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Board Meeting Five Board Agenda item: One

From: Mike Vanbruggen, Deputy Group HR Director, WRSX Paris To: Board Directors

Creating new employment policies – Becoming employer of first choice

You will remember that the Board challenged the HR department to propose a 'WRSX Future Leaders' Programme – a dynamic programme that will help ensure the continued future growth of WRSX. We have lost out on our preferred new employees recently to competitive agencies and we were challenged by the Board to do something about this.

The current thinking on this is that certain companies – known as 'vanguard' companies – are leading the way in new policies and practices. Leading the way are companies such as IBM, Procter & Gamble and some of our clients in the US and EU markets. They are trying to create innovation and profits through values and principles that that enable employees to have a positive social impact. They are thinking their way out of 20th century management policies that state that the job must be performed in a particular location at specific times and assigned by a boss who observes the performance – and creating dynamic 21st century workplaces.

These companies set out to be employers of choice – and with the war for talent in the advertising industry – this should also be our strategic recruitment objective. We need to speak of workplace flexibility and not insecurity about not being able to see the work being done. This flexibility shows in many ways: family friendly policies, community service, charitable work – and understanding that purpose or principle-inspired opportunities do not always conflict with commercial considerations.

I strongly believe that if we want WRSX Group to become an employer of first choice among our target employees – and we want to ensure the future of the company, that you include this item on your Board agenda.

We need to model ourselves on these 'vanguard' companies whose leaders are saying that the challenges of global change require a shift in responsibility from employer to employee.

Matching Learning Accounts – continuing education: We must give our employees opportunities and the tools to succeed, but individuals must keep themselves ready for the future. A way of doing this is to offer employees incentives to invest in their own continuing education – like a bank account with credits that is portable and can be taken from position to position, new responsibility to new responsibility.

Flexibility: We should be managing by results. Twentieth century management beliefs that are that the job must be performed in a particular location, at specific times and assigned and supervised by a boss who observes their performance. While some of our jobs in WRSX do require this, many do not. We should be creating the job specifications, performance management and remuneration systems of the 21st century workplace.

Family-friendly policies: Flexibility also shows up in family-friendly policies. This may come as a shock in an industry which works long hours and believes that it is forever youthful like Peter Pan – but we should be offering our employees leave for care-taking, re-assigning husbands and wives so that they can work from the same city. The rationale for this is that many of the companies in the group are not advertising agencies – where the long- hours culture and 'presenteeism', i.e. always being seen in the office – are endemic.

Tapping into values: People work harder when their values are tapped into and they add their heart to their head. Let employees work on community and charity projects an agreed number of days per year on company time – and let them bring these initiatives back into the organisation.

The CEO of Procter & Gamble, the world's largest fast-moving consumer goods company has announced their strategy called 'purpose- inspired growth' – in which they want to 'invoke the heart and care about human needs' – and growth will follow.

The consensus is that any business can adopt a variation of this strategy if leaders understand the rising importance of values. Leading with values is important for the new generation of employees in being associated with ethical behaviour that gains the respect from the public at large and favourable treatment from government. These are the lessons from the vanguard companies:

Inspire employees to add their heart to their head. Add a third P to performance measurement: Potential for impact. If purpose-inspired opportunities and commercial considerations seem to conflict, find another way.

After discussion and consultation with colleagues, especially Francoise Mellier, who has been very helpful, I have pleasure in putting forward these options for action to the Board:

Agenda Item Decision Options:

The Board has four Action Options:

Option A: If we want to make this happen from the Board room down, the Board will have to make a policy decision to encourage culture change across the Group. We agree to treat this as a high-profile initiative and give it a great deal of publicity both inside the Group and outside, especially in advertising recruitment media.

Option B: Take a more measured approach and float the idea to HR heads in the different WRSX locations across the world to see how it sits with the different national cultures, but implement it where we are most likely to have immediate agreement: Paris, London and in the US.

Option C: Look at WRSX client companies and suppliers to WRSX that have similar values and work with them to come up with a joint implementation strategy for ways of attracting and retaining talent through the range of policies previously outlined including Matching Learning Accounts, where employees in WRSX and our client company employees can job swap / or job shadow for agreed periods. This could have the beneficial effect of enabling employees to work smarter and more efficiently – to the benefit of all companies.

Option D: This is just a management 'fad' and is more about PR than the real world and you decide that the Board should stay clear of it.

Board Meeting Five Board Agenda item: Two

From: David Caparelli, VP Finance Department, WRSX New York To: Board Directors

Major clients move towards re-negotiating agency income model

You may have seen the headlines in Advertising Age about some of the larger consumer marketing companies setting up on-line purchasing systems. The idea behind these systems is effective cost control by getting suppliers to bid for their business in an on- line auction. In my view, in this bidding system price and consequently margins can only go one way – and that is downwards – because the lowest price nearly always wins.

Advertising Age referred to the move towards on-line procurement bidding as follows: 'Corporate purchasing control is a spectre that is stalking the advertising industry – and it is a very fearsome one'.

We might like to think that this on-line price bidding only applies to office items like stationery, office furniture and computer consumables – but it is being extended to services as well. And we have already heard that one of the largest beer, spirits and wine marketers in the US is going to put its advertising out to bid using this system. Until now the usual procedure has been that the client company marketing department (i.e. the budget holders) have the final decision on which advertising agency is appointed. There has been a standard advertising industry income structure on media buying on behalf of the client, with the creative time taken to create the advertising being charged at an agreed hourly rate. So up to now, when a client company wants to put an account out to bid, they produce a shortlist of three to five agencies and they ask them to present their marketing and advertising ideas. The client company purchasing department – or as they now like to call themselves the professional procurement department – have not been involved in the advertising purchase decision. It looks like all this is about to change.

One of our competitors in the US and UK has negotiated a results-based remuneration model with a major client. The way this works is that the basic income is lower than the traditional income model outlined above, but under the new model the agency gets greater income if the advertising gains the client’s product increased market share. Agreeing to this model shows that the agency believes in (i) the power of advertising and (ii) the power of their creativity.

This raises the whole issue of the power of buyers versus the power of suppliers. Whereas the creative reputation of an advertising agency gives it relative power in the bargaining process, this power seems to be shifting towards the buyer, i.e. our client companies. New on-line procurement technology has shifted the buying power to the purchaser as the influence of procurement departments increases in client organisations.

The big question is whether we want to pre-empt this shift by reviewing our income model – and whether we can we share some of the risk of servicing a client's business with our suppliers down the supply chain.

I would request that the Board considers this item with great urgency.

Clients put advertising buying under the purchasing lens

To emphasise the urgency of the matter, and why this should be discussed at Board level and appropriate decisions taken, here is an extract from a special survey that we subscribe to: 'At a growing number of client companies, the procurement officer is supplanting the chief marketing officer (CMO) when it comes to choosing an advertising or public relations agency. Why has this happened? What is to be done?'

Why has it happened? The new purchasing professional’s job is to apply purchasing disciplines to spend areas – including advertising – not traditionally influenced by procurement and to industries not accustomed to objective cost opportunity reviews, competitive bidding, and so forth.

Qorvic, one of the world's largest supplier of premium drinks, with a US $600 million advertising and promotion budget, is introducing this system and the person in charge of its introduction has said that her department's objective is 'to build a long-term rapport' with the company's internal budget holders, i.e. those marketing people that WRSX have traditionally dealt with in building relationships in order to acquire new business.

According to the survey, an initial reaction from marketing budget holders is to ask how the new purchasing system will affect established relationships with agencies/suppliers. Marketing budget holders are also concerned about procurement changing relationships and affecting creativity. Advertising agencies, meanwhile, might see the involvement of purchasing / procurement departments in the process as solely focussed on reducing costs and margin.

The survey goes on to quote the head of purchasing at Qorvic as saying: “The first time the agencies see us coming, they understand that the relationship is changing. Naturally, they're going resist the change. Our goal is to be seen as 'honest brokers' – ones who add value to our supply relationships”.

What is to be done about it? We have to accept that change is on the way and my assessment together with colleagues in the New York office finance department is the following options for potential action:

Agenda Item Options:

The Board has four Action Options:

Action Option A: We should wait for clients to put in this on-line purchasing system and then approach us. The view is that this will initially occur in a few cases, where we are retained on a portfolio of brands, possibly with Qorvic. When this occurs we can negotiate with our suppliers to reduce input costs and hopefully defend our margins.

Action Option B: We can take a proactive approach and consider introducing a 'value-based' system as a new compensation model with our clients. 'Value- based' means that we share the cost risk with our clients by agreeing a basic fee to cover costs, plus an additional fee amount based on the uplift in product sales as a result our ad campaign. This system would guarantee to cover our media and creative costs, plus it would incorporate a bonus mechanism of up to 30%, dependent upon a number of measures, such as the sales and market share of the products being advertised, plus the agency's overall performance rated on agreed measures, like management of time and budget. In our view, the aim with our 'value-based' model is not to cut costs to clients but to inspire creativity and efficiency and maintain our margins.

Action Option C: We should review our client list on the basis of profitability and mount an active campaign to demonstrate that an on-line purchasing system will damage client / supplier working relationships and reduce creativity, which can have a direct positive effective on sales. Therefore if the client invests in such a system, that the advertising purchase process should be excluded from it.

Action Option D: The majority of WRSX clients are happy with the current charging / agency income model and you decide to do nothing about this issue.

Board Meeting Five Board Agenda item: Three

From: Neil McInnis, Finance Department, WRSX London To: Board Directors

Key strategic appointment in underperforming subsidiary

Our UK audio visual production and staging business – Audio Image – has a problem with underperformance and the management seems to be falling short of the targets they have been set. Together with the London HR director, we decided to identify three candidates – both internal and external – that we thought may be suitable to take over as managing director and we asked them to take a look at the business and come up with a strategic change programme that they believed would improve the business performance. All of this was done in the strictest confidence as the current MD is unaware that we are thinking of managing him out of the business.

As you will know, Audio Image is important to WRSX in the UK as its key clients are leading automobile manufacturing companies. Audio Image arrange all their new model launches at the major motor shows throughout the world (except the US) – in Frankfurt, Geneva, London and Paris – and in the Far East in Shanghai and Seoul. Another reason why the performance and reputation of this company is important to us is that these clients also use WRSX London as their advertising agency.

Each of the proposed candidates is equally capable and qualified and the way to select the most appropriate candidate we believed was to get them to come up with a plan for the turnaround of the business.

I would request that the Board considers these proposals for the turnaround of Audio Image.

Before identifying the potential candidates, we conducted independent research among Audio Image's clients and staff to see if the financial underperformance was also reflected in client and staff attitude ratings. In terms of the customer satisfaction survey, we can report that there were some very low customer loyalty scores and some of the senior executives in our client companies are considering moving their business, reflecting dissatisfaction with the account management team, budget control, quality of communication and complaint resolution.

