Global Advertising And Marketing Communications Marketing Essay

Published Date: 23 Mar 2015

With the current state of WRSX, there is a need for the Board of Directors to relook into the strategic management of the company; ensuring strategy applied is relevant, creating value to the company and its stakeholders. WRSX need to function as a complete integrated entity, different business units operate and contribute to the success of WRSX. WRSX strategy needs to be accepted by all stakeholders, preventing conflict, allowing alignment across all levels in the business.

Vision

Wants to turn a mid-size player into a top 20 agency group with global presence and in turn increase ROI for shareholders.

Mission

Making the clients successful through differentiating and strengthening their brands by creating advertising and using a range of market related activities.

Through the mergers and acquisitions, the structure ensures independence of the various business units with a great deal of autonomy that subsequently contributes to the effectiveness of the service offered.

Goals

Looking at the growth strategies to increase market share:

either through expanding market share in existing market

Expand range of products and services

Beating competitors through expanding geographically

Targeting new industry sectors

Phase 1

Strategic Capabilities (Strength and Weakness)

Taking into consideration WRSX's scope of activities and resource commitment, WRSX should stand among the medium-to-large scale advertising and marketing services companies. The market segments that WRSX serve are the medium-to-large clients companies from the following sectors: auto automotive and transport, health and pharmaceuticals, telecoms, personal care, beauty and fragrances, public sector and charities industries.

WRSX has managed under them a range of highly specialised business units i.e. media buying, public relations, research and insight, direct marketing, branding, film production, sports marketing, brand identity, digital media. This is an extensive breath and range of service provided from a medium-large advertising group.

Among them, their research and insight unit continually addresses any changes in the industry, making sure WRSX doesn't lag behind its competitors. And information is passed on to the production teams so to create effective advertisement to targeted market. These production teams are highly creatively thus value-adding to the advertisement and increase the effectiveness.

All the talk on creativity and innovation wouldn't have been possible without leveraging on the leadership behind it. Located in each geographic office are creative professionals with good track record before the merger on the area of creativity. Furthermore, each business units enjoyed a great deal of autonomy brought together by the merger. Therefore, the leaders behind WRSX are the unique resources here.

These are considered dynamic resources and capabilities as they are constantly evolving with the dynamics of the industry. This enables WRSX to renew and recreate its strategies to tackle the changes and new development in the market.

Critical Success Factors

Like any company striving in this highly competitive market, WRSX possess a few critical success factors which are further attested by the results from the ADCOM Benchmark Survey. WRSX has a good track record of producing creativity and innovative works for its clients and it has a very capable market research business unit, understanding the market segments thoroughly, accurately targeting the end customers of the advertisements.

These are two factors that many client companies valued as it can simply underline the effectiveness of any advertising company. WRSX's client companies want innovation and creativity in the various marketing tools as only through such differentiation can the client companies outshines its competition as well as for WRSX.

Use VRINE framework

Diagnosing WRSX's strategic capability > Activity mapping, Value chain analysis.

bases for WRSX achieving competitive advantage: Operations, Human resource management, Service

From the diagram above, we can see that WRSX's value chain consist of a firm infrastructure in the form of Office Central Services where it will take charge off all, HR, Finance and administrative issues. Following which are the rest of the supportive activities.

The Market Research and Insight units will help conduct market research which gives insight into consumer and market development. They are then strategically interpreted and adapted into the advertisement which adds value to client's business through the improved advertisements.

The Public Relations units will help flow information to the general consumers through events like conferences, acting as another channel to advertising. They are also involved in building rapport within the company with the employees and lobbying for and against legislative decision that affects the clients and WRSX.

The Business Development is involved in the organic growth of the company, making sure that WRSX is always moving forward and reacted to changes in the industry and take opportunities when one comes about along the way. They are involved with decisions concerning acquisition, strategic alliances and even divestment.

WRSX has a wide breath and range of services it provides. They are mainly the following:

Branding and Identity unit are the ones involved in developing strategies in order to reach the objectives of each client. It will take into account the inputs from the Accounts Management units which are tasked to understand what the clients' aims to achieve. Closely related is the relationship marketing where marketing campaigns are launched with an emphasis on customer retention.

Consumer Advertising units are in charge of creating the actual ads either in-house or out-source to a specialist.

Media Services are the ones that do the media buying, sourcing out the right media for the right kind of consumers.

There are a whole range of specialist services that covers the different the different niche consumers out there. Some examples are the film production units, new media and digital unit and sports marketing.

Weaknesses in WRSX's Processes

Business Level

WRSX definitely have shone out from its competitors, having many highly specialised business units as mentioned earlier, however each of these units are spread out across the four geographic offices. Some notable ones are its range of business units providing a complete start-to-end service for its clients. Not all office has the capabilities required to function as effectively as compared to one office that have all of these business units.

Corporate Level

It would have help if WRSX have shared the knowledge across the offices, creating synergies between the business units and thereby gaining a competitive advantage in terms of efficiency and economies of scale.

There would have been much more help if there was a policy for corporate governance where knowledge and information could flow naturally through to other offices. Greater efficiency could be achieved as each office now has greater knowledge empowerment to make more informed decisions.

No group-wide corporate governance policy has also led to reporting irregularities and scandal affecting the reputation of WRSX, which snowballed to affecting the share prices. In the aftermath, some shareholders have lost confidence in the WRSX's non-executive directors and urge a change in directors. This will have tarnished some of the well-built relationships it has with its clients and pushing WRSX further away from attaining its goals.

Another group of stakeholders crucial in attaining its goals are its employees, who WRSX have issues retaining them when it lost its clients amid the many turn of events i.e. scandal of bribery.

