WRSX - Complete - Assignment 1

2015
WRSX Group Report

Assignment 1
Drew Washbourne,
Hyung Kyoo Jeon,
Malick Kane
Word Count: 2685
[GROUP SIMULATION
REPORT]
In groups of THREE students, a business report on the strategic options you believe were available to
WRSX, and document the several options and decisions taken by your group in the 6 board meetings
of the simulation. Give your rationale and reflect upon the results of your decisions (provided
progressively by the simulator), both in share price and non-financial indicators. It is suggested that
you review your work in Semester ONE in BS3954 and build upon the key strategic options you
identified then. Extend these where appropriate before moving to the Board Meeting phase of the
simulation.
Contents
1.0 Introduction ......................................................................................................................... 3
2.0 Current Company Position and Suggested Strategies ......................................................... 4
2.1 Eradicating Inessential Staff through Downsizing ........................................................... 4
2.2 Restructuring to Implement a Matrix Structure .............................................................. 5
3.0 WRSX Business Simulation .................................................................................................. 6
3.1 Board Meeting One ......................................................................................................... 6
3.1.1 Analysis of Agenda Items.......................................................................................... 6
3.1.2 Eradicate Inefficiencies and Become to Flexible ...................................................... 7
3.2 Board Meeting Two ......................................................................................................... 8
3.2.1 Analysis of Agenda Items.......................................................................................... 8
3.2.2 Improving Client Customer Base & Procurement Management.............................. 9
3.3 Board Meeting Three..................................................................................................... 10
3.3.1 Analysis of Agenda Items........................................................................................ 10
3.3.2 The Matrix Structure .............................................................................................. 11
3.4 Board Meeting Four....................................................................................................... 12
3.4.2 Corporate Governance ........................................................................................... 13
3.5 Board Meeting Five ....................................................................................................... 14
3.5.2 Retaining Quality Employees and the 7 Principles of Future Employees ............... 15
3.6 Board Meeting Six ......................................................................................................... 16
3.6.2 The Long Term Future ............................................................................................ 17
3.7 The Results of the Simulation ........................................................................................ 18
3.7.0 Period Zero ............................................................................................................. 18
3.7.1 Board Meeting One ................................................................................................ 20
3.7.2 Board Meeting Two ................................................................................................ 22
3.7.3 Board Meeting Three.............................................................................................. 24
6.7.4 Board Meeting Four................................................................................................ 26
6.7.5 Board Meeting Five ................................................................................................ 28
3.7.6 Board Meeting Six .................................................................................................. 30
4.0 Conclusion & Recommendation ........................................................................................ 32
5.0 Reference List: ................................................................................................................... 33
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6. 0 Appendices: ...................................................................................................................... 35
6.1 Simulation One .............................................................................................................. 35
6.1.1 Sustainability profile of group ................................................................................ 35
6.1.2 Non-performing business within the group ........................................................... 36
6.1.3 Cultural change in New York .................................................................................. 37
6.1.4 Opportunities in digital media ................................................................................ 38
6.2 Simulation Twos Agendas ............................................................................................. 39
6.2.1 Reducing client churn ............................................................................................. 39
6.2.2 Sponsorship opportunity ........................................................................................ 40
6.2.3 Knowledge sharing & communication coordination .............................................. 41
6.2.4 Corporate governance issue ................................................................................... 42
6.3 Simulation Three Agendas ............................................................................................. 43
6.3.1 Outsourcing central services .................................................................................. 43
6.3.2 Launching Cine FX in London and New York .......................................................... 44
6.3.3 Competitive advantage through backward integration into reprographics?......... 45
6.3.4 Changing organisational structure to meet our strategic challenges .................... 47
6.4 Simulation Four Agendas ............................................................................................... 48
6.4.1 Profiting from sustainability ................................................................................... 48
6.4.2 Strategic alliance in the Indian advertising market ................................................ 50
6.4.3 Breakaway WRSX management / creative group................................................... 52
6.4.4 Parent companys ability to dictate group-wide corporate governance ............... 53
6.5 Simulation Five Agendas................................................................................................ 55
6.5.1 Creating new employment policies Becoming employer of first choice ............. 55
6.5.2 Key strategic appointment in underperforming subsidiary ................................... 56
6.5.3 UK Government contracts potential account conflict ......................................... 57
6.5.4 Business integration how much autonomy should we give to the businesses we
acquire? ........................................................................................................................... 59
6.6 Simulation Six Agendas.................................................................................................. 60
6.6.1 Resourcing growth.................................................................................................. 60
6.6.2 Opportunity for strategic review and to raise capital ............................................ 62
6.6.3 Making WRSX the agency of choice for Asian brands expanding globally ............. 64
6.6.4 The formulation and practice of strategy at WRSX ................................................ 65
6.7 Business Plan Proforma ................................................................................................. 66
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1.0 Introduction
WRSX is a public limited company that competes within the related marketing
communications industry. The service that WRSX intends to offer is to help our clients
establish their brands and sell more products or services to consumers or business
customers (WRSX: 1). The current strategy that was adopted by WRSX was to increase their
organizational portfolio, not specifically in business advertising but in other areas consisting
of research, PR, direct marketing, branding, film production and sports marketing (WRSX: 7).
This strategy however has created a strategic drift within WRSX. Within this report a week
by week simulation will take place in order to implement new business strategies within the
WRSX case; these strategies intents are to improve the overall organizational performance
of WRSX, while additionally improving the share price over the 6 board meetings of the
simulation.
3|Page
2.0 Current Company Position and Suggested Strategies

2.1 Eradicating Inessential Staff through Downsizing
When examining WRSXs income statement and the company report, it is clear that there
are significant organizational changes that need to take place. One of the significant
weaknesses at WRSX being the staff costs ratio. According to the WRSX report the staff costs
ratio is well above industry average at 63% (WRSX: 21). This may suggest that WRSX does
not fully capitalize their use of their employees in the most efficient way over their portfolio.
WRSX had acquired various strategic business units with expertise to support their 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 (WRSX: 6).
However, considering their staff cost ratio and their inorganic differentiation strategy that
has enabled them to differentiate their products to their clients through acquisition
(Aswathappa, 2010: 343). It may be suggested that WRSX has gave too much autonomy and
control to these acquired organizations. Downsizing is the practice of reducing the size of
the business (Hatten, 2010: 9). As things stand, WRSX have accumulated a staff cost of
126m; which is adversely high considering their total operating cost is 157m (WRSX: 2123). Therefore downsizing should be seriously considered as a strategy that can enable cost
reduction internal to the organization, while facilitating an eradication of inessential and
inefficient staff which can enable a restructure to be produced.
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2.2 Restructuring to Implement a Matrix Structure

The current structure of WRSX gives the power of autonomy to the various strategic
business units within the portfolio (WRSX: 6). There may be due to a lack of understanding
between offices but even more so a lack of leadership. With local autonomy in place, the
directors of these subsidiaries exercise their power by setting strategies that can be
achievable in terms of their own subsidiary; consequently these subsidiaries do not cohere
with the strategies implicated for WRSX as a whole. This unfortunately leaves WRSX
vulnerable to strategic drift from the subsidiaries within their portfolio, due to different
offices having different motives. Having said this, it would be feasible to restructure the
organization and to implement a coherent code of corporate governance. This will strip the
strategic power from the subsidiaries, and enforce a top-down approach to management of
strategies. This restructuring process would adopt a matrix structure. The matrix structure
enables both divisional and functional structure to be combined; enabling teams to be
created that operate across functions supporting the different product, process or project
and can radically improve the horizontal coordination and information sharing
(Schermerhorn, 2011: 188; Mukherjee, 2005: 101). This will not only allow for better
communication and cohesion between WRSX subsidiaries, but for the company as a whole,
it provides a collective direction for employees. By enabling employees to be crossfunctional within most areas of the business, employees capabilities will be improving
throughout the business by sharing activities. Thus WRSX will use its employee capabilities
to maximize efficiency within the WRSX portfolio and to provide a better service overall to
its clients by having a flexible and intelligent workforce.
5|Page
3.0 WRSX Business Simulation

3.1 Board Meeting One
3.1.1 Analysis of Agenda Items
6|Page
3.1.2 Eradicate Inefficiencies and Become to Flexible

Based on the strategies of downsizing and matrix structure, the board meetings agendas
was selected to get rid of the inefficient subsidiaries within the portfolio of WRSX, and to
become flexible through an adapted organizational structure.
WRSX has been experiencing serious problems within its organizational structure. Due to
this geographic footprint that WRSX works within, the structure of the organization is
problematic in achieving organizational capabilities that can be shared over the subsidiaries.
The reason to sell Promoco Exhibitions and Conference Management is mainly due to the
restructuring process of WRSX. The Promoco subsidiary operates within a market which is
highly saturated due to many manufacturers of exhibitions stands and [many] event
management companies (Appendix 6.1.2). By eradicating Promoco it would raise capital of
4.4 million and will enable the capital to be reinvested internally. It was advisable for WRSX
to eradicate this subsidiary from the portfolio as it correlated with the strategies of
downsizing and matrix structure.
One of the benefits of a matrix structure is that it handles amplified information better than
traditional structures (Horney, 2009: 4). This is because a matrix creates various lateral
layers for communication (Ibid.). The New York office adopts a hierarchical nature to their
offices (Appendix 6.1.3). This matrix structure therefore cannot be implemented as
capabilities within WRSX geographic cannot be shared due to misaligned organizational
culture and management systems in New York. Therefore by changing the culture in the
New York office; the management systems of the other geographics can be aligned, enabling
the matrix structure to be implemented.
The increased contact among departments allows information to permeate the
organization, improving decision making and response time, which translates into an
organization that can quickly and flexibly adapt to a dynamic situation (Horney,
2009: 4).
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3.2 Board Meeting Two

8|Page
3.2.2 Improving Client Customer Base & Procurement Management

In simulation 1, in spite of efforts to improve non-financial performance indicators and
capabilities of WRSX, there have not been any notable achievements in client retention and
procurement management.
Reducing client churn could have detrimental effects on company, due to loss of profits and
possible loss of continued business (Reichheld & Sasser, 1990: 5). Moreover, the difficulty of
retaining clients outweighs that of acquiring new ones (Siber, 1997:77). Therefore, the
reason to focus not only on the Top ten clients, but also the suggested clients who are at
risk can lead to improved profits, consequently reducing the threat from competition, while
also reducing dependency on these top 10 clients (Appendix 6.2.1). In other words, by WRSX
extending its customer base, WRSX can keep customers they already have, while attracting
new clients by meeting their needs through a highly differentiated service meeting clients
requirements, which can ensure long term profitability and better customer relationships.
In terms of procurement and supplier management, outsourcing can be a solution.

