|
 |
 |
|
|
 |
Student Publications
Author: Anna-Denise Ioannou
Title:
Foundations of Management - A Strategic
Review
Area:
Country :
Profile:
Program:
Available for Download:
Yes
Sharing knowledge is a vital component in
the growth and advancement of our society
in a sustainable and responsible way. Through
Open Access, AIU and other leading institutions
through out the world are tearing down the
barriers to access and use research literature.
Our
organization is interested in the dissemination
of advances in scientific research fundamental
to the proper operation of a modern society,
in terms of community awareness, empowerment,
health and wellness, sustainable development,
economic advancement, and optimal functioning
of health, education and other vital services.
AIU’s mission
and vision is consistent with
the vision expressed in the Budapest Open
Access Initiative and Berlin Declaration
on Open Access to Knowledge in the Sciences
and Humanities. Do you have something you
would like to share, or just a question
or comment? We would be happy to hear from
you, please use the Request Info link below.
For more information on the AIU's Open Access
Initiative, click
here.
|
|
| |
|
|
| |
FOUNDATIONS OF MANAGEMENT
ASSIGNMENT
"A Strategic Review"
Case:
Action Global Communications
(AGC)
International Public Relations
Company founded and
headquartered in Cyprus.
1. INTRODUCTION
This assignment attempts to examine
the competitive standing and future
of AGC, a Cypriot
founded and headquartered Public
Relations company with a presence in
36 countries for
2
more than 35 years, employing a team
of more than 200 professionals -
with a turnover of
24.5 mil ion for 2005. In doing so
we are going to examine the external
and internal
environment of the organization, by
using business models that wil help
us conduct a SWOT
analysis and evaluate AGCs VMOST in
order to reach some conclusions
concerning the
organizations strategic position. A
brief description of the company is
given below.
COMPANY HISTORY AND BACKGROUND
AGC was founded in 1971 by
PR-industry guru Tony Christodoulou
currently CEO, to
generate the power of public
relations in emerging markets (East
and South Europe, North
Africa, Central Asia and the Middle
East) by operating an international
network and acting as
a regional hub and single point of
contact for the clients. AGCs core
practice is the creation,
development and implementation of
region-wide PR campaigns, in a
wide spectrum of
sectors including aviation (British
Airways in 28 countries), travel &
tourism (Visit Britain,
Radisson Hotels, Four Seasons
Hotels, Cyprus Tourist Organisation),
IT, sports marketing
(World Rally Championship, Paris
2012) oil & gas (OMV), banking
(Nomura Bank, Bank of
Cyprus, Piraeus Bank) real estate,
and automotive (BMW) etc. AGC
expanded rapidly the
past 5 years by buying out local
partners either fully or partial y.
This move has created
problems with its financials and
forced the directors to acknowledge
the need of a
comprehensive business plan, leading
to the development or enhancement of
Finance, HR,
New Business and Client Service
departments, to remain a key player
and profitable entity.
2. VMOST ANALYSIS/STAKEHOLDERS
2.1 VMOST ANALYSIS
In short the analysis of the AGCs
VMOST found in appendix 8.1 is
clearly focused on new
business followed, by
improvement of profitability, cost
control and effective use of
existing
infrastructure. The involvement in
the new business tactics of
the country managers and the
3
necessity of inspiring and involving
al the employees in the companys
strategic plans seems
imperative; while current levels of
client service must reach high
standards.
AGCs recent designed vision, to
make public relations the lead
discipline in the
communications mix for the region
it operates, is highly ambitious
while the mission
encompasses its purpose of
existence. Although both are well
written; lack of commitment
from the directors and effective
communication among the network of
either statement results
in an unclear direction and absence
of commitment. On the other hand the
objectives meeting
the ,,SMART analysis are simple and
straightforward. Therefore provided
the ,,network engine
commits and focuses on them
immediately, actual results (in
short: 3-5% increase of new
accounts in each office, focus on
value add services and improve cash
flow and margins by
controlling costs and capital
management cycle) could be achieved
within the determined
time frame. Moreover AGCs three
faced strategy; includes short and
long term goals
supported by door opening tactics,
focus on new business by achieving
growth using the
existing infrastructure in the short
term and improving financial
position in the long term.
In simple words, we could say that
strategy and tactics are wel
designed but implementation
hangs in thin air. Unless an
incentive scheme, substantial
training, performance monitoring
and fusion of passion by the
directors are set in motion in a
consistent manner, the entire
business plan of Growth Increase
Revenue Vision; will be extremely
difficult to fulfil.
2.2 STAKEHOLDERS ANALYSIS
AGCs has eight important
stakeholders, divided into external
and internal; shown in Fig. 1
(Stakeholders Map) and analysed in
more detail in appendix 8.2.
Stakeholder management
should primarily be concerned with
long-term strategic decisions,
because is important to
know about their expectations and to
determine, to what extend they could
and would exert
an influence.
Most influential stakeholders
are analysed below.
4
Internal Stakeholders:
Directors- AGC founded and
stil owned by the same family was
build and is strongly
depended by their performance on a
personal basis. Having complete
control on expansion
decisions and budget allocations;
gives them the highest level of
interest and influence. In
addition they monitor and influence
almost al activities on a daily
basis. Clearly, immediate
profitability and family motives
(strongest expectations) are the
driving force of the directors,
goals which are aligned with the
strategy and objectives. Rather
short sighted approach
though, lacking real commitment to
the Vision and Mission statements.