External Environment Analysis (Opportunities & Threats)

Need to mention stakeholder with key drivers with strategy!

Opportunities

Economic - Growth of Asian Multinational companies

The growth of Asian-based multinationals has been tremendous. Many of these companies are doing so well, constantly expanding and adding headcount to capture the opportunity in the still infant market. Similar potential has arises from the Muslims countries, African nations, India.

Social/Demographics - Escalation of Consumerism in Asia Pacific

US had been a favourable choice for advertising due to its huge homogeneous market, ease of raising equity capital and strength in technology and digital media. However, the countries in Asia Pacific are slowly gaining more affluence, catching up to the countries in the west. China itself already has more than half the size of the consumers than the US market and this is increase in years to come.

Technological - Popularity of Internet & Mobile Phones

One technological product that has been growing in popularity significantly is the use of mobile phones and one of the biggest markets is in China. The Internet has also brought information to educate consumers faster than better. This together with the large consumer market in Asia Pacific only signals the need to tackle the more knowledgeable end consumers.

Social - Changes in Demographics

In US and Europe, retirement age consumers are increasing in proportion with the aging population and graduate-age consumers with Generation Y values getting more prominent in the market.

Threats

Economic - Unpredictable World Economy

Even with growth in the world economy in the last few years, the outlook for the medium and long-term is more risky and less predictable. A downturn is expected in the US economy with the scale of consumer debt and rising oil prices not doing it any favour. If there were any downturn, US will be hit the hardest as almost 50% of the revenue on global advertising comes from there.

Legal - Change in Manufacturing & Service locations

Western Europe and the US are having more stringent employment laws and this is pushing many clients to move their manufacturing and service location out of these countries to maintain labour force numeric flexibility and avoid litigation costs.

Technical - Effects of Manufacturing Overcapacity

Considering that clients are competing in a low-inflationary environment, with limited pricing power and concentrated retail distribution, the only way to compete is through innovation and strong branding. Clients are looking for mergers and acquisition to use their brands to drive up prices or through economies of scale to drive cost down.

Technical - Internal Communications

Helping the client emphasise on good internal communications, combined with retail concentration and significance of corporate responsibility can help create additional value for the clients.

Technical/Environmental - Emphasis on CSR

Competitors are looking at the investment in education and reduction of carbon footprint in promoting their CSR policies to their shareholders. Client will look at the amount and recyclability of packaging.

Implications of Opportunities and Threats

U.S., Europe and the western countries have become more risky and difficult to do business. Stringent employment laws have pushed manufacturing companies to other countries where they can maintain their labour force numeric flexibility. In addition, U.S. is expecting a downturn to hit its economy where more than 50% of the advertising revenue is created. Therefore, there is an urge for companies to look for new opportunity elsewhere away from the western countries.

One promising alternative is Asia Pacific where many companies are doing so well in the region, continuingly adding headcount. One complementary factor for their success is the growth in affluence of the consumers in Asia Pacific. Therefore, WRSX should consider focusing on Asia Pacific as the revenues gained from this region could end up offsetting any poor performance in its other offices.

The rise of the technologies like hand phones and the Internet has open up more avenues where end-customers could be reached with the client's message. Some of these new tools have proved to be more effective in certain areas by reaching the target clients and promising a high return for clients than traditional methods. WRSX should learn to exploit these technologies and compete with others as they slowly become the norms of the industry.

The effects of manufacturing capacity have been the demand for greater innovation and branding to create differentiation and a competitive advantage over others. This spells a greater emphasis on differentiation for WRSX, adding value to clients business through branding.

On the lighter side of business, there has also been more emphasis on the goods of an established internal communication and a Corporate Social Responsibility (CSR) policy with a company. The alignment of internal communication with the clients' retail concentration and importance of corporate responsibility are values that clients looking which WRSX should pay more attention to.

Industry/Sector - Porter's 5 Forces

Threat of entry of 'boutique' competitors

These smaller agencies compete on specialist knowledge and established relationships with the clients. They make use of targeted advertisements, combined with the advantages of internet like usage tracking, customer profiling and social networking sites as platforms to accurately capture the targeted end customers of the clients.

Their low start cost possibly from being a breakaway group from major agencies will put many bigger agencies like WRSX a run for their money.

Competitive rivalry

The advertising industry is in the mature stage in Europe, US and developed countries and there isn't much growth opportunities. Coincidentally, traditional media revenue is also falling. Thus, it is difficult to build bases of sustainable competitive advantage in these markets.

However, on the other side of the world, the strong emergence of consumer brands in developing countries and their emerging markets are promising as they are in their growth phase. This coupled together with new digital marketing media are showing many signs of potential. These new digital media are making advertising and marketing much faster, cheaper and more extensive than traditional medias and at the same time reaching its targeted customers.

Phase 2

Strategic Choices

WRSX Corporate Level Strategy

Portfolio Strategy

With financial figures showing as evidences, New York agency is performing poorly in comparative with the other three agencies under WRSX. Significantly New York agency has been spending too much time on many level of reporting, affecting decision making efficiency resulting to client loss. To boost WRSX overall corporate performance, WRSX corporate office aims to better manage New York agency reporting system.

Market

Share

High

Low

High

Paris agency

London agency

Singapore agency

New York agency

Market

Growth

X

X

Low

Comparing Paris, London and Singapore agencies which have similar reporting systems, these three agencies has achieved high market share in their growing market in their respective regions. Objective of WRSX corporate is to develop New York agency portfolio into similar portfolio to Paris, London and Singapore agencies with a standardizing code of reporting with proper systems, processes and structure among agencies.

Considering the cost and revenue together with debt, growth rates and capital, New York agency alone is expected to increase its revenue by £500,000 per annum, securing a bigger market share with the reorganizing of its reporting systems and structure.

