WRSX

Business Analysis Report

Director: name here

4 May 2019, 5 PM

Melbourne
Executive summary

Business evaluation to analyse the strategic approach to be taken into consideration towards

post-confrontation of exploring market opportunities in one of the fastest economies of the

world ‘China’ and participation pointing to digital media while being existing among the

highly sophisticated globalised industry.

This report aims at providing how the decisions made by the Board will enable the

organisation to address strategic issues and what participation is required to confront towards

sustainable business growth.

The emerging economies tend to outgrow as leading business markets capable of luring the

globalised industry by providing an easy pathway for easy juncture set up. While there are

already some potential strategic issues which the organisation might encounter, there is a

need to highlight insights on how it can affect the pace by which the business is growing.

Another challenge at the doorway is to analyse the business approach to be taken post

exploring opportunities in the field of digital marketing.

Strategic assessment (Internal Environment)

WRSX has come across having quality teams set up consisting of creative workforce expert

at having knowledge of many different geographies and market segments due to the existence

of our branches in different parts of the world including UK, US, France and Singapore. This

enables WRSX in attaining value by gaining expertise in delivering solid marketing services

via different channels. The bigger aspirations of WRSX helped giving the teams a straight

approach to our goals to achieve them with perfection. With the same expertise, the approach

towards entering into Chinese market must be taken into account. But as China is very well

diversified as compared to countries we have dealt with in the past, this is definitely going to
be a crucial phase for us to tackle doing business. We can strive towards attracting our

customers by enhanced digital media.

WRSX has been valued for innovation and creativity since a long time and it has developed a

great reputation by gaining excellence mainly through collaboration and acquisition. The

autonomous business units and efficient services the organisation offers a contributing role

among various clients. The organisation earned its reputation in the areas of advertising to

attract matured clients specifically in sectors like public relations, film production, research,

marketing and media. In addition to that, WRSX also specialises in service sectors like sports

marketing and branding.

From the Account Management function perspective, there has been a considerate

restructuring of the function to maintain sustainability of the firm in accordance with the

clients and their need. Although, the Account Management is being improved on a regular

basis, still our clients are unable to grasp the function and so we are receiving feedback that

the Account Management team has not been proving a satisfactory service to the clients. The

need to enhance service quality by the Account Management team needs to be addressed in

due respect to the client requirements and it will not only enable the organisation to

understand customer needs but also will show us a path to move in the right direction in

terms of service manoeuvrability and adaptation to a better service ethics.

Planning to reach and gain a stronghold in the Chinese market, the WRSX needs to define its

global goals as a matter of capability evaluation to enter into sizably large potential markets

with service and intensive resource planning. As per Journal of Consumer Marketing, among

the variable economic and social changes in today’s society, international organisations

which enter in such massive markets, they face challenges pertaining to understanding the

base line market situation and also to act accordingly with efficient marketing strategies.
[Cui, G., and Liu, Q. (2000). Regional market segments of China: opportunities and barriers

in a big emerging market. Journal of Consumer Marketing, 17 (1), pp. 55]

Strategic assessment (External Environment)

The firm has a history of strong acquisition mechanism and built up reliability to succeed in

future business endeavours; however, since recently the strategic management has analysed

the success pertaining to acquisition had a direct connection with the complexity of the

process it is involved with. Recent scenario by the strategic team evaluated the inconsistency

in terms of acquisition had taken place and could only feed the process to go smoothly.

According to XYZ (2019), fair and consistent acquisition leads to favourable outcomes. To

enter into bigger economic markets—China in this case—needs a large-scale acquisition

models to cater to consistent growth, however, as the recent survey suggests, continued

investment approach will also need to be considered as it had a negative impact in the past

growth stages of WRSX. Therefore, the analysis suggests that the Board needs to look at

alternative entry methods to acquisition. WRSW has faced criticism primarily in the area of

organic growth and as per the strategic analysis, the roadblocks are more dominant in areas of

how the production is being handled and the purchasing scenarios while dealing with its full-

service suppliers, which in turn, has a direct scope and knowledge sharing incapability of the

organisation in question. Another issue which needs special attention before entering to huge

markets like China is the vulnerability to deal with financial corruption-related issues. What

if, in future, a situation pertaining to corruption/scandals comes into place--which might

potentially sack the organisation—and how ready will be the organisation to face its

consequences, are one of those questions which are required to be addressed before entering
into sophisticated markets, when chances of ‘going back’ are almost minimised to none or

difficult. By looking at the revenue pattern the organisation had generated in the past,

evaluation on the consequences of new business models and functions, and strategic

leadership measures in terms of investment scenarios will have a positive impact on

maintaining sustainability of the organisation.

