Case Study Analysis Chapter 15 and 16-

Case Study Analysis Chapter 15 and 16- - Case Study...

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Case Study Analysis Chapter 15 and 16 CASE STUDY 15-1 Hughes Corporation Moves from the Defense Industry into the Entertainment Business 1. Question How did changes in the Hughes’ external environment contribute to it’s dramatic 20 year restructuring effort? Cite specific influences . Hughes’ financial and structural performance, just like any other company, is dependent on external factors because it is the external environment that greatly determines whether the business is to continue in existence, close, or requires a change. The external factors Hughes Corporation faced were the dwindling defense spending contracts, the end of the Cold War, and a parent company that lost interest in the defense-related industry. Hughes tried to sustain its business in the defense industry by altering its products and/or finding a niche in the declining defense contract industry. However, General Motors did not want to stay in the defense-related business because of the idle growth and decrease in the defense industry market share. Hughes management realized the telecommunications unit was the fastest growing and saw the opportunity and need for redirection of the company. Management restructured Hughes by divesting itself of defense industry subsidiaries to build up the telecommunications business. The transformation was a great success because in 1995 Hughes was worth $4 billion as a telecommunications business and just short of ten years later, it was valued at $19.4 billion ( DePamphilis, 2008)
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Why did Hughes move so aggressively to hire employees from the cable TV and broadcast industry? Hughes move to aggressively hire from the TV and broadcast industry was based on the need to have the right people for the job. Their current employees from the defense industry who had transferred from defense to communications industry were at best, in cultural shock in the work environment. The hiring from the communications industry was based on the need for core competencies and technical expertise. These employees with a broadcast background were part of the key for a successful fast growing business. Investment in key talented employees can address knowledge management concerns that plague many new companies (Alavi, M. & Leidner, D.,
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Case Study Analysis Chapter 15 and 16- - Case Study...

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