Strategic Management of WRSX Company - Report Example

Strategic Management Report: WRSX STRATEGIC MANAGEMENT REPORT: WRSX Introduction WRSX is an advertising firm that comprises of four offices in Singapore, London, New York, and Paris. The firm offers diversified advertising services in special communications, public relations, direct marketing and advertising, although it is not listed as a top 20 firm in the advertising industry. This personal report aims to utilize models in the analysis of WRSX’s strategy position and choices through an intensive external and internal analysis. The external analysis will be done via a PESTEL and Porter’s 5 forces analysis while the internal analysis will be done using a SWOT analysis. Corporate strategy and business level strategy will be used for the strategy choice part. External Analysis One tool that can be used to carry out an external analysis is the PEST analysis (Crossan & Fry, 2013: p23). For WRSX, a PEST analysis for the two regions that they operate in, that is Asia-Pacific and the U.S. and EU regions was done. Political Factors In the EU and U.S. region, there are stringent laws regarding employment that governments have put, in place, to protect employees. The governments have also sought to encourage their citizens to increase their birth rates. Finally, there are very stringent data protection laws. This contrast with the political factors in the Asia-pacific region that include the loose implementation of laws aimed at data protection. In addition, the Chinese government has been encouraging to entry of international firms with provision of favorable tax rates. Economic factors In the EU and U.S. region, Interest rates are relatively low with the UK the only country with comparatively high interest rates, which, however, are expected to fall with the slowdown of the housing market. The U.S. also has approximately half of the global advertising revenue with a 4% forecasted increase in the next year. In the Asia-Pacific region, especially China, there is growth of powerful Chinese-owned multinationals while their economy is increasing at a rate of 8% of GDP each year. Social Factors In the Asia-pacific region, India and China have over 2.5 billion people, although only approximately 150 million of them in China use the services that are provided by WRSX. However, this is slightly more than half of America’s population, making it a dynamic market, especially as it is expected to keep growing. In the EU and U.S., there is a shift in values with more workers attempting a work/life balance and community work. The population in the west of Europe is in decline, especially the youth. Technological Factors In both markets in the EU/U.S. and the Asia-Pacific region, digital media is becoming increasingly important as a part of the advertising industry. This is especially so because of the growth of internet and improvement of connection. Based on the results, WRSX group could take various options, including management of generation Y, a sustainability policy, expansion into China, and exploitation of the digital opportunity. When these actions are taken, their share prices spiked to £2.50 from £2.28, as well as an increase of PBIT index, profits, and revenues, as well. WRSX group has the capability of using its resources to achieve more financial stability, as well as respond to its social responsibility requirements. The group possesses experienced and talented staff that is equipped with excellent creative and innovative capabilities for the production of services. However, this is not the case at their New York offices because some of the experienced and talented staff is quitting the WRSX group. In the meantime, the firm is doing well as far as market research is concerned, which is reliant on their comprehension of the market and the methods required to perform effective market research (Raisch, 2009: p31). For example, the WRSX group is looking into setting up in the Chinese market. As far as the global advertising market is concerned, the WRSX group concentrates most of its efforts in the US. However, the general trend in global advertising shows that other countries like Russia and China show increased vitality that WRSX group should exploit (Johnson et al, 2008: p76). To identify the attractiveness of digital media to WRSX, Porter’s Five Forces analysis can be of help. Porter’s 5 Forces: Internal Analysis The digital media sector is highly attractive. In the future, digital media is expected to develop even more. However, the threat of entry by other competitors to WRSX is important. These new entrants could lead to a depression in price with the objective of gaining a foothold in this area (Waldersee & Tywoniak, 2007: p66). However, even considering these factors, digital media is poised to become the major means of advertisement in the industry. Internal Analysis SWOT Analysis Strengths: WRSX has a higher rate of client attraction and retention compared to the industry average. WRSX has the ability to manage change with enhanced ability to attract