In terms of the employee survey we conducted, there were very low scores on: positive and optimistic culture, clearly articulated strategy, management motivation, clear about job objectives, etc. There is certainly enough evidence – over and above the disappointing financial performance – to indicate that the current management could do much better.

Agenda Item Decision Options:

The Board has four Action Options:

Option A: Candidate A has identified that the main issue for the business is the way that it is structured: Solutions that this candidate has proposed include (a) the business should be restructured in that the MD has too many direct reports and spends his time in meetings (b) there is no long-term planning and little time to manage (c) interpersonal management skills are lacking and the staff feel de-motivated by the culture of the organisation. Candidate A feels that the restructuring of the business would be time-consuming and disruptive but it is the only way to get the business back to performing well. Smaller teams would be better motivated. The only way to bring about change in the business is to completely restructure with each manager having no more than five direct-reports.

Option B: Candidate B has identified a culture where mediocre or poor performance is not punished and above average performance is not rewarded as the key to turning around the business. Candidate B feels that this is a classic change management issue and that she is the best person to lead the change. Candidate B thinks that the re-structuring may be a longer-term option but priority should be given to introducing effective performance management systems. This means that all managers will require training in setting SMART (Specific, Measurable, Achievable, Relevant and Time Bound) objectives for their staff. Then a system of monthly meetings will be put in place so that everyone knows how well objectives are being achieved on a month-by-month basis. Candidate B argues that performance management systems will enable top management to get the under-performing people out of the business and to reward those who achieve their objectives and specifically to reward the high achievers. This action will bring about the needed change to the culture of Audio Image and will turn around the business performance.

Option C: Candidate C has proposed that customers should be the focus for turning the business around. The Customer Satisfaction Survey clearly indicates that there is a problem with the service the business provides to its customers. Candidate C advises that a senior manager from the business is allocated to each major customer as the main point of contact between the customer and the business. This will take up a lot of senior management time but will make clients feel that Audio Image takes their current dissatisfaction seriously and wants to correct the problem. Feedback direct from customers will help the business to identify what the problems are. Then, in a few months' time, senior management from Audio Image will all attend an away-day chaired by Candidate C where they can review their findings and look for solutions.

Option D: You believe that the time is not right to introduce a change management programme at Audio Image and you decide to leave the existing

management in place. Nothing should be done while the current MD is still in place towards replacing him. You set tough targets for the existing MD and his top team of managers with a clear message that failure to turn the business around in the next few months will mean that they will be looking for new jobs. You believe that this will focus their minds and that with the information they now have on why the business is underperforming, they will be able to find their own solutions to the problems.

Board Meeting Five Board Agenda item: Four

From: Lloyd Silberstein, President, New York Office, WRSX Group To: Board Directors

West Coast acquisition

You will remember that the Board agreed eighteen months ago that we should look to open a West Coast agency to complement our East Coast business based in New York. An acquisition should have a clear strategic goal and objectives might be:

1. Increasing market share 2. Increasing the rate of growth 3. Improving competitive positioning in an attractive market or entering a new one 4. Improving margins or reducing cost 5. Acquiring new knowledge and/or skills 6. Acquiring undervalued assets 7. Unlocking value (in the target company) which has been mismanaged

Our strategic aim was to service West Coast based businesses from San Francisco rather than New York and so provide a 'local' service to West Coast businesses. In reality, much of the creative and technical work would be handled from New York but Account Management and some creative would be SF based.

This has been a fraught project that has taken much longer than we imagined at the outset. A deal to acquire Gumtree was almost a done-deal when they received an offer from Hotbrands Inc, one of our major competitors that effectively blew our offer out of the water. We did wonder if we should match the offer but having undertaken due diligence it became clear to us that our offer was an accurate reflection of the value of Gumtree to us. Trade reaction to the Hotbrands deal seems to confirm that we were right in this assessment. So, it was back to the drawing board.

We now have two options to put before the Board. Preliminary discussions have taken place with both agencies and the principle shareholders in both agencies are in broad agreement to sell at a price we are prepared to offer – subject to final approval of the deal by this Board which is equivalent to £28m for each agency. So, at the same cost of acquisition, the issue is which agency fits best with WRSX and is most likely to deliver shareholder value in the future?

Ashley, Bender, Dwyer (ABD) is an integrated strategic marketing and advertising agency that works with clients, mainly in the consumer, FMCG, market to 'keep brands relevant and companies successful.' The agency has a reputation for innovation, not only in its consumer marketing messages but in how and where to place them for maximum impact.

Mind2Mind Inc is a specialist agency, set up four years ago in San Francisco that is entirely focused on Silicon Valley hi-tech businesses. We are not talking Microsoft and Google here but fairly recent start-ups (3-5 years) with high potential for growth. The agency has had some notable successes in the last two years in developing and promoting business-to-business start-ups by helping establish and promote hi-tech brands.

I am now coming back to the Board to ask for agreement to proceed with this acquisition.

My original brief was to acquire a West Coast agency that would deliver a sense of 'local' service/market awareness to businesses in cities such as Los Angeles, San Diego, San Francisco and Seattle while continuing to offer the 'global' benefits of the WRSX Group. The team working on this project has come up with ABD which clearly fits the profile we were looking for. Interestingly they have also put forward a specialist agency in Mind2Mind Inc that would deliver a new specialisation for WRSX. The decision before the Board is which agency to buy. I guess the other options are to buy both or neither. We do have the funds for both if we decided to go that route. Of course there is the option to go for neither of these and to ask the acquisition team to take another look at what is out there.

Agenda Item Decision Options:

The Board has four Action Options:

Option A: Ashley, Bender, Dwyer (ABD) is an integrated strategic marketing and advertising agency that works with clients, mainly in the consumer, FMCG market to 'keep brands relevant and companies successful.' The agency has a reputation for innovation not only in its consumer marketing messages but also in how and where to place them for maximum impact.

Strengths The creative team which is young, bright and savvy

The company is financially sound, with audited revenues for its last financial year of US$ 40m and pre-tax profits of US$ 10m (£6.25m). ABD's client portfolio of West Coast based businesses including:

Mitsuvi Motors North America – one of the world's largest motor manufacturers Paloma Life Insurance Company – a Fortune 500 company, Rainbird Sandals Inc. a company that specialises in men's and women's leather, hemp, and rubber flip-flops manufacturing 1,200 pairs of sandals a day. Great American Cruises operates 14 ships to seven continents and carries nearly 700,000 cruise passengers a year. The Chop & Pipper Company sells beach-oriented clothing – shorts, shirts, and hats – generating $18 million in sales. More recently ABD worked with Chop & Pipper to launch a brand new line aimed particularly at the teen market. It includes an array of denim items including jeans, skirts, Bermuda shorts, and crop pants along with T-shirts, tops, and fleece.

Culturally ABD is similar to WRSX and probably close to how the WRSX culture was a few years ago when we were smaller and less global.

Weaknesses Strictly US-based with no overseas client work

Some small clients amongst the larger ones who demand a lot of attention for the return they generate

Acquisition Price: US$ 45m (£28m), just over 1 times revenues.

Terms: Lock-in for key players for three years and six months ban on approaching existing clients after severance. Cash purchase as major shareholder (not active in the business) wishes to sell outright.

Option B: Mind2Mind Inc is a sector specialist agency, set up four years ago in San Francisco that is entirely focused on Silicon Valley hi-tech businesses. We are not talking Microsoft and Google here but some mid-sized companies as well as fairly recent start-ups (3-5 years) with high potential for growth. The agency has had some notable successes in the last two years in developing and promoting business-to- business start-ups by helping establish and promote hi-tech brands. This year it has also managed to land one or two projects for some of the largest multinational brands but these have been small contracts for specialist sales systems/training/conference design/incentives programmes rather than the big advertising contracts. For example, M2M worked directly with the CiberCo Field Marketing Programs Managers to develop an integrated lead generation and lead harvesting system for a new product being launched by CiberCo.

M2M is a full-service advertising agency working in all media, from offline to online to broadcast.

The agency is dominated by its CEO/Creative Director John Benjamin who has a strong belief in 'Creativity That Sells'. His philosophy is to strengthen the link between sales and marketing. During the past three years Mind2Mind has twice been named a 'Top 200 Fastest Growing Private Company' by the Silicon Valley Business Journal.

Strengths Specialist knowledge of Silicon Valley businesses

Focus on Sales using training/incentives programmes for Sales staff

Highly energetic team of creative, account, operations and innovative development teams, coupled with advanced lead generation and demand creation technology

Client portfolio of Silicon Valley based businesses including:

CiberCo – a Fortune 500 company developing imaging programmes and related products Nickelplated – worked directly with Nickelplated's internal licensing team, 3rd party manufacturing, and a team of product developers to package, promote and position computer components under the Streetweyes brand. Kickblaze – created a web site which showcases Kickblaze as a new category of enterprise-class, web-based applications – and did it in only 10 days. ApplicationZone – M2M's team worked to create a focused conference for IT and business professionals.

Growth of 230% in 3 years and projected growth at similar rates over the next 3 years.

Weaknesses Financial growth has been astounding and costs have increased to cope with this growth rate. This has left M2M vulnerable during the recent downturn as banks have refused to extend loans and cash flow has been stretched.

The dominance of John Benjamin who is a charismatic CEO with many years in creative and sales. His passion has driven growth to date but there is no strong management team under him to continue the business should he decide to move on.

The culture and values of M2M are driven by John Benjamin's ambition. The core beliefs are in reward for performance and performance means sales. While this has many positives the culture is competitive between departments in the business and between individuals in those departments. The business attracts young, ambitious people who are loyal to themselves alone. This is driven by the knowledge that they will be out of the company as soon as they fail to produce results regardless of any previous track record of success. Rewards are high for those who stay the course but many don't.

Many clients see M2M as entrepreneurial and young. Association with WRSX could be detrimental to this.

Acquisition Price: US$ 45m (£28m), a relatively high multiple on historic revenues but there is huge growth potential in this business.

Terms: Lock-in for key players for 18 months and 6 months ban on approaching existing clients after severance. Cash purchase as major shareholder (John Benjamin) wishes to sell outright

Option C: Buy both businesses. They are both attractive and would each bring new markets and expertise to WRSX. WRSX can afford to do this and these kinds of businesses will never be as cheap again.

Option D: We are only just coming out of recession and this is not the time to be investing heavily in the USA when we can service West Coast businesses from the New York office. Neither of these businesses is a perfect fit with WRSX and so we should keep our money in the bank for now.

