Strategic Management

In order to understand Waldon Roux Silberstein Xao (WRSX) strategic position, it is important to have an overview of the company’s internal performance and operational set up.

First of all, WRSX is a medium-sized company that operates from four key main offices, which are Paris, New York, London and Singapore. However, the centre of gravity is in Paris; it is where concurrent board meetings and strategic decisions are being made. The company was built from the ground up with mergers and acquisitions. Thus, it created a unique identity for the company, which is characterized by independence and autonomy. The best part about these distinctive characteristics is the capability to react effectively to client’s needs and requirements. The company wants to continue in this path, however, current challenges and changes in the market force WRSX’s corporate leaders to take into consideration the current performance levels of the company. In one of the board meetings, the Chief Finance Officer suggested streamlining the operations, which also means reducing the number of personnel in each business unit. This move will drastically affect the culture of the company, and may alter the identity of WRSX. However, the failure to act decisively, when faced with great challenges, can also lead to long-term problems and weaken the position of the company to compete in the long run.

Waldron Roux Silberstein Xao faces a dilemma. The company adheres to basic principles of human resource management, as well as Corporate Social Responsibility, and the need to measure success on non-financial factors. However, corporate leaders at WRSX understand that these principles will make the company look good to the outside world, but in the internal operation of the company, the bottom line is to please the shareholders. The company may receive praise and awards from the external environment, but may still fail to enhance the value of the company, as reflected through price of the company’s shares. Corporate leaders are not willing to contemplate the above described scenario. Thus, there is a need to make drastic decisions, and the need to look into choices that are painful to analyze because of the need to let go of personnel.

The Financial Dilemma

The financial problem of WRSX showed itself when Andy Carnelley, one of the business analyst tasked to diagnose the business outlook of the industry, did not mince words when he declared that the worldwide economic forecast could at best only be flat. The last statement eradicated any hope or assurance that the company will make a decent profit in the near future. Thus, a pragmatic approach to Carnelley’s findings will compel corporate leaders to take a look at the non-operating assets of the company. This evaluation must inevitably include human resources.

Strategic Position and Strategic Choices

WRSC is currently in a difficult position. If cost-cutting measures are not contemplated and not implemented in the next few months, the profitability and overall performance of the company will suffer. The end result would be a negative perception of the company. This, in turn, will cause shareholders to panic. Investors might also shy away from the company’s shares. Thus, the company will fail to infuse fresh funds into the operation. As a result, tough measures must be implemented, and the company will have to find prudent ways on how to cut costs.

The knee jerk reaction to this problem is to drastically reduce operating costs. This is made possible by streamlining the delivery processes, especially when it comes to the company’s service delivery mechanism. Thus, WRSC must simplify the means of providing quality service to clients. The things that are unnecessary to produce the requirements of the clients are eliminated from the delivery process. However, a closer scrutiny on WRSX’s business model has revealed a major area that significantly contributed to the financial loss, and that is the presence of underutilized human resources.

It can be argued that corporate leaders at WRSX were not prepared to hear the suggestion from Leena Chakrabati, the Chief Financial Officer of the company. She did not sugar-coat her message and, therefore, has dropped a bombshell when she declared that there is no other way to solve the financial problem, except to fire a substantial number of employees. This meant that a significant number of employees working for WRSC would lose their jobs. Chakrabati tried to temper her message by acknowledging the fact that WRSC’s core value was to believe in the ideal that the “people are the company’s most valuable asset.” Nevertheless, she proceeded to say that there is no other way to move forward, other than to strip bare the current structure of the company. Her proposal was not an easy pill to swallow because she did not only make the recommendation to fire a few people, she wanted everyone to go in the rank and file division of the company. Mrs. Chakrabati wanted to fire everyone, except for a few key personnel, such as, the HR Strategy Team, the Group Career Planning Team, and one HR contact per business unit. She justified her action by saying that this move would allow WRSC to save at least 3 million sterling pounds a year.

Strategic Decisions

The company’s Chief-Financial-Officer outlined a bold initiative to outsource the bulk of the company’s HR needs. She said that many current employees no longer fit for the company’s goals and client needs. She asserted that by outsourcing the recruitment and training process, the company will be able to find the best strategy that will result in a more cost-efficient way to deliver high-quality service.

