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[GROUP SIMULATION
REPORT]
In groups of THREE students, a business report on the strategic options you believe were available to
WRSX, and document the several options and decisions taken by your group in the 6 board meetings
of the simulation. Give your rationale and reflect upon the results of your decisions (provided
progressively by the simulator), both in share price and non-financial indicators. It is suggested that
you review your work in Semester ONE in BS3954 and build upon the key strategic options you
identified then. Extend these where appropriate before moving to the Board Meeting phase of the
simulation.
Contents
1.0 Introduction ......................................................................................................................... 3
2.0 Current Company Position and Suggested Strategies ......................................................... 4
2.1 Eradicating Inessential Staff through Downsizing ........................................................... 4
2.2 Restructuring to Implement a Matrix Structure .............................................................. 5
3.0 WRSX Business Simulation .................................................................................................. 6
3.1 Board Meeting One ......................................................................................................... 6
3.1.1 Analysis of Agenda Items.......................................................................................... 6
3.1.2 Eradicate Inefficiencies and Become to Flexible ...................................................... 7
3.2 Board Meeting Two ......................................................................................................... 8
3.2.1 Analysis of Agenda Items.......................................................................................... 8
3.2.2 Improving Client Customer Base & Procurement Management.............................. 9
3.3 Board Meeting Three..................................................................................................... 10
3.3.1 Analysis of Agenda Items........................................................................................ 10
3.3.2 The Matrix Structure .............................................................................................. 11
3.4 Board Meeting Four....................................................................................................... 12
3.4.1 Analysis of Agenda Items........................................................................................ 12
3.4.2 Corporate Governance ........................................................................................... 13
3.5 Board Meeting Five ....................................................................................................... 14
3.5.1 Analysis of Agenda Items........................................................................................ 14
3.5.2 Retaining Quality Employees and the 7 Principles of Future Employees ............... 15
3.6 Board Meeting Six ......................................................................................................... 16
3.6.1 Analysis of Agenda Items........................................................................................ 16
3.6.2 The Long Term Future ............................................................................................ 17
3.7 The Results of the Simulation ........................................................................................ 18
3.7.0 Period Zero ............................................................................................................. 18
3.7.1 Board Meeting One ................................................................................................ 20
3.7.2 Board Meeting Two ................................................................................................ 22
3.7.3 Board Meeting Three.............................................................................................. 24
6.7.4 Board Meeting Four................................................................................................ 26
6.7.5 Board Meeting Five ................................................................................................ 28
3.7.6 Board Meeting Six .................................................................................................. 30
4.0 Conclusion & Recommendation ........................................................................................ 32
5.0 Reference List: ................................................................................................................... 33
1|Page
6. 0 Appendices: ...................................................................................................................... 35
6.1 Simulation One .............................................................................................................. 35
6.1.1 Sustainability profile of group ................................................................................ 35
6.1.2 Non-performing business within the group ........................................................... 36
6.1.3 Cultural change in New York .................................................................................. 37
6.1.4 Opportunities in digital media ................................................................................ 38
6.2 Simulation Twos Agendas ............................................................................................. 39
6.2.1 Reducing client churn ............................................................................................. 39
6.2.2 Sponsorship opportunity ........................................................................................ 40
6.2.3 Knowledge sharing & communication coordination .............................................. 41
6.2.4 Corporate governance issue ................................................................................... 42
6.3 Simulation Three Agendas ............................................................................................. 43
6.3.1 Outsourcing central services .................................................................................. 43
6.3.2 Launching Cine FX in London and New York .......................................................... 44
6.3.3 Competitive advantage through backward integration into reprographics?......... 45
6.3.4 Changing organisational structure to meet our strategic challenges .................... 47
6.4 Simulation Four Agendas ............................................................................................... 48
6.4.1 Profiting from sustainability ................................................................................... 48
6.4.2 Strategic alliance in the Indian advertising market ................................................ 50
6.4.3 Breakaway WRSX management / creative group................................................... 52
6.4.4 Parent companys ability to dictate group-wide corporate governance ............... 53
6.5 Simulation Five Agendas................................................................................................ 55
6.5.1 Creating new employment policies Becoming employer of first choice ............. 55
6.5.2 Key strategic appointment in underperforming subsidiary ................................... 56
6.5.3 UK Government contracts potential account conflict ......................................... 57
6.5.4 Business integration how much autonomy should we give to the businesses we
acquire? ........................................................................................................................... 59
6.6 Simulation Six Agendas.................................................................................................. 60
6.6.1 Resourcing growth.................................................................................................. 60
6.6.2 Opportunity for strategic review and to raise capital ............................................ 62
6.6.3 Making WRSX the agency of choice for Asian brands expanding globally ............. 64
6.6.4 The formulation and practice of strategy at WRSX ................................................ 65
6.7 Business Plan Proforma ................................................................................................. 66
2|Page
1.0 Introduction
WRSX is a public limited company that competes within the related marketing
communications industry. The service that WRSX intends to offer is to help our clients
establish their brands and sell more products or services to consumers or business
customers (WRSX: 1). The current strategy that was adopted by WRSX was to increase their
organizational portfolio, not specifically in business advertising but in other areas consisting
of research, PR, direct marketing, branding, film production and sports marketing (WRSX: 7).
This strategy however has created a strategic drift within WRSX. Within this report a week
by week simulation will take place in order to implement new business strategies within the
WRSX case; these strategies intents are to improve the overall organizational performance
of WRSX, while additionally improving the share price over the 6 board meetings of the
simulation.
3|Page
4|Page
5|Page
6|Page
7|Page
8|Page
Reducing client churn could have detrimental effects on company, due to loss of profits and
possible loss of continued business (Reichheld & Sasser, 1990: 5). Moreover, the difficulty of
retaining clients outweighs that of acquiring new ones (Siber, 1997:77). Therefore, the
reason to focus not only on the Top ten clients, but also the suggested clients who are at
risk can lead to improved profits, consequently reducing the threat from competition, while
also reducing dependency on these top 10 clients (Appendix 6.2.1). In other words, by WRSX
extending its customer base, WRSX can keep customers they already have, while attracting
new clients by meeting their needs through a highly differentiated service meeting clients
requirements, which can ensure long term profitability and better customer relationships.
