Case Study: Chengdu Bus Group
Chem. had proven himself In previous positions as a thoughtful and Insightful manager. He had accumulated a wealth of experience in not only effective adhering in Chinese society but also the field of management theory. In addition, he had earned a PhD-a very rare achievement in the Chinese business community.
Due to the seriousness of Cab’s problems, the mayor of Changed gave Dry. Chem. Just three years to reform CB-too short a time to gradually transform the organization, including the critically flawed management system and financial situation. Therefore, Dry.
had to implement rapid change and take risks to carry out a successful reform in the required time frame, even though he knew it would be met with great assistance from Cab’s employees and many stakeholders. After taking up his new position, Dry. Chem. conducted a careful investigation into the functioning of CB, after which he formulated a series of reform measures. He then discussed his ideas and proposed changes with the mayor and leaders of Changed city, obtaining full support in both authorization and funding, before Implementing the organizational changes in the company.
Because CB is an old, state-owned enterprise, very complicated working relationships and politics existed among the 14,000 employees. Dry. Chem. knew that this situation would make it very difficult to carry out large-scale organizational reforms within the company. However, after two months of examination, Dry.
Chem. felt he had accurately grasped the important characteristics of the 533 managers In the company. He then carefully designed a reform plan and schedule for the managers and their positions.
To avoid the Influence of complicated guan (special relationships) among the managers, and to avoid them managers forming solid opposition to his changes, Dry. Chem. implemented the reforms with a fast, accurate, and ambitious strategy.
The changes were made quickly, precisely, and without compromise. This strategy meant that adjustments to the managerial positions were completed before the managers could effectively react to what was happening and potentially disrupt the process. Nonetheless, when they realized what had happened, they began to protest.
The organization had four branch companies; two were wholly state-owned, whereas, the other two were Joint ventures with external investors. In addition to operating bus routes, each company owned buses, bus stations, repair workshops, and other facilities and equipment required to run their bus services.
However, this organization created significant problems and inefficiencies each company ran its operations independently of the other companies and did not share stations or repair workshops-essentially, the four companies were in direct competition. Furthermore, different routes throughout the city had quite different profit rates.
Without any formal authority coordinating the companies or implementing policies and rules, there was overcompensation for the desirable high profit routes, resulting in inefficiencies and losses for all of the companies. To rectify this situation, Dry. Chem.
arranged for CB to buy back the external equity of the Joint ventures and changed the branch operations to purely state-owned subsidiaries. He then removed overpricing on the high profit rotes and redeployed the surplus buses and employees from these routes to develop the potential profitability of other routes, under the principle of optimization.
All the routes were rezoned to fall under the operations of four specific areas of the city, forming the eastern, western, southern, and northern bus companies. All bus stations were amalgamated into a single repair company. These reforms amalgamated into a single repair company.
These reforms made it possible for each of the four bus companies to obtain services from the taxation company or repair company anywhere in the city, which greatly reduced resource waste, overcompensation, and operating costs.