The Strategies Implemented By Saatchi Saatchi Commerce Essay


Today, Saatchi & Saatchi is one of the most successful advertising companies in the world. The development of the company is accompanied by the implementation of aggressive financial strategy and policy of international market expansion. The aggressive financial strategy contrasted to the traditional strategy implemented by the company in the 1970s - 1980s. However, the strategy used by the company in the 1970s - 1980s did not work in the 1990s. By the mid-1990s the company had faced the problem of the consistent deterioration of the marketing performance and the emerging problems that affected the organizational performance consistently. To put it more precisely, Saatchi & Saatchi faced the problem of poor communication and organizational operations that undermined the functioning of the organization and put the company under a threat of the total ruin. In such a situation, in the mid-1990s the top executives of the company had taken the decision that had changed the development of the company. Since the mid-1990s, Saatchi & Saatchi has implemented aggressive financial strategy, which has proved its efficiency. The top executives of the company proved to be true leaders of the Saatchi & Saatchi. They proved to be able to change the strategy of the company and its operations consistently. Top executives defined the mission of the company as taking the position in the top rank of the advertising industry. In such a way, top executives of the Saatchi & Saatchi decided to make a breakthrough and the company had succeeded in this regard under the leadership of its top executives.

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At the same time, it is important to place emphasis on the fact that the company focused on the development of its business and aggressive financial policy. Basically, the aggressive financial policy implied the fast expansion of the company and entering new markets. In this regard, Saatchi & Saatchi grew particularly concerned with the international market expansion. The latter contributed to the fast growth of the company and improvement of its financial position. The objective of the company was to become one of the leaders of the world's advertising industry, which accelerated the development of the company and defied clearly the direction in which the company had to develop.

On the other hand, to develop effectively and to keep growing, the Saatchi & Saatchi needed to change its management style and approaches to the organizational structure and financial policies. To put it more precisely, the top executives divided all units comprising the Saatchi & Saatchi into three major categories: lead, drive, and prosper. Each category had its own financial program and financial resources available. In such a way, the Saatchi & Saatchi attempted to optimize its financial performance and stimulate the effective development of its units. The main goal of the division of all agencies of the company into three categories was to improve the effectiveness of funding of different units and optimize their performance. To put it more precisely, the company had to define clearly, which units could bring profits to the company and which not, which units had the potential to grow and which not. As the matter of fact, such a decision of the top executives of the Saatchi & Saatchi was absolutely right from the financial point of view. This decision was determined by the ongoing deterioration of the financial performance of the company. This means that the company needed to save costs and to maximize the effectiveness of using its financial resources. In such a context, the division of all units in three categories implied the division of the company in units which had the major priorities in the development and, thus, funding, and those units that had to be restructured or simply sold out to let the rest of the company to develop steadily and successfully. As a result the company had to take bold step to develop its business successfully even at cost of losing some of its units.

In addition, the company developed the strategy of mergers and acquisitions to penetrate new markets and to improve its financial position. At the same time, it is worth mentioning the fact that the Saatchi & Saatchi needed a considerable change in the field of the use of its financial resources and the definition of priorities of the company and grouping its units into three categories helped the company to improve its position and become one of the leaders of the world advertising industry.

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In this regard, it is important to briefly dwell upon each category. The prosper category included units which had less than 50 employees and which had a limited potential to grow into large agencies. In such a way, these agencies were the smallest and needed the least funding. At the same time, they had the least prospects.

Another category united drive agencies. Drive agencies were larger compared to prosper agencies and consisted of 50 to 150 employees. Basically, these agencies had a potential to grow but their transformation into large agencies was quite difficult. In fact, these agencies had a long way to go to become prosperous and successful large agencies. These agencies were supposed to maintain stable revenues but they also had their growing margins. In such a way, the drive agencies could maintain the stable development of the Saatchi & Saatchi but they could not accelerate the development of the company consistently.

In this regard, the lead agencies were consistently different from the two other categories defined by top executives of the Saatchi & Saatchi. The lead agencies were the agencies which the top executives of the Saatchi & Saatchi expected to grow rapidly. Therefore, they decided to spend the lion share of investments on the development of the lead agencies. The reason to allocate investments to the lead agencies was quite logical taking into consideration the prospect of the rapid growth. What is meant here is the fact that the lead agencies could bring considerable return on investment. What was probably the most important factor that determined the decision of top executives to allocate investments to the lead agencies was the fact that they could bring revenues fast. In the time of the profound crisis of the company and the ongoing deterioration of its financial position, the rapid development and high return on investments attract top executives. Therefore, the decision of the Saatchi & Saatchi's top executives was logical and natural.

On analyzing the decision of top executives to divided all agencies into three categories seems to be logical but from the financial point of view, the retention of the prosper agencies was a bit illogical because they did not bring considerable profits and had little, if any potential to grow. Therefore, it would be logical to sell these agencies. However, in this regard, it is necessary to take into consideration the strategy of aggressive financial strategy of the company and its international market expansion. What is meant here is the fact that retaining the prosper agencies the Saatchi & Saatchi could preserve its markets and maintain its position in different markets. Even if the position of the company is not strong in certain markets, it still has the basis, the starting point from which the company can start aggressive financial expansion and rapid expansion of its business and market share. In such a way, the company preserved markets and could start rapid growth even the growth of the prosper agencies when the overall financial position of the company is stabilized.

Thus, taking into account all above mentioned, it is impotent to place emphasis on the fact that the policies and strategies of the company was effective from the financial point of view. The strategies applied allowed the Saatchi & Saatchi to optimize its spending and investments and maximize the effectiveness of using financial resources of the company. At the same time, customers could also benefit from such strategies because they allowed to use services of the company in different parts of the world and to rely on the high quality of the company's services.