Employees-On the other hand,
AGC being a public relations company
depends immensely on
the excel ent levels of service
delivered by its ,,satisfied
employees to maintain and acquire
new clients. This issue is not much
appreciated by the directors who
need to reconsider
offering valuable job benefits
(dedicated HR schemes) in order to
decrease the high level of
staff turnover and enhance the
feeling of belonging in a solid and
reliable organisation,
(expected attributes from employees
leading to pay rises and bonuses).
Even though the
employees have no say on the
decision making process, are
the face of the company. At the
very least, they need to be
communicated the key goals and
objectives.
External Stakeholders:
Clients- Evidently the
objective to offer impeccable
service; meets the clients
expectations of
receiving ROI, leading to successful
communication campaigns which
generate sales
opportunities and positive
reputation management for them.
Retention of existing and
acquisition of new clients is the
major influencer of the companys
revenues.
Therefore the company must ensure
that the clients perception of its
services matches their
expectations more than they expect!
Suppliers- They have great
power over AGC operations and client
service delivery levels,
because the company depends on their
,,mood whether they will publish or
cover a story
generated on behalf of the client.
AGC does not pay the media nor has
advertising budgets to
allocate; therefore maintaining
excellent relationships with the
media is a priority and a
constant effort. Examining AGCs
successful business tactics so far
proves that the medias
expectations are met successfully
via being a credible and transparent
source of information.
Fig.1 Stakeholders Map
5
Stakeholder Power
Low
High
1
5
10
F
Keep advised low level
Keep informed regularly- stay
attuned
ulf
reaction
to their needs and behaviours
ilment
P
of ex
G
p
S
ect
5
C A
a
OM
tions
E
M
C
Monitor Closely
Keep informed-
B
Keep regularly informed
Remain aware of their
Lobby actively
contacts with others
10
High
External Stakeholders : Suppliers,
Public, Government,
Clients, Competitors
Internal Stakeholders : Board
of Directors,
Employees, Management
Therefore, since AGC operates within
complex, culturally different and
emerging markets
must constantly assess and evaluate
the external forces of interests and
influences and
adjusting them with corporate
objectives.
Following in our analysis, we are
going to take a look in the external
environment of Action
Global Communications.
3. EXTERNAL ANALYSIS
In this part we aim to give a
representative analysis of AGCs
external environment in order to
understand the chal enges of the
highly competitive market of PR
services, in the regions it
operates by using various academic
business models as the PESTLE, Life
Cycle,
Competitors analysis methods and the
Porters 5 forces model.
3.1 PESTLE ANALYSIS
Ideal y to thoroughly analyze the
environment in which AGC operates we
could conduct a
PESTLE analysis for each region;
Middle East/ Balkans/ Central Europe
/ East Europe and
North Africa, because an external
influence could have a positive
impact in a specific region
6
while at the same time have a
negative impact in another region.
Since the main problem with
PESTLE factors is that they are
continuously changing; is important
to analyze what is
affecting the company now.
Therefore, for the purpose of this
assignment we have conducted
a more generic PESTLE analysis found
in Appendix 3, focusing on the main
threats and
opportunities facing the company as
a network.
Key current Opportunities:
Despite the global trend of reducing
operating costs as a priority, the
marketing departments
stil enjoy high budgets; whether are
intended for advertising, marketing
or public relations.
Most importantly, corporations the
past 3 years are shifting from the
traditional ,,costly
advertising campaigns and search for
more innovative and alternative ways
of communication
via ,,value for money public
relations methods. Clearly this
global economic trend of allocating
higher budgets for PR activities; is
a huge opportunity for AGC for all
markets; because its
client base is consisted both of
international (high pr budgets) and
local clients.
EUs recent expansion of adding 10
new member states including Cyprus
is proving a door
opener for new business. Cyprus
remains the most prosperous of the
new member states, as
both inflation and unemployment
rates remain relatively low.
Healthy facts which al ow the H/O to
use its current infrastructure and
become a valuable
partner; acting as a single point of
contact for global clients who wish
to do business in these
countries. Presence of more
than 15 years in the Balkans, in
Eastern and Central Europe,
strategic affiliations with
local agencies and highly
experienced staff are AGCs
network
powerful competitive advantage.
(Positive change in the political
environment).
Normally language and cultural
differences tend to be an obstacle
in business, but for AGC is
an opportunity. Employing more than
200 professionals, mainly local
staff in each agency (36
countries) under the H/O support and
overview; enhances client service
and creates real
relationships between the client and
the suppliers (media) being the
hardest thing to achieve.
Along the same lines, changes in
lifestyles; positively challenges
AGC core ability to adjust
and present innovative PR ideas to
the client.
Key current threats:
7
However, not everything is as bright
as it seems until now. Real threats
exist as well.
Intense competition affects the
industry immensely by acquisitions,
unfair practice, and loss
making fees (just to win a specific
project with the prospect that the
client wil become a long
term one.) The domination of this
market by few multinational agencies
(quite often
Advertising ones, offering PR
services for free on the side) who
strive for market share
-sometimes at any cost was, is
and will be the greatest threat
for AGC. This profession has
no limiting entry requirements;
anyone from former employees to
senior retired managers can
start up a PR agency. In addition is
important to continually identifying
the strategic policies of
the competitors and comparing them
against AGCs, i.e. benchmarking of
growth or
acquisition strategy. Moreover,
focusing on new business
opportunities and reassessing its
competitive position in relation to
competitors, is in line with the
strategy and objectives set.
