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Posted on September 9th, 2012, by

Saatchi & Saatchi is one of the successful advertising agencies today, although the company faced considerable problems in the 1990s, when the agency stumbled through serious financial problems. In fact, the organizational structure and financial performance of Saatchi & Saatchi deteriorated and changes were essential to save the company from the financial collapse. In such a situation, the change of the leadership of the company was the first step to the salvation of the company and its steady recovery after the steep decline in the 1990s.

Therefore, the company started changes as the new leadership developed the new strategy and conducted the restructuring of the company.

As the new leaders headed the company, they set new strategic and financial goals for Saatchi & Saatchi to achieve. Obviously, the company needed the recovery after the downturn in its business development. The company needed to optimize its financial performance. In such a situation, the new leadership of the company focused on saving costs and developing the most prospective units of the company. The company could recover faster as it refused from projects that had little prospects and focusing on the most lucrative projects instead. Such strategy could have been effective for the marketing strategy conducted by the company in the 1990s was a complete failure, while the new strategy was pragmatic and minimized the risk of financial losses.

As the new leadership of the company defined strategic and financial goals, the restructuring of the company has started. First, the company was divided into three types of agencies, including prosper agencies, drive agencies and lead agencies. They were different in size and potential and the company had different strategies in relation to its agencies.

First, prosper agencies were agencies that had less than fifty employees. These agencies had no prospects of becoming gigantic agencies, which were the target agencies for the new leadership of the company. Therefore, these agencies were of low interest for the company.

Moreover, the new leadership planned to get rid of these agencies because they had no prospects in terms of the new marketing strategy of the company. In this regard, prosper agencies had to ways. On the one hand, the company could sell prosper agencies. On the other hand, prosper agencies could shift to the drive agencies at the best. In such a situation, the company assessed the performance of each agencies and either sold them or shifted to drive agencies, but steadily the company focused on getting prosper agencies rid of.

The second unit of agencies of Saatchi & Saatchi consisted of the drive agencies having from fifty to one hundred fifty employees. These agencies had the potential to become gigantic agencies. More important, these agencies had a considerable potential for the further growth of the company. This is why the company paid a particular attention to the drive agencies because they were supposed to become the major drivers of the fast recovery of the company after the steep decline in the 1990s. The drive agencies were flexible and could progress fast that contributed to the high attention from the part of the leadership of the company to their development.

Finally, lead agencies were gigantic agencies, such as the ones in the UK, New York and China. They maintained the stable business performance of the company but they had limited potential for growth. These agencies were essential for the company to maintain its stable financial performance but their limited potential for the further growth made them not attracting for Saatchi & Saatchi as the major drivers of the company’s growth.

In addition, the company focused on the growth of the company’s loyal customer. In this regard, the company attempted to enhance the customer loyalty through the rise of the customer satisfaction offering customers services of the high quality. The focus of the company on the quality was an essential condition of its steady growth and recovery after the crisis the company faced in the 1990s. At the same time, Saatchi & Saatchi focused on the formation of a positive image of the company among customers. The company attempted to enhance the customer satisfaction and customer loyalty that increased the number of loyal customers.

Thus, Saatchi & Saatchi faced a deep decline in the 1990s. However, the company has managed to improve its performance consistently after the change of the leadership. The change of the leadership led to the restructuring of the company and its fast recovery. In addition, the change in the structure was accompanied by the change in the company-customer relationships of the company.

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