Good Essay About Strategic Management

Introduction

WRSX Group is the company which has been considered for the same aspect. According to the scenario, there are six different board meetings have been arranged in which the strategic functionality of the company have been discussed. A thorough analysis is required in which the encryption of these six meetings is required in a comprehensive manner.
WRSG Group is an advertising Company which was originally founded by Juliette Waldron from a big merger of WWMV in the London area. The merger took place between three companies which were WWMV, RTB and SILBERSTEIN & LORD of the United States. Hence, it is a combination of London, Paris and the United States. The company is known as a keen creator, innovator and customer driven and oriented organisation that differentiate it from the other firms operating in the same line of business with the help of specialized and powerful business based units (Jones and Hill, 2010).
The objective of the company is very effective and broad, as they want to become a specialist in terms of providing and improving the competition in the business based processing which will help out the company to enhance their core productivity. Currently, the company has its operations in three different locations, however they are looking forward to tap more and more markets in the near future for their future goal optimization and implementation. It is very important for the business to diversify the things in a perfect manner to increase their core recognition in the Forex Market. There are certain tools and techniques that can be used by the company specifically to move on with a robust pace and with a positive frame of mind. Strategic Positioning is very important for the company to maintain their position in the market, and flourish their earnings effectively and positively in the international markets as well.

Question-1

Imagine you are presenting to WRSX investors. Referring to data from the performance log and your notes on the decisions that were made, assess a specific decision (or group of related decisions) which explains the performance outcome. Include a discussion of the underpinning theoretical frameworks you either used, or could have used, to assist your decision making. Did the theory support the decision, or mislead you, and why? – 50 Marks
In the first board meeting an income statement is presented in which the share price of the company was set on a level of £2.23. The best thing associated with the board meeting in this particular scenario is very clear and it is found that direct cost is one of the major elements that work exceptionally well for the company in terms of managing their core needs in the market. The Gross Profit Margin (GPM) which analyzes the cost efficiency stance of a company decided in the Board Meeting for 1st and 2nd period of the company is 94.94% each, and it actually went on a level of 95% in the real term which is showing that the meetings result was very near to the actualization. However, there is a big difference found in the end year’s profit of the company. According to the Board meeting, the net income margin (the bottom line profit) in both of the periods will be nearly to a level of 8.9%, while in the actual term it was nearly 9.5%. In the second board meeting, the share prices have been transformed on a level of £2.49, which means that the price of the share will increase in a definite time period. Profit before Interest and Taxes (PBIT) which was nearly 16.5% in the starting period, moved to a level of 14.5% in the first and 2nd period. From the non financial indicators in the third, fourth and fifth board meeting, it is found that there are two aspects for which the company has to take good care which are compliance with the Corporate Social Responsibility (CSR). The average Score of both of these scenarios is comparatively lower than that of the industry Average. It is also essential for the management to organized such platforms for their employees from which the company can comply with the standards in a more productive and powerful manner. With the help of these strategies, the company may attract high number of shareholders within their operations which will collectively bring economic and strategic well being for them in the future.

Question-2

Consider your original analysis of the strategic position and strategic choices. To what extent did your assessment of the strategic position and strategic choices change or evolve over the three year period? Did key changes occur, or new information emerges, that changed your original summary and did this lead to a change in strategy? – 25 Marks
The second question asks about the strategic positioning of the company, and its changes that take place with the passage of time. Strategic choice and strategic positioning are important for the company, and it can be found with the help of both financial and non financial indicators. As per the Appendix B, it is clear that structure of the industry is powerful and effective, and count among four largest advertising companies of the US and European region. The strategic position of the company highlighted the major economical problem of volatile exchange rate and its effects over the company that many dismantle them from their core workings.
The diagram relates to ANSOFF Matrix which is showing that the company should move towards diversification of its products. From the analysis, it is found that WRSX Group is not having severe problems within their strategic functions and operations. The level and extent of information has not been changed in a great deal in neither in the 1st nor in the last Board Meeting. It is seen from all the board meetings that the management of the company is over estimating the things for the company to comply with their starting position. Management of Growth is the first indicator which was actually pointed out on a level of 43.5%, while it was originally estimated to a level of 53% by the board management. The leadership capability of the Group is the only information that change in almost every board meeting or with a given time scenario. It was also over estimated by the board members in the board meeting; however it was nearly to a level of 38.5% to 39% in the actualization.
One of the major things that is very powerful for WRSX Group that found from their strategic capabilities is their big and great portfolio comprises of number of companies like telecom, personal care, beauty, fragrance and others that keep the level of extravaganzas of the company on a higher level.
Price to Earnings (P/E) is one of the most important ratios that associated with the investment stance of a company. This ratio has the tendency and ability to manage the level of their investors in a perfect manner. High P/E is an indemnity that the company is powerful in terms of maximizing the return of their investors, and the shareholders are expecting high return from their power. According to the board meeting and the information revealed in the meetings, the P/E of the company will be nearly to a level of 16.4%, however it was originally lies on the level of 15%. This particular information is in the relation with the well being of the company. From this particular aspect, it is clear that the strategic position of the company is very effective and sound; however there are three different functions on which the company has to work very hard. The group has to win the heart of their shareholders in order to bring betterment within their functions and operations to maintain their significant position in the market in the industry with a positive mindset and power. The board meeting regarding the P/E and non financial indicators remains somewhat constant in almost every board meeting particularly.
According to Appendix-C of Strategic Position, it is found that the corporate strategy underlies with the attracting of global clients rather than focusing over the domestic client firms, which seem to be more effective for them in the future. Attracting the customers and have their confidence is the most effective business strategy for WRSX Group. The strategic positioning analysis of the company is also showing that advertising is their core expertise, and they are using it tremendously well in their internationalization strategy to become more competitive and powerful in the marketplace.
Conclusion

