Business Strategies at China Telecom - Case Study Example

STRATEGIZING FOR CORPORATE SOCIAL RESPOSIBILITY (CHINA TELECOM) Executive Summary Organizations need to have effective corporate social responsibility frameworks. Corporate responsibility activities are important in assessing the influence of organizations on the environment, and on its impact on the social welfare of communities. Social corporate responsibility efforts transcend beyond efforts. Regulators of the environment come into play in the development of such guidelines. Another term for corporate responsibility relates to corporate citizenship (Rasche, Bakker & Moon, 2013). This term involves an organization incurring costs, which do not provide immediate financial benefits. To this effect, organizations in the business world have much power on the communities they serve. Therefore, such organizations need to develop sustainable programs. Some corporations have been instrumental in investing time, as well as real time in corporate responsibility framework. This corporate social responsibility framework concentrates on providing guidelines at China Telecom. Telecommunication firms have great impacts on the lives of citizens Kang, F., (Hauge & Lu, 2012). In a country like China where the population exceeds billions, it is infallibly important for organizations to have effective CSR. Since most of the populations in the country rely on the telecommunication network, it is essential for such firms to payback its customers. The corporate social responsibility framework needs to consider all stakeholders whereas it needs to be in line with organizational goals. It also needs to consider all the influences of the regulating corporation (Flammer, 2013). The influence of telecommunication on the lives has had a tremendous influence on the communication as well as living. China Telecom operates within laws, the organization concentrates on meeting customer needs, contribute to the community, as well as foster employee relationships. Concerning its corporate social responsibility framework, China Telecom operations follow integrity standards. The company’s operations comply with industry laws (Hauge & Lu, 2012). On the other hand, certain regulations by the state have an influence on the company. In relation to this, the company fosters aspects of integrity through strengthening internal controls, facilitation of legal education, anti- corruption as well as supervision audit. a. Summary of Strategy The profit motive of the corporation is to provide telecommunication needs for the China market. However, the organization faces challenges from other firms with diverse rates of charges. Since CSR is not profit motivated, corporate social responsibility of China Telecom border on creation of employment. Other strategy involves involvement of the firm in community initiatives (Rasche et al., 2013). China Telecom as a firm also promotes initiatives that benefit the environment through use of sustainable practices. The organization recognizes that the key reason for business is to remain productive and sustainable to its customers. In relation to the fulfillment of customers needs, the firm’s operation ensures protection of customer values. The company protects the interests of its customers; provide value-for- money and easily usable products. As part of its agenda, the company has been instrumental in the provision of education. It is prudent to state that the firm’s efforts have had an impact in training students at secondary and primary schools. A record of over 27,000 broadband lines transmits information within schools (China Telecom, 2013). Therefore, the corporate social responsibility framework in the telecommunication; border on providing efficient communication networks and products. These networks need to meet standards of the industry, as well as customer needs. Concerning this CSR, the firm ventures on some important aspects. These aspects of the strategy in the company include sustainable development, enhancement of corporate values, growth as well transforming lives and fostering development (Kleinrichert, 2008). On the environment, the strategy of China Telecom emphasizes on social transformation techniques. Such activities ensure sustainable development, compliance to laws, fulfilling customer needs and contributing to the community. The corporation understands that technology has an influence hence developing communities. It further wishes to provide quality products that meet international standards of emission. China Telecom corporate social responsibility strategy additionally provides economic contribution to the economy (China Telecom, 2013). Since the firm has had growth in the past decade, its influence has had an impact on the economic growth of the society. The firm has a record of accomplishment of providing social utilities as well as contributing to communities’ objectives. A crucial feature of the corporate social responsibility; emphasize on its value chain. This influence promotes organizational ethics as well as providing sound practices in the supply chain (Hauge & Lu, 2012). In respect to the above strategies, the CSR relates to its vision. The vision of the corporation is to enrich people’s lives. b. Opportunities in the Industry Opportunities for China Telecom in the region are tremendous. The organization fights with other firms to meet telecommunication demands of over 2 billion Chinese citizens. The company battles with giants like China Mobile and China Unicom. In the country, rebranding of telecommunication firms came in the year 2008. During the rebranding exercise, firms acquire 3G network statues as well as an increased presence of mobile business (China Telecom, 2013). On the other hand, China had very strict laws on accepting foreign