Back to Company Performance and Results

Board Meeting 1

Introduction to feedback

Strategy in action

Purpose
At the end of each decision period there is an opportunity to review the Agenda Items for that decision period and the issues that they raise for the WRSX Group. The purpose of this
feedback is to enable the participant to answer the following questions:

1. Were you able to identify the key strategic issues raised by the agenda item?
2. Were you able to anticipate the impact of your decision on Non Financial Performance Indicators (NFPIs)?
3. As in the real world, in most cases it is almost impossible to predict the financial outcomes of any major strategic decision accurately. But it is possible to anticipate the financial impact of
one action alternative compared to choosing other action alternatives. Were you able to identify which action options would be most likely to deliver long-term return on investment?
4. If this were a case study or exam question, which strategic models and frameworks from the text would be useful in demonstrating your grasp of corporate and business strategy when
addressing this agenda item?

Format
Each Decision period you will receive feedback in the following format for each Agenda Item:
1. Some key strategic questions raised by the Agenda Item
2. Some broad feedback on the impact on Financial and Non-Financial Performance Indicators of the various action options.
3. Some suggested models and frameworks from the text that might have helped you surface the strategic issues raised by the Agenda Item.

Phase 3 – Board Meeting: One

Feedback on issues raised by the agenda items

Agenda item one – expansion into China

This agenda item is based on a common strategic issue for companies looking to expand globally: when and how to expand.

Questions to ask would be:

1. Do the opportunities outweigh the risks?
2. Does the WRSX Group have the resources and capabilities to develop a profitable business in China?
3. Is this the right time in terms of the market development of China's consumers?
5. Are there other issues such as ethical or legal issues?
6. If the decision is to go ahead with entering the Chinese market, what should be the best method for doing so based on all of the above?

Financial and non-financial impact

The reality is that there are no guarantees when entering a market of this size and stage of development. The key issue is balancing Opportunity with Risk, i.e. doing too little for a company
of this size or taking a substantial financial risk. The Strategic Alliance is appealing at this stage as it would deliver relevant knowledge and capabilities as well as being relatively low-cost.
Not entering the Chinese market would also have financial consequences, i.e. that WRSX would have no presence in China, when other agencies do, and would consequently continue to
miss business opportunities in China itself and with clients seeking to create global campaigns. Market entry into China might take time to deliver positive financial benefits, i.e. incresed
profits would not be obvious immediately.

A major investment would be a positive for Management of Growth, Client Attraction and Retention, and Leadership Capability but a negative in terms Management of Risk, especially
financial risk and business risk. There may also be some Corporate Social Responsibility issues raised by entering the Chinese market to be taken into consideration.

Relevant models and frameworks:

1. International strategy framework
2. Four international strategies
3. Market entry modes: advantages & disadvantages
4. Ansoff matrix.

Back to top | Back to Company Performance and Results

Agenda item two – sustainability policy

This agenda item is based on a current strategic issue for many companies: how to demonstrate their support for sustainable development/carbon footprint reduction and how to implement
this across the business.

Questions to ask would be:

1. Is this a suitable subject for Group-wide action and therefore should it be discussed at a Main Board Meeting?
2. What is the best way to get buy-in from each part of the business?
3. How important is this issue to WRSX clients, suppliers and employees?
4. What could be the impact on shareholders if WRSX fails to respond appropriately?
5. This is a global/local issue. Does WRSX have a global policy on sustainability or should this matter be managed at a local level?

Financial and non-financial impact

Sustainability is clearly an issue in most industries so this Agenda Item has an impact both internally on the WRSX Group and externally in terms of client relationships and investor
satisfaction. The option to 'green' one of the agencies is a major investment but with potential for major returns. The option to develop internal capabilities in this area will deliver long-term
returns. Deciding to let this be managed entirely locally means no investment but little or no additional return for the Group. In terms of the market's view of WRSX, a high-profile 'green'
agency will deliver good results especially in terms of market positioning, strategic leadership, CSR- sustainability/carbon footprint and breadth and of client services. The less expensive
option of developing internal capabilities would also perform well in these areas, although client awareness might be less in the short-term. The other two options would have only a limited
impact on market perceptions of WRSX as a 'green' organisation, and no impact on how the market sees WRSX as a campaigner for sustainability practices in the industry.

Relevant models and frameworks:

There is a lot of information on company websites in this sector on Sustainability policy and it is clearly a competitive issue, as well as a CSR issue. Stakeholder mapping could be used to
measure the stance of potential impact on various stakeholders on this issue. This is also a change management issue. How to bring about cultural change that allows effective
implementation of a Sustainability Policy across the Group that is also effective at a local level? Helpful models and frameworks might be:

1. Stakeholders analysis
2. CSR Stances
3. Some questions of CSR
4. Conflict of Expectations
5. Parenting Matrix
6. Styles of Managing Strategic Change.

Back to top | Back to Company Performance and Results

Agenda item three – delivering the doughnuts

This agenda item looks at options for managing individual performance and, through this, company performance. It raises the issues of changing employee expectations of the
employer/employee relationship. It also highlights the importance of aligning individual, personal objectives with organisational objectives through an effective performance management
system.

