1. (a) Why did Saatchi & Saatchi decline?
(b) What would you have done differently at Saatchi & Saatchi to avoid the downturn at end of the 80s: "pause for breath in... growth"?
There are many reasons behind the decline of Saatchi & Saatchi. The reasons are:
• Decline of trust among client companies and issues regarding confidentiality and conflicts of interest;
• Saatchi’s acquisition efforts are no longer effective;
• Weakening management focus, whereas the Saatchi brothers are no longer interested in Saatchi and shareholders;
• Poorly handled earn-out and acquisition deals; and
• Saatchi’s share significant drop.
As seen in the previous performance of Saatchi before 1988, the company was performing expressively and shows some strength in their arena. But despite of this performance, there were some indication in 1986 that the company was losing their focus. As they purchase Bates in 1986, Saatchi now suffers from a string of client account losses and staff departures. In this time, there are lots of accounts lost because of issues regarding confidentiality and conflict of interest. Basically, client companies did not want to deal with the same ad agency as their competitors had. For this reason, Procter & Gamble and Colgate-Palmolive withdrew hundreds of millions of dollars worth of business because Saatchi also carried a competitor's account.
In addition to this issue, the departure of Saatchi's top financial executive Marten Sorrell also hurt the company. In his stay at Saatchi, Sorrell expertise was incomparable. Aside from Sorrell’s expressive financial expertise, he also played significant role in gathering number of investors and shareholders. But as he leaves the company, no one replaced him as a mediator between management and the shareholders. This created significant impact to the company as the shareholders/investors perceived that the Saatchi brothers were no longer interested in the Saatchi and Shareholder.
The problem concerning Saatchi's acquisitions also create significant impact to their decline. Hay, a company acquired by Saatchi had completed their earn-out periods. Some executives are afraid that those acquired companies are no longer had the capabilities to maintain the profit boosts going as strongly. Due to poor handling of earn-out deals, it resorted to the selling shareholders to milk the business considering that it is the best way to get maximum earn-out.
Speaking of poor handling of acquisition efforts, the lack of focus of the brothers to bid for two British banks, Midland and Hill Samuel backfired miserably that creates panic among shareholders. With this, the brothers were questioned by shareholders in accordance to their strategy in handling the business. Had the company's vast growth, by means of aggressive acquisitions, truly added value to the companies purchased? Or was Saatchi, as some critics claimed, an example of dyssynergy? As this problems begun damaging the company’s reputation, the share price fell drastically.
In contrast to the actions of Saatchi that leads to their decline, I will fist consider the company’s standing as a leading and respected company in its specialised operations i.e. advertising, there are other distinguished aspects to consider in its success. The power of the Saatchi & Saatchi name; Saatchi brothers, their personal reputation; the unsurpassed association of supporters, contacts and partners; the Saatchi & Saatchi management approach; the means talent is empowered to prosper within the group are considered vital attributes of its competitive advantage.
Additionally, all the marketplaces in which Saatchi & Saatchi operates tend to have similar characteristics. These markets are comprises of clients that have been ripped-off/under-served, in which there is uncertainty and/or where the rivalry is not at the peak. With this, Saatchi & Saatchi is able to rupture into and shiver it up. The role of the Saatchi & Saatchi is to be the client champion, and doing this requires delivering the brand values and company strategies to the clients. Saatchi & Saatchi’s brand values and company strategy should hub on: value for money, excellent service, innovative, competitively challenging, good quality, and entertaining.
Considering that Saatchi & Saatchi is a broadly diversified industry, it should know what is to focus. It is deemed that a company is diversified when it is in two or more lines of business (Luffman et al. 1996). It is obvious that it is certainly more difficult to craft and execute a strategy in a diversified firm rather than in single-line dealing. Actually, Thompson & Strickland (2003) had recommended that focusing on a single-line of business has several important gains. Though, with the unvarying technological improvements, shifting tastes and needs, and new alternative services/products, it is not remarkable for businesses to change their processes in diversified means. A lot of respected people had proposed that diversification varies partially on a business’s growth prospects in its current market and fairly on the prospects to utilise its capabilities, capital, and proficiency in other market arena. This is relevant to the current situation of Saatchi & Saatchi when Saatchi brothers continuously aimed for the company’s expansion.
