Case Research Centre (case)
HONG KONG FERRY: TRANSFORMING ITS BUSINESS FROM Ferry TRANSPORTATION SERVICE TO PROPERTY DEVELOPMENT
|Reference No.||17/001||Publication Year||2017|
|Author(s)||Patricia Tse, Amy Yip, Ailie Tang|
|Company||Hong Kong Ferry|
|Geographic setting||Hong Kong|
|Functional Area||Strategy/ General Management, Drucker's Management, CSR/Sustainability|
The Hong Kong Ferry (Holdings) Company Limited (Hong Kong Ferry), which was established in the 1920s, grew rapidly in the post-war period when the population and economy of Hong Kong expanded significantly. It was the only cross-harbour transportation provider until the 1970s, making it a well-known and stable company. However, because of changes in its business environment—such as the opening of the Cross-Harbour Tunnel in 1972 and the development of the Mass Transit Railway (MTR) in the 1980s that provided faster alternatives to the cross-harbour journey—Hong Kong Ferry’s passenger numbers began to decrease. The company’s revenue and profit from ferry operations went down accordingly. The government’s long-term goal of developing the MTR as the backbone of Hong Kong’s transportation system further weakened the role and importance of ferry services in public transportation.
Recognizing that the ferry industry had limited potential for growth, Hong Kong Ferry began to diversify as early as the 1970s, taking up new businesses in addition to ferry operations. In 1999, it decided to go even further and basically transformed its business by divesting the passenger ferry business and shifting its focus to property development. This major change for the company required good preparation and communication, strong leadership to govern the timing and progress of the transformation, and a new strategic business plan.
This case describes why and how Hong Kong Ferry (Holdings) Company Limited diversified its business and transformed its core business from transportation service to property development in the late 1990s. By reading this case, students have the opportunity to learn about the background of Hong Kong Ferry’s business transformation and the growth of its new property business from the late 1990s to 2016. This case could be used for class discussion for Master’s and MBA programmes. Students will be required to understand the concepts relating to strategic planning and transformational leadership, as well as Drucker’s management principles. Students will also be required to critically analyse and critically review Hong Kong Ferry’s business transformation.
1. Discuss the changes of business environment that contributed to Hong Kong Ferry’s business transformation.
2. Critically evaluate the approach taken by Hong Kong Ferry in exiting its passenger ferry business.
3. Analyse the approach taken by Hong Kong Ferry in establishing its new property development business.
4. Examine the approach used by Hong Kong Ferry in communicating its business transformation decision to various stakeholders.
5. Use Hong Kong Ferry as an example to analyse how corporate culture and corporate social responsibilities (CSR) could contribute to a successful business transformation.