firm’s influence on the industry. This however has change making it possible for the firm to launch new products. It is a fact that North American and European firms’ influence on the telecommunication industry observes changes. Since the launching of Chinese manufacturing firms led by Huawei Technology, the industry faces numerous challenges. According to data of 2009, Huawei Technologies will surpass other players in the industry. Foreign telecommunication firms in China include Nokia, Alcatel as well as Siemens. Telecommunication companies in china battle for over 284 millon subscribers. This statistics refers to those on fixed telephones (PR, 2014). On the other front 1.01 billion subscribers, represent individual on the mobile front. China’s population provides tremendous opportunity for industry players on telecommunication. In respect to investment, China’s firms have made an investment of over $25 billion (Hauge & Lu, 2012). Further opportunities in the industry arise with the allocation of resources, governments granting of licenses, supervision and provision of research and development services (PR, 2014). China Telecom is the largest organization providing telecommunication services. The company has the ability to meet customers within China’s mainland. The company offers services that operate mobile networks, PAS systems, CDMA as well as other multimedia services. In the year 2008, the company acquired a CDMA network from its rival Unicom. c. Recommendation It is a recommendation that China Telecom contribute more to communities. As a corporate social responsibility strategy, the firm needs to contribute more into charity work. For the organization to meet its corporate social responsibility needs, consideration on profitability is important (Rasche et al., 2013). The organization needs to lay more emphasis on the business value rather than Charity. On the other hand, it is imperative to connect organization goals to CSR. Linking of these aspects ensures that organizational practices do not ignore aspects of communities. It is also a recommendation that the organization values its sustainable practices. The company needs to develop an effective strategy for towards environmental conservation. It is also imperative that the organization provides environmentally sustainable telecommunication systems. It is a recommendation that the organization values its business ethics, corporate citizenship as well as sustainability measures (PR, 2014). The organization, therefore, needs to value the welfare of Humans, develop life support systems, as well as institute social equity. Its corporate responsibility needs to concentrate on the environmental, financial, and social aspects. Human rights need to be an important aspect in the attainment of corporate goals, corporate governance area of application, as well as environmental protection. Another important area of application of China Telecom corporate strategy is on the promotion of education and health. 2. Background of CSR The goal of corporate social responsibility program (CSR) on the globe is to meet the needs of consumers. Telecommunication industry players need to consider immediate needs of the society as well as future needs of the globe. With the rise of population and increase in poverty rates global environmental degradation is increasing. Since the industrial revolution, organizations have been agents of pollution. Therefore, in the wake of globalization, organization needs to value the needs of the society. Organizations have been influenced by new technology, civil actions, and legislations. Since it has become evident that industrial actions have an influence on global warming, organizations need to be accountable for their actions (Kleinrichert, 2008). For large organizations, management of the corporate responsibility aspects has complex features. This, therefore, means that organizational management teams need to prioritize their actions. The prioritization of actions of managers includes the analysis of stakeholders. Key stakeholders in organizations include suppliers, managers, as well as customers. On the other hand, the management teams of organizations need to consider the influence of communities, governments, as well as Non-Governmental organizations (Rasche et al., 2013). In the past decade, there has been an increase in noise concerning pollution. Various environmental groups have had an influence on the management of organizations. In respect to these influences, there have been various schools of thoughts on the concept. There are individuals who argue that an organization exists in order to make profits. On the other hand, another perspective considered is that the social responsibility of firms exists in order to gain profits. Managers need to classify stakeholders on a scale of importance. Stakeholders for organizations include the government, suppliers, as well as employees. Scholars of the school of thought that advocates for shareholder capitalism argue that firms attempt to meet social goals of individuals (Rasche et al., 2013). In relation to this, organizations provide employment, a social welfare strategy. In relation to this, managers will lose their interest on profits. It is an argument that stakeholders have an equal right to bargaining fair deals. Managers need to be objective while dealing with stakeholders. It is true that stakeholders have conflicting interests in organizations. Therefore, it becomes a challenge for the management team to manage multiple stakeholder interests (Rasche et al., 2013). Eventually, the progress of CSR in organizations has made it true for managers to develop strategies that come under the influence of free market needs. The other influence on meeting stakeholders’ needs for organizations relates to the increasing gap between the rich and the poor. This influence has made it necessary for organization to innovate products. Innovation of products and activities are essential in meeting the needs of all classes of stakeholders (Dhanesh, 2014). Globalization, on the other hand, has been instrumental in developing new markets. Organizations of this century have a challenge of meeting consumer needs in Asia, Africa as well as other regions. 