Board Meeting Five Board Agenda item: Five

From: Leah Weinstein, Account Manager, Government Information Office, WRSX London Office and James Henley, Account Manager, Goodey Fast Foods, WRSX London To: Board Directors

UK Government contracts – potential account conflict

We have been asked to bid for two contracts that the UK Government Information Office has put out to tender under the banner of 'social marketing'. Social marketing is defined as the use of marketing principles to influence human behaviour in order to improve health or benefit society.

Both Information Office contracts are substantial pieces of work and they are also potentially prestigious and award winning if our creative teams produce really good work – plus we have been told that, if we tender, we are the favoured agency because of our reputation.

The first contract is part of the government's 'social marketing' campaign to reduce obesity levels in the country by publicising the health risks of obesity and government health schemes to combat obesity such as diet programmes, exercise programmes, appetite suppressant drugs and surgery. The target audience is teenagers and even school children who are significantly overweight. The second contract is designed to reduce food wastage and our creative team is keen to create a campaign that links food wastage and sustainability. They want to use the message that wasting food has a direct impact on climate change through land clearance for food production, manufacture of fertilisers, transport of food across the world, landfill from unused food, etc.

Our issue is that James Henley's client, Goodey Fast Foods, hit the headlines recently because of the amount of fat and sugar in its products. These products are targeted at children and teenagers. Goodey Foods has made it clear in previous meetings that they will not tolerate their suppliers 'working with the enemy' as they call it, i.e. the lobby intent on reducing obesity. Goodey is a profitable account for WRSX in the order of £750,000 per annum.

The London office feels that this is a strategic issue for WRSX. Do we continue to support clients who are known to be damaging children's health or do we risk losing, or even decline further work from, this client and take the government contracts if we can get them?

This is a matter of commercial interests versus social responsibility in our view. Can the Board make their position clear on this issue? We would like to see this on the Board's agenda.

Over the last ten years, social marketing has developed as a key tool for governments and organisations aiming to influence positive social change. In the UK alone, government spending on information campaigns tops £1bn.

There is also a view that the principles of social marketing can also have a beneficial effect on commercial marketing, so besides profit, there may also be a second good reason for WRSX to present ideas for this business. To quote a leading marketing expert on the subject: 'We believe that social marketing is set to assume a vitally important role in best marketing practice. There is growing evidence demonstrating how it can improve and enhance the impact and effectiveness of commercial sector techniques and approaches'.

In recent years there has been increased awareness of the importance of sustainable business development, that is, where businesses use resources (economic, social and environmental) in an efficient manner so that the company's operations must not compromise the ability of future generations to meet their own needs. The socially responsible question is whether fast food products are contributing to an unsustainable social situation.

Putting social responsibility to one side and looking at the commercial implications, with regard to the relative budgets, the Information Office is saying that they are budgeting as much on these two campaigns as Goodey Fast Foods is currently spending – although there is no guarantee that WRSX London will win the business in what is a competitive situation with other agencies.

These are the options for action that we would like to put before the Board:

Agenda Item Decision Options:

The Board has four Action Options:

Option A: You decide that the invitation to present ideas for these two government accounts is too good an opportunity to miss. You decide to accept the invitation to tender for the Information Office work, and make the following internal arrangements: set up an account / creative / media group completely separate from the Goodey Fast Foods business and locate them on a different floor in the WRSX London building. In the event that the government business is awarded to WRSX, you believe that you can justify the situation to the Goodey Fast Foods client. You decide that you will even go to the extent of setting up separate premises for the account group.

Option B: You consider that the issues raised by the Government Information Office with regard to obesity are real and urgent issues – and that WRSX's own social responsibility programme should take this into consideration. You decide to call a meeting with Goodey Fast Foods and tell them that you are going to accept the Information Office invitation to present ideas for the obesity campaign. You also recommend to Goodey Fast

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Foods that this is an ideal opportunity to launch a range of low-fat, low-salt fast foods in a major national campaign, supported by the Information Office. You believe that all parties will see the good sense in this approach. You also suggest that it is time to act in a socially responsible way and take on board the anti-obesity campaign.

Option C: As the US has already started to confront this issue, the Board agrees to present ideas for the Information Office business, but assemble a team in the WRSX New York office and, in the event that the London office wins the business, Goodey Fast Foods will be told that the whole account is being serviced out of the US and therefore should not be detrimental to the business relationship.

Option D: You decide not to accept the Information Office invitation and run with the Goodey Fast Foods client and campaign as planned.

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Board Meeting Five Board Agenda item: Six

From: Sandrine Mauret, Non-Executive Director, WRSX Group To: Board Directors

Business integration how much autonomy should we give to the businesses we acquire?

As you know, in my role as a non-executive director, I periodically visit WRSX subsidiary businesses to meet with management, review performance and provide feedback to the Board. I recently visited WRSX PR in Paris. When we acquired this business it had two great strengths:

Outstanding entrepreneurial abilities of the management team we acquired Delivery of a financial performance ahead of the PR industry average

A recent review of the PR agency by Elodie Feuillet and her team of management consultants at Feuillet et Associates SA, have identified some key issues. Firstly, how do we integrate business that we acquire? Do we over-burden them with standardised processes and red tape? How much autonomy should we give them? In an attempt to drive down costs and to create a standardised “WRSX way of doing things” across the group, we have prevented individuals from having the authority to work closely with clients to customise their PR efforts to deliver PR that the client really values. We have moved from an individually-based company with lots of management autonomy to one that is perceived as being more bureaucratic in order to offer standardised modular solutions to clients at lower costs. Many of the staff at the agency expressed a view that being answerable to shareholders, as a publicly quoted company, as opposed to working for a privately owned business previously, has been detrimental to morale at the agency.

Secondly, how do we keep their management - who are often very entrepreneurial having set up their own business – motivated and delivering business growth and profit? We have lost key people from the business who were central to the successful relationship building activities that underpinned long-standing client relationships. Some of our best people have chosen to go to competitors, or set up their own businesses, rather than conform to a way of doing business that they feel is detrimental to their ability to deliver value to their clients.

I believe that this is a much bigger issue than merely losing PR business to competitors. It is, in my view, time to take a close look at how we integrate and manage businesses into the WRSX Group without losing the competitive edge that they had as independent businesses. I urge the Board to take the time to discuss this at our Board Meeting

Studies suggest that up to fifty per cent of acquisitions fail to deliver their anticipated value. How do we unlock the value in our acquisitions? Why does the value of some of our acquisitions drop as a result of changes instigated by WRSX? The ability to extract value from our acquisitions depends critically on our approach to integration and organisational fit.

In the case of the Paris PR agency, it would appear that the desire to strengthen inter-dependencies between WRSX and the acquisition has had a direct impact on the autonomy of the employees of the acquired PR agency; an autonomy that they feel is essential to their ability to deliver value to clients. WRSX Group has prided itself on its ability to provide superior solutions (modular, modified, or adapted) that create value for clients while achieving efficiencies of scale which have driven down costs. But in doing this have we destroyed the value on this business?

The review of the business highlighted the sense that many at the agency felt that they had moved from a culture of autonomy, decision- making by consensus and a minimum of managerial authority to a professional bureaucracy with routines and methodologies that, while they may suit other businesses, do not suit the PR business. “Selling solutions” is not the same as working with clients in partnership to deliver a customised communications strategy. The problem for WRSX is how to keep its experts in the PR agency happy while providing “ready-made solutions” that are the only way to bring costs efficiencies to the business.

There are other issues arising from this:

Some of the best performers in terms of delivering business results are the people most likely to disregard the WRSX “way we do things” in favour of doing what they did prior to the acquisition. Close interaction with clients is their focus and they are not good at managing or coordinating projects that require input from a range of people very different from themselves.

Many of these “experts” are unwilling to share their knowledge and expertise in terms of mentoring junior staff. Equally, administration is seen as a burden and to be avoided at all costs. They feel that their time is better spent in client-facing activities working as partners with clients seeking the best outcome to achieve a strategic goal.

One common theme in the Feuillet review was the sense that the agency was losing business because its team were no longer authorised to spend sufficient time with each client getting to know the business. This put them in a poor position to pitch for business at a strategic level and this is where the market is going now with large businesses.

Integration of an acquisition is a complex problem that needs substantial amounts of management time and effort to integrate operations. It also needs a clear understanding of the culture of the acquired business, its fit with the acquiring business and important decisions have to be made as to the extent of integration and the knock-on effect of this on employees’ ability to deliver client value.

Note on PR:

Public Relations is the function that establishes and maintains mutual understanding between an organisation and its public. While it may have originated in” impression management”, at its best, the PR function delivers behavioural/relationship activity and this activity is strategically focused on the organisation’s strategic goals. Research shows that access to top management is essential in order to gain a shared understanding of the value of communication to shareholders, employees, clients, governments, the general public and other key stakeholders.

Agenda Item Decision Options:

Action Option A: You decide that in order to extract value from this and other acquisitions, that there is a good strategic reason to standardise processes and that in fact there is a “WRSX way of doing things”. You decide to set up a business integration task force formed of some board members, senior managers and financial managers who will be able to explain to recently acquired businesses that there is a strong strategic interdependence and little need for organisational autonomy. The task force will explain that the acquired companies’ old strategies need to be adjusted to the needs of WRSX – the new owner.

Action Option B: You decide that there is little strategic interdependence between WRSX and the PR business but a high need for autonomy so you decide that there is no need for a task force because the old strategies, culture and systems in the PR business can continue as they are. You decide that any changes should be confined to financial reporting and minimum levels of profit delivery. You give management six months to turn the situation around and as a precaution, you brief an executive search company to come up with candidates to replace the current management.

Action Option C: You decide that the current PR management team will not turn the situation around and brief an executive search company to prepare a list of candidates who would be capable of replacing the current management team.

Action Option D: The first priority must be to sort out the issues at the Paris PR agency – and then extend any policies developed in the process to the rest of the group. While there is a strong strategic interdependence, you believe that there is a high need for organisational autonomy for acquired companies like PR. You decide to set up a task force formed of some experienced board members, senior managers and financial managers who will meet with the acquired company’s senior managers to learn the best qualities and processes from each other. While doing this you recognise that this is the most complex of the integration processes, you still wish to proceed with this option. Having established the principles with WRSX PR in Paris, you roll these out through the WRSX Group as a blueprint for integration.

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Phase 3 Results

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Company Performance & Results

This is where you review and print off your results for each Board Meeting in Phase 3, see feedback and keep track of the decisions you have made each Board Meeting.

SHARE PRICE

Your Share Price is currently: £4.20 (EUR 5.04)

Share Price Trend You can see your Share Price trend after each Board Meeting.