One of the major environmental factors which need to be focused on is the competitor related

challenges for WRSX. Among many competitors of WRSX, WPP has been in discussion

since long. Founded as grocery baskets maker, it has transitioned to a giant in advertising

sector by renowned investors through their efficient efforts. The acquisition strategy

incorporated by this giant made it successful to lead in terms of high-level of

buying/borrowing power and the day the giant had acquired another advertising player in

Europe ‘’Ogilvy Group’, WPP has created a stronghold by becoming the largest advertising

company in the world. These acquisition were not only powerful but also fast.

As far as the external factor related to client base is concerned, the biggest challenge for

WRSX is that we are probably losing our clients or in other words, we are failing to attract

new clients which has a direct connection with the global issues like currency inflation issues,

exchange rates, world political condition, etc. Losing client at such a pace will definitely have

an impact on the results for which we have forecasted.

As the downturn of US economy in the past few years could have been seen clearly, the

emerging Asian superpower are taking a toll due to the increasing number of high-revenue

generating multinational companies which are responsible for their economies to grow up

much more rapidly than the American and Western European companies. Chinese

multinationals like Lenovo, Haier, Bird and China Mobile are attracting the clients within the

country. Similarly, China has been seen attaining massive growth since recent years in the
field of advertising in terms of revenue generation, turnover, profit and profit margin, cost

and market structure, market structure by buyer, imports and exports, etc., and is also

expected to grow in the upcoming years with the dominant pace.

Entering into Chinese market will certainly give WRSX an edge to attain future growth

among the global leaders and will not only increase our clients but will also enable us to

explore new horizons by attracting global clients which will affect our revenue build-up as

well as creating future opportunities to sustain our business in terms of client reach. But the

question again lies with the fact that it is indeed a challenge to enter Chinese market to

explore opportunities as it needs methodological planning and future growth forecast. This

includes forecasting potential financial issues like exchange rate concerns, dealing with

variety of consumers and to fulfil their needs in accordance with profit sharing of the

company and also potential roadblocks which might occur while transitioning at early stages.

Planning pertaining to demographics will also need to be considered before entering in

Chinese market. The differences in traditional ethics, psychological aspects, lifestyle

differences, etc., are few of the challenges that need to be taken into consideration with

proper understanding, training, guidance, planning and adaptability measures.

Managerial evaluation of the growth opportunities

As one of the fastest growing economies of the world, China has put up with major structural

changes in the past few decades and keeps on evolving towards being an economic

superpower in the near future. More and more global business giants are finding ways to set

up their manufacturing hubs in China as it happens to be the perfect market for growth and

earning profit. According to Asian Journal of Communication, for global publicists the

possibility of running a solitary publicizing effort, converted into numerous dialects, offers

incredible opportunities. Institutionalized publicizing efforts offer the promoter more

dominant authority over substance, decreased costs, bound together brand picture, and in

addition to that, the disentangled technique arranging. [Frith, K. T., and Tsao, J.

(1998). Advertising and cultural china: Challenges and opportunities in Asia. Asian Journal

of Communication, 8(2), 1–17.]

(a) Market opportunity in China

1- Rapid Internet development in China has been a huge success for multinational

marketplace to support commerce through digital channel and also the participation

by purchases increased. As per the book ‘Knowledge, Industry and Environment:

Institutions and Innovation in Territorial Perspective’, earlier than 1990, the China

only succeeded with experimenting with transferring email through communication

system and later in 1990, it had registered its domain name to the information centre.

(Hayter, R. and Le Heron, Richard 2018)

[Hayter, R. and Le Heron, Richard. 2018. Knowledge, Industry and Environment:

Institutions and Innovation in Territorial Perspective. USA. Ashgate Publishing]

This helps us in understanding how recently China has entered into the world of

internet. Now the economy is at the verge of expanding itself into huge advertising

marketplace, it gives an edge to foreign media advertisers to get a hold of the market

to set up their business and provide services to a wide variety of customary audience.

