Chairman of New World Development Company Limited

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Chairman of New World Development Company Limited

• Cheng Yu Tong
• Group 6

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Outline (Click to go to different parts)

• Profile of CHENG YU TONG
• His Career Development
• Position of CHENG YU TONG
• His personal Attributes as a leader
• - Trait Approach
• - Behavior Approach
• His leadership style
• Situational factor contributing to his success
• Will Cheng continue success as a leader?
• What weve learn from him?

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Profile of CHENG YU TONG

• Name CHENG YU TONG
• Year of birth 1925
• Marriage status a wife with 2 sons and 2
  daughters
• Education level primary school
• Field Business
• Corporation Website Click Here
• Core business
• Property, service, infrastructure,
• ports, telecommunication and
• some strategic business.
• Back to our outline

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His Career Development

• 1940
• worked in Chow Tai Fook, a jewelry shop, as
  trainee
• 1943
• Married with daughter of Chow Tai Fook
• 1960
• Chow Tai Fook was acquired by Dr. Cheng Yu Tong
• 1970
• establishment of New World Development
• In late 70s
• diversify to other business e.g. gambling.
• foreign property , TV, hotel
• In 90s
• diversify to telecommunication
• market eg. New world Mobility
• Back to our outline

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Position of Cheng Yu Tong

• Chairman of Chow Tai Fook Enterprises Limited
• Chairman of the New World Development Company
  Limited
• Director of the Hang Seng Bank
• Back to our outline

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Personal Attributes as a Leader
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Personal Attributes as a leader

• Trait approach (Big Five Model)
• Behavioral approach
• (Yukls approach)

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Trait Approach (Big Five Model)

• An integrative conceptual framework
• small number of metaconstructs
• encompass all relevant personal traits of a
  leader
• Simple

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Trait approach (Big Five Model)

• Surgency
• Extroversion
• Always go to play golf with his friends
• e.g.Li Ka Shing
• Went to China with his subordinates before he
  made contracts with the Chinese business
• Energy and activity level
• At an age of 77, he is still the chairman of
  directors of the New World Development Company
  Limited and makes important strategic decisions
  for the company currently.
• Need for power
• Try to gain as much power as he can in the New
  World Development Company Limited which is a
  listed company

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Trait approach (Big Five Model)

• Conscientiousness
• Personal integrity
• Let his patron be the chairman of the New World
  Development Limited for 10 years (until
  March,1982)
• -- Need for achievement
• In 1972, he decided to build the best buildings
  in Tsim Sha Tsui and went to Paris to ask for
  experts opinion about the style of construction.
• Dependability
• When he came back to the office in 1991, he could
  increase the profit margin from 1.168 billion
  (1991) to 2.363 billion (1992)

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Trait approach (Big Five Model)

• Agreeableness
• Cheerful and Optimistic
• Investment in gambling industry (1977) and
  navigation (1983) made a loss. This did not
  discourage him from expanding his company.
• Optimistic about the future of Hong Kong after
  1997.
• Nurturance (sympathetic, helpful)
• Cooperation with and provision of assistance to
  social groups (e.g. religious group) on land
  development.

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Trait approach (Big Five Model)

• Adjustment
• Emotional Stability
• Investment in gambling industry in Telran of Iraq
  (1977) a loss.
• This did not reduce his confidence in making
  decisions afterward.

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Trait approach (Big Five Model)

• Intellectance
• Open Minded
• Innovative the 1st Chinese-owned Company to
  issue zero coupon bond.
• Made the Chow Tai Fook Enterprises Limited into a
  chain store.
• But not absolutely open-minded Rule the New
  World Development Company Limited in a
  traditional way.
• Learning Oriented
• His philosophy on learning by doing is the best.
• He began his career from a position of trainee in
  the Chow Tai Fook Enterprises Limited although it
  was owned by his father-in-law at that time.
• Back to our outline

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Personal attributes as a leader

• Using the trait approach alone is not enough
  because .. even when the component traits are
  all relevant, they may not have the same
  relationship with leadership behavior.
• Therefore we also use the behavior approach the
  three
• dimensional model

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Behavior Approach Task-oriented behavior

• Monitoring
• He dont reply on others to monitor the workers.
  He always monitor the work progress by going to
  the construction sites frequently. Even the
  short-term employed workers know his boss.

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Behavior Approach Task-oriented behavior

• Problem-solving
• When the debt of his company increases
  continuous in 1989, he stopped his retirement and
  manage the crisis. After his effort, the debt
  ratio decreases. Profit increases by double from
  1991 to 1992.

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Behavior Approach Task-oriented behavior

• Planning and consulting
• When he prepares to invest in China in 1992 or
  before land bidding etc., he will do some
  research beforehand. The hell consult his
  subordinates and then make a thorough plan
  together.

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Behavior approach Relation-oriented behavior

• Supporting
• He believe that only if you care about your
  subordinates and support them, they will do their
  best for the company.

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Behavior Approach Relations-oriented behavior

• Networking
• He has good relationship with his subordinates,
  the government (he built the Hong Kong
  Conventional Centre with the Trade Development
  Council) and
• even his competitors
• (He always play golf
• with Li Ka Shing and
• Lee Shiu Kee)

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Behavior Approach Change-oriented behavior

• His business is diversified including property,
  hotel and telecommunication business. He know
  when and how to make a change to his business and
  he commits to the changes.
• Back to our outline

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Leadership style
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Leadership Style

• Directive leadership few elements of
  participative leadership
• Directive leadership
• Letting subordinates know what they are expected
  to do, giving specific guidance, asking
  subordinates to follow rules and procedures,
  scheduling and coordinating the work.

