Companies need to evolve to adapt to changing business conditions.
Blue chips are no exception.
If these companies choose not to do so, they are at risk of stagnating.
There are a few ways to go about this process of business change.
One way is to bring in new blood into the organisation so that its existing problems can be viewed from a different perspective.
Another is to trim excess cost to make the business leaner and better prepared to face challenges in the external environment.
And yet another method is to shed legacy businesses while pushing promising ones to the fore.
With that in mind, here are three blue-chip companies that recently announced organisational changes.
OCBC Ltd (SGX: O39)
OCBC is one of Singapore’s three largest local banks.
The group offers a comprehensive range of banking and investment services for individuals and corporations.
OCBC recently announced that its CEO, Mr Samuel Tsien, will be stepping down on 14 April after being in the top seat for the last nine years.
Ms Helen Wong, an executive from HSBC Holdings (NYSE: HSBC), will be assuming the CEO position on 15 April.
This move demonstrates rigorous succession planning on the part of the bank as Mr Tsien was due for his retirement.
Ms Wong brings with her a wealth of experience regarding Chinese banks and this knowledge should serve her well as OCBC’s head honcho.
Investors can also look forward to a refreshed corporate strategy with her at the helm, and possibly new initiatives that may steer the bank in a different direction.
Such a change is welcome as the local banks face one of the biggest shake ups in their industry in a long while.
Last year, the Monetary Authority of Singapore awarded four digital bank licences to a group of bidders.
The entrance of these new competitors promises to turn up the heat for the incumbents.
OCBC’s new CEO will have her hands full in trying to grow the bank amid one of the worst crises the world has seen, as well as managing the threat from these new upstarts.
Singtel (SGX: Z74)
Singtel is Singapore’s leading telecommunication (telco) group and offers a portfolio of services including mobile, broadband, cable TV and next-generation communication services for individuals and companies.
On the last day of 2020, the telco announced a new organisation structure to capture growth opportunities for the group.
A new subdivision will be created under the Group Enterprise division, specifically focused on driving growth in its 5G enterprise business.
Singtel sees significant potential in assisting businesses with their digital transformation amid a pandemic.
By helping organisations to transition from physical to digital processes, Singtel hopes to ride on the digitalisation wave that has been sweeping the globe.
Also, Singtel’s information and communications technology (ICT) arm, NCS Group, will now report directly to the group CEO Yuen Kuan Moon.
The aim is to build up and grow the ICT arm in the Asia-Pacific region with a particular focus on China and Australia.
The above changes took effect on 1 January 2021.
In addition, from 1 April, the International group that manages Singtel’s portfolio of investments in associates such as Telkomsel (IDX: TLKM), Globe Telecom (OTCMKTS: GTMEY) and Bharti Airtel (NSE: BHARTIARTL), will come under the Group CFO office.
These changes are aimed at repositioning the group for growth after the telco reported a weak set of earnings for its fiscal 2021 first half.
Operating revenue was down 10% year on year while underlying net profit was down 36% year on year.
Singtel’s stable of associates has also been struggling, with almost all entities reporting year on year declines in profit after tax.
Singapore Technologies Engineering Ltd (SGX: S63)
Singapore Technologies Engineering Ltd, or STE, is an engineering conglomerate with businesses in four divisions: Land Systems, Marine, Aerospace and Electronics.
In mid-November last year, the group announced a reorganisation of its business divisions to align its corporate structure for continued growth.
Rather than having four disparate divisions, the group will now have just two core divisions: Commercial, and Defence & Public Security.
This new arrangement makes STE leaner and allows it to pursue international growth in smart cities and international defence.
A new Group Engineering Centre will also be created to complement the existing Group Technology Office to strengthen the group’s engineering expertise.
Investors will be closely watching this development to see if STE can post better growth and higher profits.
In a business update for its fiscal 2020 third-quarter, the engineering giant continued to snag orders totalling S$1.7 billion for its aerospace and electronics division.
Its order book remained solid at S$15.8 billion as of 30 September 2020 and consisted of long-term, multi-year contracts.
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Disclaimer: Royston Yang does not own shares in any of the companies mentioned.