Bsba Integrative Project

TUI UNIVERSITY

MODULE #1 CASE STUDY

BUS 499

BSBA Integrative Project

26 August 2010

Introduction

Prior to the 1990s, Saatchi & Saatchi enjoyed phenomenal growth. However, as a result of the economic and financial crisis brought about by the Asian crisis in the 1990s this growth was suddenly stopped. Given the changes within the company's macroeconomic environment, it reevaluated its existing vision, mission and strategies that resulted to changes. These changes also resulted to the establishment of new financial goals, which are aligned with the company's new vision and strategies.

The following are the goals that Saatchi & Saatchi's new leadership established in terms of the financial perspective of the team's approach to combat the effect of the economic recession in the 1990s:

1. A revenue growth rate higher than the market

2. A 30 per cent operating profit for the additional revenues

3. Earnings per share to be double

Given the above financial goals and its new vision and strategies, Saatchi & Saatchi also reorganized its organizational structure. The company created three agency categories, mainly lead, drive and prosper. In lined with organizational restructuring, the company designed different strategic plans for each unit.

The prosper business units are characterized by having less than 50 employees and have inherent limitation on their expansion that they might never become gigantic agencies. Hence, the prosper units' strategy is to obtain high margins from their existing account more than the focus assigned to obtaining incremental revenues.

The lead business units, on the other hand, are comprised of the largest agencies of Saatchi & Saatchi. Thus the strategy drive for these units is rapid growth expansion and in support of this strategy the company will allocate a major portion of its investment budget to these business units.

Lastly, the drive business units are comprised of agencies with 50 to...