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Underlying Philosophy Behind the Holding Company Structure
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Business Report 2012
Melco's Strategy
Underlying Philosophy Behind the Holding Company Structure
The "Forest" Management
A Constantly Evolving Corporate Group
Business Domains Characterized by Rapid Change
The core businesses of Melco Group involve PCs and the internet, which are well known for their rapid changes of environment. Now, our group is expanding our range of business into the digital home market. Technological progress is rapid in this market, with new key technologies being developed worldwide. We strive to adopt these technologies and combine them with our own technology and know-how to develop products to fulfill user demands. Accomplishing this demands more than research of leading-edge technologies or alliance with suppliers around the world, but also requires the ability to foresee user needs. We do not just adopt new technologies, we strive to foresee changes in user needs to stimulate new demands for the future.
Changing the Company Structure
to Respond to these Changes
The user base for Melco Group products is expanding to include the PC, Internet and digital home electronics domains, at the same time becoming more diverse. To serve these new user segments, the group must alter its product lineup and how it extends customer support, use new sales channels, and adopt other approaches that differ from those of the past. More brands and new companies are needed to accomplish this. Melco Group adopted a holding company structure on October 1, 2003. With this organization, the group is determined to advance to a new stage of growth, one backed by developing new markets, like those associated with the digital home, spinning off businesses as separate companies, establishing new companies, and forming alliances with companies in other industries.
A Forest-like Approach to Management
The long-term objective of switching to the pure holding company structure is to establish a management framework capable of responding even faster to major changes in markets. Through this speed, the group is aiming to operate in a manner that maximizes its corporate value by sustaining growth in sales and earnings. This signals a shift from being a company that simply aims to grow fast into an organization with a management framework able to support long-term growth driven by many elements. The goal is a management system that is similar to a forest. Each tree stands on its own. But together, they create a forest. And if one tree dies, others will grow to take its place and preserve the forest. In this same way, we want to be a collection of small units that together have great strength along with flexibility. This is the "forest management" style that Melco Group aims for. Melco Group will preserve a prominent stature in the marketplace. The objective is raise the value of the group for the benefit of stakeholders over a time period measured in centuries.
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