Outsourcing can enable cost reduction to be put into place (McIvor, 2005: 21). However, this
form of outsourcing, which is facilitating WRSX with a procurement and supplier
management service, is introduced in order to take control off of WRSXs portfolio of
subsidiaries. Due to the inorganic growth strategy that WRSX had adopted, outsourcing
procurement and supplier management should enable cost reductions as the head offices
direct the control of the overall process of supply and procurement. By implementing this
process, it gives the employees within these subsidiaries more opportunity to use their skills
over the organization, as the head of the offices gain more control of the production line and
their costs. Therefore by utilizing an outsourced supplier, it can motivate WRSXs employees
to concentrate on their activities to benefit the value proposition (Kehal, 2006:187), while
letting procurement and supplies be managed externally.
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3.3 Board Meeting Three

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3.3.2 The Matrix Structure

WRSXs main problems arise from a general lack of communication and leadership; this may
be due WRSXs organizational structure. Currently, WRSXs structure is a divisional
organisational structure; this is built up of separate divisions on the basis of products,
services, or geographical areas (Johnson, Whittington, Sholes, Angwin & Regnr 2014: 436).
This structure is evident with the four offices in London, New York, Paris and Singapore.
A divisional structure can be effective as divisions can be controlled through the measure of
their performance (ibid.) Unfortunately WRSX has not been able to reap the benefits of a
divisional structure, which is clear in their NFPIs (WRSX: 28). This is further justified by the
disadvantages of a divisional structure as divisions can become so self-sufficient that they
are de facto independent businesses, divisions can also be detrimental to co-operation and
knowledge sharing and divisions can become too autonomous (Johnson et al, 2014: 437).
These issues suggest that WRSX will benefit from restructuring, which acts as an opportunity
for WRSX to increase grow their company while retaining quality employees,
The quality of management and the organisational structure itself will all have an
impact on strategy and may even be a source of competitive advantage (Lynch,
2003: 604).
Option B has presented WRSX with an opportunity to work in collaboration with all divisions
to develop a different way to grow the company. This is what has led to the decision of
implementing the matrix organisational structure; as it combines different structural
dimensions simultaneously [for example] product divisions and geographical territories or
product divisions and functional specialisms (Johson et al, 2014: 438). This structure has
advantages that can significantly benefit WRSX as they eradicate problems with
communication, which inherently strengthens management; due to coordination and coalignment being the major function of management (Cushman & King, 1995: 36). WRSX have
a staff cost ratio of 62.5% and operating costs of 176.9m (See 6.7.3), with a matrix structure
in place WRSX can benefit from efficient use of resources, flexibility in conditions of change
and uncertainty for long-range planning, improving motivation and commitment and
giving opportunities for personal development (Barnett & Wilstead, 1988: 177). Its clear
that the advantages of a matrix structure can improve WRSX significantly and it has potential
to address issues that have been detrimental to WRSXs growth.
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3.4 Board Meeting Four

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3.4.2 Corporate Governance

Corporate Governance at WRSX has been subject of controversy to date; this is possibly due
to corporate governance being managed at a local level. Currently WRSX have allegations of
bribes to win business which have come from the Paris office (WRSX: 15). An internal
investigation is on-going and no charges have been made to date (WRSX: 15).
Corporate governance relates primarily to the selection and conduct of the senior
officers of the organisation and their relationships (Lynch, 2003: 377).
With this being dealt with at a local level, WRSX have little to no control over their
subsidiaries which leaves them in a position where they are vulnerable to local offices
affecting the global image of WRSX.
Action Option A (see 6.4.4) was regarded as an opportunity to provide a group wide code of
corporate governance. Corporate governance is concerned with the structures and systems
of control by which managers are held accountable. (Johnson et al, 2014: 113). WRSX are
clearly in a weakened position because of the absence of a group wide code of corporate
governance, this has questioned about the strength of the non-executive directors.
Consequently shareholders have now asked for the appointment of new non-executive
directors who are strong in corporate governance. (WRSX: 15).
This supports the decision to exercise option A. As WRSX can assert control over their
subsidiaries and possess the power to dismiss employees that does not meet the new code
of corporate governance. Inherently this will broaden the level of trust within the group of
shareholders. Furthermore, WRSX will be in a stronger position to deal with situations in
governance.
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3.5 Board Meeting Five

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3.5.2 Retaining Quality Employees and the 7 Principles of Future Employees

Within this board meeting there was the opportunity to enable WRSX to become an
employer of first choice (Appendix 6.5.1). As a strategy, the matrix structure was chosen to
ensure that all of the employees of WRSXs organization were used in the most efficient way
possible being cross-functional over the subsidiaries. Therefore this agenda correlates
strongly with that of the matrix structure. By identifying that WRSX will need a highly skilled
workforce for the future; it will prepare WRSX for natural growth.
By planning for future employees and by correlating the idea of the matrix structure with
that of the future employees, WRSX will be able to ensure that the seven principles of future
employees can be ingrained within the daily operations of WRSX.
By implementing 7 principles towards our employees
throughout WRSX, the employees that are employed and
the potential employees of the future will have to express
certain characteristics from these different principles. The
matrix structure was designed to help employees become
cross-functional over the WRSX portfolio, by improving
flexibility between these subsidiaries; the staff capabilities
within WRSX will increase enabling staff to become more
competitive and effectively used over the organization. The
matrix structure therefore can significantly improve lateral
communication (Horney, 2009: 4); By implementing
downsizing and a matrix structure within WRSX, the
inefficient employees were removed, while a structure was
implemented to improve employees effectiveness
subsequently improving communication over the
subsidiaries. By implementing various different employee
agendas throughout the simulation experience, with the
correlating matrix structure facilitating and encouraging
these principles for future employees. WRSX will adapt to
new ideas, suggestions and learning from employees which
will enable WRSX to achieve organic growth.
Sourced from: (Morgan, 2014 [Online])
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3.6 Board Meeting Six

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3.6.2 The Long Term Future

In board meeting six, the agendas were chosen by taking a long term decision making
approach. Due to the strategy of downsizing correlating strongly with acquisitions,
especially when excessive premiums are paid (Hitt, Ireland & Hoskisson, 2008: 200), we
found that it would be highly beneficial for WRSX to eradicate the Cine FX subsidiary due to
the conflicting interests that clients have been experiencing when the Cine FX subsidiary is
used for marketing purposes (Appendix 6.6.2).
At this point the new media market was [a]t a time of such rapid growth (Appendix 6.6.1).
Consequently it was decided to use the financial capabilities of WRSX to the advantage of
the competitiveness of the company as a whole. Due to there being a significant shift in the
growth in new media market, WRSXs mature and declining subsidiaries profits were used
to fund the Silverfish new media (Appendix 6.6.1). By using the financing from the other
mature and declining subsidiaries, the equity of the WRSX was kept intact which makes
WRSX attractive to investors.
However, board meeting six proved to be more essential for the long term growth as there
was a significant shift in how strategy would be set. Due to the strategic shift that WRSX had
been experiencing, [a] bi-annual strategic conference [would] be held which would include:
chair, CEO, executive and non-executive directors, all operating company heads from all
worldwide operations (Appendix 6.6.4). By having these key personnel within the
management come together for a strategic conference a coherent strategy can be set that
involves contributions from all parts of WRSX portfolio, therefore this agenda realizing the
importance in which all these subsidiaries have to play.
This board meeting holds great importance for WRSX as they have managed to eradicate a
lot of inefficiencies within their organization, restructure the organization to be structured
as a matrix structure to improve flexibility; while also noticing the key involvement of all of
its subsidiaries within its portfolio in achieving a coherent strategy.
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3.7 The Results of the Simulation

3.7.0 Period Zero
SHARE PRICE
Your Share Price is currently:
2.28 (EUR 2.74)
Share Price Trend

You can see your Share Price trend after each Board Meeting.
Start
Position
(Period 0)
2.28
EUR 2.74
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)
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 0
Start
Position
(Period 0)
m
200.0
(10.0)
Start
Position
(Period 0)
m
240.0
(12.0)
190.0
228.0
(126.0)
(151.2)
Establishment costs
(16.0)
(19.2)
Other operating costs
(15.0)
(18.0)
Total operating costs
(157.0)
(188.4)
33.0
39.6
Revenue
Direct costs
Gross profit
Board
Meeting
(Period )
m
Board
Meeting
(Period )
m
Operating costs:
Staff costs
Profit before interest and taxation

Finance income
5.0
6.0
(10.0)
(12.0)
Total finance costs
(5.0)
(6.0)
Profit before taxation
28.0
33.6
Taxation
(9.0)
(10.8)
Profit for Period
19.0
22.8
Finance costs
Key Ratios:
PBIT (%)
Staff Costs Ratio (%)
Start
Position
(Period 0)
16.5%
63.0%
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)
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Board
Meeting 6
(Period 6)
Non-financial Performance Indicators

Your non-financial performance is shown in terms of indices on this table:
1. Management of Growth
2. Management of Risk
3. Leadership Capability
4. Corporate Social
Responsibility
5. Client Attraction & Retention
6. Procurement & Supplier Mgt
Index Average
Start
Position
(Period 0)
43.5
41.3
39.2
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)
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)
38.5
52.0
38.7
42.2
Price / Earnings Ratio:
P/E ratio (%)
Start
Position
(Period 0)
15.0
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3.7.1 Board Meeting One

SHARE PRICE
2.57 (EUR 3.08)
Share Price Trend

Start
Position
(Period 0)
2.28
EUR 2.74
Board Meeting
One
(Period 1)
2.57
EUR 3.08
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)

Start
Position
(Period 0)
m
Start
Position
(Period 0)
m
Board
Meeting 1
(Period 1)
m
240.0
(12.0)
Board
Meeting
1
(Period
1)
m
207.0
(10.1)
Revenue
Direct costs
200.0
(10.0)
Gross profit
190.0
228.0
196.9
236.3
(126.0)
(151.2)
(131.0)
(157.2)
(16.0)
(19.2)
(16.3)
(19.6)
248.4
(12.1)
Operating costs:
Staff costs
Establishment costs
(15.0)
(18.0)
(16.2)
(19.4)
(157.0)
(188.4)
(163.5)
(196.1)
33.0
39.6
33.5
40.1
5.0
6.0
6.1
7.3
(10.0)
(12.0)
(10.0)
(12.0)
(5.0)
(6.0)
(4.0)
(4.7)

