Case Study Citic Ii Tower Project

CORPORATE STRATEGY

CPL’s business activities go beyond the property sector into industries such as technology, infrastructure, financial services, etc. In addition to involvement in multiple sectors, CPL’s role / interests in the above extends beyond that of developer to operational management, distributor, marketing.

As of June 2000, the majority (over 85%) of CPL’s corporate assets are held in the infrastructure and aviation sectors. With regards to infrastructure, forecasts indicate that this sector could experience decline due primarily to the changes in government policy (toll abolition leading to loss of toll revenue stream), which could leave CPL with major assets that are considered much less attractive to potential buyers. As CPL has indicated, it’s focus is moving away from physical infrastructure therefore a strategy needs to be developed, potentially in line with the government, (CPL’s CEO appears to have high-ranking and far reaching connections), to increase the attractiveness of these assets to enable CPL to dispose of them. These assets alone make up over 54% of CPL’s holdings.

CPL should also define its strategy for the remaining parts of its business. This will guide them when new opportunities present themselves in the market place. From the outside, the perception could be that CPL’s transactions appear to drive company strategy (as opposed to the other way around). Future disposition of existing assets i.e. infrastructure, will also influence CPL’s financing arrangements and cash-flow structure for future projects. Given the above, CPL should give consideration to pursuing developments / investments in sectors that will replenish the significant infrastructure assets that may be disposed.

Subject to the market research and financial analyses below, the following are reasons CPL should give consideration to pursuing the development of Tower II:

• Move of Hong Kong’s manufacturing processes to China thus freeing Hong Kong for...