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Leadership Style

• Elements of participative leadership found on Mr.
  Cheng Yu-Tung
• Delegation
• Psychological empowerment

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Leadership Style

• Directive Leadership
• Investment in Tsim Sha Tsui in 1970
• Although he did not have expertise in the
  construction field, he gave a lots of opinions in
  the styles and designs of the buildings.
• He went to the construction sites frequently.
  Even the temporary workers in the sites knew him.

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Leadership Style

• Management style
• Monitor the work closely.
• Gave a clear and specific direction to his
  subordinate, Selina Chow, who was the head in
  restructuring the Asia Television Limited

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Leadership Style

• Participative Leadership
• Delegation
• After Mr. Chen gave a clear
• goal to Selina Chow, the major
• decisions in restructuring the Asia
• Television Limited are left to her.
• She was free to hire anyone she found capable.
• She could decide how to spend a large amount of
  money to strengthen the company

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Leadership Style

• Psychological empowerment (Selinas case)
• The Asia Television Limited was a joint venture
  of Mr. Chen and his partner, Mr. Lim Por Yen.
• Mr. Lim did not like the huge expenditure
  approach by Selina Chow, while Mr. Chen believed
  that there would be a large return if the
  investment was large.

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Leadership Style

• Selina could do whatever she
• wanted to do when it was Mr. Cheng that
  monitored the daily operation of the company.
• When Mr. Cheng was superseded by Mr. Lim,
  Selinas power was taken away.
• Selina dissatisfied with the arrangement and
  left.
• It was evidenced that empowerment was found under
  Chengs leadership.

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Leadership Style

• Prudent
• He prefer a debt ratio of 20 and 30 is only
  acceptable while in the industry 50 is
  considered as problematic.
• He spend a long time (a few years) to observe
  his employee's ability and reliability.

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Leadership Style

• Risk Averse
• He once said to the public
• I prefer to earn less at low risks. Theres no
  point to be too risky.
• Back to our outline

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Situational factor contributing to his success
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Situational Factor

• Turning Point in his Career
• Marriage in 1943
• Riot in Hong Kong, 1967
• Cooperation with Trade Development Council (TDC)
  in 1985

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Marriage

• Stepping stone of his career
• Married with Chow Tsui-Ying, (daughter of Owner
  of Chow Tai Fook Jewelry Co.)
• After his marriage, he become the manager of Chow
  Tai Fook Jewelry Co. in Hong Kong
• Further developed his jewel business
• (Expand to Diamond business)
• Chow Tai Fook Jewelry Co. provide the capital to
  establish New World Group

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Riot in Hong Kong

• Property market collapse
• Price of land dropped a lot
• Cheng bought large amount of high quality land in
  low price
• Diversity business scope from jewelry to property
  market
• Those land became land reserve of New World
  Development Co. Ltd

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Cooperation with Trade Development Council

• Trade Development Council (TDC) aimed at
  promoting HK industrial product
• Demand for an exhibition centre
• New World get very attractive deal from TDC
• Big Project
• No need to paid the difference of land price for
  changing land use
• Able to build hotels around the exhibition centre
  ? good locations
• Turn to a new page of business
• Further diversity New World Developments
  different businesses e.g. Hotel, Foreign
  Property, Mass Media, Telephone
• Back to our outline

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Will Cheng continue success as a leader?
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Continue success as a leader?

• Succeed ?
• Learning Oriented
• Personal Commitment Learning by Doing
• Accumulate experience
• Prudent, Cautious Personality
• Careful in making decision
• Well planned person
• Emphasize on Networking
• With peers, business partner, subordinates and
  government

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Continue success as a leader?

• --Delegation (Cont)
• Good at delegation and empowerment to subordinate
• Cheng could focus on the issue related to vision
  and direction
• Improve decision quality

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Continue success as a leader?

• Not Succeed ?
• Physical Ability
• Already in the age of 78
• Physical strength and health condition will be
  worse
• Cronyism
• Trust in family members mainly
• Important decision made by him or his family
  members e.g. his son
• His successors may not be as talented as he was

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Continue success as a leader?

• Not Succeed (Cont)
• Little development
• Mainly rely on experience and intuition he had
• No further development in professional knowledge

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Continue success as a leader?

• As a result
• Generally SUCCEED
• Cheng do well in the most important criteria in
  effective leadership
• Well planning
• Networking
• Delegating

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Shades of Future Success

• However, since Cheng is already 78 years old, he
  may not be in charged of the company for a long
  time. When his successors is not able as he was,
  his kingdom could easily fall apart since he
  heavily rely his family members to make decision
  for his company
• Back to our outline

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What weve learn from him?
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What weve learn from him?

• There is no single best style that can contribute
  to ones success. We need to have different
  management style eg. Partcipative or directive
  style, that suits different situations
• We have to be adaptable to changes and take the
  chances. As we can see from Mr. Cheng, he always
  foresee the potential benefits of different
  situations and grab the chance.

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What weve learn from him?

• It is important to have good network of people. A
  good network can make things get done more easily
  and achieve success.