Deriving from the decline of the company in 1980s, operations management and capabilities of Saatchi & Saatchi and other strategic options would become very important. It is then necessary to assess these strategic alternatives as to whether they are suitable to the concerns addressed, whether they are reasonable enough to be executed and their suitability to main stakeholders.
Meaning, in order to avoid decline of Saatchi & Saatchi, there should be a concrete organisational development and decision building. There is absolutely a necessity to reunite both the inside-out and outside-in potentials. While Saatchi & Saatchi’s processes administration engages focusing on its core competencies with market situation following its source support, Saatchi brothers and their company will be put into a difficult spot should they decide to overlook both the large scale and the industry environment. Therefore, Saatchi & Saatchi has to be conscious of the most recent processes administration transformations, including alterations in economic, political, legal and even demographic movements in order to build up the outside-in potentials, for example client linking, market sensing, technology supervising and channel relationships.
The improvements enjoyed by Saatchi & Saatchi may come in the structure of amplified returns. Knowing what the market stipulates and the newest movements could aid the Saatchi & Saatchi completely utilize its R&D capabilities to come out with services which are not only lucrative but also excellent feat. The premeditated alternative can even be used as marketing means where the main goal was to maintain attachment to their clients and paying attention to their criticisms. On the other hand, there will be an enormous mobilisation of capital engaged, and the related risks presented on Saatchi & Saatchi.
Nonetheless, the mentioned premeditated alternative appears the most sensible in the wake of globalisation, considering there is an unexpected change headed for a more incorporated and autonomous world market. The main stakeholders too should not have any protests so long as Saatchi & Saatchi’s core dealing is not endangered.
Considering the strategic implication of management of operation is something that Saatchi & Saatchi has to be familiar with. Saatchi brothers normally practice a centralised and globally measured arrangement of procedures and potentials. This permits information distribution to be engaged.
Actually, there are many factors that may contribute to the success and perhaps the minor setbacks that the Saatchi & Saatchi faces. What brought them to victory is the truth that they consider, not only the sum of profit they create, but as well as the happiness of the clients. Alternatively, Saatchi & Saatchi must still also consider a more centralised structure. This is not to outdo their vision of a non-hierarchical arrangement as efficient. Through an additional centralised structure, the administration would be able to have power over of their sources, therefore consider an improved yield.
2. Discuss how Saatchi & Saatchi has approached the balance between globalisation and localisation, and what could be done to improve it?
Organisation and diversification—these are what Saatchi & Saatchi has done to be able to balance their globalisation and localisation efforts. In order for Saatchi & Saatchi to offer multinational clients global and local advertising campaigns, the company created a matrix that arranges in accordance to regional and worldwide division. Considering that Saatchi & Saatchi is organized geographically whereas the operation and coordination between home country and country of operation are arranged properly by means of regional management boards. Actually, Saatchi was organized by client, whereby worldwide account directors (WADs) and regional account directors (RADs) are in charge for representing multinational clients’ needs across all agencies. WADs and RADs are currently running the 12 biggest international accounts.
Actually, these efforts of Saatchi towards globalisation and localisation were fine but there are lots of ways to enhance it. One way was through enough evaluation of the globalisation and technology impact to business. Nowadays, the concept of globalization has become one of the most important concepts that affect the operations of many organizations and companies worldwide. The changes happening in the society, including changes in terms of communication and technology have led to the modification of business and marketing processes and strategies, with the aim of coping with the mentioned changes. Due to the existing fact that along with the changes that happen in the society is the event of observing global markets becoming more homogenous. With this, companies and business organizations, especially multinational companies, continuously develop and improve their marketing programs and projects to meet the standards of consumers and serve them across national boundaries. The development and improvement of such marketing programs, strategies and projects lead many researchers and analysts to evaluate and assess the effects or impacts of globalization.