Corporate Parenting Strategy

Although all four agencies of WRSX belong to the same WRSX corporate office, all four agencies function individually without much coordination from the corporate office. There is an absent of communication and knowledge sharing among the four agencies.

Corporate governance is to be restructured where managers are held accountable of their own behavior and to govern behavior in WRSX. WRSX corporate aims to clean up tainted image of WRSX caused by the allegations.

WRSX corporate aims to add value to its SBU in ensuring alignment of corporate and SBU strategies. To improve individual business unit capabilities, corporate monetary resources are to allocate to meet individual agency needs. With a corporate level strategy, WRSX will be able to increase its buying and selling power simultaneously increasing the barrier to entry to the advertising and marketing industry.

WRSX corporate has identified business units where WRSX corporate is unable to add value that is able to translate into critical success factor. Such business units fall into the category of value trap where they fit with WRSX opportunities for support but have limited understanding of critical success factors. WRSX are to redefine its back of house office which corporate is not efficient in translating the value. Cutting cost on sustaining on WRSX business unit that corporate office is unable to relate to the value to critical success factor is a feasible strategy for WRSX corporate to implement. Activities in back of house office are not directly influential to WRSX CSF. Outsourcing the business unit to a better corporate parent will allow better opportunities to be focused on and redirect the organisation to focus on them.

To prevent strategic drift, corporate parent is to have set a set of strategies to be taken into action. WRSX corporate office is to help improve the efficiency of individual business units by envisioning, providing vision to individual WRSX agency to follow.

As a corporate parent, WRSX corporate office can create more value to the individual agencies through developing a communicating and knowledge sharing information technology system. WRSX can tap on the synergies across the business units through coordinating and resourcing its capabilities from all agencies creating advertising and marketing services. With knowledge sharing all agencies are more competent in providing a complete range of services increasing overall value delivered to stakeholders. WRSX corporate office will act as a key controller of information, the setter and leader of strategy to all agencies, providing a common strategic direction and common pool of resources that all agencies can follow and rely on.

WRSX corporate office is to implement proper systems where managers are responsible for their duties and behaviors, therefore creating value to individual offices and organization as a whole. Managers held accountable for their own actions will incline decisions being made towards WRSX's benefits than individual office's benefits.

Improving communication and knowledge sharing among agencies foster the relationship among the agencies. Specialist demands from individual agency's clients can be learnt from hitch on capabilities on other agencies. Adapting a heartland business, WRSX corporate office will be able to manage the communication and sharing across agencies effortlessly where all agencies are able to fit and feel into the WRSX corporate office, maximizing the translating WRSX capabilities into critical success factor.

WRSX corporate office will set guidelines for individual offices to follow to meet their objectives, information is to be screened and pass through a structured format. Job scope are clearly defined such that managers make legitimate decision that deliver value to organization and stakeholders. Setting benchmarks and targets for managers to achieve and fully utilized WRSX highly competencies talent. Good corporate governance is a key to meet CSF for WRSX and only through corporate parenting strategy; WRSX will be able to lead the agencies towards it.

Management of costs, bureaucratic complexity and obscuring financial performance are the keys consideration to be considered before WRSX starts implementing the strategy.

Providing central services and resources in the heartland of the business

Feedback: Executive sub-committee of the non-executive directors that conduct review of the new WRSX corporate governance model

Phase 3

Board Meeting 1

Agenda Item One: Market Opportunity in China

WRSX aims to have a piece of market share in Asia as many competitors companies in the industry already set up bases in the Asia market. To make full use of the opportunity in the upcoming second largest market, China, WRSX need to act strategically in internationalization.

WRSX has identified the opportunity in China adverting and marketing market which has been remaining a rapid growth but their local advertising and marketing are still at a developing stage. Foreign firm services like WRSX are preferred in China's market as we are at a mature stage in the industry. Another key reason for WRSX to enter China's market is due to the fact that WRSX has major, global clients that trade in China, WRSX need to make a presence in China in order not to lose them.

Considering competitors first mover advantage in China, WRSX will go with Action Option C as WRSX is not very familiar with China's market and culture. With a strategic alliance, WRSX will at least be on par with its competitors in terms its understanding of China's market, culture and networks. Since Victor Xao has an outstanding track record, WRSX board can trust him. Instead of doing a joint venture with the Chinese agency, WRSX can consider doing a network alliance where WRSX can tap of the Chinese familiarity of China and at the same time risk impacting from a wrong choice of partner will be minimized. Action Option C is selected instead of others is due to the relatively low amount of financial risk in comparison with the other options.

Agenda Item Two: Sustainability Profile of Group

Attract more potential investors to positively impact WRSX share prices (Internal)

There is a growing emphasis in recent times on green companies or at least have some green initiatives, which WRSX cannot be ignored if they were to increase its overall shareholder value. Shareholders are pickier nowadays, choosing to invest in companies with actions in reducing its carbon footprint and sustainability compared to one that has not.

Shareholders aren't the only group involved; attraction and retention of employees and clients are also closely link to this issue. Having come aspects of green initiatives in the company's processes is generally being accepted as a more successful company, therefore naturally gaining more interest from top talents and clients.

Option C should be chosen as WRSX should create a group-wide sustainability agenda to fill the gap in that area. With the new committees made up of interested internal employees and external 'sustainability expert', it only symbolizes higher effectiveness and success in boosting sustainability of WRSX. Each office will customize its own action plan fitting its local environment yet there will be reporting to local board to share best practices and ensure some alignment to group-wide policy on sustainability. Thus there is some alignment to group-policies yet individual offices are efficiently managed and no possibilities of talk trap.

