Strategic Analysis of WRSX Group
Introduction
Phrase one. Analyzing the strategic position
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In this stage, is analyzing the strategic position of WRSX Group.
By using the PESTEL framework we can analyse the many different factors in a firm’s macro environment. PESTEL analysis is a useful tool for understanding the “big picture” of the environment, in which you are operating, and the opportunities and threats that lie within it. By understanding the environment in which you operate (external to your company or department), you can take advantage of the opportunities and minimize the threats. (Ghemawat, 2008). The Five Force frameworks will response to the industry analysis. Five Forces is a framework for industry analysis and business strategy development. It is consisted of five key factors; entry barriers, buyer power, supplier power, substitute competitions and industry competitor. (Johnson and Scholes, 2009) The SWOT is useful when we are analyzing the internal environment of WRSX Group. It is a strategic planning method used to evaluate the Strengths, Weaknesses, Opportunities, and Threats. (Strengths: characteristics of the business or team that give it an advantage over others in the industry. Weaknesses: are characteristics that place the firm at a disadvantage relative to others. Opportunities: external chances to make greater sales or profits in the environment. Threats: external elements in the environment that could cause trouble for the business). (David, 1995)
For the current situation of whole industry of advertising, it is under high level competition. A considerable numbers of agencies live in this industry. The range of their scale is quite widely, it covers large international agencies to small local business firm even only two people involved. Meanwhile, lots of business opportunities in advertising. Under the whole world economic is increasing background, firms are comfortable to put budget on advertise part. Generally speaking, the advertising industry is trend to maturely and prosperously. However, lots of elements could be influence advertising industry. The industry trends to mature, then the problem come out, which is market shrink. New media develops. Due to the outstanding advantages of it, whole advertising industry has to move the core to new media filed.
Competitive advantages in advertising industry mainly deriving from creative & innovative capability, range and breadth of services or products. The creative & innovate capability is the most important for any agency in advertising industry due to it is the key thing to clarify differentiation of products or services what they are supply . At the same time, this is also a significant factor to attract clients.
The key stakeholders in the WRSX Group, expects a long – term global brand developments and achievements. In somewhere, conflicts may exist different stakeholder groups. (Johnson and Scholes, 2009, p.106 )
Currently performance of WRSX Group is relatively successful. However, some aspects should be enhanced. The attraction & Retention: WRSX Group scores highly on its market research capability and its understanding of market segments and channels, also scores highly in terms of its creativity and innovation, but not in USA. The breadth of services matches the industry average. The Leadership Capability: some offices perform well but others perform badly in terms of Management of Operations, Information Management and Administration. This is the reason for why its score of this below industry average. Management of Risk: the WRSX Group has performed well in management of Financial Risk, but it has dropped below average due to some acquisitions have not been perceived as financially astute. Corporate Social Responsibility (CSR): Previous analyses have shown high scores for WRSX Group in terms of its ethical stance and its social profile but lower for corporate governance. After the discussing processing in the presentation group, some of strategic issues are find out. The first one is relation to marketing. The revenue of WRSX Group in Asia Pacific has some problems due to the WRSX Group does not focus on the new media and digital media filed. It leads to lose attraction to clients. The second one is the financial problem. The WRSX Group get high level staff costs, while the revenue is not good enough to support this behavior. The third one is the management issue, including the corruption, the weak leadership capabilities and the bad procurement. The WRSX Group losing talent people in firms, which influence the creation and reputation. The awful acquisitions make WRSX Group losing financial supports to develop brand value. Broadly speaking, the WRSX Group has matched average score in advertising industry. Meanwhile, there are something above have to enhanced or revised, which aim to achieve the global brand development of WRSX Group.
Phrase Two. Making Strategic Choices
In this stage, is analyzing the strategic choices of WRSX Group. The current strategy of the WRSX Group is in some aspects. For the marketing, the exits market of WRSX Group indeed need develop, which aims to enhance the capability. Meanwhile, lots of new thing are waiting for the WRSX Group to achieve as well. The choice of opening new markets, such as new media or digital media field could be excellent for WRSX Group. (Johnson and Scholes,2009) For the WRSX Group, it defines itself as a creative advertising agency in the industry. So the WRSX Group the group should keep and attract the experienced staffs who equipped high level innovation and creativity. The talent and quality staffs are not enough to make sure the WRSX Group goes well. The situation of weak leadership capability of WRSX Group has to be improved. The weak awareness of leadership could be the reason for some awful acquisitions what the WRSX Group did. The money losing release pressure to WRSX Group’s financial. For the financial part, control the costs and the budget for acquisitions should be done immediately. Meanwhile, keep its revenue also indeed. It is able to make sure the whole agency goes well. It is the foundation of enhance the WRSX Group’s buying power, increase its reputation and develop new market. Generally speaking, the strategic gaps of WRSX Group have list above, it focus on several aspects which are the future and exist marketing development, the human recourse issue about the weak leadership capabilities & lack of talent people in group and the cost and budget problems response to finance. In this stage, in order to evaluate our strategic choices, also shrinking the gaps which mentioned, the group members analyzed about suitability, acceptability and feasibility aspects of the WRSX Group.(Johnson and Scholes, 2009) While some problems in implementing the choice we are making at this stage. They are in different levels. In corporate level, the group should focus new market or new field developing, meanwhile, enhance the attraction of WRSX Group is necessary as well. While in the business level, revise the leadership issue should be done, and risk management should be consideration. Whether or not to open new markets in international market should be make the choice. The result of us for this aspect is developing the Chinese market as the new market for the WRSX Group. Another aspect, talent and experienced people are losing in the New Work office of WRSX Group. This influences the creative quality of the WRSX Group.