Basically, the primary drive of companies and firms Like Saatchi & Saatchi to globalize is their intention or desire to expand and widen their target markets. The expansion and widening of the target markets of international firms indicates that the firm has enough resources to sustain and maintain its operations and production. Expansion of the company also indicates that the company has acquired enough knowledge in maintaining the operation of the company, thus, more learned and experienced in its own industry. This is a major factor to recognize, for with the desire to expand, the company aims for more profit and sales, which would enable to company to become more established in its industry. Second major factor to recognize and emphasize is the role of diversification, which is related to the presence of different cultures and races in the company. Several positive effects are attributed to diversification, and include efficient resource allocation through internal capital markets, the increase in the ability of firms to internalize market failures, and increase in productivity (as cited in Li & Jin, 2006). In addition, diversification can also increase the generation of ideas, for more individuals become involved in the processes of the firm. Employees are also exposed to more cultures, practices and knowledge, thus, developing its organizational culture. Third major influence is the open opportunities for firms to engage in new business ventures, which would provide them with chances for more profit and prestige. New business ventures involve the production of new products or the innovation of a specific product or service. Fourth major influence or drive is the fact that firms may achieve fame or prestige if it globalize. The establishment of name, product/service, and reputation in specific countries and continents gives the business organization a chance to be regarded as one of the most successful business organizations in the whole world, thus, becoming more established in its own industry. Last major influence is the possibility of attracting new and more talents and skills in the company, which would give the organization the edge of performing well over other companies.
3. Critically evaluate Robert Louis-Dreyfus’ strategy to turnaround the company.
As the CEO Robert Louis-Dreyfus handled the business Saatchi & Saatchi created significant impact and shows business revival. One of his great efforts was his review of financial and strategic records of Saatchi & Saatchi. Upon his evaluation of financial and strategic records of Saatchi & Saatchi, he decided to took and consider the board's decision to concentrate on the communication business (advertising, direct marketing, public relation media services, etc.) and to drop the concept of a full-range services company.
As the process of disposal initiated, Louis-Dreyfus found out that the company had overpaid when buying businesses that are causing too much liabilities. For this reason, Louis-Dreyfus removed 10 out of 12 of the consulting businesses (for a total net extraordinary costs in 1989 and 1990 of £99 million) and had pushed through a recapitalization plan, which provided some short-term breathing space.
Actually, the management strategy of Louis-Dreyfus was expressive. His decision making styles and team leading with respect to his review and evaluation of financial and strategic records and consideration to the board's decision of Saatchi & Saatchi creates great impact for company’s survival. Actually, the rise of teamwork and related changes in an organisation creates reasonably idiosyncratic skills that may not translate well to other settings. Getting a group of people to cooperate and function as a team is not easy. It requires learning about each other, establishing trust, and developing good methods of communication (Mackins, 2010).
In accordance to the efforts of Louis-Dreyfus, his leadership in Saatchi & Saatchi provides excellent impact not only to the business decision of Saatchi brothers but also to the development and survival of the company. According to Kousez & Posner (2002), credibility is the foundation of a good leader which is actually present to Louis-Dreyfus as he reviewed the company’s business performance and financial status. A leader should be credible for him to lead. Come to think of this, would you believe in leaders who do not practice what they preach, do not walk the talk, do not do what they say they will do, and do not keep their promises? What would happen to the change process in a company if managers are lacking of skills?
As part of the development of the competitive advantage of the business organisation with respect to leadership capabilities of Louis-Dreyfus, several factors should be considered. Social responsibility, efficient decision making, change management and of course leadership among business industries should be given enough priorities. If proper leadership style and efficient decision making are used firms can have the edge it has to counter any threats, solve any problems, and achieve its goals. The efficient decision making given by leaders gives a company critical edge to counter any threats from its competitors and its environment. The efficient decision making given by Louis-Dreyfus despite of the influence of the Saatchi brothers helps to compete in a global business environment. It steers the company into making right decisions and right practices with regards to competitors thus enabling it to survive in the global business environment. Actually, Shackleton, (1995) stressed that it gives a company critical edge to solve problems it has. Through effective decision making and social responsibility this solving problems can be easier for any company. Methods and preventive measures can be formulated towards problems the company has. The efficient decision making and team leading shown by Louis-Dreyfus gives a company critical edge to achieve its goal. Organisations use different things to reach the goals and objectives they have. Without this the goals cannot be easily reached.
4. Provide advice to Maurice Saatchi on his musings at the close of the case: would rededicating the company to the principles of creativity that had built it in the first place be enough to get it out of the red?
In my opinion, rededicating the company to the principles of creativity that had built it in the first place be is not enough to get it out of the red. There are lot of things to consider in business and the issue of creativity is not only the sole driver of business loss. Issues that are affecting Maurice Saatchi’s business decision making must be assessed carefully.