9|Page
10 | P a g e
11 | P a g e
12 | P a g e
13 | P a g e
14 | P a g e
15 | P a g e
16 | P a g e
17 | P a g e
Board Meeting
One
(Period 1)
Board Meeting
Two
(Period 2)
Board Meeting
Three
(Period 3)
Board Meeting
Four
(Period 4)
Board Meeting
Five
(Period 5)
Board Meeting
Six
(Period 6)
Start
Position
(Period 0)
m
200.0
(10.0)
Start
Position
(Period 0)
m
240.0
(12.0)
190.0
228.0
(126.0)
(151.2)
Establishment costs
(16.0)
(19.2)
(15.0)
(18.0)
(157.0)
(188.4)
33.0
39.6
Revenue
Direct costs
Gross profit
Board
Meeting
(Period )
m
Board
Meeting
(Period )
m
Operating costs:
Staff costs
5.0
6.0
(10.0)
(12.0)
(5.0)
(6.0)
28.0
33.6
Taxation
(9.0)
(10.8)
19.0
22.8
Finance costs
Key Ratios:
PBIT (%)
Staff Costs Ratio (%)
Start
Position
(Period 0)
16.5%
63.0%
Board
Meeting 1
(Period 1)
Board
Meeting 2
(Period 2)
Board
Meeting 3
(Period 3)
Board
Meeting 4
(Period 4)
Board
Meeting 5
(Period 5)
18 | P a g e
Board
Meeting 6
(Period 6)
1. Management of Growth
2. Management of Risk
3. Leadership Capability
4. Corporate Social
Responsibility
5. Client Attraction & Retention
6. Procurement & Supplier Mgt
Index Average
Start
Position
(Period 0)
43.5
41.3
39.2
Board
Meeting 1
(Period 1)
Board
Meeting 2
(Period 2)
Board
Meeting 3
(Period 3)
Board
Meeting 4
(Period 4)
Board
Meeting 5
(Period 5)
Board
Meeting 6
(Period 6)
Board
Meeting 1
(Period 1)
Board
Meeting 2
(Period 2)
Board
Meeting 3
(Period 3)
Board
Meeting 4
(Period 4)
Board
Meeting 5
(Period 5)
Board
Meeting 6
(Period 6)
38.5
52.0
38.7
42.2
Start
Position
(Period 0)
15.0
19 | P a g e
Board Meeting
One
(Period 1)
2.57
EUR 3.08
Board Meeting
Two
(Period 2)
Board Meeting
Three
(Period 3)
Board Meeting
Four
(Period 4)
Board Meeting
Five
(Period 5)
Board Meeting
Six
(Period 6)
Start
Position
(Period 0)
m
Start
Position
(Period 0)
m
Board
Meeting 1
(Period 1)
m
240.0
(12.0)
Board
Meeting
1
(Period
1)
m
207.0
(10.1)
Revenue
Direct costs
200.0
(10.0)
Gross profit
190.0
228.0
196.9
236.3
(126.0)
(151.2)
(131.0)
(157.2)
(16.0)
(19.2)
(16.3)
(19.6)
248.4
(12.1)
Operating costs:
Staff costs
Establishment costs
Other operating costs
(15.0)
(18.0)
(16.2)
(19.4)
(157.0)
(188.4)
(163.5)
(196.1)
33.0
39.6
33.5
40.1
5.0
6.0
6.1
7.3
(10.0)
(12.0)
(10.0)
(12.0)
(5.0)
(6.0)
(4.0)
(4.7)
28.0
33.6
29.5
35.4
Taxation
(9.0)
(10.8)
(9.4)
(11.3)
19.0
22.8
20.1
24.1
Board
Meeting 5
(Period 5)
Board
Meeting 6
(Period 6)
Key Ratios:
PBIT (%)
Staff Costs Ratio (%)
Start
Position
(Period 0)
16.5%
63.0%
Board
Meeting 1
(Period 1)
16.2%
63.3%
Board
Meeting 2
(Period 2)
Board
Meeting 3
(Period 3)
Board
Meeting 4
(Period 4)
20 | P a g e
1. Management of Growth
2. Management of Risk
3. Leadership Capability
4. Corporate Social
Responsibility
5. Client Attraction & Retention
6. Procurement & Supplier Mgt
Index Average
Start
Position
(Period 0)
43.5
41.3
39.2
Board
Meeting 1
(Period 1)
48.5
44.0
43.6
38.5
52.0
38.7
42.2
40.0
55.2
39.0
45.1
Start
Position
(Period 0)
15.0
Board
Meeting 1
(Period 1)
16.0
Board
Meeting 2
(Period 2)
Board
Meeting 3
(Period 3)
Board
Meeting 4
(Period 4)
Board
Meeting 5
(Period 5)
Board
Meeting 6
(Period 6)
Board
Meeting 2
(Period 2)
Board
Meeting 3
(Period 3)
Board
Meeting 4
(Period 4)
Board
Meeting 5
(Period 5)
Board
Meeting 6
(Period 6)
21 | P a g e
Board Meeting
One
(Period 1)
2.57
EUR 3.08
Board Meeting
Two
(Period 2)
2.94
EUR 3.53
Board Meeting
Three
(Period 3)
Board Meeting
Four
(Period 4)
Board Meeting
Five
(Period 5)
Board Meeting
Six
(Period 6)
Start
Position
(Period 1)
m
Start
Position
(Period 1)
m
Board
Meeting 2
(Period 2)
m
248.4
(12.1)
Board
Meeting
2
(Period
2)
m
222.6
(10.3)
Revenue
Direct costs
207.0
(10.1)
Gross profit
196.9
236.3
212.3
254.8
(131.0)
(157.2)
(139.2)
(167.1)
Establishment costs
(16.3)
(19.6)
(20.1)
(24.2)
(16.2)
(19.4)
(17.5)
(21.0)
(163.5)
(196.1)
(176.9)
(212.2)
33.5
40.1
35.4
42.5
267.1
(12.4)
Operating costs:
Staff costs
6.1
7.3
6.4
7.6
(10.0)
(12.0)
(10.0)
(12.0)
(4.0)
(4.7)
(3.6)