3. Internal Resource, institution and Industry Analysis China Telecom operations in China transcends towards compliance on laws as well as industry regulations. The company on the other hand values business ethics. It is a well-established venture whose operation provides opportunity for education. On the other, hand the firm has tremendous record of accomplishment on fastening internal controls as well as in articulation on standards of operation on the industry (PR, 2014). China Telecom has an effective communication mechanism that ensures the disclosure of corporate information to citizens. This task ensures that the organization has effective control over its market and other players. With this regard, the organization scores high in terms of social supervision and in regulating government’s influence. China is Telecom CSR on further, has the ability in fulfilling corporation’s responsibility. The responsibility of the firm in the country is to be an efficient telecom operator. The company meets this need through the development of universal system of networks, maintenance of information on health, facilitation of innovations as well as industry development. In meeting this need within the industry, China Telecom implements 3G networks within rural regions. The company has been in the forefront in improving roads as well as networks. Such improvements make the company’s share value increase. Other important aspects of the firm include promotion of Broadband within China’s region. The firm has been on the edge in the promotion of Broadband infrastructure within the region. It is imperative to note that the company’s initiative fosters customized techniques within rural areas. In terms of its industry influence in the country, China Telecom provides services for over 80 Million households. The firm’s operations cover over 27 million-telephone subscribers (PR, 2014). Its corporate social responsibility frameworks, on the other hand aims at reaching over 100 Million subscribers within its mainland. This facilitation of services however covers over 21 provinces in the country where over 80% of subscribers use Broadband services. Additionally China Telecom has been a player in provision of telecommunication services within all regions of the country. The Initiation of the project “Village- to –Village” ensures speedy construction of telecommunication networks (PR, 2014). The organization has been able to meet competition demands by constructing outlets within all regions of the country. Apart from this, the company’s influence within rural regions reveals growth in communities. Agriculture industry within rural region receives a boost from the company. The company has been effective in raising standards in infrastructure development in rural regions. In the year 2013, the company has made an effort to providing lines over 6800 rural locations (China Telecom, 2013). On the other hand, the company has been effective in securing emergency communication. The firm has been on the forefront in dealing with natural disasters within the region. Various earthquakes that have an impact on the country destroy communication networks. As a leading industry in telecommunication, China Telecom secures communication in seasons of disasters. A case in point is in the year 2013 when the country had an earthquake. The company responded to the disaster using volunteers. Other initiatives towards the tragedy came by the provision of equipment as well as logistical support. A total of over 27,500 vehicles and 188,600 volunteers did respond to the disaster. Further, the company fulfills its mandate through supporting certain events. The firm has been instrumental in supporting Youth games as well as other expeditions (China Telecom, 2013). In terms of other players within the region, China Telecom faces competition from China Netcom, China Tie Tong, China mobile as well as other players. An In-depth analysis of telecommunication industry in china reveals various aspects. The industry provides a market of over 1 billion mobile subscribers as well as over 284.3 million fixed line market capability. Companies within the region have made an investment of over $25 billion according to data (PR, 2014). With a possibility of increasing in population after lifting of “one child” rule, Telecommunication industries have a formidable playing field. Chinese players now venture into providing services for the Asian, African and Even European markets. 4. SWOT Analysis In relation to the strength of China Telecom, the firms’ team influence is essential. The organization has been able to meet demands of customers on the strength of its employees. The organization has an effective team of specialists, management, and other individuals. Another important strength of the organization relates to its revival plans. The organization has a strong revival plan that makes it able to meet customers’ demands in time. In respect to its CSR strategies, China Telecom strategies’ strength relates to its ability to meet stakeholders’ demands on time (PR, 2014). The firm recognizes its employee team as valuable resources. In respect to this phenomenon, the organization values the principle of cherishing and respecting every employee. In this regard, the organization has been able to develop employees’ technical abilities as well as in safeguarding employees