Start Position (Period 0)

Board Meeting One

(Period 1)

Board Meeting Two

(Period 2)

Board Meeting Three

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Board Meeting Four

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Board Meeting Five

(Period 5)

Board Meeting Six

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£2.28 £2.45 £3.00 £2.66 £2.88 £4.20

EUR 2.74 EUR 2.94 EUR 3.60 EUR 3.19 EUR 3.46 EUR 5.04

Note: £ / Euro exchange rate is fixed at £1 = Euro 1.2

Financial Performance Your financial performance is shown in terms of an Income Statement:

INCOME STATEMENT for Period 5 Start Position

(Period 4) £m

Start Position

(Period 4) €m

Board Meeting

5 (Period

5) £m

Board Meeting 5 (Period 5)

€m

Revenue 242.0 290.4 279.8 335.8

Direct costs (11.2) (13.5) (17.4) (20.9)

Gross profit 230.8 276.9 262.4 314.9

Operating costs:

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Staff costs (158.6) (190.3) (175.7) (210.9)

Establishment costs (21.4) (25.7) (22.0) (26.4)

Other operating costs (17.8) (21.3) (21.0) (25.2)

Total operating costs (197.7) (237.2) (218.8) (262.5)

Profit before interest and taxation 33.1 39.7 43.6 52.4

Finance income 7.1 8.5 7.9 9.4

Finance costs (10.2) (12.2) (10.2) (12.2)

Total finance costs (3.1) (3.7) (2.3) (2.8)

Profit before taxation 30.0 36.0 41.3 49.6

Taxation (9.6) (11.5) (13.2) (15.9)

Profit for Period 20.4 24.5 28.1 33.7

Key Ratios:

Start Position

(Period 0)

Board Meeting 1 (Period 1)

Board Meeting 2 (Period 2)

Board Meeting 3 (Period 3)

Board Meeting 4 (Period 4)

Board Meeting 5 (Period 5)

Board Meeting 6 (Period 6)

PBIT (%) 16.5% 15.2% 16.1% 13.7% 13.7% 15.6%

Staff Costs Ratio (%) 63.0% 64.0% 62.9% 65.2% 65.5% 62.8%

Non-financial Performance Indicators Your non-financial performance is shown in terms of indices on this table:

Start Position

(Period 0)

Board Meeting 1 (Period 1)

Board Meeting 2 (Period 2)

Board Meeting 3 (Period 3)

Board Meeting 4 (Period 4)

Board Meeting 5 (Period 5)

Board Meeting 6 (Period 6)

1. Management of Growth 43.5 51.8 53.3 52.3 53.3 58.0

2. Management of Risk 41.3 45.0 44.7 43.7 46.7 51.0

3. Leadership Capability 39.2 44.4 46.2 48.0 49.0 51.4

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4. Corporate Social Responsibility 38.5 40.3 41.8 41.8 44.3 46.5

5. Client Attraction & Retention 52.0 56.2 56.4 57.2 58.6 62.4

6. Procurement & Supplier Mgt 38.7 41.0 43.0 44.0 46.7 46.0

Index Average 42.2 46.4 47.5 47.8 49.7 52.6

Price / Earnings Ratio:

Start Position

(Period 0)

Board Meeting 1 (Period 1)

Board Meeting 2 (Period 2)

Board Meeting 3 (Period 3)

Board Meeting 4 (Period 4)

Board Meeting 5 (Period 5)

Board Meeting 6 (Period 6)

P/E ratio (%) 15.0 16.5 16.9 17.0 17.7 18.7

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Board Meeting Six Board Agenda item: One

From: Jay Bravura, CEO, Silverfish New Media, London Office To: Board Directors

Resourcing growth

At our annual conference I raised the issue of our growth rate in new media/digital marketing compared to our competitors. It is clear that while our growth rate is well above that of other WRSX businesses, we are in no way matching the growth rate of some of our competitors. It has become clear to me that the major factor in this slower growth rate is lack of resources. This includes People, IT systems, Information and the Financial resources all of which we need to market WRSX New Media, take on new office space, expand our headcount etc. At a time of such rapid growth in this market, we are in danger of starving the business of the resources it requires to take a dominant market position. We are making profits now but not enough to fund our investment needs.

A classic example of this is people. In an industry where there are few workers with real expertise, it is a seller's market if you want to recruit people who are really competent. This means paying top salaries, bonuses and, very often, profit-share to be able to recruit the best people. We are constantly failing to attract the calibre of people we need into the business and remuneration packages are at the heart of this. Equally we need to invest in training programmes and incentives to keep our best people loyal to Silverfish New Media. Head hunters are always looking to take good people from us.

Equally, the speed of development in this business is awe-inspiring and we need much better information in order to know what is happening in terms of new product development, competitor performance and the functionality of what leading-edge firms are offering. Equally we need new technology in order to manage the business more effectively. We have outgrown our own systems and need to invest in new technology in order to stay competitive.

All of this comes down to two things: a clear strategy for resourcing the business adequately and the necessary financial investment to make this happen. I am asking the Board to reduce investment in other businesses and to move resources into New Media. Without this, I believe we will always be a second-string player in New Media and that this is a strategic mistake of huge proportions. Please put this on the Board agenda.

Jay puts forward a powerful argument for investing more resources in New Media/digital marketing. Digital has grown at record levels but will it continue to do so into the future? The question is, if there were more resources available would the business really deliver significantly faster growth and with it high levels of profitability? The Board is responsible for the allocation of resources across the businesses.

Agenda Item Decision Options:

The Board has four Action Options:

Option A: WRSX's institutional shareholders are likely to be wary of demands for additional funding through a rights issue. A large bank loan to fund investment in the New Media business is going to be costly. Many large shareholders are risk averse and they see the digital business as more risky than traditional forms of advertising and marketing communications. However, if WRSX wants to be a market leader in digital it does need substantial investment and the Board should 'bite the bullet' and go to the markets for new investment funding.

Option B: Jay and his top team are supremely confident of the future of Silverfish New Media. WRSX should use this confidence to get Jay and his team to invest in the business in return for an equity stake. This will encourage them to deliver on their forecast growth and is a way of off-setting the risk to WRSX.

Option C: We should look at where we have spare resources in the Group and should undertake a review of which businesses have reached maturity, which are in declining markets and which are in markets that continue to grow. The Board should transfer resources out of mature/declining businesses into Silverfish New Media. There are businesses in WRSX that are operating in mature markets that regularly produce good profits that could be used to fund the New Media business. Equally, there are businesses that have people who may be surplus to requirements who could be transferred across. This would take funding and other resources out of the mature businesses but it would be a way of generating cash for investment in the digital media business without taking out loans or reducing WRSX's equity share of the business.

Option D: Jay needs to prove that he can manage the business effectively as growth slows and within the scope of its existing resources. Any re- investment through a rights issue, loan or resourcing from other WRSX businesses would carry unnecessary risks. Jay should ensure he is using the resources he has to maximum capacity and use the profits of the business to re-invest in people, IT and other resource needs.

Board Meeting Six Board Agenda item: Two

From: Juliette Waldron, Executive Chairman, WRSX Group To: Board Directors

Institutional shareholder planning to sell WRSX shares

In a recent presentation that I make to institutional shareholders, one of our largest institutional shareholders made it clear that they are considering selling all their WRSX shares. This could have a major detrimental impact on our share price if this was perceived as a vote of no confidence in the future of WRSX.

The institutional shareholder voiced concerns about the company’s strategy and the lack of shared identity and coherent practices, the inability to drive synergies across the business, a lack of transparency in financial reporting, the company’s acquisition / disposal strategy and indeed my own strategic leadership of WRSX.

I believe that the growth in WRSX’s share price has been on target. I am confident that we have a sound strategy that will deliver shareholder value now and in the future but we need to take heed of this warning and to consider why the managers of this institutional shareholder (a pension fund) are thinking of selling our shares. They clearly have some worries about our ability to deliver the kind of returns they need on their investment.

I wanted to draw this to the attention of the Board and recommend that this item is included so that it can be discussed and the appropriate action taken

I have heard that there are areas where some shareholders may have cause for concern but I am sure that we can address them. These are:

1. While shareholders may have seen a history of sustained growth, they want to have confidence that our share price will continue to grow in the future. Many of our competitors have chosen to grow more rapidly than we have through an aggressive acquisition strategy. Some are making at least two substantial acquisitions each year. While this has risks it has also allowed them provide a broader range of services to clients and to take market share from WRSX and other competitors. This has meant that they are perceived by some as a better investment prospect compared to WRSX which is seen as 'careful' and 'conservative.'

2. A second issue is our operational performance where some of our subsidiary companies are seen to be underperforming the industry averages.

3. Finally, shareholders worry about the lack of transparency in our financial reporting systems. They believe that the focus on publishing results for the Group and not in-depth analysis of individual businesses may be an issue. Is WRSX protecting weak businesses by cross-subsidising them through the profits of the strong performing businesses?

I think that we need to address all of these issues at our next Board meeting and to agree actions that will reinvigorate the business and show our shareholders that we are looking to outperform our competitors and to lead our sector in terms of shareholder returns.

All of the issues outlined have clear implications for restoring shareholder confidence. The objective is clear: shares in WRSX should not be sold. This means restoring faith in WRSX to deliver value in both the short and long-term.

The Board has the following options to consider:

Agenda Item Options:

The Board has four Action Options:

Action Option A: Shareholders have a sense that WRSX is a company working as separate units and there is no shared identity or coherent practices compared with competitors. However, the Board believes that there are still many opportunities to drive synergies and value. The Group should clearly demonstrate its shared vision and values which can be achieved by a complete re-branding of the main advertising agency and subsidiary service companies. Where the Group has a majority controlling interest, you decide to re-brand all agencies and subsidiary companies with the name WRSX followed by the particular specialisation, for example WRSX Advertising, WRSX Research & Insight, WRSX Digital, etc. You propose to set up a task force to implement a re-branding and PR campaign aimed at shareholders, clients and potential clients.

Action Option B: Unbeknown to Juliette Waldron, who has drawn to the Board’s notice the possibility of an institutional shareholder selling its WRSX shares, a Non-Executive director has been secretly lobbying members of the Board to find a replacement for her. Juliette Waldron may have done a reasonable job to date, but does she have the vision or energy to take the company to the next level of growth demanded by institutional shareholders. You have discussed this with other Board members and they seem to be divided. However, you could cast your vote in favour of replacing Juliette Waldron. What will you decide?

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Action Option C: You think that financial underperformance across the Group is the main issue. You ask Leena Chakrabati and Els Janssen will look at the individual businesses and whether WRSX is in fact disguising some poor performers that need to be turned around or divested from the WRSX portfolio of businesses. This might mean selling these businesses immediately or preparing them for sale in a year or two through a process of refocusing the management of these businesses on improved performance. Top management would need to see some personal benefit from preparing these businesses for sale in terms of bonus payments based on the sale price of the business. Management buy-outs may also be an option. Leena and Els should prepare a report for the Board on the pros and cons of more transparent financial reporting on the performance of individual businesses to major shareholders.