Level of education, finding and
holding qualified people are another
competing element
among agencies. People are the face
and heart of AGC. Demand for these
people is rising
due to growth plans of large
consulting agencies, while on the
other hand many graduates
choose to join start-ups. Without a
doubt, ongoing investment on the
human capital is needed
for AGC.
In short the major external driving
forces in the PR consulting industry
are:
all the changes happening in the
clients environment ( Threat and
Opportunity)
the rising competition within the
industry (Threat)
the investment on human capital (
Opportunity )
the developments in the areas of
technology ( Threat and Opportunity)
3.2 LIFE CYCLE ANALYSIS (LCA)
As a principle where LCA is used to
evaluate procedures rather than
products, the information
can help ensure appropriate choices
are made. Fol owing the different
stages of the LCA
(Johnson & Scholes 2001), AGC
depending on the region it operates
can be placed in al five.
In the Middle East booming
markets- and in Eastern Europe
emerging markets - the
company gains market share daily
while for example in Greece it
strives to keep it, let alone
gain in expense of the competition.
Of course the strategy and
objectives set need to be
adjusted accordingly for each
country, but following their main
direction are applicable. Finally
the network as an entity is at a
growth stage.
8
3.3 THE MAJOR COMPETITORS
The competitors affecting AGC
network are divided into two main
groups:
Multinational agencies i.e.
Weber Shandwick, Hil & Knowlton,
Porto Novelli.
Having high operating costs, being
faceless, weak presence in AGCs
operating
markets; give to the company new
business opportunities. Main threat
remains their
strong brand image; when it comes in
terms of winning international
clients
,,Stealing international clients
from multinational agencies is an
objective set for this
year.
Local agencies. I.e. in
Cyprus is DELEMA, Marketway, Gnomi.
These agencies
(dominate Cyprus PR market) are
advertising ones offering PR
services on the side
to their customers. Generally
companies in Cyprus assign their PR
needs to their
advertising agencies for two
reasons: a) PR tool is
underestimated b) Saving of
Budgets.
This practice creates both
opportunities and threats for AGC,
being a purely PR
agency. Eventual y clients realize
the value and differences of PR Vs
Advertising
methods offered to them by
advertising agencies which DO NOT
have dedicated PR
departments. On the other hand
advertising agencies started to
acknowledge this fact
by creating PR departments. AGC
should take this opportunity and act
aggressively
to win new clients.
3.4 THE CUSTOMERS
The scenario with the customers is
the same as with competitors:
International customers
British Airways, Goodyear, Siemens,
BMW etc.
Control ing costs and decrease in
budgets while maintaining value for
money deals
and successful results; is a major
trend within international
corporations. Therefore
9
AGCs cost effective PR campaigns,
established network and experience,
allow the
company to be a serious choice of
potential clients when choosing an
agency.
Local customers Any company
requesting AGCs services along the
network
either in their country only or for
other regions as wel . The threats
with this group is
low budgets, family owned business
(use traditional ways of promotion
i.e.
advertising, marketing only) hard to
evaluate PR benefits and the easy
way out by
hiring internal PR manager.
Alternative al these elements can
turn into opportunities
by educating local customers of the
value of PR services offered by an
established
network with reasonable fees.
3.5 PORTER'S 5 FORCES MODEL
Assessing industry attractiveness
Intensity of rivalry is high because
every agency is fighting for market
share and the service
market is always a struggle of
tenders and awarded projects.
Competition is especially strong
within the market segments and
within the player groups, while the
market is dominated by
large players. Moreover, big players
have developed different strategies
by positioning
themselves as a one-stop-shop
service for the consulting needs
they might have. Therefore
they focus on long-lasting customer
relationships and cross-selling
opportunities, almost at
any cost, a tactic that AGC
currently does but without a defined
plan.
Threat of new entrants is high. A
threat of new entrants into an
industry depends largely on
barriers to entry. Specifically for
the PR industry; entry barriers are
considerably low, no legal
limiting regulations, need into
fixed assets investments is little,
forming agencies is quite
simple, growing entry trend of
companies from outside this industry
i.e. IT companies; surely
leaves no doubts of this threat for
AGC.
Threat of substitutes is low.
Although PR does not receive as much
attention as advertising
and marketing, its role is
increasingly important to
organizations, because it fully
support them
10
to influence public perceptions. PR
discipline and activities cannot be
replaced by other
communication methods and receive
the same results. Al three are
interrelated and
compliment each other.
Bargaining power of suppliers is
high. As already mentioned earlier,
suppliers are the media.
This means that publication of
articles and any other media
coverage is depended on the
good intentions of the journalist
whether they cover the story.
General y publicity is received
by maintaining ,,excellent
relationships with the media,
because articles and news releases
are not paid. Media can turn the
publics perception in a split second
either positively or
negatively. One of the strongest
advantages of AGC is the remarkable
media relations it has
around the network, a guaranteed
success factor which must be
maintained and enhanced.
Bargaining power of buyers is high.
Almost needless to say how powerful
customers are. The
growing emphasis from clients on ROI
(Return-on-investment) is a major
concern to the
industry. Switching ease allows
clients to constantly press and push
for lower fees. PR
industry needs to be more
accountable by moving from wide
coverage in media to more
precise and measurable coverage,
which can be proven to affect the
target audiences
attitudes and behavior.