References

Hill, C. and Jones, G. (2004). Cases in strategic management. Boston: Houghton Mifflin Co.
Hitt, M., Ireland, R. and Hoskisson, R. (1999). Strategic management. Cincinnati: South-Western College Pub.
Hitt, M., Ireland, R. and Hoskisson, R. (2007). Management of strategy. Australia: Thomson/South-Western.
Jones, G. and Hill, C. (2010). Theory of strategic management. [Mason, Ohio]: South-Western Cengage Learning.
Švob-Đokić, N. (2005). The emerging creative industries in southeastern Europe. Zagreb: Institute for International Relations.
Appendix A: Summary Performance Log
Appendix-B: Phase One: Strategic Position
Phase One: Strategic Position
The Environment (Myrin)
Currently the industry is worth over £300 billion worldwide with two-thirds of the market controlled or influenced by the US. 4% growth is expected this year, the same as last year. Due to emerging markets, Asia-pacific countries have the greatest growth potential. Within the next 10 years, digital media has the biggest growth potential. The industry is made up of agencies of all sizes from freelancers through to multi-agency conglomerates such as the big four global advertising holding companies; Omnicom Group, WPP Group, Publicis and Interpublic Group of Companies. But either Google or Microsoft are expected to become the largest advertising agency in the future. The top 100 advertisers account for nearly 50% of the advertising economy.
The risks associated with the effects of global, regional and national economic conditions such as economic growth rates, interest rates and currency exchange rates can have a detrimental effect on the industry. This makes the industry less predictable because when a client is underperforming they usually cut their marketing budget first. Many are predicting a severe downturn in the US economy but the revenue decrease should be offset by the revenue growth in Asia-Pacific countries.
The industry is at the risk of political changes in the regulatory and legal environment for advertising and marketing communications, especially within Asia-Pacific countries. For example internet based market research is seen as a major innovation. This has led to the industry being susceptible to litigation due to data protection; which has led to groups introducing strong regulatory policies on the use of personal data.
Technology presents the advertisers with enormous opportunity but companies are switching marketing budgets from traditional media such as TV to digital media. Digital media is seen to be highly productive. The role of mobile phones is changing so rapidly that it is hard to keep up with developments. Mobile phones can be a way of targeting consumers in emerging markets
On demand content and commercial communications and the expansion of digital channels will only increase in the coming years which will create a rise in more channels that will cater to specific audiences
Strategic Capabilities (ashton)
WRSX have a number of strengths and weaknesses. Currently, the agency is classified as a medium sized agency despite their wide range of activities. WRSX’s client base is companies that operate in the following market segments: auto automotive and transport, health and pharmaceuticals, telecoms, personal care, beauty and fragrances, public sector and charities industries. The threshold of WRSX’s success is their strong reputation as a leading advertising agency winning various awards.
In addition to this, WRSX have expanded beyond advertising with the acquisition of business units (SBU’s) with expertise in the following service sectors: media buying, public relations, research and insight, direct marketing, branding, film production, sports marketing. This method of related diversification definitely gives WRSX a competitive advantage over competitors as the more services WRSX offer, the more likely WRSX are to attract new clients and attract more business from existing clients. The focus now should be building a strong reputation in these new areas.
Leadership seems to be a key issue for the WRSX group. Not having a group-wide stated code of corporate governance has led to the group performing well below the industry average in terms of its strategic leadership capability. This will have a negative influence on future projects and could cause negative synergies. As WRSX is been built primarily from mergers and acquisitions, it seems as though the SBU’s and each office continue to operate as though they are still individual companies. Even revenue and costs are reported differently throughout the group. Having a more centralised chain of command would put a stop to this and possibly promote synergy throughout the business.
Strategic Purpose (Usman)
As previously mentioned agency is medium sized company with aims of becoming a top 20 agency group. To achieve this aim, WRSX needs to create a global presences by being a diverse advertising and marketing agency offering clients a range of marketing related strategies which will help strengthen and differentiate the clients brand from competition.
WRSX has developed a reputation as a leading advertising agency in the industry, with expertise in a variety of services sectors. WRSX also have a variety of specialised business units. In order to achieve the agency’s mission, WRSX aim to increase of market share through the following options; by expanding WRSX’s market share in existing markets or expanding the range of the agency’s products and services or by expanding the agency’s operations geographically or by targeting new industry sectors or increasing portfolio. After analyse of current industry leaders, WRSX have similar capabilities and have the opportunity to grow WRSX’s currently portfolio to attract global clients. WRSX aims to be global company by becoming more active in growing consumer markets such as Asia Pacific.