Finance income
Finance costs
Total finance costs
28.0
33.6
29.5
35.4
Taxation
(9.0)
(10.8)
(9.4)
(11.3)
Profit for Period
19.0
22.8
20.1
24.1
Board
Meeting 5
(Period 5)
Board
Meeting 6
(Period 6)
Key Ratios:
PBIT (%)
Start
Position
(Period 0)
16.5%
63.0%
Board
Meeting 1
(Period 1)
16.2%
63.3%
Board
Meeting 2
(Period 2)
Board
Meeting 3
(Period 3)
Board
Meeting 4
(Period 4)
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4. Corporate Social
Responsibility
Index Average
Start
Position
(Period 0)
43.5
41.3
39.2
Board
Meeting 1
(Period 1)
48.5
44.0
43.6
38.5
52.0
38.7
42.2
40.0
55.2
39.0
45.1
Start
Position
(Period 0)
15.0
Board
Meeting 1
(Period 1)
16.0
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)
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 (%)
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3.7.2 Board Meeting Two

SHARE PRICE
2.94 (EUR 3.53)
Share Price Trend

Start
Position
(Period 0)
2.28
EUR 2.74
Board Meeting
One
(Period 1)
2.57
EUR 3.08
Board Meeting
Two
(Period 2)
2.94
EUR 3.53
Board Meeting
Three
(Period 3)
Board Meeting
Four
(Period 4)
Board Meeting
Five
(Period 5)
Board Meeting
Six
(Period 6)

Start
Position
(Period 1)
m
Start
Position
(Period 1)
m
Board
Meeting 2
(Period 2)
m
248.4
(12.1)
Board
Meeting
2
(Period
2)
m
222.6
(10.3)
Revenue
Direct costs
207.0
(10.1)
Gross profit
196.9
236.3
212.3
254.8
(131.0)
(157.2)
(139.2)
(167.1)
Establishment costs
(16.3)
(19.6)
(20.1)
(24.2)
(16.2)
(19.4)
(17.5)
(21.0)
(163.5)
(196.1)
(176.9)
(212.2)
33.5
40.1
35.4
42.5
267.1
(12.4)
Operating costs:
Staff costs

Finance income
6.1
7.3
6.4
7.6
(10.0)
(12.0)
(10.0)
(12.0)
Total finance costs
(4.0)
(4.7)
(3.6)
(4.4)
29.5
35.4
31.8
38.1
Taxation
(9.4)
(11.3)
(10.2)
(12.2)
Profit for Period
20.1
24.1
21.6
25.9
Board
Meeting 5
(Period 5)
Board
Meeting 6
(Period 6)
Finance costs
Key Ratios:
PBIT (%)
Start
Position
(Period 0)
16.5%
63.0%
Board
Meeting 1
(Period 1)
16.2%
63.3%
Board
Meeting 2
(Period 2)
15.9%
62.5%
Board
Meeting 3
(Period 3)
Board
Meeting 4
(Period 4)
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4. Corporate Social
Responsibility
Index Average
Start
Position
(Period 0)
43.5
41.3
39.2
Board
Meeting 1
(Period 1)
48.5
44.0
43.6
Board
Meeting 2
(Period 2)
51.3
47.3
47.4
38.5
52.0
38.7
42.2
40.0
55.2
39.0
45.1
41.5
59.0
40.7
47.9
Start
Position
(Period 0)
15.0
Board
Meeting 1
(Period 1)
16.0
Board
Meeting 2
(Period 2)
17.0
Board
Meeting 3
(Period 3)
Board
Meeting 4
(Period 4)
Board
Meeting 5
(Period 5)
Board
Meeting 6
(Period 6)
Board
Meeting 3
(Period 3)
Board
Meeting 4
(Period 4)
Board
Meeting 5
(Period 5)
Board
Meeting 6
(Period 6)
P/E ratio (%)
23 | P a g e
3.7.3 Board Meeting Three

SHARE PRICE
2.84 (EUR 3.41)
Share Price Trend

Start
Position
(Period 0)
2.28
EUR 2.74
Board Meeting
One
(Period 1)
2.57
EUR 3.08
Board Meeting
Two
(Period 2)
2.94
EUR 3.53
Board Meeting
Three
(Period 3)
2.84
EUR 3.41
Board Meeting
Four
(Period 4)
Board Meeting
Five
(Period 5)
Board Meeting
Six
(Period 6)

Start
Position
(Period 2)
m
Start
Position
(Period 2)
m
Board
Meeting 3
(Period 3)
m
267.1
(12.4)
Board
Meeting
3
(Period
3)
m
227.5
(10.5)
Revenue
Direct costs
222.6
(10.3)
Gross profit
212.3
254.8
217.0
260.4
(139.2)
(167.1)
(143.9)
(172.7)
Establishment costs
(20.1)
(24.2)
(21.0)
(25.3)
(17.5)
(21.0)
(18.9)
(22.7)
(176.9)
(212.2)
(183.8)
(220.6)
35.4
42.5
33.2
39.9
273.0
(12.6)
Operating costs:
Staff costs

Finance income
6.4
7.6
7.5
9.0
(10.0)
(12.0)
(10.0)
(12.0)
Total finance costs
(3.6)
(4.4)
(2.5)
(3.0)
31.8
38.1
30.7
36.8
(10.2)
(12.2)
(9.8)
(11.8)
21.6
25.9
20.9
25.0
Board
Meeting 5
(Period 5)
Board
Meeting 6
(Period 6)
Finance costs
Taxation
Profit for Period
Key Ratios:
PBIT (%)
Start
Position
(Period 0)
16.5%
63.0%
Board
Meeting 1
(Period 1)
16.2%
63.3%
Board
Meeting 2
(Period 2)
15.9%
62.5%
Board
Meeting 3
(Period 3)
14.6%
63.2%
Board
Meeting 4
(Period 4)
24 | P a g e

4. Corporate Social
Responsibility
Index Average
Start
Position
(Period 0)
43.5
41.3
39.2
Board
Meeting 1
(Period 1)
48.5
44.0
43.6
Board
Meeting 2
(Period 2)
51.3
47.3
47.4
Board
Meeting 3
(Period 3)
50.5
45.7
49.2
38.5
52.0
38.7
42.2
40.0
55.2
39.0
45.1
41.5
59.0
40.7
47.9
40.8
59.8
41.7
47.9
Start
Position
(Period 0)
15.0
Board
Meeting 1
(Period 1)
16.0
Board
Meeting 2
(Period 2)
17.0
Board
Meeting 3
(Period 3)
17.0
Board
Meeting 4
(Period 4)
Board
Meeting 5
(Period 5)
Board
Meeting 6
(Period 6)
Board
Meeting 4
(Period 4)
Board
Meeting 5
(Period 5)
Board
Meeting 6
(Period 6)
P/E ratio (%)
25 | P a g e
6.7.4 Board Meeting Four

SHARE PRICE
3.88 (EUR 4.66)
Share Price Trend
Start
Position
(Period 0)
2.28
EUR 2.74
Board Meeting
One
(Period 1)
2.57
EUR 3.08
Board Meeting
Two
(Period 2)
2.94
EUR 3.53
Board Meeting
Three
(Period 3)
2.84
EUR 3.41
Board Meeting
Four
(Period 4)
3.88
EUR 4.66
Board Meeting
Five
(Period 5)
Board Meeting
Six
(Period 6)

Start
Position
(Period 3)
m
Start
Position
(Period 3)
m
Board
Meeting 4
(Period 4)
m
273.0
(12.6)
Board
Meeting
4
(Period
4)
m
257.1
(12.6)
Revenue
Direct costs
227.5
(10.5)
Gross profit
217.0
260.4
244.5
293.4
(143.9)
(172.7)
(156.8)
(188.2)
Establishment costs
(21.0)
(25.3)
(25.4)
(30.4)
(18.9)
(22.7)
(21.6)
(25.9)
(183.8)
(220.6)
(203.8)
(244.5)
33.2
39.9
40.8
48.9
308.6
(15.1)
Operating costs:
Staff costs

Finance income
7.5
9.0
8.2
9.9
(10.0)
(12.0)
(10.0)
(12.0)
Total finance costs
(2.5)
(3.0)
(1.8)
(2.1)
30.7
36.8
39.0
46.8
Taxation
(9.8)
(11.8)
(12.5)
(15.0)
Profit for Period
20.9
25.0
26.5
31.8
Board
Meeting 5
(Period 5)
Board
Meeting 6
(Period 6)
Finance costs
Key Ratios:
PBIT (%)
Start
Position
(Period 0)
16.5%
63.0%
Board
Meeting 1
(Period 1)
16.2%
63.3%
Board
Meeting 2
(Period 2)
15.9%
62.5%
Board
Meeting 3
(Period 3)
14.6%
63.2%
Board
Meeting 4
(Period 4)
15.8%
61.0%
26 | P a g e

4. Corporate Social
Responsibility
Index Average
Start
Position
(Period 0)
43.5
41.3
39.2
Board
Meeting 1
(Period 1)
48.5
44.0
43.6
Board
Meeting 2
(Period 2)
51.3
47.3
47.4
Board
Meeting 3
(Period 3)
50.5
45.7
49.2
Board
Meeting 4
(Period 4)
53.8
50.7
51.8
38.5
52.0
38.7
42.2
40.0
55.2
39.0
45.1
41.5
59.0
40.7
47.9
40.8
59.8
41.7
47.9
43.8
65.0
44.0
51.5
Start
Position
(Period 0)
15.0
Board
Meeting 1
(Period 1)
16.0
Board
Meeting 2
(Period 2)
17.0
Board
Meeting 3
(Period 3)
17.0
Board
Meeting 4
(Period 4)
18.3
Board
Meeting 5
(Period 5)
Board
Meeting 6
(Period 6)
Board
Meeting 5
(Period 5)
Board
Meeting 6
(Period 6)
P/E ratio (%)
27 | P a g e
6.7.5 Board Meeting Five