When the top leaders of the company met to discuss the above mentioned problem, they came up with a strategic decision to the basic framework of the Chief-Financial-Officer’s strategic initiative. As a result, the company gave the go signal to outsource certain aspects of the HR and use the services of the third party to handle key functions, such as: payroll and benefits, pay negotiations, training, and development of personnel. The proposed move also covered recruitment of administrative staff and other non-creative staff. However, the approved proposal limits the outsourcing scheme, so that the company retains those who are part of the recruitment, training, and management of reward systems for all creative and account management staff within the WRSX group. They gave the go signal with the assumption that the said strategic decision will enable the company to save 1 million sterling pounds per decision period, and an additional 2 million sterling pounds six months after the implementation of the same.

In order to develop a competitive advantage over other firms competing in the same industry, WRSX decided to duplicate the business model of Cine FX in Paris. The said business model enables the company to produce TV advertisements and post-production services for other production companies. The specific focus is on the special aspects of TV production. The company decided to duplicate the said model in the United Kingdom first because WRSX London is perceived to be well-established.

The company also considered the proposal suggested by the Barton Consulting Group. However, the company was unsure how to proceed further. The top leaders decided that the most prudent course of action is to meet with the managers and figure out the best way to implement the matrix structure. The matrix structure allows for company’s greater flexibility and synergy. At the end, the company will be able to maximize resources. However, it is a complicated system that is prone to confusion and error.

The Theoretical Frameworks

The PESTLE Analysis and Porter’s Five Forces frameworks were helpful in appreciating the strategic decisions made by WRSX’s corporate leaders. For example, the PESTLE Analysis framework helps the leader to grasp the economic factors that were at work against or for the company. The use of the said analytical tool allowed WRSX to understand the importance of reducing costs in a time when the economic outlook was dim.

When it comes to the Porter’s Five Forces framework, the company saw the importance of working with suppliers. It was discovered that by working with suppliers, the company can reduce costs and improve the efficiency of service delivery process.

Considering the Original Strategic Position

With regards to the decision to outsource key aspects of the HR component, WRSX made the right choice. However, the leaders realized that it would require a delicate balance of several factors and careful consideration of the clients’ needs in order for the outsourcing strategy to work. However, the decision to open a CineFX business was not seen as the best move forward because it gives the impression that WRSX will be forced to use the service of CineFX, meaning that the company cannot assure clients that they are doing everything they can to reduce the costs. The company, however, was hesitant to go full steam ahead with regards to the suggestion for aggressive organizational restructuring.


Strategic Position

Firstly, to understand the current strategic position of Waldron Roux Silberstein Xao, a brief summary and analysis into their internal performance and operational/logistical set up must be understood, prior to assessing them strategically from an external perspective.

WRSX acts as a medium size level company, operating from four key main offices. The concurrent board meetings and strategic decisions are made within the Paris office. Historically, the company was founded based through the methodology of merger and acquisitions, as such the structure of their business contributes and establishes itself on the basis of independence and autonomy to various business units. As such, this allows them to react effectively to the requirement of needs for client’s services. To summarize, business specialist units and industry expertise are identified as key part of their mission strategy.

The industries in which WRSX have experience in include: automotive, health & pharmaceuticals, telecoms, personal care, beauty & fragrances and public sector/charities. Through these sectors, services with WRSX have expertise include public relation, media buying, research & insight, branding, sports marketing, direct marketing and film production.

Having briefly summarized the function of WRSX, the organization can be recognized as a medium boutique agency with unique functions to provide tailored and strong levels of expertise to various clients. Providing and implementing this to the external business environment allows to see the opportunities and risks presented to WRSX at this current stage.

Economically, the current global economy sits rather in a level of high uncertainty. It is suggested that within the next few years, the U.S will face a downturn in their economy based on the level of consumer debt rising alongside with rising oil prices. With U.S. economy being a major industry for global advertising and media communication, accounting for over 50% of revenue, leaving the New York office in a precarious position. Most likely, this will encourage a greater risk from the inability to retain or attract new clients, as with an approaching environment which limits pricing powers and concentrated retail distribution, will lead pressures for competitors to compete through innovation and branding. While WRSX has been reputable for expertise towards these traits, it has been noted that the New York office falls weak in this area, as such key choices will need to be discussed in regards to the New York office in the next section. With the American market being a homogenous market of 300m people, the importance of strategic position for WRSX in the US market will be crucial for its long term performance.

Alongside with the pressures on the US market, the rise of Asian based multinational corporations indicates the prominence that the Asian market will offset the decline in the Western economies. Particularly, the rise in growth can be source to India and China. Over the last four years, the number of Asian multinational based organizations has increased from 15,000 to over 60,000, which represent the significant rate of growth produced in the Asian market. However, WRSX’s current capabilities and resources for any strategic position within the Chinese or Indian market are very limited with only the Singapore office providing sales and influence in the Philippines, Hong Kong, Singapore, Malaysia and Thailand. Should the market in Asia keep rising, it leaves WRSX in a rather weak position as such, it should be considered whether expansion or opportunities of growth can be attained within either the Chinese or Indian market.

