Peter Hanson Case

Peter Hanson Case

What were the strategic rationales for the establishment of the product development centre in Shanghai, China?

The reason behind setting up a Product development center (PDC) in Shanghai was to keep up with the pace of the fast growing market in China that was becoming ever more important to High Tech Systems (HTS). The company had already an established market share in the Chinese market and produced its products locally. However it had not opened up a PDC in the area to adapt its products to the local market. HTS had learned from their experience that product development was the key to its success, with 20 percent of its staff working in research and development. They had also observed that different areas acquired different technology and standards. Therefore it was logical to locate R&D in different locations where technologies reside. This helped the company to adapt its product more easily to its market and environmental changes. It also enabled HTS to explore human resources in various locations.

Evaluate the approach to managing people in the Product Development Centre. What should Peter Hanson, the leader of the centre, have done differently? Why?

Peter Hanson had certain experience of the Chinese culture after living in Asia and having an Asian wife. When taking over the PDC in China he wanted to hire candidates that had experience of Chinese culture and environment. He did a comprehensive screening of candidates but soon had only few that he considered feasible to relocate and work in China. He was also concerned about the challenges these people would face when moving to China.

HTS human resource management approach was standardized and all incentives aimed at individuals. Peter used the company's compensation system to encourage employees to reach their objectives and a standardized performance system to measure performance.