ECS | Results Feedback

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Board Meeting 1 Introduction to feedback Strategy in action

Purpose At the end of each decision period there is an opportunity to review the Agenda Items for that decision period and the issues that they raise for the WRSX Group. The purpose of this feedback is to enable the participant to answer the following questions: 1. Were you able to identify the key strategic issues raised by the agenda item? 2. Were you able to anticipate the impact of your decision on Non Financial Performance Indicators (NFPIs)? 3. As in the real world, in most cases it is almost impossible to predict the financial outcomes of any major strategic decision accurately. But it is possible to anticipate the financial impact of one action alternative compared to choosing other action alternatives. Were you able to identify which action options would be most likely to deliver long-term return on investment? 4. If this were a case study or exam question, which strategic models and frameworks from the text would be useful in demonstrating your grasp of corporate and business strategy when addressing this agenda item? Format Each Decision period you will receive feedback in the following format for each Agenda Item: 1. Some key strategic questions raised by the Agenda Item 2. Some broad feedback on the impact on Financial and Non-Financial Performance Indicators of the various action options. 3. Some suggested models and frameworks from the text that might have helped you surface the strategic issues raised by the Agenda Item.

Phase 3 Board Meeting: One Feedback on issues raised by the agenda items Agenda item one Market opportunity in China
This agenda item is based on a common strategic issue for companies looking to expand globally: when and how to expand. Questions to ask would be: 1. Where is the competitive advantage for WRSX in being in China? 2. What is driving the WRSX strategy for global expansion? 3. How can WRSX position itself in order to maximise the opportunities? 4. Does the WRSX Group have the resources and capabilities to develop a profitable business in China? 5. Is this the right time in terms of the market development of China's consumers? 6. Are there other issues such as ethical or legal issues? 7. If the decision is to go ahead with entering the Chinese market, what would be the best method for doing so based on all of the above? Financial and non-financial impact The reality is that there are no guarantees when entering a market of this size and stage of development. The key issue is balancing opportunity with risk. WRSX must consider both its reasons for entering this market and how it can position itself for competitive advantage. Financial investment in China requires the Board to take a long-term view of its return to shareholders. Depending on your chosen method of entry, investment in China will take more or less time to deliver positive financial benefits, i.e. increased profits may not be immediate. Not entering the Chinese market will also have financial consequences. WRSX would continue to lose business to competitors in China itself and also with clients seeking to create global campaigns. A major investment would be a positive for Management of Growth, Client Attraction and Retention, and Leadership Capability but a negative in terms Management of Risk, especially financial risk and business risk this would vary according to method of entry. There may also be some Corporate Social Responsibility issues raised by entering the Chinese market to be taken into consideration. Relevant models and frameworks: 1. International strategy framework 2. Four international strategies 3. Market entry modes: advantages & disadvantages 4. Ansoff matrix. Back to top | Back to Company Performance and Results

Agenda item two Sustainability policy

This agenda item is based on a current strategic issue for many companies: how to demonstrate their support for sustainable development/carbon footprint reduction and how to implement this across the business. Questions to ask would be: 1. Is this a suitable subject for Group-wide action and therefore should it be discussed at a Main Board Meeting? 2. What is the best way to get buy-in from each part of the business? 3. How important is this issue to WRSX clients, suppliers and employees? 4. What could be the impact on shareholders if WRSX fails to respond appropriately? 5. This is a global/local issue. Does WRSX have a global policy on sustainability or should this matter be managed at a local level? Financial and non-financial impact Sustainability is clearly an issue in most industries so this Agenda Item has an impact both internally on the WRSX Group and externally in terms of client relationships and investor satisfaction. The option to 'green' one of the agencies is a major investment but with potential for major returns. The option to develop internal capabilities in this area will deliver long-term returns. Deciding to let this be managed entirely locally means no investment but little or no additional return for the Group. In terms of the market's view of WRSX, a high-profile 'green' agency will deliver good results especially in terms of market positioning, strategic leadership, CSR- sustainability/carbon footprint and breadth and of client services. The less expensive option of developing internal capabilities would also perform well in these areas, although client awareness might be less in the shortterm. The other two options would have only a limited impact on market perceptions of WRSX as a 'green' organisation, and no impact on how the market sees WRSX as a campaigner for sustainability practices in the industry. Relevant models and frameworks: There is a lot of information on company websites in this sector on Sustainability policy and it is clearly a competitive issue, as well as a CSR issue. Stakeholder mapping could be used to measure the stance of potential impact on various stakeholders on this issue. This is also a change management issue. How to bring about cultural change that allows effective implementation of a Sustainability Policy across the Group that is also effective at a local level? Helpful models and frameworks might be:

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1. Stakeholders analysis 2. CSR Stances 3. Some questions of CSR 4. Conflict of Expectations 5. Parenting Matrix 6. Styles of Managing Strategic Change. Back to top | Back to Company Performance and Results

