Sino Ocean Land: Responding to Change Harvard Case Solution & Analysis

Sino Ocean Land: Responding to Change Case Study Solution

Problem Diagnosis

Sino Ocean Land Holdings Limited has been a highly successful company in the year 2010 and was based in Beijing, China. It was a real estate developer and in 2010 it had emerged into a large real estate development company. Sino Ocean Land Holdings Limited had three core business segments that included the property management, property development and the other real estate segments. The company had devised its first five-year plan in 2004 for the period of 2005 to 2009 and this was the first time when the company had devised a corporate strategy of becoming the leading regional developer in Beijing with a multi product offering.

This strategy of the company and the five-year plan had been successful for the company and this could be seen by the spectacular growth of the real estate sector of China in 1998 to 2008 and during this period there had been a loosening of the Chinese real estate regulations. Sino Ocean Land Holdings Limited had gone public in the year 2007 however, majority of the key stakeholders of the company included the state owned enterprises.

The state of China maintained a huge control on the real estate market of China and also on Sino Ocean Land Holdings Limited. Now after entering into the phase of the global financial crisis and facing all the challenges related to corporate governance, financing and land acquisitions, the management of Sino Ocean Land Holdings Limited is considering to devise a new five-year plan for the company. The CEO of Sino Ocean Land Holdings Limited, Li Ming has to handle the changing regulatory environment and the market dynamics and move ahead to adopt the best course of action for the company.  A range of decisions need to be made for the company and these include as follows:

  • Whether the focus of Sino Ocean Land Holdings Limited should be national or local
  • Whether the company specialize in one product type or continue with multi product offering.
  • Whether to continue to property investment and holding or continue to pursue the primarily development.

Case Analysis

Before discussing the key issues faced by the company, we discuss the factors contributing to the success of the company so far as follow.

Success of Sino Ocean Land Holdings Limited

The company had been a successful regional real estate company in Beijing, China. It operated on the basis of three segments that were property investment, property management and other real estate related businesses each of which had around 93%, 4% and 3% share in the market in 2009. For the year ended 2009, the company’s financial position was highly strong as it is shown by the financial analysis performed in the excel spreadsheet.

The company had operated independently however, of Sinochem, COSCO and the SOE shareholder however, the state backed real estate background of the company had several implications for its operations in the future years. But despite this, the effects of the state have been positive on the performance of the company such as the advantages possessed by Sino Ocean Land Holding Limited Company in acquiring the land. Secondly, because of the SOE backing, the company was said to have advantages for obtaining the financing from the domestic banks in China.

Along with this, the company had adopted the corporate governance practices and philosophy at earlier stages and this was a direct impact of the partial SOE status of Sino Ocean Land Holding Limited Company. Finally, the last significant advantage of Sino Ocean Land Holding Limited Company due to the state backing was that the company was highly sensitive to the policy changes and as China was a policy driven market, therefore, anticipating all the policy changes in advance and then reacting back quickly, provided a core advantage to the company in China.

Evaluation of Issues during Second Five Year Plan

Three core issues were faced by the company during the planning of the second five-year plan for Sino Ocean Land Holding Limited Company. We have evaluated each of the three key issues facing the company and then made the recommendations based on the analysis...................

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