Overall the PR industry being a
younger one than marketing and
advertising shows high
future growth margins attracting all
kinds of players (from one-man show
to international
corporations). In addition TV
commercials are losing their charm
an opportunity for PR
agencies therefore AGCs must
create and deliver revolutionary and
exciting ways of
communication while meeting the
clients expectations for ROI.
A recent debate said: ,,The market
for PR and communications
professionals can only be
described as extremely healthy. A
recent article in the Economist
magazine (January19th,
2006), cites PR as ,,an increasingly
vital marketing tool.
Fig.2 Porter's Five Forces Model
applied for Public Relations
industry
11
Threat of new entrants - HIGH
·No entry barriers
Bargaining power
·Local ADV agencies develop
dedicated
of buyers-
Bargaining
independent PR departments
power of
HIGH
·Smaller specialised consultants
start to
suppliers -
serve customers of all sizes
HIGH
·many companies from outside the
consulting industry enter this
market
·Switching agencies
·Low capital investment
effortless process
·Growing emphasis
l
from clients on
return-on-investment
·Publication of
Intensity of rivalry - HIGH
(ROI )
articles depends
·PR budgets almost
entirely on the
·Established international
always lower from
journalist's mood
players: one-stop-shop
Advert. & marketing
·Imperative to
service creating business leads
maintain excellent
·Fees war
relationships with
·Local ADV agencies offer
the media
PR services to existing
·Negative media
Clients almost for free
Coverage over night
·PR is cheaper/ supports/enhances -
Advertising and Marketing
·Increasingly role of PR
·PR is a growing young industry
·In-house PR capabilities do not
preclude the use of an outside
agency
·Use of online-media grows
Threat of substitution - LOW
4. INTERNAL ANALYSIS
In this section we are going to
analyze how AGC uses its resources
and configures its
operations in order to develop
services that meet market needs and
create a competitive
advantage. In doing so we used the
concept of Porters value chain
(1985), identified and
evaluated the factors of Mc Kinseys
7S model, presented and translated
financial data and
final y assessed AGCs distinctive
capabilities.
4.1 VALUE CHAIN
AGC's primary activities and
supporting activities hold
simultaneously core competencies and
vital linkages exist between them.
An outline of AGCs value chain is
found in appendix 4.
New contracts being the primary
source of operations, separated in
retainer fee and ad hoc
contracts are the inbound logistics.
International retainer fee accounts
are the companys
strength; i.e. British Airways (BA)
due to automatic renewal of contract
every year for the past
12
30 years in 28 countries. Therefore
AGCs power of servicing this client
successfully for so
many years in so many countries has
two positive effects: a) becoming a
strategic partner for
BA thus making it costly for them to
switch agency easily and b) enhances
AGCs brand
name across the region it operates.
Moreover ad hoc projects and other
retainer fee accounts
remain a daily priority in securing
existing clients and attracting new
ones.
Operations include the pitching
(preparation of offer/proposals)
process until the contract is
signed. A major weakness used to be
the preparation of these proposals
only from a PR
perspective, neglecting the clients
primary goal; that of increase in
sales in general. The
recent introduction of dedicated new
business team, is educating country
managers in
presenting more ,,communications
strategic proposals. Further to
brainstorming and creative
PR ideas, the need of addressing the
clients sales targets is becoming
the next competitive
advantage of AGC.
Outbound logistics include project
implementation which is directly
linked with service of
monitoring and evaluation. Both are
powerful primary activities because
are what the client
perceives as value for their fee.
Results measurement of PR activities
is not easy to prove to
clients; except with the number of
cuttings and advertising value
received. AGC maintains the
competitive advantage of high
standard services; something that
took years to build, evidently
very difficult to create or copy
over night.
Marketing department never existed,
because the core philosophy of the
founder is that a
successful PR agency shouldnt be
doing PR for itself. Indeed the
company hasnt bought its
reputation. It was build via word of
mouth effect by being among the top
five PR agencies in
each country. Nevertheless modern
times require more dynamic presence,
thus the creation
of a dedicated Sales/ New Business
team was necessary.
Next we are going to examine the
supporting activities of AGC in
order to have a full view on
the inside of the organization.
Firm Infrastructure - As
mentioned in the stakeholders
analysis, AGCs directors and
founders are the control ing force
who quite often ,,panic and deviate
from the long term
13
objectives; in an effort to achieve
immediate results now. On the other
hand, the core
competence (value) of the directors
skil s and in-depth market
intelligence is almost priceless
and should be promoted in any
possible way.
Human Resource Management -
In addition, human resources
management does not seem
to be one of the companys
priorities. Due to the fact that
there is no HR department; the
accounts departments of each office
deals with operational procedures
such as payment and
compensation, insurance etc for
their staff. Currently the directors
are examining HR schemes
with the help of an external HR
consultant, a promising fact.
Technology development A
large part of AGC operations is
based on basic IT structure;
supporting its network on a 24 hour
basis, keeping up to date with new
technologies. None of
the less though, is all basic
systems of exchanging information,
while using as a primary tool
the emails. Automatically the whole
system is unsophisticated. For
example the accounting
process of the network is not
streamlined creating additional work
and duplicated effort
leading to high operational costs.