Most business organisations find it unattainable to generate any sort of sustainable competitive lead based on product/services only. It is general understanding that each one of the flourishing organisation required and establish an accurate understanding of how it could generate a client-centred competitive advantage and forget the management factors such as motivation, leadership and team building. It is indeed true that one of the best ways to attain success was through enhancement of critical success factors. According to Thierauf, (2001), critical success factors (CSFs) in an organisation, are the limited number of parts in which upshots, if they are satisfactory can guarantee that booming competitive advantage. Identifying these factors is an old idea in management for the reason that there were great leaders throughout time who have acknowledged and addressed key factors to attain business victories. There is no one meaning of CSF however it is identified as that these are the parts which the organisation needs to focus on to do well. For that reason, the activities should be cautiously monitored and directed by the management.
Hayes, (2002) described critical success factors as administrative factors that generate a competitive advantage for a business in its own arena. There is no exact procedure in categorizing and implementing critical success factors in strategic management development. This is the grounds why Thierauf, (2001) states that diverse organisations which have parallel composition can carry out its market entry forming diverse ways which lead to the progress of various critical factors. As the principal means for an organisation to pull off its approach, CSFs must take into consideration about the disparities in the situation and administration that is present.
As conversed, the facts of the primary sources of competitive force emphasizes the critical areas where skill concerning motivation, leadership and team building may yield the greatest payoff, and highlights the areas where an organisation trends promise to hold the utmost significance as either opportunities or threats. Accepting these sources will also confirm to be useful in considering areas for management, though the main spotlight is on strategy in the industry. Management is an indispensable thing for any organisation. This is a significant process for the reason that it allows the organisation to make verdicts that will be advantageous and beneficial for them. Additionally, organisations that are aware of the effects of motivation, leadership and team building skills are more successful compare to organisations that are solely relying on their products and services.
References:
Hayes, J. (2002). The Theory and Practice of Change Management, London, Palgrave
Kouzes, J.M. & Posner B.S. (1987). The Leader Challenge, Second Edition. San Francisco, California: Jossey Bass Wiley.
Li, D. & Jin, J. (2006). The Effect of Diversification on Firm Returns in Chemical and Oil Industries, Review of Accounting and Finance, 5(1), 20-29.
Luffman, G.A., Kenny, B., Lea, E., & Sanderson, S. (1996). Strategic Management: An Analytical Introduction, 3rd Edition, Blackwell, Oxford.
Mackins, D. (2010). The Difference between a Team and a Group, The Sideroad. Retrieved March 16, 2010 from http://www.sideroad.com/Team_Building/difference-between-team-and-group.html
Shackleton, V. (1995). Business Leadership, Routledge, London,.
Thierauf, R.J. (2001). Effective business intelligence systems, Quorum Books, Westport, CT.
Thompson, A.A. & Strickland, A.J. (2003). Strategic Management: Concepts and Cases, International Edition, McGraw-Hill, New York.
(b) What would you have done differently at Saatchi & Saatchi to avoid the downturn at end of the 80s: "pause for breath in... growth"?
There are many reasons behind the decline of Saatchi & Saatchi. The reasons are:
• Decline of trust among client companies and issues regarding confidentiality and conflicts of interest;
• Saatchi’s acquisition efforts are no longer effective;
• Weakening management focus, whereas the Saatchi brothers are no longer interested in Saatchi and shareholders;
• Poorly handled earn-out and acquisition deals; and
• Saatchi’s share significant drop.
As seen in the previous performance of Saatchi before 1988, the company was performing expressively and shows some strength in their arena. But despite of this performance, there were some indication in 1986 that the company was losing their focus. As they purchase Bates in 1986, Saatchi now suffers from a string of client account losses and staff departures. In this time, there are lots of accounts lost because of issues regarding confidentiality and conflict of interest. Basically, client companies did not want to deal with the same ad agency as their competitors had. For this reason, Procter & Gamble and Colgate-Palmolive withdrew hundreds of millions of dollars worth of business because Saatchi also carried a competitor's account.
In addition to this issue, the departure of Saatchi's top financial executive Marten Sorrell also hurt the company. In his stay at Saatchi, Sorrell expertise was incomparable. Aside from Sorrell’s expressive financial expertise, he also played significant role in gathering number of investors and shareholders. But as he leaves the company, no one replaced him as a mediator between management and the shareholders. This created significant impact to the company as the shareholders/investors perceived that the Saatchi brothers were no longer interested in the Saatchi and Shareholder.