Although WRSX is a financially secure agency, looking at the company’s Non-Financial Performance Measures, WRSX average is 42.2 whereas the industry is 50 which indicates WRSX are not taking advantage of agency’s size and capabilities. Therefore currently the agency is not working towards achieving the agency’s mission of becoming a top 20 agency group.
Culture and Strategy
Currently the WRSX Group has the resources and competences to achieve market advantages. However the board lacks the ability to take control of the company structure to create dominance in areas the agency are failing in as WRSX have issued too much power to SBU’s. Presently WRSX main organisation structure compromise of three agencies, with offices located in opportunistic areas such as Paris, New York, London and Singapore. The company gains market advantage through the acquisition of independent business units controlled by the head office in relative areas. WRSX currently is a federation of agencies however due to the lack of unity within the group, WRSX face difficulties in many different areas as each office act as independents. Acting as a single entity may bring success in the short run but will affect the company performance overall, which is currently taking place. Therefore by acting as a complete integrated entity WRSX will be able to exploit economies of scales to gain a better market advantage, therefore increasing WRSX’s competitiveness.
At present WRSX operates in a decentralised structure as individual business units can make their own decision and tailor requirements closer to the clients need. Additional to being decentralised, independent business units will be able to make faster changes and implement strategic decisions based on the external environment.
In the upcoming future WRSX would need to turn away from being decentralised and progress to have a centralised structure. This will help the company to implement common policies and stay away from wrong decision making which could create bad media such as the corruption scandal which cost the organisation dearly. Being centralised will help the organisation to have a direct strategic goal, which can be achieved by combining WRSX resources to create core competences for greater advantage. Centralised structures will allow WRSX to take control from the centre such as solving finance problems such as budgets therefor creating greater profit. Economic of scale will not be a problem anymore as WRSX buying power will increase. Being centralised will allow alignment across all levels of the organisation and improve strategic focus..
Appendix-C: Phase Two: Strategic Position
Corporate Strategy
WRSX Group has global ambitions to transition into a top 20 agency group. The agency’s current range of disciplines indicates WRSX have aspirations of globalisation therefore continuing to be a broad based provider of integrated solutions is a suitable strategic choice. When analysing WRSX’s top competitors such as Omnicom Group, WPP Group, Publicis, Interprublic Group of Companies and Haves, these competitors have a combination of different multidisciplinary integration programs. Therefore to compete, WRSX has to depict to the agency’s clients that the group has at least the same capabilities and expertise as WRSX competitors. To differentiate, WRSX should further develop digital solutions to attract the digital generation of clients.
WRSX currently have expertise in a variety of industries which has attracted global clients but should begin to target the manufacturing industry. Experts describe the manufacturing industry as experiencing over capacity. This has led to clients demanding stronger brands and greater differentiation which WRSX have expertise in through the agency’s creativity and innovative services. The manufacturing industry has seen many companies relocating to Asian Pacific countries. This has caused an emergence of larger consumer markets in Asia Pacific which has resulted in the growth of multinational companies from that geographic area therefore WRSX should seek geographic growth in this area in order to gain an global presence.
Business Strategy
Strategically WRSX will need to regain customer’s confidence before losing all clients due to poor performance in creativity and terrible press. Industry research shows the market is heading into a new direction of digital media thus slowly disregarding traditional methods of advertising as revenues decreases. WRSX has the resources and competences to join the fierce competition in the market place currently; however it lacks the ability to combine all resources and knowledge to take advantage of our scale and size.
WRSX will be more suited to address a broad rather than niche market place, as market research shows large multinational companies compete against competitors based on having a wide variety of creative teams, breadth and range of services to offer to clients plus exploiting economies of scale in area such as media buying and direct marketing. However putting all points mentioned together it shows WRSX can compete on the same grounds as large organizations as WRSX have the ability and resources to compete with industry leaders. On the other hand for this to be accomplished WRSX will need to take control of the whole company structure and act as a single entity to represent power. However if WRSX chooses to head into a niche market it would disrupt the company culture and structure.