Another example is luck of a global
HR application allowing
the organization to reduce its
efforts in managing its human
resources. Ultimately the
company does not invest in IT
systems to gain the competitive edge
and enhance its primary
activities by realizing benefits
such as:
Increase Value add to its clients
Increase knowledge share across the
network
Allow employees across the network
to jointly work on projects
4.2 MC KINSEY 7S MODEL
The main conclusion of the value
chain analysis is luck of HR
management procedures to
support the companys most valuable
and profitable asset; its people! In
an effort to have
better understanding we will use the
Mc Kinseys 7S model.
Hard S's: Easy and feasible to
identify
14
Strategy Derived from
VMOST, is well structured and
detailed actually responding to the
external environments challenges.
Again the issue here is that
strategy should be
communicated to the staff, thus
winning them over and achieving
desired results for the
Network.
Structure The
organizational structure of AGC
could be characterized as flat. In
fact the
directors are on top, followed by
client service, finance and new
business managers who
support the network from the H/O.
Further down we have the country
managers, their
department heads (only in big
offices) and the executives. Career
paths do not exist.
Systems The formal and
informal (basic) procedures support
the strategy and structure. In
addition the flexible pricing policy
and the well organized and effective
new business team are
considered to be major strengths of
doing business. Surely the systems
could upgrade and
even become more sophisticated, thus
creating an added value for the
client.
Soft S's: Hardly feasible and
difficult to describe
Style (culture) Dominant
values are ,,lets make it for the
month, while managers focus on
the day-to-day activities (to
achieve unstructured targets)
maintain a casual relationship with
their team members, failing to
create enthusiasm, loyalty and
serious involvement in the
companys objectives.
Staff Absence of incentive
schemes, internal career plans,
consistent management training,
allow no room for high morale. Its
imperative to introduce HR-systems
to address these
issues, thus achieving one of the
most important objectives; that of
providing high standards
of service. Satisfied and wel
informed employees affect the
companys positive performance.
Skills - The distinctive
competences of AGC include
multi-experienced and diverse
professionals who deliver creative
and innovative PR ideas.
Unfortunately high staff turnover
results in losing these
professionals; an identified
weakness.
Shared Values - Being a
perception influencer company; is
defined by integrity, transparency
and simplicity; shared and operating
by values of AGC.
.
15
4.3 FINANCIAL PERFORMANCE
Since AGC is a family private owned
company, access to financials is
limited and not so
transparent. Therefore in this part
of the analysis we will attempt to
present some facts and
figures concerning financials in
order to get a better understanding.
Five years ago AGCs financial
position was not one of its
strengths. The fact that the
company was making losses every year
forced the directors to consider
hiring a general
manager whose main responsibility
was to shift the company from loss
making to profits.
Today the Network is getting
financially strong; however there
are business centers which are
loss making currently and they
represent 20% of the network
operations. Gearing ratio is low
and the reason is that AGC doesnt
use loans or large overdrafts to
operate. Occasionally
cash flow becomes an issue due to
collection cycle of fees from local
clients, even though
most of the clients are
international corporations who pay
normally.
Impact of retainer fee clients on
AGC's revenues:
The major international retainer fee
client represents 36% of AGC overal
revenues which
could be both a positive and
negative fact. Positive because
specialization and in depth know
how of a client makes AGC a
strategic partner for life, while
should an international client
decide to leave the agency this
could have a negative impact.
Therefore the balance between
costs and income needs to be
enhanced by more retainer fee
clients focusing on network
accounts - thus creating
economies of scale with the existing
infrastructure.
16
In Fig.3 Normal
Distribution Graph demonstrates the
impact of retainer fee clients. To
get a
better understanding of the revenues
we have separated the extremes in
retainers by
excluding the low end (low fee
accounts) and the high end (premium
fee accounts) to
calculate an average realistic fee
(global retainer), which is derived
from the volume of
revenues. This method helped to set
feasible and realistic targets for
2006.
Fig.3: Normal Distribution
Graph
·
Action Global PR Revenues 2005
·
Fees 180,135*12 = 2,161,620
11 accounts
·
36% Revenue from BA
Average Global Retainer 10,000
Less 5,000
25,000 +
Low A/Cs
Network A/Cs
Premium A/Cs
Act. Egypt
Merloni
BA
Savoy
Siemens
OMV
NEC
Visit Britain
CTO
Goodyear
BAE
5. SWOT ANALYSIS AND CONCLUSIONS
5.1 SWOT ANALYSIS
In the table below are included al
the outputs from internal and
external analysis. The ranking
for the strengths and weaknesses
that were identified in our internal
analysis was based on
the strategic importance that each
one of these factors has for the
organization now and in
17
the future. Additionally, for the
opportunities and threats the
prioritizing of the factors was
made according to their occurring
probability and their expected
impact on the organization.