There still have some risks for the WRSX Group. Those risks are linked to the problems which are presented in the phrase one. The reputation risk links to the talent and experienced people losing, the whole team creative capability is influenced; the financial risk links to the weak leadership capability, some bad acquisitions losing money.
Phrase Three. Analyzing the strategic actions
In this stage, is analyzing the strategic actions of WRSX Group.
Based on the results what we got from previous two stages, there are four options of action picked up from six of them. The four options are Managing Generation Y: delivering the Doughnuts, Sustainability policy, exploiting the digital opportunity, Expansion into China. After those actions taken, the share price increased from 2.28 GBP to 2.50 GBP. The revenue, profit and PBIT index increasedas well.
The assumption brought out on the task which is hoping the share price increased due to the right decisions what we made. However, some disagreements are appears in the processing of pick up those options mentioned above. The most outstanding problem in discussing is disagreement of the definition of some options. Every group member presents their own opinions and awareness of each option. After that, compare with every member’s presentation, then pick up the agreements and disagreements. For the disagreement, group members discuss about them again. The reasonable word should be come out when the member presenting. At the end, the final decisions were made by the majority opinion of group members. For the personal decisions degree of certainty, it might be seven or eight degree on a scale of one to ten. But other members also keep some common opinions with me. This is reason for why the degree in high level.
After each group meeting and seminar, lots of resources and results come out for the WRSX Group. It is able to use these resources to obtain more achievements, response to financial and social relationship part. The WRSX Group equipped experienced and talent staff, whom equipped excellent innovation and creativity capabilities to produce or supply services. However, this is not including the New York office due to some talent and experienced people quit the WRSX Group. All in all, the WRSX Group still obtained high level reputation in this industry. At the meantime, the WRSX Group doing well about market research, which is rely on understanding its market parts and methods. As the consequences of it, many spaces for the group are able to develop. For instances, set up the Chinese market as the new market for the WRSX Group. For global advertising market, the United States occupied most percent of it. However, in the global advertising market in general downward trend, China, Russia and some other advertising market showed vitality. For Chinese advertising market, it is continuous developing with high speed in last decade. In 2010, the turnover of Chinese advertising industry is 200.41 billion Chinese Yuan. Increased by 14 billion Chinese Yuan compared with 2009. Meanwhile, the Chinese advertising industry is not mature. It is an opportunity for WRSX Group to establish the branch in China, or looking for a local agency as a corporate body. This point is analyzed in previous part. Another is that the WRSX Group should consider about the opportunities in new media or digital media aspect. Some reasons, the digital media is the main trend in the near future, which based on the internet, mobile phones and etc. Two, it can attract the potential clients, especially the young generation. For this part, the online media develops with a high speed in last decade. It obtains numbers of outstanding advantages. There are two main of them, one is generally low cost than ads on traditional media. Another one is more widely audience range it can reach. As the consequence of those, lots of firms want to spent more budgets on digital space. Meanwhile, it proves this digital space definitely is a more and more huge market in future. The WRSX Group have supplier relationship in various offices, so that, they are able to offer their clients the digital services. There are some methods to developing this business. One is developing itself capability for digital space, or otherwise relying on external providers to deliver this service to WRSX clients. However, the suitable way for WRSX Group is combine two of them. Due to the WRSX is not named by the top agency in the world. Not so strong capability to developing it individually. So, this could be the most suitable way for WRSX to do this field business. So it is better for the WRSX Group to explore the advertising of digital media or new media field. At the end, balance the short-term (three-year plan, etc.) and the long-term achievements (mission, company objectives, etc.) of the WRSX Group should be done.
Conclusion
After studying this strategic management module which is “understanding the strategic position of organizations, strategic choices for the future and turning strategies into action” (Johnson and Scholes, 2002), based on the WRSX Group case study. Learn a lot, for example, some classic strategy tools – PESTEL, Five Forces, SWOT etc. I am clear about what is the aims and objective of those tools (PESTEL, firm’s macro environment. Five Forces, the industry analyzing. SWOT, analyzing the internal environment); which elements are involved in those tools (PESTEL, policies, economic, society, technological, environment, legal. Five Forces, entry barrier, industry competitors, substation competition, buyer power, supplier buyer. SWOT, strengths, weaknesses, opportunities, threats); what is the function of each element in those tools. Another is, I learn about the strategy has different levels; two basic levels are corporate level and business level. In another aspect, this is a group work study. So that, I have learn lots of technology about team work capability. Taking the right actions when group members encounter disagreements in meeting or seminar could be better. I learned use logical method to finding out the right actions. Well communication ability is necessary for me in the future. All in all, after this semester study, I have practiced and enhanced personal communication skills, while learned knowledge of strategic management.
Reference
David, Fred R, (1995) Strategic Management , Englewood Cliffs, NJ,
Ghemawat, P. (2008) Strategy And The Business Landscope, Beijing: Peking University Press
Johnson, G, Scholes, K, (2002) Exploring Corporate Strategy, Prentice Hall,
Johnson, G, Scholes, K, Whittington, R (2009) Fundamentals of Strategy, Prentice Hall,
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