WRSX compromises of three agencies, which takes control of four offices located in London, New York, Singapore and Paris. The head offices manage the individual business units which specialises in different area of advertising. However there is a huge gap between the board and individual business units as there is minimal communication between both parties as SBU’s work independently. The organisation lacks leadership capability. WRSX lacks the ability to attract and retain high quality personnel in key positions causing high disruption within the management structure and the board therefore causing inefficiencies within the organisation.
International Strategy
Advertisers with global markets for their products and services want to create global brands through the use of advertising campaigns. This puts WRSX in a brilliant position as it already operates in four countries despite not being seen as a global player amongst competition.
Future trends indicate the strong emergence of consumer brands in developing countries such as Latin America with a growth rate of 42% in the last quarter of last year, China with 35% growth and India with 19% compared to the US with 4% France, at 9% and the rest of Europe at 6%. In addition to this, Asian-based multinational companies are continually increasing. India has seen a rise of 45,000 multinationals and plans to increase by 50,000 more in the next two years. This illustrates the need for WRSX to become more active internationally.
The scope of Asia is undeniable in terms of population. China and India are estimated to have eight times as many inhabitants between them than America, the world’s leading country in the entire industry. Although only 150 - 200 million Chinese can afford the goods and services being sold to them, this is still over half of the population of America and as consumerism continues to escalate throughout the region, this figure will grow.
Another neglected market is the Muslim community who make up 1.5 billion people or a quarter of the world’s population currently. This figure is predicted to rise to 2.1 billion over the next few years. WRSX needs to gain knowledge of theses untapped markets in order to successfully penetrate and operate within them. The sooner the group becomes active these markets the better their position will be to take advantage of the growth potential. This will definitely aid in the goal of becoming a top 20 firm.
Mergers, acquisitions and alliances
WRSX should consider using all methods of grow to achieve the agency’s aim of becoming a top 20 agency group. The main method WRSX should seek to grow is organically through ironing out current issues which are affecting our performance and growth. First of all WRSX needs to define the agency’s global ambitions and seek a direction in aiming to achieve the agency’s global ambitions. We currently struggle to originally grow as a result of the following issues; WRSX lack creative directors and senior account managers which is affecting WRSX client attraction and retention. WRSX do not have good relationships with their suppliers. WRSX also fail to exploit the scale and size of the agency, WRSX has failed to create synergies between the three companies. Knowledge and expertise within the group is not shared. These factors have had a detrimental effect on the agency’s growth and need to be looked into.
The board is concerned about the governance standards of the agency due to the corruption scandal which occurred at the Paris office. This has led to WRSX being criticised for the lack of strategic leadership and the inability to manage change. WRSX should take an assessment of the agency’s capabilities and define how as an agency, WRSX can grow the agency’s capabilities into a top 20 agency group.
Digital media is highlighted as having the biggest growth potential within the next 10 years. Clients are being attracted to new digital agencies. As an agency, WRSX needs to depict to clients that the agency are able to use all forms of media effectively to help clients attract their target markets. WRSX has only had a tentative entry into the digital market but should take a stronger focus stance. Also WRSX should actively seek to enter emerging economies such as India, China and Brazil in order grow their global presence.
Corporate social responsibility is becoming increasing important. WRSX needs to improve the agency’s corporate social responsibility because as CSR becomes more and more important to the agency’s clients, WRSX’s poor sustainability may affect the agency’s ability to attract clients who place high emphasise on sustainability.
Currently WRSX struggle to add value to the agency’s clients and attract and retain talented staff. WRSX should aim to improve the lack of innovation in the agency’s HR policies in order to attract talent which can improve the value WRSX add to the group’s clients. Even though accounting management function is regularly assessed with no measurable improvement made, WRSX should reassess where the agency is falling short and where WRSX can add value and improve customer loyalty.
Regarding mergers, acquisitions and alliances, the board has expressed its concerns over the agencies past acquisitions. The board would prefer to seek alternative methods to entering alternative methods. This has resulted in WRSX focusing more on developing organically but acquisitions, mergers and alliances will be consider if they are viable and beneficial and if the agency is able to effectively able to manage the change within the organisation..