UTStarcom in China
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Case Details:
Case Code : BSTR184
Case Length : 15 Pages
Period : 2001-2005
Organization : UTStarcom
Pub Date : 2005
Teaching Note :Not Available
Countries : China
Industry : Telecom Equipment
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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.
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Introduction Contd...
The primary goal of these improvements is to optimize our cost structure and allow UTStarcom to deliver consistent and sustainable profitability for our stockholders beginning in the second half of 2005."5
Background Note
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UTStarcom was established in 1995 when two entrepreneurs - Hongliang Lu (Lu) and Ying Wu (Wu), decided to merge their individual start-up companies. Lu's company, Unitech Telecom Inc. had strong presence in the telecom hardware business, while Wu's Starcom Network Systems Inc. developed telecom software. Both companies concentrated on the fixed line segment of the Chinese telecom market. Lu was born in Taiwan and received his early education in Japan. At the age of eighteen, he went to the US for a BS in Civil Engineering from the University of California, Berkeley. After his graduation, Lu joined a new venture promoted by Masayoshi Son (Son), who later founded Softbank6 in Japan.
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The venture, called Unison World, developed software for the telecom industry. Lu served as the President of the company till 1986, when Kyocera7 acquired a majority stake in the company. The company was named Kyocera Unison and Lu was named the CEO of the company.
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Lu, however, wanted to satisfy his entrepreneurial craving and was looking for start-up opportunities. He left Kyocera Unison in 1990 and traveled to China in 1991, looking for business opportunities. The poor state of China's telecom infrastructure came to Lu's notice for the first time when he tried to make a call from Beijing to Shenzhen. Commenting on China's poor telecommunication system, Lu said, "China had only five or six digits for telephone numbers. If you wanted to make a call from Beijing to Shenzhen, you'd have to hire a secretary to keep dialing until the call went through or call people at lunch time or at home at 10 or 11 at night."8 Lu immediately realized the tremendous business opportunity there would be in improving China's telecommunication infrastructure... |
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