Agenda item three Delivering the doughnuts

This agenda item looks at options for managing individual performance and, through this, company performance. It raises the issues of changing employee expectations of the employer/employee relationship. It also highlights the importance of aligning individual, personal objectives with organisational objectives through an effective performance management system. Questions to ask would be: 1. What is driving the move towards performance assessment based only on objective-achievement? 2. What are the risks of introducing such a scheme? 3. What could be the up-side of introducing such a scheme? 4. How would such a move be perceived in this industry compared to other industries? Financial and non-financial impact The financial impact of any such programme is very difficult to predict. It could have a profound impact on individual performance and through that Business/Group performance. But if, and only if, objective setting really delivers strategic and organisational goals. An incremental approach would therefore be the least risky option. Another risk would be that both clients and suppliers would suffer from lack of availability of key contacts due to the new regime. However, if it worked, it could be a major driver to improved performance and could also impact on important issues in the business such as the ability to retain key personnel and attract new talent. Relevant models and frameworks: This agenda item focuses on the management of people. Helpful models and frameworks might be: 1. Stakeholders mapping power/interest 2. Organisational purpose 3. Culture's impact on strategy development 4. Cultural web 5. Organising for success 6. Strategy & people 7. Key elements in managing strategic change 8. Types of change 9. Contextual features of strategic change programmes. Back to top | Back to Company Performance and Results

Agenda item four Disposal of unprofitable business

This agenda item focuses on whether or not the Board should agree to the disposal of PromoCo. Questions to ask would be: 1. What is the strategic fit for this business in the WRSX Group? 2. What are the capabilities required for managing such a business and are they ones that WRSX has or wishes to acquire? 3. Could the resources released by selling all or part of this business be better used for more profitable/core parts of the business? 4. Is this a decision that should be made locally or is it directly relevant to the WRSX Group strategy and therefore should be made at Board level? Financial and non-financial impact The major decision to be made here is not a financial one but a strategic one. Is this business core or non-core? Is this business a new product/service that can be sold to existing clients (product development) or is it in fact a diversification from WRSX Group's main business? Does the business require similar capabilities and resources to those of other service lines in the Group? Is the client base the same? Are the likely returns such that they justify keeping the business? If you take the view that this is a diversification, the risks would be higher than if you take the view that it is a product/service development. Relevant models and frameworks: This agenda item focuses on the management of people. Helpful models and frameworks might be: 1. Strategic directions Ansoff matrix 2. The growth share (or BCG) matrix 3. Strategy guidelines based on the directional policy matrix 4. The parenting matrix. Back to top | Back to Company Performance and Results

Agenda item five Culture change in New York

This agenda item looks at the potential impact of culture change on business performance. Questions to ask would be: 1. How important is the culture of the business in terms of business performance in this industry sector? 2. What are the risks of introducing a major cultural change programme into the New York office? 3. What could be the up-side of introducing such a programme? 4. Should the change be incremental/ evolutionary or radical/revolutionary? Financial and non-financial impact This industry sector relies on the creativity and innovation of its employees, as well as the customer relationship management skills of its account management teams. The key question is therefore 'How detrimental is the current culture to the performance of the business?' Radical change will be disruptive but is more likely to produce significant financial gains in the long-term but how long before these returns outweigh the disruption to the business brought about by the proposed changes? In terms of the NFPIs such decisions impact broadly across all the headline NFPIs either positively or negatively as they impact on many different stakeholders. The option to move office would allow the WRSX Group to improve its Sustainability Profile, as a new office could be chosen with this in mind. Relevant models and frameworks: Helpful models and frameworks might be: 1. Analysing culture the cultural web 2. Types of change 3. Contextual features of strategic change programmes 4. Forcefield analysis 5. Styles of managing strategic change 6. Key elements in managing strategic change. Back to top | Back to Company Performance and Results

Agenda item six Consultants report on opportunities in digital media

This agenda item looks at how a business evaluates the options for exploiting a new market/sector opportunity. Questions to ask would be: 1. 1. What is the potential for this market/sector in the future in terms of contribution to future profits in different time horizons based on the report from McIver & Co?

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2. Can WRSX compete with the large, global agencies by providing its clients with a broad range of digital products and services? What range of capabilities would it need to do this and what would be the investment/risks? 3. What would be the risks of positioning WRSX as an agency that outsources its digital services in this expanding market? 4. Would having Jay and his team traveling round the world providing expertise to clients/colleagues be a sufficient response in the longer-term? Financial and non-financial impact The question to ask here is: to what extent does WRSX need to be a major player in the Digital Marketing sector in order to remain profitable into the future? Is this business core or non-core and therefore what investment should be put into this business? In terms of NFPIs the major areas of impact are around management of growth, client attraction and retention, management of operational, market and business risk and strategic leadership Relevant models and frameworks: Helpful models and frameworks might be: 1. Porter's five forces 2. First mover advantages/disadvantages 3. Strategic capabilities and competitive advantage 4. SWOT analysis 5. Sustainable competitive advantage and strategic lock-in 6. Game theory . Back to top | Back to Company Performance and Results

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2013/3/20