Strengths
Weaknesses
1. Strong network Brand name
1. Human Resource Management
2. High standards of service
2. VMOST is not communicated to
3. Creation of dedicated New
Business
employees
department
3. Financials regular cash flow
problems
4. Multi cultural professional
employees
4. Basic technology is used
5. High profile long term clients
5. 7S linkages
6. Flexible pricing procedures
6. Lack of inspiration from the
directors
7. Excellent media relations
Opportunities
Threats
1. Expansion of European Union
1. Intense competition from local
agencies
2. Development of own network
and multinationals
3. Operation in emerging and booming
2. Entry in PR market of companies
outside
markets
the consulting industry
4. Global trend of innovative ways
of
3. Smaller specialized consultants
start to
promotion ie PR activities
serve customers of al sizes
5. PR market is a healthy one
4. Low capital investment, specially
in
emerging markets
5.2 CONCLUSIONS
The company being in growth state
has two promising assets, its
network in emerging and
booming markets and multi cultural
professionals offering high quality
of service which can
place AGC within the next ten years
as the market leader. Looking
forward is beyond a doubt
that a number of chal enges lie
ahead, especial y when current
globalization trends are taken
18
into account. Unfortunately not al
local units survive following
periods of turmoil. Moreover,
since the global scene is delicate
and unpredictable; at any given
moment big players could
open offices in the markets AGC
operates and become dominant
players. Therefore each
business unit must be competitive
and become profitable in it self.
Thus becoming the market
leader in the specific country,
resulting to sustainability and
security, while implementing HR
schemes to motivate employees and
keep them on board.
6. RECOMMENDATIONS
To sum up, the following are the
main recommendations for AGCs
strategy:
Communicate strategy to staff to
create sense of acceptance and
ownership and
motivate them by applying incentive
schemes and offering valuable job
benefits.
Through continuous environmental
scanning and analysis of Porters
five forces
model use the existing market
position to control suppliers power,
to be a step ahead
of competition and new entrants and
to fulfil clients expectations, thus
lowering their
bargaining power
Focus on high standards of customer
service through efficiency and ROI
measurable
results. These wil in turn lead to
lower operational costs and
increased profitability.
Implement New Business Plans both
for short and long term in a
structured,
consistent and defined direction
way. Stop acting ,,in a panic to
achieve short term
results.
Each business unit to become top
player in their market by acquiring
big local clients
Create new working-styles and
corporate cultures that are
attractive for more
entrepreneurial-minded people, and
actually keeping them
Enhance network alliances to
increase range of services offered
through cooperation
with other agencies
Concluding our analysis, we would
recommend AGCs top management team
to evaluate the
linkages within the mission,
objectives and tactics focusing at
the same time on the linkages
within the 7Ss and investing not
only in expanding its network and
technological development
but also to its most valuable asset,
the human capital.
19
7. REFERENCES/BIBLIOGRAPHY
Action Global Communications
Internal Reports, 2004-2005
Johnson, G & Scholes, K (2001)
Exploring Corporate Strategy,
6th edition, Prentice Hal
Porter, M E (1980) Competitive
Strategy: techniques for analyzing
industries and competitors,
The Free Press
Porter, M E (1985) Competitive
Advantage: Creating and Sustaining
Superior Performances,
the Free Press
Peters T., Waterman, R. (1982) In
Search of Excellence, New York,
London: Harper & Row.
http: www.actionprgroup.com
http:
www.ft.com
http:
www.hbr.com
20
8. APPENDICES
APPENDIX 1 - VMOST
Vision
Analysis/Implications/Discussion
"AGC aims to make the public
relations tool,
AGC,,s recently designed vision
portrays a
the lead discipline in the
communications mix dynamic and
ambitious big idea on behalf of
for the region it operates; because
public
the company. In some countries, this
can be
relations have the immediacy and
achieved quite easily, in some
already it has
transparency to build credibility
and trust."
and in some it may never be the
case. Action
operates in emerging and
multi-cultural
countries; therefore the complexity
and
unpredicted evolution of the
region -
combined with many unknowns are a
chal enge for the company. The tool
of
,,Advertising is the major
competitor against
this idea, which nevertheless tends
to lose
budget amounts every year.
Therefore, the
vision statement needs to be
effectively
communicated among the network in
order to
promote this idea, internal y and
external y.
Mission
Analysis/Implications/Discussion
"To be universal y recognised as the
most
A thorough and explanatory mission
effective and creative public
relations
statement which mirrors the purpose
and
consultancy throughout the regions
we
ways of operation. The issue again
is that
operate in, building lasting
relationships
neither Vision nor Mission is
effectively
between our clients and their
stakeholders."
communicated in the Network, a fact
that
disorientates people. Although both
Core organisational values:
statements are wel written, they
lack
Engage credible sources of
commitment by the employees who need
to
information
be inspired by the directors of the
company,
Cut through the information overload
in order to secure more clients.
Unless the
to something meaningful
unity of the network is ,,fused to
its staff, thus
Maintain excellent ,,Media know-how
creating a snowbal effect of passion
and
Offer creative and innovative
loyalty, AGC will not be able to
make great
experiences
advances under these conditions.
Employing pioneering spirits
Personal and professional integrity
in
daily activities
To understand global and local
trends : ,,movers and shapers
Objectives
Analysis/Implications/Discussion
Increase market share new It seems
that the objectives set for 2006
meet
accounts - in existing
almost all elements of the ,,SMART
analysis,
markets of operation by 3-
by being specific, measurable,
achievable
5% by the end of 2006.
and realistic. The agreed
part remains a bit
Increase value add services
foggy due to lack of commitment and
leading to an increase in
effective communication among the
network.
revenues from existing
The major concern remains the
immediate
accounts
improvement of the is cash flow,
which will be
Improve cash flow by
quite hard to positively influence
in all
21
controlling costs and capital
markets. Evidently some markets will
be a
management cycle process. feasible
task while in others a strong
chal enge, therefore the company
should
To operate by the slogan
focus pressing and supporting the
big offices
,,Think Globally, Act Local y
first. With regards to the slogan-
service
offered, this shouldnt be a problem
at all,
since this is the competitive
advantage of
AGC against other PR agencies. Local
know-
how and excellence of service
offered is the
strongest advantage. Provided the
,,network
engine focuses on them immediately,
actual
results could be achieved soon.