The problem concerning Saatchi's acquisitions also create significant impact to their decline. Hay, a company acquired by Saatchi had completed their earn-out periods. Some executives are afraid that those acquired companies are no longer had the capabilities to maintain the profit boosts going as strongly. Due to poor handling of earn-out deals, it resorted to the selling shareholders to milk the business considering that it is the best way to get maximum earn-out.
Speaking of poor handling of acquisition efforts, the lack of focus of the brothers to bid for two British banks, Midland and Hill Samuel backfired miserably that creates panic among shareholders. With this, the brothers were questioned by shareholders in accordance to their strategy in handling the business. Had the company's vast growth, by means of aggressive acquisitions, truly added value to the companies purchased? Or was Saatchi, as some critics claimed, an example of dyssynergy? As this problems begun damaging the company’s reputation, the share price fell drastically.
In contrast to the actions of Saatchi that leads to their decline, I will fist consider the company’s standing as a leading and respected company in its specialised operations i.e. advertising, there are other distinguished aspects to consider in its success. The power of the Saatchi & Saatchi name; Saatchi brothers, their personal reputation; the unsurpassed association of supporters, contacts and partners; the Saatchi & Saatchi management approach; the means talent is empowered to prosper within the group are considered vital attributes of its competitive advantage.
Additionally, all the marketplaces in which Saatchi & Saatchi operates tend to have similar characteristics. These markets are comprises of clients that have been ripped-off/under-served, in which there is uncertainty and/or where the rivalry is not at the peak. With this, Saatchi & Saatchi is able to rupture into and shiver it up. The role of the Saatchi & Saatchi is to be the client champion, and doing this requires delivering the brand values and company strategies to the clients. Saatchi & Saatchi’s brand values and company strategy should hub on: value for money, excellent service, innovative, competitively challenging, good quality, and entertaining.
Considering that Saatchi & Saatchi is a broadly diversified industry, it should know what is to focus. It is deemed that a company is diversified when it is in two or more lines of business (Luffman et al. 1996). It is obvious that it is certainly more difficult to craft and execute a strategy in a diversified firm rather than in single-line dealing. Actually, Thompson & Strickland (2003) had recommended that focusing on a single-line of business has several important gains. Though, with the unvarying technological improvements, shifting tastes and needs, and new alternative services/products, it is not remarkable for businesses to change their processes in diversified means. A lot of respected people had proposed that diversification varies partially on a business’s growth prospects in its current market and fairly on the prospects to utilise its capabilities, capital, and proficiency in other market arena. This is relevant to the current situation of Saatchi & Saatchi when Saatchi brothers continuously aimed for the company’s expansion.
Deriving from the decline of the company in 1980s, operations management and capabilities of Saatchi & Saatchi and other strategic options would become very important. It is then necessary to assess these strategic alternatives as to whether they are suitable to the concerns addressed, whether they are reasonable enough to be executed and their suitability to main stakeholders.
Meaning, in order to avoid decline of Saatchi & Saatchi, there should be a concrete organisational development and decision building. There is absolutely a necessity to reunite both the inside-out and outside-in potentials. While Saatchi & Saatchi’s processes administration engages focusing on its core competencies with market situation following its source support, Saatchi brothers and their company will be put into a difficult spot should they decide to overlook both the large scale and the industry environment. Therefore, Saatchi & Saatchi has to be conscious of the most recent processes administration transformations, including alterations in economic, political, legal and even demographic movements in order to build up the outside-in potentials, for example client linking, market sensing, technology supervising and channel relationships.
The improvements enjoyed by Saatchi & Saatchi may come in the structure of amplified returns. Knowing what the market stipulates and the newest movements could aid the Saatchi & Saatchi completely utilize its R&D capabilities to come out with services which are not only lucrative but also excellent feat. The premeditated alternative can even be used as marketing means where the main goal was to maintain attachment to their clients and paying attention to their criticisms. On the other hand, there will be an enormous mobilisation of capital engaged, and the related risks presented on Saatchi & Saatchi.
Nonetheless, the mentioned premeditated alternative appears the most sensible in the wake of globalisation, considering there is an unexpected change headed for a more incorporated and autonomous world market. The main stakeholders too should not have any protests so long as Saatchi & Saatchi’s core dealing is not endangered.
Considering the strategic implication of management of operation is something that Saatchi & Saatchi has to be familiar with. Saatchi brothers normally practice a centralised and globally measured arrangement of procedures and potentials. This permits information distribution to be engaged.
