BUSINESS INTEGRATED PROJECTS

Title: Business Integrated Projects: The Financial Prospective

Module: Module 1

Class: Business Integrated Projects

Paper: Case Assignment

Number of Pages: 4Saatchi & Saatchi Worldwide

Introduction

In the mid 1990s, Saatchi & Saatchi Worldwide was hit by the same economic downturn that affected all the other companies in the world. Saatchi & Saatchi Worldwide, after having grown so much through mergers and acquisitions was on the verge of bankruptcy. This situation called for the founding members, that is the two brothers Charles and Maurice Saatchi leaving the organization. The gap in the top management was then filled by Bob Seelert and Kevin Roberts. They joined the organization as chairman and Chief Executive Officer respectively. Both these men were good for the organization in that they had been associated with the organization from the perspective of a client prior to joining it. Prior to joining Saatchi & Saatchi Worldwide, Bob Seelert was working with General Foods and Kevin Roberts was working for Procter & Gamble (Greenhalgh, 2004).

The change in the leadership meant a change in the overall direction of the failing organization. To begin with, the company de merged from Cordiant Communications in April 1997 and announced to its Wall Street shareholders that it will be coming back within the short period of three years. This was a challenge for the new management. To live up to their own statement, the new management made changes in the company's vision and mission and made new goals with respect to clients and financial objectives.

The financial goals of the company were as follows:

Saatchi & Saatchi Worldwide wanted to increase its revenue and change at least 30% of the incremental revenue earned to operating profits. It also aimed to increase earnings per share by a 100% (Greenhalgh, 2004).

Analysis

Saatchi & Saatchi Worldwide conducted a detailed analysis of its business units across the globe. It assessed the financial performance and client profiles of these units. The purpose was to identify which of the agencies were profitable and which ones were on the brink of downfall.

The company divided its business units spread across 82 countries into three broad categories. These were Lead, Drive and Prosper. The smallest of these agencies that employed less than 50 employees were termed Prosper. Agencies that employed 50 to 150 employees were termed Drive and those that were the largest or that contributed the most to the company's revenues were called Lead.

For the Prosper agencies, the company concluded that they did not have much chance of tuning into a profitable giant. Hence, their growth was not of critical importance and they were expected to achieving high-margins. For the Drive agencies, the company aimed at increasing their margins thereby increasing the revenues earned from these agencies. The last type of agencies, and also the most profitable ones are the Lead ones (Greenhalgh, 2004). They got most of the management's attention and budgets. It was these agencies that generated the most revenue for Saatchi & Saatchi Worldwide.

There were two major strategies adopted by Saatchi & ...