2.1.5 Manufacturing
- Location advantage
- Large manufacturing space (350,000 sq. ft.)
- Strong in designing and manufacturing
- The company designed and built world class appliances
- Core expertise included design and building
- Pushed to keep labor and material costs low
The company has access to a broad spectrum of world class manufacturing services and technologies due to its location advantage in Shenzhen. Computime can achieve economies of scale and produce enough for its customers, with its large manufacturing space of 350,000 sq. ft. Their core expertise inclus design optimization and building of systems solutions. The strength in designing and manufacturing electronic control devices for residential, commercial and industrial applications has lead the company to build world class, end-to-end control systems for home appliances, wireless applications, heat ventilation and air-conditioning systems and home comfort appliances. In order to compete in the global market, they constantly push to keep labor and material costs at a minimum and make sure there was reasonable level of quality.
2.1.6 Social and Environmental Policies
- Socially responsible
- Proactive in environmental policies
- Strengthen ties with communities
- Provide training and opportunity programs
Based on the article, Computime is proactive in policies that protected the environment from pollution. They attempted to be a good corporate citizen, adhering to minimal environmental impact. The company also strengthens ties with its communities by providing training and opportunity programs for young people, which included internships and co-operative courses for students, ongoing scholarship assistance and close cooperation with local universities. These show that Computime is a socially responsible organization in the corporate world.
2.2 Weakness
2.2.1 Human Resource
- Weak role of HRM
- HR not able to take challenges
From the article, we know that the Human Resource Department in Computime find difficulties in taking up challenges in a more strategic role. They focused more on achieving financial objectives rather than strategic objectives. This will be a serious problem if it is not solved immediately because the HR Department plays an important rule in Computime.
2.2.2 Organizational Structure
- Difficult to manage
- Organizational structure was facing problems
- Disadvantages of centralization
- Dysfunctional organizational structure
- China not supporting employee empowerment
Bernard believes that the disadvantages of centralization have begun to outweigh the advantages. The current organizational structure is facing problems and they find it difficult to manage centrally. The dysfunctional aspects in the organizational structure lead to an increasing gap between sales and the production function. Apart from that, China also does not naturally support the idea of employee empowerment in managing human resource. If these problems go on, the operation and performance of Computime will be greatly affected in the future.
2.2.3 Inefficiency
- Unable to coordinate
- Bernard’s father is involved in most decissions
- Couldn’t keep up with sales
- Organization becoming bureaucratic
Bernard’s father is involved in most decisions in the company. People follow his orders without asking any questions. They are unable to coordinate the numerous functions and organizational levels leading to suppressed efficiency. Computime face problems in keeping up with the sales and also the demands of the socio-economic environment. After a while, the organizational structure is gradually becoming bureaucratic and that slows their responses or services to their customers.
2.3 Opportunities
- Economy was forecasted to grow by 12% a year throughout 2005
- WTO entry, low costs of production
- low labor costs for 10 years in the region (China)
With the forecasted growth of the current economy in Hong Kong and with the WTO entry, which lead to the low labor cost for 10 years, Computime definitely view this as an opportunity to increase its productivity. This is because all these will lead to the low production cost and consequently lead to a higher profit margin for Computime in the next few years.
2.4 Threat
2.4.1 Emerging Foreign Competitions
- Competitors is becoming more sophisticated as they incorporated modern accounting and control systems
- Global players such as Solectron, Flextronics and Sanmina; which are similar to Computime
- Global players are larger than Computime
2.4.2 Increasing Strong Local Competitors
- Local competitors, such as Wong’s Electronics, WKK Electronics and PCI Electronics Manufacturing
- Local competitors emphasis on product diversification and the new market penetration
- Local players have already gone through major reorganization or even been publicly listed
2.4.3 Technological Factors
- Technological parks attracted foreign investments
- Higher technology industries were benefiting from the research of local universities
The emerging local and global competitors are more competent and efficiency than Computime. All these threats will actually lead to fall in sales in Computime.