Action Option D: You believe that the growth in WRSX’s share price to date has been on target and you decide that you should not over react to what is only a rumour at this stage. You decide to brief the WRSX PR investor relations team to prepare a presentation which outlines the company’s successes to date based on the current strategy and make the point that this strategy holds the seeds for success in the future – and that this strategy should be adhered to by the Board.

Board Meeting Six Board Agenda item: Three

From: Aziz Kaf, Consumer Advertising, WRSX Paris Office To: Board Directors

Islamic marketing and the Muslim consumer

I was interested to read an article by Vohra, Bhalla and Chowdhury concerning the advertising world's lack of focus on the Muslim consumer. According to the article, Muslims are the majority in 50 countries in the world and a third of their population is under 14 as opposed to 18-20% in Western markets. The article described these young people as the consumers of the future and by example the global Halal food market was worth USD580 billion last year.

The main point of the article was that marketers and advertising agencies have a limited understanding of Muslim values and how they drive Muslim consumer behaviour. The article examines different groups according to beliefs, lifestyles and values and looks at their attitude to consumer products and Western brands.

While there is much debate about the rate of growth in the Muslim population and whether this will be sustained, or is in fact already reducing, it is approximated that if current trends continue, 40% of the world's population will at some stage be Muslim.

So, the question is whether we should develop specialist knowledge in Islamic marketing in the same way that banks have developed specialist services for Islamic banking.

I would like to bring this issue before the Board for discussion at the next Board Meeting if there is room on the agenda.

My proposal is a simple one: that WRSX should set up a unit that is specifically designed to look at how we can help our clients target the Muslim consumer around the world through an understanding of Muslim values.

The question is how differences in value systems may impact on consumer choices? Do Muslims have a negative attitude towards Western products and brands? Can one regard the followers of Islam as a cohesive, monolithic group of consumers from a marketing perspective? The study showed that this is not the case and that they identified five different segments based on values and attitudes as consumers. The size of these segments varies from 17 to 24%. These are the segments the authors came up with when looking at Muslims as consumers:

Religious Conservatives – do not approve of gender interaction New Age Muslims – Are religious but do not expect others to follow religious practices Societal Conformists – Believe that social norms should be adhered to Pragmatic Strivers – non-traditional and ambitious Liberals – broad-minded, independent and assertive

The question is, how can we help our clients with more accurate consumer targeting? Here are the options for the Board to consider:

Agenda Item Decision Options:

The Board has four Action Options:

Option A: Set up an Islamic Marketing business unit in a Muslim country, staffed by Muslims from a variety of backgrounds with different perspectives, from Religious Conservatives to Liberal. Ask this unit to undertake research on the Muslim market on behalf of clients and to create advertising and other marketing communications that are driven by Muslim values.

Option B: Ask Aziz to recruit one or two people into the Paris office who have developed an expertise in this area already and who can work with existing creative teams on behalf of clients. As this is a commercial venture, these recruits may or may not be Muslims themselves, with faith and culture not being criteria for recruitment, as it may be that non-Muslims would also have this expertise.

Option C: This issue is not so much about Islamic marketing as it is about targeting certain countries which happen to have large Muslim populations. In other words, WRSX should concentrate for example, on the values of the Indonesian consumer, values that may or may not be driven by faith. WRSX should appoint country experts and not experts in one religion or another.

Option D: This is a controversial issue that could be difficult for WRSX to manage when so many clients are perceived as having Western brands that may or may not be acceptable to certain groups depending on their religious beliefs. A team to target these brands at Muslim consumers is fraught with difficulties. Equally, the market for products or services that are specifically and uniquely designed to target the Muslim population is limited and not one that WRSX should focus on. Tell Aziz that for the time being nothing should be done but that WRSX will review this position at some stage in the future.

Board Meeting Six Board Agenda item: Four

From: Leena Chakrabati, Group Finance Director, WRSX London and Elsje Janssen, Finance Department, WRSX Group To: Board Directors

Opportunity for strategic review and to raise capital

The way finance is managed can be a key factor in our strategic success. Funding our strategic growth is an important issue. After a wide-ranging review in which we looked at all aspects of WRSX Group's business, we have identified the fact that we need to redefine our strategic plan and identify core and non-core businesses in terms of both our strategic plan and return to shareholders. Historically WRSX started out as an advertising agency and over the years we have integrated laterally – in terms of specialist media-driven advertising agencies – and vertically in terms of support services in the supplier chain.

The Group has grown substantially in size over the years and, as we have entered new market sectors, we have come up against competition and the need to manage all of our businesses efficiently for maximum shareholder return. Unfortunately, as we have now identified, some of our subsidiaries in the high competition sectors are under-performing in terms of the margins that we would like to see.

The Board believes that we need to regroup our financial resources so that we can continue to invest in high-margin areas. We have therefore highlighted three sectors which need to be put under the strategic spotlight to see whether they: a. still fit within our strategic plan and b. can be sold at a reasonable price

At this stage we can only sell off one business otherwise it might appear that we have lost our strategic way or that we are short of cash, so I am putting forward this agenda item which I am recommending is included in the Board meeting.

There may be some heated debate about which business we should let go in which sector – as I am sure that many of my fellow directors may feel that there are sectors which we should not withdraw from as we can manage these businesses efficiently and that they support the overall WRSX service proposition. However, they may be able to be sold at a premium price that will enable us to invest in other areas.

These are the options we have identified for the different reasons stated below. While it might appear to be a difficult choice, we still have the option to do nothing. However, it is our belief that we need to make a start on redefining our strategic direction and letting go of at least one company.

Agenda Item Decision Options:

The Board has four Action Options:

Option A: Sell FastTrak Mailings – the mail-handling business in New York. Strategic reason: Historically, this business was a start-up for the New York office many years ago when they won the largest US East Coast mail order catalogue company as a client. Now the Board questions whether this is a business in which WRSX should be investing. It is a downstream service and does not necessarily add to the overall WRSX New York brand reputation and it is not a service that we wish to enter in other markets worldwide. It is seen as 'old marketing'. It is also a service that we can buy-out from other suppliers as opposed to being locked into one supplier. Over the years, John Soares, who has been with the company almost from the beginning has done a terrific job of being client-focused and has grown the business to the third largest company in this sector by turnover on the US East Coast. It is in a very competitive marketplace.

Financial reason: FastTrak is in a very competitive marketplace where margins are always under scrutiny by clients wanting to shave a few cents off the price here and there, but the sheer volume means that the company is profitable. This means that we may be able to sell the business relatively easily.

Management reason: John Soares is getting close to retirement age and because of his strength in the job, succession management has not been in place. John has a brief to select and train his successor but this has not yet happened so the business could be entering a period of uncertainty.

Sale price: John Soares is an 18% shareholder in the FastTrak Mailings business and we believe that he would not be against putting the business on the market. The Board has also been told that Soares has been approached by the fourth largest mailing services competitor with a view to a possible buy-out, which would take the combined companies to the number one slot in terms of turnover on the US East Coast. We have estimated that the asking price should be £8m (USD 13m)

Option B: Sell the film production business – CineFX, located in Paris, London and New York. Strategic reason: The Board questions whether this is a business in which WRSX should be investing. It is a downstream service and does not necessarily add to the overall WRSX brand reputation in most markets. It is also a service that we can buy-out from many talented suppliers as opposed to being locked into one supplier. Also some clients see this relationship between WRSX Group and CineFX as conflict

of interest and they show resistance when we inform them that CineFX will be producing the commercials that the main agency has come up with. They question whether they are getting the best talent and value for their money.

Financial reason: While this company has been successful in the French market, it has limited success in entering other markets. It requires a heavy investment in terms of technology.

Management reason: Jean-Luc Breton has always been a creative maverick who has 'done his own thing' and he pays little attention to budgets – creative expression is all that is important to him, despite the recent incentive package offered to him.

Sale price: Having spoken to business brokers the strategy would be to play off an outside purchase against a management-buyout by the Jean-Luc Breton and his team. We have estimated that the start asking price should be £5m

Option C: Sell the WRSX Research & Insight businesses in London, Paris and New York. Strategic reason: Historically, research and insight used to be an integral part of the agency but over the years, as research has become more widely used by all clients and opportunities have arisen to create research products, like consumer panels, the research business has become a highly successful operation in its own right – not only servicing WRSX clients, but clients of other advertising agencies as well. In some ways it is a strategic 'jewel in the crown'. So why would we suggest that this may be one of the operations that we should consider selling? It is purely financial.

Financial reason: I am sure that there are many Board members who would say: We should never sell. However, the research & insight businesses are highly profitable and would realise a substantial amount of money. The question is, whether we could get better returns in our traditional media advertising businesses.

Management reason: There is no management reason for wanting to sell. Under the current management team, they remain a growing and highly profitable business.

Sale price: On a turnover of £4m and an operating margin of 12% across all WRSX research and insight businesses, we estimate that a realistic starting price would be £5m. Potential purchasers would be one of the three top publically-quoted international research networks based in the US, France or Germany.

Option D: You decide that there is no need for a strategic review, that the market would not take kindly to WRSX selling off one of its subsidiaries, and you decide to do nothing.

Board Meeting Six Board Agenda item: Five

From: Bradley Harris, New Business Director, WRSX London and Rod Cunningham, New Business Director, WRSX New York To: Board Directors

Making WRSX the agency of choice for Asian brands expanding globally

We have been approached by the number two automotive brand in India (in terms of number of cars sold) – Hindustan Automotive Limited (HAL) – with regards to their brand strategy and their plans to take the HAL brand into global markets. We have had an initial review meeting with their marketing team to look at the strategy they have currently been following with their range of cars. This is on a simple export basis, where they manufacture in India and have independent agents in the Middle East and Africa. Cars and vans are sold uniquely under the HAL brand. HAL has invested heavily in product development in recent years and has designed a fuel-efficient, eco-friendly low-cost 'people's car' – the EcoCar – which they believe not only has domestic market appeal among the emerging millions of Indian consumers and in other emerging Asian countries, but also has a potential global market.

The question that HAL wants help with is: Should it sell into Europe and the US under the HAL brand or should it be seeking to build or acquire a western brand (as other Asian automotive manufacturers have) in order to avoid consumer perception of Asian brands as cheap, lower quality, maybe unreliable. The business that WRSX is pitching for is to help HAL formulate and implement its global branding strategy. HAL is looking to WRSX Research & Insight to help them identify which markets to enter, WRSX Brand Identity to help with branding in these chosen markets, WRSX Audio Image to launch the car at local motor shows, and for the main agency to help with national advertising.