Since the
objectives are simple and
straightforward
make things easier.
Strategy
Analysis/Implications/Discussion
"For AGC the way to move forward is
by
Evidently the AGC clear cut strategy
targets
generating new business for the
network
and focuses on the main challenge
faced by
constantly, delivering high results
and
the company which is to acquire
the
seamless service to the clients,
encouraging
soonest new business, resulting
immediate
them to remain with us.
improvement of its financial
position. The
To achieve this we wil :
strategy is a three faced one and
addresses
a) Use Door Opening Tactics
both short and long term goals.
Therefore the
b) Apply Focus and
reasons for emphasizing on New
Business
c) Concentrate in the Big Picture"
are increased costs and risks which
resulted
from the past 5 years rapid
expansion and
investment moves in the Network.
Further to
this, in order to achieve short term
goals of
gaining 3-5% market share in 2006 in
operating markets, the existing
infrastructure
must generate the additional growth.
Tactics
Analysis/Implications/Discussion
Door Opening Tactics
Cleary the every day tactics support
the
1. Focus on Small Medium
strategic plans and if implemented
effectively
Enterprises on the brink of
by the managers of the agencies
around the
expansion.
network, actual results could be
produced
2. Use off-the-shelf Modules
within reasonable time. Nevertheless
though,
Apply Focus
implementation of these tactics
requires the
1. Business as usual, maturity.
commitment of each agencys manager
in
2. Work on the internal mission
attracting new clients, and again
this is
3. Develop a centre of excel ence
another challenge for AGC. The
company
that will demand over and above
designs and delivers Public
Relations
market rates
services. Therefore its managers are
NOT
The Bigger Picture
sales people and hiring a sales
person for
1. New local affiliations for each
each agency is not an option at this
stage. In
country
plain words we would say, that the
tactics are
2. Enhance existing AGC
well designed but implementation is
hanging
affiliations
on thin air. Unless a powerful
motive scheme,
3. ,,Stealing Multinational
intense education and commitment
from the
accounts
directors are set in motion
immediately, the
whole plan could face great
difficulties
moving forward.
(Source: Action Global
Communications Business Plan for
2006 - 2008)
22
APPENDIX 2: STAKEHOLDERS ANALYSIS
As a first step we have divided
stakeholders into two groups:
Inner circle :
o Owners who are the founders and
current directors
o Human capital (management +
employees),
o Suppliers -for AGCs case is the
media ( print, tv, radio, internet
sites),
o Clients ( multinationals and local
companies)
Outer circle:
o Competitors( PR agencies,
Advertising agencies, Internal
departments)
o Public
o Government.
Overview of the key-stakeholders
is presented below.
Stakeholder
Power
Interest Expectations Objectives
met/satfied?
Directors
High
High
YES so far
Growth - Expansion plans
Internal
but to move
Profitability
forward, need Strategic freedom PR
agency of
to stay focus
choice in the region
on VMOST
High performance
elements
Enhance reputation
Family motives
Management
High
High
NOT to an
Personal motives
acceptable
Operational freedom
degree to
High salaries attracting
secure loyalty competent country
managers
Need
Support from H/Q
motivation
and trust
from owners
Employees
Modera
High
NOT real y.
Salary and job security
te
Fear for
Job satisfaction
companys
Great service supports customer
future. Need
retention, leading to bonuses and
to share
pay rises
VMOST as to
make them
feel part of
AGC team!
23
Clients
High
High
YES in most
Value for money service
External
cases. Need
Fee VS Publicity value
to sustain
Competent and efficient account
HIGH levels
managers representing them
of service
Generation of business
and keep
opportunities where possible
flow of
Positive word of mouth effect at
innovative
high levels
ideas going
Proud to be represented by AGC
Suppliers
High
Low
ABSOLUTEL
Credible flow of information to the
( Media)
Y
media AGC is a trustworthy
source
WIN- WIN relationship maintaining
excellent relationships with them
Anticipate their needs
24/7 contact with AGC peoples
Media are our ,,friends
Positive influence on behalf of our
clients
Competitors
High
Modera
NOT all of
Enhancing competitive
te
them. Need
advantages
to focus on
Close monitoring
differentiation ,,Steal
multinational clients
elements
Securing niche markets
Public
High
Modera
YES
AGC to deliver trustworthy news
te
maintain
and information on behalf of its
positive
clients
reputation of
Create innovative communication
AGC by
plans to impress and positively
being
influence perceptions
transparent,
innovative
and ethically
correct.
