PacificLink Imedia: Becoming a Full-Service Interactive Agency - Case Study Example

PacificLink iMedia: Becoming a Full Service Interactive Agency Company background PacificLink iMedia was founded in 1998 by Alvin Lam, Alex Lo, and Andy Hui. The company was established to provide high quality up-to-date technology for clients seeking Internet marketing services in Hong Kong. The company positioned itself for success by capitalizing on the weaknesses that many small firms in the web design and Internet industry had. Some of the products that the organization initially offered included: e-commerce solutions, business web hosting, domain registration, and Flash multimedia. Over the years, the organization has grown in size and targets both small and big companies with its products. Some of the main services that the company currently offers include: Web-based Applications, e-marketing solution, e-commerce solutions, hosting and facility management, online and offline advertising, interactive web development, and web-based applications. Headquartered in Hong Kong, PacificLink iMedia has a presence in a number of cities in mainland China including Guangzhou, Shanhai, and Shenzhen. The company has clients across different economic sectors including banking and finance; public; education; transportation and utility, real estate and hospitality. The organization has several achievements to its name. It has over 30 awards from different international and domestic institutions. Some of the awards in this respect include: Best of the Best Awards (2000) from MEDIA; Platinum Award of e-Tailing (2000) from Hong Kong e-Award; and three awards from the Web Award Competition in the U.S.A. PacificLink iMedia has grown significantly ever since its establishment in 2008. It has waded the murky waters that characterize the global business environment to become a big name in the international arena serving multinational companies such as IBM, Nokia, PCCW and Ocean Park, LG, Citibank, and Sony. It has survived difficult times by adopting different strategies as the situation demanded. Between 1999 and 2000, NetAlone acquired 51% of the company’s equity. A few years later, Pacific Link management bought back NetAlone’s stake in the company. The company boasts of having 80% stake in An Agency & Associates Ltd.; 50.1% stake in An Agency & Associates Ltd.; and 50% stake in DMA Solutions Ltd. The acquisitions have seen Pacific Link enjoy greater geographical presence in China, have better capacity to serve small and medium sized organizations, and bolster its capacity to offer more and better products and services to clients while at the same time saving on costs. Given the stakes Pacific Link has in different organizations and its bias toward multiple brands, its The organization has had its share of difficult times in the market. Its performance has on occasion been affected by the SARS crisis, dot.com bubble, high employee turnover, and the challenge of getting good employees. Names of people and positions As previously stated, Pacific link was founded by three partners; Alvin Lam, Alex Lo, and Andy Hui. While Lam and Hui were graduates from the Hong Kong University of Science and Technology (HKUST), Lo was a graduate from the U.K. and held a degree in graphic communications. Years after the establishment of the organization, Hui, an expert in finance, left the company. Lam, an expert in web design, has remained at the helm of the organization throughout its existence. The company has grown in terms of the number of workers from three to over 50. At different points in time, the company had different numbers of employees depending on the business environment, effects of acquisitions, and potential for growth. Under normal circumstances, the organization has 15% of its staff working under IT for application development; 30% working under project management; and 60% under design. Typically, when an employee joins the organization, they undergo a three-month training period before starting their progression path from junior director to senior director, the organizational structure being flat. Case analysis In its pursuit for growth, PacificLink has several options to pursue; each with its set of pros and cons. The company can opt to expand geographically, issue an initial public offer (IPO), position itself as a target for acquisition, or reduce the number of employees that it has. While this is the case, the best option for PacificLink is expand geographically. Even though the organization has a relatively strong brand and has good potential as a target for acquisition, this option will not be as good for PacificLink as it would be for the acquiring company. The current managers of the company including Lam would not be in full control of the organization as the directors of the acquiring company will have a lot of control of it after its acquisition. Another disadvantage relating to being acquired is in respect of the complexity that would accompany the management of the new dispensation. On the other hand, the company would possibly enjoy more assets/funds by being acquired much as it would benefit from the knowledge base of the acquiring company. PacificLink appears to be a successful company which gives it potential for going the IPO way. The company seems to have been consistent in its growth trajectory over a period of several years, a factor that Mayr (2011) cites as being of great importance when considering whether or not to go for an IPO . According to Mayr, another factor that a company should consider before considering to go for an IPO relates to its assets. In this respect, Pacific Link would have good ground for considering an IPO if it had solid proprietary intellectual property to its name or tangible assets, all of which the company seems to have. While this is the case, the complexities involved in arranging for and actualizing an IPO in whichever country are often numerous and the costs associated with organizing the event quite astronomical. Furthermore, it is evident that regulations and requirements