Over the next few years we expect to see many more opportunities to bid for brand strategy work from Asian businesses seeking new markets for their products. We believe that we should use the HAL experience as a strategic blueprint for making WRSX the agency of choice for Asian brands with global ambitions.

What does the Board consider a winning strategy for achieving this ambition?

There is currently much discussion about the role of brands in emerging markets, especially the BRICS countries (Brazil, Russia, India, China and South Africa) and many experts take the view that a low-cost production/low price strategy is not sustainable in the longer-term against a background of rising costs fuelled by higher wages. In these countries, consumers with rising living standards are beginning to differentiate between low-cost and value-added products and branding is integral to this.

Asian based companies have come to realise that branding is not only about succeeding in local markets, it is critical to going global. While emerging Asian nations such as India, China and Malaysia have recorded impressive growth in recent years, most often they have failed to build impressive brands. Only 8 Indian brands appear in the list of the world’s top 500 brands and, if you exclude Japan, only 44 brands across all Asian countries. HAL and other Asian brands will fail to achieve their global aspirations if they fail to build a brand strategy that conveys quality, innovation, safety and reiiability to consumers in their target markets.

Many Asian brands have the brand image of value-for-money based on a lower sales price and lower costs but wish to build a global brand based on value, quality and innovation in order to increase their price-points in order to maintain their margins against an inevitable rise in their cost-base in the future. Our research shows that for an Asian brand to overcome the brand image associated with most Asian products currently takes 10-15 years. Automotive brands must deliver on quality, innovation and create an emotional connection in order to succeed in Western countries.

The Hal account is huge – but it is a competitive situation – as HAL has also asked three other agencies to put forward their ideas. What WRSX can offer HAL is:

Knowledge of global market trends through our Market Insights business Long-term experience building brand awareness in the automotive sector Creative reputation for delivering memorable advertising Account management teams that work with clients to deliver to their specification, on-time and to budget

We feel that this is more than just a bid for a large account. It is a real opportunity for WRSX to position itself as the agency of choice for Asian brands with global ambitions in the future. The questions is how best to do this?

Agenda Item Decision Options:

The Board has four Action Options:

Option A: The key to this is industry sector experience and we should bring together our top automotive people from across the WRSX Group so that we demonstrate the strength of our team in brand strategy, market insights, creative, media buying etc. Our strategy should be to get the HAL account and this should be our one and only priority. We can plan a longer-term blueprint for successful bidding for Asian brands once we have secured this account. As three other agencies have been asked to present ideas, you have a one in four chance of winning the business. The cost of this pitch would be £0.3m.

Option B:

We need to think strategically about this “agency of choice” concept and the realities of making this happen. We think that we would have much more chance of success if we collaborated with the existing HAL agency in India which does not trade outside of India. While collaboration with a current or future competitor has its risks, we believe that their insider knowledge of “what makes HAL tick” would give us a competitive advantage when bidding for the HAL global business. We could use this collaborative approach as our blueprint for future Asian brand business. The cost of this will be £0.3m.

Option C: The New York office has a great deal of experience of selling US automotive brands into South America and we should use this experience with HAL. Why over-complicate this? The US produces more global brands than any other country and we should use their expertise in globalisation of FMCG brands, hi-tech brands, sportswear brands etc. and not involve other offices which increases costs and inevitably adds complexity. The cost of using the US team for HAL and as a blueprint for future business in the globalisation of Asian brands will be £0.2m.

Option D: All the big brands come out of the US and the EU and Japan and it will take many years before brands from other Asian countries are established globally. WRSX has limited resources and these can be better used working with clients from these countries and not the BRICS countries or other emerging markets. It’s all about financial returns and WRSX should not get into a competitive pitch for this business.

Board Meeting Six Board Agenda item: Six

From: Raphael Roux, CEO, WRSX Group and Rod Raoul Saurez, Non-Executive Director, WRSX Group To: Board Directors

The formulation and practice of strategy at WRSX

After a great deal of thought and taking on Board pressures to produce earnings growth for our shareholders, we have come to the conclusion that we need to change the way WRSX formulates and practices strategy. Up until now, the Chair and CEO have been seen as chief strategists, ultimately responsible for all strategic decisions, with WRSX Group executive directors in support.

We have the benefit of strategic advice from our non-executive directors, who see a wide range of business environments and are an invaluable help. They consult closely with the CEO on strategy, however, as they are part-time appointments, their ability to contribute substantially with strategy is limited.

The big question is who should be included in strategy? There are potentially a wide range of people who could be involved in any strategic issue or strategy formulation. In addition to the Chair, CEO, group executive and non-executive directors, there are strategic planners, strategy consultants, operating company managers – and perhaps even external stakeholders.

This issue has been discussed with our Chair, Juliette Waldron, and she is aware that we wanted to raise it as an issue and we request that this agenda item is included in your Board meeting.

There is also a practical side to asking the question: who should be involved in strategy formulation. As we know from our own experience, those with closest access to the Chair and CEO, i.e. the Group directors and non-executive directors have little responsibility for strategy implementation at an operational level and little knowledge of the cut and thrust of business on the ground in the same way as our middle managers do.

The paradox is that –under the current WRSX strategy formulation system –the operating company middle managers who have both the knowledge of implementation – and the responsibility – can often have the least access to the Chair and CEO in strategy discussions and decisions. This is because they are either too busy managing their businesses or because they are not seen as strategically objective.

Agenda Item Decision Options:

Action Option A: You believe that it is essential to change the way strategy is formulated and practiced and recommend a bi-annual strategic conference be held which would include: chair, CEO, executive and non-executive directors, all operating company heads from all worldwide operations. You believe that this is imperative irrespective of the cost – as the investment will be worthwhile in terms of increased shareholder value as strategy is implemented more effectively at a middle management level. You believe that a wider forum of involvement in the formulation and practice of strategy will be beneficial and that this break from the WRSX tradition of not involving operating company senior executives in this process must change. You think that the benefits will outweigh the difficulties and possible distractions from operations. You decide to brief WRSX's internal PR people to produce a Group-wide video cast to announce the first bi-annual conference to be held in the south of France in three months' time, the conference centre and all travel and hotel accommodation to be booked immediately.

Action Option B: You believe that objectivity is the most important factor and that outside strategic consultants – who see a wide range of businesses – can provide the most objective assessment of the WRSX strategy and value for shareholders. Consultants generally have mastery of analytical concepts and techniques and can be very rigorous in their analysis and recommendations for implementation. It is acknowledged that WRSX has never appointed consultants to this role before. The Board understands that consultancy of this kind is very expensive with an uncertain outcome – and that you would be relying on the reputation of the consultancy with no guarantees that the Board would implement any of their recommendations. However you are prepared to run with this option as you believe that the current way of formulating and practicing strategy is too 'inward-looking' and the Board cannot see the wood for the trees.

Action Option C: You believe that great benefits can be derived from the addition of a planning department to the current system. The thinking is that an internal planning department with an appointed Head of Strategic Planning, with a formal responsibility of contributing to the strategy process, will be able to work with the Board to provide: information and analysis, manage the strategy process and take on special projects as briefed by the Board. You therefore decide to authorise a budget for this function and department and begin the process to appoint the best qualified person within the next six months.

Action Option D: You are content that the current system of strategy formulation that has been in place since your appointment as a board director, works well and any change to this would be costly and time-consuming, with no guaranteed improvement in the value to shareholders, so you decide to keep the current system as it is.

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each 500/BM6/BM6 Results.html

Company Performance & Results This is where you review and print off your results for each Board Meeting in Phase 3, see feedback and keep track of the decisions you have made each Board Meeting. SHARE PRICE         Your Share Price is currently: £6.00  (EUR 7.20)   Share Price Trend You can see your Share Price trend after each Board Meeting. Start Position (Period 0) Board Meeting One (Period 1) Board Meeting Two (Period 2) Board Meeting Three (Period 3) Board Meeting Four (Period 4) Board Meeting Five (Period 5) Board Meeting Six (Period 6) £2.28 £2.45 £3.00 £2.66 £2.88 £4.20 £6.00 EUR 2.74 EUR 2.94 EUR 3.60 EUR 3.19 EUR 3.46 EUR 5.04 EUR 7.20               Note: £ / Euro exchange rate is fixed at £1 = Euro 1.2 Financial Performance Your financial performance is shown in terms of an Income Statement: INCOME STATEMENT for Period 6 Start Position (Period 5) £m   Start Position (Period 5) €m   Board Meeting 6 (Period 6) £m   Board Meeting 6 (Period 6) €m Revenue 279.8   335.8   326.5   391.8 Direct costs (17.4)   (20.9)   (20.7)   (24.9) Gross profit 262.4   314.9   305.8   367.0                 Operating costs:               Staff costs (175.7)   (210.9)   (193.3)   (231.9) Establishment costs (22.0)   (26.4)   (27.6)   (33.2) Other operating costs (21.0)   (25.2)   (25.2)   (30.2) Total operating costs (218.8)   (262.5)   (246.1)   (295.3)                 Profit before interest and taxation 43.6   52.4   59.8   71.7                 Finance income 7.9   9.4   9.0   10.8 Finance costs (10.2)   (12.2)   (10.2)   (12.2) Total finance costs (2.3)   (2.8)   (1.2)   (1.5)                 Profit before taxation 41.3   49.6   58.5   70.2 Taxation (13.2)   (15.9)   (18.7)   (22.5)                 Profit for Period 28.1   33.7   39.8   47.7   Key Ratios: Start Position (Period 0) Board Meeting 1 (Period 1) Board Meeting 2 (Period 2) Board Meeting 3 (Period 3) Board Meeting 4 (Period 4) Board Meeting 5 (Period 5) Board Meeting 6 (Period 6) PBIT (%) 16.5% 15.2% 16.1% 13.7% 13.7% 15.6% 18.3% Staff Costs Ratio (%) 63.0% 64.0% 62.9% 65.2% 65.5% 62.8% 59.2% Non-financial Performance Indicators Your non-financial performance is shown in terms of indices on this table: Start Position (Period 0) Board Meeting 1 (Period 1) Board Meeting 2 (Period 2) Board Meeting 3 (Period 3) Board Meeting 4 (Period 4) Board Meeting 5 (Period 5) Board Meeting 6 (Period 6) 1. Management of Growth 43.5 51.8 53.3 52.3 53.3 58.0 58.8 2. Management of Risk 41.3 45.0 44.7 43.7 46.7 51.0 50.7 3. Leadership Capability 39.2 44.4 46.2 48.0 49.0 51.4 52.4 4. Corporate Social Responsibility 38.5 40.3 41.8 41.8 44.3 46.5 47.3 5. Client Attraction & Retention 52.0 56.2 56.4 57.2 58.6 62.4 62.6 6. Procurement & Supplier Mgt 38.7 41.0 43.0 44.0 46.7 46.0 46.7 Index Average 42.2 46.4 47.5 47.8 49.7 52.6 53.1 Price / Earnings Ratio: Start Position (Period 0) Board Meeting 1 (Period 1) Board Meeting 2 (Period 2) Board Meeting 3 (Period 3) Board Meeting 4 (Period 4) Board Meeting 5 (Period 5) Board Meeting 6 (Period 6) P/E ratio (%) 15.0 16.5 16.9 17.0 17.7 18.7 18.9   Keep a record of your results: Please keep a record of your results for each Board Meeting by printing this page. Congratulations! You have now completed the sixth and final Board Meeting of The Strategy Experience simulation. It's now time to review the impact of your decisions on company performance, as well as reflect on what you have learned by filling out the final sections of the Learning Review. We hope that you have enjoyed your time as a Board Director of WRSX Group and found it useful in translating the theory of strategic management into strategic decision-making. Good luck in applying what you have learnt to your work and studies in the 'real world'! Please click the Close button to return to Phase 3 and complete your Learning Review.