SHARE PRICE
4.76 (EUR 5.71)
Share Price Trend

Start
Position
(Period 0)
2.28
EUR 2.74
Board Meeting
One
(Period 1)
2.57
EUR 3.08
Board Meeting
Two
(Period 2)
2.94
EUR 3.53
Board Meeting
Three
(Period 3)
2.84
EUR 3.41
Board Meeting
Four
(Period 4)
3.88
EUR 4.66
Board Meeting
Five
(Period 5)
4.76
EUR 5.71
Board Meeting
Six
(Period 6)
Start
Position
(Period 4)
m
Start
Position
(Period 4)
m
Board
Meeting 5
(Period 5)
m
308.6
(15.1)
Board
Meeting
5
(Period
5)
m
286.7
(18.7)
Revenue
Direct costs
257.1
(12.6)
Gross profit
244.5
293.4
267.9
321.5
344.0
(22.5)
Operating costs:
Staff costs
(156.8)
(188.2)
(172.0)
(206.4)
Establishment costs
(25.4)
(30.4)
(25.9)
(31.0)
(21.6)
(25.9)
(23.8)
(28.6)
(203.8)
(244.5)
(221.6)
(266.0)
40.8
48.9
46.3
55.6

Finance income
Finance costs
Total finance costs
Taxation
Profit for Period
8.2
9.9
8.9
10.6
(10.0)
(12.0)
(10.0)
(12.0)
(1.8)
(2.1)
(1.1)
(1.4)
39.0
46.8
45.1
54.2
(12.5)
(15.0)
(14.4)
(17.3)
26.5
31.8
30.7
36.8
Key Ratios:
PBIT (%)
Start
Position
(Period 0)
16.5%
63.0%
Board
Meeting 1
(Period 1)
16.2%
63.3%
Board
Meeting 2
(Period 2)
15.9%
62.5%
Board
Meeting 3
(Period 3)
14.6%
63.2%
Board
Meeting 4
(Period 4)
15.8%
61.0%
Board
Meeting 5
(Period 5)
16.1%
60.0%
28 | P a g e
Board
Meeting 6
(Period 6)

4. Corporate Social
Responsibility
Index Average
Start
Position
(Period 0)
43.5
41.3
39.2
Board
Meeting 1
(Period 1)
48.5
44.0
43.6
Board
Meeting 2
(Period 2)
51.3
47.3
47.4
Board
Meeting 3
(Period 3)
50.5
45.7
49.2
Board
Meeting 4
(Period 4)
53.8
50.7
51.8
Board
Meeting 5
(Period 5)
57.3
54.7
54.8
38.5
52.0
38.7
42.2
40.0
55.2
39.0
45.1
41.5
59.0
40.7
47.9
40.8
59.8
41.7
47.9
43.8
65.0
44.0
51.5
46.0
67.6
46.7
54.5
Start
Position
(Period 0)
15.0
Board
Meeting 1
(Period 1)
16.0
Board
Meeting 2
(Period 2)
17.0
Board
Meeting 3
(Period 3)
17.0
Board
Meeting 4
(Period 4)
18.3
Board
Meeting 5
(Period 5)
19.4
Board
Meeting 6
(Period 6)
P/E ratio (%)
29 | P a g e
Board
Meeting 6
(Period 6)
3.7.6 Board Meeting Six

SHARE PRICE
7.35 (EUR 8.81)
Share Price Trend

Start
Position
(Period 0)
2.28
EUR 2.74
Board Meeting
One
(Period 1)
2.57
EUR 3.08
Board Meeting
Two
(Period 2)
2.94
EUR 3.53
Board Meeting
Three
(Period 3)
2.84
EUR 3.41
Board Meeting
Four
(Period 4)
3.88
EUR 4.66
Board Meeting
Five
(Period 5)
4.76
EUR 5.71
Board Meeting
Six
(Period 6)
7.35
EUR 8.81

Start
Position
(Period 5)
m
Start
Position
(Period 5)
m
Board
Meeting 6
(Period 6)
m
344.0
(22.5)
Board
Meeting
6
(Period
6)
m
337.8
(26.2)
Revenue
Direct costs
286.7
(18.7)
Gross profit
267.9
321.5
311.6
373.9
(172.0)
(206.4)
(188.2)
(225.8)
(25.9)
(31.0)
(26.9)
(32.3)
405.4
(31.5)
Operating costs:
Staff costs
Establishment costs
(23.8)
(28.6)
(28.8)
(34.6)
(221.6)
(266.0)
(243.9)
(292.7)
46.3
55.6
67.7
81.2
8.9
10.6
10.3
12.4
(10.0)
(12.0)
(10.0)
(12.0)
(1.1)
(1.4)
0.3
0.4

Finance income
Finance costs
Total finance costs
Taxation
Profit for Period
45.1
54.2
68.0
81.6
(14.4)
(17.3)
(21.7)
(26.1)
30.7
36.8
46.2
55.5
Key Ratios:
PBIT (%)
Start
Position
(Period 0)
16.5%
63.0%
Board
Meeting 1
(Period 1)
16.2%
63.3%
Board
Meeting 2
(Period 2)
15.9%
62.5%
Board
Meeting 3
(Period 3)
14.6%
63.2%
Board
Meeting 4
(Period 4)
15.8%
61.0%
Board
Meeting 5
(Period 5)
16.1%
60.0%
30 | P a g e
Board
Meeting 6
(Period 6)
20.0%
55.7%
4. Corporate Social
Responsibility
Index Average
Start
Position
(Period 0)
43.5
41.3
39.2
Board
Meeting 1
(Period 1)
48.5
44.0
43.6
Board
Meeting 2
(Period 2)
51.3
47.3
47.4
Board
Meeting 3
(Period 3)
50.5
45.7
49.2
Board
Meeting 4
(Period 4)
53.8
50.7
51.8
Board
Meeting 5
(Period 5)
57.3
54.7
54.8
Board
Meeting 6
(Period 6)
60.5
53.3
59.0
38.5
52.0
38.7
42.2
40.0
55.2
39.0
45.1
41.5
59.0
40.7
47.9
40.8
59.8
41.7
47.9
43.8
65.0
44.0
51.5
46.0
67.6
46.7
54.5
46.3
68.6
47.7
55.9
Start
Position
(Period 0)
15.0
Board
Meeting 1
(Period 1)
16.0
Board
Meeting 2
(Period 2)
17.0
Board
Meeting 3
(Period 3)
17.0
Board
Meeting 4
(Period 4)
18.3
Board
Meeting 5
(Period 5)
19.4
Board
Meeting 6
(Period 6)
19.9
P/E ratio (%)
31 | P a g e
4.0 Conclusion & Recommendation

As a group there was an inherent problem with sticking to the original strategies planned.
Nonetheless, as we progressed throughout the simulation, we found that our strategies had
to be flexible in order to radically improve the organizational performance of WRSX.
The strategies of matrix structure and downsizing for WRSX has proved to work most
effectively, by eradicating any unnecessary layers of management and employees, WRSX
were able to retain its quality employees within their organization, and therefore the
strategy of downsizing deemed to be effective. However, without the implementation of a
matrix structure, downsizing would be ineffective. By aligning these two strategies together,
WRSX was able to maximize its employee capabilities to work over the different subsidiaries.
By managing the employees of the organization so that they can work effectively over the
organization, the NFPIs average increased by 11.7, suggesting that these strategies have
significantly improved the overall management of WRSX. Consequently by improving the
overall capabilities of the organization in managing their growth, risk, leadership; the share
price of WRSX significantly increased to 7.35 from 2.28, which subsequently saw
profitability increase dramatically.
The company position of WRSX from period one exemplifies how some strategies are not
effective within organizations. By reviewing the structure and capabilities of the WRSX
portfolio, the two strategies of downsizing and matrix structure were adapted to exploit the
key areas of competitiveness in which WRSX already had.
32 | P a g e
5.0 Reference List:

Mukherjee, S. (2005). Organisation & Management and Business Communication. New
Delhi: New Age International.
Hatten, T. (2010). Small Business Management. (4th Ed.). Boston: Cengage Learning.
WRSX (2012) company report (case study) Available: Winchester Learning Network
Hoskisson, R., Ireland, R. and Hitt, M. (2008). Strategic Management: Competitiveness and
Globalization, Concepts, Volume 1. 8th ed. Mason: South-Western Cengage Learning.
Hitt, M., Ireland, R.D., & Hoskisson, R. (2008). Strategic Management: Competitiveness and
Globalization, Concepts, Volume 1 (8th ed.). Mason: South-Western Cengage Leanrning.
Aswathappa, K. (2010). International Business (4th Ed.). New Delhi: Tata McGraw Hill.
Kehal, H. S. and Singh, V. P. (2006) Outsourcing and Offshoring in the 21st Century: A Socioeconomic Perspective. United States: Idea Group Pub.
McIvor, R. (2005) The Outsourcing Process: Strategies for Evaluation and Management.
United Kingdom: Cambridge University Press.
Reichheld, F. F. and Jr, W. E. S. (1990) Zero Defections: Quality Comes to Services, Harvard
Business Review. Harvard Business Review, 68. Available at: https://hbr.org//zerodefections-quality-comes-to-ser/ar/1(Accessed: 22 March 2015).
Richard, S. (1997) Combating the churn phenomenon, Telecommunications - International

Edition. 10th edn, 31.
33 | P a g e
Morgan, J. (2014). The 7 Principles Of The Future Employee. [online] Forbes. Available at:
http://www.forbes.com/sites/jacobmorgan/2014/11/11/the-7-principles-of-the-futureemployee/ [Accessed 22 Mar. 2015].
Johnson, G., Whittington, R., Scholes, K.,Angwin, D., & Regner, O. (2014). Exploring Strategy
(10th Ed.), Harlow: Pearsons Education
John, H., & Barnett, W. D. W. (1988) Strategic Management Concepts and Case, Colorato:
PWS Kent
Lynch, R. (2003) Corporate Strategy (3rd Ed.), Harlow: Pearsons Education
Cushman, D., & King, s. (1995) Communication and High-Speed Management, Albany: State
University of New York Press
34 | P a g e
6. 0 Appendices:
6.1 Simulation One
6.1.1 Sustainability profile of group
From: Rod Raoul Saurez, Non-Executive Director, WRSX Group
To: Board Directors
You know at WRSX you pride yourselves on being on-the-ball and your market research
team has a terrific reputation for identifying trends almost before they emerge. How come
then that WRSX appears to be nothing about its carbon footprint and sustainability profile? I
don't see anything on the website or in last year's company report and frankly it's a bit
disappointing. Is the lack of a coherent and well-publicised policy impacting on clients'
perception of WRSX? What about potential shareholders there are plenty of 'ethical'
shareholders these days who will not invest in non-green companies. Also how is this lack of
profile going down with young, bright people? It is hurting your ability to attract top talent
into the agency? I am a Non-Exec on several Boards and WRSX seems to be behind the rest
in setting out its sustainability profile. I think WRSX needs to act and act now. Can we discuss
this at the next Board Meeting?
Action Option C:
WRSX is in danger of falling behind its competitors in the area of sustainability. There are
commercial as well as ethical reasons for setting a Group-wide Sustainability Agenda. Create
a new WRSX Committee made up of internal employees interested in this issue and also
employ an external 'Sustainability Expert' with extensive experience of this field in the
Marketing Communications sector. This will mean a high salary cost but it will be the
responsibility of this expert to develop a group-wide strategy on Sustainability and to ensure
that it is effectively implemented. Ask each office to develop an action plan for rating its
sustainability profile. Ask each office to appoint a Sustainability Co-ordinator at a low/mid
level salary. Each office will then report to their local Managing Director and the local Board
on progress in this area sharing experience and best practice. The Board would need to
approve a budget of 350,000 for such an initiative.
35 | P a g e
6.1.2 Non-performing business within the group