Option A was not chosen as there wouldn't be a consistence in the overall 'green' policy across the various offices leading to a mixed image portrayed. And Option B is a relatively risky move as it involves segregating the "non-green" clients from the rest which may be seen as an overly aggressive move to create a clean slate in its record, stakeholders may not be extremely impressed by this.

Nonetheless, there is going to be a substantial financial cost required to get this running but this is just on par with some of WRSX's major competitors. This option will help create a high-profile green agency image, thereby improving WRSX's market position, its CSR stance as well as broadening its breadth of service provided with more 'green-focus' advertising option, similar to horizontal integration.

WRSX is already playing a catch-up game in the area of sustainability therefore competitors reaction will be limited to just imitating some of the best practices i.e. local office looking after their own policies.

Feedback Mechanism

One feedback mechanism that can be considered is looking at WRSX's market position, whether has it improve over this move, being seen as stronger player among the competitors e.g. WPP and Omnicom. Do a survey on clients and talents out in the job market before and after the implementation, checking whether WRSX has improved its profile as a more 'green-orientated' agency. Looking at the shareholder's reaction can reflect the success and failure of this plan, an increase in share price will means success.

Agenda Item Five: Cultural Change in New York

The aim to cultural change in New York, standardize code of reporting with proper systems, processes and structure among agencies in order to increase efficiency and productivity of New York agency and WRSX as a whole. WRSX is to do that in order to improve the revenue of New York agency and WRSX as a whole. Alignment with the goal of providing top quality advertising and marketing services which are valued by clients.

We need to consider the below key piece of information before make determine what are the steps to be taken to change the culture in New York.

There is a trend whereby decisions about important and urgent matters, many of which relate to clients, are delayed, sometimes to the detriment of the business in the New York office leading to a loss of clients after contract period.

It difficult to transfer people into the New York office or to get them to work on project teams under some of the top NY managers, as they feel de-motivated by their lack of authority.

To worsen the situation, some of the very best talent in New York seems to be leaving the agency and exit interviews have highlighted 'lack of respect' and 'autocratic working environment' as a major reason for leaving.

By adopting action option A, WRSX will be able to align the management of New York agency with other agency by reducing the number of management level. Issues of inefficiency due to junior managers unable to make decision will be solved as now they are being empowered the rights to make decision with less level of management. With the alignment of management across all agencies, transferring of people into New York agency will be less of an issue. Talents will be retained as they are rewarded intrinsically, gaining due respect in their field of professionalism.

To reduce risk and cut cost, Action Option A is preferred over Action Option B and C, as moving of leaders among offices will result a higher cost to WRSX. There will be ambiguity in the management style of New York as objectives are unclear with the displacing of leaders, it will take a longer period of time to implement the new culture in New York office; reaping benefits from the change of culture later.

Agenda Item Six: Opportunities in Digital Media

Having witness the increasing amount of advertising dollars clients are putting into digital advertising in recent months, WRSX should minimally set foot into the digital advertising to gain first mover advantage. Consumers are more IT-savvy and going digital is the most effective means of advertising. Forecast also shows that the biggest growth in advertising will come from digital media and thus reducing the effectiveness of mass media traditional advertising agencies. Having understood the potential of digital media advertising, WRSX should make a move to make digital advertising a strategic business unit.

Option B should be the right decision for WRSX as they need set a foothold in digital advertising but yet with reduced risk of capital investment. WRSX already has a poor record of managing financial risk, therefore letting each office deal with the local digital supplier to deliver digital service to WRSX clients not only reduces the risk but also lighten the load of keeping pace with the changes in digital advertising. Option C is let go as reports of other company getting to the end of the deal is likely thus WRSX may end up empty-handed. And Option A is too big an acquisition for WRSX to management which may hurt its non-performance indicator. Moreover, there seem to be a clash of culture even though one could lead the other to success.

With minimal input into digital advertising and yet being able to gain significant first mover in this area of advertising. This will definitely bolster WRSX industry position, making them almost an all-rounded service provided of advertising solution. This competitive advantage is important as many competitors are taking similar action towards this area and some have greater financial and operations strengths to absorb a new digital advertising arm.

Feedback Mechanism

To check if this move is effective, WRSX should continually measure the growth in this market sector and the share that WRSX is providing towards. If there is a decreasing in the share, means that WRSX should take a bigger move to further capture a bigger slice of the pie.

Board Meeting 2

Agenda Item One: Reducing Client Churn

The client churn situation in New York office is more serious than other offices, as WRSX's clients are unsatisfied with their current service deliveries. This adds to the cost as new clients need to be sought out and the savings from long-term collaboration efficiency will be lost. WRSX should no longer depend on its excellent creative quality to attract and retain clients as other aspects i.e. understanding of client's business and experienced personnel, adds to clients' satisfaction of service standards.

Option B should be chosen as Accounts Management teams have a better understanding on the satisfaction of the clients, whether are they coming to the end of the client-agency relationship tenure. The Top 10 clients shouldn't be limited to only big spenders as mention in Option A as most clients are long-standing business partner and the degree of collaboration makes client churn very unlikely, but rather look at those clients that are at risk.

The Client Relationship Managers (CRM) has an important role if WRSX is to come down hard on tackling this client churn issue. Their role includes raising awareness of delivering excellent client service, meaning to answer queries on understanding of clients businesses and providing inputs and advice to drive operating units' growth. Best practices are also shared across office and the group. Therefore Option C should be forgone.