(4.4)
29.5
35.4
31.8
38.1
Taxation
(9.4)
(11.3)
(10.2)
(12.2)
20.1
24.1
21.6
25.9
Board
Meeting 5
(Period 5)
Board
Meeting 6
(Period 6)
Finance costs
Key Ratios:
PBIT (%)
Staff Costs Ratio (%)
Start
Position
(Period 0)
16.5%
63.0%
Board
Meeting 1
(Period 1)
16.2%
63.3%
Board
Meeting 2
(Period 2)
15.9%
62.5%
Board
Meeting 3
(Period 3)
Board
Meeting 4
(Period 4)
22 | P a g e
1. Management of Growth
2. Management of Risk
3. Leadership Capability
4. Corporate Social
Responsibility
5. Client Attraction & Retention
6. Procurement & Supplier Mgt
Index Average
Start
Position
(Period 0)
43.5
41.3
39.2
Board
Meeting 1
(Period 1)
48.5
44.0
43.6
Board
Meeting 2
(Period 2)
51.3
47.3
47.4
38.5
52.0
38.7
42.2
40.0
55.2
39.0
45.1
41.5
59.0
40.7
47.9
Start
Position
(Period 0)
15.0
Board
Meeting 1
(Period 1)
16.0
Board
Meeting 2
(Period 2)
17.0
Board
Meeting 3
(Period 3)
Board
Meeting 4
(Period 4)
Board
Meeting 5
(Period 5)
Board
Meeting 6
(Period 6)
Board
Meeting 3
(Period 3)
Board
Meeting 4
(Period 4)
Board
Meeting 5
(Period 5)
Board
Meeting 6
(Period 6)
23 | P a g e
Board Meeting
One
(Period 1)
2.57
EUR 3.08
Board Meeting
Two
(Period 2)
2.94
EUR 3.53
Board Meeting
Three
(Period 3)
2.84
EUR 3.41
Board Meeting
Four
(Period 4)
Board Meeting
Five
(Period 5)
Board Meeting
Six
(Period 6)
Start
Position
(Period 2)
m
Start
Position
(Period 2)
m
Board
Meeting 3
(Period 3)
m
267.1
(12.4)
Board
Meeting
3
(Period
3)
m
227.5
(10.5)
Revenue
Direct costs
222.6
(10.3)
Gross profit
212.3
254.8
217.0
260.4
(139.2)
(167.1)
(143.9)
(172.7)
Establishment costs
(20.1)
(24.2)
(21.0)
(25.3)
(17.5)
(21.0)
(18.9)
(22.7)
(176.9)
(212.2)
(183.8)
(220.6)
35.4
42.5
33.2
39.9
273.0
(12.6)
Operating costs:
Staff costs
6.4
7.6
7.5
9.0
(10.0)
(12.0)
(10.0)
(12.0)
(3.6)
(4.4)
(2.5)
(3.0)
31.8
38.1
30.7
36.8
(10.2)
(12.2)
(9.8)
(11.8)
21.6
25.9
20.9
25.0
Board
Meeting 5
(Period 5)
Board
Meeting 6
(Period 6)
Finance costs
Taxation
Profit for Period
Key Ratios:
PBIT (%)
Staff Costs Ratio (%)
Start
Position
(Period 0)
16.5%
63.0%
Board
Meeting 1
(Period 1)
16.2%
63.3%
Board
Meeting 2
(Period 2)
15.9%
62.5%
Board
Meeting 3
(Period 3)
14.6%
63.2%
Board
Meeting 4
(Period 4)
24 | P a g e
1. Management of Growth
2. Management of Risk
3. Leadership Capability
4. Corporate Social
Responsibility
5. Client Attraction & Retention
6. Procurement & Supplier Mgt
Index Average
Start
Position
(Period 0)
43.5
41.3
39.2
Board
Meeting 1
(Period 1)
48.5
44.0
43.6
Board
Meeting 2
(Period 2)
51.3
47.3
47.4
Board
Meeting 3
(Period 3)
50.5
45.7
49.2
38.5
52.0
38.7
42.2
40.0
55.2
39.0
45.1
41.5
59.0
40.7
47.9
40.8
59.8
41.7
47.9
Start
Position
(Period 0)
15.0
Board
Meeting 1
(Period 1)
16.0
Board
Meeting 2
(Period 2)
17.0
Board
Meeting 3
(Period 3)
17.0
Board
Meeting 4
(Period 4)
Board
Meeting 5
(Period 5)
Board
Meeting 6
(Period 6)
Board
Meeting 4
(Period 4)
Board
Meeting 5
(Period 5)
Board
Meeting 6
(Period 6)
25 | P a g e
Start
Position
(Period 0)
2.28
EUR 2.74
Board Meeting
One
(Period 1)
2.57
EUR 3.08
Board Meeting
Two
(Period 2)
2.94
EUR 3.53
Board Meeting
Three
(Period 3)
2.84
EUR 3.41
Board Meeting
Four
(Period 4)
3.88
EUR 4.66
Board Meeting
Five
(Period 5)
Board Meeting
Six
(Period 6)
Start
Position
(Period 3)
m
Start
Position
(Period 3)
m
Board
Meeting 4
(Period 4)
m
273.0
(12.6)
Board
Meeting
4
(Period
4)
m
257.1
(12.6)
Revenue
Direct costs
227.5
(10.5)
Gross profit
217.0
260.4
244.5
293.4
(143.9)
(172.7)
(156.8)
(188.2)
Establishment costs
(21.0)
(25.3)
(25.4)
(30.4)
(18.9)
(22.7)
(21.6)
(25.9)
(183.8)
(220.6)
(203.8)
(244.5)
33.2
39.9
40.8
48.9
308.6
(15.1)
Operating costs:
Staff costs
7.5
9.0
8.2
9.9
(10.0)
(12.0)
(10.0)
(12.0)
(2.5)
(3.0)
(1.8)
(2.1)
30.7
36.8
39.0
46.8
Taxation
(9.8)
(11.8)
(12.5)
(15.0)
20.9
25.0
26.5
31.8
Board
Meeting 5
(Period 5)
Board
Meeting 6
(Period 6)
Finance costs
Key Ratios:
PBIT (%)
Staff Costs Ratio (%)
Start
Position
(Period 0)
16.5%
63.0%
Board
Meeting 1
(Period 1)
16.2%
63.3%