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TSE_Board_Meeting 6_External Environment_Transcript_v3 1 of 3

WRSX Business Environment Board Meeting Six

Andy Carnelley, WRSX Business Analyst

Hello – Andy Carnelley here. There is more good news on the economic growth forecast front. The outlook is for continued growth for this period with Europe and particularly the US returning to a growth forecast of between 3 and 5%. Some forecasters are predicting that growth in China and India will be double the US and EU rate. This should be treated with some caution - especially the China estimate - as reliable consumer statistics from China are notoriously difficult to obtain. Consumer spending in emerging Asia Pacific markets is certainly growing rapidly - which is fuelling confidence in manufacturing and marketing companies – the type of companies we want to attract as clients of WRSX. As always, there is some lag in different industries with certain sectors being able to take quicker advantage of the upturn. With the upturn in the world economy has come a focus on where the next consumer opportunity is coming from. Two demographic groups have provided a focus for potential growth in the next few years:

• the over 50’s in affluent developed countries

• and the emerging Islamic consumer market The over 50’s market - especially in the US and Europe – is changing. To quote a recent report: “The 50-plus group used to be far more homogenous; kids flying the nest and people being ‘empty nesters’ and then eventually retiring. It used to be very well delineated but this is changing,” says a recent report.

TSE_Board_Meeting 6_External Environment_Transcript_v3 2 of 3

Equally, Islamic banking has been at the forefront of recognising that marketing to the Islamic sector may be a growth opportunity in the next decade and beyond. The Muslim consumer and the value of Islamic markets have been receiving some attention in market research journals recently. Now to some insights about our institutional shareholders. How do institutional shareholders judge the performance of individual companies’ shares within an industry sector? They use a system known as Total Shareholder Return. So TSR is a concept used to compare the performance of different companies’ stocks and shares over time. It combines share price appreciation and dividends paid to show the total return to the shareholder. The absolute size of the TSR will vary with stock markets, but the relative position reflects the market perception of overall performance relative to a reference group. Lately our TSR rating has slipped in relation to our main competitors and I need to draw this to the Board’s attention. Here is another emerging trend - the global ambitions of businesses based in the Asia Pacific region. Recent surveys indicate that while US and EU companies are looking towards growing markets in the Asia Pacific region, manufacturers in this region may use their domestic market success to look at entering the US and EU markets in greater numbers – all part of the move to globalisation of markets. With regard to the competitive environment, there have been a number of informal approaches from agencies that are looking to sell off part of their businesses as a result of strategic reviews of their business portfolio. Nothing that has appeared to date has been of sufficient interest to tempt WRSX but this might change if the right company was on offer at the right price. Equally, WRSX might be interested in divesting itself of some businesses within the group if the right offer was on the table.

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On an unusual note, competitors are sharing resources to meet client demand on cost efficiencies – and in so doing, a new word has been created. As clients demand greater cost efficiencies, market research agencies are setting a trend for pooling their resources. When two major market research specialists agreed a deal last month to integrate their back office systems, many were shocked. Both big players in the tight-knit panel research sector, the two businesses had been in direct competition for many years. The deal involves the two companies pooling technological resources and respondent assets while remaining ostensibly fully competitive on the analysis and insights side. Working together and competing at the same time is being termed “co-opertition” by many in the industry and it appears that the two organisations are more effectively targeting where they spend a client’s research budget by co-operating on data gathering, but then working separately on data analysis. Is this now set to become a wider trend in research? In this case the “co-opertition” seems to have come about because the two businesses felt there was little advantage to be gained from using two sets of technology and respondents to glean essentially the same answers in the data gathering process. Panel research entails high costs and significant ongoing investment on a global scale. Combined, the companies’ investment power and expertise can command significant control of this niche area – and offer clients increased value.

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each 500/Business plan for Group H.docx

Business Plan for the WRSX Group

Team Members: Yifan Huang (s1408821)

Yingting Liu (s1408835)

Zhenwu Yang (s1408844)

Zihao Han (s1408819)

Due Date: 23rd March, 2015

Module Tutor: Clive Kerridge

Module Code and Title: BM6101 Building and Sustaining Strategy

1. Executive Summary

A. Company description

Name: WRSX (Waldron Roux Silberstein Xao) was established 15 years ago through the merger of three historical agencies: London agency, WWMV and new partner agencies in New York (Silberstein & Lord) and Paris (Roux Toussaint Berthe) (WRSX, 2011).

Products and services: WRSX main provides advertising, media, direct marketing, PR and specialty communication services.

Current structure:

WRSX Group Main Board:

Paris Office

New York Office

London Office

Singapore Office

B. Market description

Target markets:

North America

Asia

Competitors:

Largest companies:

WPP Group, London

Omnicom Group, New York City

Publicis Group, Paris

Interpublic Group

North America:

aQuantive, Seattle

BBDO, New York City

DDB Worldwide, New York City

Deutsch Inc., New York City

JWT, New York City

Europe:

Aegis Group, London

Bartle Bogle Hegarty, London

Chime Communications plc, London

M&C Saatchi, London

Stuart Hirst Limited, Leeds, UK

Asia:

Asatsu-DK, Japan

Cheil Worldwide, Seoul

Digital Jungle,Beijing

Innocean Worldwide,Seoul

2. Mission Statement

We exist to make our clients successful through differentiating and strengthening their brands by creating advertising and using a range of marketing related activities.

Also we extend influence on adverting sector and create profits to increase share price through develop new markets, improve financial situation, implement effective management and so forth.

3. Company Objectives

In market, there exist several potential market development locations, such as North America, China and India, where company can increase market share in advertising. And also some fresh media advertising will be offered larger, such as on-line advertising and cell phone advertising. Meanwhile, the company economy will not only be reached to industry average, but will also adding value in share price for shareholders. Additionally, new management group will be organized. New non-executive directors will be responsible to supervision and evaluating company’s’ performance; HR and accountants will give more reasonable programmes in human and expenses. Finally, through reaching these aims, the company will rank into Top 20 in advertising industry. In turn, these strategies facilitate the advance of company from downward to upward.

4. Market Analysis and Strategies

A. External marketing environment

Marco environment:

Political factor: The regulatory system for advertising and marketing communications that companies are changed by government around the world. The government has controlled the macro marketing and economic environment. This policies will affect companies making decision (Carnelly, no date).

Economic factors: The revenue of the global advertising and media communication industry in the US accounts for half of the world and the world economy is increasingly growing in the next few years. The risk for WRSX Group is that they cannot predict the prospects and make their client businesses getting into trouble. Meanwhile, they are losing the existing clients, failing to attract the new clients. A series of global, regional and national economic factors are also influencing WRSX and arising lots of detrimental impacts on business, such as fluctuations in economic growth rates, interest rates and currency exchange rates. There are lots of uncertain changing following a series of risks and challenges in terms of WRSX.

In Asia market, there are a lot of Asian-based multinational companies which have increasingly developed in recent years, especially Japanese, South Korean, Chinese and Indian. In the long term, the revenues from the US and Western Europe will decline and the main market will transfer to the Asian-Pacific region (Carnelly, no date).

Social-cultural factors: In the next few years, because of the high level of consumption in a long term, the US and Europe demographics will play an important part in consumer behaviour. Especially the retirement age consumers have begun to dominate and create new demands in products and services. They are also concerned about the next generation. The young generation especially the graduate-age consumers have begun to pay attention to work-life balance, doing meaningful work and contributing to society through community work.

Following the increasing growth of economic standard in Asia demographics, the scale of Asia-Pacific’s potential development is not to be sniffed at the West. The emergence of a large consumer market in Asia Pacific is mean that WRSX need to consider the cultural issues of their global consumers and the international human resource management in multinationals(Carnelly, no date).

Technological factors: The traditional advertising agencies have changed into the digital media in this few years. The digital technologies have provided big opportunities which can enable global consumers to deliver information efficiently at low cost. There are more and more channels which are created for catering to specialist audiences. In the channels changing rapidly, WRSX in order to enhance the corporate band they demand to develop the expertise of companies and the value of services in the marketing communications sector (Carnelly, no date).

Legal factors: Western Europe and the US have stringent employment laws that are designed to protect employees, such as the law about the health and security of employees and the law about the child labor. Equally, they have made the data protection laws to regulate the industry and dispose personal data (Carnelly, no date).

Environment factors: More and more major corporations have produced corporate social responsibility (CSR) to report the sustainability decision and environmental-friendly action to their stakeholders. For example, the companies invest the education and social projects and invest the plans to reduce the emission of carbon, save the energy and recycling of waste (Carnelly, no date).

Micro environment

Competitors: The major competitors for WRSX are WPP Group, Omnicom Group, Publicis, Interpublic and Havas which are the big players in advertising industry. In addition to these large, global agencies, there are a lot of smaller ‘boutique agencies which exist in this industry. Competition within the industry is fierce based on creative ability, range and breadth of services and market insight. The large companies which based on the good quality of their group have begun to explore new services and markets such as mergers and acquisitions, joint events, alliances and a series of business transactions to develop the understanding of global impact. The smaller boutique companies survive by focus on some specific services and markets and then create some breakthrough ideas in advertising and marketing campaigns. They are acquired by the large multinationals in order to focus specific capabilities to target new markets and provide additional services to existing clients (Mitcham, 2013).

Customers: WRSX’s account management function restructuring exist some defects which cause they losing their clients and very hard to retain the clients. They provide a below average service to clients and don’t add enough value to client businesses (WRSX, 2011).

In global market, the clients and potential clients do not see WRSX as the ‘global players’. They need to attract the eyes of existing and potential clients as global through evaluating the resources and capabilities to enter the key markets (Watson, 2015).