2.5 The Problems during Restructuring
2.5.1 Financially
If an organization were to restructure or to add SBUs, the first step to be taken will be the adjustment of the organization structure. Whether there is addition or reduction of any departments or SBUs, the legal works in each department such as bank loans will be affecte. For instance, if a new department (SBU) is created or added into the organization structure, the organization will need to prepare new finance arrangements and law documents for the SBU. As a result, all this legal transactions with the banks or any other financial subsidiaries will involve high cost (Financial issues: Will Restructuring Save Us Money?).
Also, legal fees will be paid to law firms to manage all the relevant transactions. These legal fees will take up a large proportion of the expenses as these legal actions are complicated but not simple ones (Funding the Strategic Restructuring Process: Funding a Strategic Restructuring Effort). They cannot be settled immediately but will definitely need a long period of time in order for the documents to be processed and approved by the law and also by the government.
2.5.2 Human Resource
When there is a restructuring in an organization, the human resource of the company will be seriously affected. Either some employees will be made redundant, or some new employees will be hired. All these will lead to redundancies and also “resource-allocation-slack” (Human Resources: Recruitment during Times of Transition). Problems will arise when it comes to hiring new employees. For instance, if the Human Resource Department does not perform a good job in allocating new staff, efficiency and effectiveness of the work performance of the organization will certainly be affected. Furthermore, when more SBUs are introduced into the organization, the new manager for each SBU will be extremely important as all the future decisions will be made by these new managers. In other words, the effectiveness of an organization in the future will depend on the future work force (Human Resources: Will Human Resource be needed in the Future?).
2.5.3 Morale of the Organization
When there is redundancy, there will be a fall in the morale of the company. It will take a long time in order for the Human Resource Department to decide which employees should go or stay. This process is very complicated and at the same time very challenging because it involved human emotions and feelings (Taguchi et al. 2005). Employees who are made redundant may or may not understand that the redundancy is made for the survival of the company. As a result, any redundancies will affect the morale of the organization. Consequently, effectiveness and efficiency of the organization will also be greatly affected.
2.5.4 Image/Branding
The news of restructuring will be channeled to the public through the media. This will spark curiosity among the public, supplier, competitors, shareholders and most importantly, the customers. These groups of people may have questions like: Why do they restructure? Is there anything wrong with the company? Is the organization facing problems? As soon as all these negative questions and doubts start to arise, people may lose confidence in Computime Ltd. Consequently, customers may stop buying your products, suppliers may tighten their credit purchase policies, shareholders may sell off their shares and the public will have a different point of view towards the organization. Once the organization loses out the customer loyalty, investor support and confidence from the shareholders, the image of the Computime will be greatly affected.
2.5.5 Financial Intermediaries
As soon as the image of the company is affected, the company will lose the confidence from financial intermediaries such as the bank. Once the tie between the company and the bank is affected, future transactions or any legal processes will also be affected. For instance, loans may be harder to be obtained by the company, or credit policies may be tightened. All this events will slow down the performance of the organization and thus, the organization will lose out its position in the competitive market. (Funding the Strategic Restructuring Process: Funding a Strategic Restructuring Effort)
2.6 Advantages of Restructuring
2.6.1 Efficiency (long run)
Restructuring an organization will definitely result in more efficiency in the performance of the organization. For instance, when more SBUs are introduced to an organization, decisions will be made more quickly because the procedures for any transactions to be approved will be reduced. As a result, the performance of the organization as a whole will be more efficient and effective.
2.6.2 Profitability (long run)
The real benefits of strategic restructuring are not short-term and tactical, but medium to long-term and strategic. This will lead to better market positioning, a larger market share, a higher public profile, a larger staff, allowing specialization of functions, the creation of a continuum of services under unified control, a potentially wider range of funding options. All of these will lead to a high profitability in the long run.
3.0 Recommendations
3.1 Financially
In the efforts of restructuring or to add more SBUs, a lot of costs will be taken into account. Once the strategic restructuring effort has been finalized, your organization may need operating funds initially to help it get off the ground.
First of all, your organization will need to hire professional services. For instance, attorneys will be needed to process and manage the legal documents such as bank loans and tax claims. They are the ones that will also process your new SBUs legal documents. Besides, accountants are also needed to close off departmental accounts and reorganize and manage the new SBUs’ accounts. Therefore, you must have sufficient funding to hire these services because they are necessary.