Board
Meeting 2
(Period 2)
15.9%
62.5%
Board
Meeting 3
(Period 3)
14.6%
63.2%
Board
Meeting 4
(Period 4)
15.8%
61.0%
26 | P a g e
1. Management of Growth
2. Management of Risk
3. Leadership Capability
4. Corporate Social
Responsibility
5. Client Attraction & Retention
6. Procurement & Supplier Mgt
Index Average
Start
Position
(Period 0)
43.5
41.3
39.2
Board
Meeting 1
(Period 1)
48.5
44.0
43.6
Board
Meeting 2
(Period 2)
51.3
47.3
47.4
Board
Meeting 3
(Period 3)
50.5
45.7
49.2
Board
Meeting 4
(Period 4)
53.8
50.7
51.8
38.5
52.0
38.7
42.2
40.0
55.2
39.0
45.1
41.5
59.0
40.7
47.9
40.8
59.8
41.7
47.9
43.8
65.0
44.0
51.5
Start
Position
(Period 0)
15.0
Board
Meeting 1
(Period 1)
16.0
Board
Meeting 2
(Period 2)
17.0
Board
Meeting 3
(Period 3)
17.0
Board
Meeting 4
(Period 4)
18.3
Board
Meeting 5
(Period 5)
Board
Meeting 6
(Period 6)
Board
Meeting 5
(Period 5)
Board
Meeting 6
(Period 6)
27 | P a g e
Board Meeting
One
(Period 1)
2.57
EUR 3.08
Board Meeting
Two
(Period 2)
2.94
EUR 3.53
Board Meeting
Three
(Period 3)
2.84
EUR 3.41
Board Meeting
Four
(Period 4)
3.88
EUR 4.66
Board Meeting
Five
(Period 5)
4.76
EUR 5.71
Board Meeting
Six
(Period 6)
Financial Performance
Your financial performance is shown in terms of an Income Statement:
INCOME STATEMENT for Period 5
Start
Position
(Period 4)
m
Start
Position
(Period 4)
m
Board
Meeting 5
(Period 5)
m
308.6
(15.1)
Board
Meeting
5
(Period
5)
m
286.7
(18.7)
Revenue
Direct costs
257.1
(12.6)
Gross profit
244.5
293.4
267.9
321.5
344.0
(22.5)
Operating costs:
Staff costs
(156.8)
(188.2)
(172.0)
(206.4)
Establishment costs
(25.4)
(30.4)
(25.9)
(31.0)
(21.6)
(25.9)
(23.8)
(28.6)
(203.8)
(244.5)
(221.6)
(266.0)
40.8
48.9
46.3
55.6
8.2
9.9
8.9
10.6
(10.0)
(12.0)
(10.0)
(12.0)
(1.8)
(2.1)
(1.1)
(1.4)
39.0
46.8
45.1
54.2
(12.5)
(15.0)
(14.4)
(17.3)
26.5
31.8
30.7
36.8
Key Ratios:
PBIT (%)
Staff Costs Ratio (%)
Start
Position
(Period 0)
16.5%
63.0%
Board
Meeting 1
(Period 1)
16.2%
63.3%
Board
Meeting 2
(Period 2)
15.9%
62.5%
Board
Meeting 3
(Period 3)
14.6%
63.2%
Board
Meeting 4
(Period 4)
15.8%
61.0%
Board
Meeting 5
(Period 5)
16.1%
60.0%
28 | P a g e
Board
Meeting 6
(Period 6)
1. Management of Growth
2. Management of Risk
3. Leadership Capability
4. Corporate Social
Responsibility
5. Client Attraction & Retention
6. Procurement & Supplier Mgt
Index Average
Start
Position
(Period 0)
43.5
41.3
39.2
Board
Meeting 1
(Period 1)
48.5
44.0
43.6
Board
Meeting 2
(Period 2)
51.3
47.3
47.4
Board
Meeting 3
(Period 3)
50.5
45.7
49.2
Board
Meeting 4
(Period 4)
53.8
50.7
51.8
Board
Meeting 5
(Period 5)
57.3
54.7
54.8
38.5
52.0
38.7
42.2
40.0
55.2
39.0
45.1
41.5
59.0
40.7
47.9
40.8
59.8
41.7
47.9
43.8
65.0
44.0
51.5
46.0
67.6
46.7
54.5
Start
Position
(Period 0)
15.0
Board
Meeting 1
(Period 1)
16.0
Board
Meeting 2
(Period 2)
17.0
Board
Meeting 3
(Period 3)
17.0
Board
Meeting 4
(Period 4)
18.3
Board
Meeting 5
(Period 5)
19.4
Board
Meeting 6
(Period 6)
29 | P a g e
Board
Meeting 6
(Period 6)
Board Meeting
One
(Period 1)
2.57
EUR 3.08
Board Meeting
Two
(Period 2)
2.94
EUR 3.53
Board Meeting
Three
(Period 3)
2.84
EUR 3.41
Board Meeting
Four
(Period 4)
3.88
EUR 4.66
Board Meeting
Five
(Period 5)
4.76
EUR 5.71
Board Meeting
Six
(Period 6)
7.35
EUR 8.81
Start
Position
(Period 5)
m
Start
Position
(Period 5)
m
Board
Meeting 6
(Period 6)
m
344.0
(22.5)
Board
Meeting
6
(Period
6)
m
337.8
(26.2)
Revenue
Direct costs
286.7
(18.7)
Gross profit
267.9
321.5
311.6
373.9
(172.0)
(206.4)
(188.2)
(225.8)
(25.9)
(31.0)
(26.9)
(32.3)
405.4
(31.5)
Operating costs:
Staff costs
Establishment costs
Other operating costs
(23.8)
(28.6)
(28.8)
(34.6)
(221.6)
(266.0)
(243.9)
(292.7)
46.3
55.6
67.7
81.2
8.9
10.6
10.3
12.4
(10.0)
(12.0)
(10.0)
(12.0)
(1.1)
(1.4)
0.3
0.4
45.1
54.2
68.0
81.6
(14.4)
(17.3)
(21.7)
(26.1)
30.7
36.8
46.2
55.5
Key Ratios:
PBIT (%)
Staff Costs Ratio (%)
Start
Position
(Period 0)
16.5%
63.0%
Board
Meeting 1
(Period 1)
16.2%
63.3%
Board
Meeting 2