Questions to ask would be:

1. What is driving the move towards performance assessment based only on objective-achievement?
2. What are the risks of introducing such a scheme?
3. What could be the up-side of introducing such a scheme?
4. How would such a move be perceived in this industry compared to other industries?

Financial and non-financial impact

The financial impact of any such programme is very difficult to predict. It could have a profound impact on individual performance and through that Business/Group performance. But if, and
only if, objective setting really delivers strategic and organisational goals. An incremental approach would therefore be the least risky option. Another risk would be that both clients and
suppliers would suffer from lack of availability of key contacts due to the new regime. However, if it worked, it could be a major driver to improved performance and could also impact on
important issues in the business such as the ability to retain key personnel and attract new talent.

Relevant models and frameworks:

This agenda item focuses on the management of people. Helpful models and frameworks might be:

1. Stakeholders mapping power/interest

2. Organisational purpose
3. Culture's impact on strategy development
4. Cultural web
5. Organising for success
6. Strategy & people
7. Key elements in managing strategic change
8. Types of change
9. Contextual features of strategic change programmes.

Back to top | Back to Company Performance and Results

Agenda item four – disposal of unprofitable business

This agenda item focuses on whether or not the Board should agree to the disposal of PromoCo.

Questions to ask would be:

1. What is the strategic fit for this business in the WRSX Group?
2. What are the capabilities required for managing such a business and are they ones that WRSX has or wishes to acquire?
3. Could the resources released by selling all or part of this business be better used for more profitable/core parts of the business?
4. Is this a decision that should be made locally or is it directly relevant to the WRSX Group strategy and therefore should be made at Board level?

Financial and non-financial impact

The major decision to be made here is not a financial one but a strategic one. Is this business core or non-core? Is this business a new product/service that can be sold to existing clients
(product development) or is it in fact a diversification from WRSX Group's main business? Does the business require similar capabilities and resources to those of other service lines in the
Group? Is the client base the same? Are the likely returns such that they justify keeping the business? If you take the view that this is a diversification, the risks would be higher than if you
take the view that it is a product/service development.

Relevant models and frameworks:

This agenda item focuses on the management of people. Helpful models and frameworks might be:

1. Strategic directions – Ansoff matrix

2. The growth share (or BCG) matrix
3. Strategy guidelines based on the directional policy matrix
4. The parenting matrix.

Back to top | Back to Company Performance and Results

Agenda item five – culture change in New York

This agenda item looks at the potential impact of culture change on business performance.

Questions to ask would be:

1. How important is the culture of the business in terms of business performance in this industry sector?
2. What are the risks of introducing a major cultural change programme into the New York office?
3. What could be the up-side of introducing such a programme?
4. Should the change be incremental/ evolutionary or radical/revolutionary?

Financial and non-financial impact

This industry sector relies on the creativity and innovation of its employees, as well as the customer relationship management skills of its account management teams. The key question is
therefore 'How detrimental is the current culture to the performance of the business?' Radical change will be disruptive but is more likely to produce significant financial gains in the long-term
but how long before these returns outweigh the disruption to the business brought about by the proposed changes?

In terms of the NFPIs such decisions impact broadly across all the headline NFPIs either positively or negatively as they impact on many different stakeholders. The option to move office
would allow the WRSX Group to improve its Sustainability Profile, as a new office could be chosen with this in mind.

Relevant models and frameworks:

Helpful models and frameworks might be:

1. Analysing culture – the cultural web

2. Types of change
3. Contextual features of strategic change programmes
4. Forcefield analysis
5. Styles of managing strategic change
6. Key elements in managing strategic change.

Back to top | Back to Company Performance and Results

Agenda item six – exploiting the digital opportunity

This agenda item looks at how a business evaluates the options for exploiting a new market/sector opportunity.

Questions to ask would be:

1. How important will this market/sector be in the future in terms of contribution to future profits?
2. How important is it for WRSX to get into this market/sector early?
3. Should WRSX be developing capabilities in this sector within the Group or relying on external providers to deliver this service to WRSX clients?

Financial and non-financial impact

The question to ask here is: to what extent does WRSX need to be a major player in the Digital Marketing sector in order to remain profitable into the future? Is this business core or non-
core and therefore what investment should be put into this business? Entering the market through acquisition might at first sight appear attractive but, with so many larger players seeking to
build market share through acquisition, is WRSX in a position to outbid major players in the industry who have much greater financial resources to call upon?

In terms of NFPIs the major areas of impact are around management of growth, client attraction and retention, management of operational, market and business risk and strategic
leadership.

Relevant models and frameworks:

Helpful models and frameworks might be:

1. Porter's five forces

2. First mover advantages/disadvantages
3. Strategic capabilities and competitive advantage
4. SWOT analysis
5. Sustainable competitive advantage and strategic lock-in
6. Game theory
7. Strategic directions – Ansoff matrix
8. The growth share (or BCG) matrix
9. Disruptive innovation
10. Suitability of strategic options.

Back to top | Back to Company Performance and Results

© Copyright Learning Dynamics 2007. All rights reserved | Terms & Conditions | Privacy Policy | Contact us | © Copyright Exploring Corporate Strategy Pearson Education. Used with permission