From: Victor Xao, MD, London & Singapore Offices
To: Board Directors
I am seeking Board approval for the disposal of an Exhibitions and Conference Management
company that WRSX acquired 18 months ago as part of a small group of Advertising
agencies. The advertising agencies and PromoCo Exhibitions and Conference Management
trade as part of WRSX Advertising, Singapore. Deena Patel, the MD of this business believes
that on the contrary WRSX should invest in expanding its Exhibitions & Conferences
business, not only in Singapore but as a global offering to its clients. Each of these sectors
(exhibitions and conference management) has a few well-known global brands and then
thousands of smaller, local companies who often survive because of a particular sector
expertise and strong customer relationships. Neither of these sectors is growing rapidly
except in some emerging markets such as India and China. The costs of setting up a
conference & event management company are low so there are many manufacturers of
exhibition stands and even more conference and event management companies. This is not
a business we want to be in and I am seeking Board approval to move forward with looking
for buyers to take over PromoCo in the next few months. The Exhibitions Division
manufactures exhibition stands with a team of experienced workers based at a
manufacturing site on the Ling Industrial Park in Singapore where they design and build
stands for customers. The Conference & Event Management Division's expertise is in
delivering highly organised and efficient events for large numbers of participants for a range
of corporate, government and NGO clients. This sale would raise approximately 4.4m for
WRSX.
Action Option A:
Sell the whole Promoco business. This will raise capital of 4.4m to reinvest in other parts of
the business that are more profitable andhave more growth potential.
36 | P a g e
6.1.3 Cultural change in New York

From: Francoise Mellier, Group HR/Talent Director, Paris Office, WRSX Group
To: Board Directors
There are some profound differences in culture across the Group and that in some cases
these differences are detrimental to the business. In particular, the hierarchical nature of the
New York office's management style is in huge contrast to the Paris office and indeed the
London office. The result of this is that junior and middle managers in the New York office
are not empowered to make decisions that are commonly made by their equivalents across
the Group in other offices. Decisions about important and urgent matters, many of which
relate to clients, are delayed, sometimes to the detriment of the business. The issue for the
Group is whether it is acceptable for the New York office to continue to operate as it does or
whether steps should be taken to bring about change in the culture of the New York
operation. The Board asked Francoise Mellier, the HR Director from the Paris office to
produce a confidential report on this issue. An employee survey was carried out as part of
her research and the results are now ready to be presented so that the Board can decide
whether it needs to take any action as a result of Francoise Mellier's report.
Action Option B:
The second option builds on the first. So, as well as undertaking a radical review of the
management structure of the New York office, reducing the number of management layers
and moving authority down the organisation in line with the rest of the Group, the Board
votes for further action. Radical change will only be brought about by moving key personnel
from other offices into the New York office at a senior level. This is what Francoise Mellier
calls 'Leadership by example'. This will also mean moving some of the New York team to
other offices or giving them an option to take early retirement or redundancy. The budget
for taking this action would be 800,000.
37 | P a g e
6.1.4 Opportunities in digital media

From: Jay Bravura, Silverfish New Media, London Office
To: Board Directors
An increasing percentage of WRSX client's budgets is being spent on the digital space. By this
I mean: website development, on-line advertising, social networks and blogs, interactive
content, email marketing and mobile marketing. It is about time that we had a cohesive
strategy on entering this market. We have supplier relationships in various offices, so we can
offer clients the service, but we do not have a cohesive, global brand approach. Silverfish
New Media could deliver on this. Already many of us can quote instances where we have
seen consumer media budgets shrinking and the money going on digital advertising. My
view is that we need a credible presence in this space and quick. The research we have
done shows how the spend in the digital space has increased year-on-year by an estimated
15%.
Action Option C:
Make a proposal to an established company in this space. The partners in the award-winning
London agency, Digivision, are looking for a suitable alliance with an agency with resources
to spread their footprint into international markets. The principle shareholders of Digivision
are not open to offers in terms of a direct buy-out. WRSX has already had a preliminary
discussion with them and they are willing to talk further about an alliance. This could be a
good cultural fit as some of WRSX London office people have worked with them at another
agency. However, there are other agencies after Digivision and it may be that WRSX are
already too late as there are rumours that one of the 'Big Four' agencies are already in talks
with the Digivision about a strategic alliance. The budget for this strategic alliance would be
1m with WRSX providing the capital for the expansion Digivision seeks with an agreed
return of 35% of Digivision's future profits. The principle shareholders of Digivision are not
open to offers in terms of a direct buy-out
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6.2 Simulation Twos Agendas

6.2.1 Reducing client churn
From: Lloyd Silberstein, President, New York Office
To: Board Directors
The concept of client or customer churn describes the cycle of acquiring new clients and
losing others. Churn is traditionally seen to limit long-term customer value due to the cost of
acquiring new clients to replace the ones that have been lost. Businesses have focused on
'client retention' as a strategy that drives profitability. In the advertising and marketing
communications industry, the concept of 'business partnerships' i.e. informal relationships
developed over a long period which are beneficial to both supplier and client are at the core
of profitable growth. These are built on trust, confidence, mutual understanding and mutual
success. Client-agency relationships are one of the most complex in the business
environment, requiring a substantial level of collaboration to be effective. According to a
recent research report by the American Association of Advertising Agencies, in 1984 the
average client-agency relationship tenure was 7.2 years. By 1997 that number declined 25%
to 5.3 years. If the trend continues, we are soon heading for a situation where clients will
search for a new agency every 4 years.
While top agencies in the U.S. admit they are not doing their best work for many of their
clients, 'creative genius' is not always the key component of the success or failure of the
client-agency relationship.
The WRSX Board asked me to investigate the client churn situation in businesses managed
by the New York office which is substantially above those of other offices and to recommend
a strategy for turning this around this financial year. We have been working hard on this and
I would like to present our new client retention strategy to the Board. We call it
'Strengthening Client Relationships.' I would like to present this at our next Board Meeting if
there is room on the agenda.
Option B:
The Board believes that the SCR programme has real merit but that focusing on the Top 10
clients for each business is not correct as many of these clients are long-standing business
partners of WRSX and the degree of collaboration is such that these clients are unlikely to
move. Better to ask each Account Management team to suggest clients that they think are
'at risk' and to focus the SCR programme on these clients only, whether they be large clients
or small. The Board should sanction the new Client Relationship Managers posts for each
New York business and and approve the full budget for the SCR programme for the next
three years i.e. 600,000 per half year for three years.
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6.2.2 Sponsorship opportunity

From: Rosie Burton-Taylor, Managing Director, BTP / WRSX, London
To: Board Directors
We have been approached by the manager of an up-and-coming young US female tennis
player who has won both the junior US title and Wimbledon in the past year and I would
like to recommend to the Board that they consider sponsoring her as this would offer a
real WRSX branding opportunity depending on the extent of her progress potentially to
millions of TV viewers.
As there is not yet a PR subsidiary in the US, I have picked this up to bring to the Board's
attention.
We have not been involved in sports sponsorship to promote our brand name up to this
point, but I believe that it is time to do so. Other opportunities might also present
themselves like up-and-coming golf players or even Formula One.
Action Option C:
You believe that sporting events are an effective way of promoting the WRSX brand and that
the personal sponsorship of a tennis player could become the first part of an overall
strategy. You therefore agree to the 300,000 p.a. sponsorship package. Furthermore, the
Board believes that other sports such as Formula 1 are an effective way of promoting WRSX
and there is the opportunity to become a leading sponsor at an annual cost of 2m (1m per
half year) over three years. The Board approves the sponsorship packages.
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6.2.3 Knowledge sharing & communication coordination

From: Brad Cunningham, New Business Director, (supported by Steve Packham,
Information Systems Manager), WRSX London
To: Board Directors
Knowledge sharing & communication coordination Qorvic, one of the world's largest drinks
companies, has invited WRSX and four other advertising agencies to pitch for a substantial
portfolio of their leading brands in Western and Eastern Europe.
This potential new client has let it be known that it is looking for an advertising partner for a
portfolio of leading brands in its consumer range, to work with them to develop these
brands in selected markets in Europe. The total marketing Qorvic budget in this market is
200m of which this portfolio of brands accounts for approximately 15% of the total budget.
I need to explain that this is a competitive pitch and we are up against four of our
competitors so there is no guarantee that we will win the business. However, the WRSX new
business team has worked on developing the relationship with their senior marketing team
and their brief is that they are looking not only looking for an agency to offer a total package
of services including: consumer advertising and media buying, public relations, digital media,
branding / corporate identity and consumer research / insight which the WRSX group can
but they are also looking for evidence that we can co-ordinate this information between our
companies and offices.
We are therefore proposing that the board considers our proposal to invest in new
information technology to improve the quality of management information and coordination of communication.
Action Option C:
The advertising presentation approach is as per Option B, but with respect to the IT system,
the Board believes that an out-sourced supplier working with the in-house IT team can
customise an existing off-the-shelf system and demo this in time for the presentation to
Qorvic. The out-source supplier has a good reputation for delivering on time and on budget
and has quoted a guaranted fixed price of 2m.
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6.2.4 Corporate governance issue