(Period 2)
15.9%
62.5%
Board
Meeting 3
(Period 3)
14.6%
63.2%
Board
Meeting 4
(Period 4)
15.8%
61.0%
Board
Meeting 5
(Period 5)
16.1%
60.0%
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Board
Meeting 6
(Period 6)
20.0%
55.7%
1. Management of Growth
2. Management of Risk
3. Leadership Capability
4. Corporate Social
Responsibility
5. Client Attraction & Retention
6. Procurement & Supplier Mgt
Index Average
Start
Position
(Period 0)
43.5
41.3
39.2
Board
Meeting 1
(Period 1)
48.5
44.0
43.6
Board
Meeting 2
(Period 2)
51.3
47.3
47.4
Board
Meeting 3
(Period 3)
50.5
45.7
49.2
Board
Meeting 4
(Period 4)
53.8
50.7
51.8
Board
Meeting 5
(Period 5)
57.3
54.7
54.8
Board
Meeting 6
(Period 6)
60.5
53.3
59.0
38.5
52.0
38.7
42.2
40.0
55.2
39.0
45.1
41.5
59.0
40.7
47.9
40.8
59.8
41.7
47.9
43.8
65.0
44.0
51.5
46.0
67.6
46.7
54.5
46.3
68.6
47.7
55.9
Start
Position
(Period 0)
15.0
Board
Meeting 1
(Period 1)
16.0
Board
Meeting 2
(Period 2)
17.0
Board
Meeting 3
(Period 3)
17.0
Board
Meeting 4
(Period 4)
18.3
Board
Meeting 5
(Period 5)
19.4
Board
Meeting 6
(Period 6)
19.9
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Hatten, T. (2010). Small Business Management. (4th Ed.). Boston: Cengage Learning.
WRSX (2012) company report (case study) Available: Winchester Learning Network
Hoskisson, R., Ireland, R. and Hitt, M. (2008). Strategic Management: Competitiveness and
Globalization, Concepts, Volume 1. 8th ed. Mason: South-Western Cengage Learning.
Hitt, M., Ireland, R.D., & Hoskisson, R. (2008). Strategic Management: Competitiveness and
Globalization, Concepts, Volume 1 (8th ed.). Mason: South-Western Cengage Leanrning.
Aswathappa, K. (2010). International Business (4th Ed.). New Delhi: Tata McGraw Hill.
Kehal, H. S. and Singh, V. P. (2006) Outsourcing and Offshoring in the 21st Century: A Socioeconomic Perspective. United States: Idea Group Pub.
McIvor, R. (2005) The Outsourcing Process: Strategies for Evaluation and Management.
United Kingdom: Cambridge University Press.
Reichheld, F. F. and Jr, W. E. S. (1990) Zero Defections: Quality Comes to Services, Harvard
Business Review. Harvard Business Review, 68. Available at: https://hbr.org//zerodefections-quality-comes-to-ser/ar/1(Accessed: 22 March 2015).
Morgan, J. (2014). The 7 Principles Of The Future Employee. [online] Forbes. Available at:
http://www.forbes.com/sites/jacobmorgan/2014/11/11/the-7-principles-of-the-futureemployee/ [Accessed 22 Mar. 2015].
Johnson, G., Whittington, R., Scholes, K.,Angwin, D., & Regner, O. (2014). Exploring Strategy
(10th Ed.), Harlow: Pearsons Education
John, H., & Barnett, W. D. W. (1988) Strategic Management Concepts and Case, Colorato:
PWS Kent
Cushman, D., & King, s. (1995) Communication and High-Speed Management, Albany: State
University of New York Press
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6. 0 Appendices:
6.1 Simulation One
6.1.1 Sustainability profile of group
From: Rod Raoul Saurez, Non-Executive Director, WRSX Group
To: Board Directors
You know at WRSX you pride yourselves on being on-the-ball and your market research
team has a terrific reputation for identifying trends almost before they emerge. How come
then that WRSX appears to be nothing about its carbon footprint and sustainability profile? I
don't see anything on the website or in last year's company report and frankly it's a bit
disappointing. Is the lack of a coherent and well-publicised policy impacting on clients'
perception of WRSX? What about potential shareholders there are plenty of 'ethical'
shareholders these days who will not invest in non-green companies. Also how is this lack of
profile going down with young, bright people? It is hurting your ability to attract top talent
into the agency? I am a Non-Exec on several Boards and WRSX seems to be behind the rest
in setting out its sustainability profile. I think WRSX needs to act and act now. Can we discuss
this at the next Board Meeting?