Actually, there are many factors that may contribute to the success and perhaps the minor setbacks that the Saatchi & Saatchi faces. What brought them to victory is the truth that they consider, not only the sum of profit they create, but as well as the happiness of the clients. Alternatively, Saatchi & Saatchi must still also consider a more centralised structure. This is not to outdo their vision of a non-hierarchical arrangement as efficient. Through an additional centralised structure, the administration would be able to have power over of their sources, therefore consider an improved yield.
2. Discuss how Saatchi & Saatchi has approached the balance between globalisation and localisation, and what could be done to improve it?
Organisation and diversification—these are what Saatchi & Saatchi has done to be able to balance their globalisation and localisation efforts. In order for Saatchi & Saatchi to offer multinational clients global and local advertising campaigns, the company created a matrix that arranges in accordance to regional and worldwide division. Considering that Saatchi & Saatchi is organized geographically whereas the operation and coordination between home country and country of operation are arranged properly by means of regional management boards. Actually, Saatchi was organized by client, whereby worldwide account directors (WADs) and regional account directors (RADs) are in charge for representing multinational clients’ needs across all agencies. WADs and RADs are currently running the 12 biggest international accounts.
Actually, these efforts of Saatchi towards globalisation and localisation were fine but there are lots of ways to enhance it. One way was through enough evaluation of the globalisation and technology impact to business. Nowadays, the concept of globalization has become one of the most important concepts that affect the operations of many organizations and companies worldwide. The changes happening in the society, including changes in terms of communication and technology have led to the modification of business and marketing processes and strategies, with the aim of coping with the mentioned changes. Due to the existing fact that along with the changes that happen in the society is the event of observing global markets becoming more homogenous. With this, companies and business organizations, especially multinational companies, continuously develop and improve their marketing programs and projects to meet the standards of consumers and serve them across national boundaries. The development and improvement of such marketing programs, strategies and projects lead many researchers and analysts to evaluate and assess the effects or impacts of globalization.
Basically, the primary drive of companies and firms Like Saatchi & Saatchi to globalize is their intention or desire to expand and widen their target markets. The expansion and widening of the target markets of international firms indicates that the firm has enough resources to sustain and maintain its operations and production. Expansion of the company also indicates that the company has acquired enough knowledge in maintaining the operation of the company, thus, more learned and experienced in its own industry. This is a major factor to recognize, for with the desire to expand, the company aims for more profit and sales, which would enable to company to become more established in its industry. Second major factor to recognize and emphasize is the role of diversification, which is related to the presence of different cultures and races in the company. Several positive effects are attributed to diversification, and include efficient resource allocation through internal capital markets, the increase in the ability of firms to internalize market failures, and increase in productivity (as cited in Li & Jin, 2006). In addition, diversification can also increase the generation of ideas, for more individuals become involved in the processes of the firm. Employees are also exposed to more cultures, practices and knowledge, thus, developing its organizational culture. Third major influence is the open opportunities for firms to engage in new business ventures, which would provide them with chances for more profit and prestige. New business ventures involve the production of new products or the innovation of a specific product or service. Fourth major influence or drive is the fact that firms may achieve fame or prestige if it globalize. The establishment of name, product/service, and reputation in specific countries and continents gives the business organization a chance to be regarded as one of the most successful business organizations in the whole world, thus, becoming more established in its own industry. Last major influence is the possibility of attracting new and more talents and skills in the company, which would give the organization the edge of performing well over other companies.
3. Critically evaluate Robert Louis-Dreyfus’ strategy to turnaround the company.
As the CEO Robert Louis-Dreyfus handled the business Saatchi & Saatchi created significant impact and shows business revival. One of his great efforts was his review of financial and strategic records of Saatchi & Saatchi. Upon his evaluation of financial and strategic records of Saatchi & Saatchi, he decided to took and consider the board's decision to concentrate on the communication business (advertising, direct marketing, public relation media services, etc.) and to drop the concept of a full-range services company.
As the process of disposal initiated, Louis-Dreyfus found out that the company had overpaid when buying businesses that are causing too much liabilities. For this reason, Louis-Dreyfus removed 10 out of 12 of the consulting businesses (for a total net extraordinary costs in 1989 and 1990 of £99 million) and had pushed through a recapitalization plan, which provided some short-term breathing space.
