Trident University International
Daniel Bunch
Module 1 Case Assignment
BUS499: BSBA Integrative Project
Dr. Paula Stechschulte
February 27, 2012
Saatchi & Saatchi
Saatchi & Saatchi advertising company was founded in 1970 by Charles and Maurice Saatchi. The company grew phenomenally in the 70s and 80s due to fact of the company’s mergers and acquisitions but mostly because they were at the forefront of advertising creativity. Saatchi strategy was to merge and acquisition the competition. Part of their strategy included the implementation of mergers and acquisitions, which allowed the company to develop alternative strategies and perspectives from new companies within their own organization. Saatchi & Saatchi was at the “forefront of creative excellence and contributor to their clients’ success” (Greenhalgh, 2004). Unfortunately, the company was not prepared for what came next, which was the negative aspects of their merging strategy. Although they were growing extensively, this growth was shared by much different ownership. The company was comprised essentially of their own competitors. In addition, the recession in the 1990s challenged the company with financial hardship. The company was losing control of its overall focus with ongoing mergers and strength of their financial base. In the 1990s, two key leaders emerged Kevin Roberts and Bob Seelert. They took over the company and are the ones who oversaw many changes including “de-mergers”. They established three main goals which focused on the financial perspective and the customer perspective: “Growing our revenue base better than the market, converting 30 percent of that increment revenue into operating profit, doubling our earnings per share” (Greenhalgh, 2004). Roberts and Seelert also determined that the company’s vision needed to be reevaluated as well as the overall strategy. Their goal was to be both creatively powerful for their customers, while at the same time financially secure. These two aspects made up the two “prongs” of the company’s overall strategic focus. Roberts and Seelert realized these two prongs would be hard to implement because the two goals could either complement one another or interfere with their success. Another thing to keep into perspective is that both Roberts and Seelert had previously held senior positions with Procter & Gamble and General Foods giving them first hand experience of the clients’ perspective. To implement their strategy Roberts and Seelert divided their agencies into three categories: lead, drive, and prosper. The “drive” agency “was given the goal of maintaining or slightly growing their revenue base but also growing their margins” (Greenhalgh, 2004). The ‘lead’ was where rapid growth was expected and where the largest share of investment would be allocated because they oversaw the largest clients. These large clients held about 20-30 percent of the client base but made up 70-80 percent of the revenue for the company and Roberts and Seelert wanted focused attention on these clients. The “prosper” agency was generally less than 50 employees to which had limited potential for growth but where expected to achieve high-margins.
These categories of lead, drive and prosper were successful because they allowed the company to focus on the two main goals: to improve the customer’s resource and to secure financial stability.
Conclusion and Evaluation
“We didn’t have the luxury of getting it wrong, we had one shot and the clock was ticking” (Greenhalgh, 2004). Roberts and Seelert clearly developed the right strategy but realized the implementation of the strategy would be difficult simply because of their key leadership positions in the past. The key to success for Roberts and Seelert was that each financial strategy implemented made sense not only to them be