Action Option C:
WRSX is in danger of falling behind its competitors in the area of sustainability. There are
commercial as well as ethical reasons for setting a Group-wide Sustainability Agenda. Create
a new WRSX Committee made up of internal employees interested in this issue and also
employ an external 'Sustainability Expert' with extensive experience of this field in the
Marketing Communications sector. This will mean a high salary cost but it will be the
responsibility of this expert to develop a group-wide strategy on Sustainability and to ensure
that it is effectively implemented. Ask each office to develop an action plan for rating its
sustainability profile. Ask each office to appoint a Sustainability Co-ordinator at a low/mid
level salary. Each office will then report to their local Managing Director and the local Board
on progress in this area sharing experience and best practice. The Board would need to
approve a budget of 350,000 for such an initiative.
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Action Option C:
You believe that sporting events are an effective way of promoting the WRSX brand and that
the personal sponsorship of a tennis player could become the first part of an overall
strategy. You therefore agree to the 300,000 p.a. sponsorship package. Furthermore, the
Board believes that other sports such as Formula 1 are an effective way of promoting WRSX
and there is the opportunity to become a leading sponsor at an annual cost of 2m (1m per
half year) over three years. The Board approves the sponsorship packages.
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HR Strategy
Payroll and benefits
Recruitment
Dispute resolution
Pay negotiations with trade unions
Training and development
Performance Management Systems
Group Career Planning
My proposal to the Board is that we implement a Group-wide outsourcing of all of our HR,
reduce our HR headcount substantially across all the businesses and only retain the Group
HR Strategy team and the Group Career Planning team and one HR contact per business.
This would save the WRSX Group up to 3m per year.
I am aware that the tradition of our industry is that our people are our most valuable asset
but they are also one of our biggest costs. I know that some of you will also argue that our
people embody many of the distinctive capabilities that give us an edge over our
competitors. But how many of our people actually fit into this category compared to the
whole number and will they be better or worse if our HR function - that recruits, trains,
develops them etc. - is outsourced to people who can do it much more cost-effectively than
us?
I am asking for the Board to approve this strategic initiative.
Option B:
Give the go-ahead for outsourcing certain aspects of HR: payroll and benefits, pay
negotiations, training and development on a Group-wide basis. Also include recruitment of
admin staff and other non-creative/client-facing staff but retain the recruitment, training
and management of reward systems for all creative and account management staff within
the WRSX Group. The Board believes that the Group's value lies in its people and the
recruitment and retention of these people should be a major responsibility of the senior
team in each business. This will save 1m per decision period with an initial one-off cost of
2m in the current six month period.
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make the WRSX Group more competitive in terms of pricing. All WRSX subsidiary companies
will be instructed to use WRSX Graphix whenever possible.
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means creating direct links between customer spending on brands and contributions to
socially and environmentally focused projects. For example, buy this pair of jeans and we
contribute this percentage of the price to education in Rwanda. Eat at this chain of
restaurants this month and for every pound you spend this much will go to buying grain for
families in Ethiopia. We can link in with world disasters: floods, famines, disease. We can
work with clients to develop campaigns that link into education, health and alleviation of
poverty through direct financial contributions from consumers. In order to do this I think
that we need a creative team that specialises in this kind of work. I would suggest they are
based in London but have a global brief to support local teams in developing ideas and
implementing campaigns. This is not just a do-good-in-the-world CSR campaign for WRSX
but a market opportunity to build on companies seeking to build their own CSR profile.
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acquisition
strategic alliance
start-up
The chosen method is dependent upon various factors assessed at the time, the scale of the
opportunity and the strategic objective, balanced against the scale of the risk. We are
increasingly coming under pressure from clients to have a presence and provide services in
India and Leena Chakrabati and I have been working with various consultants to identify
both the target companies and format to extend our service footprint into India.
Why India? We can benefit from entry into the Indian market in a number of ways:
Access to the growing Indian market by making sure that we can provide our US and
EU clients with services so they do not put their business out to a competitor.
Equally we can provide Indian clients who are globalising with advice and advertising
in US and EU markets
Most of our major competitors are already in India or are planning to enter the
Indian market this year. This means that we are losing business to competitors
where a client wants to reduce costs by standardising its advertising campaigns
across its global markets.
Analysis by McIver & Co shows that if India continues on its current high-growth path, over
the next two decades the Indian market will undergo a major transformation. Income levels
will almost triple, and India will climb from its position as the twelfth-largest consumer
market today to become the world's fifth-largest consumer market by 2025.
Together with the consultants, Leena and I have identified three potential strategic alliance
partners and it is up to the Board to analyse the upside and downside of all three. I hope
that the Board will agree that this is an initiative that we should move forward on and not
decide to do nothing.
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Option B:
Consumer Perception / Advertising Ltd:
Background:
The agency was started 10 years ago by two ambitious executives: one from the leading
Indian telecoms company and the other from an international firm of accountants.
Head office: Mumbai
Branches: New Delhi, Hyderabad, Bangalore
Services offered: Advertising & media buying
Billings: Rs 800 million (approximately GBP 10 million)
Major client sectors: Telecoms, fmcg (fast moving consumer goods), automotive
Senior Executive: Vijay Krishnan, Chief Executive, Prakash Misra, Chief Financial Officer
Reputation among staff: Very ambitious
Reputation among clients: Fast talkers
Reputation among competitors: Very slick
Our assessment:
Upside:
We have interviewed the CEO and CFO and were impressed with their ability and ambition.
They saw the advantages of a strategic alliance with the WRSX Group and how we could
fast-track them into specialist areas such as: PR, brand identity and digital media. Plus our
US and EU clients can slot into their agency network. The agency has just signed a contract
with a major American FMCG company to be its advertising agency for India.
Turnover growth in past 12 months: +15%
PBIT: Rs 160 million (approximately GBP 2.0 million)
They are very forward-looking and have invested in Consumer Perception / Digital which
they have set up in Bangalore, drawing off the abundant local tech talent.
Downside:
While we have questions over the cultural fit between the two organisations, we have no
doubts about their ambition to be a significant player in the sub-continent.
The deal on the table: Rs 580 million (approximately GBP 7.4 million) for 49% of the equity
of the company.
