Huge and Digital Strategy - Essay Example

? HUGE: Becoming a Digital Uber Firm through Expanded Traditional Services ANALYSIS The recommended strategic growth option is to extend offerings to traditional services, in order to support the company’s business strategy of being an “uber firm” and to leverage its competitive advantages, which are its management and staff expertise and organizational culture, and scarce resource of existing client and business-to-business relationships. Retainer Relationships Advantages. 1. Supports existing business strategy. HUGE has idiosyncrasies in its projection selection and management that retainer relationships support. It focuses on projects that seek business transformation, so it prefers projects with ambitious re-design aspirations, new product development, and cross-platform marketing strategies. Retainer relationships can maintain these specific preferences of HUGE. 2. Long-term profits through long-term relations. Retainer relationships can result to long-term profits because clients can eventually see HUGE as a strategic partner for their overall growth. HUGE can reap greater revenues, if it becomes integral to their client’s strategic directions. Furthermore, long-term client relations can soon become a core competence. If these companies also grow, such as geographically and/or through offering new products and services, HUGE’s business will also grow with them. Their clients’ successes become intertwined with HUGE’s, thereby providing limitless opportunities for national and global growth. 3. Advancement of general view of the business as transformational and strategic. If HUGE is embedded into other companies in long-term retaining relations, companies might realize that digital marketing is not merely a reinforcement of traditional marketing efforts, but a superior marketing edge. Shapiro and his staff assert that: “…everything will be digital” (Casadesus-Masanell and Karvounis 7). Their belief in the digital future is not without substantiation. Table 1 shows that digital marketing projections will continue to rise for the next years. Social media, for instance, is expected to jump from $988 million in 2010 to $4.995 billion in 2016, an increase of 405%. Table 1: Digital Marketing Projects from 2010 to 2016 2010 2013 2016 Social Media 988 2,760 4,995 E-Mail 1,328 1,875 2,468 Mobile 885 4,238 8,237 Display 9,347 16,085 27,600 Search 16,308 24,613 33,319 Source: Casadesus-Masanell and Karvounis (14) Disadvantages. 1. Demand for capabilities that are not part of HUGE’s core competencies. Despite the advantages of retainer relationships, HUGE does not have existing capabilities that long-term relations entail. For instance, retainer means engaging in traditional digital marketing activities, such as display advertising and search marketing. HUGE does not have the competencies yet for these marketing channels. 2. Not related to market expansion. Retainer relationships may extend revenues per client, but it does not automatically bring in new clients. It does not allow HUGE to tap new markets or to exploit existing ones. 3. Not supportive of business model. HUGE wants to be the one-stop digital marketing firm. If it caters to the same clients, it is not growing that much at all, unless the same market grows. HUGE is not opening itself to prevailing market demand for search and display marketing, in particular, which is a mounting marketing field opportunity. Geographic Expansion Advantages. 1. Taps new markets with the same transformative needs. HUGE can tap foreign markets that have similar transformative needs. It does not have to veer far away from its business practices because it can find large, challenging projects in other countries. Some of the potential locations are Japan, UK, Norway, and Denmark. These nations have high numbers of citizens who have bought something online and a large percentage of firms with websites (Casadesus-Masanell and Karvounis 19). 2. Expands markets in a geographical way. Geographic expansion can result to market expansion. Market expansion will allow HUGE to improve revenues through accessing international markets. Several companies are already operating worldwide, such as Razorfish and Digitas. HUGE can use these new markets as opportunities to develop new businesses and to hire new employees that can add a multicultural advantage to its workforce. Disadvantages. 1. Cultural differences. Japan, Denmark, Norway, and Austria, which are promising markets, have cultural differences with America. HUGE still has to grapple with cultural differences, which when not clearly known and prepared for, can result to economic risks from failed expansion. 2. Infrastructure and technological challenges. Other countries may have specific infrastructure and technological differences that HUGE is not accustomed to. The company might not have the right competencies to compete in these different technological and infrastructure settings. 3. Economic and legislative risks. Expanding to these markets has economic and legal risks. HUGE has to invest in developing systems and competencies that can allow them, not only to compete with firms already operating there, but to also become better than them. In addition, it must follow new laws (employment and business policies, for instance), which increas the cost of initial investment and risks. Health Care Advantages. 1. Captures a new profitable market. Pharmaceutical and healthcare online ad spending is expected to increase by 50% in 2014, resulting to $1.52 billion in spending (Casadesus-Masanell and Karvounis 12). HUGE can take advantage of this growing market, so that it can enhance revenues in the long run. 2. Increases competitiveness. Digitas and Razorfish are serving the healthcare sector already (Casadesus-Masanell and Karvounis 12). They have first-mover advantage that may not stay long, if HUGE successfully comes in to take a piece of the ad spending pie of the healthcare sector. Disadvantages. 1. Lack of core competencies. HUGE does not have the workforce to compete in this field. It needs additional relations and training that will help it respond to specific healthcare digital marketing needs. 2. May not support HUGE’s business preferences. Health care is not necessarily aspiring for transformative digital marketing, since it focuses only on email and help lines. In a Capstrat and Public Policy Survey on consumers’ preferred channels with their doctors, 82% of female participants and 61% of male participants preferred Nurse Helpline, while 67% of female participants and 53% of male participants opted for e-mail (Casadesus-Masanell and Karvounis 20). Only a small percentage is interested in social media and online forums, which are conventional areas that HUGE normally serves (Casadesus-Masanell and Karvounis 20). Expanded Traditional Services Advantages. 