WRSX GROUP INTERNAL AND EXTERNAL ANALYSIS

10TH MARCH 2011. BY THE SALAD MAFIA

NAME: SUNNY UPADHYAY VIGNESH MOHANKUMAR XIN MIAO XUAN QI YANYAN WANG

REGISTRATION NO: 1928741 1929155 1931740 1915312 1921091

INTERNAL STRATEGIC ENVIRONMENT ANALYSIS Strengths: 1) Good leadership - Famous names of the industry working for the company. The flamboyance with which the company was pushed to its heights could be reinvented with the help of fresh talent and new ideas. 2) Creativity and Innovation - Ranked higher than average when retaining existing customers. 3) Established and well-known in the industry. Its a company that has been around for a while and had some very high profile clients. 4) The company has an existing impression of being high profile within the Advertising Industry. 5) Branding and Identity of the WRSX Group are well established in the sector. Weaknesses: 1) Corporate Governance - No decided or dedicated code of corporate governance as this issue is managed at a local level. 2) Human Resource Problems - High HR Costs compared to industry average, lack of innovation in HR because they fail to attract talent into the business. 3) Poor Social Responsibility 4) Failed to retain a lot of high profile customers who left along with high profile employees of the company. 5) Fails to use its group buying powers to procure media for its clients. 6) Co-ordinated Leadership Capability lacking because there is no centralised code of governance. 7) Needs to specialise in more sectors. Sector specialisation limited. 8) The American counterpart of the company let the group down in terms of innovation and creativity, because they failed to get new business due to the creative team in the US underperforming.

Opportunities: 1) Expanding use of Digital Media 2) Previously having a high rating in terms of ethical stance and its social profile, the company can use this as a factor in rebuilding its image. 3) Company can go in for some public welfare related advertising, which may help the company to re-do its image. 4) The company could try and venture into more emerging markets by way of joint venture with local companies. 5) They should add more sectors to their specialisations. 6) Integration: The Company could integrate with other companies by acquiring them or merging with them to be able to overcome cost fluctuations and can provide clients with cheaper media. 7) The American part of the company can look towards serious expansion because US companies seem to spend a huge part of their yearly budget on advertising and the US accounts over 1/3 of the whole advertising sector in the world.

Threats: 1) Lack of legal advice. And no fixed code, which caused the company being alleged into corruption reports which werent proven but tarnished the companys image. 2) The great deal of well talented people that left the company last year which also caused a lot of clients to leave could well turn into a potential threat and cause even more clients to leave. Seemingly, the clients seem to trust the people working for the company individually more than the company at a whole. 3) If the companys image is not taken care of, it will cause the company to even further drop in terms of investor attractiveness and in terms of seeking new business. 4) The Account Management team allegedly could not add enough value to the clients business in the US primarily. This makes the company vulnerable to losing clients. 5) Carbon Footprint: The company seems to not be environmentally friendly

which it could work towards to also improve its recently tarnished image.

EXTERNAL STRATEGIC ENVIRONMENT ANALYSIS (PORTERS 5)

PORTERS 5 FORCES:

Bargaining power of suppliers: 1) Availability of Substitute Inputs: Depending on the number of advertising agencies competing in the market, an agencys power to keep its costs in control differs. If there are only a handful of advertising agencies in the market, they could have a large profit margin and there wouldnt be available too many substitues. 2) Suppliers Threat of Forward Integration: There is always a threat if your supplier decides on forward integration and becomes a competitor. This will lead to him having a cost advantage over you due to him being his own supplier. Bargaining power of buyers: 1) No. of buyers related to sellers: In this case, if again there are a lot of

clients and only a few advertising agencies, they could form cartels and manipulate the costs, but if there are a lot of advertising agencies, the market would be more competitive. 2) Product Differentation: If an advertising agency monopoloises in a particular style of advertisements, and has considerable product/service differentiation in comparison with its competitors, then its in a position of demanding a higher price for its services. 3) Importance of product to the buyers: They should add values to the customers product and their brands. Threat of new entrants : 1) Cost Advantages: The longer a company has been a part of the industry, it ideally has cost advantages over new entrants. Also, the risk of new investment is lower than that of a new entrant. 2) Government Policies: Government Policies are inescapable for any company. A company must mould itself regardless of how big a player it is to conform to the government policies. In case an advertising agency wants to enter a new market, it must conform to government policies. For eg. In India & China, any foreign company must have a domestic partner in order to be able to do business within that country. There are also norms as to how much part of the equity the foreign company can directly hold.

Threat of substitute products: 1) Relative price of substitute: For any client, if there is a cheaper substitute available, they will always give a thought whether to buy from the supplier that is providing the cheaper substitute. In the case of an ad agency, if another competing agency quotes a better price for the services to be provided to the client, then the original agency always risks losing the client to competitive prices. 2) Relative quality of substitute: Rather than only thinking of going for the cheaper prices, the advertising agency also needs to maintain its quality of services it offers. A company that only provides cheap goods cannot go beyond a point, because any client looks for quality, when a company becomes a high-profile company. Rivalry among existing firms:

1) Number of competitors: The higher the number of competitors, the higher the competition. If there are many ad agencies present in the existing market, there will inevitably be more and more of them trying to woo existing companies to become their clients. Also, existing ad agencies can never be undermined because they have an established brand. 2) Relative size of the competitors: In terms of ad agencies, a smaller agency may compete with a big one if they have equally brilliant people in the creative department of the company. However, if it is a stagnant as well as a small company, then it always has to be afraid of being overshadowed by the big players.

3) Industry growth rate: The Industry growth depends on many factors including the state of the economy, which in itself concerns many many factors. Ideally if the industry is growing positively, all sectors accordingly grow with it. During this period, it is very important to have the company grow alongside the industry, gain new clientelle and go into expansionary phase.