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of how every business is operated and this is especially true of the relationship between the
individual businesses and the Group as it impacts on our relationship to shareholders. All
business MDs and their senior teams should have revised contracts agreed that include
clauses on the implementation of certain corporate governance standards. Failure to meet
these will result in instant dismissal. This will send a clear signal across the Group that we
are serious about Corporate Governance at WRSX.
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the obesity campaign. You also recommend to Goodey Fast Foods that this is an ideal
opportunity to launch a range of low-fat, low-salt fast foods in a major national campaign,
supported by the Information Office. You believe that all parties will see the good sense in
this approach. You also suggest that it is time to act in a socially responsible way and take on
board the anti-obesity campaign.
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6.5.4 Business integration how much autonomy should we give to the businesses we
acquire?
From: Sandrine Mauret, Non-Executive Director, WRSX Group
As you know, in my role as a non-executive director, I periodically visit WRSX subsidiary
businesses to meet with management, review performance and provide feedback to the
Board. I recently visited WRSX PR in Paris. When we acquired this business it had two great
strengths:
A recent review of the PR agency by Elodie Feuillet and her team of management
consultants at Feuillet et Associates SA, have identified some key issues.
Firstly, how do we integrate business that we acquire? Do we over-burden them with
standardised processes and red tape? How much autonomy should we give them? In an
attempt to drive down costs and to create a standardised WRSX way of doing things across
the group, we have prevented individuals from having the authority to work closely with
clients to customise their PR efforts to deliver PR that the client really values. We have
moved from an individually-based company with lots of management autonomy to one that
is perceived as being more bureaucratic in order to offer standardised modular solutions to
clients at lower costs. Many of the staff at the agency expressed a view that being
answerable to shareholders, as a publicly quoted company, as opposed to working for a
privately owned business previously, has been detrimental to morale at the agency.
Secondly, how do we keep their management - who are often very entrepreneurial having
set up their own business motivated and delivering business growth and profit? We have
lost key people from the business who were central to the successful relationship building
activities that underpinned long-standing client relationships. Some of our best people have
chosen to go to competitors, or set up their own businesses, rather than conform to a way
of doing business that they feel is detrimental to their ability to deliver value to their clients.
I believe that this is a much bigger issue than merely losing PR business to competitors. It is,
in my view, time to take a close look at how we integrate and manage businesses into the
WRSX Group without losing the competitive edge that they had as independent
businesses. I urge the Board to take the time to discuss this at our Board Meeting
Action Option C:
You decide that the current PR management team will not turn the situation around and
brief an executive search company to prepare a list of candidates who would be capable of
replacing the current management team
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investment in the digital media business without taking out loans or reducing WRSX's equity
share of the business.
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Management reason: Jean-Luc Breton has always been a creative maverick who has 'done
his own thing' and he pays little attention to budgets creative expression is all that is
important to him, despite the recent incentive package offered to him.
Sale price: Having spoken to business brokers the strategy would be to play off an outside
purchase against a management-buyout by the Jean-Luc Breton and his team. We have
estimated that the start asking price should be 5m
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6.6.3 Making WRSX the agency of choice for Asian brands expanding globally
From: Bradley Harris, New Business Director, WRSX London and Rod Cunningham, New
Business Director, WRSX New York
We have been approached by the number two automotive brand in India (in terms of
number of cars sold) Hindustan Automotive Limited (HAL) with regards to their brand
strategy and their plans to take the HAL brand into global markets. We have had an initial
review meeting with their marketing team to look at the strategy they have currently been
following with their range of cars. This is on a simple export basis, where they manufacture
in India and have independent agents in the Middle East and Africa. Cars and vans are sold
uniquely under the HAL brand. HAL has invested heavily in product development in recent
years and has designed a fuel-efficient, eco-friendly low-cost 'people's car' the EcoCar
which they believe not only has domestic market appeal among the emerging millions of
Indian consumers and in other emerging Asian countries, but also has a potential global
market.
The question that HAL wants help with is: Should it sell into Europe and the US under the
HAL brand or should it be seeking to build or acquire a western brand (as other Asian
automotive manufacturers have) in order to avoid consumer perception of Asian brands as
cheap, lower quality, maybe unreliable. The business that WRSX is pitching for is to help HAL
formulate and implement its global branding strategy. HAL is looking to WRSX Research &
Insight to help them identify which markets to enter, WRSX Brand Identity to help with
branding in these chosen markets, WRSX Audio Image to launch the car at local motor
shows, and for the main agency to help with national advertising.
Over the next few years we expect to see many more opportunities to bid for brand strategy
work from Asian businesses seeking new markets for their products. We believe that we
should use the HAL experience as a strategic blueprint for making WRSX the agency of
choice for Asian brands with global ambitions.
What does the Board consider a winning strategy for achieving this ambition?
Option A:
The key to this is industry sector experience and we should bring together our top
automotive people from across the WRSX Group so that we demonstrate the strength of our
team in brand strategy, market insights, creative, media buying etc. Our strategy should be
to get the HAL account and this should be our one and only priority. We can plan a longerterm blueprint for successful bidding for Asian brands once we have secured this account. As
three other agencies have been asked to present ideas, you have a one in four chance of
winning the business. The cost of this pitch would be 0.3m.
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From: Raphael Roux, CEO, WRSX Group and Rod Raoul Saurez, Non-Executive Director,
WRSX Group
After a great deal of thought and taking on Board pressures to produce earnings growth for
our shareholders, we have come to the conclusion that we need to change the way WRSX
formulates and practices strategy. Up until now, the Chair and CEO have been seen as chief
strategists, ultimately responsible for all strategic decisions, with WRSX Group executive
directors in support.
We have the benefit of strategic advice from our non-executive directors, who see a wide
range of business environments and are an invaluable help. They consult closely with the
CEO on strategy, however, as they are part-time appointments, their ability to contribute
substantially with strategy is limited.