This is somewhat an unrelated diversification strategy, where WRSX will create this new CRM post to counter-check the service standards that it is delivering and share across board best practices. Together with the inputs from Accounts Management team, WRSX can provide satisfactory service and at the end of the day manage a good client relationship. As the market is in a mature stage, there should be too much investment but some cost should be involved however the benefit from this relative significant. If WRSX does not handle this client churn issue quickly, many of its clients will switch over to the competitors.

Feedback Mechanism

One simple feedback mechanism can be checking with current clients on whether the issues identified by those previous terminated their relationship with WRSX are still present not. Better partner relationship between clients and agency can also bring about cost savings and greater efficiency in the operations.

Agenda Item Four: Knowledge Sharing and Communication Coordination

The aim of knowledge sharing and communication coordination is to meet the dynamic needs of clients. WRSX corporate need to better manage its communication and knowledge control stay competitive in the industry, with the changing needs of the industry environment. Clients need more rounded services and many clients businesses are targeting the international market. WRSX must better manage and control communication and knowledge sharing among agencies to meet these needs.

Qorvic, one of the world's largest drinks companies, has invited WRSX they are also looking for evidence that we can co-ordinate this information between our companies and offices. WRSX will invest in a new knowledge-sharing and information co-ordinating IT system across WRSX companies - which can be accessed as on-line portal by our clients.

This will fit into WRSX growth strategy or concentration by allowing agencies to expand out into relating industry. WRSX can share its knowledge across its agencies where agencies can provide wider ranges of services using knowledge bought over from another agency.

Action Option C is preferred over A or B as WRSX core competencies and strategic is not on developing IT and communication systems. WRSX can add value by providing financial support to IT business unit; the value is unable to translate into a success factor of the business unit with WRSX lack of talent in this field. WRSX will outsource the business unit to a better corporate parent who has the right expertise in IT where values can be translated into success factor. Although Action Option C is more costly than the other options, lower risk is involved; WRSX can tap on the low interest rate with the macro environment trend and focus on developing its strategic business unit. Action Option C will be the most feasible way to win the Qorvic contract as the implementation is almost instant.

Agenda Item Five: Corporate Governance Issues

WRSX goal is to tighten up its corporate governance where mangers are held accountable of their own behaviour and to govern behaviour of the company. A good reputation of corporate governance can help WRSX remain competitive in the advertising and marketing industry; ability to attract and retain clients.

WRSX has an active problem in its corporate governance. WRSX and Buenos Aires joint venture supporting PR services for footballers and football clubs in Latin America has gotten into a scandal of allegations. WRSX reputation is greatly affected. A highly valuable contract between the European clubs association and WRSX is up for renewal, the allegation in South America will affect the decision of the European clubs association renewal decision. Actions need to be taken by WRSX to keep the contract. Tightening up WRSX corporate governance issue will be a challenge as WRSX is a growing business with many acquisitions and joint ventures.

In order to solve the problem, WRSX will apply Action Option C, implementing the 10 Point Code of Business Conduct, sack the two local directors implicating in the scandal, put a PR campaign into immediate effect publicising those decisions and reviewing WRSX corporate governance model. This will be able to ease the specific situation in South America when WRSX has made WRSX corporate governance transparent, sending a message to all that such undesirable behaviour will not be tolerate by WRSX corporate office. Reviewing of corporate governance model will critically address the long term initiatives about WRSX shareholder model of governance. In comparison to the other Action Options, although Action Option C incurred a higher cost, it is the only solution to meet the long term and short them goals of WRSX issue of corporate governance.

Agenda Item Six: Role of Parent Company, Strategy & Branding

WRSX wants to achieve the alignment of corporate and SBU strategies, WRSX will be a powerful brand in its own right that can capitalise on in terms of its global strategy. WRSX wants its brand to be preferred by providing its clients multinational and national advertising and marketing services. Through acquisitions and joint ventures, WRSX has gain in size in providing various advertising and marketing services. To maximise the values added by WRSX corporate office translate into success factors for its strategic business units, all business units owned by WRSX corporate must be recognized under the name of WRSX by its stakeholders.

Action Option B will be preferred over other action options. To be an effective corporate parent, WRSX need to align its business units with corporate office. With the re-branding of all agencies and subsidiary companies, WRSX will be able to create synergies; stakeholder such as employees will be able to identify a clear direction to follow. WRSX will be seen as a large and strong buyer and seller in producing and purchasing. Other Action Options are not chosen as the Action Option will be more cost effective in the long run, incurring a one time off million dollar investment which will bring long term advantage to the WRSX as a whole.

Board Meeting 3

Agenda Item One: Outsourcing Central Services

WRSX Human Resources office is a supporting business unit, outsourcing it is an attractive option for WRSX bonus of it can WRSX cost, which WRSX has performing poorly in terms of cost management. The main concern for outsourcing the Human Resources office is if WRSX will be able to recruit talents who can fit into WRSX organization culture.

Action Option B is selected as it will be able to meet the two objectives of outsourcing its central services, cutting cost on sustaining on business units that corporate is unable to relate the value to critical success factor and at the same time not compromising on WRSX key capabilities of a good team of talents. Outsourcing Human Resource department will too ensure of better translating of values to success factor for the business unit having it under a corporate parent with expertise in managing central services. This decision is the most rational among all other choices.

Agenda Item Four: A Question of Vertical Integration, Strategy and Ethics

Having understood the work that SpectraGraphix Repro can provide, acquiring it will bring about more control and this help adds to the complete service package WRSX is offering. Retail clients who are the main stakeholders for the repro companies, changes their requirement very frequently thus having greater control over a repro company can help satisfy them more quickly and ultimately reduce client churn.

Option C should be chosen as there should still be a backward integration of the repro company however it shouldn't be merge into part of WRSX scope of operation. SpectraGraphix Repro should be allowed to run its own operation, only providing relevant service to WRSX. Option A and B shouldn't be chosen as changing the repro company to WRSX Graphics may be seen as a weakness in acquisition management as WRSX have already made some unsounds acquisition recently.