and retain their personnel WRSX is also reputed for its creativity and innovative culture Weaknesses: WRSX does not possess a stated corporate governance code at international level as it is managed at local level Loss of talent and corruption scandals have led to loss of clients Opportunities: Digital technology has led to opening up of opportunities as client culture evolves and the media landscape fragments WRSX also has the opportunity to integrate or merge with other media companies to overcome fluctuations of cost while also providing their clients with a low cost media Threats: Most clients who use WRSX are becoming aware of recyclability of their packaging Poor employment practices like those impacting on child labor and health have become headline news, which has damaged brands, especially due to the bad PR it gives them. A SWOT analysis will allow WRSX to see the position it is in and make plans that could help it solve its problems (Johnson et al, 2008: p52). Loss of talent and scandals from corruption are the major problems that face WRSX, as well as various clients who have influence over WRSX. They, however, can rely, on their opportunities and strengths, to overcome these problems. Corporate Level Strategy In marketing, WRSX group needs to develop with emphasis on the enhancement of capability. The choice of new and digital media would be would be an excellent starting point (Johnson et al, 2008: p56). The firm defines itself in terms of a creative advertising company so they should attract and retain experienced workers equipped with adequately high levels of innovation and creativity. The weak leadership capability situation at the firm might be one of the reasons why they have made unsatisfactory acquisitions, and the loss of revenue has put increased pressure on their financial stability. Financially, the firm should strive to control the budget and costs for their acquisitions immediately. By improving their revenues, they will build a foundation for the enhancement of their buying power, develop new markets, and increase their reputation. The strategic gaps present for the WRSX group are; market development, human resource issues, poor retention of talent, weak leadership capabilities, and issues with budgetary response. High Annual real rate of market growth (%) Low Earnings: high stable, growing Cash flow: neutral Strategy: invest for growth 1. digital media SBU ? Earnings: low, unstable, growing Cash flow: negative Strategy: analyse to determine whether business can be grown into a star, or will degenerate into a dog 1. branding and identity SBU Earnings: high stable Cash flow: high stable Strategy: milk 1.Advertising and media SBU 2.Information, insight and consulting SBU Earnings: low, unstable Cash flow: neutral or negative Strategy: divest High Relative market share Low Business level Strategy In order to maker an evaluation of the strategic choices, it is essential to analyze various aspects of their acceptability, suitability, and feasibility (Johnson et al, 2008: p66). At the corporate level, WRSX group needs to focus on new markets while enhancing their attraction of new talent. At the business level, the leadership issue should be revised, while they should also consider improving their risk management policies. They should also consider expanding into new markets with the Chinese market being attractive for the group. The group also has to deal with risks, such as reputation risks linked to low of experience and talent that influences the creative capability of the team, while financial risks are linked to bad acquisitions and weak leadership that leads to los of money. Recommendations WRSX group is a medium sized firm with high aspirations. While there are substantial threats and risks facing WRSX group, they also have vast opportunities. Firstly, the firm needs to focus on its financial growth by paying more attention to its financial performance due to the risky future of economic growth. They should also pay more attention to recovering in corporate governance since it could upset the innovative and creative process, which is a concern in a highly competitive industry. They should also grasp market prospects and focus on the hybrid strategy that is suitable for WRSX in the form of collaboration and competition. In the case of corporate governance, the Ansoff matrix model is best for the firm. References Crossan, M. & Fry, J., 2013. Strategic analysis and action. Pearson: Toronto . Johnson, G., Scholes, K., & Whittington, R., 2008. Exploring corporate strategy. Harlow : Financial Times Prentice Hall. Raisch, S., 2009. Dynamic strategic analysis : demystifying simple success strategies. Wiesbaden: Deutscher Universitätsverlag. Waldersee, R. & Tywoniak, S., 2007. Strategic analysis : a guide to practice. North Ryde : McGraw-Hill Australia. Warner, A., 2010. Strategic analysis and choice : a structured approach. New York : Business Expert Press. Williamson, D., Cooke, P., Jenkins, W., Michael, K., 2012. Strategic Management and Business Analysis. London: Routledge. Read More