needs. The company’s employee strength relates to the ability of the organization to provide education and training to employees. Another area of importance is the improvement of employees’ conditions of living, provision of human rights goals. The firm has been instrumental in provision of training facilities. China Telecom, professional training facilitation rate; increased by 6.2% in the year 2012. In respect to its opportunities, the firms’ products meet market demands of consumers in China’s Mainland as well as possibility of meeting Asia, Africa and Europe. The company’s opportunity relates to the population of the people of China. With a population of over 2 billion individuals, the telecommunication company can make immense profits. In china, there has been an increase in demand for mobile telephones, technologies, and devices. China is probably the largest market for mobile usage. The country has an estimated 520 mobile phone users (PR, 2014). Another arena of opportunity for the company is the saturation of cities. Saturation of citizens within China’s region provides an opportunity to telecommunication companies. Considering China Telecom threats, various aspects come into play. The threats to the concept includes low market share of the company. The company encounters stiff competition from other players in the market. In respect to threats, China’s new subscribers have low value. The low value rate of subscribers makes the industry players face declining profit rates. On the other hand, the government provides frameworks for competition. This framework comes into effect with allowance of new players in the market. The company therefore faces competition from China Unicom and other international players (Dhanesh, 2014). Further, influences such as threats from new entrance, the bargaining power of suppliers as well as threats from substitute products has an influence on the firm. Other important aspect on the concept includes the intensity of rivalry among competitors, legislation influences as well as impacts from civil communities 5. Implementation & Evaluation plan In order for the CSR to take place, various implementation as well as evaluation plans come into application. The implementation of the CSR plan takes place on a 2-day drive. However, other aspects of the strategy will take place on the yearly basis. An aspect such as donations to charity and educational projects takes place on an annual basis. In relation to these aspects, checklist will be able to provide the extent of the projects. Checklists, on the other hand, provide a basis for corrective measures. In relation to the evaluation bit, the organization needs to evaluate the influence of the 2-day drive. The 2-day CRS drive, that involves provision of educational materials, planting of trees as well as discussions. Another important feature on the drive is the inclusion of local communities on the project. This drive will be essential in providing consumers information on the project derivatives. Customers will have the opportunity to test drive the vehicles thus rate its functionalities. 6. Conclusions and Summary Corporate social responsibility is a function of organizations. Organizations undertake this initiative to promote their products, as well as meet community’s needs. This study relates to the corporate social responsibility of China Telecom. In relation to this firm, it is apparent that employees, communities and authorities have an influence on firms. China Telecom ventures into providing high quality telecommunication technology (China Telecom, 2013). It is also a fact that the industry faces challenges from competitors, regulations and other cost implications. Its corporate responsibility needs to border on the environmental, financial, and social aspects. Human rights need to be an important aspect in the attainment of corporate goals, corporate governance, and area of application, as well as environmental protection. Another important area of application for a firm’s corporate strategy is on the promotion of education and health (Rasche et al., 2013). Further, the organization needs to consider influences that arise from threats of new entrance. In respect to the CSR of the organization, China Telecom influence will be of importance to consumers. Consumers will benefit from the initiative in terms of donations. On the other hand, CSR of the organization will be effective in fostering growth of the firm, open new markets, as well as develop interactions. Further organizations need to consider CSR as an important organization endeavor. This means that first consideration of CSR is of essence by the management team. 7. Bibliography China Telecom Corporation Limited SWOT Analysis. (2013). China Telecommunications Corporation SWOT Analysis, 1-9. http://eds.b.ebscohost.com Dhanesh, G. S. (2014). CSR as Organization–Employee Relationship Management Strategy: A Case Study of Socially Responsible Information Technology Companies in India. Management Communication Quarterly, 28(1), 130-149. Flammer, C. (2013). Corporate Social Responsibility And Shareholder Reaction: The Environmental Awareness Of Investors. Academy Of Management Journal, 56(3), 758- 781. Kang, F., Hauge, J. A., & Lu, T. (2012). Competition and mobile network investment in China’s telecommunications industry. Telecommunications Policy, 36(10/11), 901-913. Kleinrichert, D. (2008). Ethics, Power and Communities: Corporate Social Responsibility Revisited. Journal Of Business Ethics, 78(3), 475-485. PR, N. (2014). China Telecom Industry IT Solution 2013-2017 Forecast and Analysis. PR Newswire US. http://eds.b.ebscohost.com Rasche, A., Bakker, F., & Moon, J. (2013). Complete and Partial Organizing For Corporate Social Responsibility. Journal Of Business Ethics, 115(4), 651-663. Read More