Actually, the management strategy of Louis-Dreyfus was expressive. His decision making styles and team leading with respect to his review and evaluation of financial and strategic records and consideration to the board's decision of Saatchi & Saatchi creates great impact for company’s survival. Actually, the rise of teamwork and related changes in an organisation creates reasonably idiosyncratic skills that may not translate well to other settings. Getting a group of people to cooperate and function as a team is not easy. It requires learning about each other, establishing trust, and developing good methods of communication (Mackins, 2010).
In accordance to the efforts of Louis-Dreyfus, his leadership in Saatchi & Saatchi provides excellent impact not only to the business decision of Saatchi brothers but also to the development and survival of the company. According to Kousez & Posner (2002), credibility is the foundation of a good leader which is actually present to Louis-Dreyfus as he reviewed the company’s business performance and financial status. A leader should be credible for him to lead. Come to think of this, would you believe in leaders who do not practice what they preach, do not walk the talk, do not do what they say they will do, and do not keep their promises? What would happen to the change process in a company if managers are lacking of skills?
As part of the development of the competitive advantage of the business organisation with respect to leadership capabilities of Louis-Dreyfus, several factors should be considered. Social responsibility, efficient decision making, change management and of course leadership among business industries should be given enough priorities. If proper leadership style and efficient decision making are used firms can have the edge it has to counter any threats, solve any problems, and achieve its goals. The efficient decision making given by leaders gives a company critical edge to counter any threats from its competitors and its environment. The efficient decision making given by Louis-Dreyfus despite of the influence of the Saatchi brothers helps to compete in a global business environment. It steers the company into making right decisions and right practices with regards to competitors thus enabling it to survive in the global business environment. Actually, Shackleton, (1995) stressed that it gives a company critical edge to solve problems it has. Through effective decision making and social responsibility this solving problems can be easier for any company. Methods and preventive measures can be formulated towards problems the company has. The efficient decision making and team leading shown by Louis-Dreyfus gives a company critical edge to achieve its goal. Organisations use different things to reach the goals and objectives they have. Without this the goals cannot be easily reached.
4. Provide advice to Maurice Saatchi on his musings at the close of the case: would rededicating the company to the principles of creativity that had built it in the first place be enough to get it out of the red?
In my opinion, rededicating the company to the principles of creativity that had built it in the first place be is not enough to get it out of the red. There are lot of things to consider in business and the issue of creativity is not only the sole driver of business loss. Issues that are affecting Maurice Saatchi’s business decision making must be assessed carefully.
Most business organisations find it unattainable to generate any sort of sustainable competitive lead based on product/services only. It is general understanding that each one of the flourishing organisation required and establish an accurate understanding of how it could generate a client-centred competitive advantage and forget the management factors such as motivation, leadership and team building. It is indeed true that one of the best ways to attain success was through enhancement of critical success factors. According to Thierauf, (2001), critical success factors (CSFs) in an organisation, are the limited number of parts in which upshots, if they are satisfactory can guarantee that booming competitive advantage. Identifying these factors is an old idea in management for the reason that there were great leaders throughout time who have acknowledged and addressed key factors to attain business victories. There is no one meaning of CSF however it is identified as that these are the parts which the organisation needs to focus on to do well. For that reason, the activities should be cautiously monitored and directed by the management.
Hayes, (2002) described critical success factors as administrative factors that generate a competitive advantage for a business in its own arena. There is no exact procedure in categorizing and implementing critical success factors in strategic management development. This is the grounds why Thierauf, (2001) states that diverse organisations which have parallel composition can carry out its market entry forming diverse ways which lead to the progress of various critical factors. As the principal means for an organisation to pull off its approach, CSFs must take into consideration about the disparities in the situation and administration that is present.
As conversed, the facts of the primary sources of competitive force emphasizes the critical areas where skill concerning motivation, leadership and team building may yield the greatest payoff, and highlights the areas where an organisation trends promise to hold the utmost significance as either opportunities or threats. Accepting these sources will also confirm to be useful in considering areas for management, though the main spotlight is on strategy in the industry. Management is an indispensable thing for any organisation. This is a significant process for the reason that it allows the organisation to make verdicts that will be advantageous and beneficial for them. Additionally, organisations that are aware of the effects of motivation, leadership and team building skills are more successful compare to organisations that are solely relying on their products and services.
References:
Hayes, J. (2002). The Theory and Practice of Change Management, London, Palgrave
Kouzes, J.M. & Posner B.S. (1987). The Leader Challenge, Second Edition. San Francisco, California: Jossey Bass Wiley.
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