2- China is expanding its advertising market very rapidly in the past few years and is

expected to surpass the market growth rate becoming the second largest advertising

market in the world after US within the span of three years. Even extensive market

insights research suggests us that there has been an increase in its advertisement

spending and is likely to increase with time. There has been a research study
conducted by WRSX research and market insights team ‘This Year, Next Year, China

Media Growth’, an in-depth research which suggests the Chinese advertisement

market growth is visible with 16 percent increase in spending on advertising, and it

was expected to increase from US$24 billion last year to US$28 billion this year. The

international firms which are planning to set up businesses in this emerging economy

have to keep in mind before entering is that the China market is not constant and

variable as well (M. Hedley 2019).

[Hedley, M. 2019. Entering Chinese Business-to-Business Markets: The Challenges

& Opportunities. [Online]. Available at:

https://www.b2binternational.com/publications/china-market-entry/ [Accessed on: 25

April 2019].

There are certain areas to focus before considering market opportunity in China:

(a) Distributing and retailing: While the majority of the sales is predominantly fruitful

in urban areas of China. The retail distribution in urban sector notices a high client

attraction and the sales distribution of brands and goods to lower-tier cities is

enabling the market to expand its reachability. More and more foreign retailers are

stretching their business in the Chinese market and it is helping consumers to give

more choices. Although the retailers need to carefully address the ability of the

company to first have an idea how capable it is to handle the market and the needs

of a very wide range of customers (Chaney and Gamble 2008) [Chaney, I., &

Gamble, J. (2008). Retail store ownership influences on Chinese consumers.

International Business Review, 17(2), 1–2]. The WRSX needs to put up the

advertising strategy to not only reach the urban area of China but also to

customers belonging to secondary and tertiary cities which tend to grow faster

than the already-established cities in China. Also WRSX need to focus on

 understanding the consequence of expansion in accordance with varied customer

base and gaining knowledge to cope up with regular needs and requirements to

maintain the long term growth and success of the company.

(b) Consumer incomes: As per International Marketing Review journal, China has

seen massive increase in incomes of individuals and the country has regained its

economic strength after the late 90s. The distribution as well as retail sectors have

predominantly existed largely local and also in pieces. Taking into account an

example of four retailers in China when combined together in terms of their

overall sales have crossed over $2057 million in the year 2000. Which directly

enables new multinational retail firms to face difficulties and competition from

already-established local retailers in China. It will ease up market penetration into

large markets and growth as well (Samiee et al. 2004). [Samiee, S., Yip, L. S. C.,

and Luk, S. T. K. (2004). International marketing in Southeast Asia. International

Marketing Review, 21(3), 248].

(c) Another area to consider is the way the organisation is planning to assign people

to work on the implementation of new business models in China. There is so

much potential in the market but the workforce who are required to work on

expanding the business by the organisation needs previous expertise in handling

the businesss as the market in China is variable and needs proper future planning.

(Harvard Business School 2019)

[Anonymous. 2019. China: The Next Big Market Opportunity or the Next Big

Bubble? [Online]. Available at: https://hbswk.hbs.edu/item/china-the-next-big-

market-opportunity-or-the-next-big-bubble [Accessed on: 25 April 2019]]

(b) Opportunities in digital media advertising:

China is an excellent global media market and due to its great size and the population

it has, it gives an edge to marketers around the world to participate in exploring

opportunities due to its variable market. Although the traditional media system is still

prevalent in China to date, by the introduction to media advertising, which in fact is a

new digital approach started to dissolve it. This in turn scatters the market and gives a

fair chance to media marketers more choice towards incorporating new media plans

(Zhang, L 2019) [Zhang, L 2019. Advertising in a New Age of Media. [Online]

Available at: https://www.chinabusinessreview.com/advertising-in-a-new-age-of-

media/ [Accessed on 25 April 2019]]

There is a need for constant transformation of business strategies by advertisers to

move forward in this digital world. The strategic approach has to align with various

customer needs as to how the services have to be delivered and making changes to

pre-existing business strategic models to cope up with new challenges. How the

products are being delivered and the engagement by customers. This approach can be

reshaped and manipulated by incorporating modified business strategies (Berman

2012). [Berman, S. J. (2012). Digital transformation: opportunities to create new

business models. Strategy & Leadership, 40(2), 16–24]

As per the research conducted by WRSX recently, the Chinese market is a

combination of scattered and complicated market existence. Advertisers who are

planning to enter the advertising market in China need to plan and focus on how to

multiply their options in digital environment to which offers better opportunities to

deal gaining knowledge about customer needs which are most of the times a challenge

for the organisation. To efficiently address the needs and taking proper measures is
the key to succeed in evolving as a powerful advertising company in a market which

is full of varied cultures, different traditional values, ethics, etc.