Our company has an excellent world-wide reputation for providing PR services to leading
international sports clubs, sports personalities and associations. Within Europe, the London
office represents some of the best-known sporting personalities in football, rugby and golf.
These personalities are mega-stars even brands especially the footballers who earn
millions, live lavish lifestyles and are constantly in the media. The London agency also
represents a consortium of the top 15 football clubs in Europe, a very prestigious and
lucrative account.
Most recently the New York office has set up a joint venture with a local company in Buenos
Aires for the purpose of creating a specialist PR agency for footballers and football clubs in
Latin America. The following article was published in the BA Noticias last week and
syndicated around the world:
Personal Gain is the Game in Argentina Corruption Scandal Damages Nation's Football
Reputation.
Government probes have uncovered corruption within the country's professional football
league and its legendary national team, including millions of dollars in embezzled funds
stashed in overseas tax havens. In addition, sports agents and PR companies allegedly paid
kickbacks to coaches and other football officials to put run-of-the-mill players on the
national team during World Cup qualifying matches, artificially inflating their value for later
trades to professional clubs in South America and Europe.
The alleged corruption has resulted in loss of support from disgusted fans and sponsors. This
is a tragic time for Argentina and it will take a huge national effort to restore football's
honour and prestige here. One of Argentina's top football legends, said in an interview
'Football in Argentina has become blinded by money and greed.' At the centre of this
scandal is the PR company
Soccer Focus South America, which is jointly owned with the global advertising and
marketing communications company WRSX Group. Two of the directors of Soccer Focus
have been interviewed by police as well as FIFA officials.
The highly valuable contract for the European clubs association currently held by WRSX is
up for renewal in the next 12 months to say nothing of some of the largest contracts with
individual personalities. WRSX London is naturally concerned to avoid being tarnished by the
scandal in South America.
The chief executive of Soccer Focus South America has interviewed two local directors
implicated in the scandal and issued a written final warning to each of them but not
dismissed them.
Action Option C:
You decide to (1) implement the 10 Point Code of Business Conduct, (2) sack the two local
directors implicated in the scandal, (3) put a PR campaign into immediate effect publicising
these decisions and (4) convene an executive sub-committee of the non-executive directors
and WRSX legal counsel to conduct a thorough review of the WRSX corporate governance
model. The cost of implementing this programme will be a one-off immediate cost of
750,000, but you believe that there is potential in the South American joint venture and
this action will be sufficient to ensure that the European clubs association contract will be
renewed.
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6.3 Simulation Three Agendas

6.3.1 Outsourcing central services
From: Leena Chakrabati, Chief Financial Officer
To: Board Directors
As Chief Financial Officer part of my brief is to cut costs. My proposal is to outsource the HR
function to a specialist supplier of HR services. The major HR functions that could be
outsourced would be:
HR Strategy
Payroll and benefits
Recruitment
Dispute resolution
Pay negotiations with trade unions
Training and development
Performance Management Systems
Group Career Planning
My proposal to the Board is that we implement a Group-wide outsourcing of all of our HR,
reduce our HR headcount substantially across all the businesses and only retain the Group
HR Strategy team and the Group Career Planning team and one HR contact per business.
This would save the WRSX Group up to 3m per year.
I am aware that the tradition of our industry is that our people are our most valuable asset
but they are also one of our biggest costs. I know that some of you will also argue that our
people embody many of the distinctive capabilities that give us an edge over our
competitors. But how many of our people actually fit into this category compared to the
whole number and will they be better or worse if our HR function - that recruits, trains,
develops them etc. - is outsourced to people who can do it much more cost-effectively than
us?
I am asking for the Board to approve this strategic initiative.
Option B:
Give the go-ahead for outsourcing certain aspects of HR: payroll and benefits, pay
negotiations, training and development on a Group-wide basis. Also include recruitment of
admin staff and other non-creative/client-facing staff but retain the recruitment, training
and management of reward systems for all creative and account management staff within
the WRSX Group. The Board believes that the Group's value lies in its people and the
recruitment and retention of these people should be a major responsibility of the senior
team in each business. This will save 1m per decision period with an initial one-off cost of
2m in the current six month period.
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6.3.2 Launching Cine FX in London and New York

We are having a very successful year and Cine FX Paris not only involved in the production of
TV ads but since we made investments in equipment last year we are now also providing
post-production services for other production companies particularly in special effects now
demanded by many creative teams.
So not only are we producing TV ads for WRSX Paris but we are also working with other
agencies and production companies. I must say that there were many main board members
who were against starting up this company five years ago when the Paris MD thought that it
would be a real plus for the agency all those years ago. Some said that it was a 'vertical
integration' that WRSX should not be involved with.
Since then, we have won awards especially for WRSX Paris which has attracted new
clients. We conduct an armslength trading relationship with WRSX and al quotes are on the
basis of competitive quotations. There are some within WRSX who said that there would be
client objections to the agency placing business with a subsidiary company, but we have
tried to keep the relationship as transparent and competitive as possible.
I would like to propose that this model be launched in London and New York, especially as
there is demand for our services in these markets from our existing client relationships and
there is the potential to increase the group turnover and profitability. Neither the UK nor US
operations has a film production company and Cine FX Paris is an established brand name
and our management is strong and successful.
Action Option B Cine FX
Having considered Jean-Luc Breton's fully-costed proposal, you decide to launch in the US
market first on the basis that this market has more potential than the UK market and will be
more favourably disposed to a company that originates in France. The cost of
implementation will be 250,000 in the first 6 months.
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6.3.3 Competitive advantage through backward integration into reprographics?

WRSX Retail Advertising division is having an excellent year. We have won two new clients
that have added 20m to our turnover: the No 1 grocery retailer in the UK and also the No 2
electrical retailer. As the board will appreciate, this type of advertising which involves
hundreds of newspaper and magazine ads being created per week requires that we work
very closely with reprographics companies. While we come up with the design concept,
supply the design, text and photographs for the adverts, it is the reprographics company
that put all of that together, and after approval from us, produce the computer files from
which the ads are printed in newspapers and magazines.
For the past three years we have worked very closely with SpectraGraphix a reprographics
service company based in the UK Midlands and also on the US East Coast and WRSX Retail
Advertising division has become their single largest customer in the UK, accounting for
nearly 40% of their business.
The SpectraGraphix managing director has told me confidentially that he wants to retire
within a year and I believe that this is a great opportunity to buy the company and increase
both our service levels to our clients and our profitability.
As you will have seen from the internal memos in the past month, our grocery retail client is
planning to launch into the US East Coast market during the next year, so this could be
another good reason for buying a controlling interest in SpectraGraphix.
This will enable us to go to our retail clients with a complete service package at fair prices
which I believe in turn will enable us to sign longer-term contracts. In the retail advertising
business, this would be a great advantage. As you know, retail clients have a history of
changing their advertising agency much more frequently than other sectors and if this
service package can reduce client churn, I believe that it will benefit our business in the long
term.
In addition to this, SpectraGraphix can offer a similar service to other WRSX subsidiaries
enabling us to introduce cost reductions based on economies of scale which can be passed
on to clients. With pressures on budgets, reducing our prices to clients will make us more
competitive.
I hope that the Board will put this proposal on their agenda for the next meeting as I truly
believe that this opportunity will not be around for very long.
Option A - Reprographics
Having heard a detailed presentation from both John Hooper and the Group Financial
Director, you decide that WRSX should acquire 100% of SpectraGraphix at a cost of 10m
and rename the company WRSX Graphix, as this is a classic opportunity to integrate
vertically, bring all the WRSX reprographic work under one company. It will enable WRSX to
reduce costs through economies of scale which can be passed on to WRSX clients. This will
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make the WRSX Group more competitive in terms of pricing. All WRSX subsidiary companies
will be instructed to use WRSX Graphix whenever possible.
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6.3.4 Changing organisational structure to meet our strategic challenges

Last year we engaged the Barton Consulting Group to examine the performance of the
WRSX Group and to look at implementing changes that would drive future growth for the
business. One thing is clear; that what has worked well in the past will not necessarily work
well in the future. Dominic Osborne from the Barton Group is available to present the
Barton conclusions to the Board this week.
Osborne and his team have done a good job. The research they have undertaken clearly
demonstrates that WRSX Group is perceived as suffering from strategic drift and that WRSX
must take the decision now either to change the way it operates significantly or continue to
stagnate in terms of shareholder value and market perception.
Osborne points out that this stagnation is potentially dangerous if the Group wishes to
remain independent. WRSX could become a target for a hostile takeover by a larger agency
that would be able to drive out economies of scale and specialism, and through these,
improved financial performance.
I am suggesting that we ask Osborne to attend our Board meeting to present the conclusions
from the research and his main recommendation, which is to restructure WRSX from its
existing multi-divisional structure to a matrix structure. A move to a matrix structure would
be complicated, disruptive and potentially costly but I have listened to Dominic and it gets
my vote.
Can we find space for this on our Board Agenda?
Option B - Matrix
Having considered the Barton Consulting Group research findings you decide to take
soundings in the business before proceeding. You call a three-day meeting of your top 50
senior managers globally at the Chawton Glade Hotel in Hampshire, England. You invite
Dominic and three of his team to this meeting. Each of them will facilitate a group of
managers who will look at the pros and cons of implementing the matrix structure and how
it can best be managed if implemented. The Board's expectation is for implementation and
this will be made clear from the beginning, but you believe that the final decision should be
taken democratically amongst the WRSX top 50 management team. If change is agreed, this
top management team will be responsible for 'selling' the new structure to their staff. There
is an immediate one-off cost of 500,000 in this six month period.
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6.4 Simulation Four Agendas

