(A brief version of the case is also available: The Government Model.) In June 1999, ICBC - the largest commercial bank in China - was technically broke, with an incompetent loan ratio of 47.59%. However, thanks to united predicaments of the government, the management group and its employees, the bank grew from the ashes through a transformation in its governance arrangement. Following the 3rd quarter of 2007, ICBC had continued to be ranked as the biggest bank on the planet by market capitalization, customers' deposits and profitability. It describes the development of government in China, the selections made, the challenges faced by leaders at all levels along with the results of these challenging decisions.
The challenges and conversation are related to Western businesses in terms of understanding the corporate governance structure adopted by large enterprises that are Chinese. The success of its governance arrangement that is exceptional and the bank bring much inspiration from East to West. Learning objectives: Participants can explore the different issues behind ICBC's governance reform. At undergraduate degree in a political economy program, students may talk about the orderly design demanded to make any reform work along with the strategies included in transforming from a centrally planned economy to a free market economy. In MBA programs, participants can discuss issues associated with corporate restructuring, IPOs, governance structure, as well as competitive strategy. At board and executive level, participants can focus on the banking governance arrangement as well as the benefits and drawbacks of the ICBC system. By the end of the class conversation, participants should have got an insight into working with large Chinese businesses. They ought to manage to grasp the issues arising from conflicts of interest among the communist party, directors, managers, the management team, strategic investors, stockholders and also regulators. They must also comprehend the inner workings of the stakeholders, particularly the incentives of other stakeholder groups, which differentiate significantly from those in the West. Participants will comprehend how sophisticated it could become and how corporate governance might be managed differently. The talks borrow elements that could be helpful and offer participants the chance to reflect on governing practices in the West.
PUBLICATION DATE: November 21, 2012 PRODUCT #: IMD571-HCB-ENG
This is just an excerpt. This case is about LEADERSHIP & MANAGING PEOPLE
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