By Jin Zhang
This ebook examines the function of company constitution, together with the position of company headquarters, within the good fortune of huge enterprises in China.
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Extra info for Catch-up and competitiveness in China : the case of large firms in the oil industry
Easier access to capital, and [an] ability to attract and hold the conﬁdence of consumers’ (Penrose, 1995: 260). Moreover, there exists competition among large ﬁrms. Their dominant market position is not stable as the market grows increasingly bigger and consumers’ taste changes to favour more innovative brands. The decline in large ﬁrms’ performance weakens the barrier to entry for potential competitors. On the other hand, the constant threat from the competitors and the effort to secure their market position encourages large ﬁrms to invest heavily in innovation and research.
The divisional managers had autonomy in running their businesses. They were responsible for the prices of speciﬁc products, for the design and quality of existing products and for the development of new ones, for supply and marketing, for technological improvements, and for the transfer of the product from the supplier to the consumer. However, these responsibilities were to be made within the framework set by the broad policy guides and a ﬁnancial budget devised by the general ofﬁce, and within the carefully deﬁned interrelationships between the operating units and the general ofﬁce.
For the mostly small Chinese family businesses in a less formal hierarchy, ultimate power lies in the hands of the owner as the top executive. At the end of the 1990s, the case of the Chinese large state-owned enterprises transformed from previous governmental ministries stood out as an exception. The structure was usually that of a holding company. The headquarters had limited control over business and internal administrative activities in the subordinate enterprises. The notion of the network enterprise is helpful to capture the changing method of organising business activities, which is characterised by co-operation and interdependence between partners.