6.4.1 Profiting from sustainability
From: Victor Xao, MD, WRSX London & Singapore Offices

To: Board Directors
I attended a very interesting conference last week in Marrakech called Managing Strategies
for Sustainable and Profitable Business Development. The venue was chosen as it gave the
delegates the opportunity to spend a day travelling to the South of Morocco to witness the
devastating effects that climate change is having on communities there. The Sahara desert is
gradually creeping North and year by year villages are emptying as people move away from
areas where there is no longer any rainfall. I must say that looking at dry river beds where
once there were major rivers is shocking, especially when you see large villages that
formerly housed hundreds of people but now only inhabited by those too old or too frail to
move.
One of the reasons I chose this conference out of the hundreds of conferences on
sustainability held each year round the world was that it had a focus this year on how there
should be no conflict between business profitability and sustainability. There were some
seriously impressive speakers who have clearly built up an expertise in communicating
across the board on sustainability, from corporate responsibility to climate change, ethics to
biodiversity.
One speaker from Canada particularly impressed me with his vision. He talked about how to
'deepen understanding of the interactions between humans and nature and to inform the
sustainable stewardship of our common natural, human, social and produced capital
endowments.' His theme was that the 'economies of communities, regions, and countries
are imbedded in and dependent upon nature's capacity to sustain ecological goods and
services for present and future generations. A world governed and grounded in sustainability
and ecological economic principles and practices will lead to a sustainable future, for the
common good.'
As a hard-nosed businessman you may wonder why I was at the conference. Well, I see
Sustainability and Corporate Social Responsibility as an opportunity for WRSX and one that
we ignore at our peril. I want the Board to consider my proposal for setting up a specialist
task force with an extensive brief to change the way we operate, the way our clients and
suppliers envisage their sustainability policies and the way every individual in our businesses
run their lives. A challenge of course. An opportunity I believe the opportunity is huge
and I want the Board's consent to prove it.
Action Option C:
My third option is to tackle the issue from a completely different perspective. We should
look for opportunities with existing WRSX clients to enhance their status in this field by
creating advertising and promotional campaigns with a socially responsible message. This
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means creating direct links between customer spending on brands and contributions to
socially and environmentally focused projects. For example, buy this pair of jeans and we
contribute this percentage of the price to education in Rwanda. Eat at this chain of
restaurants this month and for every pound you spend this much will go to buying grain for
families in Ethiopia. We can link in with world disasters: floods, famines, disease. We can
work with clients to develop campaigns that link into education, health and alleviation of
poverty through direct financial contributions from consumers. In order to do this I think
that we need a creative team that specialises in this kind of work. I would suggest they are
based in London but have a global brief to support local teams in developing ideas and
implementing campaigns. This is not just a do-good-in-the-world CSR campaign for WRSX
but a market opportunity to build on companies seeking to build their own CSR profile.
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6.4.2 Strategic alliance in the Indian advertising market

From: Raphael Roux, Global CEO, WRSX Group and Leena Chakrabati, CFO, WRSX Group
To: Board Directors
As you know, we have been working with McIver & Co, Management Consultants to clarify
our strategy for growth and to evaluate opportunities that arise which will help us to
implement our strategic plans this year. One issue that McIver & Co have highlighted is the
ability of strategically targeted internationalisation to deliver competitive advantage for
WRSX.
Our growth strategy is to provide our clients with services as they globalise and enter newly
developed and emerging markets and at WRSX we do this in three ways:
acquisition
strategic alliance
start-up
The chosen method is dependent upon various factors assessed at the time, the scale of the
opportunity and the strategic objective, balanced against the scale of the risk. We are
increasingly coming under pressure from clients to have a presence and provide services in
India and Leena Chakrabati and I have been working with various consultants to identify
both the target companies and format to extend our service footprint into India.
Why India? We can benefit from entry into the Indian market in a number of ways:
Access to the growing Indian market by making sure that we can provide our US and
EU clients with services so they do not put their business out to a competitor.
Equally we can provide Indian clients who are globalising with advice and advertising
in US and EU markets
Most of our major competitors are already in India or are planning to enter the
Indian market this year. This means that we are losing business to competitors
where a client wants to reduce costs by standardising its advertising campaigns
across its global markets.
Analysis by McIver & Co shows that if India continues on its current high-growth path, over
the next two decades the Indian market will undergo a major transformation. Income levels
will almost triple, and India will climb from its position as the twelfth-largest consumer
market today to become the world's fifth-largest consumer market by 2025.
Together with the consultants, Leena and I have identified three potential strategic alliance
partners and it is up to the Board to analyse the upside and downside of all three. I hope
that the Board will agree that this is an initiative that we should move forward on and not
decide to do nothing.
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Option B:
Consumer Perception / Advertising Ltd:
Background:
The agency was started 10 years ago by two ambitious executives: one from the leading
Indian telecoms company and the other from an international firm of accountants.
Head office: Mumbai
Branches: New Delhi, Hyderabad, Bangalore
Services offered: Advertising & media buying
Billings: Rs 800 million (approximately GBP 10 million)
Major client sectors: Telecoms, fmcg (fast moving consumer goods), automotive
Senior Executive: Vijay Krishnan, Chief Executive, Prakash Misra, Chief Financial Officer
Reputation among staff: Very ambitious
Reputation among clients: Fast talkers
Reputation among competitors: Very slick
Our assessment:
Upside:
We have interviewed the CEO and CFO and were impressed with their ability and ambition.
They saw the advantages of a strategic alliance with the WRSX Group and how we could
fast-track them into specialist areas such as: PR, brand identity and digital media. Plus our
US and EU clients can slot into their agency network. The agency has just signed a contract
with a major American FMCG company to be its advertising agency for India.
Turnover growth in past 12 months: +15%
PBIT: Rs 160 million (approximately GBP 2.0 million)
They are very forward-looking and have invested in Consumer Perception / Digital which
they have set up in Bangalore, drawing off the abundant local tech talent.
Downside:
While we have questions over the cultural fit between the two organisations, we have no
doubts about their ambition to be a significant player in the sub-continent.
The deal on the table: Rs 580 million (approximately GBP 7.4 million) for 49% of the equity
of the company.
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6.4.3 Breakaway WRSX management / creative group
From: Francoise Mellier, Group HR Director, Paris Office, WRSX Group

To: Board Directors
I have to inform the Board that two senior executives have indicated their intention to leave
the WRSX Group. They are Philippe Jourdan, the deputy MD of WRSX Paris, and Jean-Luc
Breton of CineFX, our film production company. I have had an initial discussion with them
and their reasons are: first, that they believe that they are not receiving the support from
the main WRSX Board, second, they want to share in the success of the WRSX Group.
Both are on 6 month restraint of trade contracts, which is standard for the Paris office. This
clause means that they cannot go and work for a competitive agency to WRSX or approach
WRSX clients with regard to getting them to switch business from WRSX to any new agency.
I have asked what their plans are and they made no secret of the fact that they believe that
their talents are very marketable and that they would like to be 'more in charge' of their
own careers and they want to start a new creative advertising 'boutique agency'. My
impression is that, based on their reasons above, they might be persuaded to stay with
WRSX. They have both been very good performers and there is no reason not to persuade
them to stay with WRSX.
I believe that with the involvement of senior management in both the Paris and London
offices, can we can turn an emergency into a strategic advantage by spinning off a new
creative agency with Philippe Jourdan and Jean-Luc Breton.
Option C:
WRSX has been subjected to a lot of competition in France from 'creative boutique' agencies
smaller 'hot shops' that attract a lot of attention in the advertising press which claims that
they are accounting for a greater share of the market. The Board believes that this is an
opportunity to put a proposition to Philippe Jourdan and Jean-Luc Breton to spin off a high
creativity visual media based agency which makes the most of their talents. The new agency
will be situated within the WRSX Paris offices, will draw off central services and will be
named as a sub-brand of WRSX, e.g. WRSX Jourdan Breton. Both will keep their WRSX Group
shares and will be offered a 10% profit share each.
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6.4.4 Parent companys ability to dictate group-wide corporate governance
From: Sandrine Mauret, Non-Executive Director, WRSX Group

To: Board Directors
As a Non-Executive director of WRSX, you will be aware that I am also a non-executive
director of other boards as well and that I was appointed to this role on the WRSX Board in
order to bring my experience to help guide the group in matters of Group strategy and
corporate governance and thereby to ensure that all stakeholders and especially our
shareholders continue to have confidence in the strategic direction and excellence of
decision-making by the WRSX Board.
Also as you will be aware, corporate governance is concerned with the structures and
systems of control by which our operating company managing directors are held
accountable for their actions to those who have a legitimate stake in the WRSX Group. One
definition of Corporate Governance is: the system by which companies are directed and
controlled. It deals largely with the relationship between the constituent parts of the
company the directors, the board (and its sub-committees) and the shareholders.
Some people are increasingly putting an economic spin on Corporate Governance such as
Mathiesen: Corporate governance is a field of economics that investigates how to
secure/motivate efficient management of corporations by the use of incentive mechanisms,
such as contracts, organizational designs and legislation. This is often limited to the question
of improving financial performance, for example, how the corporate owners can
motivate/secure that the corporate managers will deliver a competitive rate of return.
In these turbulent times, corporate governance has become an increasingly important issue
for all organisations and especially since we are a publicly-quoted company that has
attracted a wide range of investors in the WRSX Group.
I believe that we need to confront corporate governance on a number of levels and the
choices for the Board are below. While corporate governance and corporate responsibility
are closely related issues, they should not be confused. Corporate governance is concerned
with structures and systems of control. Corporate responsibility is concerned with our
company standards of social, ethical and environmental behaviour.
I believe that there are many issues relating to our strategy and guiding policies that need to
be overhauled and I would like to propose that we have a radical overhaul of our corporate
governance chain and review the roles and relationships of the different stakeholder groups
in our organisation
Action Option A:
The issue is whether WRSX can have a Group-wide Corporate Governance policy that is
enforced through contracts, remuneration systems and clear guidelines as to how each
business is managed at a board level. Transparency and accountability should be at the core
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of how every business is operated and this is especially true of the relationship between the
individual businesses and the Group as it impacts on our relationship to shareholders. All
business MDs and their senior teams should have revised contracts agreed that include
clauses on the implementation of certain corporate governance standards. Failure to meet
these will result in instant dismissal. This will send a clear signal across the Group that we
are serious about Corporate Governance at WRSX.
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6.5 Simulation Five Agendas

6.5.1 Creating new employment policies Becoming employer of first choice
From: Mike Vanbruggen, Deputy Group HR Director, WRSX Paris
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.
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
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6.5.2 Key strategic appointment in underperforming subsidiary
From: Neil McInnis, Finance Department, WRSX London

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.
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.
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6.5.3 UK Government contracts potential account conflict

From: Leah Weinstein, Account Manager, Government Information Office, WRSX London
Office and James Henley, Account Manager, Goodey Fast Foods, WRSX London
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.
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
57 | P a g e
the obesity campaign. You also recommend to Goodey Fast 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.
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6.5.4 Business integration how much autonomy should we give to the businesses we
acquire?
From: Sandrine Mauret, Non-Executive Director, WRSX Group
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
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
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6.6 Simulation Six Agendas

6.6.1 Resourcing growth
From: Jay Bravura, CEO, Silverfish New Media, London Office
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.
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
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investment in the digital media business without taking out loans or reducing WRSX's equity
share of the business.
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6.6.2 Opportunity for strategic review and to raise capital

