certain steps:
- Learning from the previous mistake of hiring a non-family CEO from outside the firm was a mistake as this new person from a big multinational firm did not know the culture and values of the organization as he was more accustomed to a multinational culture than Chinese culture. Therefore, for the leadership role, some should be hired who hold similar values as the Wang Group. A better option would be to groom a few young employees as future leaders from within the company such that they would know the inside out of the company’s culture and values and transition of leadership would become smooth.
- Wang must participate as a part of the restructuring team during the transition phase as the employees are unaware of the plans that the company holds for them and a new, alien team would face more difficulty than their trusted leader.
Works Cited
Yan, Jun and Ritch Sorenson. “The Effect of Confucian Values on Succession in Family Business.” Family Business Review XIX.3 (2006): 235-250. Print.
Dieleman, Marleen and Jonathan Ho Wye Kit. “Family Busienss Succession in Asia.” Richard Ivey School Of Business Foundation (2015): 1-8. Print.