There will be cost savings and increase earning gradually as this company is already performing very well, and help to value-add the service that WRSX requires. As there isn't a merger, there wouldn't be lock-in technologies however the investment upfront could be quite a huge amount. If WRSX doesn't make this move, competitors may snapped up this supplier and WRSX will lose out in creating a supply barrier in the industry.

Feedback Mechanism

Measure the earnings over the period after the acquisition; see if there has been an increase earnings over the efficiency gained from the acquisition.

Agenda Item Five: Ways of doing things in the past have stopped working

The main fear of WRSX is to be taken over by larger agency which would be able to drive out economics of scale and specialism. In order to prevent this, WRSX need to move away from strategic drift. Staying in strategic drift will caused WRSX to lose its market share not being able to meet the needs of clients and other stakeholders thus affecting WRSX financial performances.

Action Option B is selected as moving away from strategic drift is a corporate issue and not just a problem of individual business unit. WRSX corporate office needs to gather all it global managers to hold meeting as they are more familiar to their field of expertise. Moving away from strategic drift will be a corporate goal but implementation will have to depend on the individual business unit top managers who will be able to identify key issues to strategic drift. Allowing the corporate office to hold the meeting where there are 50 key opinion leaders and decisions to be taken democratically will solve the issue of strategic drift more critically reducing the chances of biases opinion as compared to allowing individual managers to decide the changes where it may ended up into a talk trap.

Agenda Item Six: Bringing down print costs through Group buying power

WRSX can enjoy significant savings if print services are centralised and these savings could be passed on to the clients, giving WRSX an edge over its competitors. These savings are generated from the lower labour and paper cost in these countries. In addition, technology and the rise of Internet have reshaped the industry, taking location out of the considerations for a print company.

Option C is preferred over the others because there is maximum cost savings in this option. Moreover, carbon offsets will be purchase, appeasing some stakeholders in the areas of CSR. Comparatively, option A suggested that outsourcing its printing works which will be managed by one main supplier however this can lead to longer turnaround time as more parties are involved. Option B suggested having regional printers which is equally good as the chosen Option C however, carbon offsets is not considered. There is also optimisation in Option C as only prints greater than 500,000 are sent to the centralised printers, small amounts will still be accounted by the older suppliers.

This is a growth strategy, a strategic alliance with this one centralised printer. Group buying power can be achieved as all printings will be done through this centralised unit and cost saving will increase significantly. Nonetheless, current suppliers may be unhappy and unions may make a fuss with this move. However, not taking such move will lead to competitors gaining competitive advantage over WRSX in this area.

WRSX's Key Stakeholders

Table 1.1 has identified WRSX's key stakeholders who have a direct relationship with the organization.

Table 1.1

WRSX's Key Stakeholders

External

Clients

Government

Suppliers

Special Interest Group

Creditors

Debtors

General Public

(Clients' Audiences)

Unions

(Refer to Page *** CSF for stakeholders' expectations, importance of WRSX to stakeholders and stakeholders' attitudes and values)

External Environment Analysis

PESTEL Framework (relook through the data to sieve out)

WRSX Group is a global company, having offices in four countries currently and business dealings with clients all around the world. Environment factors will definitely have effects on the current company's operations and affects future decisions. Moreover, this industry is undergoing a period of change with shifts in the different elements. The following describes the different drivers in the environment that will impact WRSX categorised into the PESTEL framework.

Political and Legal

With more stringent law in Western Europe and US to protect employees, many WRSX clients had moved manufacturing and service centres out of their home country. However a point to note, close to 60% of global advertising revenues still comes from these two areas. This is a critical issue that WRSX has to tackle strategically as it is a big revenue market.

With the changing world economy and prediction of an economy downturn in the US, their government will be issuing subsidies to multi-national companies (MNCs) including WRSX to assist clients to market their products and services internationally and up-skill the workforce.

Economic

The forecasted world economy is bleak, with the instability of economic growth rates, interest rates, currency exchange rates. There is a growing urgency for WRSX to better satisfy its existing clients as they are readily cutting advertising and communication cost in view of the bleak future. Moreover, with the issue of manufacturing overcapacity, the need for differentiation in the advertising and marketing communications services is essential to stand out among the competitors.

Socio-cultural

There are changing demographics and values of consumers that affect the branding strategies used advertising and marketing communications. One example is the aging populations are more willing to spend as they have access to their retirement fund thus a higher buying power. This pulls some focus from new-age digital media back to traditional advertising tool as these consumers are still attracted to conventional advertisement

With the population in Asia and Africa getting more affluence, this simply meant more opportunities for WRSX's and its clients in the industry. Similarly in the Muslims countries, many multi-national advertising and marketing communication groups has yet to fully exploit the potential that lies in these markets as their lack the understanding of the culture there.

Advertising and marketing not only plays a part in promoting sales in companies, it offers opportunity to be used as a channel to attract and recruit talents for WRSX clients, in this 21st century where talents are scarce. WRSX clients too require the service to communicate internally, allowing internal alignment within the organization.

Technological

With the growing reliance on technology and new digital media, it has changed ways how advertisements can reach its targeted markets and open up this industry to more forces at play. Internet being the more popular medium nowadays to get information is a blue ocean for WRSX to invest in. Mobile phones are another medium gaining popularity as an avenue for advertising, where currently there are not many players in the industry.

China has the prospects of an attractive market for any companies looking to expand globally with its abundance of opportunities in the country. WRSX has to follow its client's footstep and consider China as an option and fully understand the different forces in the China market to be a valued and sought after advertising and marketing communication company.