Suppliers: WRSX got the bad relationships with suppliers. This situation might cause them performing badly in the synergies. It is very detrimental in the group development (WRSX, 2011).

B. Internal Marketing Environment

Capability:

Marketing: WRSX have rich capability on market research, understanding of market segments and channels and innovation. In addition, they have built up a strong reputation for acquisitions. This strength can make them being easy to enter to new markets (Watson, 2015).

Creative: WRSX have more and more creative and innovative ideas which can provide the highly specialized business units to their customers. They also have strengths which are their expertise in many aspects of their business such as transport, health, telecoms, beauty and public activities (WRSX, 2011).

Human resource management: The corruption scandal has seriously undermined the confidence of investors and clients. The group have been criticized their lack of strategic leadership and inability to lead and manage change. They also lack of innovation in HR policies to attract talent into the business (Watson, 2015).

Financial: Following the corruption scandal in the Paris office, the share price has been in a long term decline. This ruinous event attacks the group financial condition and causes the liabilities increasing (WRSX, 2011).

C. SWOT Analysis

Internal elements External elements	Organisational strengths	Organisational weaknesses
Strategic options
Environmental opportunities (and risks)	· Have good reputation for acquisitions · Have a lot of expertise in different aspects of their business · Good at market research, market segment and innovation	· Economic development of the emerging markets especially Chinese, India and Japan · The huge market demand in Asia · The rise of digital media · CSR and sustainability have increasingly play an important role in business decision
Environmental threats	· The regulatory system in different countries · Various culture and barriers of customers in different countries · The changing of the global economic environment · The fierce competition in advertising industry · Government control the market and economic environment	· Bad relationship with suppliers · The corruption scandal in Paris office · Lack of innovation in HR policies

D. Marketing Activities

Client retention strategy: In order to prevent the client and customer churn in North American market, building a good business partnerships with both supplier and client are one of the cores of profitable growth. This mean they need to build on trust, confidence, mutual understanding and mutual success. WRSX require a substantial level of collaboration with their clients.

Sponsorship strategy: Sponsoring sport events would provide a good opportunity to enhance the branding value. There are not only countless TV viewers but millions of potential viewers watching the sports match around the world. Investment on a comprehensive proposal including PR and entertainment will promote the brand name to new market easily.

Business strategic cooperation: WRSX can cooperate with large IT companies around the world. They can share the knowledge each other and extend to new market. WRSX also can coordinate the information across their business.

Corporate governance strategy: WRSX perform badly in the corporate management. The clients and customers lose the confidence and trust to the group. They need to renew the organisational structure to retain their clients. For example, build up strict rules and regulations to supervise the management team. They also can promote the CSR and sustainability in business decision.

5. Operations and Environmental Sustainability

A. How operations need to change in order to deliver your plan

The idea of doing environmental sustainability

First of all, do some public service advertisement. Although doing public service advertisement cannot earn lot of profit. But one of the most important things of WRSX is to make this company well-knowing. In this case, WRXS should not think about the profit first, but develop the popularity, so that more customers will know about the company. And this will bring WRSX more opportunities.

Secondly, WRSX can save electricity power and water in their company. On one hand, it helps protect environment. On the other hand, it can save money for the company.

Thirdly, to cooperate with local internet company can also get more popularity so that more customers will come. In this case, WRSX need to think about their focus point, such as what website will most of their customer interested in and what type of advertisement will leave people deep impression.so that it can also help with sustainability.

B. Environmental/sustainability that may impact on the WRSX Groups’ operations

1. Influence our company to cooperate with public charity

Environmental and sustainability is one social trend, people are more focus on environment problem. So having some advertisement about environment protection is also a good way to win attention.

2. Set up regulation to help our company and employees learn about environmental and sustainability.

Because WRSX once got some manage problems, regulation of environment and sustainability is good idea to foster a good and healthy company image.

3. Influence our company to support environment protection and save resources.

6. Structure and Key Management Personnel

A. Issues with the organisation structure and your plans to retain or change this

1) Procurement & Supplier Management below the average

As is shown in the profile, WRSX performed badly in handling the relation with suppliers, which got 38.7. As a result, our plan is to establish R&D department for procurement and rebuild the relationship, using their group buying power to increase our income and market share.

2) Management of risk

The non-financial performance illustrates that WRSX Group is facing lots of disadvantage issues, particularly the management of risk. WRSX Group has performed well in terms of management of Financial Risk, but the survey recently shown that it has declined below average, leading to a result of sustained investment in acquisitions. Moreover, the reputation has been damaged by the corruption scandal which concerns about the strength of WRSX Board. Our plan is to minimize the managerial risk while moving the emphasis towards the risk management and business development. Business development focus on the profit-gaining capability and risk management confirms that the transaction will not go wrong by risk avoidance elements.

B. Skills/experience that give strength to the WRSX Group that you need to retain

1) Have gaining high score in Client Attraction & Retention, but do badly in USA recently.

The situation of client churn is more serious in the USA as our client are not satisfied with our service currently, which might increase the cost of finding new target customers and losing the preservation of long-term cooperation competences. As a result, we assumed not to depend on the excellent creativity to attract and retain clients and other features, for example, comprehension of client’s requirement and experienced employees.

2) Advertising & Media accounts for the largest percentage of income.

The analysis which classified by division illustrates advertising and media contain nearly 40% of the revenue. Therefore, the next step is to keep this strength further, which make it becomes the main value for the company.

C. Obvious weaknesses in the WRSX team and how you will overcome them

1) Corruption scandal - Corporate Social Responsibility

The Corporate Social Responsibility gained the lowest scores among NFPI, which partly due to the corruption scandal. Therefore, we planned to prohibit personal profits or monetary benefits strictly. After reducing the number of staff by competition among employees, training and motivating employees is another method to qualified staff.

2) New media and digital occupy the lowest proportion of company’s income.

During the beginning of 21 century, digital marketing communication is popular which have become a stable and substitute to traditional advertising agent. According to Caroll (2013), digital marketing is experiencing a period of change rapidly and it enables information more mobile accessibly to customers. As a result, a company with high range of digital marketing communication competencies can access to the global market easily by less trading barriers. Therefore, we attempt to enhance the strategic capability in digital marketing communication and set up a typical information system, gaining competitive advantages through it.

3) Corporate Social Responsibility needs improvement from 38.5 to 45.0.

Kenndy et al(2003; Kirca et al, 2005, cited in Korschun et al, 2014) points out that employees of a company are supposed to comprehending the perspective of top manager in terms of how market oriented the company is, as well as integrating this information into how they manage their job. Such performances can be explored beyond information which high related to working, including CSR activities. For those front-line workers, they are supposed to notice when leaders take actions for present support for the company’s corporate social responsibility practices. Therefore, we planned to use digital material accessibly when operation and training employees understanding better about the company’s corporate social responsibility during daily accomplishment.

7. Financial Data

A. Projection for the next three/four years

WRSX will increase the market share in advertising and marketing communications industry and extend to emerging market around the world especially China, India, Japan and other Asian countries. Moreover, they will engage digital media and cooperate with IT industry to develop their technology. In addition, the new management team will set up supervision system for the company and enhance the management skills, such as HR, employees’ performance, account management and etc.

B. Key assumptions made in prospective financial forecast

WRSX key financial performance ratios (Start Position Period 0) in prospective financial forecast are:

RATIOS:	Current Data	In next three years	Industry average
PBIT Margin	16.5%	30%	19%
Staff Costs Ratio	63%	32%	59%
Return on Capital Employed	12.9%	28%	15%
Gearing Ratio	45.5%	20%	42%

Source: WRSX Financial Performance Measure

In next three years, the ratios of PBIT margin and return on Capital Employed both will increase twofold over the industry average. The liabilities and staff costs are looking forward to decline 25.5% and 31% respectively.

The Forecast of Share price & Market Capitalisation

The marketing share price will be expected increasingly grow in next few years from 2.28 to 3.89.

Industry Average Score each NFPI	50
WRSX Scores:	Current	Predictive
1. Management of Growth	43.5	47.0
2. Management of risk	41.3	45.0
3. Leadership Capability	39.2	41.0
4. Corporate Social Responsibility (CSR)	38.5	46.0
5. Client Attraction & Retention	52.0	52.0
6. Procurement and Supplier Management	38.7	40.0
Average of All Six NFPI’s for WRSX	42.2	45.2

Source: WRSX Non-financial Performance Measures

As it is shown in the measures, CSR and Procurement and Supplier Management both gained the lowest scores. Therefore, we predicted these two factors with an increasing to 46.0 and 40.0 respectively. With regarded to the rest of elements, they are looking forward to grow in some extend.

Reference

Carnelly, A. (no date) WRSX External Environment – Phase1. Available at: http://media.pearsoncmg.com/intl/ema/ema_uk_he_strategy_experience/10-0/assets/pdf/p1_environment_at.pdf (Accessed: 23/03/15).

Caroll, A. (2013) UK digital advertising market continues unstoppable growth as mobile doubles market share. Available at: http://www.themediabriefing.com/article/iab-pwc-h1-2013-adspend-report （Accessed: 22/03/15）.

Korschun, D. et al (2014), 'Corporate Social Responsibility, Customer Orientation, and the Job Performance of Frontline Employees', Journal of Marketing, vol. 78, no. 3, pp. 20-37. Available at: http://eds.b.ebscohost.com/eds/pdfviewer/pdfviewer?sid=cf88366f-4c7f-4d16-a997-de902f9e48c6%40sessionmgr113&vid=8&hid=108 (Accessed: 23/03/15).

Mitcham, C. (2013) The Advertising and Marketing Communications Industry Profile. Available at: http://media.pearsoncmg.com/intl/ema/ema_uk_he_strategy_experience/10-0/assets/pdf/brief_advertising.pdf (Accessed: 23/03/15).

Watson, T. (no date) Phase Two – Business Development. Available at: http://media.pearsoncmg.com/intl/ema/ema_uk_he_strategy_experience/10-0/assets/pdf/p2_business_at.pdf (Accessed: 23/03/15).

WRSX (2011) Company Report & Profile. Available at: http://media.pearsoncmg.com/intl/ema/ema_uk_he_strategy_experience/10-0/assets/pdf/brief_wrsx.pdf (Accessed: 23/03/15).

WRSX Share Price - £'s

列3 Period 0 Period 1 Period 2 Period 3 Period 4 Period 5 Period 6 2.2799999999999998 2.4500000000000002 2.95 3.01 3.25 3.5 3.89 列1 Period 0 Period 1 Period 2 Period 3 Period 4 Period 5 Period 6 列2 Period 0 Period 1 Period 2 Period 3 Period 4 Period 5 Period 6

__MACOSX/each 500/._Business plan for Group H.docx