Strengths and Weaknesses of WPP - Research Paper Example

Therefore, the international client portfolio of the company comprises several world-renowned companies. The customer-centric high quality of the service offered by WPP also adds to its inner strength. 

The recession phase of 2008-2009 had a negative influence on the operation of WPP. This resulted in poor revenue and constantly shrinking profitability. In 2007, the profit for the year was $1,037.2 million which declined in 2008 by $ 934.2 million, and finally, it reached $ 819.9 million in 2009. Again, the company’s clients are mainly from developed nations (US and UK). This results in too much dependency on the developed nations from the west. This low degree of diversification enhances the business risk of WPP.

Considering the economic growth in the developing markets, the company has an opportunity to diversify its client base and enter these emerging nations. China is the world’s fastest-growing followed by India (BBC NEWS, “Overview”). Therefore, Asian nations are developing at a faster rate. The companies in these nations are trying to compete with international revivals and thus WPP can offer them the required expert knowledge and guidance. As the US economic condition is reviving, the companies are in the process to expand their marketing budget. This will result in more business prospects for WPP.

In the last decade, companies have realized the importance of integrated marketing communication to attract and retain their customer base. As a result, they are ready to pay high fees to the ad agencies. This made the marketing communication service sector one of the attractive industries for new entrants and the degree of competition in this sector has grown a lot (Neff, p.2). This growing competition is a major threat to WPP. Apart from the growing competition, there is a risk of a double-dip recession in the Eurozone (Hannon, “UN Sees Risk Of Double-Dip Recession As Europe Pursues Austerity”). This disturbs the economic recovery rate in Euro Zone and considering the fear of financial crisis, companies are hesitating to invest in marketing-related activities.

The high economic growth in an emerging market that is resulting in the growing demand for international marketing communication, as well as the customer-centric service offered by WPP, reflects a healthy sign of growth for the company in near future. Considering this internal strength of the company and the external opportunity, it can be said that the company has a sound growth prospect in these emerging markets.

Though the global market condition is improving WPP’s poor financial performance can deteriorate its image as a market leader in the global marketing communication industry. The company may face problems in raising fresh capital to expand its business shortly because the creditors may doubt WPP’s ability to repay the loan. This may hamper the growth prospects of the company.

The customer-based high-quality communication service is one of the major strengths of the company. This should be effectively used to face the threat of growing competition among global communication service providers. By shifting towards a customer-centric delivery model, WPP can enhance customer loyalty and its market image (Hewlett-Packard Development Company, “Shifting To a Customer-Centric Delivery Model Can Provide Competitive Advantage In the Aggressive Communications Services Market”).

Excessive dependency of the company on the developed nations in the west and the risk of a double-dip recession in the Eurozone may result in major business risk for WPP. The deteriorating economic condition in the Eurozone will further affect the revenue and profitability of the company.