From: Leena Chakrabati, Group Finance Director, WRSX London and Elsje Janssen, Finance
Department, WRSX Group
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.
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.
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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
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6.6.3 Making WRSX the agency of choice for Asian brands expanding globally
From: Bradley Harris, New Business Director, WRSX London and Rod Cunningham, New
Business Director, WRSX New York
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?
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 longerterm 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.
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6.6.4 The formulation and practice of strategy at WRSX
From: Raphael Roux, CEO, WRSX Group and Rod Raoul Saurez, Non-Executive Director,
WRSX Group
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.
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.
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6.7 Business Plan Proforma

Business Plan for the WRSX Group
Participant name: Drew Washbourne, Malick Kane, Hyung Kyoo Jeon
1. Executive Summary
(Complete this section of your plan last. Go straight to Section 2 of this plan. Return to the Executive
Summary when you have completed all other sections.)
A. Purpose of the plan (e.g. establish mission, vision, goals and objectives for WRSX Group in
the next three years.)
Do eradicate then inefficiencies within WRSX portfolio and organizational structure.
To change WRSXs growth strategy to become organic growth
To maximize and use the staffs capabilities over the portfolio
B. Company description
i.
ii.
iii.
I)
II)
III)
Company name
Products and services
Current/future structure
WRSX
Related Marketing Activities
Matrix Structure
C. Market description
i.
ii.
I)
II)
Target markets (geographic, demographic, segments)

Competitors
London, New York, Paris and Singapore

AOL, Google
2. Mission Statement
(Current WRSX mission statement or a revised statement created by you.)
66 | P a g e
We exist to make our clients successful through differentiating and strengthening their brands by
creating advertising and using a range of marketing related activities.
3. Company Objectives
(Objectives should include the goal sought, the index used for measurement, the target to be achieved
and the timeframe in which the target is to be achieved.)
i.
ii.
iii.
iv.
v.
General company objectives

Marketing objectives
Operations objectives
Finance objectives
Human resources objectives
i.
ii.
Achieve a share price of over 5 by the end of the board meetings

Eradicate any inefficient subsidiaries which conflict with the idea of marketing related
activities
iii. Improve our non-financial performance indicators to an average over 50 by board meeting 6
iv. Improve profits by 30 million by board meeting 6
v. Make our employees at WRSX become cross functional in many areas of WRSX portfolio
4. Market Analysis and Strategies
(Key factors impacting on or about to impact on WRSX Group's business taken from your Phase 1
Strategic Analysis and how you plan to deal with them.)
A. Macro environment economic factors
Brands allow consumers to differentiate between products and services and it

is the job of the advertising agency to position the brand so that it is associated
with functions and characteristics that the consumer values.
Online advertising is booming as search engines generate revenues from paid
search
big global clients dont need big global agencies any more. This trend is
reflected by the growth of non-traditional agencies in various global markets,
which have been referred to as a revolution in the ad world.
Sourced From: TSE 10.0 Advertising Industry Profile
B. Business environment
The beginning of the new millennium has seen new competition in this industry
as giants such as Google, Yahoo and Microsoft begin to exploit their ability to
interact with millions of potential consumers of branded products.
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Larger advertisers such as Coca-Cola and Procter & Gamble have been moving
away from this commission/time compensation model to a model which
includes value based on a number of metrics
Another significant trend regarding the future of advertising is the growing
importance of the niche market using niche or targeted ads. Brought about by
Internet advertisers, this will have an increasing ability to reach specific
audiences.
Microsoft paid $6 billion (3 billion) to buy digital marketing firm Aquantive in
its biggest-ever acquisition in 2007. Aquantive advises agencies and website
publishers on putting adverts online, connecting buyers and sellers
Sourced From: TSE 10.0 Advertising Industry Profile
C. Sector/market analysis
i.
ii.
iii.
Describe the potential of the industry, outlook and trends and how you intend to
position WRSX in relation to these
Describe WRSX Groups' products and services, market position in its different
sectors as you see them in three years time
Competitive analysis and how you see that shifting
a. Market segments served by competitors
b. Strengths and weaknesses
c. Capabilities marketing, financial, creative, production, other
d. Current and future competitive threats
i.
Due to the changes in the macro environement and the business environment, we felt it would
be essential to focus on expanding the digital advertising sector within WRSX to capitilise on this
shift in advertising trends.
ii.
WRSX has diversified into a vast amount of marketing related activities, the portfolio of WRSX is
particularly advantageous, due to the different types of organizations which can facilitate each
other with information, i.e. research and insight, brand identity, digital marketing. With requests
from clients being highly specialized WRSX portfolio facilitates them with the resources to
achieve these wide specifications which clients demand.
iii.
A) The competitors of WRSX will extensively move to digital marketing due to the wide use of the
internet and the changing consumer demands.
B) This will be harder for WRSX to compete within these markets due to the high amount of
market share which companies such as Google or Yahoo, however due to the widely diversified
68 | P a g e
portfolio which WRSX has, WRSX can capitalize on their unique cross/functional portfolio to offer
clients a highly specialized experience and deliverable
C) WRSX has a massive amount of employees which are spread over a wide geographic, which
means they can work flexibly to the demands of the clients, in addition to this WRSX has research
and insight subsidiaries within 4 different geographies enabling them to research data in areas
that match the demands of the clients.
D) The major shift from television, multimedia, radio to a more online form of advertising poses
as a great problem.
D. Marketing activities
i.
Overall marketing strategies that will deliver your company objectives in the next
three years
a. Geographic strategy
b. Segmentation strategy
c. Pricing strategy
d. Growth strategy
a)
Make subsidiaries cross/functional so we can capitalize on staff capabilities and

organizational capabilities Matrix Structure
b) Build relationships between the subsidiaries across geographics, which enable different
subsidiaries to identify potential investments and opportunities. By building a relationship
over these geographies with reference to a specific market segmentation WRSX can
capitalize in different areas where these segmentations have not been exploited.
c) Pricing strategy will vary depending on what type of marketing related activity the client is
requesting for.
d) Growth strategy will be through organic growth, and by specializing in the marketing
activities which are present within the WRSX portfolio, however some of these subsidiaries
will be eradicated to keep the most strongest subsidiaries within their portfolio. This will
enable WRSX to offer the best quality service to its existing and potential clients.
5. Operations and Environmental Sustainability

A. How operations need to change in order to deliver your plan
Due to the corporate governance scandal, there needs to be a shift to implement a group wide stated
code for corporate governance and environmental sustainability, we plan on making WRSX adhere to
both of these codes throughout all business practices and hope to influence our clients to adopt them
to make sustainability a core feature of WRSX.
B. Environmental/sustainability issues that may impact on the WRSX Groups' operations

Higher staff costs may be a problem for the sustainability of financing WRSX. However the corporate
governance scandal has damaged the reputation of WRSX which needs to be rectified in order for all
of our existing/potential clients to understand and feel confident that WRSX will offer the highest
class service it can offer.
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6. Structure and Key Management Personnel

A. Issues with the organisation structure and your plans to retain or change this
Due to the organization structure being widely diversified through the inorganic growth strategy of
acquisition, we wanted to eradicate any inefficient subsidiaries and eradicate any unnecessary labour
that may of consequently affected the higher staff costs which WRSX experienced at first of 63.3%.
Due to WRSX having a divisional structure, we wanted to change distinguishing characteristics from
these divisions so the different subsidiaries can collaborate in projects for clients to improve the
overall process and deliverable.
B. Skills/experience that give strength to the WRSX Group that you need to retain
Due to the implementation of a matrix structure, we want our employees to become cross/functional
and active within most of WRSXs operations. We therefore need to retain quality employees that
have a diversity of skills and interests which are relevant to the WRSX portfolio.
C. Obvious weaknesses in the WRSX team and how you will overcome them
Due to the acquisition growth strategy, WRSX has a very wide communication channel, steep levels of
hierarchy and significantly higher staff cost. The matrix structure will provide WRSX with a structure
that enables subsidiaries to come together and collaborate within the WRSX structure, using the
capabilities of different employees to maximize efficiency and harness creativity by encouraging
different perspectives to take part within the different parts of the portfolio.
7. Financial Data
A. Projections for the next three/four years
Double WRSXs profits by 2018
Significantly reduce the staff cost ratio to 40% by 2018
B. Key assumptions made in prospective financial forecast
Benefits of restructuring WRSX through down-sizing can ensure to improve the

disproportion between size of its branches and capabilities. Finally, it can enable to increase
profits with long-term vison Benefits of matrix structure can revise WRSXs corporate
governance by combing both divisional and functional structure. Then, it can improve all
communication between senior managers and rookies, which enables to make quick and
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correct decision. As focusing on sustainability and promotion, it is believed that WRSX can
receive plaudits for innovation and technological development, and this will ensure to
improve WRSXs brand identity and image.
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2015

WRSX Group Report

2.0 Current Company Position and Suggested Strategies

2.2 Restructuring to Implement a Matrix Structure

3.0 WRSX Business Simulation

3.1.2 Eradicate Inefficiencies and Become to Flexible

3.2 Board Meeting Two

3.2.2 Improving Client Customer Base & Procurement Management

In terms of procurement and supplier management, outsourcing can be a solution.

3.3 Board Meeting Three

3.3.2 The Matrix Structure

3.4 Board Meeting Four

3.4.2 Corporate Governance

3.5 Board Meeting Five

3.5.2 Retaining Quality Employees and the 7 Principles of Future Employees

Sourced from: (Morgan, 2014 [Online])

3.6 Board Meeting Six

3.6.2 The Long Term Future

3.7 The Results of the Simulation

2.28 (EUR 2.74)

Share Price Trend

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

Other operating costs

Total operating costs

Profit before interest and taxation

Total finance costs

Profit before taxation

Profit for Period

Non-financial Performance Indicators

Price / Earnings Ratio:

P/E ratio (%)

3.7.1 Board Meeting One

2.57 (EUR 3.08)

Share Price Trend

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

Total operating costs

Profit before interest and taxation

Profit for Period

Non-financial Performance Indicators

Price / Earnings Ratio:

P/E ratio (%)

3.7.2 Board Meeting Two

2.94 (EUR 3.53)

Share Price Trend

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

Other operating costs

Total operating costs

Profit before interest and taxation

Total finance costs

Profit before taxation

Profit for Period

Non-financial Performance Indicators

Price / Earnings Ratio:

P/E ratio (%)

3.7.3 Board Meeting Three

2.84 (EUR 3.41)

Share Price Trend

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

Other operating costs

Total operating costs

Profit before interest and taxation

Total finance costs