In the process of restructuring, your organization will have to employ new staff for your SBUs. In order for your new SBUs to be competent, you can send the staff to relevant workshops and trainings. These workshops will certainly upgrade your employees’ job performance. All this training will be part of your restructuring costs.
Furthermore, there will be a huge “one-time start-up costs” such as moving costs, database development costs, web site development costs, severance costs, signage costs and systems integration costs. Therefore, your organization must hire IT experts and technicians to make these changes.
3.2 Ways to Overcome the Problems in Human Resource Department
During the restructuring process, the Human Resource Department should highlight those skills that are still needed to increase competence and effectiveness (Pophal 2000, P. 79). Very so often, staff will be reallocated or be made redundant.
We realize that your current Human Resource Manager is facing difficulties in deciding the future position of the Human Resource Department in your organization. Therefore, we recommend you to send the current Human Resource Manager to relevant workshops and training in order to increase his or her job performance.
Besides that, during organizational restructuring, new employees will be hired to manage the new SBUs. We recommend you to carefully hire your new workforce because they are the ones that determine the success of your organization in the future.
3.3 Ways to Gain Support
In addition, we know that some of your Board of Directors do not agree with your decision to restructure your organization. So, you should get support from your most negative managers. You can seek out those managers who tend to be the most negative and the most vocal, and genuinely listen to their concerns and incorporate their input whenever you can. By gaining support from them, the restructuring process will proceed smoothly.
3.4 Ways to Boost Employees’ Morale
As mentioned in the findings, the morale of most employees will be at a low point during and after restructuring. One of the reasons is because most of their usual colleagues have been reallocated to other departments or SBUs. A low morale of an employee will lead to unproductive work and low efficiency (Ngeow 2000, p. 42). Each employee has a significant impact of the company’s performance. Therefore, if the employees have low morale, the company might face difficulties in progressing.
There might be some employees that are unhappy with the reallocation of jobs. During this time, you must help employees understand the need for recruiting. You can explain to your employees the tangible benefits of recruiting to the company as a whole. For example, hire world renowned motivational speakers or current successful employees to boost their morale effectively.
Also, you can invite your employees to a welcome event for new hires. For instance, you can enlist some current employees as mentors or buddies for these new recruits. Try to do everything you can to encourage current employees to feel involved in the recruiting process, in case they should feel subject to the arbitrary whims of management.
Another method is to organize holiday retreats for the employees. An all expense paid retreat together is definitely going to help the employees to realize their importance to the organization. This way, they will perform more efficiently and effectively in their work.
3.5 How to Regain Organization Image
Restructuring is never good for a firm’s image. As mentioned in the findings, the public may think that the reason that your organization is being restructured is due to financial difficulties.
We recommend that your organization to hold press conferences to inform the public that the restructuring process is to improve the organization’s efficiency in the future. Apart from that, you can also release financial reports to shareholders, investors and the public to regain their confidence in your organization. This way, shareholders and investors will not be affected by the gossips and continue to support your organization.
4.0 Conclusion
After all the research done by us, we strongly recommend you to restructure your organization despite the huge disadvantages that will strike your organization in the short run. We believe that your organization is strong enough to overcome the difficulties and problems during restructuring. In addition, Computime will progress more efficiently and effectively after restructuring. Also, your organization will be more cost efficient and this allows higher profit margin. In fact, by adding more SBUs, decisions will be made quicker. This allows your organization to keep up with the increasing sales and competition in the future. As a result, your organization will gain high profitability and better performance in the long run.
5.0 References
Computime: Company Profile.
Retrieved September, 28, 05 from
Financial Issues: Will Restructuring save us Money?
Retrieved October, 5, 2005 from
Funding the Strategic Restructuring Process: Funding a Strategic Restructuring Effort. Retrieved September, 28, 05 from
Human Resources: Recruitment during times of transitions.
Retrieved September, 28, 05 from
Human Resources: Will Human Resource be needed in Future? Retrieved October, 3, 2005 from
Ngeow Y.M., 2000, Human Resource: Issues & Challenges, Jobstreet.com, Malaysia.
Pophal L.G., 2000, The HR Book: Human Resource Management for Small Business, International Self-Counsel Press Ltd., Canada.
Taguchi, S. G, 2005, Hiring During Layoffs: Lessons From the Field. Retrieved October, 3, 2005 from