Environmental

Advertising are being used to influence people's lifestyle by the government, as well as internally by companies to influence certain behavior through its corporate social responsibilities (CSR)

WRSX's Key Drivers

The drivers that WRSX is to be especially concerned with are:

Political / Legal

Economic

Changing government funding and

policies for all industries

National Growth rates and interest rates

Socio-Culture

Technological

Rise in elderly consumers

A huge market for digital media in China

Drop in teen-age consumers

Technology as the next medium for advertising

Increase in wealth of Asians and Africans

Mobile phones as a tool for advertising

Strategic gap in Muslims industry

Increase in advertising for talents seeking

and spreading campaigns

Environmental

Rise in environmental friendly awareness

Looking at the list of drivers in the external environment, we have identified the following key drivers as the most significant: (NEED TO EXPLAIN WHY THESE, link back to the strategies)

Rise in environmental-friendly awareness

Technology as the next medium for advertising

National Growth rates and interest rates

Porter's 5 Forces Framework (WRSX)

Using the Porter's 5 Forces Framework to look at the competitors' behaviours, we can assess the degree of actions required to tackle these immediate key drivers in the external environment.

Threat for potential entrants

Rise in environmental-friendly awareness

There is no legislation or government action on entry to the advertising and marketing industry. With the rise of environmental friendliness awareness, WRSX has the capabilities of differentiating its services to provide environmental friendly advertising and marketing services through its well-endowed capabilities of creativity; providing advertising and marketing services that clients valued. The differentiation reduces the threat of entry because it increases the loyalty of WRSX clients.

Technology as the next medium for advertising

Base on the scale, WRSX has the bargaining power on media buying and planning, possesses well established infrastructure and equipment, pools of more talents to tap on for creative advertising ideas.

To enter international markets such as China, WRSX need the capability to equip with itself with the latest technology following the popularity of internet and rise in demand in digital media advertising and marketing services. Consider as a medium scale firm in the industry, WRSX has the scale to purchase and developed the technology relying on its well linked network of global clients, good reputation in terms of creativity and experiences in assisting to bring its cost in line with the industry average.

In recent years some of WRSX suppliers, like Facebook or Google are providing a whole range of services from strategy, marketing, design to technology services on their own channel directly to WRSX potential clients. These digital agencies tap on the trend of popularity of internet and bypassed the traditional agencies like WRSX and sell the service directly to clients.

National Growth rates and interest rates

Retaliation from the industry is expected if the economy in the country continues to go downslope. Medium to large size MNCs like WRSX has the capabilities to start a price war or marketing blitz to retain and attract clients, incurring high cost to the entrants which already have a disadvantage base on experience.

Threat of Substitutes

Rise in environmental-friendly awareness

Technology as the next medium for advertising

National Growth rates and interest rates

There are no threats of substitutes as no other industry is competing with advertising and marketing industry. Digital agencies are not consider as suppliers or competitors as they provide ranges of advertising and marketing services which are competing with SBUs of WRSX. They play a role as supplies as WRSX purchases to publish WRSX's clients advertisement on their channels.

The Power of Buyers

Rise in environmental-friendly awareness

Technology as the next medium for advertising

National Growth rates and interest rates

The concentration of the buyers of the industry will be largely depending on the national growth rate of the economy. With the expectation of economy downturn, there are many medium to large companies in the market being the potential clients of WRSX. These large numbers of potential clients want to differentiate their products and services by engaging WRSX advertising and marketing services.

Advertising and marketing industry generally has high switching cost for buyers. WRSX has contracts with clients and has generally few competitors similar to larger scale competitor in the industry. The bad economy in the marco-environment caused switching cost to be even higher as services provided in the industry are strongly differentiated, in times of bad economy, clients especially requires a reputable firm like WRSX than a random advertising and marketing firm to assist them to success.

Increase in the popularity of the internet poses buyer competition threat to WRSX. WRSX's clients might find it more economical to acquire small advertising firms and owned them as their advertising and marketing SBU supporting their own advertising and marketing activities on the internet. WRSX's clients will be able to cut cost by advertising on their own company website.

The Power of Suppliers

Rise in environmental-friendly awareness

Technology as the next medium for advertising

National Growth rates and interest rates

Currently in the industry there are few produces supplying environmental friendly advertising resources. (e.g. bio-degradable posters) This situation might potentially weaken WRSX negotiating power when it comes to purchasing of environmental friendly advertising resources.

High switching cost are not considered in WRSX strategy as WRSX services are on project basis, resources required for the services are mostly base on self-capability of fixed resources (e.g. software). For ad-hoc projects when WRSX require external resources, WRSX will purchase on a flexible basis as advertising and marketing services are customize services.

Supplier threat is present with the increase popularity of the internet when digital media suppliers capture some WRSX's clients and potential clients. (Details had been discussed earlier with the mention of access to supply or distribution channels.)

Competitive Rivalry

Rise in environmental-friendly awareness

Technology as the next medium for advertising

National Growth rates and interest rates

Agencies are in all sizes, specializing and providing advertising and marketing services to different industries. They are too diverse specializing in their own market segments plus with the industry highlight of the trend of companies sourcing to differentiate their products and services through advertising and marketing due to manufacturing overcapacity and economic growth rate, there will be an overloading of clients for any agencies to gain dominance over the industry. With the support of this trend, WRSX can be having a bright outlook to the industry growth and be intimidated by on the factor competitor balance.

The factors of high fixed cost and high exit barriers can be overlooked as the advertising and marketing industry is not hungry for consumers with the spill over effect of the unpromising economic growth rate.

