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The Crown Worldwide Group: Relocating in China under the Closer Economic Partnership Arrangement                                                                                                                                                                                      
Product Ref: 07/339C Company: Crown Worldwide Group

Product Type: Case Industry: Commercial Services

Related Product(s): Teaching Note
Authors: Michael J. Fratantuono   
In June 2003, the governments of Hong Kong and the People's Republic of China signed the Closer Economic Partnership Arrangement (CEPA). CEPA outlined terms for liberalisation of trade in goods and services and enabled firms incorporated in Hong Kong to establish wholly owned businesses on the mainland. One firm that benefited from the liberalisation was the Crown Worldwide Group. Founded by Jim Thompson in 1965, and based in Hong Kong since 1970, Crown had evolved into the world's largest privately held company providing relocations and records management services and had become a significant player in the field of logistics. By 2003, the company had a global network of offices and warehouses in more than 100 cities on six continents. Following the signing of CEPA, Crown formulated a plan for building state-of-the-art warehouseˇVoffice complexes on the mainland. The first was to be in Shanghai, to be followed by a second in Beijing and then others in several more cities. Crown was successful in the first phase of implementing its strategy: by August 2006, Shanghai employees had been working out of the new facility for more than a year. Meanwhile, Crown had located a plot of land in Beijing and had completed site preparationsˇXbut progress on construction had stalled due to unexpected delays in project registration approval from Beijing authorities. The delay raised the question: How best to proceed? As he considered his options, Jim weighed tactical considerations and strategic concerns. Economic logic suggested the need to get the construction project back on track as quickly as possible. Nonetheless, Jim Thompson knew that any action had to be consistent with the core values he had cultivated at Crown, the reputation his company had earned as a world-class provider of logistics services and Crown's plans for further expansion in China.
Functional Area : Human Resource Management
Production & Operations Management
Strategy & General Management

Issues: Logistics, International relocations, Network form of organization, China, Strategy formulation, Strategy implementation, International strategy, Corporate strategy, Business and society
Length: Text: 25 pages
Exhibits: 6 pages
Country: China (People's Rep. of)

Pub. Year: 2007 Level of Difficulty: 3
This product type is available in the following language(s):      English   Simplified Chinese
Related Information: For a course in business strategy, the case provides insight about Jim Thompson's leadership and management styles and Crown's core competencies, as well as about the various dimensions of Crown's strategy, including Crown's strategy for achieving a global presence. The case also describes factors critical to implementation of strategy such as organisational structure and controls. Finally, the case describes the challenges and opportunities of operating and growing a business in Shanghai and Beijing, and thus suggests the need to match capabilities to the external environment. For a course in global economy, the case provides an illustration of the globalisation process, the impact of the revolution in IT on global supply chains, the increasing share of services and knowledge content in economic activity, the shift in the centre of economic gravity in the international system toward Asia and the role of the multinational corporation in society. For a course on doing business in China, the case provides an illustration of on-the-ground conditions in Hong Kong, Shanghai and Beijing. In particular, it sketches the rationale for CEPA between Hong Kong and the mainland; the approach used by towns and villages to convert farmland into industrial parks in Shanghai; the terms of negotiation for land acquisition in Shanghai and Beijing; the degree to which special relationships, corruption and lack of transparency are still prevalent on the mainland; the challenges and opportunities for multinationals operating in the mainland; and the evolution of social, political and economic norms in China.
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