surrounding IPOs keep changing making it more and more difficult for growing organizations to meet the requirements thresholds. Yet another challenge for PacificLink in this consideration relates to it size; the company’s limited size and annual growth rate may not be sufficient to attract the trading volumes and interest that would be enough to sustain strong and consistent valuations (Solomon, 2008). Besides, IPOs in Hong Kong recently have not shown good results, which hints to the fact that the company’s IPO may not go well. PacificLink has achieved significant growth over the years. This growth is, to a great extent, the result of the efforts of the company’s employees or human resources. With a head count of over 50 individuals and with great prospects for growth, the company, without doubt, needs to maintain its human resource. This is especially the case if the company has to expand geographically and in terms of product offerings. In this respect, the company should not opt to retrench some of its staff. As previously noted, the best alternative for PacificLink at the moment is focus on expanding its product lines and geographical presence. Evidently, the presence of the company in mainland China can draw great rewards in terms of lower costs and associated high profits. This is because the company can benefit from economies of scale (Community Futures Stuart Nechako, 2014). Furthermore, by expanding geographically, the business gains the capacity to attract and retain good employees, work for major (big) organizations, and become a dominant force in the market niche. The company also may benefit from the knowledge, technology, and human resources that the company to be acquired has. One good example of a company that started small and made it big by expanding geographically is Express Employment Professionals (Dahl, 2010). Express Employment Professionals achieved its level of success and geographical expansion by adopting the franchising model having been established in Oklahoma City. On the other hand, one main disadvantage of expanding geographically is that the company may need to invest heavily on assets and in setting up base for its operations. To overcome this challenge, the company may decide to acquire stake in already existing companies and use that stake to leverage itself to greater heights. This way, the company will not have to spend much on assets. Furthermore, the managers may lose personal control of the organization which may lead to the production of lower quality products, branding mistakes, and subsequently customer dissatisfaction (Community Futures Stuart Nechako, 2014; My Own Business, 2014). In a new environment, the business may also face aggressive competitors and unfamiliar business and legal environments. To overcome these challenges, management need to get conversant with the legal and business environment of the places they want to expand to and put measures dedicated to ensuring that they maintain a high level of control on the companies they have stakes in such as by acquiring a high percentage of stake in them. Lam’s strategy of getting the company to become a full service interactive agency is a move in the right direction. This is especially the case considering that many clients tend to seek one-stop shops when seeking solutions to their needs. This strategy is also well thought out considering that it is geared toward seeing the company grow faster by targeting both SMEs and multinational companies that pay better in a wider area. By presenting itself as a full service interactive agency, the company will have good prospects if it decides to go public or position itself for acquisition in the near future. By offering more products and services, the company will possibly be able to serve more customers and satisfy more needs, which could easily translate to more revenues and profits. From the outlook, the organization will merge as one of the major players in Hong Kong’s IT sector by 2015. In 2015, the company should be well placed to go for an IPO in Hong Kong or get listed in the Growth Enterprise Market in Hong Kong. This is the case going by recent trends; the market has seen many smaller organizations get acquired or altogether leave the market due to high competition. PacificLink has survived many of the challenges it has faced in the past and often spinning back to occupy an enviable position after experiencing setbacks. This is also the case because the company has been consistent in growth, acquiring stakes in different organizations, and positioning itself as a leader in the IT field. In conclusion, PacificLink has a good track record and has been consistent in its growth pattern. In spite of the challenges that it has faced, the organization has consistently shown its resilience. Lam and his team should focus on expanding geographically and adding more products to the company’s portfolio as opposed to going for an IPO or positioning for acquisition. This is because the company has great potential for growth on its own. It is worthwhile for the company to gain more financial muscle and expand its base as it thinks of going for an IPO in 2015. References Community Futures Stuart Nechako (2014). Business expansion. Retrieved 17 July, 2014 from http://www.cf-sn.ca/business/business_expansion/expansion_risks.php Dahl, D. (Feb 25, 2010). How to Develop a Business Growth Strategy. Retrieved 17 July, 2014 from http://www.inc.com/guides/small-business-growth-strategies.html Mayr, C. (June 10, 2011). What to consider before going public with an IPO. The Montreal Gazzette. Retrieved 17 July, 2014 from http://blogs.montrealgazette.com/2011/06/10/what-to-consider-before-going-public-with-an-ipo/ My Own Business (2014). Session 12: Buying businesses. Retrieved 17 July, 2014 from http://www.myownbusiness.org/buying_businesses/ Solomon, D. (2008). The IPO option: When to consider an initial public offering. Retrieved 17 July, 2014 from http://multichannelmerchant.com/crosschannel/the-ipo-option-when-to-consider-an-initial-pubils-offering-01112008/ Read More