Advertising and marketing services are highly differentiated services; low differentiation factor is not for concern for the industry.

Strategic Groups & Market Segments

Considering WRSX's scope of activities and resource commitment, WRSX strategic groups are medium to large scale advertising and marketing services consumers. We will primarily focus our market segment on medium to large multinational corporations from automotive and transport, health and pharmaceuticals, telecoms, personal care, beauty and fragrances, public sector and charities industries and secondarily on government agencies and medium to large companies from other industries that strategize branding as a key factor to success by differentiating their products and services or spreading a message to their target audiences around the world through various marketing tools.

Internal Environment Analysis

Ming Kai Inputs Q10 to Q14 (Maybe cut the opportunities part from CSF for input SWOT?)

Like any company striving in this highly competitive market, WRSX possess a few critical success factors which are further attested by the results from the ADCOM Benchmark Survey. WRSX has a good track record of producing creativity and innovative works for its clients and it has a very capable market research capability, reviewing the market segments thoroughly, accurately targeting the end customers of the advertisements.

These are two factors that many client companies valued as it can simply underline the effectiveness of any advertising company. WRSX's client companies want innovation and creativity in the various marketing tools as only through such differentiation can the client companies outshines its competition as well as for WRSX.

On the same note with regards to manufacturing overcapacity, the low-inflationary environment, limited pricing power, and more concentrated retail distribution among the client companies businesses only adds to the already competitive state. So the only way to stand out among the competition is nonetheless with differentiation.

WRSX's Critical Success Factors

To fulfill WRSX's strategic purpose, WRSX has to manage the best way to meet all stakeholders' expectations applying the key drivers identified from the environment into the WRSX strategy. WRSX's external stakeholders are differentiated into three different types, namely economic stakeholders, socio stakeholders and technological stakeholders.

WRSX's Key Stakeholders

Economic

Socio

Technological

Investors

Clients

Clients

Debtors

Government

General Public

Creditors

Suppliers

 

 

Special Interest Groups

 

 

General Public

 

WRSX critical success factors are WRSX's good reputation of creativity and innovation and WRSX's business unit specializations. WRSX's clients want and valued most on innovative and creative advertising and marketing services which are able to keep up with the marco-environment trend. WRSX must outperform the competition as they are what WRSX market segments valued most.

Revealing the opportunities, WRSX will take advantage of the trend to attract and retain clients benefited from the US government subsidies in-lieu of prediction of economy downturn, providing them advertising and marketing services and use the subsidies received from government to further research and improve on environmental friendly advertising and marketing capabilities.

With the low interest rates in the western hemisphere, WRSX can seize the opportunity from companies who are more willing take up loans to develop their business, marketing and advertising assist companies to increase market share, contributing to business development.

With the highlight of the idea of innovation and branding as the only one way to increase revenue due to a low-inflationary environment, limited pricing power, new brands arising from merging, more specified market and more concentrated retail distribution. Advertising and marketing industry seems much more at an advantage.

Opportunities open up when mobile phones has become an avenue for advertising, a blue ocean market where not many players in the industry has target the market. Creativity of advertising and marketing agencies is sourced to promote bands alongside with Corporate Social Responsibilities (CSR), with the rise of CSR.

WRSX's Key Stakeholders Power & Interest

Level of interest

Low

High

Low

 

 

Suppliers

Special Interest Groups

Debtors

 

 

(Minimal effort)

(Keep informed)

 

 

Power

 

 

 

General Public

Government

Management

Creditors

Board of Directors

Employees

(Keep Satisfied)

Investors

 

Clients

High

 

(Key Players )

Acceptability of strategies to WRSX's key players is of major importance, they are the direct influence of WRSX's sales of services and revenues. They hold the highest sources control of power and should prioritize. Key blockers and facilitators of WRSX strategy are found within the group of key players. To achieve desirable strategy outcome, WRSX need to co-op key players on board to work towards the best interest of WRSX.

Government and Creditors need to be kept satisfied; they show little interest in WRSX unless there share prices have sharp dip or the advertising and marketing industry is facing a crisis as a whole.

Special interest groups need to be kept informed on what WRSX is doing as they might be capable of influencing the other powerful stakeholders.

Corporate Governance

WRSX does not have a group wide-stated code of corporate governance. Majority of boards are executive directors, with a minority of 3 out of 8 non-executive directors. Corporate scandal, allegations of bribes to win business which have come from Paris Office has no charges made to date, shows weak corporate governance and leadership in WRSX. Relationship between shareholders and non-executive boards of business are not optimal with the shift of reappointment of new non-executive directors. WRSX's corporate governance has been put down critically following the corruption scandal.

WRSX need to tighten up corporate governance to operate at the best interest of the company and not individual stakeholder interest at the expense of other stakeholders.

WRSX's Symptoms of Strategic Drift

WRSX has showed symptoms of strategic drift when WRSX share price has been underperforming in the advertising sector for the past 18 months. WRSX has failed to react to China market where there is a huge market in for digital media.

History Influences on WRSX's Strategic Position

Through the merger that form the current WRSX, the independence of the various units granted with autonomy helps to contribute to being a creative, innovative, customer-focused company strategically.

Lloyd Silberstein practice of not being able to keep top staff had cause WRSX to lose many talents, weaken WRSX innovative and creative capabilities.

The Paris agency has a reputation for producing creative award-winning work with the experience of Raphael Roux at the helm of the business in Paris. This could serve as a story that members in the company can share internally to interns, as well as to a message to its suppliers and competitors, giving WRSX a competitive edge and employees being motivated to do much to the expectations.

The reputation WRSX has bulked up from the merge companies that it was made from acts as a symbol where competitors could infer the financial and non-financial capabilities of WRSX.