The big question is who should be included in strategy? There are potentially a wide range of
people who could be involved in any strategic issue or strategy formulation. In addition to
the Chair, CEO, group executive and non-executive directors, there are strategic planners,
strategy consultants, operating company managers and perhaps even external
stakeholders.
This issue has been discussed with our Chair, Juliette Waldron, and she is aware that we
wanted to raise it as an issue and we request that this agenda item is included in your Board
meeting.
Action Option A:
You believe that it is essential to change the way strategy is formulated and practiced and
recommend a bi-annual strategic conference be held which would include: chair, CEO,
executive and non-executive directors, all operating company heads from all worldwide
operations. You believe that this is imperative irrespective of the cost as the investment
will be worthwhile in terms of increased shareholder value as strategy is implemented more
effectively at a middle management level. You believe that a wider forum of involvement in
the formulation and practice of strategy will be beneficial and that this break from the WRSX
tradition of not involving operating company senior executives in this process must change.
You think that the benefits will outweigh the difficulties and possible distractions from
operations. You decide to brief WRSX's internal PR people to produce a Group-wide video
cast to announce the first bi-annual conference to be held in the south of France in three
months' time, the conference centre and all travel and hotel accommodation to be booked
immediately.
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1. Executive Summary
(Complete this section of your plan last. Go straight to Section 2 of this plan. Return to the Executive
Summary when you have completed all other sections.)
A. Purpose of the plan (e.g. establish mission, vision, goals and objectives for WRSX Group in
the next three years.)
Do eradicate then inefficiencies within WRSX portfolio and organizational structure.
To change WRSXs growth strategy to become organic growth
To maximize and use the staffs capabilities over the portfolio
B. Company description
i.
ii.
iii.
I)
II)
III)
Company name
Products and services
Current/future structure
WRSX
Related Marketing Activities
Matrix Structure
C. Market description
i.
ii.
I)
II)
2. Mission Statement
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We exist to make our clients successful through differentiating and strengthening their brands by
creating advertising and using a range of marketing related activities.
3. Company Objectives
(Objectives should include the goal sought, the index used for measurement, the target to be achieved
and the timeframe in which the target is to be achieved.)
i.
ii.
iii.
iv.
v.
i.
ii.
(Key factors impacting on or about to impact on WRSX Group's business taken from your Phase 1
Strategic Analysis and how you plan to deal with them.)
A. Macro environment economic factors
The beginning of the new millennium has seen new competition in this industry
as giants such as Google, Yahoo and Microsoft begin to exploit their ability to
interact with millions of potential consumers of branded products.
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Larger advertisers such as Coca-Cola and Procter & Gamble have been moving
away from this commission/time compensation model to a model which
includes value based on a number of metrics
Another significant trend regarding the future of advertising is the growing
importance of the niche market using niche or targeted ads. Brought about by
Internet advertisers, this will have an increasing ability to reach specific
audiences.
Microsoft paid $6 billion (3 billion) to buy digital marketing firm Aquantive in
its biggest-ever acquisition in 2007. Aquantive advises agencies and website
publishers on putting adverts online, connecting buyers and sellers
Sourced From: TSE 10.0 Advertising Industry Profile
C. Sector/market analysis
i.
ii.
iii.
Describe the potential of the industry, outlook and trends and how you intend to
position WRSX in relation to these
Describe WRSX Groups' products and services, market position in its different
sectors as you see them in three years time
Competitive analysis and how you see that shifting
a. Market segments served by competitors
b. Strengths and weaknesses
c. Capabilities marketing, financial, creative, production, other
d. Current and future competitive threats
i.
Due to the changes in the macro environement and the business environment, we felt it would
be essential to focus on expanding the digital advertising sector within WRSX to capitilise on this
shift in advertising trends.
ii.
WRSX has diversified into a vast amount of marketing related activities, the portfolio of WRSX is
particularly advantageous, due to the different types of organizations which can facilitate each
other with information, i.e. research and insight, brand identity, digital marketing. With requests
from clients being highly specialized WRSX portfolio facilitates them with the resources to
achieve these wide specifications which clients demand.
iii.
A) The competitors of WRSX will extensively move to digital marketing due to the wide use of the
internet and the changing consumer demands.
B) This will be harder for WRSX to compete within these markets due to the high amount of
market share which companies such as Google or Yahoo, however due to the widely diversified
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portfolio which WRSX has, WRSX can capitalize on their unique cross/functional portfolio to offer
clients a highly specialized experience and deliverable
C) WRSX has a massive amount of employees which are spread over a wide geographic, which
means they can work flexibly to the demands of the clients, in addition to this WRSX has research
and insight subsidiaries within 4 different geographies enabling them to research data in areas
that match the demands of the clients.
D) The major shift from television, multimedia, radio to a more online form of advertising poses
as a great problem.
D. Marketing activities
i.
Overall marketing strategies that will deliver your company objectives in the next
three years
a. Geographic strategy
b. Segmentation strategy
c. Pricing strategy
d. Growth strategy
a)
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B. Skills/experience that give strength to the WRSX Group that you need to retain
Due to the implementation of a matrix structure, we want our employees to become cross/functional
and active within most of WRSXs operations. We therefore need to retain quality employees that
have a diversity of skills and interests which are relevant to the WRSX portfolio.
C. Obvious weaknesses in the WRSX team and how you will overcome them
Due to the acquisition growth strategy, WRSX has a very wide communication channel, steep levels of
hierarchy and significantly higher staff cost. The matrix structure will provide WRSX with a structure
that enables subsidiaries to come together and collaborate within the WRSX structure, using the
capabilities of different employees to maximize efficiency and harness creativity by encouraging
different perspectives to take part within the different parts of the portfolio.
7. Financial Data
A. Projections for the next three/four years
Double WRSXs profits by 2018
Significantly reduce the staff cost ratio to 40% by 2018
correct decision. As focusing on sustainability and promotion, it is believed that WRSX can
receive plaudits for innovation and technological development, and this will ensure to
improve WRSXs brand identity and image.
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