The advertisers, primarily in western economies, who normally might not indulge in

exploring the market in China, there is a big challenge in this scenario is to first

understand how media agencies command, control, supervise, oversee and assess

media advertising strategy to create effective media growth, which in turn will affect

the increase in the budget and the return as the company expects.

As per the report generated by management consultants called up by WRSX to find

out and highlight how strategically the company is capable of handling advertising

business in the future (by looking at the past records and statistics), we can clearly

have an insight into WRSX’s ineffective strategy in the advertisement and digital

market. To make the approach a group-wide strategy, WRSX certainly needs we need

more investment in this field. This is very important in gaining an extra edge on

finding out opportunities to persuade and satisfy clients in a way that they realise how

better our agency is as compared to our competitors.

To approach this, the Differentiation Strategy (from Porter’s Generic strategies) need

to be considered. It is always useful to implement Differentiation Strategy for

growing businesses especially when seeking a very broad market area where

uncertainties are higher which if not treated without such a strategy, it could certainly

be a factor affecting the customer base. By involving with new and unique ways of

introducing advertising methods, it helps the organisation sustains their customer and

it will directly affect the growth of the organisation in the long run.

The strategy meets the suitability, acceptability and feasibility in a way corresponding

to SAFE criteria. The suitability of this scenario is dependent on addressing the key

opportunities and constraints the organisation is facing to deal with the

implementation of a new market approach. The addressing of suitability criterion had

been discussed in the internal strategy assessment, whereas the acceptability is

employed when the addressed issues have been strategically aligned to have a clearer

path ahead. The feasibility depends on the potential investment the company will

incorporate. By gaining more insights into future planning, the feasibility prediction is

more refined and clear.

Conclusion:

The proposed business analysis report suggests various phases of strategy, pre-

existing media strategies, growth measures governed by WRSX and potential

challenges the organisation might face post entering into China as a media marketer.

We need to focus on multiple factors which have a direct impact on the growth and

sustainability of the organisation once it enters in a very vast, dynamic, complex and

varied market. The scope of this analysis is to highlight various issues the

organisation is facing and the what strategic planning needs to be incorporated in

order to create a successful path for sustaining media advertising business in a new

global market.

Following are the factors which need to be considered for improvement prior entering

into Chinese market:

1- The improvement to pre-existing Account Management function is crucial before

entering into a new market place. Although it has been under regular

improvement, still clients are unable to cope up with the Account Management

function we are currently incorporating. By receiving feedbacks, we came to

know that the function has not been proving satisfactory results to clients. The

service quality by the Account Management team needs revision and also in
 accordance with client requirements and it will enable the organisation to grab

idea about customer needs in a better and efficient way possible.

2- Acquisition inconsistencies have been noticed which is hindering the acquisition

process. Large-scale acquisition models are required for a bigger growth in

markets like China. To attain that, investment planning also needs to be taken into

consideration so that it eases up large acquisitions to take place.

3- Future financial planning is also be dealt with in order to have forecast about

future financial issues which might come into picture, for example, financial

issues like exchange rate concerns, dealing with different consumer base and

considering their needs to lie within the profit sharing. Forecast related to

demographics is also crucial to understand prior entering in Chinese market. To

get familiar with multiple traditional ethics and psychological aspects can be a bit

challenging than it looks. Therefore, it needs special planning.

4- The company needs workforce which has previous expertise in handling

businesses like in huge and varied markets like China. Definitely, there is a need

to assign key personnel’s by the higher management to direct other stakeholder in

a way which has been familiarised with the culture and difference of China as

compared to the western countries.

5- Transformation of pre-existing strategic business models need to be first planned,

tested and then put forward to be able to survive in the market among giants

which already have stronghold since many years and who have gained knowledge

about the economic conditions of China and how to deal with them to sustain and

attain success.

6- Understanding the fragmented nature of Chinese market, how they perceive a

foreign advertiser and how the marketer manages business strategies to lie with
the scope of attracting customers, deal with future potential failures and

unavoidable financial roadblocks. This needs to be taken care of before the

implementation of strategic models suitable for complex and variable market of

China.