1. Supports the company’s business strategy of being an “uber firm.” The company wants to be a one-stop digital marketing firm, and it can only achieve this vision, if it expands to traditional digital marketing services. Table 1 shows that display and search marketing are increasingly profitable ventures. They offer long-term business opportunities that HUGE must and can exploit for long-term growth. 2. Leverages its competitive advantages. Management and staff expertise and scarce resource of existing client and business-to-business relationships can support HUGE’s expansion of services. First, the management has expertise and openness to developing their proficiency further. They are not limited to what the company does now because they have created an organizational culture that is open to constant changes and evolving challenges (Hodson and Sullivan 300). Second, the staff is composed of experts, who come from a rigorous selection process. These experts can be used to test their competencies in traditional digital marketing environments. Furthermore, HUGE has loyal and dedicated employees, who can support new business ventures. Several of the company’s first employees are now handling more challenging management roles in the company (Casadesus-Masanell and Karvounis 6). Third, HUGE has a scarce resource of existing client and business-to-business relationships. It has clients that might have traditional digital marketing needs. HUGE can offer a comprehensive solution to their total digital marketing needs. In addition, HUGE can use its business-to-business relationships to recruit employees and to tap more clients. These relations can be client and employee-rich sources of future growth. 3. Maximizes the business model that is open to changes and challenges. The demand for integrated creative and UX design services is rising due to the increasing use of social networking sites, mobile technologies, and search engines on the part of consumers and businesses, and HUGE has a successful business model for this demand. HUGE follows a business model that is dynamic, flexible, and systematic. Its business process is tested in complex scenarios and can be scaled down to smaller display and search marketing campaigns. HUGE will not have difficulty in appealing to the traditional marketing needs of clients, as long as it has sufficient infrastructure and people. 4. Improves business revenues without sacrificing quality of services and products. HUGE management asserts that digital marketing necessitates a “comprehensive, firm-wide coordination of strategy, technology, and design” (Casadesus-Masanell and Karvounis 6). It wants to be the “uber firm,” a one-stop firm that offers both the design of digital products and digital marketing campaigns. Display and search ad revenues will rise further in the coming years, as more consumers and companies go digital. As a result, HUGE can be geared to respond to diverse digital marketing needs and preferences. Disadvantages. 1. Exposure to more competitors. Competition will be more intense and complex because of the intersection among design, strategy, and technological capabilities (Casadesus-Masanell and Karvounis 3). Some of the new and existing competitors are management consulting firms, IT firms, emerging technology specialists, and traditional marketing firms with extended digital marketing services. 2. Lack of workforce in new marketing fields. Since HUGE will be facing a talent battle with other companies, which are much larger and established in their respective industries and have strong brand names to new graduates and experienced employees. RECOMMENDATIONS 1. Expand to traditional digital marketing services through a spin-off company that caters to these specialized services. HUGE should create a spin-off company that caters to traditional marketing campaigns. This new company will be in charge of smaller digital marketing projects and marketing campaigns. Furthermore, to expand its recruitment net, it should hire employees in places with high numbers of digitally-savvy employees and those with numerous Fortune 500 headquarters to 2. Sell the company brand internationally through advertising HR policies and doing HR marketing through digital media. The company needs a larger workforce with varied traditional and digital marketing knowledge and skills. As an employee-centered firm, it can market its brand better through advertising its HR policies in digital technologies. It must also expand its recruitment to international settings by allowing off-site and other flexible employment opportunities. A multicultural workforce will build contacts, knowledge, and experience that will be useful for future geographical expansion. 3. Continue to be selective in projects and campaigns that do not violate management and employee values. HUGE has the same mantra as Google, “Do no evil.” It is successful because it is a socially responsible firm and it should not forget that in the course of its expansion. EXECUTIVE SUMMARY Retainer relationship works on existing customers only. It can produce long-term revenues, but not necessarily market growth. It requires resources and competencies that are new to HUGE too. Geographic expansion is not feasible because of HUGE’s limited workforce and potential economic, cultural, technological, and legal risks. This can be a future long-term strategy, nevertheless. Extended traditional services expose the company to more competitors that have established core competencies in traditional digital marketing campaigns. However, HUGE offers distinct competitive advantages because of its core competencies of management and staff expertise and organizational culture. Furthermore, if HUGE wants to be an “uber firm,” it must offer something to every digital marketing demand. It is recommended to CEO Shapiro that the company must expand to traditional digital marketing services through creating a spin-off company that caters to these specialized services. The new company must have flexible employment systems to attract more local and international employees. Works Cited Casadesus-Masanell, Ramon, and Nichoals G. Karvounis. HUGE and Digital Strategy. Harvard Business School (2012): 1-22. Print. Hodson, Randy, and Teresa A. Sullivan. The Social Organization of Work. 4th ed. Belmont, CA: Thomas Higher Education, 2008. Print. Read More