Over the last few years, the rise of technologies and innovations has also started to introduce new opportunities. Particularly with the introduction of digital media and media digital devices such as mobile phones and tablet, brings an emergence of on demand content and new channels for distribution of media. While still in a stage of development in the market, should this increase this is certainly an area for which WRSX may consider diversifying with a changing demographic that compliments technological generation.

A final note to the external environment is the rising trend of corporate social responsibility being incorporated towards many large organizations. Many of these CSR policies are reported and publicized to the shareholders, promoting organizations to be ethical in their carbon footprint. As such, should these trends be ignored, it can be considered a major risk to WRSX’s strategic position on this frontier, as this can easily deter and lose further clients in an ever straining high pressure global market.

Strategic Choices

As we evaluated the external business environment, it is clear that there is a pressure from several areas of the global market; WRSX must assess their current resources and capabilities whether or not they could react to the current demand and future demand in emerging markets.

Business development is needed to critically review the current performance level of WRSX, giving an insight of the direction and priorities in which WRSX must focus on. Combining this, alongside with motives and incentive of the external business environment, will allow compilation of strategic choices which will formulize the business plan WRSX should take. In the process, this will identify the competitive advantages in which WRSX will gain, areas in which diversification may take place, internal processes which must be reassessed and opportunities for growth in either new or existing markets.

First concurrence of thought is the weak position of the New York office, particularly highlighted through the Vice President of Business Development Tom Watson. Alongside with the external pressures on the U.S market falling into decline, as mentioned in the previous section, the New York office has been noted to be lacking in creativity and innovation, resulting in the lack of new clients or retaining current clients. A review of internalization would be recommended. Notably, what should be assessed is the resource within the New York office and understanding what is currently lacking in these parameters. Most likely, a key strategic choice in this area is to improve the work base knowledge and pool of candidates. Rectifying this with the new generation of employees may be the likely solution, as a result, it seems logical to implement a HR review toward work structure, pay policies and organizational hierarchy to innovate and not only rejuvenate but attract new talents into the existing company.

With the emergence of the Asian market, especially of China’s and India’s market, based on Ansoff’s matrix, we can see both markets as new. Whether it is taken as to introduce existing products/services or new products/services, both recommend developing into the market in some form. It should be noted that both countries have a large increasing demographic surpassing the 300m people in the U.S. Along with this, both have a large increase in the number of digital devices, indicating a large growth towards the digital media market. WRSX should invest into diversification and play on its strength of being experts in specialize market. By diversifying into the digital media market, this will allow WRSX to increase its market power and exploit economics of scope within the two markets. Should diversification be related, this allows greater control over the distribution and access to their expertise, however, expansion into unrelated diversification can also benefit greatly, as, in general, this spreads the risk of investment and allows the escape from the possible decline in the western economies.

It is crucial to maintain a sustainable competitive advantage to remain ahead of other competitors. Through the entrance into the Asian market, combined with the diversification into Digital Marketing, this allows WRSX to create an inimitable and valuable brand, unique to the organisation. However, further internal concerns need to be rectified to increase the impact of their organic growth.

As previously stated, WRSX have historically expanded through the mergers and acquisition, providing a degree of autonomy to each of their sub divisions. However, as a result, the reaction of corporate governance remains at a minimal level. With a lack of governance, the synergy between different businesses remains weak and, thus, WRSX are unable to exploit the economies of scale across the organization.

Therefore, the final note to address that must be strategically tackle is the implementation of CSR ethical standards, both to the environment and stakeholders. By promoting reports and creating a visual presence of control over the group, this may provide the ease of tension that shareholder may feel, particularly in regards with unethical standards breaching the company, such as the recent scandal involved with Raphael Roux.

In summary, through the implementation of these issues throughout the operation of WRSX in the coming periods, this will enable natural organic growth through the emergence of new markets and also reviewing internal structures and performances. The key objective is to increase the resources and capabilities for WRSX in the coming future, allowing them to take advantage of current and future opportunities within the business environment, allowing WRSX to maintain a competitive advantage over various other competitors.

Measure of success over the coming years will be the measure through financial performance but also through non-financial factors. These include the management of growth and retention and attraction of new clients, which is the aim of these strategic choices.

Also read my article about the gender quotas on corporate boards and promoting gender equality

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