Bus499

BUS-499 Case Assignment 1

The Financial Perspective

Stuart Lee Williams

TUI

Module 1-Case Assignment 1

The situation for Saatchi and Saatchi in the mid 1990s was very dark. Due to the growth from the 70’s and 80’s the Company was hit hard by the recession in the early 90’s. In 1995 the Company was facing bankruptcy at best.

The management team adopted an approach that was primarily two-pronged. The financial prospective and the customer prospective. In terms of the financial prospective they set goals that were to be met by the end of a three year period. These goals were:

a. Growing the revenue based better then the market.

b. Converting 30 percent of that incremental revenue to operating profit.

c. Doubling earnings per share.

These goals were pledged to Wall Street and to shareholders.

The Company categorized its business units into three categories these categories were as follows:

a. Lead.

b. Drive.

c. Prosper.

A unique strategy was chosen for each of these three categorized units.

Module 1-Case Assignment 1

Prosper-

A Prosper unit or agency which most fell into this category usually had less than 50 employees and limited potential to ever become a large agency. The strategy for this category stated that units in this category were not expected to grow dramatically but were charged with achieving high margins.

Drive-

A Drive unit or agency had between 50 and 150 employees and was goaled with maintaining or slightly growing their revenue base, however simultaneously growing their margins as well.

Lead-

A Lead unit or agency was the biggest of the agencies included were agencies like UK, New York and China. It was here that rapid growth was expected and were most of the investment would be given.

Saatchi and Saatchi also adopted several strategies that related best to a customer prospective. One of...