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Case Study 4 To Move or Not To Move Cathay Pacific Airways

29111311 29111328 29111329 29111338 29111344 29111384 29111387 29111393 Haidir Afesina Hendra Winata Mita Listyatri Andek Prabowo Aprian Eka Rahadi Chairunnisa Mirhelina Franciscus Xaverius Kresna Paska Agung Indri Pramantyo

Company Background
• Cathay Pacific it was founded in 1946 with two DC-3s and

home base at Hong Kong under Swire Group.
• On the regulatory framework being Hong Kong National Flag Carrier around 1990. • Has IT Data Center located in three cities in Hong Kong.

IT Data Center
• IT Data center was divided in two main sections :

• Production Located in Quarry Bay.
• Development Located in Kowloon, Kai Tak Airport.

• Have a crucial role [ref. Exhibit 7 page 18]

PROBLEMS
• Fire Crisis at Quarry Bay in Hong Kong 1991.
• Normal business was interrupted for almost 13 hours. • Almost 500 Tasks must be done by staff and vendors. After two weeks, the Quarry Bay office in Hong Kong was finally restored and ready for

normal operations again.
• The disaster demonstrated how vulnerable these offices were, given their location in crowded and multi-tenanted districts.

• High cost for staff wage [ref. Exhibit 4].

OPTIONAL SOLUTIONS
• Fire Problem
Rebuild but not move: + Faster + Cheap at the beginning - No room for expansion - Less of security - Less reliability & consolidation Rebuild & Relocation + More Secure + More reliability & consolidation +More Room - Initial investment more expensive but not for the future - Need more analysis for new location & system & environment

OPTIONAL SOLUTIONS
• High Staff Cost
Outsource

+ Flexible - Less sense og belonging + Less cost - Lack of control + Simple & Transfer of Risk - Leak of information
In House Personnel - More Cost + Controlling Data - Not simple + Have sense of belonging  Mixing (SMARTSOURCE) Combine the strength points of in-house & outsource scenario

Recommendation
• Move to other location (Ref. slide 8)  Move to Australia • Use smart source Some key position in IT Data Center must use in house system, & the others can use outsource In house personal can benchmark with outsource personal

To Move or Not To Move
Parameter INFRASTRUCTURE LAND RENT POLITICAL TIME ZONE HR SKILLS + +++ + ++ + China +++ ++ ++ ++ ++ Australia ++ + +++ ++ ++ Singapore

HR WAGES
GDP Total scoring

+++
+ 12

++
++ 15

+
+ 12

Thailand & Philippines eliminated due to their immature supporting infrastructure, political stability, & lack of relevant HR. (ref exhibit 9 page 20) Canada was eliminated because of its reverse time zone relative of Hongkong.