Government
Modera
Modera
YES pay
Abide by local laws
te
te
taxes and
,,Friends with local authorities
keep the
Taxes paid on time
books legal
Transparent accounting
procedures
Effective lobbying
APPENDIX 3: PESTLE FRAMEWORK AND
ANALYSIS OF MOST IMPORTANT EXTERNAL
INFLUENCES
24
Political
Economic
o Expansion of EU
o Business Cycles
o Middle East Governance
o Intense competition
o Government Changes
o Tendency for tight budgets
o Taxation Policy
o Exchange Rates
o Terrorism/War
o Interest rate risks
o Money Supply
o Inflation
o Unemployment
Socio cultural
Technological
o Population Demographics
o Speed of Technological Transfer
o Language and cultural differences
o New Discoveries / Development
o Income Distribution
o Government Spending on Research
o Social Mobility
o Government and Industry Focus on
o Lifestyle Changes
Technological Effort
o Attitudes to Work and Leisure
o Security measures
o Consumerism
o Levels of Education
o Global diseases
Environmental
Legal
o Environmental Protection Laws
o Monopolies Legislation
o Waste Disposal
o Employment Law
o Energy Consumption
o Health and Safety
o Product Safety
25
HENLEY MANAGEMENT COLLEGE
FOUNDATION OF MANAGEMENT ASSINGMENT:
Lannet Communications
ACTION GLOBAL
COMMUNICATIONS
PESTEL ANALYSIS
Threat /
FACTOR
External influence
Opportunity
Explanation
AGC operates mainly in EU's emerging
markets therefore huge and
EU expansion and economic
O = high
numerous opportunities for
growth;new markets for existing
clients and
POLITICAL
growth in some regions
impact
prospects for potential clients
Depending on the location of a war
and the nature of terrorism ( Sept.
11), a
temporary downfall of economy is
created. Evidently PR services are
the
T = high
least of the people's worries.
SOLUTION: Be flexible within the
operating
War / terrorism
impact
country, maintain a NEUTRAL position
regarding Politics.
T = High
Every country has its own laws and
regulations, despite belonging in
EU. As
impact/ O =
for the Middle East region, monarchy
is a totally different game where is
Government Changes
High impact
important to be friends with the
ruling family.
ECONOMIC
Unfortunately the game is not fair.
Advertising agencies tend to offer
PR
services on the side - some time for
free. This means devalue of the PR
tool
and bad practice. Takeovers to
increase market share. SOLUTION:
Close
monitoring of competition moves.
Anticipate moves where possible and
act
T = high
proactively. Offer consistent high
levels of service and acquisition
plans
Intense Competition
impact
when is feasible and at a reasonable
price
26
HENLEY MANAGEMENT COLLEGE
FOUNDATION OF MANAGEMENT ASSINGMENT:
Lannet Communications
Primary goal of organisations (
unless not-for - profit) is to make
profits.regardless of other external
or internal influences, a means of
promotion wil always be important.
Therefore in hard times, advertsing
budgets decrease and PR ones
increase; while in good times both
benefit.
T = High
SOLUTION: Take advantage of
current trend of decreasing
Advertising
impact/ O =
budgets and investing in alternative
ways of promotion ie- innovative pr
Business Cycles
High impact
campaings.
Local know how under Global
thinking. Being a network operating
in so
Language & Cultural
O = high
many different markets by using
local staff reporting to H/O is a
solid
SOCIAL
differences
impact
competitive advantage which creates
LASTING relationships
O = high
Core line of business of AGC is
reputation management, which means
it can
Lifestyle changes
impact
adjust client campaings accordinlgy
due to multi culture countries
expertise
Eventhough SARS, cow flu, bird flu
etc are negative issues around the
globe, for AGC could generate new
business for PR campaings. ie
Objective
: To promote Dubai as a travel
destination! It is a safe
destination no bird flu
Global diseases
T = low impact cases!
Competenet high caliber personnel is
hard to find, let alone to keep.
T = High
SOLUTION: AGC has two issues
to consider: 1) Create attractive
job
Level of Education
impact
benefits 2) Focus and Invest on
current key people as not to lose
them
TECHNOLOGICAL
For a PR network Information
management is crusial in delivering
excellence
of Services. Keeping up with
technology involves Increased costs
&
Employee Special Training.
Competitors who are leaders in
Technology
T = High
have the upper hand. SOLUTION
: Since Information Technology is a
impact/ O =
means of competitive advantage (
Porter:1985) - keeping up to date
with the
Information management
High impact
latest trends in IT and market trend
makes the difference.
27
HENLEY MANAGEMENT COLLEGE
FOUNDATION OF MANAGEMENT ASSINGMENT:
Lannet Communications
Depending on the clients needs these
laws usually request Public Affairs
ENVINROMENTAL
Environmental Laws
O= Low impact services, thus
more business for AGC
Various laws in various countries
have a negative impact on clients
public
T = Low
image and line of business meaning
the PR agency cannot offer them its
LEGAL
Laws in general
impact
services or only at a limited
degree.
28
HENLEY MANAGEMENT COLLEGE
FOUNDATION OF MANAGEMENT ASSINGMENT:
Lannet Communications
APPENDIX 4: AGC VALUE CHAIN
Support activities
Organisation infrastructure:
Directors, Country Managers,
monitoring systems, finance,
quality
Human Resource Management :
Incentive scheme, Job benefits
IT Management: Development of IT
processes and systems
Procurement: Business Partners (
catering services,
Valu
photographers, venues,
translators etc)
e for
Visibility / Public Relations
Bene
ficiar
Operations:
Outbound
Marketing &
Service:
Inbound
Project
logistics:
Sales:
Project
y
logistics:
Brand Value,
Funding
design,
Project
Network
monitoring,
(budget)
tendering,
implementati
power
evaluation
contracting
on
follow up
Primary activities
29
|
|
 |
dd |
 |
|
|
|
|
|
|
|
|
|
|
